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Greetings. Welcome to the USA TODAY Company Q1 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Matt Esposito, Head of Investor Relations. You may begin.

Thank you. Good morning, everyone, and thank you for joining our call today to discuss USA TODAY Company's First quarter 2026 financial results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer; Trisha Gosser, Chief Financial Officer; and Kristin Roberts, President of USA TODAY Media.

If you navigate to the USA TODAY Company 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 Company.

You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the earnings supplement.

Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of offer to purchase any USA TODAY Company securities. The webcast and audio cast are copyrighted material of USA TODAY Company and may not be duplicated, reproduced or rebroadcasted without our prior written consent.

With that, I would like to turn the call over to Mike Reed, Chairman and CEO of USA TODAY Company.

Thank you, Matt. Good morning, and thanks to all of you for joining our first quarter earnings call. I am pleased to report that we had an excellent start to the year. In our last call, we laid out our expected path to growth. A critical part of that strategy is improving total revenue trends through digital revenue growth. And in Q1, we saw meaningful progress on both fronts.

As you will hear throughout the call this morning, our momentum continues to build, and we believe our first quarter results have set the tone for a promising 2026. Year-over-year, total revenue trends were a bright spot in the quarter, with same-store declines improving to less than 2%, representing our strongest performance in 4 years.

This improvement was driven by a return to year-over-year growth in digital-only subscription revenues and continued contributions from our AI partnership agreements. As a result, total digital revenues increased 5% on a same-store basis versus Q1 of last year and accounted for 48% of total revenues, representing an all-time high. In addition to our top line momentum, we drove a marked improvement across several key financial metrics in Q1.

Adjusted EBITDA increased 45% year-over-year. Net income increased $27 million over the prior year period. First lien net leverage decreased to 2.3x and we generated positive free cash flow in the quarter. Overall, we believe our strong execution against our most important strategic actions is leading to the results we had anticipated. And therefore, we are reaffirming our full year business outlook.

Now with that, I would like to review the operational highlights from the first quarter. Our digital strategy continues to focus on our large organic audience, deepening engagement and improving the revenue of each digital user on our platform. In the first quarter, we continued to attract one of the largest digital audiences in the media industry with 180 million average monthly unique visitors coming to our platforms, which is up slightly from 179 million in Q4.

That scale, combined with our ability to stay closely aligned with our readers' preferences, drove 1.4 billion total page views per month across our digital platforms at Newsquest and USA TODAY Media. We believe our large and highly engaged audience positions us well to accelerate total digital revenue growth through highly diversified and predictable revenue streams.

One area worth highlighting is our digital-only subscription business. In the first quarter, digital-only subscription revenue returned to year-over-year growth and recorded its third consecutive quarter of sequential growth. We also saw continued strength in digital-only ARPU, reaching a new high and growing 43% year-over-year and 5% sequentially. Regarding digital-only subscription volumes, we are starting to see signs of stabilization. Our start-to-stop ratio is quickly approaching parity, an important inflection point, and as we sustain that trajectory, it sets the stage for sequential volume growth over time.

Overall, we feel really good about the progress we have made in our subscription journey. Digital-only ARPU continues to grow, and we expect that momentum to carry through the year. Volumes are stabilizing with a return to sequential growth expected in the next few quarters, and we expect digital-only subscription revenue to continue growing on a year-over-year basis.

Now with that, I'll turn the call to Kristin to outline some of the exciting initiatives underway to drive monetization through the expansion of our content experiences and product portfolio. Kristin?

Thank you, Mike. USA TODAY Media continues to lead as an organization that prioritizes its audience, experiments with purpose and intent and delivers content that is both relevant and essential. And we're seeing that reflected in our scale as we continue to reach one of the largest digital audiences among content creators in the country.

Two verticals that continue to reinforce our position as a leading media organization are sports and entertainment. In sports, we recently expanded our High School Sports hub into 12 additional markets, bringing our total footprint to 35 markets nationwide. These hubs deepen our connection with local communities while enabling us to scale high-impact, locally relevant content that drives audience growth and attracts premium sponsorship opportunities.

High School Sports also underscores a key differentiator for us, the ability to follow an athlete throughout their entire career from high school and clubs to college and into professional sports. That continuity allows us to engage fans earlier, sustain engagement over time and drive stronger monetization.

In Q1, we also launched our USA TODAY soccer hub, bringing together our domestic and international soccer coverage into a single cohesive destination. We believe this creates a more immersive experience for fans, supports higher time spent on platform and better positions us to capture both audience and advertiser demand, especially as we move into the 2026 World Cup cycle.

Our entertainment team also rolled out an exciting initiative in Q1, with the USA TODAY Style Meter. Aligned with the Oscars, Style Meter created a fashion-forward way for audiences to engage by rating red carpet looks through an interactive voting experience. As a result, this feature was part of a strong Oscar season that generated approximately 20 million page views. That's up more than 5% year-over-year. Experiences like Style Meter helped deepen our connection with audiences around key cultural moments while creating incremental e-commerce opportunities. They also opened the door for additional engagement and visibility during high interest events, such as the Met Gala next month.

Shifting to our digital-only subscription business. As Mike mentioned, we made meaningful progress in Q1 with digital-only subscription revenues returning to year-over-year growth and marking the third consecutive quarter of sequential growth. As we move through 2026, we will continue to evolve how we monetize our audience with a more deliberate approach in how and where we introduce subscription opportunities across the platform. This comes with an intentional trade-off in page views, but over time, we expect to expand digital revenue per user and ultimately maximize monetization across the customer journey.

On that note, we're encouraged by the strong performance in digital-only ARPU in Q1. Moving forward, we believe there is meaningful upside ahead through additional pricing power and stacked products. Introduced late last year, stacking represents a foundational step in our shift toward a more flexible, value-driven subscription model. It provides subscribers with greater flexibility by enabling them to combine complementary offerings such as USA TODAY Play and local publications, into a single tailored experience.

As our digital users adopt a more personalized mix, we expect to see increased engagement, improved retention and higher overall revenue contribution relative to single product subscribers. Importantly, second is already showing meaningful potential with digital subscribers who add a second product to their bundle, demonstrating a 20-point improvement in pay-up rates versus single product subscribers.

In other words, these users are significantly more likely to choose a paid premium offering rather than remain on free or promotional access. As a result, we view stacked products as a powerful lever to drive continued growth in digital-only subscription revenue, especially as we add more products to the stack this year and next, including Golfweek.

We have also moved into a phase of disciplined experimentation focused on monetizing consumers' engagement on their terms. Rather than forcing a single subscription model, we're testing multiple pathways that align with different levels of interest and commitment. This includes a range of pathways from free access to registration and from article level purchases to broader topic or season-based offerings. A clear example is the introduction of our first limited series and single payment subscription offering around the Kentucky Derby, which delivers a 90-day premium event-driven experience. This USA TODAY front aggregates high-intent content, including live race updates, fashion and culture coverage and exclusive on-site reporting within a premium advertising environment designed for both dedicated fans and casual audiences.

More broadly, this initiative represents a key step in developing a limited series product model, enabling us to package existing network content into premium time-bound offerings. We believe this approach will drive incremental engagement, first-party data and monetization around major tentpole events, including the World Cup.

To recap, our progress in the first quarter was a team effort. I want to express my sincere gratitude to the entire team. We have important work ahead of us to sustain this momentum, but we are executing on our strategy to expand our content and product portfolio, amplify our journalism and drive diversified revenue streams.

Back to you, Mike.

Thanks, Kristin. It's encouraging to see these initiatives taking shape, and we believe they will strengthen engagement and enhance monetization across our platform. And as Kristin detailed, through the experiences we're creating and the introduction of more modern payment methods, we are driving registrations and expanding our known user base, which grows our first-party database and over time, should support higher CPMs across our advertising business.

At the same time, we are increasingly leveraging AI-driven personalization, combining dynamic paywall decisioning with personalized [ 4U ] placements on the homepage to deliver the right content and subscription prompts to the right users at the right time while balancing engagement, advertising and subscriber growth. These capabilities allow us to translate user behavior signals in real time and surface more relevant offers to audiences with a higher propensity to convert.

Now this is a good segue into AI. Over the past 18 months, we have positioned ourselves as a trusted content provider while building the capabilities to act quickly as opportunities emerge. We are doing this through valued and unique content creation on a daily basis at scale, digitizing more of our very large archived content base and deploying blocking technology on our platform to prevent unauthorized use of our valuable content. We have been at the forefront for our industry in terms of putting together licensing deals, and we see this as a continued significant future growth opportunity.

Our existing AI agreements, such as with Meta and Microsoft, had a notable impact on our Q1 results, and we continue to maintain an active pipeline across the AI ecosystem, including foundational model providers, start-ups and emerging licensing platforms. As a result, we expect this category to contribute meaningfully to our growth over time. We expect these deals to be lumpy in nature. But when you step back and take a longer term view, this opportunity remains significant.

