Gannett's Q3 2025 Earnings Call: Contradictions in Digital Advertising Drivers, Google Antitrust Impact, and Debt Paydown Strategies

Date of Call: October 30, 2025

Financials Results

• Revenue: $560.8M, down 8.4% YOY (down 6.8% on a same-store basis)

Guidance:

• Q4: expect meaningful year-over-year adjusted EBITDA growth and strong free cash flow driven by AI licensing and larger digital ad campaigns.
• Full-year digital revenue: expected down low-single-digits on a same-store basis; Q4 digital revenue expected to grow in the low-single-digits same-store.
• $100M cost reduction fully implemented; anticipate full benefit in Q4 and improving adjusted EBITDA trends.
• Expect full-year adjusted EBITDA growth and ~30% growth in free cash flow; plan to repay >$135M of debt in 2025.

Business Commentary:

* Digital Revenue and Strategy: - Gannett's total digital revenues grew to 47% of total company revenues in Q3, an all-time high. - The increase was driven by a strategic focus on expanding the digital audience and deepening engagement across customer journeys, as well as the successful execution of large digital client campaigns.

• Financial Performance and Cost Reduction:
• Total adjusted EBITDA for Q3 was impacted by approximately $7 million due to revenue shifting and incremental expenses from cost reduction actions.

• Despite these factors, Gannett expects significant year-over-year adjusted EBITDA growth in Q4, supported by a fully implemented $100 million cost reduction program and strong digital advertising campaigns.

• AI Licensing and Content Monetization:

• Gannett secured a new AI licensing deal with Microsoft, contributing to its AI content monetization strategy.

• The partnership is part of Microsoft's pilot program to support the launch of its publisher content marketplace, aiming to fairly compensate publishers for AI usage of their content.

• Debt Reduction and Financial Health:

• Total debt fell below $1 billion for the first time since Gannett's merger in 2019.
• This milestone was achieved through consistent debt repayment, with $116.4 million repaid in the first nine months of 2025, contributing to improved financial health and lower leverage.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted debt falling below $1B, digital at 47% of revenues and nearing 50% in Q4, a fully implemented $100M cost program, expected meaningful YOY adjusted EBITDA growth in Q4, and new AI licensing deals (Microsoft, Perplexity) as drivers of near-term improvement.

Q&A:

• Question from Giuliano Anderes-Bologna (Compass Point Research & Trading, LLC): Can you share what the development was in the Google antitrust case and how it impacts the case and timeline?
  Response: Judge Castell granted partial summary judgment establishing liability on key claims against Google, narrowing the case to damages and remedies and likely accelerating the timeline.

• Question from Giuliano Anderes-Bologna (Compass Point Research & Trading, LLC): What drove the timing shift of large revenue drivers from Q3 into Q4, and does it reflect broader advertiser demand trends?
  Response: The shifts were timing-related—notably Perplexity's product launch delay and several ad campaigns moving into October—management views these as timing issues rather than demand deterioration.

• Question from Giuliano Anderes-Bologna (Compass Point Research & Trading, LLC): Can you explain the incremental expenses incurred in Q3 and whether they will persist?
  Response: Incremental Q3 expenses were mostly one‑time exit-related costs (medical/benefits) tied to headcount reductions from the $100M cost program and are not expected to persist; the program's recurring savings begin in Q4.

• Question from Giuliano Anderes-Bologna (Compass Point Research & Trading, LLC): With digital revenues approaching 50% of total, how do you see this evolving into 2026 and how durable are these streams?
  Response: Management expects ~50% digital mix in Q4 and >50% in 2026, driven by a more diversified digital portfolio (AI licensing, PLAY, stronger ARPU, DMS stabilization) which supports durability.

• Question from Giuliano Anderes-Bologna (Compass Point Research & Trading, LLC): How do AI partnerships translate to monetization and what are the next steps?
  Response: Monetization varies by deal (direct licensing fees, revenue share); Gannett is participating early to help shape marketplace pricing/policy with partners like Microsoft and Perplexity while preserving long‑term upside.

• Question from Matthew Condon (Citizens JMP Securities, LLC): Are you seeing meaningful traffic or click‑throughs from AI platforms such as Perplexity following launches?
  Response: No—management says AI platforms have not driven meaningful referral traffic; the primary monetization path is licensing content rather than expecting click‑throughs.

• Question from Matthew Condon (Citizens JMP Securities, LLC): Are AI platforms like OpenAI willing to negotiate fair licensing deals?
  Response: OpenAI has been a major scraper and is not currently willing to agree to a fair deal; Gannett continues discussions while actively blocking scraping.

