Q2 2026 Townsquare Media Inc Earnings Call Transcript
Key Points
- Digital advertising revenue accelerated to +11% YoY in Q2, up from +7% in Q1, with expectations for further acceleration in Q3.
- Townsquare Interactive achieved record segment profit margins of 37.6%, with churn at historically low levels and revenue stabilizing.
- Media partnership business expanded to 16 partners across 115 markets, with revenue expected to more than double in 2026 and a long-term target of $50 million revenue at 20% profit margin.
- Completed first proprietary technology licensing deal with Summit Media, creating a new recurring revenue stream and deepening partner integration.
- Broadcast business continues to outperform industry peers, with strong cash flow generation and disciplined expense management despite secular headwinds.
- Digital now represents approximately 59% of total segment profit and 57% of total net revenue, significantly outpacing local media peers.
- Programmatic revenue grew +27% YoY in Q2, now representing ~70% of digital advertising revenue, with continued strong growth expected in Q3.
- Company maintains significant tax attributes, including $121 million in federal NOL carryforwards, with no material cash taxes expected until approximately end of 2028.
- Q3 guidance implies mid-single-digit YoY adjusted EBITDA growth, with full-year guidance narrowed within initial ranges.
- High dividend yield of ~13% supported by strong cash flow, with management confident in long-term value creation.
- Townsquare Interactive revenue declined 8.5% YoY in Q2, with sales force still 40% below peak levels and rebuilding expected to take until 2027.
- Broadcast advertising revenue declined 5.5% YoY in Q2 (7.2% ex-political), with continued secular pressure and national/agency business down high teens.
- Non-cash impairment charges of $26.6 million in Q2 and $35.2 million YTD related to FCC licenses, with expectations of continued write-downs.
- Net leverage remains elevated at 5.44x, though expected to tick down in H2 as EBITDA returns to growth.
- Political revenue forecast of $8 million for 2026 is modest, with some share shifting to digital and competitive races not fully materializing.
- Digital remnant revenue, though only 6% of digital advertising, has been a headwind due to AI search impacts, with stabilization only recently achieved.
- Q2 adjusted EBITDA declined 6.2% YoY, reflecting ongoing broadcast weakness and Interactive revenue declines.
- Net loss of $41.8 million in Q2, driven by impairments and a non-cash income tax expense of $18 million.
- Broadcast segment profit margins expected to average mid-20s for the full year, consistent with 2025 but below Q2's 30% level.
- Company expects FCC license values to continue to be written down regularly, which may weigh on reported earnings.
Good morning and welcome to Townsquare Media's second quarter 2026 conference call.
(Operator Instructions) I would like to introduce the first speaker for today's call, Claire Yenicay, Executive Vice President.
Thank you, operator, and good morning to everyone.
Thank you for joining us today. With me on the call are Bill Wilson, our CEO and Stuart Rosenstein, our CFO and Executive Vice President. Please note that during this call, you may make statements that provide information other than historical information, including statements relating to the company's future expectations, plans and prospects.
These statements are considered forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1,995 and are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These statements reflect the company's beliefs based on
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