Now turning to LocaliQ. While the return to growth has been slower than anticipated, this business remains an important solution for our advertisers, and we believe having it as a part of our portfolio allows us to capture a broader share of advertising spend across our media platform. The foundational actions we have put in place to shift from a traditional search agency business to a results-driven approach are beginning to take hold, and we can see that progress.

As we diversify search, we are expanding higher growth areas like our social offerings, our owned inventory and targeted e-mail, while also deepening CRM integrations. We continue to make Dash a more comprehensive AI-powered platform that helps customers turn more leads into paying customers faster. We are encouraged by the progress and expect these initiatives to improve our revenue trends and position this business for growth in the second half of the year.

I'd now like to turn the call over to Trisha to provide additional details and color around our 2026 first quarter financials. Trisha?

Thank you, Mike. Good morning, everyone. Please keep in mind, all comparisons are on a year-over-year basis unless otherwise noted. As Mike mentioned, we're very pleased by our business momentum and the progress we made in the first quarter, which is evident in our financial results. In the first quarter, total revenues were $548.5 million, a decrease of 4% or 1.8% on a same-store basis. This represents a same-store improvement of 210 basis points over Q4 and is the second consecutive quarter of top line trend improvement. The strength in total revenues was primarily driven by the expansion of our digital revenues, which delivered solid growth compared to the prior year.

Total adjusted EBITDA was $73.1 million in the first quarter, an increase of 44.7% or $22.6 million. Total adjusted EBITDA margin expanded to 13.3% in Q1 compared to 8.8% in the prior year quarter. The growth in total adjusted EBITDA was driven by the improving revenue trends, the impact of the 2025 cost reduction program, along with ongoing cost discipline and the continued execution against our operational priorities. Expense management remains a critical priority. And in the first quarter, we drove an 8.8% reduction in operating costs and SG&A expenses compared to the prior year.

Total digital revenues in the first quarter were $261.9 million, up 5.2% on a same-store basis, representing the second consecutive quarter of growth. In the first quarter, total digital revenues accounted for 47.8% of total revenues, an increase of 400 basis points compared to the prior year. Digital advertising revenues decreased 3% in Q1 due to some softness in page views and programmatic revenue.

That said, we delivered our strongest quarter of new digital business signings in Q1, which combined with stabilizing retention trends, is expected to drive a notable improvement in our Q2 digital advertising and digital marketing services revenue trends.

Page views were down modestly year-over-year, primarily on our local sites. This was driven by lower referrals from Google Discover as well as the deliberate actions we've taken to increase paywall encounters and shift traffic toward higher-value monetizable experiences. As a result, we're seeing improved conversion rates and believe this is the right trade-off as we optimize for revenue per user rather than raw traffic volume.

Digital-only subscription revenues totaled $45.9 million in the first quarter, up 6.2% year-over-year and marks the third consecutive quarter of sequential growth. Digital-only subscription volumes continue to reflect the intentional actions to optimize sustainable and predictable profitability by prioritizing long-term monetization over short-term volume.

Volume decline slowed in Q1 with new starts approaching parity with stops late in the quarter, indicating stabilization and a potential return to volume growth. In Q1, digital-only ARPU also reached a record high of $10.30, up 42.7% year-over-year. In the first quarter, our digital other revenues, which includes digital content syndication, affiliate content and AI partnerships and licensing revenues, grew 125.6% or $18.8 million.

As we noted last quarter, we expect variability in timing and recognition given the structure of these agreements, with Q1 reflecting a strong contribution. We continue to optimize our print and commercial business. And in Q1, print and commercial revenue trends were largely unchanged from Q4 on a same-store basis, and our results reflect the shuttering of a substantial advertising mailer whose closure had no impact on total adjusted EBITDA.

Turning to the USA TODAY Media segment. Segment adjusted EBITDA totaled $59.5 million, increasing 89.9%, while segment adjusted EBITDA margin expanded 720 basis points to 14.3%. For Q1, total revenues decreased 5.4%, representing an improvement of 180 basis points from Q4 sequentially.

Turning to the Newsquest segment. Total revenues in the first quarter were $59.8 million, up 7%, representing the fourth consecutive quarter of revenue growth. In the first quarter, segment adjusted EBITDA was $14.9 million, up 6.6%, while segment adjusted EBITDA margin totaled 24.9%.

And looking at our LocaliQ segment, for Q1, core platform revenue totaled $99.3 million. Segment adjusted EBITDA totaled $6.8 million and reflected the inherent seasonality associated with the first quarter in our LocaliQ business. We ended the quarter with approximately 11,900 core platform average customer count and core platform ARPU remained near record highs at approximately $2,800.

Let's now turn to the balance sheets. At the end of the first quarter, our cash balance was $85.2 million and net debt stood at $903.1 million. Free cash flow in the first quarter totaled $6.4 million, and we ended Q1 with $988.3 million of total debt, reflecting $4 million of total debt paydown in the quarter, which combined with our strong total adjusted EBITDA growth, further reduced our first lien net leverage by 12% to 2.3x.

On the bottom line, net income totaled $19.9 million, up $27.2 million or 371.3%. As we look forward to the second quarter, we expect to largely sustain the top line momentum with total revenue figures and same-store revenue trends remaining largely in line with Q1. We believe our strong new business activity, combined with stabilizing retention trends, continued growth in digital-only subscription revenue and year-over-year growth in digital other, supports ongoing digital revenue growth.

With respect to total adjusted EBITDA, we expect continued year-over-year growth in Q2, though at a notably more moderate pace than Q1. Adjusted EBITDA in Q2 will be impacted by the mix of digital revenue with a higher contribution of DMS revenue and a lower contribution of licensing revenue. We view Q2 as a continuation of the progress we made in Q1, along with significantly higher free cash flow generation quarter-over-quarter. We are reaffirming our full year 2026 business outlook and remain confident in delivering year-over-year free cash flow and profit growth on the back of improving revenue performance.

Overall, I'm very excited about the progress achieved through the first quarter. The start of 2026 was successful from both an operational and financial perspective, and we are entering the second quarter with a great deal of optimism.

I will now hand it back to the operator for questions, and then we will go back to Mike for some closing thoughts.

[Operator Instructions] Your first question for today is from Giuliano Bologna with Compass Point.

Congratulations on the impressive results in the first quarter. As a first question, it seems like you're making very strong progress, especially early in the year, and it's great to see the outlook reiterated. I'm curious if there are any specific drivers that we should be focused on that are driving the results early in the year and how sustainable a lot of those drivers are throughout the year? I'm thinking about the AI potential deals and other things around that, that are obviously great positive contributors at this point?

Yes. Giuliano, thank you. Yes, the -- there is a -- there are a lot of drivers in the first quarter and then there are -- and those are sustainable not only this year, but throughout the coming years. We have -- licensing deals were definitely strong in the first quarter following a strong fourth quarter. And on top of that, their digital subscription revenues have really turned the corner and were a strong performer in the first quarter.

Obviously, we expect that to continue not only this year, but for years to come. And our affiliate revenue has really started to turn and grow as well, which is also captured in that digital other category. And we feel really good about the progress we're making on the audience side in terms of engagement, which leads to digital advertising growth. And finally, we feel good about the progress we're making underneath the DMS business, which will also lead to growth in the back half of the year soon.

When we look out over the rest of this year, Giuliano, we see all those factors contributing to digital revenue growth, starting with DMS, digital advertising, digital subscription and then digital other with contributions from both licensing and from affiliate revenue. So all of those will be contributors.

That's very helpful. And then there's obviously been a lot of progress when it comes to AI licensing deals. I'm curious where things stand in terms of the opportunity set that's still out there and the potential for more transactions or more deals on that front?

Yes, Giuliano, we think there's a lot of opportunity for more deals. As I mentioned on the last call, and I'll say again on this call, it's hard to predict the timing of those deals, so they will be a bit lumpy. However, we are taking all of the appropriate actions in our view, which start with creating really unique, at scale, valuable content every single day, combine that with we're digitizing more and more of our archived content so that we have a larger offering of archived content. And then finally, we're blocking those that don't have licensing deals with us from being able to scrape our content.

So creating new content at scale, blocking those that want to scrape and then digitizing more of our archived content, we think make us one of -- probably the premier news media company for AI tech companies to partner with. There are a lot of big companies out there, as you all know, that we have not partnered with yet. We have ongoing conversations with many of them. There are also new entrants and new marketplaces coming on board. So this opportunity is really massive in our view. We're taking a long-term approach rather than near term because in the very near term, it's a little bit lumpy or unpredictable. But over the long term, lots of opportunity. We think we're the premier partner, and we're doing, we think, all the right things to make sure that we are the right partner for those companies.

That's very helpful. And there's obviously a great improvement when it comes to your EBITDA margin as well. And I'm curious if there's still any opportunities on the cost side to continue working on your cost structure and other cost improvements around the company?

