Cumulus Media (NASDAQ: NASDAQ:CMLS) reported steady third-quarter results for 2023, meeting revenue and EBITDA expectations despite a decline in national advertising. The company managed to maintain its performance by focusing on controllable areas such as digital business investments, cost-cutting measures, and balance sheet improvements.
Key takeaways from the earnings call include:
- Digital revenue increased by 7%, driven by growth in streaming, podcasting, and digital marketing services.
- Cumulus executed an additional $5 million in fixed cost reductions, totaling $110 million since 2019.
- The company completed a $10 million asset sale and retired $5.2 million of debt, maintaining a strong liquidity position and balance sheet.
- Despite the weakness in national advertising, there were positive trends in certain categories, including home products, consumer packaged goods, and retail.
- Local revenue, including local spot and digital revenue, was down 5% in the third quarter, with auto-showing growth despite strikes impacting certain markets.
- The company is optimistic about the growth of its digital marketing services business and plans to continue investing in it.
- Cumulus reduced total expenses by over $6 million through fixed cost reductions and lower variable costs.
- The company reduced debt by over $130 million since the beginning of 2022, maintaining a strong balance sheet.
Despite the weak national advertising environment and a challenging political comparison, Cumulus remains cautiously optimistic about a better national advertising environment in 2024. The company is prepared for any circumstance and remains committed to cost reduction, improving operating leverage, and maximizing financial flexibility.
During the call, the company also highlighted that macroeconomic factors are impacting Q4 results. However, signs of recovery in the national advertising market for the next year are evident. The company is positioning itself for this rebound by investing in digital businesses and improving operational efficiency. Increased sales force and contract renegotiations are part of the cost-reduction strategy.
The company's podcasting business returned to growth in Q3, with a focus on monetization and expanding the podcast portfolio. The margin profile for podcasting remains in the 20s, and new podcasting talent is being added to attract brand advertisers.
Cumulus also expressed a high demand for live sports from advertisers, despite the weak national advertising market. The company is pleased with its sports portfolio, including the NFL rights, and is continuously looking for ways to increase revenue opportunities and improve its network business.
In terms of capital allocation, the company is prioritizing debt reduction and maintaining financial and strategic flexibility. The debt has been reduced over the past four years, benefiting both debt and equity holders.
Cumulus Media's management team concluded the call by expressing their appreciation and looking forward to the next quarter.
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