IHRT earnings call transcript, November 9, 2026

Excluding the impact to political, our consolidated revenue was up 0.9%. We generated just an EBIT of $170 million in the third quarter, below our previously provided guidance range of $180 to $220 million. Our digital audio group... led by podcasting and our audio and media services group, both continued to deliver strong results and profitability. However, our multi-platform group, which importantly continues to have real strength with the consumer, faced ongoing industry and macro... ...economic revenue headwinds that impacted financial results more than anticipated. But we believe many of these multi-platform group revenue challenges are addressable, and that the strategic monetization initiatives we have put in place... ...to return the multi-platform group back to earnings growth. The shortfall in multi-platform group performance was driven primarily by four factors. First, lower than anticipated political advertising revenue for radio. Second, a number of advertisers, especially larger advertisers, delayed their advertising spend until after the election. Third, audio advertising buying is moving faster to programmatic than we had anticipated, in addition to the targeting measurability. and attribution that have historically separated broadcast radio from digital media. This is ahead of our complete rollout of our own radio programmatic and attribution offerings. Fourth, a much more challenging macroeconomic environment than we had.

We had hoped for, and one which we expect will continue through the remainder of the year. I will discuss each of these factors in greater detail. I will also outline how we plan to manage our business starting in 2027 when we expect to present podcasting as a separate reporting segment. Turning to our individual operating segment. The digital audio group generated third quarter revenue of $389 million, up 13.8% versus prior year, and within the range of our previously provided guidance of up-low teens. The digital audio group generated third quarter. Quarter adjusted EBITDA of $127 million, down 2.3% versus prior year, as it was burdened by higher non-cash marketing expenses. The adjusted EBITDA margin was 32.8%. Within the digital audio group, our podcast revenue is strong. Momentum continues at $174 million for the quarter, up 24.6% compared to prior year of $140 million, above our guidance of up approximately 20%. We continue to be the number one podcast publisher in America and audience. Supported by both PodTrack and Triton, the two largest measurement services that measure actual downloads and users. Podcasting continues to be the strongest growth component for the company, and the overall podcast industry growth remains strong as well. Our expansion into video podcasting represents an entirely new market for our podcasting products, creating additional revenue opportunities.

Beyond YouTube, our video podcast content is now distributed across major platforms, including... ...including Netflix, Apple, Amazon, Disney Plus, and Hulu, as well as our own iHeartRadio app, strongly positioning us to participate in this new and important revenue stream. As video and audio podcast consumption continues to grow... ...we believe we're well positioned to take advantage of both. In the third quarter, digital X podcast revenue grew 6.3% compared to prior year, within our previously provided guidance of up mid-single digits, and it continues to be an... ...important growth vector for the company. Turning now to the multi-platform group, which includes our broadcast radio, networks, and events businesses. Third quarter revenue was $562 million, down 4.9% versus prior year, and below our guidance range of approximately flat. Excluding... ...the impact of political advertising, multi-platform group revenue was down 6.6%. The multi-platform groups adjusted at EBIT of $68 million, compared to $119 million in the prior year. Nine cash marketing expenses related... ...the co-marketing partnerships supporting our audiograph platform, which we'll discuss in more detail, drove the majority of the negative impact on our multi-platform group's adjusted EBIT in this quarter. Now let me expand on the four drivers that negatively... ...impacted the multi-platform group's performance in Q3. First, we generated less political revenue than we expected, accounting for about a third of the underperformance in Q3 revenue. As we mentioned on our last earnings call, we expected...

...that this was going to be a robust political advertising year for broadcast radio in addition to media overall. And we anticipated even doing better than the 2024 presidential year. But we actually came in slightly below the 2022 non-presidential election year on multi-platform group revenue because of two... ...major factors. In response to strong political advertising demand, local TV broadcasters created more inventory and therefore held on to a lot of the political advertising dollars that historically would spill over to broadcast radio when TV... ...reached sellout. In fact, according to Ad Impact, approximately 50% of all political spending this cycle was on broadcast television, which is much larger than its typical 15% share of overall advertising spend. And the other factor was that even in audio advertising, a greater percentage of political advertising spend moved to programmatic platforms in this cycle than we had anticipated. While this is in line with the broader transition to programmatic, it happened with political advertising spend. political inventory faster than we thought it would. It's important to note that overall in this political cycle, radio share political advertising is actually lower than radio share of the overall advertising marketplace. Exactly the opposite experience. of local broadcast TV. While disappointing, both developments reinforce our belief that expanding our broadcast radio programmatic capabilities through our audiograph platform is the right strategic plan. Second, some brands.