Yes, absolutely. Giuliano, it's Trisha. We think there is opportunity there. We were very smart in the way that we addressed costs last year, took $100 million out of the business. And I think you can see that we're still improving our revenue trends at a pretty good clip even with those expenses coming out of the business. And we'd look to be balanced and thoughtful in how we do it going forward. We're always optimizing our costs around our print infrastructure. We'll continue to do that. You've heard us talk about changes that we're making to our delivery structure, for example. We'll continue to explore those type of things.

The other things, we are seeing efficiencies, whether it comes from things like AI licensing or using vendors and partners, outsourced vendors. We're getting efficiencies within the organization. I think more so, those will eventually drive revenue upside for us, but they should also help us manage costs like software or outsourcing with our partners as well. So I would say, yes, long answer, but yes, we have the opportunity to continue to manage our expenses. You saw it in Q1, you'll see it for the rest of the year as well.

That's very helpful. And then maybe one final one. I'm just curious if there's any update or changes to kind of the timing or process around litigation and if you have any opinion around that?

Yes. No changes. Obviously, we remain very optimistic there. The next big things are really the -- outside of our case, the DOJ case, we expect the remedies to be ruled on by the judge here any day now. And then that would, we think then lead to the state of Texas's case going to trial probably within 60 days after the remedies ruling. And then with regard to our case specifically, the next big milestones are the judge ruling on Google summary judgment filing, which we expect in the next few months and then a trial date being set, which we expect for either late this year or early next year.

That's very helpful.

Your next question is from Matt Condon with Citizens.

My first one is just on the DMS side of the business. You obviously are seeing some underlying trends that give you confidence in the acceleration of growth in the back half of this year. Can you maybe just dig in on what a few of those catalysts or products that should drive that growth in the back half of this year are?

Matt, it's Trisha. Thanks for the question. Yes, we see a lot of promise in our DMS business. I think the first big thing to point out is that it's a product that our advertisers really view as a critical component of their marketing spend. And so we think that having it as part of our portfolio really allows us to capture more dollars across the advertising ecosystem, including on our own platforms.

So the things that we've done over the past year or so, things like integrating CRMs, leveraging AI search capabilities with Google on the platform, as well as bringing our own inventory or our owned and operated inventory into the Local IQ platform, really gives us confidence that we can continue to grow our customer account in our business. I think one of the things that we've seen is that we're maintaining near record high ARPU at about $2,800. And so our customers are seeing a lot of value in what we're providing to them. Now the work is really about growing our client count.

And the other thing I would highlight is that we're continuing to invest in Dash, which is our AI-driven platform, which allows our customers to address their leads and turn those leads into revenue much faster. As we build out capabilities on that platform, build out CRM-type solutions on that platform, we are finding that customers are stickier, and we should see that play out in our results as well.

Matt, I would add one thing, too, and Trisha mentioned this in her remarks before the Q&A. Both in our O&O on the media side as well as DMS in the first quarter, we saw really nice increases in new client count, but also in budgeted spend with us. And so what we saw specifically in the DMS business that we're referring to that give us a lot of confidence in outward look on revenue trends, a leading indicator for us is the budgeted spend from all of our clients.

And we saw a really significant uptick every single month from January through April here, now that we're at the end of April. So the underlying work we're doing, improving retention and becoming stickier with the clients and leading to bigger budgeted spend with us, has all materialized here in the first 4 months of the year. So we're pretty excited about what we're seeing underneath and expect that to really show up in the financials in the back half of the year.

That's helpful color. Maybe another question just on AI licensing. I think this is a big question is just the sustainability of AI licensing revenue going forward. Specifically, if you have lots of your content archived and used to train these models, on a go-forward basis, just how do you think about the sustainability of that revenue trend? Obviously, there needs to be the refresh of the new content that comes on. Do the value of those contracts go down over time? Again, obviously, it was a key driver in the quarter. I think people are just trying to wrap their minds around just how sustainable that is going forward?

Yes. No, I don't think that they go down. I think they go up. I think the real value in the content we produce is we produce it at scale and it's unique and it's valuable and it's new every single day. And you're right, these models and all of the AI programs out there, products out there need to be refreshed and updated on an ongoing basis. So I actually think the real-time content on a go-forward basis is much more valuable than the archived content, which theoretically can be used one time to train a model.

So I actually think that the value of our licensing agreements will grow over time. We are expanding the amount of content we have that is digitized in our archives, which hasn't been available for training. So we think that's also an opportunity for more revenue, but the real value in our eyes is the ongoing kind of new content we create every day. And we're in a lead position because we create more content than most anybody, and it's unique, right, because of the local aspect. So where we feel really good about the sustainability and the ability to grow the AI licensing category over the long-term.

That's very helpful. And then maybe just a final one. On digital advertising, it sounds like there were some contracts that were signed in the quarter that just give you confidence that, that can accelerate here or improve in 2Q. Maybe just to dig in on just the underlying trends that are going on in digital advertising, what happened in the quarter? And what are the improvements that are taking place under the hood?

[indiscernible]

Sure, Trisha -- Yes, go ahead Kristin. You can take this.

Sure. I'd say that the impact that we're seeing in digital advertising, it has something to do with AI overviews, but it's been much more muted than what much of the industry has been reporting. That said, we have always expected some headwinds in this category in digital advertising, and we've been prepping for it, Matt. I think what's more impactful in Q1 for us has been the shift in Google Discover, and that's been surfacing less local content this quarter. So when we look at these numbers, we expect Google to recalibrate over time, but it does reinforce the point that we've been making for a while now, which is the importance of reducing our reliance on any single traffic source.

And a good -- I'd say a good illustration of this was our coverage this weekend of the White House correspondent dinner event. Roughly half of our audience came to us from search referrals, but the other half came from direct visits and social and e-mail and other referral sources. And that indicates that we are building that direct relationship with the audience, and that has been our deliberate focus. We also have the ability to turn the dial a little bit from programmatic revenue to subscription revenue in local, especially now that we have a more profitable subscription strategy.

And as we layer in these new AI-driven smart tech insights, new tools, we can really target the right user at the right time with an offer that makes sense for that person, and we can choose to turn the dial more towards subscription. So that's the value of having an audience and a portfolio like ours. We're not overly reliant on any one source of traffic or any one revenue stream for revenue growth. And when you look out longer term, you can see this model gives us the opportunity for more significant overall digital revenue growth of our data and our insights, and importantly, our orchestration capabilities mature, and that includes our digital advertising. I hope that helps.

Very helpful.

Your next question for today is from Barton Crockett with Rosenblatt.

I wanted to just drill in a little bit more into the Google Discover thing that you were talking about. And just to be clear, you're saying that this is not related to AI overviews. This is a separate mechanism? I just want to be clear on that. And then could you give us a little bit more kind of quantification of how much of an impact this had? And given that it seems to be like a choice that Google has made, I mean, what can you do about it?

I'm happy to take that, Barton, and it's nice to hear from you. Google Discover and the AI overviews are separate issues for us. And so AI overviews have had an impact primarily in local, but not uniformly. Google Discover also has seen -- also is surfacing less of our local content. But what we've been seeing over the course of Q1 has been sort of a new norm. So we've begun to see some calibration, some normalization in what we're seeing from Google.

The impact varies. It varies by market, depending on market size, on total number of audience we already have. It also varies between local and USA TODAY. And it is why we have begun moving and shifting our content-related resources to things that we see working in real time.

So for example, there are some content categories that continue to overperform for us, whether they're overperforming on local page views or for geo-neutral audience, we are shifting resources to those places. And you can see the impact of that both in local and the USA TODAY. So for example, for local, the things that continue to work for us are obviously sports, from high school all the way through college and pro sports. Also breaking news, also local opinions, these are content categories for us in addition to service journalism that continue to drive significant audience for us. And so we're leaning into those places. And where we see content categories that are not working or not appearing in Google Discover, for example, we are shifting those resources to develop a kind of exclusive and distinctive content that Mike just referenced in his answer to what is the future value of AI deals. Right?

On USA TODAY, what we're seeing is we have ongoing ability to drive significant audience via Google, right? And that is around content categories that we have a right to win, where we are, if not the dominant player, in contention to be the dominant player. So think about sports, think about entertainment, again, think about breaking news and think about lifestyle. These are content categories for us that continue to drive significant audience. And it's the reason why, according to Comscore, we are still serving the largest audience in America among content creators.

The other piece that I will just throw in here before giving you the mic back Barton is, that video is increasingly driving audience for us, especially on USA TODAY. And so we took a deliberate step last year to begin expanding our catalog of video content, and that's paying off now as Google begins to shift what it is surfacing.

Okay. And then Mike, I don't know if there's anything to say on this question, but as you guys are aware, a Google executive made a blog post earlier this year about presumably in response to some U.K. proceedings about being open to separating the search crawl from the AI crawl, allowing people essentially to opt out, which presumably would, maybe that happened would give you leverage. Has there been any advancement on that front? Or is there anything happening in the U.K.? Any developments there? Or is that just kind of a post and then follow through?

