USA Today's Earnings Call Contradictions: AI Traffic Projections and Google Licensing Strategy Shift Unsettling Consistency

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $536.3 million, a decrease of 8.3% YOY
• EPS: Net income of $9.1 million; adjusted net income attributable to USA Today Co. of $11 million, marking second consecutive quarter of positive net income.
• Gross Margin: Not explicitly provided. Segment-adjusted EBITDA margin for USA Today Media segment was 10.6%; for Local IQ segment, 12.4% (expanded 560 basis points sequentially).
• Operating Margin: Total adjusted EBITDA margin of 10.6%. Operating expenses decreased 7.8% YOY.

Guidance:

• Reaffirmed full-year outlook: expect revenue trends to improve, adjusted EBITDA to grow YOY, net income to grow, and double-digit free cash flow growth.
• Expect digital advertising trends to improve in the back half of the year.
• Expect digital-only subscription revenue and digital other revenue to continue growing.
• Expect meaningful improvement in same-store revenue trends compared to 2025.
• Remain optimistic about pending Google litigation and opportunity for AI licensing deals.

Business Commentary:

Digital Revenue Growth and Strategy:

• USA Today Co. reported digital-only subscription revenue growth of 34% year-over-year for the second consecutive quarter.
• The increase in digital revenue was driven by a focus on direct audience relationships, investments in newsletters, social platforms, and video content, as well as efforts to stabilize subscription volumes and increase ARPU.

Operational and Financial Performance:

• The company generated $19.7 million in free cash flow for the quarter, marking the second consecutive quarter of positive net income.
• This performance was supported by cost management, improvements in digital subscription metrics, and strong performance in digital other revenues, which include content licensing and syndication.

Impact of Consumer Behavior Shifts:

• USA Today Co. noted a decline in traditional search-driven traffic, reflecting a broader shift in consumer behavior.
• The company is responding by diversifying content discovery channels, focusing on social media, video, and AI-powered platforms to engage audiences more effectively and reduce dependence on search traffic.

AI and Data Utilization:

• The partnership with Palantir aims to enhance audience data collection and activation to drive more effective monetization across USA Today's platform.
• This initiative is expected to improve engagement, enable personalized experiences, and increase the value of audience relationships, contributing to higher ARPU and sustainable revenue growth.

Content Licensing and AI Partnerships:

• Digital other revenues grew 20.2% year-over-year, driven by content licensing agreements and AI partnerships.
• The company is actively engaged in discussions to expand AI licensing deals and reformat content for machine readability, aiming to build recurring long-term relationships and recognize the value of its trusted content.

Sentiment Analysis:

Overall Tone: Positive

• "The second quarter reflects continued progress against our long-term strategy and strengthens my confidence in reaffirming our best driving that confidence, the momentum we continue to pull your outlook." "We feel really good about the second half of 2026." "We are excited about the work we are doing... and look forward to really getting risks that we're continuing to make." "We have a lot of confidence in where we are and where we're going."

Q&A:

• Question from Giuliano Bologna (Compass Point): Can you elaborate on your work with Palantir and what the opportunity looks like?
  Response: The Palantir partnership will allow real-time conversion of audience data into actionable intelligence to monetize consumers faster and at higher rates across content, commerce, and subscriptions, with a focus on turning anonymous interactions into known relationships.

• Question from Giuliano Bologna (Compass Point): Is the large audience you're building on social media a potential new revenue stream?
  Response: Yes, social media is a primary discovery channel and represents a new revenue opportunity through sponsorships, branded content, and bringing users back to the platform for deeper engagement and monetization.

• Question from Giuliano Bologna (Compass Point): Do you see any more licensing deals coming this year, particularly in AI?
  Response: Yes, more AI licensing deals are expected in 2026, with active discussions underway to build recurring long-term relationships and reformat content to be machine-readable.

• Question from Giuliano Bologna (Compass Point): Were the softened Q2 revenue trends a setback?
  Response: No, Q2 is not viewed as a setback; it reflects expected quarterly variability. Underlying fundamentals in key growth areas like digital-only subscriptions and digital other are strong, leading to reaffirmed full-year guidance.

• Question from Giuliano Bologna (Compass Point): Is there any update on the Google litigation?
  Response: Remain very optimistic about the case. Expect a ruling on the DOJ's remedies case and on Google's summary judgment motion in September. The outlook for 2026 does not include any benefit from potential remedies.

• Question from Matt Condon (Citizens Bank): Can you size the impact of Google's AI push on the business this quarter and have search trends stabilized?
  Response: The focus is on diversifying audience discovery and building direct relationships, not on sizing Google's AI impact. Digital advertising pressure in Q2 was due to search shifts, loss of a programmatic partner, and a platform policy change, but premium sales grew.

