Townsquare Media CEO Bill Wilson issued the company’s 2024 year-end earnings report in the form of a letter to shareholders.
Wilson noted that, “We view local radio as an extremely valuable asset with significant cash flow properties, unparalleled consumer reach, and an important local connection to our audience. However, radio is not a growth driver, and in 2024, Broadcast Advertising net revenue declined -1.3% year-over-year, and -6.1% excluding political revenue. We take the view that broadcast is a mature, cash cow business that will continue to face headwinds going forward, as businesses will continue to share shift from traditional advertising to digital advertising.”
Townsquare’s digital advertising business Townsquare Ignite saw net revenue increase +5.5% year-over-year to $158.6 million. The company’s subscription digital marketing solution business Townsquare Interactive was down -8.4% from 2023, but the company said it expects in to return to profitability in Q1 2025.
Over the past two years, the Townsquare team has done a significant amount of “blocking and tackling” to solidify our strategy and optimize our operating model, ensuring that the Company is set up for long-term, profitable growth and success. I am extremely proud of the Townsquare team’s hard work and performance over this time: we delivered solid and consistent financial results consisting of mild revenue declines, strong profit margins, and as always, significant cash flow generation. In both 2023 and 2024, the lackluster economic landscape, defined by high inflation and high interest rates, weighed on consumers and advertisers alike. So, with more than 75% of our Company’s business tied to advertising, we felt the impact of those macroeconomic headwinds. In addition, we faced some first-time hurdles in our Subscription Digital Marketing Solutions business, Townsquare Interactive, that were largely self- inflicted and which we have described in detail on our last number of earnings calls. I am pleased to report that we successfully navigated these challenges, attacked ourselves and improved upon our foundations by a) acknowledging what wasn’t working; b) fixing what wasn’t working; and therefore c) setting ourselves up for long-term success and profitable growth. And I’m pleased to share that as I sit here today, I feel that Townsquare is better positioned than ever before, with ample runway to grow and thrive in the long-term.
Some of our more relevant accomplishments this past year include the successful turnaround of Townsquare Interactive, supported by a more efficient and scalable business model; the expansion of Townsquare Interactive’s addressable target customer base through the introduction of a new SAAS offering; the creation of our Media Partnerships division for Townsquare Ignite, our Digital Advertising business, opening the door to grow third-party revenue streams outside of our market footprint; and the refinancing of our outstanding debt, successfully navigating a term loan lender market that has experienced bad outcomes in the radio industry over the past decade. What has become clear to us through our many conversations with lenders during our recent refinancing, is that as a microcap public company with radio broadcast assets, we are often overlooked and assumed to be a smaller version of other publicly traded companies with radio broadcast assets. While I’m not here to judge the strategies and performance of others, what I will highlight and emphasize is our significant differentiation from them. Quite frankly, Townsquare is unique, particularly in the local media competitive landscape. There are many ways we are different from other local media companies, and I’d like to take the time to outline those ways, as they are the driving force behind our solid and consistent performance over the past several challenging years, and what will drive our growth and transformation in the coming years.
Townsquare Operates Exclusively in Markets Outside of the Top 50
Our first point of major differentiation is our deliberate focus on markets outside of the top 50, which affords us many benefits. Because we are not in the bigger, top 50 markets, we face significantly less competition from large media players, digital marketing solutions companies, and digital programmatic providers; and importantly, the competitors we do face rarely have the resources to build the in-house solutions that we offer and instead utilize third-party vendors. Owning our tech platforms in-house, combined with the breadth and sophistication of our digital solutions, is a competitive advantage in any size market, yet in cities outside the top 50, it is a significant difference maker. In addition, operating outside of the top 50 markets has had a meaningful and positive impact on our broadcast business, and that is due to our stable audience trends. While it is widely known that broadcast radio’s cume, or audience, has remained consistent across the industry, TSL, or time spent listening, has declined drastically in large markets. In contrast, Townsquare’s TSL has been remarkably stable for the past five years. We believe this is because we play a vital role by filling the ever-expanding void of local information available in our communities due to the dwindling availability of local news sources in small and mid-sized markets across the country. We are one of the largest publishers of content in our markets (we produce ~20,000 pieces of original content per month), because we employ talented local personalities, reporters and journalists who create highly localized content both online and on-air. Remaining live and local in our markets has always been a key component of our strategy. And to do that, we had to make our on-air personalities online personalities as well, so that their content can be consumed wherever the audience is – online, on-air, on social, etc., which has allowed us to build a sizeable digital audience in addition to our broadcast audience. In fact, we have 7x more monthly visitors to our digital properties than those who listen to our on-air broadcasts. In contrast, broadcasters in large markets often employ a syndication strategy, as opposed to our strategy of remaining local in our news starved markets. One final benefit from focusing on markets outside of the top 50 is that our business is primarily tied to the local marketplace, with less than 10% ofour net revenue coming from the broadcast national marketplace. As national has experienced meaningful pullbacks in recent years, particularly on the broadcast advertising side, we have had a more stable base of business across our local market footprint historically, with a direct connection to our local clients.