Yes. No, Barton. To state the obvious, Barton, we're very supportive of that, and we'd like to see that be followed through on. There hasn't been any movement at this case at this point in time, but we're hopeful that, that moves forward. I think it's more likely to move forward in the U.K. before there's any traction here in the U.S., but that's obviously something we would like to see.

And Barton, just on the last question, too, because I don't want to overplay anything here on the downside in terms of audience. One of the reasons we mentioned the 180 million uniques and 1.4 billion page views on the call this morning is that those are higher numbers than we saw in the Q4. And so, I know there's so many in the media industry that are seeing overall audience declines, page view declines, things of that nature. We have not seen that. We've been very proactive in driving this business, driving our audience. And our audience does have scale and our biggest opportunity is engagement with that audience. More engagement with that audience is obviously is our biggest opportunity, but we're not seeing any large declines.

Google does adjust algorithms all the time, and we have to adjust our strategy based on those changes, and that's what Kristin outlined, and we're confident we'll be able to do that. But the biggest driver for us over the last 2 years in audience growth has been what Kristin mentioned, which is really recognizing you can't be too dependent on one source of referral traffic. And so we've been very aggressive in building traffic from a lot of different sources, including direct, and we really reap the benefit of that.

And so we're pretty excited even about the digital advertising strategy going forward and don't view anything that happened in Q1 as permanent or long-term.

We have reached the end of the question-and-answer session, and I will now turn the call over to Mike for closing remarks.

Yes. Thanks. And before we wrap this morning, let me just quickly recap a few important things. First of all, Q1 was a great quarter. It's the strongest start to the year that we've had in several years. And the truth is what you're seeing in the results reflects the work we have been doing over the last 24 months to strengthen the foundation of the business and to execute against a clear strategy. That work is paying off, and Q1 is a clear signal of that.

A few highlights, I think, worth calling out because we're really getting very, very closer tied to some important inflection points that we've been talking about over the last couple of years. First of all, in Q1, total revenue trends were the best we've had in nearly 4 years. And we're nearing that inflection point at down 1.8% to being down 3.9% in Q4 and down -- over 6% in Q3 last year or near around 6% last year in Q3. So we're really nearing that inflection point, and we expect that to come here in 2026.

We also saw total digital revenues grow at over 5% in the first quarter and reach 48% of total revenues. We've been talking about inflection point of total digital revenue being 50% of total revenues. We're really nearing that inflection point as well, which we also expect to happen here in 2026. But importantly, with this revenue mix shift and the growth in digital and the improvement in same-store, we're also seeing growth in EBITDA and free cash flow and expanding margins. So this is good profitable revenue, which is very important.

And then finally, we're seeing leverage continue to come down, and we've been aiming to get under 2x. We finished the first quarter at 2.3x. So we're getting very close to that 2x mark, too. So a lot of things going in the right direction and a lot of inflection points here to be reached in 2026.

You put all that together, we got improving revenue trends, expanding margins, strong and growing cash generation and a healthier balance sheet. A lot for us to be excited about. We're looking ahead to a really strong second quarter as well. And our digital-only subscription business has really turned a great corner. We saw the results in the first quarter, and that will continue to be a big contributor as the year goes on, as will the digital other category, which contains our licensing agreements as well as our affiliate deals. And that's a really nice category for us as well.

So expecting a strong second quarter with even stronger free cash flow generation and look forward to updating you all in 3 months with our progress on Q2. And again, thanks for joining us this morning, and thanks for your support.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to the USA TODAY Company, Inc. Q4 2025 Earnings Call.

[Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Matt Esposito, Head of Investor Relations. You may begin.

Thank you. Good morning, everyone, and thank you for joining our call today to discuss USA TODAY Company's Fourth Quarter 2025 Financial Results.

Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer; Trisha Gosser, Chief Financial Officer; and Kristin Roberts, President of USA TODAY Media. If you navigate to the USA TODAY Company 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 and our 2026 business outlook.

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 US 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 Company. You can find reconciliations of our non-GAAP measures to the most comparable US GAAP measures in the earnings supplement.

Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any USA TODAY Company securities. The webcast and audio cast are copyrighted material of USA TODAY Company 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 Company.

I am pleased to report that Q4 was by far our strongest quarter in recent years, and we are excited to share our progress with you today. I want to begin by highlighting some very important themes that you will hear throughout this morning's call. We delivered our strongest profitability in 4 years, with total adjusted EBITDA surpassing $90 million and growing approximately 17% over the prior year period.

Margin expanded 300 basis points to approximately 16% and represents our highest margin percentage in 5 years. Same-store revenue trends also achieved their strongest performance in nearly 4 years, driven by an expansion of digital revenues, which, importantly, returned to year-over-year growth on a same-store basis.

Digital revenues represented more than 47% of total revenues, an all-time high. We also generated $32 million in free cash flow, reflecting significant growth over the prior year period. At the same time, we continue to strengthen our balance sheet with an increased cash position, further debt repayment, and First Lien Net Leverage reduced to 2.4x.

We exited 2025 with good momentum across the business, reflecting our strategy to scale the largest audience in the nation, improve engagement, and maximize revenue growth. We expect this momentum to carry into 2026, including full-year growth in net income, total adjusted EBITDA, and free cash flow, improving same-store revenue trends, total digital revenue growth, and continued deleveraging.

Furthermore, our fourth quarter performance capped off what we believe was a defining year for USA TODAY Co., highlighted by significant milestones and a successful rebrand that fully embraces the ethos of a dynamic media company.

Before turning to our quarterly results, I want to highlight some of these milestones that help to reinforce our confidence as we move into 2026.

We delivered our third consecutive year of free cash flow growth over the prior year. We achieved positive net income for the first time since our merger in 2019. We saw further expansion in our digital revenue mix, as I just mentioned. Over 47% of our revenue is digital, and we are well-positioned to surpass 50% during 2026.

We executed several AI licensing agreements that we expect to improve digital revenue trends and be highly accretive to total adjusted EBITDA, including a recently signed partnership with Meta, which represents our largest AI licensing deal to date. These agreements contributed positively to our fourth quarter results and positioned us for further growth in 2026.

With regard to total adjusted EBITDA for the full year 2025, keep in mind that our results reflect some larger asset sales completed during the year, including the Austin American-Statesman. And without those sales, total adjusted EBITDA would have essentially been flat year-over-year.

We continue to strengthen our capital structure by repaying approximately $136 million of long-term debt and repurchasing $14 million of convertible notes. And we reduced our First Lien Net Leverage by 11% versus the prior year. In the second half of the year, we also took meaningful actions to create a lower and more flexible cost base, which resulted in $100 million in annualized savings, some of which we expect to flow into the first half of 2026

A couple of other factors that will further improve 2026 results were completed in January of this year. First, we completed the transfer of the Detroit News. This strategic transaction strengthens the USA TODAY NETWORK's audience across more than 200 local publications nationwide and reinforces our commitment to local journalism in the Detroit metropolitan area.

And second, as part of the transaction, we were able to reduce our First Lien Interest Rate by 50 basis points or about $3.5 million annually, which will generate cash interest savings in 2026. Overall, we believe the strength of our results demonstrates the traction we have gained and the long-term potential of the business we are building.

Now I'll turn to the operational highlights from the fourth quarter.

Our digital strategy focuses on expanding our audience, deepening engagement, and maximizing monetization across the customer journey. In the fourth quarter, we continued to attract one of the largest digital audiences in the media industry with 179 million average monthly unique visitors coming to our platforms. That scale, combined with our ability to stay closely aligned with our readers' preferences, drove another quarter of at least 1 billion page views per month domestically. As a result, digital advertising revenues delivered a third consecutive quarter of year-over-year growth.

Turning to our Digital-Only Subscription business. As many of you know, we made a pivot in early 2025 on our Digital-Only Subscription strategy. We felt some pain on volume and revenue from that pivot early in the year. However, we have conviction around the merits of that pivot. We saw some early signs in Q3, and those were further reinforced in Q4.

Our Digital-Only Subscription business delivered its strongest quarterly performance for the year. Digital-only ARPU reached a new high of $9.81 in the fourth quarter, up 24% year-over-year and 11% sequentially. Digital-only subscription revenues also grew sequentially for the second consecutive quarter, and we realized year-over-year growth in December. We believe the actions we took in early 2025 are creating a more sustainable, predictable, and growth-oriented subscriber base.

Importantly, we expect Digital-Only Subscription revenues to continue to grow year-over-year, contributing to the overall growth we expect in total digital revenue per user in our ecosystem. We see additional upside through pricing optimization, leveraging our full product portfolio, including our newly launched gaming hub, PLAY, and doubling down on local growth.

Combine this with the outstanding work, our content team delivers through our high-quality journalism and broader content experiences in categories consumers engage deeply with, and we believe we have a compelling value proposition for both consumers and advertisers.

With that, I'll turn the call over to Kristin to outline some of the exciting initiatives underway to expand our content experiences and product portfolio.

