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TM

Townsquare Media, Inc. (TSQ)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 landed in-line on revenue and above guide on Adjusted EBITDA ex-political: Net revenue $115.4M (-2.3% YoY) met guidance; Adjusted EBITDA $26.4M (+0.7% YoY; +3.8% ex-political) exceeded guidance high-end, with margin expanding to 22.9% from 22.2% .
  • Mixed vs S&P consensus: Revenue modestly beat ($115.4M vs $114.8M*), but Adjusted EPS of $0.22 missed $0.26*; note S&P’s EBITDA consensus is not directly comparable to company Adjusted EBITDA (company: $26.4M vs S&P EBITDA actual $22.6M*) .
  • Guidance narrowed but maintained within original ranges: Q3 revenue $106.5–$108.5M and Adjusted EBITDA $22–$23M; FY25 revenue $435–$440M and Adjusted EBITDA $90–$94M (from $435–$455M and $90–$98M in May) .
  • Narrative/catalysts: Digital growth engine intact (programmatic ~60% of digital advertising; six media partners, 19 markets), but near‑term digital ad growth muted by industry‑wide search referral declines and “Doge” government ad budget cuts; dividend maintained at $0.20/share (≈12% yield at announcement) and deleveraging continued (net leverage 4.58x) .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted EBITDA ex-political beat and margin expansion: $26.4M (22.9% margin) vs guide $25–$26M; up from 22.2% margin last year .
    • TSI profitability inflecting: Segment profit +15% YoY; Q2 profit margin 33% and expected “above 30%” in 2H; restructuring, sales productivity, and AI tools cited as drivers .
    • Programmatic resilience and media partnerships: Programmatic ~60% of digital ad segment, strongest component; six partners now reach 19 incremental markets; management targets $6M revenue at ~20% margin in 2025 and $50M in ≤5 years .

  • What Went Wrong

    • Search referral traffic declines hit remnant/indirect digital: Management cites AI answers pushing down blue links, pressuring publisher traffic; digital ad growth slowed to +2% YoY, with Q3 expected “roughly in line” with Q2 .
    • Government ad budget (“Doge”) cuts reduced both broadcast and digital spend by “several million dollars,” further muting growth .
    • Broadcast remains structural headwind: Q2 broadcast revenue -9.2% YoY (-7.8% ex-political), with similar declines expected in 2H despite cost actions; company continues to frame broadcast as a mature cash‑cow .

Financial Results

Overall performance vs prior periods

MetricQ2 2024Q1 2025Q2 2025
Net Revenue ($M)$118.225 $98.675 $115.448
Adjusted EBITDA ($M)$26.231 $18.137 $26.421
Adjusted EBITDA Margin %22.2% n/a22.9%
GAAP Diluted EPS ($)$(3.26) $(0.12) $0.09
Adjusted Diluted EPS ($)$0.14 $(0.05) $0.22

Q2 2025 vs S&P Global consensus

MetricActualConsensus
Revenue ($M)$115.448 $114.766*
Adjusted EPS ($)$0.22 $0.26*
EBITDA (S&P definition, $M)$22.631*$25.125*
Adjusted EBITDA (Company, $M)$26.421 n/a

Values with asterisks retrieved from S&P Global.

Segment revenue and segment profit (Q2 YoY)

SegmentQ2 2024 Revenue ($M)Q2 2025 Revenue ($M)Q2 2024 Segment Profit ($M)Q2 2025 Segment Profit ($M)
Digital Advertising$41.524 $42.538 $11.009 $10.897
Subscription Digital Marketing Solutions (TSI)$18.515 $18.767 $5.417 $6.243
Digital (Total)$60.039 $61.305 $16.426 $17.140
Broadcast Advertising$53.633 $48.684 $16.021 $14.677
Other$4.553 $5.459 $0.266 $0.802

