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LEE ENTERPRISES, Inc (LEE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025: Revenue $141.29M (-6% YoY), Digital Revenue $77.91M (+3% YoY; 55% of mix), Adjusted EBITDA $14.94M (+92% QoQ), Diluted EPS -$0.31 (vs -$0.73 YoY) .
  • Digital-only subscriptions revenue rose 13% YoY to $23.48M; Amplified Digital Agency revenue was $29M (+10% YoY same-store), with digital ads/marketing 74% of total ad revenue; digital-only subscribers ended at 670k .
  • Cost discipline continued: Cash Costs fell 7% YoY to $127.96M; Operating expenses fell 6% YoY; company reiterated 2H FY25 outlook for low-single-digit YoY growth in Total Digital Revenue and Adjusted EBITDA .
  • Liquidity/debt: BH Finance waived interest/basic rent for Mar–May after the February cyber incident; all required payments since May funded organically. Cash $14M; debt $455M; net debt $441M; capex outlook cut to up to $5M for FY25 .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted EBITDA improved to $14.94M in Q3 (vs $7.77M in Q2), aided by cost reductions; management: “Adjusted EBITDA improvement drove organic free cash flow… since May 2025, all mandatory principal and interest payments were funded through cash from operations.” .
    • Digital mix and monetization strengthened: Total Digital Revenue $77.91M (55% of revenue), digital-only subscription revenue $23.48M (+13% YoY) with 16% same-store growth and continued ARPU optimization .
    • Amplified Digital Agency momentum: $29M in the quarter (+10% YoY same-store) and launch of AI-powered packages (Smart Answer, Smart Team, Smart Suite HQ) expected to accelerate digital ad growth .

  • What Went Wrong

    • Print headwinds persisted: Print subscription revenue fell 20% YoY to $38.08M; print advertising declined 7.7% YoY to $17.47M .
    • Digital ad softness: digital advertising & marketing services revenue dipped 1.6% YoY (same-store) to $49.10M, reflecting a still-recovering local ad environment post-cyber incident .
    • Net loss remained: -$1.68M (Diluted EPS -$0.31) despite cost controls, as interest expense remained elevated ($10.13M) .

Financial Results

Headline metrics vs prior year, prior quarter, and estimates (where available)

MetricQ3 2024Q2 2025Q3 2025YoY ΔQoQ ΔQ3 2025 Consensus
Revenue ($M)150.58 137.38 141.29 -6.2% (calc. from )+2.8% (calc. from )n/a (S&P Global consensus not available)*
Diluted EPS ($)-0.73 -2.07 -0.31 +$0.42 (less negative) (calc. from )+$1.76 (less negative) (calc. from )n/a (S&P Global consensus not available)*
Adjusted EBITDA ($M, non-GAAP)14.82 7.77 14.94 +0.8% (calc. from )+92.1% (calc. from )n/a

Note: “YoY Δ” compares Q3 2025 to Q3 2024; “QoQ Δ” compares Q3 2025 to Q2 2025. Adjusted EBITDA is non-GAAP; see reconciliations in filings .

Segment revenue composition

Revenue ($M)Q3 2024Q1 2025Q2 2025Q3 2025
Digital Advertising & Marketing Services49.90 46.73 43.94 49.10
Digital-Only Subscription20.70 21.57 23.79 23.48
Digital Services5.15 5.09 4.83 5.33
Total Digital Revenue75.75 73.38 72.56 77.91
Print Advertising18.94 19.86 16.53 17.47
Print Subscription47.61 43.43 41.08 38.08
Other Print8.28 7.89 7.21 7.84
Total Print Revenue74.82 71.18 64.82 63.39
Total Operating Revenue150.58 144.56 137.38 141.29

Profitability and cost

MetricQ3 2024Q2 2025Q3 2025
Net Loss ($M)-3.69 -12.02 -1.68
Diluted EPS ($)-0.73 -2.07 -0.31
Adjusted EBITDA ($M)14.82 7.77 14.94
Cash Costs ($M, non-GAAP)137.55 131.23 127.96
Operating Expenses ($M)146.78 143.04 137.32
Interest Expense ($M)10.08 9.95 10.13

KPIs and balance sheet

KPIQ2 2025Q3 2025
Digital Revenue Mix (%)53% 55%
Digital-only Subscribers (ending)728k 670k
Digital Ads & Marketing as % of Ad Revenue73% 74%
Amplified Digital Agency Revenue ($M)25 29
Cash ($M)5 14
Principal Debt ($M)453 455
Net Debt ($M)448 441
Capex ($M)1 (quarter) 1 (quarter)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Digital RevenueFY2025YOY growth 7%–10% (issued Q1) 2H FY25: YOY growth in low single digits (Q2/Q3) Updated/narrowed (2H focus)
Adjusted EBITDA (non-GAAP)FY2025/2H FY25FY2025: YOY growth low single digits (Q1) 2H FY25: YOY growth low single digits (Q2/Q3) Timing refocused to 2H
CapexFY2025Up to $12M (Q1) Up to $7M (Q2) → Up to $5M (Q3) Lowered twice
Cash TaxesFY2025$4M–$10M (Q1) $3M–$9M (Q2/Q3) Lowered range
Debt serviceNear term—BH Finance waived Mar–May interest/basic rent post-cyber; all due payments since May from operating cash flow Temporary waiver; resumed organic funding