Thank you, Mike. 2025 was a year defined by innovation, resilience, and strong collaboration across our media business. We rallied around new ideas, new approaches, new opportunities, and we implemented meaningful change across the organization that generated strong momentum in our key metrics. We sustained one of the largest digital audiences in the media industry, generated more than 1 billion page views per month, marking 2 consecutive years at that level, and maintained our overall reach even as we implemented a new subscription strategy.

We also closed the year as the #1 news and information provider among content producers in the country, based on unique visitors as measured by Comscore. Together, these results reinforce our position as the preferred platform for relevant and essential content, and that includes sports.

In the fourth quarter, we continued to enhance our NFL and NCAA sports hubs with new features and richer data designed to deliver more immersive mobile-first experiences. As a result, we're driving stronger engagement as well as increased time spent with our content.

And more broadly, these enhancements are elevating how we cover sports every day and how we show up during the moments that matter most to our sports readers and viewers. And from marquee events, that means activating the full strength of our platform to drive scale, to deepen engagement, to maximize monetization across the consumer journey.

That approach was evident during the Winter Olympics, the NCAA Football Championship, and the Super Bowl. We generated millions of dollars in revenue across advertising, eCommerce, subscriptions, and merchandise, as well as visibility for the beloved USA TODAY Ad Meter. This is the tool recognized in the advertising industry for gauging consumer sentiment related to Super Bowl commercials.

Importantly, we see similar opportunities with global events such as the FIFA World Cup. Entertainment is another vertical where we're building meaningful momentum. We continue to execute strongly on our strategy to create standout experiences around topics our readers love, so celebrities, fashion, style, and doing so in the formats and platforms they prefer.

In the fourth quarter, we launched a reimagined entertainment hub designed to be more immersive and visually dynamic with a focus on vertical video, prominent photography, and richer storytelling formats, as we deliver scoops and exclusive content. Importantly, these enhancements are driving deeper engagement and audience connection across our platform.

As we've seen in sports, Entertainment also attracts robust advertiser demand, and it creates incremental opportunities to expand our commerce platform. On that note, our Digital-Only Subscription volumes in the fourth quarter reinforce that there is a meaningful opportunity to further strengthen our core business, which, in turn, will allow us to unlock the company's full potential. I'm encouraged that our subscription strategy drove both sequential and year-over-year growth in Digital-Only ARPU.

As I emphasized throughout the year, local is our key differentiator for generating unique content, attracting subscribers, and connecting with communities in more profound ways, where local stories feed national news, and national news connects with local relevance.

With a combined reach of 125 million average monthly unique visitors coming from our US media network, we are well-positioned to be essential and relevant in the local communities we serve. Our extensive portfolio of local brands allows us to deliver non-commoditized hyperlocal content that cannot be found anywhere else. From local government and politics to high school sports and community events, these are the stories that matter most to our readers, and we are uniquely positioned to deliver them at scale.

Looking ahead to 2026, we plan to further expand our subscription portfolio around high-interest areas and differentiated content experiences. PLAY is an example of that strategy in action. The launch is off to a solid start with early indicators showing audience expansion, deeper engagement, and growth in registrations and subscription starts. More broadly, games complement our sports and entertainment portfolio by driving habitual engagement, opening new monetization pathways, and supporting long-term growth.

To recap, our progress in 2025 was a result of strong collaboration across the organization, and I want to thank the entire team. We see significant opportunities ahead, and we believe our strategic actions have positioned us for sustainable long-term revenue growth. Back to you, Mike.

Thanks, Kristin. It's exciting to see the key initiatives underway to deepen engagement and enhance the overall monetization across our platform. It's so important to our overall digital revenue growth strategy.

Now I want to turn to AI. High-quality, trustworthy content is foundational to a healthy open web, particularly as AI agents become more common to help people discover and consume information.

Our strategy in this evolving landscape is straightforward, engage early with foundational partners, help shape the framework, maintain flexibility as monetization models evolve, and protect our long-term upside in this emerging ecosystem.

Consistent with that approach, in the fourth quarter, we entered into a multiyear strategic partnership with Meta to license both new and archival content from the USA TODAY NETWORK. This partnership enables Meta's family of apps and devices to incorporate accurate, timely information rooted in incredible local and national journalism. This multiyear AI licensing agreement, as well as the agreement we signed with Microsoft back in October, is high-margin and will contribute meaningfully to expected year-over-year revenue growth in digital other revenue.

And while we continue to engage with foundational partners and evaluate additional opportunities in this space, we are doing so with a disciplined long-term lens. Excluding Google, we currently block more than 99% of verified and unverified AI bots attempting to scrape our content without licensing agreements in place.

As we look ahead to 2026, we will continue to take an aggressive approach by actively sourcing AI-related revenue opportunities while continuing to protect the value of our content. And given the scale of our national and local footprint across the US and the U.K., we are uniquely positioned to be a leading provider of real-time trusted content to these various technology companies.

Now turning to our LocaliQ segment. In the fourth quarter, segment adjusted EBITDA totaled approximately $17 million, while core platform ARPU remained near record highs and grew over the prior year period. There is still work ahead with regard to customer count and revenue. However, the progress we made last year to strengthen our product foundation and sales strategy positions us well to drive stronger results across our key metrics, and we expect to return to revenue growth during the back half of 2026.

Let me highlight a couple of important initiatives underway. These initiatives include expanding our CRM integrations, strengthening our search optimization capabilities, and advancing the features and functionalities of our AI-powered software solution, Dash. These product enhancements are expected to increase client retention, deepen customer engagement, and improve measurable ROI across our platform. We also recognize that consumers are engaging with social media more than ever. And as a result, we are proactively expanding our social offerings to meet that demand.

In January of this year, LocaliQ became a badged TikTok marketing partner, joining a select group of companies recognized for quality, scale, and innovation in driving advertiser success. Being part of this exciting program means we have enhanced tools, deeper integration, and direct collaboration with a platform where over 1 billion people come to discover, connect, and take action.

In 2026, we plan to further align with evolving consumer behavior by improving and expanding our AI solutions across all parts of the sales funnel, which in turn will strengthen our ability to help SMBs achieve their goals by driving measurable results and unlocking the full value of their digital investments.

I'd now like to turn the call over to Trisha to provide additional details and color around our 2025 fourth quarter financials and 2026 business outlook. Trisha?

Thank you, Mike. Good morning, everyone. Please keep in mind, all comparisons are on a year-over-year basis, unless otherwise noted.

In the fourth quarter, total revenues were $585 million, a decrease of 5.8% or 3.9% on a same-store basis, which marks a 290 basis point improvement over Q3 same-store trends. The strength in revenue was driven by renewed momentum across our digital portfolio, with 3 of 4 categories growing over the prior quarter.

Importantly, this progress reflects both the early success and long-term potential of the strategic initiatives we've been building in 2025, including AI licensing agreements, more targeted subscription efforts, and expanded content in high-interest verticals such as sports and entertainment, where advertising performance and audience engagement remain strong. Together, these initiatives reinforce our integrated model, enabling us to drive the highest possible digital revenue per user across all streams.

Total adjusted EBITDA was $91.1 million in the fourth quarter, an increase of 16.6% or $13 million. Total adjusted EBITDA margin expanded to 15.6% in Q4 compared to 12.6% in the prior year quarter. The growth in total adjusted EBITDA was driven by the improving revenue trends, ongoing cost discipline, and continued execution against our operational priorities. Expense management remains a critical priority. And in the fourth quarter, we drove a 9% reduction in operating costs and SG&A expenses compared to the prior year.

Total digital revenues in the fourth quarter were $277.5 million, growing 5.6% sequentially and up slightly on a same-store basis. In the fourth quarter, total digital revenues surpassed 47% of total revenues. Digital advertising revenues increased 1.8% in the fourth quarter, marking the third consecutive quarter of year-over-year growth.

This momentum was primarily driven by improved sell-through and stronger yield performance as our B2B sales teams more effectively leverage the USA TODAY co-brand, attract new national advertisers to our platform, and deliver highly relevant, scaled audiences. This is an encouraging signal as we look ahead to digital revenue growth in 2026.

In the fourth quarter, Digital-Only Subscription revenues totaled $45.6 million, up 4.4% over Q3 and marking the second consecutive quarter of sequential growth. Digital-Only Subscription volumes continue to reflect the intentional actions to optimize sustainable and predictable profitability by prioritizing long-term monetization over short-term volume. As a result, digital-only ARPU reached a record high of $9.81, up 23.7% year-over-year.

We expect digital-only ARPU to continue to grow in 2026 as we remain focused on attracting and retaining higher-value subscribers while remaining smart in our pricing across the portfolio. In the fourth quarter, our digital other revenues, which include digital content syndication, affiliate content, and AI partnerships and licensing revenues, grew 27.1% and grew approximately $10 million over Q3.

This growth reflects our recent agreement with Meta as well as the shift of revenue from Perplexity into the fourth quarter. As we continue to expand these AI licensing relationships, we expect variability in timing and recognition given the structure of these agreements relative to our more traditional revenue streams.

