Transcript: Townsquare Media Q2 2026 Earnings Conference Call

On Thursday, Townsquare Media (NYSE: TSQ ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

8 million, reflecting strong execution of its digital-first local media strategy. Digital advertising revenue grew by 11% YoY in Q2, driven by Townsquare Ignite, with expectations of further growth in Q3. 5% YoY revenue decline. The media partnership business expanded to 115 markets and expects revenue to more than double in 2026, with a target of $50 million in revenue within four years.

The broadcast segment faced a slight revenue decline but continues to generate significant cash flow, with expectations of maintaining high profit margins. Non-cash impairment charges related to FCC licenses impacted the net loss, but these do not affect operating revenue or cash flow. Future outlook remains optimistic, with a focus on digital growth, maintaining strong broadcast profitability, and strategic investments in technology and sales teams. Full Transcript OPERATOR Good morning and welcome to Townsquare Media second quarter 2026 conference call.

As a reminder, today's call is being recorded and your participation implies consent to such recording. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad, and with that I would like to introduce the first speaker for today's call, Claire Yenicay, Executive Vice President.

Claire Yenicay, Executive Vice President of Investor Relations and Corporate Communications Thank you, operator, and good morning to everyone. Thank you for joining us today. With me on the call are Bill Wilson, our CEO, and Stuart Rosenstein, our CFO and Executive Vice President. Please note that during this call we may make statements that provide information other than historical information, including statements relating to the company's future expectations, plans and prospects.

These statements are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties, including those that are detailed in the company's Annual Report on Form 10-K filed with the SEC. During this call we may discuss certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income.

Such non-GAAP financial measures should be used in conjunction with all the information contained in the quarterly, year-end, and current reports available on our website. I would also encourage all participants to go to our corporate website and download our investor presentation, as Bill will reference some of those slides during our discussion this morning. At this time I would like to turn the call over to Bill Wilson. Bill Wilson, Executive Vice President & CEO Thank you, Claire, and good morning, everyone.

Thank you for joining us today. We are very pleased to share that our second quarter performed as we anticipated and telegraphed on our last earnings call. In Q2, we met the total net revenue and adjusted EBITDA guidance we provided, reflecting the continued execution of our digital-first local media strategy, the strength of our differentiated digital platform, and the disciplined way our teams continue to manage the business. In the second quarter, digital advertising revenue accelerated meaningfully from Q1.

Our media partnership business continued its impressive growth. Townsquare Interactive delivered another quarter of record-setting profitability, and our broadcast business continued to generate significant cash flow while outperforming the industry. For many years we've talked about transforming Townsquare from a traditional broadcast company into a digital-first local media company. Today that transformation is no longer aspirational; it's simply who we are.

Digital now represents approximately 59% of our total segment profit and approximately 57% of our total net revenue on a year-to-date basis, levels we believe remain unmatched among our local media peers. As highlighted on Slide 10, our competitors have, on average, only 31% of their revenue coming from digital sources. That differentiation is the result of more than a decade of strategic decisions and investment in our technology, products, people, and proprietary platforms.

Rather than simply relying on third-party vendors and traditional media assets, those investments are increasingly translating into stronger operating performance and expanding competitive advantages for us. As we've consistently said for many years, digital is Townsquare's growth engine. But I think it's fair to say today that we have evolved beyond a single digital growth engine. We now have multiple scalable digital businesses, each serving different customer needs, each generating attractive margins, and each contributing to the long-term growth of our company.

Our digital advertising business, Townsquare Ignite, continues to lead that growth. Second quarter digital advertising revenue increased 11% year over year, representing a meaningful acceleration from Q1's 7% year-over-year growth and one of the strongest quarterly performances we've delivered in recent years. This growth was driven by strategic execution across our numerous specialized verticals as well as our media partnership business. It represented a full-funnel strategy that captured greater share from our large client base and a concentrated effort to maximize owned-and-operated opportunities with our most engaged audiences.

