Cumulus Media Inc (CMLS) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges and ...
Total Revenue: $200 million, down 2.7% year-over-year.
EBITDA: $8.4 million for Q1.
Digital Marketing Services Revenue: Grew 25% in the quarter.
Podcasting and Streaming Revenue: Increased low single digits year-over-year.
Political Revenue: $2.2 million in Q1, down 55% from 2020.
Debt Reduction: Reduced outstanding debt by approximately $33 million.
Interest Rates: Secured attractive interest rates.
ABL Facility: Increased to $125 million from $100 million.
Expenses: Decreased by approximately $4 million year-over-year.
Release Date: May 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Cumulus Media Inc successfully refinanced its capital structure, extending maturities to 2029 and reducing the principal amount of debt by approximately $33 million.
Digital marketing services revenue grew by 25% in the quarter, demonstrating strong growth in the digital sector.
The company achieved a 12% improvement in converting previously radio-only customers to digital marketing services buyers.
Cumulus Media Inc managed to increase its total gross merchandise sales customers by over 25% in the first quarter.
The company saw significant improvements in national spot and network business trends compared to 2023, with strong increases in consumer packaged goods and insurance categories.
Negative Points
Total company revenue was down 2.7% year over year, indicating a continued overall decline in revenue.
Political revenue for the quarter was down 55% from 2020, reflecting less competitive presidential primaries.
The recovery in national advertising remains uneven, with several key categories like mortgage banking and home improvement citing the interest rate environment as a significant obstacle.
Local spot revenue performance, although improved from Q4 2023, was still down, indicating ongoing challenges in local markets.
Total company revenue is currently pacing down low single digits for Q2, suggesting continued revenue challenges ahead.
Q & A Highlights
Q: Can you provide a breakdown of your digital businesses and insights into how they are pacing for the second quarter? A: Francisco Lopez-Balboa, EVP and CFO of Cumulus Media, explained that the digital businesses are still roughly divided into thirds among direct marketing services, podcasting, and streaming. He noted strong growth in direct marketing services and mentioned that digital is currently pacing in the mid-single digits, with particularly strong performance in direct marketing services consistent with first quarter results.
Q: Could you provide more details on the $4 million fixed cost reduction and potential for further reductions? A: Francisco Lopez-Balboa highlighted that the fixed cost reductions were achieved through more efficient use of contractors, renegotiating fixed-price contracts, and personnel savings. He emphasized the ongoing effort to find cost-saving opportunities, particularly in production costs for sports.
Q: Are the new client additions to your digital marketing services from other providers, or are they new to the space? A: Mary Berner, CEO of Cumulus Media, indicated that the new clients are a mix of both. She emphasized the company's unique ability to offer a full spectrum of digital marketing solutions, which allows them to package audio and digital advertising effectively, attracting new clients and taking business from other agencies.
Q: Can you discuss the improvement in podcasting trends? A: Mary Berner mentioned that the improvement is linked to both product quality and an increase in listenership. She highlighted the success of local podcasts and the overall growth in podcast revenue, which follows increases in listenership.
Q: What are the current trends and expectations for the broadcast side in the second quarter? A: Francisco Lopez-Balboa noted that the broadcast is currently pacing down mid-single digits, with variability expected due to late bookings in local spots and lumpiness in national advertising. He pointed out the lack of major sports events in Q2, which might affect national advertising revenues.
Q: Could you provide insights into the strategic focus for Cumulus Media moving forward? A: Mary Berner outlined the company's strategic priorities, which include accelerating digital growth, reducing fixed costs, and continuing to deleverage the balance sheet. She emphasized the importance of these strategies in building long-term shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
