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Gannett Co., Inc. (GCI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 missed Wall Street on revenue and EPS as ~$7M of digital revenue slipped into Q4 and cost program-related expenses were pulled forward; revenue $560.8M (-8.4% YoY), diluted EPS -$0.27, Total Adjusted EBITDA $57.2M (10.2% margin) .
  • Consensus vs actual: revenue $571.0M* vs $560.8M (miss $10.2M), primary EPS -$0.12* vs -$0.21* (worse by ~$0.09), EBITDA $64.6M* vs $54.7M* (miss $9.8M)*. Management flagged timing and expects strong Q4 driven by AI licensing and large digital ad campaigns .
  • Guidance updated: FY25 digital revenues now expected to decline low-single digits (prior: flat), with Q4 digital growth low-single digits; FCF and adjusted EBITDA still guided up >30% YoY and positive respectively .
  • Strategic catalysts: new AI licensing agreement with Microsoft’s Publisher Content Marketplace, Perplexity deal launch in October, partial summary judgment against Google establishing liability on several claims—management views these as stock-relevant narrative drivers into Q4 .

What Went Well and What Went Wrong

  • What Went Well

    • “Total debt falling below $1.0 billion” and first lien net leverage 2.69x; $18.5M debt repaid in Q3, cash expected to be ~$100M by year-end .
    • New AI licensing deal with Microsoft and Perplexity launch in October; management blocking >99% of AI bots and sees growing AI monetization pipeline .
    • Digital-only ARPU hit a record ($8.80), with sequential growth in digital-only subscription revenue; Newsquest delivered its second consecutive quarter of revenue growth and margin expansion .

  • What Went Wrong

    • Revenue and EPS missed consensus due to timing of large digital campaigns and ~$7M revenue shift; adjusted EBITDA was impacted by unplanned Q3 expenses tied to the $100M cost program .
    • Consolidated revenue down 8.4% YoY and digital revenues down 5.3% YoY, with Domestic Gannett Media segment revenue and EBITDA margins compressing YoY .
    • Free cash flow fell to $4.9M vs $19.8M in prior-year Q3 and cash from ops was $15.2M vs $33.7M YoY; interest paid and integration/reorg costs weighed on FCF .

Financial Results

YoY comparison

MetricQ3 2024Q3 2025
Total Revenues ($USD Millions)$612.439 $560.796
Net Income (Loss) ($USD Millions)$(19.653) $(39.249)
Diluted EPS ($USD)$(0.14) $(0.27)
Total Adjusted EBITDA ($USD Millions)$62.879 $57.173
Adjusted EBITDA Margin (%)10.3% 10.2%
Cash from Operations ($USD Millions)$33.745 $15.163
Free Cash Flow ($USD Millions)$19.762 $4.880
Digital Revenues ($USD Millions)$277.386 $262.744

Sequential comparison (Q1–Q3 2025)

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Millions)$571.573 $584.861 $560.796
Net Income (Loss) ($USD Millions)$(7.333) $78.391 $(39.249)
Diluted EPS ($USD)$(0.05) $0.42 $(0.27)
Total Adjusted EBITDA ($USD Millions)$50.509 $64.237 $57.173
Adjusted EBITDA Margin (%)8.8% 11.0% 10.2%
Cash from Operations ($USD Millions)$23.308 $32.555 $15.163
Free Cash Flow ($USD Millions)$10.168 $17.596 $4.880
Digital Revenues ($USD Millions)$250.394 $265.435 $262.744
Digital-only Subscription Revenues ($USD Millions)$43.3 $42.7 $43.7
Digital Advertising Revenues ($USD Millions)$83.4 $87.9 $87.2