• Question from Matthew Condon (Citizens JMP Securities, LLC): Why are you shifting certain DMS clients to the Media segment and what are the benefits?
  Response: Large multi‑location or media‑heavy clients are better served via Media tools to deliver speed/scale and preserve DMS platform economics by focusing on its ideal customer profile.

• Question from Matthew Condon (Citizens JMP Securities, LLC): With debt now below $1B, what remains on real estate monetization and further debt paydown plans?
  Response: Gannett has repaid $116M YTD, expects >$135M repaid in 2025, has a few small/mid real‑estate deals remaining, and anticipates rising free cash flow and lower interest expense to fund additional paydowns.

• Question from William Kavaler (Odeon Capital): Will you break out AI licensing revenue separately for transparency as it grows?
  Response: Yes—management would consider breaking out licensing revenue once it becomes a more meaningful and sustainable part of overall revenue and the business model matures.

Contradiction Point 1

Digital Advertising Revenue Drivers

It involves differing perspectives on the primary drivers of digital advertising revenue growth, impacting expectations about the company's financial performance and strategic focus.

What is causing the shift of major revenue drivers from Q3 to Q4? - Giuliano Anderes-Bologna (Compass Point Research & Trading, LLC, Research Division)

2025Q3: Digital advertising revenue increased by 5.4% to $94.7 million, primarily driven by national brand strength. - Trisha Gosser(CFO)

What drove the improvement in digital advertising revenue? - Matthew Condon (Citizens JMP Securities, LLC, Research Division)

2025Q2: Digital advertising revenue increased 9.8% to $94.7 million, primarily driven by improvements in page view growth, programmatic revenue, and national brand strength. - Trisha Gosser(CFO)

Contradiction Point 2

Google's Antitrust Litigation Impact

It involves differing perspectives on the impact of Google's antitrust litigation, which is crucial for understanding Gannett's strategic positioning and potential revenue implications.

What developments occurred in the Google antitrust lawsuit, and how do they affect the case's future? - Giuliano Anderes-Bologna (Compass Point Research & Trading, LLC, Research Division)

2025Q3: This is a positive development for Gannett as it relates to our case against Google. Judge Castell ruled that Google illegally monopolized the digital advertising market and can't relitigate those issues in our case. - Michael Reed(CEO)

How might Google’s recent loss in the Antech case affect your business and create opportunities? - Giuliano Bologna (Compass Point)

2025Q1: The DOJ’s win is a meaningful step for the digital advertising ecosystem, which should benefit Gannett and publishers. It sets the stage for a more fair and favorable market. - Michael Reed(CEO)

Contradiction Point 3

Digital Revenue Growth Trends

It involves differing expectations for digital revenue growth trends, which are critical for understanding Gannett's growth trajectory and financial performance.

How will the digital revenue mix evolve into '26, and what factors support this outlook? - Giuliano Anderes-Bologna (Compass Point Research & Trading, LLC, Research Division)

2025Q3: We expect our digital revenue mix to surpass 50% in 2026. - Trisha Gosser(CFO)

How do you plan to boost digital revenue growth in the second half of the year? - Giuliano Bologna (Compass Point)

2025Q1: We expect to return to digital revenue growth in the second half of this year. - Trisha Gosser(CFO)

Contradiction Point 4

AI Partnerships and Content Licensing

Inconsistency in the approach and expectations regarding AI partnerships and content licensing, which impacts the company's strategic direction and potential revenue streams.

Have you noticed significant traffic from AI platforms like Perplexity? - Matthew Condon (Citizens JMP Securities, LLC, Research Division)

2025Q3: There is currently no meaningful traffic from AI platforms. We focus on monetizing our content through licensing. - Michael Reed(CEO)

Are you seeing trends in AI platforms' willingness for content partnerships? - Giuliano Anderes-Bologna (Compass Bank)

2025Q2: We're seeing momentum shift towards publishers, with technology companies supporting fair licensing and blocking unauthorized scraping. - Michael Reed(CEO)

Contradiction Point 5

Asset Sales and Debt Paydown

It involves the strategy and expected outcomes of asset sales and debt paydown, which are crucial for the company's financial health and long-term prospects.

What is the status of real estate and asset sales to reduce debt? - Matthew Condon (Citizens JMP Securities, LLC, Research Division)

2025Q3: We've largely monetized the real estate portfolio. With improved free cash flow and lower debt balances, we expect significant debt reduction next year, supporting long-term financial strength. - Trisha Gosser(CFO)

Can you clarify the status of nonstrategic assets you plan to divest in 2025, 2026, and beyond? - Matthew Condon (Citizens JMP Securities, LLC, Research Division)

2024Q4: The total in 1Q is likely to be in the $50 million to $60 million range, and for the first half of the year, it's more like $60 million to $70 million. - Michael Reed(CEO)