Diversified Digital Strategy
Another significant point of differentiation is our digital strategy. For larger broadcasters, podcasting and digital audio is often the digital path most taken. For Townsquare, podcasting is not part of our monetization strategy, and digital audio contributed less than 10% to our total Digital revenue in 2024. We launched our digital strategy in 2010, much earlier than our competitors, as embracing the importance of digital transformation was a founding principle of Townsquare and why I originally joined the Company from AOL. We started by training our on-air personalities to create compelling digital content, allowing us to build a significant online audience which we could then monetize using the high impact digital advertising solutions developed by our in-house digital engineering team; then, beginning in 2012, we organically built Townsquare Interactive, our subscription digital marketing solutions business; and then, starting in 2014, we organically built our digital programmatic advertising business. We intentionally do not include podcasting as part of our digital strategy, as a successful podcasting business requires national audience scale, which we do not have given our focus on markets outside of the Top 50. So, although our personalities can and do create podcasts for our local audiences, we do not seek to monetize those in the way others do. Instead, we have built our digital success through our differentiated digital advertising and subscription digital marketing services products and solutions. And our strategy has clearly worked very well. In 2024, 52% of our total revenue was derived from digital, more than 2.5x that of the industry. And importantly, our digital solutions are in-house, giving us greater control of the process than those utilizing third-party solutions. Having our digital solutions in-house also allows us to operate our two digital businesses with strong profit margins, even stronger than our strong core broadcast profit margins, and as a result 50% of our total Company Segment Profit was derived from our digital businesses.
Best-in-Class Digital Product and Engineering Team
Another distinct point of differentiation and a significant competitive advantage is our world class digital product and engineering team. When I was recruited to Townsquare back in 2010, I brought with me the team of digital engineers who I worked closely with during my time at AOL, and they have been crucial to our success in building our digital businesses at Townsquare. Our 50+ team of world class engineering, product, design, QA and systems developers has developed and built products of major impact for our Company, including our content management system, which houses our 400+ local and national websites and tens of thousands of our Townsquare Interactive client websites, our portfolio of 380 mobile apps, our in-house tech stack for our digital programmatic business, innovative AI solutions, numerous ad products, platforms, and operational tools, and Blueprint, our very own customer relationship management (CRM) platform. In fact, in 2022, the team was awarded the NAB’s PILOT Technology Innovation Award for their development of the Blueprint app and CRM. Importantly, because of the hard work and innovation of this team, we are able to own and operate all of our digital products and services entirely in-house, owning the entire customer experience, which we believe leads to higher customer satisfaction and therefore higher average spend and higher retention rates, and also better digital margins as we rely less on third-party vendors.
Townsquare’s unique and differentiated Digital First strategy, our focus on local markets outside of the top 50, and our execution of that plan has paid off demonstrably. Comparing Townsquare to other local media peers, Townsquare is more diversified, with over 50% of our profit and revenue coming from digital solutions. On average, our competitors have only 18% of their revenue coming from digital sources1, even when including our larger peers, as most entered the digital space much later than we did and have struggled to gain footing. Our focus on small markets means that a much smaller percentage of our revenue is from national sources, which we have less control of and is more susceptible to macroeconomic weakness. Approximately 85% of our total revenue excluding political is tied to local revenue, as compared to 70% of our peers. Our focus on Digital and local has translated to a quicker recovery to pre-pandemic revenue levels, and our digital growth has overcome broadcast declines such that our total revenue is above 2019 levels, which hardly any of our peers have managed to achieve. In addition, we have not sacrificed profitability to do so, maintaining a higher profit margin than all of our radio peers (our 2024 total Segment Profit Margin was 28% as compared to 19% for our radio peers) despite being in smaller markets with a smaller revenue base.
