After Townsquare Media made a massive share buyback from MSG National Properties to end Q2, they had one of the most anticipated earnings calls in the industry. Now that the “digital first” company has released its quarterly numbers, shareholders have gone from excited to disappointed.
Financially, Townsquare reported a net revenue of $121.2 million for Q2 2023, narrowly beating analysts’ predictions of $121.06 million but down slightly Year-over-Year. The company swung to a net loss of $2.7 million from a net income of $4.92 million. The adjusted Q2 earnings per share of 18 cents fell well short of the consensus EPS estimate of 48 cents, causing shares to fall more than 19% by Wednesday’s closing bell.
On Tuesday, TSQ closed at $11.27; on Wednesday, the price was $9.05.
CEO Bill Wilson consistently emphasized the company’s commitment to radio and local markets but admitted the firm’s recent success is driven more by digital ad solutions. As stated by Wilson in the call, 52% of the company’s total net revenue now stems from digital products.
Townsquare experienced a decrease in broadcast advertising net revenue by 5.8% to $53.72 million, a fall in subscription digital marketing solutions net revenue by 7.5% to $21.27 million, but an increase in digital advertising net revenue by 10.6% to $41.13 million.
The company also took a $26.24 million impairment charge in Q2 2023, up from $9.42 million a year earlier. CFO Stu Rosenstein attributed the decision to rising interest rates.
With national OTA advertising revenue being down 21% in Q2, Wilson is bearish on the market’s future, saying, “I don’t see it getting better.” Despite, or perhaps because of, this, he expressed confidence in Townsquare’s digital and small-to-mid-sized market business model. The company’s Q3 2023 net revenue is expected to come in between $115 million and $117 million.