specifically larger brands delayed deploying their budgets until after the election for two reasons. Additional clutter combined with the higher commercial loads and the negative environment of wall to wall political advertising. Not an environment that most general market advertisers are comfortable with. The local TV broadcasters were able to make up for this delayed brand advertising with political advertising. Unfortunately, we did not make up that deficit. Third. We are seeing core radio buying transitioning faster to programmatic, impacting our multi-platform group ahead of our ability to fully participate in the programmatic TAM with the rollout of our audiograph platform. In fact, according to... ...ad exchange for a leading technology industry publication, the percentage of advertising agencies that buy audio programmatically has grown from 41% in 2022 to 82% this year. I'll get into more specifics on the current status of our audiograph rollout in a few minutes. In addition to programmatic, target... ...measurability, and attribution have historically separated broadcast radio from digital media and are increasingly important elements for all advertisers, not just those using programmatic. We are solving for this in addition to our audiograph... ...platform. And fourth, as mentioned in our Q2 earnings call, we're not immune to macroeconomic issues. And in particular, consumer-facing businesses where fuel volatility and broader inflation are pressuring advertisers' budgets.

These macroeconomic issues also contributed to consumer uncertainty, which, according to the World Economic Policy Uncertainty Index, recently spiked to an all-time high, dramatically higher than the 9-11, the financial crisis... and even the COVID-19 periods. The combination of all-time high consumer uncertainty and macroeconomic pressures certainly had an impact on the multi-platform group's negative financial performance this quarter, and despite the strong momentum of our... digital and podcast groups this quarter may even have moderated some of their performance as well. We expect this to continue through the remainder of the year compounded by additional uncertainty resulting from the midterm elections. The audio and media services group, which includes our CATS TV... CATS Radio and RCS businesses had another strong quarter. Revenue was $82 million, up 22.6% year-over-year, driven primarily by television political as well as the growth of digital audio and video revenue. Excluding the impact of political revenue, the Audio and Media Services Group's revenue was still up 2.9%. Adjusted EBIT was $37 million, up 65.9% compared to the prior year. We continued to grow adjusted EBIT over time, with a focus on an increasingly meaningful digital business and operating efficiencies. Given the accelerating adoption of audio programmatic and the resulting impact on the multi-platform group, AudioGraph is more critical than ever to our long-term success.

You heard us discuss our AudioGraph. platform on pass calls. Simply put, with AudioGraph, we are meeting the advertising community the way they want to buy advertising. Given the limited reach of the ad-supported digital audio players, we believe broadcast radio is the only solution for buyers. to get the audience reach they need for audio campaigns. Advertisers will also be able to access the full suite of our audio products, from broadcast radio, to streaming, to podcasting, and one offering. As a result, we believe that AudioGraph has to... ...potential to meaningfully improve the performance of our broadcast radio business. Additionally, all the data work associated with AudioGraph helps us in providing improved measurement, targeting, and attribution for our non-programmatic advertising as well. ...that gap between broadcast radio and digital media. As we look at the financial opportunity for our programmatic revenue, our expectation is that we'll hit our guidance of $200 million of programmatic revenue for the year, and that in 2027... ...will be approximately $400 million, with approximately $100 million of that total being incremental broadcast programmatic revenue. Furthermore, we're excited about the potential of agentic buying, including new capabilities developed by... ...of Triton digital ad tech platform that enable AI agents to transact directly across the audio advertising ecosystem.

Triton recently completed its first agent-to-agent media buy, automating the process from campaign request and negotiation through booking, and demonstrating the potential to make audio... ...substantially easier and more efficient for advertisers to buy. As I mentioned in my opening, I also want to discuss an important change in how we plan to manage and report our business beginning next year. In 2027, we plan to separate our podcast... ...business from the Digital Audio Group and report them as separate standalone segments. This additional granularity is expected to make it easier for the investor community to fully value all four of our segments and our entire company. Three of our expected... ...for future segments or strong growth businesses, and we think audiograph and our attribution tools will be an important component to getting our multi-platform group back to growth. Additionally, we're already working on plans for incremental... ...efficiencies in 2027, which include leveraging the strategic deployment of AI and other technology solutions to enhance efficiencies through the organization as we have done in the past. As we continue to execute on our strategic goals and opportunities, Rich and I are committed to allocating and optimizing the company's assets to create value. for our stakeholders, including the improvement of our capital structure and positioning the company for future growth. And with that, I'll turn it over to Rich.