As we've discussed previously, we believe our digital advertising platform is differentiated because we're much more than a digital reseller. We operate as a full-service digital marketing partner for local businesses, combining campaign strategy, creative development, sophisticated audience targeting, campaign optimization, and omnichannel reporting into a single solution for our customers. Just as importantly, our local sales teams continue to execute at an exceptionally high level.

Their ability to combine the trusted relationships they built in our local markets with an increasingly sophisticated suite of digital products continues to differentiate Townsquare from both traditional local competitors and national digital platforms. Our customers aren't simply buying digital advertising inventory; they're buying measurable business outcomes, and that continues to drive healthy client retention, larger average customer spend, and continued market share gains. One area I'm especially excited about is the continued momentum of our media partnership business. Just over two years ago, this business did not exist.

Today we have 16 media partners contributing 41 incremental markets beyond our owned-and-operated footprint of 74 markets, and thus we now provide digital programmatic advertising in 115 markets across the United States. We expect that media partnership revenue, which was approximately $6 million in 2025, will more than double in 2026.

One major point of differentiation for this business is that our best-in-class sales talent integrates directly into our partners' local markets, leading four-legged calls, mentoring sales teams by leveraging more than a decade of proven sales strategies to drive incremental digital revenue while simultaneously protecting their high-margin radio business. We also manage campaign strategy, creative development, media buying optimization, and customer support. Notably, this strategy has delivered a 100% retention rate of our media partners' client base over the past two years.

This model allows us to expand well beyond our own market footprint with very little incremental capital investment while generating attractive returns for shareholders and, importantly, attractive returns for our media company partners. Perhaps most importantly, it validates something we have believed for many years: that the capabilities we've built internally are valuable not only to our own advertisers, but increasingly to other local media companies as well.

I'm also very excited to report that we've completed our first licensing deal for our proprietary technology with one of our media partners, SummitMedia, further demonstrating that our partners see substantial value in our tech platform to the point of licensing it for their own use. SummitMedia's decision to adopt our in-house developed CRM software for their own sales team is strong third-party validation of our innovation and further differentiates us from the competition.

Beyond creating a new recurring revenue stream, this deepens our integration into our partners' operations, making us an even more strategic and indispensable partner through a true 360-degree relationship. In addition to our current 16 partners, we expect that number to grow in the coming years as more and more media companies reach out to us to discuss replacing their current third-party solutions with our more comprehensive digital platform. We believe our media partnership business has a long runway for growth, and we continue to target $50 million of revenue at a 20% profit margin within the next four years.

Given the growth and scale we've achieved to date and the significant long-term opportunity we see ahead, we've added a slide to our investor presentation highlighting our media partnership business, which you can now find on Slide 12. Our team's performance in the second quarter demonstrates just how resilient and diversified our digital advertising platform has become. Our programmatic revenue, which now represents approximately 70% of our year-to-date digital advertising revenue, increased by 27% year over year in the second quarter.

In addition, the direct sales of our local owned-and-operated digital websites and mobile apps increased at a high single-digit year-over-year growth rate, just as we expected. Another positive note, which we have outlined on previous calls, is that our digital audience—and therefore our digital remnant revenue, which is only approximately 6% of our year-to-date digital advertising revenue—has sequentially stabilized in 2026 and, in Q3, will begin to lap the dramatic year-over-year audience and associated revenue declines that started last August 2025.

Due to the moderation of this headwind, but more importantly given the continued strength of our digital advertising solutions directly sold by our local sales teams, we expect Q3 digital advertising revenue will accelerate yet again, with growth expected to be stronger than Q2's 11%. Let me now turn to our second digital business, Townsquare Interactive, our subscription-based Digital Marketing Solutions SaaS-based business. As we've discussed over the past several quarters, our focus at Townsquare Interactive has been on building a business capable of delivering durable, profitable, long-term growth rather than simply maximizing short-term revenue.