2024 PERFORMANCE
As I shared earlier, we delivered solid and consistent results in 2024, overcoming headwinds and building momentum throughout the year. Importantly, we delivered results that were in-line with the guidance we provided at the start of the year, demonstrating our reliability and consistency. In 2024, Digital net revenue increased +0.6% year-over-year, partially offsetting Broadcast revenue declines of -1.3%, which resulted in total net revenue declining -0.7% to $451.0 million. 2024 Adjusted EBITDA increased +0.4% year- over-year, to $100.4 million. In addition, our differentiated business model generated meaningful cash flow, amply supporting investment in our digital growth engine and our debt service requirements and allowing us to apply excess cash flow to our high-yield dividend and voluntary debt and equity repurchases, which I’ll touch on a bit later.
As the year progressed, we saw meaningful improvement in year-over-year revenue growth rates across each of our three business segments. In part, this was driven by the pickup in political advertising in a presidential election year, but also importantly due to sequential improvement in our two digital businesses. Thus, it is worth highlighting that in Q4 2024 our total Digital net revenue grew a very strong +10.8% year-over-year. Digital is and will continue to be Townsquare’s growth engine, the area where we focus the bulk of our investment capital going forward, consistent with our plan of being a Digital First Local Media Company. In 2024, Digital revenue contributed 52% of our total net revenue and 50% of our total Segment Profit.
Townsquare Ignite, which is our Digital Advertising business, is the larger of our two digital divisions and the fastest growing part of our Company. In 2024, Townsquare’s Digital Advertising net revenue increased +5.5% year-over-year to $158.6 million; and throughout 2024 our Digital Advertising business gained momentum, as first half 2024 Digital Advertising net revenue grew +1.1% year-over-year, increasing to +4.7% year-over-year in Q3 2024, and then accelerating to a very strong +15.5% in Q4 2024. Our Digital Advertising segment is composed of our owned and operated (O&O) portfolio of local and national websites and our digital programmatic business, which contribute approximately 40% and 60%, respectively, of the segment’s revenue. The success of our O&O digital business is due to our focus on super-serving our communities with high quality, hyper-local content, which has allowed us to build a large at-scale and engaged digital audience of over 70 million monthly unique visitors to our O&O websites. With the deep skillset of our digital product and engineering team that I described earlier, we have developed a multitude of digital advertising solutions for our clients, bringing national scale and sophistication to our size markets (including high impact solutions that are not available on programmatic exchanges, such as site takeovers, first impression full site coverage, mobile interstitials, sponsored social mentions/endorsements, etc.). In addition, we have the unique ability to collect and analyze first-party data from our digital audience, allowing us to provide detailed and unique insights about consumer behaviors, audience interest and purchase intent that drive real results with strong ROI for our clients, giving us a true strategic advantage over our local competition. These factors have helped fuel the growth of our O&O digital advertising revenue streams. Due to the strength of our original local content and brands, combined with this powerful first party data, we are confident that our O&O digital advertising business will be a growth driver for our business going forward.
Yet, the area we are most excited and confident about is our digital programmatic business, which has been and will continue to be the largest growth driver of our business for the foreseeable future, particularly when factoring in the potential of the third-party, Media Partnership model that we launched in 2024. Our digital advertising programmatic platform provides our customers with precision targeted solutions, giving them the ability to reach a high percentage of their online audience across desktop, mobile, connected TV, email, paid search and social media platforms utilizing display, video and native executions. We essentially act as a full-service digital agency for our clients, from design and creative services, to buying inventory, optimizing a campaign, and providing real-time reporting, analytics and insights, therefore providing a level of service that is often not available in the markets we operate. In addition, given our scale across our 74 market footprint, and our in-house proprietary demand side trading desk that is integrated with more than 15 digital advertising buying platforms with access to all major advertising exchanges and more than 250 billion impressions per day, we are simply able to offer a more effective campaign to our clients than most of our competitors.