As audiograph comes fully to market in Q4, we'll be substantially reducing these co-marketing partnerships. As we've discussed before, the revenue and expense associated with each partnership have zero impact. Unadjusted EBITDA over time. And as a reminder, the majority of this revenue and expense impacts the multi-platform group segment. Turning now to the performance of our operating segments. In the third quarter, the digital audio group's revenue was $389 million of 13.8% versus prior year and within the range of our previously provided guidance of upload teams. The digital audio group's adjusted EBITDA was $127 million down 2.3%. to prior year, driven by higher non-cash marketing expenses. Our Q3 adjusted EBITDA margins with 32.8% compared to 38.1% in the prior year. Within the digital audio group, our podcasting revenue was $174 million, which grew 24.6% year-over-year and above our guidance of up approximately 20%. Our third quarter digital audio group X podcasting revenue grew. 6.3% year-over-year to $215 million. Turning now to the multi-platform group. Revenue was $562 million, down 4.9% compared to prior year, below our guidance range of approximately flat. Adjusted EBITDA was $68 million, down from $119 million. In the prior year quarter, and non-cash marketing expenses related to co-marketing partnerships supporting our audiograph platform drove the majority of the negative impact on our multi-platform group adjusted EBITDA in this quarter.

Turning to the audio and media services group, which includes CATS TV, which, as you know, has much higher revenue in political years. Revenue is $82 million of 22.6% year-over-year. Driven primarily by television, political, and the growth of digital audio and video revenues. Excluding the impact of political revenue, the audio and media services group revenue is up 2.9%. Adjusted IHRTDA was $37 million, up 65.9% compared to the prior year. Third quarter, our company's free cash flow was a negative $10 million compared to a negative $33 million in the prior year quarter, primarily driven by revenue softness, including political, offset by stronger working capital performance. At quarter end, our net debt was approximately $4.7 billion. Our total liquidity was $416 million, and our cash balance was $140 million, which included $125 million borrowed under the ABL facility. As noted on our prior call on August 10th, we amended and extended our ABL facility. We maintained both the $450 million size of this facility and the pricing of the facility at the same interest rate. And we extended the maturity date from May 17th, 2027 to January 30th, 2029. Furthermore, we have a small $72 million tranche of notes due in May 2020. Which we expect to repay by their maturity. We have $277 million due in 2028, with the more meaningful maturities coming in 2029. I want to reiterate that we remain focused on.

Optimizing our capital structure. Now let me turn to our guidance for the fourth quarter and the full year. The factors that Bob discussed earlier, which had a negative impact on our Q3 multi-platform group performance, are reflected in our guidance today. Let me give you some context. This is one of the most uncertain periods in the advertising environment that we have managed through, including COVID, which is what makes it difficult for us to narrow the range of our expected results. In Q4, we expect to generate adjusted Ibitda between 135 million and 185 million. Embeddedness guidance is approximately $100 million net negative impact of non-cash marketing. We expect our consolidated revenue to be up mid-single digits compared to prior year, and we expect to generate approximately $130 million. $30 million of free cash flow in the quarter. We're still closing October, but we expect October revenue to be up mid-teens and approximately flat ex-political year-over-year. Turning to the individual segments. For the fourth quarter, we expect the digital audio groups revenue to be up mid-teens year-over-year with podcasting revenue expected to be up approximately 20% and digital ex-podcasting to be up high single digits. We expect the multi-platform groups revenue to be approximately. down low single digits compared to prior year. We expect the audio and media services group revenue to be up approximately 30% year-over-year. Turning to the full year, we are adjusting our full year adjusted EBITDA guidance to $550 to $600 million and our free cash.

Full of guidance to approximately $50 million. Embedded in our adjusted EBITDA guidance are the following. We expect to generate approximately $200 million of overall programmatic revenue in 2026, up approximately 50% from $135 million. In 2025. And as a reminder, we expect our broadcast programmatic revenue trajectory to be similar to the growth we experienced in podcasting revenue. And our adjusted EBITDA guidance also. Include the benefit of our cost savings programs. Let me provide some additional inputs embedded in our free cash flow guidance. Interest expense will be approximately $440 million. Minimal cash taxes this year. And for the next few years, as long as the current tax laws are in effect. This is a great outcome and will help us avoid approximately $150 to $200 million of cash taxes over the next three years. Apple expenditures are expected to be approximately $90 million. Cash restructuring expenses will be approximately $50 million. I would also like to remind you that beginning in 2027, we plan to report podcasting as a... ...standalone segment. This change is expected to provide investors with increased insight on an important growth engine for the business. Podcasting comprises 17% of total Q3 revenue and reflects how we... ...plan to manage the business moving forward. Additionally, we expect programmatic revenue will represent a significant financial driver for us next year, with total programmatic revenue expected to be approximately $400...

million in 2027, and we expect this to include approximately $100 million of incremental broadcast radio programmatic revenue. Before we turn to Q&A, I want to reiterate that we are laser focused on getting additional cost deficiencies out of the business and optimizing our capital structure to ensure we have the flexibility to continue to invest in our business. Now, we will turn it over to the operator to take your call.

Your first question comes from the line of Steven Laszak.

with Goldman Sachs. Your line is open Steven. Please go ahead.