Our strategic efforts to enhance the quality and the overall value proposition of our print product continued to deliver encouraging results. While print and commercial revenues remained in secular decline, we are actively managing the long tail. The actions taken to improve the subscriber experience have helped moderate decreases over the past several quarters. We remain focused on managing the print portfolio efficiently and profitably, and we expect this disciplined approach to continue into the year ahead.

Turning to the USA TODAY Media segment. Segment revenue decreased 7.3% in the fourth quarter. Segment adjusted EBITDA totaled $69.9 million, increasing 19.3% year-over-year, while segment adjusted EBITDA margin expanded 340 basis points to 15.6%.

Turning to Newsquest. Total revenues in the fourth quarter were $60.1 million, up 3.1% year-over-year, representing the third consecutive quarter of revenue growth. In the fourth quarter, segment adjusted EBITDA was $13.5 million, up 20.7% year-over-year, while segment adjusted EBITDA margin expanded 330 basis points to 22.5%.

Looking at our LocaliQ segment, core platform revenue in the fourth quarter was $107.3 million, and segment adjusted EBITDA totaled $16.6 million. We ended the quarter with approximately 12,700 core platform average customer count, and core platform ARPU remained near record highs at approximately $2,800, reflecting growth of 1.4%.

Let's now turn to the balance sheet. At the end of 2025, our cash balance was $90.2 million, and net debt stood at $887.1 million. Free cash flow in the fourth quarter increased by $27.7 million to $31.5 million. And for the full year, free cash flow totaled $64.2 million, an increase of approximately 10% versus the prior year. We ended 2025 with $977.3 million of total debt, reducing First Lien Net leverage by 11% to 2.4x.

In the fourth quarter, we repaid $19.1 million of long-term debt. And for the full year, we repaid approximately $136 million of total long-term debt. Our net loss of $30.1 million for the quarter reflects a tax provision of $73.6 million, reflecting the expected large quarterly variances in our provision.

For the full year of 2025, our tax benefit was $3 million, and our full-year net income was $1.7 million. Subsequent to year-end, we completed the transfer of the Detroit News. This follows the conclusion of the long-running joint operating agreement between the Detroit Free Press and the Detroit News, which ended on December 28, 2025, under which the results for both titles were consolidated into our financial results.

Now with common ownership, we can operate more seamlessly in a strategically important market, creating opportunities to better scale audience, strengthen local journalism, and accelerate digital growth while continuing to support distinct newsroom voices for both titles.

The transfer of the Detroit News was funded in part by cash on hand and $15 million of additional principal under our 2029 term loan facility. In connection with the transaction, we also secured a 0.5 percentage point reduction in the interest rate on the 2029 term loan and the first required amortization payment as per the amendment agreement, shifted to June 30.

As we look forward to 2026, we intend to build on the successes of 2025. In Q4, total adjusted EBITDA grew approximately 17% over the prior year, and we expect higher levels of total adjusted EBITDA growth in Q1 as revenue trends improve, in part due to the impact of AI licensing and as we cycle the impact of the sale of the Austin American-Statesman.

As new revenue streams scale, we expect to have more consistent total adjusted EBITDA across the quarters in 2026, which may result in greater year-over-year variances by quarter than has been typical. We finished 2025 with a marked improvement in our same-store revenue trends, and we expect to continue to improve on that trend throughout the year, which we believe will lead us to same-store revenue growth late in 2026.

For the full year, we expect total digital revenues to remain at year-over-year growth on a same-store basis, driving more meaningful growth and exceeding 50% of total revenues during the year. We expect total revenues to be flat to down in the low single digits on a same-store basis and expect to continue to drive ongoing improvement in year-over-year trends through the year.

With the expectation of improving revenue trends and the impact of the cost reductions made in 2025, we expect full-year growth in net income attributable to USA TODAY Co., and in total adjusted EBITDA. These year-over-year gains in profitability still allow us to invest in our business in data, technology, product development, and people, which we believe enables us to create a sustainably growing media company.

We also expect double-digit year-over-year growth in cash provided by operating activities, as well as free cash flow, with a slight usage of cash in the first quarter and more meaningful free cash flow generation occurring over the remaining 3 quarters of the year.

Overall, our strong finish to 2025 reinforces the confidence we have in our strategy, and we believe it positions us well to build further momentum in 2026.

I will now hand it back to the operator for questions, and then we will go back to Mike for some closing thoughts.

[Operator Instructions] The first question today is coming from Giuliano Bologna from Compass Point.

Great to see the continued performance. As the first question, the fourth quarter showed great revenue improvement. Do you expect that to continue in '26? And what do you think will drive that?

The answer is yes. And from a high level, the driver is continued digital revenue growth, digital revenue improvement. But let me be a little more specific, and these are all items that we actually covered in the call this morning.

First is our focus on the scale, the size of our audience, and continuing to grow that audience, but more importantly, improving engagement with those folks coming to our platform. And that is leading and will continue in '26 to lead to improved consumer revenue. And we look at total ARPU across the platform, which comes from advertising, subscription, and affiliate. And we're looking to continue to grow that total ARPU per consumer on the platform through improved engagement, as well as growing the number of users on the platform.

Second, we talked about it a bit in our remarks here this morning, is both our current AI licensing deals and any new AI deals we do this year will lead to growth here in 2026 and improve our revenue trends.

And third, I'd highlight our improved digital subscription revenue trends. We started to really see that shine in the fourth quarter, including growth that we saw in December from a year-over-year perspective. So, with that return to growth, we expect those revenue trends to be much improved in 2026, leading to overall revenue improvement on the digital side.

And then finally, we do expect to improve our DMS revenue trends. We expect to return to growth later in the year, second half of 2026. And we outlined the various action items we have underway in the DMS business as well. I think to summarize this, the good news here is these are all action items that we have been putting in place during 2024 and '25. They're not things that we yet need to do. So, there are things that we're starting to reap the rewards for in our financial statements now, as we really started to see in Q4. And these things will all drive better, improved trends in growth in 2026. So pretty excited about the outlook.

That's very helpful. And just as a follow-up, you gave strong guidance for 1Q and 2026 free cash flow and also 2026 free cash flow guidance, but it was indicated a slight usage of cash in the first quarter. What's driving that?

Giuliano, this is Trisha. Yes, the usage of cash in Q1, it's largely seasonality and timing. It's consistent, I think, with what you've seen historically from a working capital perspective from us. And year-over-year, there's also some minor timing changes in our interest payments. But you're right, we did guide to a pretty strong quarter for Q1. We took a really meaningful step forward in our same-store revenue trends in Q4, almost 3 percentage points. And we expect, as Mike mentioned, to take another step forward here in Q1.

And then if you look at our Q4 adjusted EBITDA, we grew about 17% year-over-year and above 20% if you take out the impact of the asset sales we made earlier this year, mainly in Austin. So we'll cycle Austin, the sale of Austin, mid-quarter in Q1. And so you take that with the strong revenue and the flow-through of the cost actions that we put in place in Q3, we expect similar to higher EBITDA growth in Q1 on a percentage basis in Q4.

So as Mike said, we've been building on this for '24 and '25, and it's really encouraging that we're starting to see the impact of our strategy play out in our results. The steps we took on subscription revenue are resulting in a more sustainable, growing digital business. The efforts we've taken to monetize our content in multiple ways, including these licensing deals, leading to improving revenue trends and what we think is going to be a really strong Q1 and, over the long term, sustainable growth.

That's very helpful. And congrats on the new high in digital ARPU. As it approaches $10, do you see more upside from there?

Mike, I'm going to take this one. Giuliano, it's Kristin. We feel really great about the progress, only ARPU hitting $9.81 in Q4, and that's up 24% year-over-year, and Digital-Only Subscription revenue growing sequentially again. So in terms of upside, I think we continue to see room to grow ARPU in 2026, and I think we're going to do that through a couple of levers. There's smarter pricing and smarter packaging across the portfolio. There's better retention and life cycle marketing. I think there's also an expanding product set like PLAY, right? And we're using PLAY and these other products to drive habitual engagement and, in turn, some incremental monetization there.

On the ARPU versus volume issue, our philosophy remains to optimize long-term value, optimize long-term predictability. We did intentionally trade off some short-term volume earlier in '25. But what you're seeing now is a healthier and more sustainable subscriber base. And we do expect that Digital-Only Subscription revenue will continue to grow year-over-year as we execute on this strategy. So I hope that helps, Giuliano.

That's very helpful. And switching over to kind of the meta topic, but you announced the Meta AI deal in 4Q. And how should we think about AI licensing revenue in 2026?

Yes. Giuliano, it will be a good growth category. And I would think about it in terms of '26 and beyond. It's a multiyear good growth category for us, we believe. I would like to introduce just a little bit of caution here as we think about the AI licensing revenue opportunity.

We do expect significant growth in 2026, but it's still a developing marketplace. And so we're learning a lot as we go forward. We have learned that the deals can be lumpy and they can take some time to get done. So the past 12 months, we have made a lot of progress. We have some great deals in place now. So we do expect nice growth in 2026. But our eye on the prize here is the longer-term opportunity, which we see from more deals to come as this overall business model in this ecosystem continues to evolve. So pretty excited, but a little bit cautious in the near term. It's a growth category, but it's also still an evolving category, and we're playing the long game here, too.