I'm pleased to report that those efforts continue to produce strong profit results. During the second quarter, Townsquare Interactive performed exactly as I telegraphed on our last call and once again delivered record segment profit margins, reaching nearly 38% profit margins, reflecting the operational improvements we've made over the past several years. While revenue has sequentially stabilized, yet remains below where we ultimately expect to be as we continue rebuilding our sales organization over the next 12 months, the quality of the business has never been stronger.

We spent considerable time restructuring our customer service organization and leveraging artificial intelligence throughout the business to improve operational efficiency. At the same time, we've intentionally increased productivity expectations across our sales organization, creating a stronger and more efficient, although temporarily smaller, sales force. The result is a business that is generating meaningfully higher profitability while positioning itself for future revenue growth. Importantly, customer retention remains healthy.

Our service offering continues to resonate with small and medium-sized businesses, as evident by our current churn returning to historically low levels, and we continue to see a significant long-term addressable market. We remain very confident that Townsquare Interactive is well-positioned to return to sustainable revenue growth while maintaining substantially stronger profitability than we've historically produced, and we still continue to expect to return to sequential monthly revenue growth by the end of the year and potentially as early as Q3. Together, Townsquare Ignite and Townsquare Interactive continue to demonstrate the strength of our digital-first strategy.

One business is delivering strong top-line and profit acceleration in 2026, while the other continues to improve profitability and operating efficiency, and we expect to return to revenue growth later this year. Both are benefiting from the investments we've made in technology, automation, and AI over the past several years. Turning to broadcast, it too performed exactly as we expected and shared on our last call. As we've consistently said, we continue to view local radio as an extremely valuable strategic asset.

It delivers unmatched local reach, deep relations with our audiences, and trusted partnerships with thousands of local advertisers across our markets. While we continue to expect advertising dollars to gradually shift from traditional media toward digital, our strategy has never been to simply defend broadcast. Instead, our objective has been to leverage the strength of our local brands and sales relationships to capture the share shift ourselves.

Although broadcast continues to operate in a challenging advertising environment, we once again outperformed the industry according to Miller Kaplan estimates in the year-to-date period, and our teams remain highly disciplined in managing expenses, and as a result we continue to generate strong broadcast profitability and meaningful cash flow despite ongoing industry headwinds. The combination of a durable broadcast cash flow business and multiple growing digital businesses creates a financial profile that we believe is unique within local media. As we look ahead to the balance of 2026, I remain very optimistic about our outlook.

Digital advertising has accelerated meaningfully during the first half of the year and will continue to do so in Q3. Townsquare Interactive is delivering record profitability while positioning itself for future sequential revenue growth. Broadcast continues to generate healthy margins and cash flow despite a challenging secular environment.

Most importantly, I believe the investments we've made over the past decade are producing exactly the type of business we set out to build: a diversified, digital-first local media company with multiple scalable growth platforms, recurring revenue, strong cash generation, and significant opportunities to create long-term shareholder value. With that, I'll turn the call over to Stu to review our financial results and our outlook in more detail. All yours, Stu. Take it away.

Stuart Rosenstein (Chief Financial Officer and Executive Vice President) Thank you, Bill. Good morning, everyone. It's great to speak to you today. We are very pleased to report that our second quarter results met our revenue and adjusted EBITDA guidance.

4 million, above the midpoint of our guidance range of $114 to $116 million. 3 million in the second quarter and $2 million in the year-to-date period. 9 million. 8 million.

2%. 8% year over year in Q1 of 2026 to strong year-over-year revenue growth of 11% in Q2 of 2026. As Bill noted, looking ahead to the third quarter, we expect digital advertising revenue growth to further strengthen and be even higher than Q2's growth rate. 2 million.

7 million of revenue in each month of Q2. We expect Q3's revenue to be roughly flat on a sequential basis and expect to return to month-over-month revenue growth by year end. 6%, representing the strongest profit margin in Townsquare Interactive's history. We're very confident that our profit margins will exceed 2025's record-setting profit margins for the remainder of 2026 due to the efficiencies and cost savings, including those enabled by AI, that have been implemented.

Broadcast advertising net revenue declines moderated slightly as compared to 2025.