Earnings call transcript: Entravision reports mixed Q2 2025 results amid digital growth

Entravision Communications reported its second-quarter 2025 earnings, revealing a mixed financial performance with a consolidated revenue of $100.7 million, marking a 22% year-over-year increase. However, the company posted a loss per share of $0.04, which fell short of expectations. According to InvestingPro data, the company maintains an impressive 8.77% dividend yield and has sustained dividend payments for 15 consecutive years. The stock reacted negatively, with a 2.56% decline in regular trading hours, closing at $2.34, and a further dip of 0.21% in aftermarket trading, though current analysis suggests the stock is trading near its Fair Value.

Key Takeaways

• Entravision’s consolidated revenue rose by 22% year-over-year.
• The company reported a loss per share of $0.04, missing forecasts.
• The Media segment saw an 8% decline, while Ad Tech and Services surged by 66%.
• Stock price fell by 2.56% in regular trading and continued to decline in aftermarket.
• Entravision aims for profitability in all segments moving forward.

Company Performance

Entravision demonstrated robust growth in its Ad Tech and Services (ATS) segment, which increased by 66% year-over-year, offsetting an 8% decline in its Media segment. The company’s consolidated revenue of $100.7 million highlights its strategic shift towards digital advertising, despite challenges in traditional media channels. The company’s operational adjustments, including a significant reduction in corporate expenses, indicate a focus on efficiency and digital transformation.

Financial Highlights

• Revenue: $100.7 million, up 22% year-over-year.
• Media segment revenue: $45.4 million, down 8% year-over-year.
• ATS segment revenue: $55.3 million, up 66% year-over-year.
• Consolidated operating loss: $800,000.
• Cash and marketable securities: $69 million.

Earnings vs. Forecast

Entravision reported an earnings per share (EPS) loss of $0.04, missing analyst expectations. This miss is notable given the company’s historical performance, where it has often met or exceeded forecasts. The revenue of $100.7 million met market expectations, reflecting strong performance in digital segments.

Market Reaction

The stock of Entravision closed at $2.34, down 2.56% from the previous close, with a further decline of 0.21% in aftermarket trading. InvestingPro data shows the stock has a beta of 1.58, indicating higher volatility than the broader market. The stock has faced pressure, reflecting investor concerns over the EPS miss and the challenges in the Media segment. Despite recent pressure, the stock has delivered a strong 37.86% return over the past year. The current price is closer to its 52-week low of $1.58, indicating cautious sentiment among investors.

Outlook & Guidance

Looking forward, Entravision aims to achieve profitability in each of its operating segments. The company plans to continue its focus on revenue growth and cost reduction, particularly in the ATS segment, which is expected to drive future profitability. Entravision also reaffirmed its commitment to maintaining a strong balance sheet and continuing dividend payments of $0.05 per share.

Executive Commentary

CEO Michael Christensen emphasized the company’s commitment to profitability, stating, "We are committed to growing our business and earning a profit." CFO Mark Belke added, "Our goal is to be profitable for each segment and generate a consolidated operating profit." Christensen also highlighted the company’s focus on digital solutions, saying, "We believe we can serve their needs in digital channels, as well as our traditional broadcast video and audio channels."

Risks and Challenges

• Economic Uncertainty: Advertiser hesitation due to economic conditions could impact revenue.
• Federal Immigration Policies: Enforcement actions may affect audience demographics and advertising demand.
• Political Advertising: A reduction compared to 2024 levels could impact Media segment revenue.
• Competition: Increasing focus on digital solutions requires ongoing investment and innovation.
• Market Saturation: The shift to digital advertising channels may face competitive pressures.

Q&A

The earnings call concluded without any questions from analysts, leaving some areas of potential investor concern unaddressed. This absence of dialogue may suggest a need for clearer communication on strategic initiatives and financial outlooks.