That's helpful. And when you talk about kind of like the growth expected in '26, is that mostly from the existing contracts you've already signed? Or are you considering potential new deals that you could sign in '26?

Yes, it's both, Giuliano. It's existing deals. So we have some banked growth already with the deals we've signed, but we do expect additional growth through more deals to be signed and more deals to come. So both.

That's very helpful. And then, as a final one, you made very strong progress on debt reduction in '25. Can you provide a little more detail on 2026 debt paydown expectations and what you're targeting from a First Lien Debt leverage perspective?

Yes, absolutely. You're right, we did make great progress in 2025. We repaid approximately $135 million of long-term debt in the year, and that brought us down to about 2.4x First Lien Net leverage to the end of the year, and we remain focused on bringing that number down again in 2026. So, our approach this year is going to be that debt is funded primarily through our operating performance and our free cash flow. We guided to double-digit growth in free cash flow in 2026.

So, less reliance on asset sales and more reliance on the cash flow that we're throwing off. We guided to full-year growth in total adjusted EBITDA and in free cash flow based on those improving revenue trends. And so, all of that's going to support our deleveraging. So, we're thinking about 2026 as the year that we continue to improve the business, and we use that cash to bring down our debt. I think that will put us much closer to that 2x First Lien Net leverage to end the year here in 2026.

The next question will be from Matt Condon from Citizens.

My first one, just some of your peers, just in the publishing industry, have called out just the AI overview impact on just programmatic revenue. Are you seeing any sort of impact or click-through rates, or traffic? Or is there anything to call out there? And then I have some follow-ups.

Yes. Matt, good to talk to you. Our click-throughs from Google from the search perspective have remained flat. So, we've done a pretty good job of continuing to have a great ranking in the search ecosystem there with regard to Google. But with regard to AI overviews, pretty much all of the AI platforms, the amount of traffic that comes back to publishers is almost nothing. So, the user stays on the AI platform in those experiences.

So, our path to monetization is by licensing content for use in those AI platforms. It's not through clickbacks to us. But with regard to the publishing industry has seen a lot of declines in traffic from search. We've been fortunate enough to be proactive from a strategy perspective over the last 2 years, we've been able to maintain a flat number with regard to search from Google blue links.

And then we've been really good at growing traffic to our platform from other means, social media being one of the biggest drivers, and then also more direct engagement with consumers coming directly to our platform. So overall, our page views remain strong. Audience remains strong, and we're battling through some of the challenges the industry is facing from declining search.

That's very helpful. And then a follow-up. There's more and more AI, and it's improving internal workflows across, I think, all companies. Just as you look at the business, obviously, you've implemented the $100 million in annualized cost savings. Are you seeing increased opportunity to implement AI internally just to further those cost reductions and run the business leaner?

Matt, the answer is yes. And we do have an AI task force that's working on deploying AI in every single facet of our business. And so we do see future cost efficiency opportunities that come from the use of AI technology. But I would say, Matt, we're actually more excited about the use of AI technology to improve our revenue performance, our ability to do better lead gen work, our ability to do better presentations with customers to tell the story better to improve ROIs for customer usage on the deployment of AI technology inside our company. That will be the big win for us. But to answer your question, we do see further cost efficiencies as well.

Great. And then maybe just the last one. Can we just get an update on the Google lawsuit? I don't know if there's anything updated there. And I think investors would just love to hear just the timetable and where we sit here today.

Yes, Matt, thanks. So yes, Judge Castel, the judge in our case last October, granted our partial summary judgment in the case, which was a great, important step for us because it established liability on certain claims. So, we're really excited about that. In January of this year, Google filed its own motion for summary judgment. We expected that. It was all in the normal course. We believe their motion lacks any merit, and we expect a favorable ruling on that motion, favorable for us. We anticipate that motion being ruled on later spring or summer of this year.

And then we expect to have our jury trial set later this year, and we expect the jury trial to be set for the end of '26 or early '27 at the latest. As far as other milestones in the case, similar to what we talked about on previous calls, we do expect the remedies ruling to be issued very soon for the DOJ case. And we expect once the remedies are ruled on, we expect the case out of Texas to go to trial. So that should happen shortly after the remedies are announced.

So, we are expecting quite a bit of progress here or quite a few milestone announcements to come over the next several months. The DOJ remedies ruling, the Texas case going to trial, a summary judgment ruling on Google's summary judgment filing in our case, and then a jury trial being set. So, we feel very, very positive about our case. That hasn't changed, and we think there's a lot of good momentum to come here in 2026.

And the next question is coming from Barton Crockett from Rosenblat.

I wanted to ask about the steps that Google took earlier this year to make a blog post saying that they would take some steps to allow separation of presence in AI overviews from search, seems to be in response to some U.K. actions, but it would seem to be a global statement of ambition to do something that was applauded by your trade group here. That would seem to be potentially very interesting, maybe providing some leverage to have a stronger licensing conversation with them if that proceeded. But I was wondering if you could give us your thoughts on what you think about that, and if you have any reason for optimism that, there could be something that could move the needle forward there.

Yes. Thanks, Barton. We are encouraged by that blog post, and nothing has happened to date. We probably should be clear about that. But the blog post was encouraging. We think it's the right move. It would move the playing field toward clear publisher control and directionally, it'd be constructive for sure. Our guiding principle remains the same. Trusted high-quality journalism has real value. And if that content is being used to power AI experiences with no compensation to the publishers, it's illegal.

And so, we believe there should be a level playing field, fair compensation for our content, and certainly, Google distinguishing between blue link search and usage in their AI products it would be a really positive development. So, we're encouraged by that. We think it's the right thing to do. And you're right, it would lead to, we think, a better licensing discussion around licensing our content for usage in AI. So, it could be a real positive development. We're hesitant to say anything too optimistic right now because we just don't really know what they'll do.

Yes. I mean to follow up on that, they made a blog post. Is there an opening for a discussion with them on your part or industry-wide, or not at this point, do you think?

Well, I wouldn't say that we don't have discussions. I wouldn't want to get into any kind of confidential information for ongoing discussions we have with any potential AI licensing partners. But I would suffice it to say that we do have a lot of conversations going on with a lot of different technology companies.

Okay. Now, one of the things I was also curious about was your monthly unique visitors. I think the number was 179 million, I think, which is down a bit from the third quarter, down year-over-year. What's driving the dip there? I mean, you said search is steady. So, what is it that's driving that?

Kristin, do you want to take that?

Yes, I'm happy too. We made some intentional steps over the course of 2025 to maintain our audience reach at more than 1 billion page views per month, so that we could begin to turn the dials on our subscription strategy and begin to do some testing and some experimenting around various tactics that would improve engagement, improve registration, and then improve take-up and then pay up on our subscription offers.

So, I think what you're seeing is a reflection of some deliberate actions that we're taking to stabilize around 1 billion page views per month, which gives us the breathing room to be testing around different subscriber thresholds in the attempt to build back a healthier long-term subscriber base in the digital-only category. Does that help answer the question?

Yes. Yes, that helps. And then one other topic I was wondering about in terms of the court schedule, if I could. I was wondering if there's also one other key milestone that you can see in terms of timing, and that might be important in terms of getting your jury seated. And that is a decision by the judge of which witnesses would be allowed for a trial proceeding. There's a term of ours for that, and I'm not a lawyer, so I forget what it is. But is that something that we should also be looking for as a marker that would signal that things are about to get started?

Yes, I do. And I'd say late summer, fall, we should have more clarity on that. So, it's right to look for it. And I would say that's another milestone to look for as we get to the summer this year.

And that concludes today's Q&A session. I will now hand the call over to Mike Reed for closing remarks.

Yes. Thank you. Thanks, everybody, for joining us this morning. Let me just quickly recap a few of the most important highlights from this morning's call.

And I'll start with, as mentioned, Q4 felt good because it was the best quarter we've had in several years. And so many of the initiatives that we've been working on really started to show up in the financials, and we're encouraged by that and how that's going to roll into '26. We delivered our strongest profitability in 4 years. And as a result, in the fourth quarter, adjusted EBITDA returned to meaningful year-over-year growth.

And also on the total digital revenue side, we returned to growth, which was great on a same-store basis. More than 47% of our revenue came from digital, and we do expect to surpass 50% here in 2026. And you saw a real step forward on same-store revenue trends in the fourth quarter, improving by about 300 basis points, and it was the best trend we've had in several years. And you heard this morning, we expect that to continue into 2026 and Q1 as well.

We did deliver our third straight year of free cash flow growth, and that was great, and we continue to expect double-digit growth again in 2026 for free cash flow. And when you take all these things together to reflect improving revenue momentum, expanding margins, strong cash generation, and deleveraging, we continue to think we're going to create great value for shareholders.

