Fubotv earnings beat by $0.10, revenue topped estimates
Lee Enterprises reported its Q3 2025 earnings, revealing a wider-than-expected loss in earnings per share (EPS) and a slight miss on revenue forecasts. The company posted an EPS of -$0.31, compared to the forecasted -$0.13, resulting in a surprise of 138.46%. Revenue came in at $141.29 million, below the expected $147.46 million, marking a 4.18% shortfall. Following the announcement, Lee Enterprises’ stock dropped 5.14% in pre-market trading, reflecting investor concerns over the earnings miss. According to InvestingPro data, the company’s financial health score stands at a concerning 1.18, labeled as ’WEAK’, with trailing twelve-month losses reaching $43.6 million.
Key Takeaways
- Lee Enterprises reported a larger-than-expected EPS loss for Q3 2025.
- Revenue fell short of forecasts by 4.18%.
- Digital revenue growth remained strong, comprising 55% of total revenue.
- The company launched new AI-powered products aimed at boosting future digital revenue.
- Stock price fell 5.14% in pre-market trading following the earnings release.
Company Performance
Lee Enterprises continued its digital transformation strategy, with digital revenue now accounting for over half of total revenue. The company reported a 4% growth in digital revenue on a same-store basis and a 16% increase in digital subscription revenue year-over-year. Despite the earnings miss, the company remains focused on long-term digital growth, targeting $450 million in digital revenue by 2028.
Financial Highlights
- Total operating revenue: $141.29 million
- Digital revenue: $78 million, 4% growth on a same-store basis
- Cash costs decreased by 7% year-over-year
- Projected fiscal year cash costs: $522-$532 million, a 3-5% decline
Earnings vs. Forecast
Lee Enterprises reported an EPS of -$0.31, which was significantly below the forecasted -$0.13, representing a 138.46% surprise. Revenue also missed expectations, coming in at $141.29 million compared to the forecast of $147.46 million, a 4.18% miss. This underperformance highlights challenges in meeting market expectations despite ongoing digital growth.
Market Reaction
Following the earnings announcement, Lee Enterprises’ stock price dropped by 5.14%, closing at $4.85. This decline positions the stock closer to its 52-week low of $4.46, down significantly from its 52-week high of $19.63. InvestingPro analysis indicates the stock is currently undervalued compared to its Fair Value, despite a concerning year-to-date decline of 67.19%. For a comprehensive analysis of undervalued stocks, visit our Most Undervalued Stocks list.
Outlook & Guidance
Looking ahead, Lee Enterprises remains optimistic about its digital revenue growth, driven by new AI products and continued expansion of its digital subscription base. The company aims to achieve $450 million in digital revenue by 2028, with a focus on unit growth and rate optimization.
Executive Commentary
CEO Kevin Mowbray stated, "We’re paving the way for Lee to lead the industry in this era of AI digital transformation." CFO Tim Milledge emphasized the company’s commitment to "long-term financial sustainability," despite the current earnings miss.
Risks and Challenges
- Continued pressure on traditional revenue streams as digital transformation progresses.
- Potential market saturation in digital subscriptions.
- Macroeconomic factors affecting consumer spending and advertising budgets.
- Execution risks associated with new AI product launches.
- Cybersecurity threats following a recent incident in February.
Q&A
During the earnings call, analysts questioned the company’s strategies to address reduced reader engagement. Management highlighted their focus on enhancing local content and improving the digital user experience to drive subscriber growth.
Full transcript - Lee Enterprises (LEE) Q3 2025:
Call Moderator, Lee Enterprises: Welcome to the Lee Enterprises twenty twenty five Third Quarter Webcast and Conference Call. The call is being recorded and will be available for replay at investors.lee.net. At the close of the planned remarks, there will be an opportunity for questions. Participants accessing this call by webcast may submit written questions through the website, and they will be answered during the call as time permits. Otherwise, you will receive a response later.
A link to the webcast can be found at investors.lee.net. Now I will turn the call over to your host, Jared Marks, Vice President of Finance.
Jared Marks, Vice President of Finance, Lee Enterprises: Good morning. Thank you for joining us. In addition to myself, speaking on this morning’s call are Kevin Mowbray, President and Chief Executive Officer and Tim Milledge, Vice President, Chief Financial Officer and Treasurer. Earlier today, we issued a news release with preliminary results for our 2025. It is available at lee.net as well as major financial websites.
Please also refer to our earnings presentation found at investors.lee.net, which includes supplemental information. As a reminder, this morning’s discussion will include forward looking statements based on our current expectations. These statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially. Such factors are described in this morning’s news release and in our SEC filings. During the call, we refer to certain non GAAP financial measures.