Full transcript - Entravision Communications Corp (EVC) Q2 2025:

Conference Operator: Greetings and welcome to the Entravision Second Quarter twenty twenty five Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Roy Nieh. Thank you. You may begin.

Roy Nieh, Vice President of Financial Reporting and Investor Relations, Entravision: Good afternoon everyone and welcome to Entravision’s second quarter twenty twenty five earnings call. I am Roy Near, Vice President of Financial Reporting and Investor Relations. Joining me today are Michael Christensen, our Chief Executive Officer and Mark Belke, our Chief Financial Officer. Before we begin, I would like to inform you that this call will contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Entravision’s SEC filings for a list of risks and uncertainties that could impact actual results.

The press release is available on the company’s Investor Relations page and was filed with the SEC on Form eight ks. I will now turn the call over to Michael Christensen.

Michael Christensen, Chief Executive Officer, Entravision: Thanks, Roy. And thank you to all of you for joining our call today. As you saw in our press release, on a consolidated basis, Entravision increased revenue 22% to 101,000,000 in 2Q twenty five compared to 2Q twenty four. And we had an operating loss of just under $1,000,000 As we’ve discussed on prior calls, we are committed to growing our business and earning a profit. So, we do acknowledge that we have work to do to improve our operating performance and profitability.

As you all know, this year, we report our results for two segments, media and advertising technology and services, what we call ATS. For our media segment, revenue declined 8% in 2Q twenty five compared to 2Q twenty four. We had fewer active local advertisers in 2Q twenty five compared to 2Q twenty four. And advertisers cited economic uncertainty and the impact of federal immigration enforcement actions for their decisions to pull back from Spanish language media. Now, although we had fewer active local advertisers in 2Q twenty five compared to 2Q twenty four, the average spent per average local advertiser was up slightly in 2Q twenty five compared to 2Q twenty four, but not enough to make it a positive growth number.

And the number of active local advertisers in 2Q twenty five was higher than 1Q twenty five and our local revenue has increased each month in 2025. We saw similar trends and pressures in our national business. In terms of operating expenses and profitability, as we’ve discussed in the past, we’re making a number of important investments in our media business in 2025. We’re adding capacity to our local sales teams, more sellers, and we’re adding digital sales specialists and digital sales operations capabilities, so we can sell more digital solutions. When we analyze our local markets and our local advertiser base, we see an opportunity to increase revenue by adding sales capacity.

In addition, in virtually all of our local advertise with virtually of all of our local advertising customers, they’re advertising in digital channels, search, social, streaming video, and streaming audio. And we believe we can serve their needs in digital channels, as well as our traditional broadcast video and audio channels. The increase in operating expenses in our media segment, these investments was a little less than $2,000,000 in 2Q twenty five compared to 2Q twenty four, or about $8,000,000 on an annualized basis. So, combination of lower revenue and increased operating expenses reduced the operating profit of our media segment to 354,000 in 2Q twenty five, compared to $6,000,000 in 2Q twenty four. Moving on to advertising technology and services, ATS revenue was 66% higher in 2Q twenty five compared to 2Q twenty four.

We had more customers and higher spend per customer. We continue to invest in our ATS segment in 2Q twenty five to grow revenue and operating profits. We’re investing in our engineering team to continue to improve our technology and to build more powerful AI capabilities into our platform. And we’re investing to increase the capacity of our sales organization and our customer operations in ATS. In addition, our infrastructure costs, primarily cloud computing costs, will grow as our revenue grows.

They’re currently growing at a slightly higher pace than the revenue growth. But as this business gets larger, we do expect to see some operating leverage. So, these costs will grow at a slightly lower pace than revenue. The combination of these investments, again, in increased operating expenses resulted in operating expenses for ATS, that’s direct operating expenses plus selling general and administrative expenses, mostly selling expenses in that line. They were $6,000,000 higher in 2Q twenty five compared to 2Q twenty four or $24,000,000 higher on an annualized basis.

