Townsquare's Q3 2025 Earnings Call: Contradictions Emerge on 2026 Growth Outlook, Broadcast Advertising Stabilization, and Digital Revenue Sources

Date of Call: November 10, 2025

Financials Results

• Revenue: $106.8M, down 7.4% total YoY and down 4.5% ex-political YoY
• EPS: $0.36 loss per diluted share (Q3 net loss $5.5M); net loss improved $31M year-to-date vs prior year
• Operating Margin: Adjusted EBITDA margin 20.5% in Q3 2025, compared to 20% in Q3 2024 (ex-political)

Guidance:

• Q4 2025 net revenue expected $105M–$109M.
• Q4 2025 adjusted EBITDA expected $21.5M–$23.5M.
• 2025 full-year revenue expected $426M–$430M with political revenue < $2M.
• 2025 full-year adjusted EBITDA expected $88M–$90M.
• Townsquare Interactive Q4 revenue ~Q3 ($18.6M) and TSI margins expected >30% in Q4.
• Remnant/search-driven digital headwind expected to persist through 1H26 and stabilize at a lower run-rate in 2H26.

Business Commentary:

* Digital Revenue Growth: - Townsquare Media's digital revenue grew 2% year-over-year in the first nine months of 2025. - This growth is attributed to Townsquare's transformation into a digital-first local media company, focusing on digital solutions outside the top 50 markets in the United States.

• Broadcast Advertising Challenges:
• Townsquare's broadcast advertising experienced a negative 8% decline ex-political in Q3, in line with expectations.

• The company is focusing on managing expenses to maintain broadcast profit margins, with plans for slight improvement in 2026.

• Profitability in Digital Marketing Solutions:

• Townsquare Interactive's segment profit increased 19% year-over-year in the first nine months of 2025.

• This growth is due to a restructuring of customer service models and the deployment of AI solutions.

• Digital Advertising Headwinds:

• Townsquare's digital advertising revenue saw a slight negative 2% year-over-year decline in Q3.
• This decline is mainly due to significant deterioration in online audience trends, impacting indirect or remnant revenue.

Sentiment Analysis:

Overall Tone: Neutral

• Management reported results met Q3 revenue ($106.8M) and adjusted EBITDA ($22M) guidance and highlighted strong digital profit margins, but revised full-year revenue/EBITDA lower due to steep remnant/search declines and weaker-than-expected political revenue; management remains confident in 2026 recovery and long-term digital growth (digital = 55% of revenue).

Q&A:

• Question from Michael Kupinski (NOBLE Capital Markets, Inc., Research Division): When do you expect stabilization in core broadcast advertising and what would it take to stabilize?
  Response: Expect ex-political broadcast declines to moderate to mid-single-digits in 2026 and low-single-digits in 2027+; Q4 pacing slightly better; company is gaining share and has expanded broadcast profit margin to 28% through expense management.

• Question from Michael Kupinski (NOBLE Capital Markets, Inc., Research Division): Given healthy margins, is there much more to cut to protect profitability?
  Response: Yes—management sees further efficiency opportunities (including AI deployment) and will continue expense reductions to align margins with revenue, aiming to sustain strong broadcast margins.

• Question from Michael Kupinski (NOBLE Capital Markets, Inc., Research Division): Did you see incremental government-related advertising (e.g., Medicare) during the shutdown?
  Response: No incremental government-buy activity was observed; instead management saw canceled orders and softness from local and national advertisers, contributing to negative impact.

• Question from Michael Kupinski (NOBLE Capital Markets, Inc., Research Division): How is the Phoenix office progressing and what are the milestones for Townsquare Interactive (TSI) west-of-Mississippi expansion?
  Response: Phoenix is meeting objectives—hiring sales talent, customer support and SMEs; TSI delivered strong profit growth (Q3 segment profit +21%, margin 33%), revenue muted due to reduced sales headcount but management will rebuild sales in 2026 and expects revenue growth then while maintaining >30% margins.

• Question from Patrick Sholl (Barrington Research Associates, Inc., Research Division): Are TSI margins sustainable in the low–mid 30s and is there room for expansion?
  Response: Yes—management expects low-30s (around 32–33%) in the next 18–24 months while rebuilding sales, with potential for margin expansion in back half of 2027 and beyond as scale and efficiencies grow.

• Question from Patrick Sholl (Barrington Research Associates, Inc., Research Division): Can you break down Ignite trends between owned-and-operated, programmatic and third-party/partnerships?
  Response: Excluding remnant, Q3 digital advertising would be +5% YoY: owned-and-operated +10% (direct sales); programmatic (~60% of digital) up high-single-digits; remnant (previously ~$20M in 2024) declined sharply (Q3 remnant $2.5M, down 50% YoY) and is expected to reduce full-year by ~$7.5M; remnant likely stabilizes in 2H26.

