U.S. multi-platform audio content and entertainment company Audacy, Inc. (NYSE: AUD; OTC: AUDA) has reported financial results for the quarter ended June 30, 2023.
Second Quarter Summary
- Net revenues for the quarter were USD$298.5 million, down 6.6% compared to $319.4 million in the second quarter of 2022. Local spot was down 3.7%, while national spot was down 16.6%
- Digital revenues, were $66.7 million, down 4% compared to the second quarter of 2022. Local digital outperformed national, increasing 7.1% year-over-year
- Total operating expenses for the quarter were $433.8 million, which includes a gain on sale of $9.9 million and a non-cash impairment loss of $125.4 million, compared to $296.2 million in the second quarter of 2022, which included a gain on sale of $0.1 million and a non-cash impairment loss of $1.8 million
- Operating loss for the quarter was $135.3 million, compared to operating income of $23.3 million in the second quarter of 2022
- Adjusted EBITDA for the quarter was $14.4 million, compared to $38.5 million in the second quarter of 2022
- For the third quarter, total revenues are pacing down 4%, with local spot pacing down 1% and national spot pacing down 22%. Digital revenues are pacing up 7% or sequentially 11 percentage points better than the second quarter
- As of June 30, 2023, the Company’s liquidity was $81.6 million
- On June 30, 2023, we effected a one-for-thirty reverse stock split of our issued and outstanding shares of common stock, par value $0.01 per share. As a result of the Reverse Stock Split, every thirty shares of Common Stock issued and outstanding were automatically combined into one share of issued and outstanding Common Stock, without any change in the par value per share
- David J. Field, Chairman, President and Chief Executive Officer, stated: “Second quarter net revenues were down 6.6% in line with our quarterly guidance, reflecting challenging ad market conditions. During the quarter, we saw accelerated growth across certain of our key performance metrics including radio revenue share, station audience ratings, and digital platform usage. We also made meaningful progress on our ad tech and ad product roadmap as we work to develop important new pools of digital demand and growth.
Expenses were impacted by $10.4 million in charges related to the accelerated recognition of podcast expenses as the company terminated one of its two largest podcast agreements and positioned itself for improved growth going forward.
Audacy has initiated discussions with its lenders to enhance its balance sheet and establish a strong financial footing to enable the company to capitalise on its growth opportunities. Notwithstanding current challenges, Audacy says it has established a prominent position as a scaled, leading multi-platform audio company distinguished by its exclusive premium content, top positions across the United States’ largest markets, and leadership in news and sports radio. The company says it continues to invest in its people, platform, content, technology and capabilities and serve its listeners and customers.
Ad market conditions remain challenging, but have stabilised entering the third quarter. Audacy says it is pacing down 4% with local spot considerably stronger than national spot. We expect Audacy’s Q3 revenues to decline by mid-single digits.
Recent Company Developments
- Solid revenue share gains and ratings performance across core radio business. Audacy grew its radio revenue share during the quarter, led by local spot and network share gains. The company also delivered a 4th consecutive quarter of A25-54 YoY ratings share growth in PPM markets and marked our highest quarterly ratings share since Q3 2020. Audacy also received 16 prestigious Marconi Award nominations.
- Digital platform acceleration. The company’s streaming audience, via its new Audacy direct-to-consumer platform, continues to demonstrate strong and accelerating growth, with double-digit increases in app installs and unique users. Total Listening Hours to its O&O streams grew 12% in the quarter, increasing 15% in June. Audacy’s patented Rewind functionality continues to drive double-digit listening growth thanks to increasing consumer demand for Interactive Radio. Audacy also rolled out new enhancements to its integrations with Apple Music, Sonos, and other partners, and added exclusive content features with Greta Van Fleet, Charlie Puth, Ed Sheeran, Kesha, Jennifer Lopez, Kylie Minogue, Kelly Clarkson, and more. The company says while it is benefiting from consumer tail-winds in streaming audio – AM/FM Streams and Podcasts are the two fastest-growing segments of audio according to Edison Research – it believes its unique features and platform investments are propelling above-market streaming growth on many of its brands.
- Audacy launched a distribution partnership with Tune-In. Through a partnership with TuneIn, it extended the digital distribution of its local stations and podcast library to over 200 additional platforms and connected vehicles and devices, including Tesla, Rivian, Lucid, Bose, Samsung and Xbox, as well as on the TuneIn mobile app and TuneIn.com. While the partnership gives access to Audacy’s bespoke linear content across TuneIn’s platform, the digital listener features being pioneered on the Audacy app remain exclusively on the company’s platform. The partnership bolsters the reach of Audacy’s content and underscores its mission to meet our listeners wherever they wish to listen to our content. The agreement also gives Audacy access to TuneIn’s advertising supply and brings select TuneIn original content to its digital platform.
- Bolstering news content with Weather Channel partnership. Audacy launched three new exclusive stations on the Audacy app as official audio companions to The Weather Channel television network, Pattrn and The Weather Channel en Español. The deal adds additional depth to its news content offering while expanding the reach of The Weather Channel’s broadcast weather coverage to Audacy listeners across the country.
- Podcast Monetisation Improving, and Network Optimisation Continues. Audacy says its Podcast advertising sales efficacy continues to improve, following the restructuring of its national sales efforts over the past year. RPMs, or revenue-per-thousand downloads, grew 38% Y/Y in the quarter, driven by growth in both CPMs and sell-through rates. Local Podcast Ad Revenues outperformed national, growing +78% in the quarter. In addition to growing consumption and monetisation of its profitable original podcast content, it is also continuing to improve the overall profitability and composition of its Podcast Network business. In June, Audacy successfully negotiated an early exit to an onerous Podcast ad representation contract, which resulted in a restructuring charge of $5.9 million in the quarter and the accelerated recognition of $4.5 million of prepaid content expense. Audacy believes exiting this agreement will have a positive impact on its Podcast margins, without materially impacting future Podcast revenue growth opportunity.
- Podcast content highlights. Audacy had multiple number-ones on the podcast charts, including This Little Light with Flea of the Red Hot Chili Peppers in the Music category, and The Set, a ten-part Audacy Original podcast series exploring the never-before-told inside story of the biggest police corruption scandal in NYPD history, which premiered in with a binge window on the Audacy app that exclusively featured all episodes prior to their wide release.
- Completed asset sales. During the quarter, the company completed the sale of an FM station in Memphis, Tennessee, an FM station in Buffalo, New York and certain intellectual property for $15.4 million.