Lee Enterprises Q1 2025: Navigating Contradictions in AI Strategy and Digital Growth

These are the key contradictions discussed in Lee Enterprises, Incorporated's latest 2025Q1 earnings call, specifically including: AI Initiatives and Partnerships, Digital Subscriber Growth Expectations, AI Initiatives and Cost Reduction Expectations, and Digital Subscription Growth Projections:



Digital Transformation and Growth:
- Lee Enterprises reported a trailing 12-month digital revenue of $302 million, with $102 million attributed to Amplified Digital Agency.
- Digital revenue grew 5% year-over-year in the first quarter, driven by a 14% increase in digital subscription revenue and strong performance in Amplified Digital Agency.
- The growth is attributed to the company's digital transformation strategy, leveraging AI to enhance customer engagement and advertising opportunities.

AI Initiatives and Monetization:
- Les Ottolenghi, Chief Transformation and Commercial Officer, emphasized the company's AI partnerships with Perplexity and AWS to develop next-generation AI systems.
- Lee is testing a hyper-personalized consumer news experience, with an early adoption rate of 85% among engaged users.
- The company's AI Boost program, an AI-powered advertising and automation solution, is expected to create high-quality content, ensuring businesses maximize visibility across AI search channels and traditional web search.

Cost Management and Digital Revenue:
- Lee identified $40 million in annual cost reductions, expected to be executed by the end of the second quarter.
- The company anticipates these investments in AI to drive new revenue streams, offsetting costs through improvements in the legacy print business.
- Effective cost management and focus on digital revenue growth are key to achieving long-term sustainability.

Financial Outlook and Digital Revenue Target:
- Lee's three-pillar growth strategy aims to achieve total digital revenue of over $450 million by 2028.
- For 2025, the company's outlook includes total digital revenue growth of 7% to 10% and adjusted EBITDA growth in the low-single-digit range.
- Confidence in achieving these targets is supported by the company's core digital businesses, AI initiatives, and identified cost reductions.