USA Today Co Reports Q3 Revenue Decline, Cuts Outlook

USA Today Co (NYSE: TDAY ) reported third-quarter financial results on Thursday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary USA Today Co reported a 7.4% year-over-year decline in total revenues for Q3 2026, with specific pressure in digital advertising due to changing consumer search behaviors. The company implemented a $100 million cost reduction program, aiming to mitigate financial impacts and support long-term growth, with expected benefits extending into 2027. Digital advertising revenue from direct sales showed growth, contrasting with a 32% decline in indirect advertising revenue, which accounts for less than 5% of the business.

Digital-only subscription revenues increased for the third consecutive quarter, with ARPU reaching a new high, reflecting a strategic shift towards higher-value subscribers. The company's antitrust case against Google is progressing, with a trial date set for April 2027 and damages calculated at $901 million through 2024. USA Today Co plans to utilize a $97 million share repurchase program, supported by $50 million in incremental debt financing from Apollo Global Management, citing undervaluation of its current stock price.

Guidance was adjusted to reflect mid-single-digit revenue declines for the year, with expectations for digital revenue to reach 50% of total revenues by 2027. Management expressed confidence in the company's strategy and future growth prospects, despite short-term challenges from search-related disruptions. Full Transcript OPERATOR Greetings and welcome to USA Today Co's third quarter 2026 earnings call. At this time, all participants are placed on listen-only mode and a 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 please note this conference is being recorded. I will now turn the conference over to your host, Matt Esposito, Head of Relations with USA Today Co. Sir, the floor is yours.

Matt Esposito (Head of Investor Relations) Thank you. Good morning, everyone, and thank you for joining our call today to discuss USA Today Co's third quarter 2026 financial results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer, Tricia Gosser, Chief Financial Officer, and Kristen Roberts, President of USA Today Media. If you navigate to our website, you will find that we have posted an earnings supplement in addition to our earlier press release.

We will be referencing it today on the call as it provides you with additional detail on this quarter's performance. Before we begin, please let me remind you that this call is being recorded. In addition, certain statements made during this call are or may be deemed to be forward-looking statements as defined under the U.S. federal securities laws, including those with respect to future results and events, and are based upon current expectations.

These statements involve risks and uncertainties that may cause actual results and events to differ materially from those discussed today. We encourage you to read the cautionary statement regarding forward-looking statements in the earnings supplement as well as the risk factors described in our filings made with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call. Please keep in mind all comparisons are on a year-over-year basis unless otherwise noted.

In addition, we will be discussing non-GAAP financial information during the call, including same-store revenues, free cash flow, total adjusted EBITDA, total adjusted EBITDA margin, segment adjusted EBITDA, segment adjusted EBITDA margin, and adjusted net income attributable to USA Today Co. You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the earnings supplement. Lastly, I'd like to remind you that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any USA Today Co securities.

The webcast and audiocast are copyrighted material of USA Today Co and may not be duplicated, reproduced, or rebroadcast without our prior written consent. With that, I would like to turn the call over to Mike Reed, Chairman and CEO of USA Today Co. Michael Reed (Chief Executive Officer) Thank you, Matt. Good morning and thanks to all of you for joining our third quarter earnings call.

In the third quarter we saw encouraging underlying signals in the categories that we believe are most important to our future, even as we navigated the impacts of the changes in consumer search along with some inflationary pressures. So when you look at the Q3 numbers, there are really two stories in our results and it is important to understand both. The first is the industry-wide change in search behavior which has had an outsized impact in the near term on a relatively small part of our business.

The second is the continued momentum in the digital revenue categories that are central to our strategy and where we see the greatest opportunity to drive long-term growth today. I will walk you through both along with the decisive steps we've already taken to strengthen the business, including the implementation of a $100 million cost reduction program at the end of Q3 and why we believe we are well positioned to deliver a strong fourth quarter. Let me start with the first story. Changes in consumer search patterns have been a headwind not just for our business, but for many media organizations and, more recently, technology platforms.

Over the past couple of quarters, these changes have had an outsized impact on one specific part of our digital advertising business, direct advertising, which includes programmatic advertising and sponsored content recommendations. In the third quarter we stabilized our audience and through this we're continuing to grow our direct-sold digital advertising revenues. This reinforces an important point. Despite the changes in search, we're still delivering an audience that is highly valuable to advertisers with meaningful opportunities to further grow our premium advertising business.