Segment breakdown

SegmentQ3 2024 Revenue ($MM)Q2 2025 Revenue ($MM)Q3 2025 Revenue ($MM)Q3 2024 EBITDA ($MM)Q2 2025 EBITDA ($MM)Q3 2025 EBITDA ($MM)Q3 2024 MarginQ2 2025 MarginQ3 2025 Margin
Domestic Gannett Media$468.511 $439.299 $417.055 $46.301 $43.224 $35.362 9.9% 9.8% 8.5%
Newsquest$59.548 $61.318 $61.023 $13.917 $14.894 $14.555 23.4% 24.3% 23.9%
Digital Marketing Solutions (DMS)$119.929 $117.478 $114.418 $11.743 $11.498 $9.780 9.8% 9.8% 8.5%

KPIs

KPIQ1 2025Q2 2025Q3 2025
Digital-only ARPU (Total) ($)$7.22 $7.79 $8.80
Digital-only Paid Subscriptions (000s, Total)1,931 1,723 1,591
DMS Core Platform Revenues ($USD Millions)$108.166 $116.927 $113.959
DMS Core Platform ARPU ($)$2,693 $2,830 $2,828
DMS Core Platform Avg Customer Count (000s)13.4 13.8 13.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Digital Revenues (same-store)FY 2025Flat in FY25; 50%+ of total by 2026 Decline low single digits in FY25; 50%+ of total by 2026; Q4 grow low single digits Lowered FY25; Q4 growth reiterated
Total Revenues (same-store)FY 2025Down low-mid single digits; flat trends early 2026 Down low-mid single digits; flat trends early 2026 Maintained
Net Income Attributable to GannettFY 2025Improve YoY Improve YoY Maintained
Total Adjusted EBITDAFY 2025Grow YoY Grow YoY Maintained
Cash from Operating ActivitiesFY 2025>30% YoY growth >30% YoY growth Maintained
Free Cash FlowFY 2025>30% YoY growth (reflecting near-term cash for cost reduction) >30% YoY growth (reflecting near-term cash for cost reduction) Maintained
Digital Revenue Mix202650%+ of total revenues 50%+ of total revenues Maintained
Q4 2025 Digital Revenues (same-store)Q4 2025Not specifiedGrow low single digits New explicit Q4 color
Year-end CashFY 2025Not specifiedCash & equivalents ≈ $100M New color

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
AI/Technology InitiativesQ1: adding AI licensing deals; Q2: Perplexity deal, DeeperDive beta on USA TODAY; blocking unauthorized scraping New Microsoft AI licensing agreement; Perplexity launched in Oct; blocking >99% of AI bots; 75M bots blocked in Sept; DeeperDive fully implemented with >3M Qs since mid-Sept Accelerating licensing monetization; defensive posture on scraping; productization of AI on-platform
Digital Audience & AdvertisingQ2: 181M uniques; digital ads +4% YoY in Q2 187M uniques (up >3% QoQ); digital ads $87.2M; Q4 pipeline strong with sports/pets verticals Sequential audience growth; ad momentum expected in Q4
DMS OptimizationQ2: Core platform metrics improved sequentially DMS core platform revenue $114.0M; ARPU near record; AI Smart Bidding adoption growing; DASH voice agents handling 15% of calls; servicing certain large clients via media segment Stabilizing with selective client migration to preserve unit economics
Regulatory/Legal—Partial summary judgment in Google case establishing liability on several claims; case now focused on damages/remedies Positive legal tailwind; potential monetization via damages
Balance Sheet/DebtQ1/Q2: ~$100M repaid in H1; intent to >$135M in FY25 Total debt < $1B; $18.5M repaid in Q3; expect >$135M in FY25; lower interest costs anticipated in 2026 Deleveraging continues; improving FCF outlook
Product PerformanceQ2: DeeperDive beta; content monetization push Launch of “Play” gaming hub; video-first sports hubs (Big Ten, SEC, NFL) with higher engagement/time spent; pets vertical expansion Diversification of consumer revenue/engagement initiatives

