Why did CHAR's Q4 net profit surge despite high operating expenses?

Townsquare Media's (TSQ) strong digital performance and effective cost management contributed to its improved financial results, despite increased operating expenses:

1. **Digital Business Growth**: The growth of Townsquare Ignite (Digital Advertising) by +15.5% in Q4 2024 and total digital net revenue growth of +10.8% demonstrate the success of their digital advertising solutions. This indicates a shift in revenue towards more profitable digital channels, which may not be directly reflected in the operating expenses but contribute significantly to the net income.
2. **Political Revenue Impact**: The company mentioned the benefit of political revenue, which can be a volatile but often substantial contributor to quarterly performance. Political advertising tends to be more lucrative due to higher average revenue per spot, which can help offset the costs.
3. **Debt Refinancing**: The completion of debt refinancing, which extended maturities to 2030, suggests a strategic move to manage long-term liabilities more effectively. While this might involve higher upfront costs, it can lead to more stable and predictable financial obligations in the long run, potentially reducing overall expense burdens.
4. **Cost Management**: Despite the increase in operating expenses, the company's adjusted EBITDA grew by +25.8% year-over-year, indicating effective cost management. This could be due to optimized operational processes, reduced non-cash impairment charges, or other internal efficiency measures that helped mitigate the impact of higher expenses.

In summary, CHAR's Q4 net profit surge can be attributed to strong digital business growth, political revenue, debt refinancing, and effective cost management, despite high operating expenses. These factors combined to improve net income and EBITDA, reflecting a healthier financial performance.