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
AI/Technology initiativesQ1: AWS partnership to accelerate digital products . Q2: Launched AI Enablement suite; cyber incident impacted rollout .Expanded AI packages via WeLevel (Smart Answer/Team/Suite), positioned to accelerate digital ad growth .Expanding AI monetization pipeline
Cybersecurity incident & recoveryQ2: February cyber incident; $2M restoration cost; ad and subscriber activation impacted .Recovery continued; BH Finance waived Mar–May payments; since May, all payments made from operations .Operational recovery on track
Digital subscriptionsQ1: Digital-only revenue +14% YoY . Q2: +20% YoY (same-store); 728k subs .+16% YoY (same-store) with 28% ARPU growth; 670k subs (sequentially down due to cyber impact) .ARPU-driven revenue growth; units stabilizing
Cost managementQ1: Identified ~$40M annualized reductions by end of Q2 . Q2: Executed ~$40M reductions; Cash Costs -2% YoY .Cash Costs -7% YoY; ~half of $40M benefit to flow into FY26 .Deeper savings; FY26 tailwind
Balance sheet/deleveragingQ1: Asset sales $5M; identified ~$25M noncore assets . Q2: Identified ~$25M noncore; principal $453M .YTD asset sales $9M; identified ~$20M more; principal $455M .Ongoing noncore monetization
Print legacyQ1/Q2: Print revenue declines (double-digit) .Print subscription -20% YoY; print ad -7.7% YoY .Structural decline persists

Management Commentary

  • CEO: “Our third quarter results mark significant progress… The increase in Adjusted EBITDA demonstrates the strength of our underlying business… Adjusted EBITDA improvement drove organic free cash flow… since May 2025, all mandatory principal and interest payments were funded through cash from operations.” .
  • CFO: “We executed approximately $40 million in annualized cost reductions… In the third quarter, cash costs decreased 7% YoY… We anticipate fiscal year will finish with cash costs between $522M and $532M.” .
  • CEO on digital growth: “Digital subscription revenue grew 16% year over year… Amplified Digital Agency had another solid quarter of double digit growth… digital revenue reaching 55% of our overall revenue this quarter.” .

Q&A Highlights

  • Engagement trends: Management emphasized local market advantages, stronger engagement metrics, and upgrades to digital UX and content depth to address evolving consumption patterns; reiterated focus on subscriber growth and revenue optimization .
  • Guidance tone: Team reiterated confidence in 2H outlook with digital-led growth and AI revenue streams supporting finish to fiscal year .

Estimates Context

  • Q3 2025: S&P Global consensus for revenue and EPS was not available at the time of this analysis; comparisons to estimates cannot be made for Q3 2025 (S&P Global)*.
  • Prior quarter reference: Q1 2025 revenue actual $144.56M vs consensus $150.55M*, and Primary EPS actual -$2.80 vs consensus -$0.40*, indicating a miss earlier in the year (S&P Global)*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Sequential profitability inflection: Adjusted EBITDA nearly doubled QoQ to $14.94M as cost actions flowed through; expect incremental benefit in FY26 from ~half of the $40M annualized reductions .
  • Digital engine resilient: Digital revenue rose to 55% of mix, with digital-only subs revenue +13% YoY and ARPU strength; AI product launches broaden growth drivers despite unit noise post-cyber .
  • Structural print drag persists: Print subscription (-20% YoY) and ads (-7.7% YoY) remain headwinds; continued print cost alignment is essential to preserve margin gains .
  • Liquidity managed prudently: Temporary waiver from BH Finance bridged cyber impact; since May, cash flows funded obligations; capex and cash tax outlooks reduced, aiding near-term FCF .
  • Outlook credible but modest: Management reaffirmed 2H FY25 low-single-digit YoY growth in Digital Revenue and Adjusted EBITDA, resetting from prior full-year targets and underscoring execution on AI and subscription monetization .
  • Potential stock catalysts: Demonstrated AI monetization (WeLevel packages), sustained digital subscription ARPU expansion, and further noncore asset sales to accelerate deleveraging could drive sentiment .
  • Watch risks: Elevated interest expense (~$10.1M/quarter), lingering cyber impacts on subscriber units, and macro/local ad trends affecting digital ad trajectory .