Outfront Media's Q3 2025 Earnings Call: Contradictions in Transit Revenue Drivers, Entertainment Recovery, and Advertising Trends

Date of Call: None provided

Financials Results

• Revenue: Consolidated revenues up 3.45% year over year

Guidance:

• Q4: consolidated revenues expected to be up low mid-single digits; transit mid-teens growth; billboard low single-digit growth.
• Excluding $11M of exited NY/LA contracts, Q4 billboard would be up mid-single digits and consolidated revenues mid- to high-single digits.
• Raised 2025 AFFO guidance to high single-digit growth (from prior mid-single-digit expectation).
• Full-year CAPEX ~ $85M (maintenance $30–35M); Q3 CAPEX ~$21M and 29 digital conversions in Q3.
• Interest expense ~ $140–145M; net leverage at ~4.7x; dividend maintained at $0.30/share.

Business Commentary:

* Transit Business Growth: - Outfront Media reported a 24% growth in transit revenue in Q3, with the New York MTA up 37%. -

- The growth was driven by a strengthening transit growth team, a focus on distinct sales solutions, and the launch of large campaigns in tech, finance, and pharma categories.

• Digital Revenue Performance:
• Combined digital revenue grew by 12% in Q3, representing 35.4% of total revenues.
• Excluding two contracts exited in New York and Los Angeles, digital revenues would have grown by nearly 18%.

• This growth was supported by a strategic partnership with AWS, enhancing planning, buying, and measurement capabilities.

• Billboards and Expense Management:

• Billboard revenues were down 2.2% due to exits from two large, marginally profitable contracts, but adjusted billboard OIBDA increased by $3 million.

• The decline in billboard expenses by 5% year-over-year was attributed to the exit of these contracts, lower credit card usage, and lowered compensation-related expenses.

• Strategic Sales Restructuring:

• The company restructured its sales function to differentiate between enterprise and commercial sales, focusing on strategic and commercial accounts.

• This restructuring aimed to have more specific, qualified sales conversations with enterprise accounts and improve capabilities in commercial sales.

• AWS Partnership and Future Outlook:

• Outfront Media announced a strategic partnership with AWS to enhance the planning, buying, and measurement of its inventory.
• This partnership is expected to create new sales opportunities and advance the way agencies and brands interact with Outfront's media offerings, improving efficiency.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management said results 'came in ahead' of expectations; transit revenue grew ~24%, New York MTA up ~37%; consolidated adjusted OIBDA up 17% to $137M and AFFO up 24% to $100M; company raised AFFO guidance and expects Q4 momentum to continue.

Q&A:

• Question from Danielle Odley (Wells Fargo): You previously described 2025 as a year of transformation. As we exit this year and look towards 2026, how do you think the company’s position compared to your strategic objectives? Also, on quarter three, transit growth was clearly very strong. Can you help to further unpack the drivers of the momentum you’ve seen there and maybe touch on expectations for how you think growth shapes up in the next year?
  Response: Transformation is on track — cultural, sales enablement, technology and operations changes are delivering momentum; transit strength is driven by a dedicated transit velocity/growth team (sales, product marketing, campaign focus) and management expects momentum to continue.

• Question from Cameron McVeigh (Morgan Stanley): Can you talk about the decision to restructure the sales function, particularly in transit, what you’ve learned, and is subway ridership still a factor in an advertiser’s decision to utilize these MTA boards? If not, what is the most important metric?
  Response: Sales was split to create tailored enterprise vs. commercial capabilities; transit success comes from a dedicated growth org (sales, marketing, product, customer success) focusing on brand experiences and campaign quality—ridership is not the sole metric versus creative/activation and measurement outcomes.

• Question from David Karnovsky (JPMorgan): As you look ahead to 2026, what is your view on an outlier event like the World Cup given your footprint, and how are you viewing the entertainment vertical and prospects for recovery there?
  Response: Bullish — management expects a healthier entertainment slate in 2026 and is actively pursuing World Cup and other major-sports experiential activations; these events are seen as significant revenue and brand-experience opportunities being expanded into a line of business.

• Question from Patrick Scholl (Barrington Research): Has the government shutdown had any impact on ad trends or planning decisions across billboard or static, particularly in DC?
  Response: No material impact observed from the government shutdown; while DC office presence is reduced, transit properties have not shown meaningful revenue effects.

Contradiction Point 1

Transit Revenue Growth Drivers

It involves the drivers behind transit revenue growth, which is a critical component of the company's financial performance.

What are the drivers of the momentum you've seen, and what are your growth expectations for the next year? - Danielle Odley(Wells Fargo)

2025Q3: The growth in transit was driven by a combination of factors, including the creation of a dedicated transit growth team, focusing on product marketing, and the ability to create brand experiences on the MTA platform. - Nick Brien(CEO)

What are the drivers of acceleration in transit? - David Karnovsky(JPMorgan)

2025Q2: Transit acceleration is driven by improved focus in New York and ridership growth. - Matthew Siegel(CFO)

Contradiction Point 2

Entertainment Vertical Recovery

It involves the expectations for recovery in the entertainment vertical, which is crucial for the company's revenue diversification.

How do you view an outlier event like the World Cup in 2026, considering your market presence and the entertainment sector's recovery prospects? - David Karnovsky(JPMorgan)

2025Q3: The entertainment vertical has faced challenges with TV network budgets shrinking, but there is optimism for a strong 2026 with a healthy film and streaming slate. - Nick Brien(CEO)

Are you through the most challenging phase of these business changes, or are there remaining areas to address? Can you analyze the decline in the entertainment vertical? - Daniel Carol Osley(Wells Fargo)

2025Q2: The weakness is really a function of some specific studio and company spending not yet returned to a normalized level. - Nicolas Brien(Interim CEO & Director)

Contradiction Point 3

Transit Growth and Ridership Impact

It involves the company's strategy and expectations related to transit growth, particularly the role of subway ridership as a metric for advertiser decisions, which is essential for understanding market dynamics and revenue potential.

Is subway ridership still a key factor for advertisers using MTA boards? If not, what is the most important metric now? - Cameron McVeigh (Morgan Stanley)

2025Q3: Subway ridership is not a primary factor; the most important metric is the platform's ability to create brand experiences. - Nick Brien(CEO)

Can you update us on the MTA contract and its impact on transit growth? - Cameron McVeigh (Morgan Stanley)

2025Q1: There's higher ridership and return to work, though it's hard to trace its impact. We're focused on MTA performance. - Matthew Siegel(CFO)

Contradiction Point 4

Advertising Trends and Impacted Categories

It highlights inconsistencies in the reported impact of specific advertising categories, which are crucial for understanding market dynamics and revenue forecasts.

Can you explain the drivers behind the momentum and discuss expectations for growth over the next year? - Danielle Odley (Wells Fargo)

2025Q3: The growth in transit was driven by a combination of factors, including the creation of a dedicated transit growth team, focusing on product marketing, and the ability to create brand experiences on the MTA platform. - Nick Brien(CEO)

What percentage of your ad categories are goods vs. services? Which is more resilient in the current environment: local or national advertisers? - Daniel Osley (Wells Fargo)

2025Q1: We've seen postponements rather than significant cuts in ad spend. Impacted categories include automotive, government and political, a brief amount of fashion and retail, tourism, and CPG. We're primarily seeing postponements, not cuts, in our book. It's mostly services. - Nick Brien(Interim Chief Executive Officer)