Townsquare Media Q1 2025 slides: digital revenue reaches 57% of total, driving profit growth

Introduction & Market Context

Townsquare Media LLC (NYSE:TSQ) released its Q1 2025 investor presentation on May 8, highlighting the company’s accelerating digital transformation and strategic focus on markets outside the top 50 in the United States. The community-focused digital and broadcast media company reported meeting revenue guidance and exceeding adjusted EBITDA expectations for the quarter, despite facing headwinds in its traditional broadcast business.

The presentation emphasized Townsquare’s evolution from a primarily radio-based company to a digital-first local media enterprise, with digital revenue now accounting for 57% of total revenue and 62% of segment profit. This transformation positions the company favorably in a media landscape where digital advertising is projected to grow from 70% of U.S. ad spend in 2024 to 80% by 2029.

Quarterly Performance Highlights

Townsquare reported Q1 2025 net revenue of $98.7 million, a slight decrease of 1.0% year-over-year but in line with the company’s guidance of $98-100 million. Adjusted EBITDA reached $18.1 million, representing a 3.5% increase compared to the same period last year and exceeding the guidance range of $17-18 million.

The company’s performance was driven by robust growth in its digital segments, which offset weakness in broadcast advertising. As shown in the following breakdown of Q1 2025 segment performance, digital advertising revenue grew 7.6% year-over-year to $36.7 million, while subscription digital marketing solutions increased 4.2% to $19.0 million:

Digital segment profit showed even stronger growth, increasing 16.2% year-over-year to $14.1 million, with particularly impressive performance from the subscription digital marketing solutions segment, which saw profit jump 22.2%. Meanwhile, broadcast advertising segment profit declined 17.8% to $8.4 million, reflecting the ongoing challenges in traditional media.

Digital Transformation

The presentation highlighted Townsquare’s successful transformation from a purely radio broadcast company in 2010 to a digital-first local media enterprise in 2025. This evolution has been marked by consistent digital revenue growth, with a compound annual growth rate of 13% from 2016 to 2024.

As illustrated in the following competitive comparison, Townsquare’s digital revenue as a percentage of total revenue (57%) significantly outpaces most of its industry peers:

The company’s digital strategy is built on two primary pillars: Townsquare Ignite (digital advertising) and Townsquare Interactive (subscription digital marketing solutions). Townsquare Ignite leverages the company’s portfolio of over 400 local websites and 380 mobile apps, reaching approximately 58 million monthly unique visitors. Meanwhile, Townsquare Interactive provides subscription-based digital marketing services to small and mid-sized businesses, with approximately 60% of subscribers located outside the company’s local media market footprint.

The following slide provides a comprehensive view of Townsquare’s digital and broadcast segments:

Competitive Industry Position

A key differentiator for Townsquare is its exclusive focus on markets outside the top 50 in the United States, where the company faces less competition from larger media players. The average Townsquare market has a population of approximately 300,000 people, and these communities are often underserved in terms of high-quality local digital content.

This strategic positioning has allowed Townsquare to build a leading presence in 74 small and mid-sized markets, with its AM/FM broadcast alone reaching 50% of adults in these areas. When combined with its digital audience, the company’s reach extends to over 70% of adults in its markets.

The following snapshot illustrates Townsquare’s key facts and market position:

Financial Outlook

Looking ahead, Townsquare provided guidance for both Q2 and full-year 2025. For Q2, the company expects net revenue between $114-116 million (representing a 2-4% year-over-year decline) and adjusted EBITDA of $25-26 million (a 1-5% decrease). For the full year 2025, Townsquare projects net revenue of $435-455 million and adjusted EBITDA of $90-98 million.

The company maintains an attractive free cash flow profile, with consistent unlevered free cash flow conversion rates between 81-88% from 2019 through the twelve months ended March 31, 2025. This strong cash generation supports Townsquare’s quarterly dividend of $0.20 per share ($0.80 annualized), which represents an approximate 12% yield based on the May 7, 2025 share price.

On the balance sheet front, Townsquare refinanced its debt in February 2025 with a new $490 million credit agreement. As of March 31, 2025, the company reported a cash balance of $6 million and total debt of $477 million, resulting in net leverage of 4.67x. Management noted they repaid $3 million of revolver debt during Q1 2025.

Forward-Looking Statements

Townsquare’s presentation emphasized that digital will continue to be the company’s growth engine, with management projecting that digital channels will eventually account for 75-80% of revenue and profit. This aligns with CEO Bill Wilson’s previous statements highlighting the strategic pivot away from traditional broadcasting.

The company’s guidance for 2025 reflects some caution regarding overall market conditions, particularly in the broadcast segment. However, management remains confident in the continued growth of digital advertising and subscription services, which are expected to offset weakness in traditional radio advertising.

As demonstrated by the comparison between guidance and actual results for Q1 2025, Townsquare has shown an ability to meet or exceed its financial projections:

While Townsquare faces challenges from the secular decline in traditional broadcast advertising and maintains relatively high leverage, its strategic focus on digital transformation and underserved markets positions the company to navigate the evolving media landscape. The attractive dividend yield and consistent free cash flow generation provide potential appeal for income-focused investors, despite the stock trading well below its 52-week high of $12.74.

Full presentation:

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