That said, these changes have pushed out our path to same-store total revenue growth by a few quarters. Now I want to put that in context because it's important to understand just how much of our business touches search. Our digital advertising revenue is made up of two primary categories: advertising sold directly by our sales teams, which, as I mentioned earlier, is growing, and indirect advertising. It's this indirect revenue, which represents about $100 million of revenue on an annualized basis, or less than 5% of our total business, that has seen the most impact, declining 32% year over year in the third quarter.

However, this part of the business has historically carried some of our lowest-value advertising inventory, generating significantly lower CPMs than our premium direct-sold advertising. So while the pressure is real right now, it is concentrated in a relatively small, lower-value part of our business and we do not view it as a permanent headwind. We also don't expect this revenue stream to go away entirely. But as we continue to shift towards premium sales and premium experiences, and we improve the customer experiences across our products, it naturally becomes a less significant part of our revenue portfolio.

And as we move through the next few quarters, we'll begin to lap some of the more notable impacts, which will help our year-over-year comparisons. This is the first story: we felt the impact, but it is limited and it does not change where we are headed. And that brings me to the second story, the one that really defines our future and the one we are most excited about. And it starts with our audience.

In Q3 we continued to serve one of the largest digital audiences in the media industry and, importantly, we're starting to see signs of stabilization with sequential growth over Q2 in both unique visitors and page views, as well as stronger engagement across newsletters, social, and video. That scale is a real advantage because it allows us to grow the digital revenue categories most important to our long-term growth, even as the search environment continues to change. We saw that play out in Q3 as those categories continued to improve for us. Let me walk through a few of those categories with you.

Starting with digital advertising, our direct-sold year-over-year revenue trends have seen solid momentum in 2026, highlighted by growth in Q3, and, importantly, we expect stronger growth in Q4 moving forward. We see several opportunities to accelerate this growth, including growing our base of high-value known users, expanding our video offerings on and off platform to capture a larger share of growing video advertising budgets, and scaling our AI-discoverable branded content, which is a product we began rolling out in September.

Next is our digital-only subscription business and Digital Other business, which we believe are two important engines for sustainable growth, and they continued to perform well in the quarter. Specifically, digital-only subscription revenues posted its third consecutive quarter of year-over-year growth and also grew sequentially, while digital-only ARPU reached a new high. Digital Other also grew year over year in the quarter, and we expect sequential growth in this revenue category in Q4 as we sign additional AI licensing agreements and grow our commerce business.

Third, our DMS revenue trends improved sequentially year over year in the quarter, and lastly, our engagement with Palantir continues to make solid progress with our first products now live and beginning to scale. Taken together, total digital revenue represented 48% of total revenues in Q3, up from 47% in Q2, and we also saw a sequential improvement in same-store total revenue trends in the quarter. And to support our long-term growth objectives, at the end of Q3 we implemented a new $100 million annualized cost reduction program.

These targeted actions were put in place in late September, fully implemented by early October, and are already positively impacting our run rate in the fourth quarter. With these cost actions and the green shoots we're seeing across our digital portfolio, we believe we are well positioned to deliver significant sequential growth in adjusted EBITDA and free cash flow, along with substantial margin expansion in Q4. And because these cost reductions are largely permanent, we expect the benefits to extend well into 2027. Beyond the operating results, our antitrust case against Google continues to advance.

As you may have seen, Google's motion for summary judgment was recently denied, allowing our claims to move forward to a jury trial. And you may have also seen that our trial date has been scheduled five months from today, on April 5, 2027. The ruling also made public our damages calculation, which totaled $901 million through 2024. We expect to update that figure ahead of trial for additional damages incurred through the trial date, and importantly, that figure doesn't include the potential for treble damages.

The trial date is approaching quickly, we feel good about where the case stands, and we look forward to our trial in April. So stepping back, when I look across the business, I'm encouraged by the underlying signals in the categories that are most important to our future. Our audience is stabilizing, engagement is getting stronger, and our cost base is lower. And despite the headwinds from search, the revenue categories most important to our future and to our same-store total revenue growth are growing.