KPIs and balance sheet

KPIQ2 2025
Digital share of H1’25 Net Revenue55%
Digital share of H1’25 Segment Profit56%
Programmatic share of Digital Advertising~60%
TSI Profit Margin (Q2 / FY25 outlook)33% in Q2; “above 30%” 2H
Net Leverage (Net Debt / TTM Adj. EBITDA)4.58x
Cash / Total Debt$3.2M / $467.1M
Dividend$0.20/share (payable Nov 3, 2025; ≈12% yield at announcement)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueQ2 2025$114–$116M (issued May 8) Delivered $115.4M Met prior guide
Adjusted EBITDAQ2 2025$25–$26M (issued May 8) Delivered $26.4M Above high-end
Net RevenueQ3 2025—$106.5–$108.5M New
Adjusted EBITDAQ3 2025—$22–$23M New
Net RevenueFY 2025$435–$455M (reaffirmed May 8) $435–$440M Narrowed within original range
Adjusted EBITDAFY 2025$90–$98M (reaffirmed May 8) $90–$94M Narrowed within original range
DividendFY 2025$0.20/quarter (raised in Mar) $0.20/quarter (declared for Nov 3) Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Digital advertising momentumDA revenue +15.5% YoY; Digital +10.8% YoY in Q4 DA +7.6% YoY; Digital +6.4% YoY; reaffirmed FY guide DA +2% YoY; programmatic strongest; growth muted by search referral declines Moderating near-term; long-term bullish
Search referral/AI impact——AI results pushing down organic links; industry-wide publisher headwind; remnant/indirect down New headwind; expected to persist near term
Government ad (“Doge”) cuts——Several million dollars lost; impacts both broadcast and digital Macro headwind in 2025
TSI profitability and sales restructuringSequential improvement; Digital mix >50% FY24 TSI +4.2% rev; profitability improved TSI profit +15% YoY; 33% margin; rev muted near-term; expect growth in 2026 as sales rebuilt Profitability strong; revenue re-acceleration targeted 2026
Media partnerships (Ignite)SummitMedia announced in 2024 [22 not shown]; strategy outlined —Added Renda Media; now 6 partners, 19 markets; ~$6M rev at ~20% margin in 2025; $50M target ≤5 years Expanding partner footprint

Management Commentary

  • “Our second quarter results met or exceeded the total net revenue and adjusted EBITDA guidance … adjusted EBITDA above our second quarter guidance … and excluding political, our EBITDA was +4% over Q2 2024.” — Bill Wilson, CEO .
  • “Programmatic [was] the strongest component of digital advertising in the quarter, making up approximately 60% of the segment’s revenue … we expect it will continue to be our primary growth driver.” .
  • “Townsquare Interactive … profit margins expanded to 33% … due to [1] restructuring of our customer service model … [2] changes to our sales structure … [3] deploying AI solutions to improve efficiency.” .
  • “Broadcast advertising net revenue … declined negative 8% ex-political year over year … broadcast profit margin ex political was approximately 30%, which is stronger than Q2 2024.” .
  • “We are narrowing our full year revenue and adjusted EBITDA guidance range … both yet will remain within the original parameters we set at the start of the year.” — CFO .

Q&A Highlights

  • Search referral trends and AI: Management detailed AI-driven SERP changes pushing down organic links, hurting publisher traffic and remnant revenue; expects declines to persist through 2025 with potential plateau thereafter .
  • Advertiser behavior: Clients remain cautious, booking shorter and closer-in; absent search headwinds, digital ad growth would have been mid–high single digits .
  • TSI outlook and sales restructuring: Reduced sales force raised productivity and margins; rebuilding through 2025; revenue growth expected to return in 2026 with margins potentially remaining >30% .
  • Media partnerships ramp: Six partners signed; most won’t contribute materially until 2026; $50M top-line goal at ~20% margin within five years reiterated .
  • Phoenix office update: ~40–50 employees; expanded sales and service presence to better serve Western markets and aid recruiting .
  • Government ad budget cuts: “Several million dollars” reduction in 1H vs 2024 across DMV/health/community campaigns, impacting both broadcast and digital .

Estimates Context

  • Q2 2025 vs S&P Global consensus: Revenue beat ($115.4M vs $114.8M*), Adjusted EPS miss ($0.22 vs $0.26*). S&P’s EBITDA framework is not directly comparable to company Adjusted EBITDA (S&P EBITDA actual $22.6M* vs company Adjusted EBITDA $26.4M) .
  • Forward context: Q3 guide ($106.5–$108.5M revenue; $22–$23M Adj. EBITDA) sits modestly below historical Q3 levels as management bakes in continued search and government ad headwinds .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Execution: TSQ delivered an Adjusted EBITDA ex-political beat with margin expansion despite macro/search headwinds, validating cost control and digital mix shift .
  • Digital engine intact but near-term muted: Programmatic strength continues and media partnerships expand reach, but AI-driven search referral declines cap near-term digital ad growth to ~low-single digits .
  • TSI margin story: Structural efficiency and AI tooling drive >30% margins; revenue growth expected to re-accelerate in 2026 as hiring catches up—supports durable cash generation .
  • Broadcast = cash cow: Revenue declines persist but margins ~30% ex-political; supports dividend and deleveraging while digital scales .
  • Guidance narrowed within prior ranges: FY25 revenue/EBITDA ranges tightened, signaling visibility in back-half trajectory despite continued caution .
  • Balance sheet discipline: Net leverage at 4.58x with ongoing debt reduction; dividend maintained at $0.20/share (≈12% yield at announcement) .
  • Trading setup: Watch for updates on search referral stabilization, partner revenue ramp timing, and government ad budgets; estimate revisions likely modestly lower on EPS near-term given mix and non-comparable EBITDA frameworks .