Management Commentary

  • “We accomplished a significant milestone within the quarter with our total debt falling below $1 billion for the first time since our merger in late 2019.” — Mike Reed, CEO .
  • “We are… excited to announce this morning our new AI licensing deal with Microsoft… one of the first large-scale efforts to fairly compensate publishers for AI usage of their content.” — Mike Reed .
  • “Adjusted EBITDA was impacted… by approximately $7 million… driven by revenue moving into Q4 and incremental expenses… tied to our cost reduction actions.” — Mike Reed .
  • “Digital-only ARPU achieved a new high of $8.80… Q3 also returned to sequential growth over Q2 for digital-only subscription revenue.” — Trisha Gosser, CFO .
  • “Judge Castell’s partial summary judgment… establishes liability… the case really now focuses on damages and remedies.” — Mike Reed .

Q&A Highlights

  • Legal case: Court’s partial summary judgment in Google suit prevents relitigation, establishes liability, and shifts focus to damages—management expects faster progress toward remedies .
  • Timing of revenue: Perplexity launch moved to October; several digital ad deals shifted to Q4—management characterizes as timing with strong October start .
  • Q3 costs: Incremental medical/benefit-related expenses from headcount reductions pulled into Q3; expected favorable impact vs typical Q4 seasonality as cost program benefits fully realized in Q4 .
  • AI traffic/licensing: Minimal click-through from AI platforms; strategy emphasizes paid licensing; OpenAI scraping blocked ~70M attempts in Sept; OpenAI not yet at “fair deal” terms .
  • DMS strategy: Large multi-location clients increasingly serviced via media segment tools to optimize ROI/unit economics; DMS platform focused on ideal customer profile .
  • Debt/asset sales: Comfortable with >$135M FY25 debt repayment; final tranche of real estate monetization likely through Q4/Q1; lower rates and debt balance seen lifting FCF in 2026 .

Estimates Context

MetricConsensusActualSurprise
Revenue ($USD Millions)$571.0*$560.8 $(10.2)
Primary EPS ($USD)$(0.12)*$(0.21)*$(0.09)
EBITDA ($USD Millions)$64.6*$54.7*$(9.9)

Values retrieved from S&P Global.*

Interpretation:

  • Revenue missed by ~$10M as several large digital campaigns and an AI licensing launch shifted from September into October .
  • EPS was below consensus due to timing and pull-forward of cost program expenses; management expects significant adjusted EBITDA and FCF growth in Q4 .

Key Takeaways for Investors

  • Near-term setup: Q4 looks materially stronger on digital revenue, adjusted EBITDA, and FCF as timing shifts normalize and $100M cost program benefits fully flow through .
  • Structural narrative: Microsoft licensing deal, Perplexity launch, and aggressive bot-blocking strengthen AI monetization and content protection positioning .
  • Segment divergence: Newsquest continues to show resilience with YoY revenue growth and higher margins; Domestic Gannett Media remains the focal point for margin recovery .
  • KPIs improving: Digital-only ARPU reached record highs and subscription revenue rose sequentially; DMS ARPU stable near record with optimization efforts underway .
  • Balance sheet progress: Debt below $1B and continued repayments support the de-risking story and future interest expense reductions—supports medium-term FCF expansion .
  • Legal optionality: Partial summary judgment in Google case potentially shortens path to damages and provides an additional catalyst .
  • Estimate revisions: Expect near-term upward adjustments to Q4 digital revenue and adjusted EBITDA; FY25 digital revenue growth trimmed to low-single-digit decline, but FY25 adjusted EBITDA and FCF guidance maintained .

Additional Notes

  • Non-GAAP adjustments: Adjusted net loss ($31.0M) excludes early extinguishment of debt, integration/reorg costs, third-party debt expenses, and other items; Adjusted EBITDA margin 10.2% vs 10.3% prior year .
  • Digital mix: Digital revenue was 46.9% of total in Q3; management expects ~50% in Q4 and 50%+ in 2026 .
  • Liquidity: Cash and equivalents $75.2M at quarter-end, expected ≈$100M by year-end .