Operating profit in ATS was $5,000,000 in 2Q twenty five. This is almost three times higher than our operating profit in 2Q twenty four. Now, as you’ll see in our numbers, it was slightly lower than our operating profit in 1Q twenty five. This sequential decline, slight sequential decline from 1Q twenty five to 2Q twenty five for ATS was really just the timing of certain expenses, not a change in trend. Finally, we funded these operating expense investments for both media and ATS in part by reducing our corporate expenses.

We reduced our corporate expenses by $4,000,000 in 2Q twenty five compared to 2Q twenty four, nearly $18,000,000 on an annualized basis. So to summarize, in media, we’re investing to increase our local sales capacity and to expand our digital sales and digital sales operations capabilities, more sellers and more digital. In ATS, we’re investing to add more engineers to advance our technology and to increase our sales capacity, more technology, better technology and more sellers. We believe that these investments will help us build a stronger company. So, that, I’ll ask Mark to share with you more details of our financial results for 2Q twenty five.

Mark?

Mark Belke, Chief Financial Officer, Entravision: Thank you, Mike. Let’s start by reviewing revenue performance. On a consolidated basis, revenue for second quarter twenty twenty five was $100,700,000 up 22% compared to second quarter twenty twenty four. In our media segment, second quarter revenue was $45,400,000 which was down 8% compared to second quarter. As Mike noted our media business began to year slowly in part due to advertiser uncertainty and anti political climate and the impact of immigration enforcement actions.

And in addition there was political advertising in 2024 that was not significantly present in 2025. However, we’ve seen sequential monthly and quarterly improvements as we move through 2025 and we are seeing progress and momentum on executing our sales strategies, including hiring additional sales, digital marketing staff and growing local digital sales. In our ad tech and services segment, second quarter revenue was $55,300,000 which was up 66% compared to second quarter twenty twenty four. We believe we’ve had success executing our strategies in this business so far during 2025 including expanding the sales team and geographic sales coverage and strengthening our platform technology and AI capabilities. One of our goals is to optimize our organizational structure and the expense of support services in order to align them with revenue.

With that in mind, let’s look at total operating expenses for each of our segments And this refers to the sum of direct operating expenses and selling general and administrative expenses or SG and A as those two line items are reported in our segment results. For our media segment total operating expense in second quarter twenty five increased 5% about $1,900,000 compared to second quarter twenty four. Looking back at third quarter twenty four we reorganized our business units and reallocated $4,000,000 of expense on an annual basis from corporate expense to media operating expense. This is the expense of personnel resources that following the integration were focused entirely on the media business. The second quarter twenty twenty five the amount of reallocated expense was $700,000 or about 2% of the 5% total increase.

We continue to evaluate the organizational structure of our media business in order to provide compelling content, drive sales and minimize the expense of supporting services. For example, we’ve made investments in our local and digital sales teams as we’ve discussed. Although we also reorganized the management of our local sales teams to reduce one layer of management, while also at the same time adding more sales staff on the street. We expect these changes will reduce and more I’m sorry, will result in more sales activity, a stronger sales organization and approximately $1,000,000 in annual savings beginning primarily in Q3 twenty twenty five. We are continuing to evaluate ways to streamline our organizational structure.

Total operating expenses in our AdSec and Services segment increased by 60% in the second quarter twenty five compared to 2024. The ATS expense increase was primarily related to the increase in revenue. For example, as Mike mentioned, the expense of cloud computing services increased as a result of processing more transactions and using stronger AI capabilities that have been built into the AdTech platform over the past year and a half. There was an increase in sales commissions and performance compensation as a result of the revenue increase and achievement of other performance metrics. And the ATS business has also hired additional sales, engineering and ad operations staff since Q2 twenty twenty four in order to drive ATS growth and expand into new geographic areas.