• Question from Matt Condon (Citizens Bank): Would you consider shutting off Google crawlers to gain leverage for AI licensing deals?
  Response: Yes, it is a possibility if necessary, but the preferred path is to negotiate a fair licensing deal. The day for such a move is getting closer as search traffic becomes less valuable.

• Question from Matt Condon (Citizens Bank): What are the key areas to drive subscription growth, and how much leverage remains in pricing?
  Response: Growth will be driven by ARPU growth through pricing, packaging, and stacked products, as well as volume growth. The work with Palantir is expected to further enhance subscription offerings.

• Question from Barton Crockett (Rosenblatt): What drove the substantial decline in monthly unique visitors?
  Response: The decline reflects a shift in consumer discovery behavior away from traditional search to social and video platforms, not lower content demand. The strategy is to prioritize a larger share of known, highly engaged users over maximizing anonymous uniques.

• Question from Barton Crockett (Rosenblatt): What gets you to the goal of having a majority of revenue from digital?
  Response: Improvement in advertising trends, growth in AI licensing revenue, and positive indicators in the local IQ segment (EBITDA, ARPU, customer count growth) are expected to drive digital revenue above 50% in the back half of the year.

Contradiction Point 1

Impact of AI Overviews on Search Traffic and Monetization

Contradiction on whether AI overviews are negatively affecting search traffic and monetization metrics.

Matt Condon (Citizens Bank) - Matt Condon (Citizens Bank)

2026Q2: Digital advertising pressure in Q2 was driven by three factors: the impact of search changes... - [Mike Reed](CEO) & [Tricia Gosser](CFO)

Can you size the impact of Google’s accelerated AI push on the business this quarter and whether search trends have stabilized? - Matthew Condon (Citizens JMP Securities, LLC)

2025Q4: Click-throughs from Google Search have remained flat due to proactive strategies. Traffic from AI overviews to publishers is currently almost nonexistent... - [Mike Reed](CEO)

Contradiction Point 2

Strategic Approach to Engaging with Google on AI Licensing

Contradiction between a neutral, ongoing discussion stance and a direct, negotiation-focused approach with Google.

Matt Condon (Citizens Bank) - Matt Condon (Citizens Bank)

2026Q2: The preferred path is to negotiate a fair licensing deal with Google for both traditional search and AI summaries. - [Mike Reed](CEO)

Would you consider shutting off Google’s crawlers to leverage AI licensing deals, and at what point would search’s business impact justify this action? - Barton Crockett (Rosenblatt)

2025Q4: The company does engage in discussions with various technology companies, but would not disclose specifics of ongoing confidential conversations. - [Mike Reed](CEO)

Contradiction Point 3

Nature and Impact of AI Platform Traffic

Contradiction on whether AI platforms drive meaningful traffic to USA TODAY sites.

Barton Crockett (Rosenblatt) - Barton Crockett (Rosenblatt)

2026Q2: The decline in unique visitors reflects a change in consumer discovery behavior... The strategy is shifting from maximizing anonymous uniques to building a larger share of known, highly engaged users... - [Mike Reed](CEO) & [Tricia Gosser](CFO)

What is driving the decline in monthly unique visitors? - Matthew Condon (Citizens JMP Securities, LLC)

2025Q3: No meaningful traffic is currently coming from AI search platforms (unlike traditional search, where clicks return to publisher sites). AI platforms display full answers on their own platforms, not linking back. - [Mike Reed](CEO)

Contradiction Point 4

Status of AI Licensing Deals and Business Model Clarity

Contradiction on the maturity and reporting of AI licensing revenue.

Giuliano Bologna (Compass Point) - Giuliano Bologna (Compass Point)

2026Q2: Yes, more AI licensing deals are expected in 2026. The objective is to build recurring long-term relationships... - [Mike Reed](CEO)

Will there be additional licensing deals this year, especially in AI? - Unknown Analyst (Odeon Capital)

2025Q3: The business model for AI partnerships is still developing; long-term monetization upside is not yet fully defined. Gannett would consider breaking out licensing fees as revenue becomes more meaningful and the sustainable model is clearer. - [Mike Reed](CEO)

Contradiction Point 5

Digital Revenue Trend Outlook

Contradiction on the expected timing for digital revenue to reach a majority.

What were Barton Crockett's key questions during the earnings call? - Barton Crockett (Rosenblatt)

2026Q2: Key drivers for reaching a majority of digital revenue include: improvement in advertising revenue trends in the back half... - [Tricia Gosser](CFO)

What strategies will drive digital revenue from 47.4% in Q2 to a majority by year-end? - Giuliano Anderes-Bologna (Compass Bank)

2025Q2: Revenues are expected to turn flat in the early stages of 2026. - [Mike Reed](CEO)