Reconciliations to the relevant GAAP measures are included in the tables accompanying the release. And now to open the discussion is our President and Chief Executive Officer, Kevin Mowbray.
Kevin Mowbray, President and Chief Executive Officer, Lee Enterprises: Thanks, Jared, and good morning, everyone. During this call, I’m pleased to share an update on our digital transformation as well as our third quarter operating results, which represented significant growth in adjusted EBITDA over q two. We also have an important update on our management team. Nathan Becki was named chief operating officer. With a strong background in strategic leadership and operational excellence, Nathan will continue to play a pivotal role in driving our digital growth and innovation.
The third quarter demonstrated solid growth amid continued recovery from last quarter’s cyber event. Notably, local advertising revenue trends showed meaningful improvement with the year over year trend favorable seven points, fueled by sustained strength across our core base of 20,000 local advertisers. We launched our first to market AI powered suite in q two. Our AI enablement program offers a full suite of AI products. Since our last update and in partnership with WeLevel, Amplify Agency has launched an expanded suite of AI powered packages designed to drive lead capture, customer engagement, and business automation.
These packages are called Smart Answer, Smart Team, and Smart Suite HQ, designed to provide scalable solutions for businesses at every stage from handling inbound calls to fully automating content, communications, and sales workflows. This rollout marks a pivotal step in evolving our product catalog into our portfolio of industry leading AI tools and solutions. We expect the growth of our AI product suite to be a key catalyst for accelerating digital advertising growth as we advance towards our long term targets. On the digital subscription front, we delivered same store revenue growth of 16% year over year, driven by an impressive 28% growth in ARPU. We ended June with 670,000 digitally only subscribers, which is down sequentially, reflecting the continued residual impact from the cyber event.
However, as we’ve said before, unit growth may not be linear quarter to quarter. We remain confident and firmly committed to reaching our long term unit target and expect to continue driving top line revenue growth through both unit growth and rate optimization. The progress in these revenue category gives us confidence in our ability to drive sustainable growth and deliver long term value to our shareholders. As a result of our three pillar digital growth strategies expected to result in $450,000,000 of digital revenue by 2028. After navigating the cyber event back in February, our entire team is back to full steam ahead.
With an excellent foundation of three zero five million annual digital revenue as of this quarter, we’re confident our strategy will achieve digital revenue of $450,000,000 by 2028. As a testament to our three pillar digital growth strategy, Lee has consistently outpaced our industry peers in several key measures of digital growth, both digital subscription and digital agency revenue growth. Digital subscription revenue grew 33% over the last three years, nearly doubling the nearest industry peer. On the advertising side, Amplify Digital agency revenue growth has significantly outpaced our nearest competitor, growing 10% annually over the last three years. Total digital revenue was $3.00 5,000,000 on a trailing twelve month basis, well on our way to achieving our long term target.
Our digital revenue continues to grow with an increase of 4% on a same store basis over the prior quarter. Digital subscription revenue continued to lead the way, growing 16% year over year on a same store basis. Ampli Digital agency had another solid quarter of double digit growth as well, with an increase of 10% on a same store basis over the prior year. Our third quarter revenue clearly demonstrates that our digital transformation is in full effect, with our digital revenue reaching 55% of our overall revenue this quarter. The strength of our core digital business is foundational to the long term success of Lee, But I’ll add that the innovative ad products that we recently launched puts us in a position to accelerate our digital revenue growth even further.
And now I’ll pass it over to Tim.
Tim Milledge, Vice President, Chief Financial Officer and Treasurer, Lee Enterprises: Thank you, Kevin. Our core digital business has driven digital revenue growth of more than 17% annually from fiscal twenty twenty one to fiscal twenty twenty four. And that has translated to comparable annual growth in digital gross margins. Replacing our print revenue with growing and profitable digital revenue sets us up to achieve long term sustainability, and we are nearing this sustainability point. As Kevin alluded to, and as we shared in our last call, we launched our suite of AI products last quarter, designed to provide local businesses with the tools they need to thrive in a competitive environment.
This innovative offering comes from Amplify Digital Agency and leverages cutting edge artificial intelligence technology. We are excited about this AI product suite in terms of our long term digital revenue outlook. While the February interrupted efforts on this project, we believe that AI products will provide a nice lift to our FY twenty five digital revenue, and more importantly, us over the long term to reach sustainability through digital revenue. Speaking to this quarter’s results, total operating revenue in the third quarter was $141,000,000 which represented a year over year trend in line with our second quarter operating results. Third quarter trends were impacted by the after effects of the cyber incident, particularly on the subscription side.
