Lee Enterprises Q4 2025: Contradictions Emerge in Debt Reduction Strategies and Free Cash Flow Outlook

Date of Call: November 26, 2025

Financials Results

• Revenue: $562 million total revenue; digital revenue $298 million (53% of total); digital-only subscription revenue $94 million, up 16% year-over-year (same-store); Amplified Digital Agency contributed $103 million to $184 million digital advertising revenue

Guidance:

• Adjusted EBITDA expected to grow mid-single digits in fiscal 2026.
• 2026 to see a lift in digital revenue and margins as transformational projects complete.
• Long-term targets: $450M digital revenue and 90% digital mix by 2030.
• Digital subscription target: $175M recurring revenue (1.2M subscribers) by 2030; digital advertising target >$250M by 2030.
• Plan a $50M common stock rights offering; successful close would cut interest rate from 9% to 5% for five years (~$18M annual interest savings).

Business Commentary:

• Digital Revenue and Transformation:
• Lee Enterprises reported a total digital revenue of $298 million in fiscal 2025, representing 53% of the total company revenue.

• This growth was driven by the implementation of a 3-pillar digital growth strategy, focusing on digital subscriptions, Amplified Digital Agency, and new digital products.

• Digital Subscription Growth:

• Digital-only subscription revenue increased by 16% on a same-store basis, reaching $94 million in fiscal 2025.

• The growth was fueled by investments in top talent, content, branding, and consumer marketing, which enhanced local content and product engagement.

• Amplified Digital Agency Performance:

• Amplified Digital Agency surpassed $100 million in revenue in fiscal 2025, with industry-leading 5% same-store growth.

• The growth was supported by innovative and scalable operations, deep customer value, and AI-powered tools, leading to a strong commercial base and leadership in the digital advertising market.

• Cost Management and Digital Investment:

• Lee Enterprises achieved a 5% decrease in cash costs for fiscal 2025, with costs totaling $524 million.
• The company maintained disciplined cost management, particularly in print production and corporate overhead, allowing it to reinvest in high-growth digital initiatives and drive operational efficiency.
  
  

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized confidence and momentum: 'we're confident in our ability to get there' (digital $450M by 2030); noted 'driving steady momentum in adjusted EBITDA'; forecast 'adjusted EBITDA growth in mid-single digits' for 2026; highlighted 16% YoY growth in digital-only subscription revenue and digital representing 53% of total revenue.

Q&A:

• Question from Web: What was the total debt reduction in the fourth fiscal quarter and the full fiscal year?
  Response: Total debt reduced $121M since 2020; excluding cyber-incident-related waiver increases, debt declined roughly $3.5M in fiscal 2025 from operations and asset sales.

Contradiction Point 1

Debt Reduction Strategies

It involves discrepancies in the strategies and timelines for debt reduction, which are critical for financial planning and investor expectations.

Can you update us on the $50 million common stock rights offering and its expected benefits? - Kevin Mowbray(President, CEO & Director)

2025Q4: If successful, the $50 million rights offering will support digital transformation and deleveraging over the next five years and will trigger a reduction in the debt interest rate from 9% to 5% for five years. - Kevin Mowbray(CEO)

What are your plans for the $50 million rights offering, anticipated cash flow generation, and monetizing non-core assets? - Kevin Mowbray(President & CEO)

2025Q3: We expect to finance our digital transformation primarily through internally generated cash, and we continue to actively pursue opportunities to monetize non-core assets. - Kevin Mowbray(CEO)

Contradiction Point 2

Free Cash Flow Expectations

It involves changes in financial forecasts, specifically regarding free cash flow expectations, which are critical indicators for investors.

What was the total debt reduction in the fourth fiscal quarter and full fiscal year? - Jared Marks(Senior Director of FP&A)

2025Q4: Lee expects to be free cash flow positive in the second half of fiscal year 2025, driven by changes in cost structure and expected total digital revenue. - Tim Millage(CFO)

Did the $12M net loss and minimal free cash flow include the interest deferral? When does Lee expect to achieve positive free cash flow? - Jared Marks(Lee Enterprises)

2025Q2: The net loss in the quarter includes the expense associated with debt, despite interest deferral. Lee expects to be free cash flow positive in the second half of fiscal year 2025, driven by changes in cost structure and expected total digital revenue. - Tim Millage(CFO)