Lee Enterprises (LEE) 1 Aug 24 2024 Q3 Earnings call transcript
In the latest earnings call, Lee Enterprises, a leading media company, shared exciting progress in its digital transformation strategy. The company announced that digital revenue streams had surpassed print revenue for the first time, marking a significant milestone in its ongoing efforts to reduce dependence on traditional print media. This achievement, highlighted by CEO Kevin Mowbray, underscores Lee Enterprises' commitment to embracing digital solutions and capitalizing on the growing demand for online content.
Strong Digital Performance and Growth Opportunities
Lee Enterprises reported a robust performance in its digital revenue streams, with each segment experiencing year-over-year growth. Digital subscription revenue, a key focus area, grew by 34% and now constitutes a substantial portion of the company's gross margin. This growth is particularly noteworthy given the company's leadership in the local media digital subscriptions market, outpacing competitors significantly.
The company's digital advertising revenue also showed promising results, reaching $50 million and achieving healthy margins. The digital agency, Amplified Digital, contributed $26 million in the third quarter, demonstrating a 12% year-over-year growth rate. These figures underscore the potential of digital revenue streams, which are expected to continue growing and contributing significantly to the company's bottom line.
Cost Management and Strategic Investments
CFO Tim Millage provided an update on the company's financial performance, noting a 150 basis point sequential improvement in same-store revenue trends. Despite a decline in print revenue, the company managed costs effectively, leading to a cash cost reduction of 8% compared to the previous year. This cost management strategy, coupled with strategic investments in talent and technology, is key to driving digital revenue growth and achieving long-term sustainability.
Outlook and Future Prospects
Looking ahead, Lee Enterprises remains optimistic about its digital transformation journey. The company is on track to achieve its digital revenue and digital subscriber targets for the year, with a strong focus on improving digital advertising market conditions and leveraging competitive political races in its markets. The company is also exploring opportunities to monetize non-core assets to facilitate debt reduction, further strengthening its financial position.
Navigating Challenges and Opportunities
The earnings call also shed light on the challenges faced by the media industry, particularly the persistent decline in print revenue. However, Lee Enterprises is navigating these challenges with a strategic approach, leveraging its digital transformation efforts to reduce reliance on print and capitalize on the growing demand for digital content. The company's strong financial performance and strategic investments in digital solutions position it well for future growth and long-term sustainability.
In conclusion, Lee Enterprises' latest earnings call highlights the company's significant progress in its digital transformation strategy and its commitment to capitalizing on the growing demand for digital content. With a focus on digital revenue streams, cost management, and strategic investments, the company is well-positioned to achieve its long-term goals and create value for its readers, users, advertisers, and shareholders.