Townsquare Media, Inc. (TSQ)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was broadly in line with guidance: net revenue $98.68M (-1.0% YoY; -0.5% ex-political) and Adjusted EBITDA $18.14M (+3.5% YoY), with margin expanding to 18.4% from 17.6% .
• Digital strength remained the key driver: Digital accounted for 57% of total net revenue and 62% of Segment Profit; Digital Advertising +7.6% YoY and Subscription DMS +4.2% YoY .
• Guidance: Q2 2025 net revenue $114–$116M and Adj. EBITDA $25–$26M; FY 2025 guidance reaffirmed at revenue $435–$455M and Adj. EBITDA $90–$98M .
• Wall Street consensus: revenue was essentially inline ($98.94M*) and EPS was a slight miss (-$0.045* vs -$0.05 GAAP); the miss reflects debt extinguishment and higher interest expense . Values retrieved from S&P Global.
• Dividend maintained at $0.20 per share (implies ~12% yield as of the release) and refinancing completed; net leverage 4.67x with focus on deleveraging .

What Went Well and What Went Wrong

What Went Well

• Digital mix, growth, and profitability: “Digital is and will continue to be Townsquare’s growth engine… total Digital net revenue increased +6.4% YoY… Digital represented 57% of our total net revenue and 62% of our Segment Profit” .
• Subscription DMS (TSI) momentum: Segment profit grew +22% YoY with ~32% margin; management expects continued strong profit growth (~30% margin in Q2) .
• Execution vs guidance: Revenue met and Adjusted EBITDA beat Q1 guidance; FY 2025 guidance reaffirmed, underscoring confidence in Digital-first strategy focused outside top 50 markets .

What Went Wrong

• GAAP EPS and net income pressure: GAAP diluted EPS was -$0.12 vs $0.06 prior year, driven by a $1.45M loss on debt extinguishment, higher stock-based comp (+$1.3M), and higher interest expense (+$1.2M) .
• Broadcast headwinds: Broadcast Advertising net revenue declined 9.1% (8.3% ex-political); broadcast profit margin dipped to ~20% in seasonally weak Q1 .
• Temporary macro/tariff pause: April uncertainty caused a brief slowdown across lines; May/June pacing improved, but management still anticipates moderate Q2 Broadcast declines .

Financial Results

Segment net revenue (YoY and mix):

Segment profit (YoY and mix):

KPIs and Balance/Capital:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Digital is and will continue to be Townsquare’s growth engine… Digital represented 57% of our total net revenue and 62% of our Segment Profit in the first quarter.” — Bill Wilson, CEO .
• “Broadcast… is not a growth driver… we take the view that broadcast is a mature cash cow business… businesses will continue to share shift from traditional advertising to digital.” — Bill Wilson, CEO .
• “First quarter adjusted EBITDA increased 3.5% year-over-year to $18.1M… margins expanded from 17.6% in Q1 2024 to 18.4% in Q1 of this year.” — Stuart Rosenstein, CFO .
• “We successfully completed the refinancing of our debt in February… maturities to 2030… expect to reduce net leverage meaningfully.” — Bill Wilson, CEO .
• “We will not be a material cash taxpayer until approximately 2028.” — Stuart Rosenstein, CFO .

Q&A Highlights

• Competitive landscape and Ignite differentiation: Townsquare acts as a full-service digital agency with proprietary tech, trading desk access to 250B+ impressions/day; partnership division contributed ~$1M in Q1, expected <$10M in 2025, LT target $50M revenue at ~20% margin .
• Share shift dynamics: Majority of broadcast advertisers also buy digital (over 85%); digital margins equal or higher than broadcast, mitigating mix shift impact .
• FCC deregulation and M&A optionality: Optimistic on potential deregulation; outside-top-50 acquisitions remain core if pursuing M&A, alongside capital-light partnerships .
• Macro/tariffs: April pause across lines amid tariff uncertainty; May and June improved; Q2 Interactive low single-digit revenue growth expected due to April impact .

Estimates Context

Values retrieved from S&P Global.

• Revenue was essentially inline with consensus; EPS was a slight miss, largely explained by $1.45M loss on debt extinguishment and higher interest expense .
• FY 2025 consensus revenue stands at $427.280M* versus management guidance of $435–$455M, implying potential upward revisions if Digital growth sustains. Values retrieved from S&P Global.

Key Takeaways for Investors

• Digital-first mix is rising (57% of revenue, 62% of Segment Profit), underpinned by programmatic and O&O assets—core to the multi-year thesis .
• Subscription DMS turnaround is gaining traction: +4.2% revenue and +22% profit in Q1, with ~30% margin outlook in Q2 and strong FY profit expectations .
• Broadcast remains a managed decline; expect continued ex-political pressure, but margins should normalize to mid-high 20s beyond Q1 seasonality .
• Cash flow supports deleveraging and dividend: quarterly dividend at $0.20/share maintained; refinancing completed; net leverage 4.67x with clear debt reduction focus .
• Near-term trading catalyst: Q2 guide ($114–$116M rev; $25–$26M EBITDA) and confirmation of Digital growth trajectory; watch tariff headlines for any residual demand volatility .
• Medium-term: Media partnerships provide capital-light expansion with LT $50M revenue potential at ~20% margin; optionality for accretive M&A if deregulation advances .
• Non-GAAP adjustments matter: Adjusted EBITDA growth (+3.5% YoY) contrasts with GAAP EPS due to refinancing-related charges; focus on Adjusted metrics and cash generation for core trend assessment .