We mentioned on our last call that our normal process for activating new digital subscribers was hampered, which significantly impacted units in the quarter. Despite the unit challenges, digital subscription revenue grew 16% on a same store basis due to a multitude of successes on the pricing side. For Amplify Digital Agency, we saw a nice pickup in revenue trends, a percentage point better than prior quarter and a promising return to double digit growth year over year. This all led to $78,000,000 of total digital revenue in the third quarter, representing growth over the prior year of 4% on a same store basis. Moving over to the cost side, Lee has a successful track record of effective cost management and thoughtfully investing in strategies that fuel long term growth.
Following up on our last call, we executed approximately $40,000,000 in annualized cost reductions in the second quarter aimed at lowering costs across the board with an emphasis on non core print operations, while preserving the integrity of our core operations. In the third quarter, cash costs decreased 7% compared to the same quarter last year, an acceleration from the first half trend due to our efforts. We anticipate fiscal year will finish with cash costs between $522,000,000 and $532,000,000 representing a 3% to 5% decline over the prior year. Keep in mind that as we enter FY ’26, about half of the $40,000,000 in annualized cost reductions we took this year will flow through and benefit next year’s operating results. We remain steadfast in our commitment to long term financial sustainability and the continued delivery of high quality local journalism.
By enhancing operational rigor this quarter without compromising quality, we’ve strengthened our long term position and are poised to drive sustainable shareholder value over the long term. Next, I’ll move over to the balance sheet. Our credit agreement with Berkshire Hathaway includes favorable terms, which include a twenty year runway, a fixed interest rate, and no financial performance covenants. These better than market terms allow us to stay laser focused executing our strategy. In response to the cyber incident and to provide short term liquidity, Berkshire waived payment of the company’s interest in basic rent payments in March, April and May.
The waived payments were added to the principal amount of due under our credit agreement. This is a fitting example of how our credit agreement benefited us in the wake of the cyber incident. Since May 2025, however, all mandatory principal and interest payments required under our credit agreement have been made from our internal operating cash flows. This is an important milestone in our cyber recovery. Despite the temporary addition of our principal debt balance, we’ve made considerable progress paying down debt in recent years and remain committed to reducing our debt going forward.
We continue to identify opportunities to monetize our non core assets, which improve liquidity and facilitates accelerated debt repayment. Year to date through the third quarter, we closed $9,000,000 of asset sales. We’ve identified an additional $20,000,000 of non core assets to monetize. The monetization of these non core assets will provide a significant source of liquidity in 2025. Our operating results in the third quarter put us on pace to achieve our outlook of digital revenue and adjusted EBITDA growth in the second half.
In the fourth quarter, we expect our core digital business led by digital subscriptions to continue to grow as the value of our high quality local news is unmatched. We have new AI revenue streams, which we expect to help drive momentum as we finish the fiscal year strong. And with that, I will turn it back to Kevin for closing comments.
Kevin Mowbray, President and Chief Executive Officer, Lee Enterprises: Thanks, Tim. I’d like to reiterate my thanks to the entire lead team for their tremendous efforts during the quarter, driving our progress on our digital transformation. We’re paving the way for Lee to lead the industry in this era of AI digital transformation. This concludes our remarks. The team will remain on the line for questions you may have.
Call Moderator, Lee Enterprises: Thank you. At this time, we will be conducting a question and answer session. As a reminder, if you are accessing this call by webcast, you may submit typed questions on your screen. Those questions will be answered during the call as time permits. One moment please while we poll for questions.
Jared Marks, Vice President of Finance, Lee Enterprises: I’ll now read our first question from the web. Recent trends suggest readers are spending less time per visit on news websites. How is Lee addressing this shift in how readers consume news?
Tim Milledge, Vice President, Chief Financial Officer and Treasurer, Lee Enterprises: I can start certainly. Thanks for the question. One of the competitive advantages that Lee has over kind of the national media is our asset portfolio, which typically does not act in the same manner as certainly as major metros. In fact, we have seen some strong metrics specifically from our loyal reader base in terms of engagement. Additionally, we are hyper focused on enhancing our digital user experience by providing state of the art digital products.
We’re also focused on expanding the depth and breadth of local content and growing subscribers and driving subscription revenue. So that’s how we’re we’re aiming to address your changes in in consumer behavior. We have no more questions from our participants. I’ll turn it back to Kevin for closing remarks.
Kevin Mowbray, President and Chief Executive Officer, Lee Enterprises: Well, thank you all for joining us this morning. Our focus remains on transforming our business for the long term benefit of our shareholders, our employees, readers, our advertisers. We appreciate your time here, Cindy Lee. Thank you again.
Call Moderator, Lee Enterprises: Thank you. At this time, we have reached the end of our question and answer session. This concludes our call and you may now disconnect.
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