Given our own momentum and success in the digital programmatic advertising space, we elected to explore an additional avenue of growth which capitalizes on the knowledge, expertise and competitive advantages we hold: white-labeling our digital programmatic advertising solutions to other local media companies. In 2024, we created the Media Partnerships division and launched a trial to white-label our programmatic platform with a single broadcaster in a single Nevada market. The insights we learned and the success that we had from this trial gave us the confidence to continue down this path, and we have since announced strategic partnerships with SummitMedia and Steel City Media, who operate local media properties across eleven combined markets. While this is currently a modest-sized opportunity in the context of our overall Digital Advertising division for 2025, we are very excited about what these and other potential partnerships represent: which we believe is the opportunity to become the chosen provider of digital programmatic advertising to broadcasters, digital agencies and other companies in local media. While early, we believe this Media Partnership initiative has the potential to be a significant difference maker and revenue and profit growth driver in 2026 and beyond, as we are currently in discussions with many local media companies about potentially partnering with us to be their programmatic digital advertising provider.
S&P Global Market Intelligence’s latest forecasts project that digital advertising in the United States will increase at an +8.9% CAGR through 2029, as it grows from 70% of all advertising spend in 2024 to approximately 80% of all advertising spend in 2029. We are confident that these favorable industry trends, together with our in-house suite of marketing solutions, third-party Media Partnerships platform, investment in our original content strategy, and our first-party data advantage, will continue to drive strong Digital Advertising growth during that same period.
One of our biggest accomplishments in 2024 was achieving a turnaround at Townsquare Interactive, our Subscription Digital Marketing Solutions business. 2023 was a “reset” year at Townsquare Interactive, where we battled high customer attrition. Combined with a difficult macroeconomic environment for SMBs during this time, we lost more than 7,000 subscribers from 2023 through Q1 2024. At the start of 2024, we outlined our path to improvement: first we would return to subscriber growth, then month-over-month revenue growth, and eventually profit growth. I’m proud to say that we have hit these targets and then some. Within the first quarter of 2024, we had achieved subscriber and month-over-month revenue growth, and in Q4 2024, we proudly returned to year-over-year revenue growth. In 2024, Townsquare Interactive’s net revenue year-over-year growth rates improved each quarter, from -15.3% in Q1, to – 12.9% in Q2, to -5.8% in Q3, and finally returning to growth at +1.9% in Q4. In total, Townsquare Interactive net revenue declined -8.4% as compared to the prior year, however, we managed expenses such that Townsquare Interactive’s Segment Profit margin actually increased 10 basis points to 28.4%. Importantly, the last confirmation of Townsquare Interactive’s turnaround is profit growth, which we expect to occur in Q1 2025 with meaningful year-over-year Segment Profit growth.
We also launched the Business Management Platform, a SAAS-based, or Software-as-a-Service, offering for Townsquare Interactive in early 2024. This platform provides a suite of digital solutions which assists SMBs in identifying prospective clients, converting those prospects to clients and then communicating with their clients. Our SAAS platform includes a CRM with email and text capabilities, as well as appointment scheduling services, payment services and invoice services. Previously, Townsquare Interactive was positioned primarily as a web design and search optimization, or SEO, company, which served us well for many years, as we grew to more than 30,000 subscribers in the first decade of operations.
And although these services are still a part of our offering today, we recognized it was time to evolve. Today, there are many SMBs who already have a strong web presence but need help in other areas, and our new Business Management Platform can be sold to clients who already have an established website that they are happy with, and/or those who already dedicate resources to SEO. We believe that our new SAAS Business Management Platform is very powerful and will be a difference maker as we grow and continue to scale the Townsquare Interactive business. We are not only helping SMBs with their digital presence, we are also helping them operate their business more effectively. Thankfully, due to our diversification within our digital businesses, the strength of Digital Advertising offset the recovery last year in Subscription Digital Marketing Solutions. In total, our Digital revenue grew +0.6% year-over-year to $234.0 million, and importantly, generated $62.1 million of Segment Profit, representing a 27% profit margin, a digital profit margin much higher than most local media competitors. And it is worth repeating that in Q4 2024, our total Digital net revenue increased +10.8% year-over-year, thus entering 2025 with strong momentum in both of our digital businesses. We believe Townsquare’s ability to drive profitable, sustainable digital growth is a key differentiator for our Company.
