DallasNews 2025 Q2 Earnings Misses Targets with 2409.8% Net Income Decline

DallasNews (DALN) reported its fiscal 2025 Q2 earnings on July 30th, 2025. The company reported a net loss of $33.49 million, a significant decline from the net income of $1.45 million in 2024 Q2. This performance missed expectations due to a non-cash pension settlement charge that significantly impacted earnings. The company expressed cautious optimism about future quarters, pointing to potential benefits from a planned merger with Hearst Media. No guidance adjustment was announced, and the company remains focused on strategic initiatives amidst ongoing revenue challenges.

Revenue

Total revenue for DallasNews in Q2 2025 was $29.77 million, marking a 7.2% decline from the $32.06 million reported in Q2 2024. The advertising and marketing services segment generated $12.3 million, with a notable drop of 3.8% compared to the previous year. Circulation revenue decreased by 5.7% to $15.3 million, largely due to a decline in print circulation. Additionally, printing, distribution, and other revenues fell significantly by 28.9% to $2.2 million, following the cancellation of a partnership.

Earnings/Net Income

DallasNews reported a net loss of $33.49 million for Q2 2025, a drastic decline from the $1.45 million net income achieved in Q2 2024. The earnings per share swung to a loss of $6.26, compared to a profit of $0.27 per share the previous year, indicating significant financial challenges.

Post-Earnings Price Action Review

The strategy of purchasing DallasNews (DALN) shares after a revenue increase quarter-over-quarter on the earnings report release date, and holding for 30 days, delivered moderate returns but underperformed the benchmark. The strategy's compound annual growth rate (CAGR) was 7.11%, trailing the benchmark by 11.48 percentage points. Notably, the strategy maintained a maximum drawdown of 0.00% and a Sharpe ratio of 0.07, indicating a low-risk profile. However, the high volatility of 96.94% underscored its sensitivity to market movements, highlighting the challenges faced by investors in navigating the stock's performance post-earnings.

CEO Commentary

Robert W. Decherd, CEO of DallasNews Corporation, highlighted the agency segment's year-over-year profit improvement despite challenges, including a substantial net loss due to a non-cash pension settlement charge. He noted a 36.7% growth in adjusted operating income, driven by cost savings in employee compensation, outside services, and operational efficiencies from transitioning to a smaller printing facility. Decherd expressed cautious optimism about the future, emphasizing the need for continued strategic focus amidst revenue declines.

Guidance

DallasNews Corporation aims to navigate future challenges while remaining committed to strategic initiatives, particularly following the recently announced merger with Hearst Media. The merger is expected to enhance shareholder value, offering $15.00 in cash per share, reflecting a 242% premium based on prior trading prices. The transaction is projected to close in the third or early fourth quarter of 2025, subject to customary conditions, positioning DallasNews for improved market competitiveness and operational efficiency.

Additional News

In recent M&A activity, DallasNews announced its merger agreement with Hearst Media, where shareholders will receive $15.00 per share in cash—a 242% premium over the pre-announcement share price. This strategic move, expected to close in Q3 or early Q4 2025, is set to take the company private, marking a significant exit strategy amidst ongoing revenue challenges. Additionally, the company rejected a higher, unsolicited $16.50 per share offer from Alden Global Capital, choosing instead to proceed with the Hearst deal. This decision has raised questions about the Board's fiduciary duty to maximize shareholder value, as it adopted a Rights Agreement (poison pill) to deter hostile takeovers.