Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cumulus Media Inc (CMLS) reported a 30% increase in revenue for its digital marketing services business, indicating strong growth in this segment.
• The company achieved $7.5 million in additional annualized net fixed cost reductions, contributing to improved cost efficiency.
• Cumulus Media Inc (CMLS) successfully leveraged its extensive client relationships and local sales teams to outperform industry benchmarks by an average of 25% in the digital marketing services market.
• The company's podcasting segment, excluding the impact of the Daily Wire, grew by nearly 40%, showcasing resilience and adaptability in content offerings.
• Cumulus Media Inc (CMLS) maintained ample liquidity with $53 million of cash on hand, demonstrating strong financial management despite a challenging macroeconomic environment.

Negative Points

• Total revenue for Cumulus Media Inc (CMLS) was down 6.4%, reflecting challenges in the overall market demand.
• The company experienced pullbacks in key advertising categories such as automotive, retail, and consumer packaged goods (CPG), impacting revenue negatively.
• Pacing for future quarters is down approximately 10%, indicating continued economic uncertainty and potential revenue challenges.
• The loss of the Daily Wire relationship negatively impacted digital revenue growth, highlighting dependency on key partnerships.
• Cumulus Media Inc (CMLS) faces a tough competitive environment in the broadcast sector, with ongoing impacts from new tariffs and government spending cuts affecting advertiser demand.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with CMLS.

Q: Were there any programs or content that you had last year that you didn't have this year in the first quarter, and what were some of the significant drivers of the decline in network for this quarter? A: Our programming didn't significantly change in the network in the first quarter. The decline was driven by general weakness in market demand, impacting both national spot and network. While our sports properties performed well, the overall market demand was weak, and we expect the network to perform worse in the second quarter due to tough comparisons and continued weak demand. - Frank Lopez Balboa, CFO

Q: Can you provide a sense of how the revenues performed month by month during the quarter on both the spot and network side? A: We had our earnings call with one month left in the quarter, and at that time, we were pacing down single digits. However, we lost some pace, ending down slightly over 6%. Advertisers are placing orders later in the quarter, and we'll see how this trend continues in the second quarter. - Frank Lopez Balboa, CFO

Q: What are your thoughts on the potential FCC deregulation and its impact on the industry, and can you update us on the prospect of asset sales? A: We are optimistic about FCC deregulation, expecting a notice of proposed rulemaking by late summer or fall. Regarding asset sales, we completed a few small sales in the first quarter and are optimistic about selling a piece of land in Nashville this year. We aim for $10 to $15 million in proceeds from asset sales. - Mary Berner, CEO and Frank Lopez Balboa, CFO

Q: How is the digital marketing services (DMS) business performing, and what are your expectations for its growth? A: Our DMS business is our fastest-growing segment, with revenue up 30% in Q1, driven by a 41% increase in total customers and a 16% rise in average campaign order size. We anticipate the DMS business will grow from its current revenue run rate of nearly $70 million to over $100 million by the end of next year. - Mary Berner, CEO

Q: What are the current challenges in the broadcast business, and how are you addressing them? A: The broadcast business faces challenges from new tariffs and government spending cuts, impacting consumer demand and advertising. We experienced pullbacks in key categories like automotive and retail. However, we are capitalizing on demand opportunities, such as premium sports content, and focusing on cost reductions, achieving $7.5 million in annualized net fixed cost reductions this quarter. - Mary Berner, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.