We view local radio as an extremely valuable asset with significant cash flow properties, unparalleled consumer reach, and an important local connection to our audience. However, radio is not a growth driver, and in 2024, Broadcast Advertising net revenue declined -1.3% year-over-year, and -6.1% excluding political revenue. We take the view that broadcast is a mature, cash cow business that will continue to face headwinds going forward, as businesses will continue to share shift from traditional advertising to digital advertising. Thankfully, we are often the beneficiary in that case, as we frequently have the most comprehensive set of digital advertising solutions available in our markets. It is our view that as Broadcast revenue declines going forward, we will continue to generate a solid profit as we carefully manage expenses to maintain a strong broadcast profit margin. We expect our differentiated digital platform will deliver strong growth to offset any potential core broadcast revenue declines, and also contribute a solid profit given its healthy and stable profit margins.
BALANCE SHEET / CAPITAL ALLOCATION
One of the largest benefits of our business model is significant cash generation. We ended 2024 with $33 million of cash on our balance sheet and generated $48.8 million of cash flow from operations over the course of the year. We utilized this cash flow first and foremost to invest in our local business through organic, internal investments that support our revenue and profit growth, particularly our digital growth engine. We also had a unique opportunity to repurchase a significant shareholder’s position in Townsquare at an attractive price, applying $14.6 million to this transaction. In total, we used $23.6 million of our excess cash flow to repurchase over 2 million shares in 2024. In addition, we repurchased $36.0 million of debt and made $12.3 million of dividend payments. Due to the Board of Director’s ongoing confidence in our business and its consistent, strong free cash flow characteristics, which we believe is not reflected in our stock price to date, the Board has elected to increase our dividend by +1%. At $0.20 per share on a quarterly basis, or $0.80 on an annualized basis, the higher dividend will now represent an ~10% dividend yield as of our last closing price.
Over the past year we have worked diligently to position ourselves for success in 2025 and beyond, and that included addressing our balance sheet. In February 2025, we entered into a $490 million credit agreement, including a $470 million Term Loan B and a $20 million revolving credit facility, both due in 2030. This offering, which replaced our existing debt due in 2026 in its entirety, will allow us to delever more efficiently, and frankly, more easily, than the past several years. Given the nature of a term loan, we are free to pay down debt at any time, unlike the previous four years when we had to buy our thinly traded bonds on the open market, which was at times very difficult to do. In 2025, our primary focus for capital allocation will be to organically invest in our digital growth engine primarily through investment in our personnel, reduce our debt through both mandatory and voluntary debt repayments, and support our high- yield dividend.
LOOKING FORWARD
In a rapidly changing landscape for consumers and local businesses, it has never been more important to embrace transformation and evolution. Broadcast is, and will continue to be, an extremely valuable and effective advertising platform, particularly for brand awareness and broad reach, top of the funnel advertising; however, to truly succeed as a local media company in 2025 and beyond, you need to be able to offer more (and in our case, digital advertising and digital marketing solutions) to your clients. Transformation doesn’t have to require a change of fundamental goals. At Townsquare, in 2025, we have the same goal that we had when the Company was formed in 2010. We want to continue to be best-in- class in entertaining and informing our audiences and communities across all platforms while super- serving our clients and partners with world class marketing and advertising solutions (coupled with outstanding customer service) to grow their business and achieve their goals.
In 2010, Townsquare’s transformation began, as our incredible team took what was a portfolio of strong brands of traditional radio stations and transformed it into a multi-platform premier media and digital marketing solutions company across the entire country. We strive to provide differentiated local content offerings side by side with powerful and effective broadcast AND digital advertising and marketing solutions to local businesses, while at the same time, treating our clients like we would treat a friend. As long as we continue to evolve, attract and retain the best talent, excel at customer service and customer satisfaction and exceeding customer expectations, the future will be very bright. In the words of Peter Drucker “The best way to predict the future is to create it.”
As always, we are going to create our own opportunities, not wait for them to show up or present themselves. We create opportunities and overcome challenges. It’s the Townsquare Way. As we did in 2024, and regardless of macroeconomic conditions, we are confident in our ability to continue to deliver attractive, current returns to our shareholders in the form of a high-yielding dividend, while also focusing on the financial health of the Company by reducing our net debt levels through strong cash generation and debt reduction.
In closing, all of us at Townsquare would like to thank our shareholders and our debtholders for the continued support of our team and your confidence in our strategy