An additional contributor to expense in Q2 was the timing of accruals for annual sales performance compensation which should ease out on an annualized basis. The combination of these investments resulted in an increase in total operating expenses of $6,100,000 in Q2 twenty twenty five compared to Q2 twenty four or $24,000,000 on an annualized basis. ATS revenue grew faster than total operating expenses in terms of percentage and in terms of absolute dollars. As Mike noted as this business gets larger going forward we expect to generate positive operating leverage in the growth of revenue relative to expense including some greater efficiencies and the use of cloud computing services and the benefits of additional staff that have been hired. Another one of our goals is to be profitable in each of our operating segments and on an overall consolidated basis.

Immediate segment operating profit was positive $350,000 This represented a decrease of 94% versus Q2 twenty twenty four due to a combination of lower revenue and increased operating expenses. But again, that was a sequential improvement versus Q1 twenty twenty five. We continue to focus on our initiatives to grow revenue and reduce expense in the media segment. Second services operating profit was $5,200,000 an increase of 190% versus Q2 twenty twenty four. Once again, we expect this business to generate positive operating leverage and the ATS revenue increase did exceed the expense increase in terms of percentage and absolute dollars.

Combined operations of both segments generated a consolidated segment operating profit of $5,500,000 This was a 28% decrease compared to second quarter twenty four attributable to the decrease in media segment operating profit discussed earlier. We achieved an operating profit for each segment in Q2, although we incurred an overall operating loss of $800,000 This was an improvement over second quarter twenty twenty four and also a sequential improvement from first quarter twenty twenty five. Our goal is to be profitable for each segment and generate a consolidated operating profit. And we have additional work to do and remain focused on growing revenue, reducing operating expense and reducing corporate expense throughout the remainder of 2025 and beyond. Regarding corporate expense, we have taken significant steps to reduce corporate expense, which was $6,400,000 for second quarter twenty twenty five.

This was a decrease of 41% compared to second quarter twenty twenty four or about $4,400,000 in reduced CorpEx. The decrease was primarily due to a reduction in personnel, a reduction in compensation paid to our executive team, including reduced salary bonus and non cash stock comp and decreased general professional services and rent expense. As I discussed earlier, we reorganized our business units and operating segments in the 2024 and approximately $700,000 of the corporate expense decrease in Q2 was due to reallocation of expense in the Media segment. Entravision’s balance sheet remains strong with over $69,000,000 in cash and marketable securities at the end of the second quarter. Sorry for the pause.

We’re proud of our strong balance sheet, which we believe sets us apart from others in the industry. Our strategy regarding allocation of excess cash is first, reduce debt and maintain low leverage second, return capital to our shareholders, primarily through dividends. Consistent with that strategy, during the second quarter, we made a voluntary debt prepayment of $1,000,000 reducing our credit facility indebtedness to about $178,000,000 Lastly, after the end of the quarter, we entered into an amendment to our credit facility. The amendment was a proactive and strategic move to accelerate debt reduction, provide more financial stability and flexibility under our credit agreement, navigate changes in media industry and economic environment, focus on our business priorities and long term goals to build shareholder value. In addition, we paid $4,500,000 in dividends to stockholders in the second quarter, dollars $0.05 per share.

In the third quarter, our Board of Directors has approved a $05 dividend per share payable on September 30, this stockholders of record, September 16, for a total payment of We’d like to thank you for joining our call today. We welcome our investors to connect with us through the Investor Relations page on our corporate website. And you will have access to a transcript of this call, the press release containing our results, a copy of our Form 10 Q quarterly report with the SEC. At this time, Mike and I would like to open the call for questions from the assessment community. Emile, back it over to you.

Conference Operator: Thank you, Mark. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the number followed by the two.

If you are using a speakerphone, please lift the handset before pressing any key. One moment, for your first question. Again, should you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you decline from the polling process, please press the star followed by the two.

We have no questions at this time. I will turn the conference back to Mike. Thank you very much.

Mark Belke, Chief Financial Officer, Entravision: Thank you all for joining our call today. We look forward to talking with you in our next quarter and report our third quarter earnings. Thank you very much.

Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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