Put all this together and we see a clear path in 2027 to same-store total revenue growth, along with adjusted EBITDA and free cash flow growth. The changes in search and indirect revenue have cost us some time, but haven't altered our strategy and they haven't changed our confidence in where we're headed. Finally, we believe our current share price does not reflect the underlying value of our business or the opportunities ahead of us. And with that in mind, we have approximately $97 million available under our authorized stock repurchase plan, and we intend to be opportunistic in repurchasing shares in the fourth quarter.

With that, I'll turn the call over to Kristen to discuss how we're putting our audience intelligence to work across the business, the early results, and what we're working on next. Kristin. Kristen Roberts (President of USA Today Media) Thank you, Mike. Last quarter we talked about how every visit, every story read, every video watched, and every signup creates a signal.

And when we connect those signals, we can make smarter decisions about the content we create, how readers discover it, and how we monetize it. And in Q3, we started putting that intelligence to work. Let me start with our newsrooms, because that's where every audience relationship begins, both domestically and internationally. We're developing AI-powered tools that help our journalists identify story opportunities faster and with greater predictability, allowing us to produce more relevant and meaningful content for our readers.

To be clear, this doesn't replace the experience and judgment of our journalists; it amplifies it. And by pairing that judgment with predictive analytics based on what worked in the past, we can drive deeper engagement and stronger monetization across our platform. We also are putting that same intelligence to work in how readers discover our content. Starting with newsletters in select local markets, we've begun introducing more personalized newsletter content using available reader and behavioral signals to create a more directly relevant offering for each reader.

The early results are encouraging. With personalized newsletter pilots outperforming our non-personalized standard, readers are seeing stories that are more engaging to them and align to their specific interests. The impact is significant both for the reader, who experiences far greater relevance in our product, and for us. A newsletter signup creates a direct relationship, it builds habit and brings readers back.

And it begins the journey from anonymous to known users, which, as Mike mentioned, are higher-value users. Our next step is to expand personalized recommendations across USA TODAY and our sports-related newsletters. We're seeing that same intelligence pay off in commerce. Last quarter I described how much of our affiliate business depended on manual work to connect relevant offers with our stories, and in Q3 we automated that process.

When an eligible story is published, a relevant affiliate offer is identified and added automatically. We've now rolled this out across our local sports content, USA TODAY Sports, our sports wire sites, and most recently entertainment. And across the network-wide rollout, affiliate clicks have increased 38%, which reinforces an important point. There is a significant amount of untapped value in the journalism we already produce, and we now have the tools to capture it at scale.

Our next step involves working with our commerce team to integrate a much broader range of affiliate opportunities, moving beyond general offers to more specific product-level recommendations. Over time, we expect that to translate into more relevant shopping experiences for readers and more revenue from the content we create every day. Which brings me to digital-only subscriptions. The same intelligence that connects readers with the right content and products also can change how we acquire, engage, and retain subscribers.

And moving forward, we're focused on three moments that matter. The first is the paywall. Not every reader wants the same thing. Some want an ongoing relationship with us, others just want access to a single story.

Our pay-per-article offering meets those readers on their terms and opens up a new revenue opportunity from audiences who are not ready for a full subscription. We've tested pay per article in the past, but we kept those tests small because we found it could cannibalize subscriptions. What's changed is that the audience intelligence we have today is much stronger, and as a result we are confident we can scale it with precision to a broader audience in a way that allows us to both build a robust pay-per-article offering and a strong digital subscription business. The second moment is the action, or what we call the next best action.

Rather than showing every reader the same offer or opportunity, we'll use what we know about their interests and behavior to personalize the timing, the messaging, the placement, and the offer itself. In other words, delivering the right engagement opportunity to the right reader at the right time. And the third is retention. From a subscriber's first week, there are moments where a more personalized experience can make a meaningful difference.

Getting those moments right can improve retention, increase lifetime value, and build a more durable subscription business. On that note, I'm encouraged by the continued year-over-year growth in digital-only subscription revenues and the new highs achieved in digital-only ARPU. Over the past year we've prioritized subscriber quality over raw volume, and as a result we have a much healthier base. Now we can begin driving volume again from a much stronger position at the right price point, where incremental subscriber growth can translate more directly into revenue growth.

This is an important distinction from the past, when volume was often driven by lower-priced subscriptions.