Gannett's Recovery Continues Amid Market Volatility

Miller Value Partners highlighted Gannett Co. (GCI) as a contributor to the Deep Value Strategy's second-quarter return, citing its recovery from Q1 lows and undervaluation. GCI's one-month return was 3.33%, and its shares lost 6.28% over the last 52 weeks. The strategy's net returns year-to-date were -13.63%, compared to +2.81% and -7.65% for the S&P 1500 Value Index and S&P 600 Value Index, respectively.

Gannett Co. Inc. (GCI) held its Q2 earnings call, revealing notable progress in digital transformation and financial management strategies. The company reported a significant sequential increase in key financial metrics, including a 27% rise in total adjusted EBITDA to $64.2 million and a 73% surge in free cash flow to $17.6 million [1].

Digital advertising revenues grew by 4% year-over-year, driven by increased page views and programmatic revenue, indicating a turnaround from Q1’s slight decline. The company’s strategic AI content licensing agreement with Perplexity is expected to bolster revenue through licensing fees and an advertising revenue share [1].

Gannett’s $100 million cost reduction program, focusing on automation and outsourcing, is anticipated to drive substantial growth in adjusted EBITDA for the latter half of 2025 and into 2026, reflecting the company’s commitment to operational efficiency [1].

The Digital Marketing Solutions (DMS) segment exhibited robust sequential growth, with core platform revenue increasing by 8.1% and segment adjusted EBITDA growing by 35.8%. The average customer count rose by 2.8%, and core platform ARPU reached new heights, highlighting the segment’s strong performance [1].

Despite these positive developments, total revenues for Q2 2025 were $584.9 million, an 8.6% decrease or 6.4% on a same-store basis, indicating ongoing challenges in reversing revenue trends at the desired pace [1]. Digital-only subscription revenues amounted to $42.7 million in Q2, facing headwinds from subscriber base rebuilding and pricing changes [1].

Print and commercial revenues continue to decline, though management remains focused on managing this long tail efficiently. This trend underscores the broader industry shift towards digital media [1].

Looking ahead, Gannett provided optimistic guidance for the remainder of the year. The company projects same-store digital revenue growth of 3% to 5% year-over-year and anticipates substantial growth in total adjusted EBITDA compared to the previous year. Free cash flow is expected to more than double, driven by the $100 million cost reduction program and the strategic AI content licensing agreement with Perplexity [1].

In summary, Gannett Co. Inc.’s earnings call highlighted a company making significant strides in digital transformation and financial management, despite facing challenges in total revenue and digital-only subscription growth. The positive sentiment was bolstered by strategic initiatives and forward-looking guidance, positioning the company for continued progress in the evolving media landscape [1].

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/GCI/pressreleases/33844290/gannett-co-inc-earnings-call-highlights-digital-gains/