• Question from Patrick Sholl (Barrington Research Associates, Inc., Research Division): How much of the ~$6M digital media partnerships fell in Q3 and what does it imply for your own-market selling?
  Response: Partnership revenue is small this year (~$6M total) and contributed modestly to programmatic growth (roughly ~1 point of growth); own-market digital selling remains strong (owned-and-operated +10% in Q3) and partnerships are being scaled deliberately with training and positive early results.

Contradiction Point 1

Townsquare Interactive Revenue Growth Projections

It involves changes in financial forecasts, specifically regarding Townsquare Interactive's revenue growth expectations, which are critical indicators for investors.

Is there potential for further margin expansion in Townsquare Interactive, and what trends are emerging across Ignite segments? - Patrick Sholl(Barrington Research Associates, Inc., Research Division)

2025Q3: We expect Townsquare Interactive revenue to return to growth in 2026. The strong profit performance in 2025 is due to operational improvements and AI tools. - Bill Wilson(CEO)

Was the decline in search engine referral traffic a few years ago similar in magnitude and impact to the changes in the social media referral traffic algorithm? - Patrick Sholl(Barrington Research)

2025Q2: Townsquare Interactive revenue will likely grow 13% to 14% in 2025, which is consistent with what we've guided in previous quarters. - Bill Wilson(CEO)

Contradiction Point 2

Broadcast Advertising Stabilization and Growth

It involves differing expectations for the stabilization and growth of broadcast advertising, which impacts the outlook for the company's core business.

When will core advertising revenue stabilize, and what steps are needed? How can healthy profit margins be maintained amid declining revenue? - Michael Kupinski (NOBLE Capital Markets, Inc., Research Division)

2025Q3: Regarding core advertising, we expect broadcast to remain challenging in 2026, with declines stabilizing at low to mid-single digits and improving into low single digits by 2027. - Bill Wilson(CEO)

How do you view potential deregulation in the broadcast industry and your interest in acquiring radio stations? - Michael Kupinski (NOBLE Capital Markets)

2025Q1: We expect the broadcast revenue to be down a little bit more than 2% in Q1, but we're going to be pretty close to flat on the political ad and expect another year of strong cash flow. - Bill Wilson(CEO)

Contradiction Point 3

Digital Revenue Growth and Sources

It involves differing explanations of the growth and sources of digital revenue, which impacts the understanding of the company's digital strategy and revenue streams.

Are there opportunities for further margin expansion in Townsquare Interactive, and what trends are emerging across the Ignite division? - Patrick Sholl (Barrington Research Associates, Inc., Research Division)

2025Q3: Ignite's Q3 digital advertising excluding remnant would have been up 5%, with owned and operated properties up 10%. Programmatic was up high single digits. - Bill Wilson(CEO)

Discuss the competitive landscape for Ignite in markets outside the top 50? What percentage of Ignite's revenues come from markets without radio stations? - Michael Kupinski (NOBLE Capital Markets)

2025Q1: Ignite provides full-service digital agency solutions not commonly available in markets outside the top 50. - Bill Wilson(CEO)

Contradiction Point 4

Broadcast Advertising Revenue Trends

It involves differing expectations regarding the stabilization and decline trends in broadcast advertising revenue, which directly impacts the company's financial outlook and investor expectations.

When will core broadcasting advertising stabilize, and what factors are needed? How do you sustain healthy profit margins amid revenue declines? - Michael Kupinski (NOBLE Capital Markets, Inc., Research Division)

2025Q3: Regarding core advertising, we expect broadcast to remain challenging in 2026, with declines stabilizing at low to mid-single digits and improving into low single digits by 2027. - Bill Wilson(CEO)

Are broadcast ex-political revenue trends expected to improve in your guidance? - Patrick Sholl (Barrington Research Associates, Inc., Research Division)

2024Q4: Broadcast is expected to decline in line with last year's 6% decline. - Bill Wilson(CEO)

Contradiction Point 5

Search Engine Referral Traffic Trends and Digital Advertising Growth

It directly impacts the company's outlook on digital advertising growth and revenue projections, influencing investor expectations.

When do you expect core advertising to stabilize, and what factors are needed for this stabilization? How do you plan to maintain healthy profit margins amid declining revenue? - Michael Kupinski(Noble Capital Markets, Inc., Research Division)

2025Q3: We expect broadcast to remain challenging in 2026, with declines stabilizing at low to mid-single digits and improving into low single digits by 2027. - Bill Wilson(CEO)

Can you clarify the search engine referral traffic trends discussed? Will this impact the digital advertising outlook outlined in your presentation for the next several years? - Michael Kupinski(Noble Capital)

2025Q2: The search engine traffic has declined significantly, impacting indirect revenue, which is muting overall digital advertising growth. - Bill Wilson(CEO)