Q1 2022 Digital Revenue Grows +16% YOY – Now 51% of Total Net Revenue
Q1 2022 Digital Adjusted Operating Income is 55% of Total
Net Leverage Declines to 4.66x
Townsquare Media, Inc. (NYSE: TSQ) (“Townsquare”, the “Company,” “we,” “us,” or “our”) announced today its financial results for the first quarter ended March 31, 2022.
“I am proud to announce our strong start to 2022, with net revenue, Adjusted EBITDA and net income increasing year-over year by +13%, +10%, and $8.9 million, respectively. In addition, net revenue and Adjusted EBITDA exceeded our previously issued guidance due to strong growth and strong margins.
As a Digital First Local Media Company, our first quarter performance was driven by our digital platform and solutions, with total digital revenue increasing +16% year-over-year in the first quarter (representing 51% of our total Q1 net revenue) and total digital Adjusted Operating Income increasing +11% year-over year (representing 55% of our total Q1 Adjusted Operating Income),” commented Bill Wilson, Chief Executive Officer of Townsquare Media, Inc.
“We are also thrilled to announce that we have officially surpassed 2019 pre-COVID results with first quarter 2022 net revenue, Adjusted EBITDA and net income exceeding Q1 2019 levels by +7%, +15%, and $7.3 million, respectively.
As we move forward, we expect double-digit digital net revenue growth to continue at strong margins, fueling our overall growth and subsequent debt reduction, from 4.66x net leverage today to 4.0x by year end. We are also pleased to re-affirm our 2022 guidance and our 2024 digital revenue target of at least $275 million.
These results and confidence in our outlook are due, in part, to the fact that Townsquare is the only local media and digital marketing solutions company of scale focused principally on markets outside of the Top 50 in the United States, a vital differentiator for our Company.”
Mr. Wilson added, “Our new reporting segments highlight the profit characteristics of our digital platform, which is essentially equal to those of our broadcast platform, each with profit margins of approximately 30%. While we view local radio as an extremely valuable asset with significant and attractive cash flow properties, unparalleled consumer reach, and an important and trusted local connection to our audience and communities, it is not our primary growth driver.
With approximately half of our total revenue and profit coming from digital today, we have a strong digital growth engine that will drive significant and consistent growth in the coming years. It is our belief that as a Digital First Local Media Company providing a detailed breakout of our digital revenue and digital profit, Townsquare should be afforded a sum-of-the-parts valuation that gives credit to our digital assets.”
We have three reportable operating segments, Subscription Digital Marketing Solutions, Digital Advertising and Broadcast Advertising. The Subscription Digital Marketing Solutions segment includes our subscription digital marketing solutions business, Townsquare Interactive.
The Digital Advertising segment, marketed externally as Townsquare Ignite, includes digital advertising on our owned and operated digital properties and our digital programmatic advertising platform. The Broadcast Advertising segment includes our local, regional, and national advertising products and solutions delivered via terrestrial radio broadcast, and other miscellaneous revenue that is associated with our broadcast advertising platform. The remainder of our business is reported in the Other category, which includes our live events business.
First Quarter Highlights*
• As compared to the first quarter of 2021:
• Net revenue increased 12.9%
• Net income increased $8.9 million
• Adjusted EBITDA increased 9.8%
• Total Digital net revenue increased 15.9%
• Subscription Digital Marketing Solutions (“Townsquare Interactive”) net revenue increased 15.0% • Digital Advertising net revenue increased 16.6%
• Total Digital Adjusted Operating Income increased 10.6%
• Subscription Digital Marketing Solutions Adjusted Operating Income increased 7.5%
• Digital Advertising Adjusted Operating Income increased 13.1%
• Broadcast Advertising net revenue increased 7.7%
• Diluted income per share was $0.11, and Adjusted Net Income per diluted share was $0.19
• Townsquare Interactive added approximately 1,050 net subscribers
• Announced the accretive acquisition of Cherry Creek Broadcasting LLC for $18.75 million *See below for discussion of non-GAAP measures.
For the second quarter of 2022, net revenue is expected to be between $117 million and $121 million and Adjusted EBITDA is expected to be between $32 million and $33 million.
For the full year 2022, net revenue guidance is reaffirmed to be between $460 and $475 million and Adjusted EBITDA guidance is reaffirmed to be between $115 million and $120 million.
Quarter Ended March 31, 2022 Compared to the Quarter Ended March 31, 2021
Net revenue for the three months ended March 31, 2022 increased $11.5 million, or 12.9%, as compared to the same period in 2021. Our Digital Advertising net revenue for the three months ended March 31, 2022 increased $4.2 million, or 16.6%, as compared to the same period in 2021, and our Broadcast Advertising net revenue increased $3.4 million, or 7.7%, as compared to the same period in 2021, each due to increases in the purchase of new advertising by our clients.
Our Subscription Digital Marketing Solutions net revenue for the three months ended March 31, 2022 increased $2.9 million, or 15.0%, as compared to the same period in 2021, due in part to the addition of approximately 1,050 additional net subscribers during the first quarter of 2022.
Total Digital net revenue increased $7.0 million, or 15.9%, to $51.1 million. Excluding political revenue, net revenue increased $11.5 million, or 13.0%, to $99.8 million, Digital Advertising net revenue increased $4.1 million, or 16.4%, to $29.2 million, and Broadcast Advertising net revenue increased $3.5 million, or 7.8%, to $47.7 million.
Adjusted EBITDA for the quarter ended March 31, 2022, increased $2.0 million, or 9.8%, to $22.1 million, as compared to $20.1 million in the same period last year. Adjusted EBITDA (Excluding Political) increased $2.0 million, or 10.0%, to $21.7 million, as compared to $19.7 million in the same period last year.
Net Income (Loss)
Net income for the quarter ended March 31, 2022, increased $8.9 million to $2.7 million, as compared to a net loss of $6.1 million in the same period last year.
Liquidity and Capital Resources
As of March 31, 2022, we had a total of $50.9 million of cash and cash equivalents and $550.0 million of outstanding indebtedness, representing 5.1x and 4.7x gross and net leverage, respectively, based on Adjusted EBITDA for the twelve months ended March 31, 2022, of $107.1 million.
The table below presents a summary, as of May 3, 2022, of our outstanding common stock.
Class A common stock 12,874,211 One vote per share.
Class B common stock 815,296 10 votes per share.1
Class C common stock 3,461,341 No votes.1
1 Each share converts into one share of Class A common stock upon transfer or at the option of the holder, subject to certain conditions, including compliance with FCC rules.
Townsquare Media, Inc. will host a conference call to discuss certain first quarter 2022 financial results and 2022 guidance on Tuesday, May 10, 2022 at 8:00 a.m. Eastern Time. The conference call dial-in number is 1-855-327-6837 (U.S. & Canada) or 1-631-891-4304 (International) and the confirmation code is 10018916. A live webcast of the conference call will also be available on the investor relations page of the Company’s website at www.townsquaremedia.com.
A replay of the conference call will be available through May 17, 2022. To access the replay, please dial 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671 (International) and enter confirmation code 10018916. A web-based archive of the conference call will also be available at the above website.