And finally, I would just say, as you heard from Trisha, we are expecting a stronger Q1 across most all trends, feeding off of the Q4 we just delivered. So, we look forward to getting back together with you all in 2 months to update you on our progress and fill you in on our Q1 results. And so, thanks for joining us this morning, and everyone, have a great day.

Thank you. This does conclude today's conference, and you may disconnect your lines at this time. Thank you for your participation.

All right. Why don't we get started? So good morning. I'm PK Keller, and I'm an associate on the media and communications research team here at UBS. TODAY, we're joined by Trisha Gosser, CFO of USA TODAY Co. USA TODAY operates a network of 200-plus local, regional and national newspapers across the U.S., Newsquest in the U.K. and LOCALiQ, a digital marketing services business. So Trisha, thanks for joining us today.

Yes. Thanks for having us.

So why don't we start by kind of outlining the company's strategy and your priorities for next year?

Yes, absolutely. So our goal is to inform, inspire and connect communities. And we do that through what we believe is the only local to national media organization in the country. Our focus is on unbiased journalism, content that brings people together in the center. And it's created the largest digital audience of any media content creator in the country. We have 187 million unique visitors digitally to our properties every month. Like I said, that's the largest of any local provider, any national provider. And with that comes a lot of responsibility and a lot of opportunity.

And in the last couple of years, our focus has really been about expanding that audience. We've been growing our audience on a very regular basis. And expanding the way that we monetize that audience. We're leaning fully into monetizing that audience across a full spectrum of opportunities. When you reach that many people across the U.S. and the U.K., we have opportunities to serve them digital advertising, to serve them digital subscriptions to find ways to monetize our content that we're already producing elsewhere on third-party platforms with AI licensing companies and to really build a full funnel advertising suite as well.

You mentioned our business, LOCALiQ, it's about a $500 million digital marketing solutions business that helps small- and medium-sized businesses find, locate, keep and grow their revenue. And so our focus is really on growing our audience on our platforms, engaging that audience more fully and really leveraging the full monetization opportunity and suite we have against that audience.

Great. So you guys are still you still have a majority of nondigital revenue you've spoken to the different types of digital revenue that you're trying to drive building out this kind of full suite of differentiated revenue streams. Can you talk about kind of how that digital mix evolves getting to 50% and where you're trying to kind of build the business in terms of if it's specific lines of revenue or if it's more about kind of the holistic view of the business?

Yes, absolutely. It's really about a holistic view of the business. So we're very close to being 50% digital. We're about 47% digital revenue in Q3. We expect to approach that 50% digital mark in Q4 and then be over 50% digital in 2026. And that's a really pivotal moment for our company. When you've got digital revenue as a predominant revenue source for you, and that's a growing business, you become a sustainably growing journalism and content business. Our goal is to leverage that audience that we have, that large audience, the largest in the country and monetize it fully. So when you have an audience that size, you know that not everybody is going to subscribe. And we want as many subscribers as we can, but that's not our only focus.

We know that we can fully monetize every opportunity we have with somebody who visits our platform. And that can be advertising revenue. It can be subscription revenue. It can be e-commerce. We have a growing and substantial e-commerce business. And like I said earlier, we also have the opportunity to take the content that we're already creating and find other avenues to monetize that, whether that's through syndication or licensing. And so it's really about taking that audience and orchestrating a full monetization of that. When we do that, when we're so close to that 50%, we really see us on this path of being a consistently growing content company.

Awesome. So going to licensing, AI has been massive over the last few years. I think people have thought print media and legacy media companies are really exposed here, but USA TODAY has been very active in licensing its content. You had the Perplexity deal that started in October. You just announced a new deal. Can you talk about kind of how AI applications are impacting the media industry, both from kind of the licensing perspective? And then are there other ways it can be a net positive to the business?

Yes, absolutely. I think we're at a pivotal shift here from the media industry. You've certainly heard you see the headlines that AI can be very disruptive to the media industry, and we're well aware of that. We are not seeing that. Our audience is growing on a consistent basis, and we are very focused on making sure that we're creating a very engaged audience. So we want people to come to us directly, not via search, and we are actively leaning into vehicles and avenues to make sure that people are coming to USA TODAY and engaging with us directly.

We also have implemented things like Taboola's DeeperDive on our website, which is an AI search-like experience that exists on the USA TODAY platform. So people don't have to go to other sites to other AI search engines to just come to USA TODAY and get our content in the format that they want it. So certainly, it has the potential to be disruptive. We are well aware of that, and we are aware of the risk that it could be for the media industry, ourselves included.

We are actively blocking AI scraping bots, the ones that we can. We're blocking 99% of verified AI bots coming to our sites right now. We mentioned on our Q3 earnings call that we're blocking something like 75 million AI scraping attempts on a monthly basis, regularly outside of Google, which we don't have the ability to block, nobody in the industry has the ability to block. And with that comes the opportunity to really force the conversation on monetizing our content. The vast majority of the AI scraping bots are local content. Like I said, it was $75 million in September. About $70 million of that was our local content. So we can see how valuable our unique content is to these AI engines, and we see a real opportunity to create a marketplace and monetization opportunities for publishers.

Got it. So can you touch a little bit more on the monetization side, the licensing deals? You signed a lot. Are there kind of other avenues in terms of having just other avenues, I guess?

Yes, absolutely. So we've signed some really important and meaningful AI monetization and licensing deals over the last several months. Perplexity was the largest that launched in Q4. You mentioned we just signed a licensing deal with Meta. We announced that last Friday. These are our 2 largest AI licensing deals that we've signed to date, along with deals with Microsoft and Amazon. I think this monetization marketplace is really developing.

Our goal is to be in the conversations early to help shape what that marketplace could look like. I think AI license -- AI companies, search engines and publishers really realize that it is unbiased factual reliable content that's going to fuel the Internet of the future. People are going to use AI search engines to get their content. You want it to be factual. You want it to be relevant. We are the largest content provider in the country. We are going to be part of those conversations. We want to help shape those conversations.

The way that we're monetizing this currently is we are licensing our content for AI companies to use for real-time use. We are also starting to explore monetizing our archives as well to allow AI engines to start to train their models if they haven't already. So it's largely a licensing opportunity right now. You are starting to see and we do have deals where we're sharing advertising revenue with some of these AI companies. I think that, that piece of the marketplace is still developing. I think there's a substantial marketplace that can be developed.

And our goal right now is to make sure we're helping to shape that, but also to make sure that we capture the long-term value of this. And so you'll see that a lot of our contracts are 3 months, 6 months, 1 year to 2 years, because we really think the marketplace could look vastly different in a couple of years than it is now.

Got it. So those are much shorter term than I would have imagined. I think we've seen other licensing deals, maybe not on the AI side, but in the publishing industry, like multiyear deals. And that speaks to wanting to be ahead of the curve and knowing what this marketplace will be. Can you give us some insight on kind of from signing to operations within the company to monetization? What does that kind of time line look like?

Yes, it varies. One of the things I will say is that I think a lot of AI companies are still determining their monetization models right now as well. Very few of them are profitable, and they are still very much determining how they will reach profitability. And so that will also determine how the marketplace develops. And I think that's why you're not seeing some of the longer-term deals that maybe you do in more mature marketplaces elsewhere. The time from a conversation to a deal signed, it varies.

It is an evolving space. And so I think the first one takes a little while as you go through conversations. But we know what's important to us. We know that attribution is incredibly important to us. We know that fair compensation is important to us. And we're having conversations with companies who believe that's important as well, and that helps those conversations move more quickly.

Great. So you touched on licensing. You touched on all these different digital revenue streams. I think one investors have looked at is advertising, and you guys have spoken to that being a growth driver given your large audience that you have digitally. Can you talk about kind of the advertising ambitions you have as a company? And how can you kind of more effectively capitalize on the engagement scale that you guys have?

Yes, absolutely. So our ambition, as you called it, is to make sure that we are fully leveraging and monetizing the scale and the quality of the audience that we have. We have an incredibly large digital audience, and there's a lot of opportunity there to drive advertising revenue. We've seen good growth year-over-year over the last couple of quarters, and we expect that to continue. That comes from a couple of different places. First, we've always had a very strong programmatic channel. We're in a lawsuit with Google, and we think there's a lot of opportunity there should that marketplace change in a more fair and equitable way.

But outside of that, we're really leaning into USA TODAY as our brand and who we are as a network, and there's an incredible amount of opportunity there. You're starting to see national brands shift back towards publishing. Stagwell has published some really great research about the high ROI and the safe space that journalism and content creators provide for brands. So you're starting to see brands shift back towards publishers into the media landscape. We're starting to see that, and we're starting to see that on the back of our strong brand here at USA TODAY.

Got it. So I think my understanding is people have avoided or advertisers have generally avoided news, maybe some of them maybe not because of the issues that they sometimes touch on. Do you think that's not really becoming a concern anymore?

I think there's 2 things there. First, where you've seen people shift their dollars to is a social media platform like TikTok or Instagram or Facebook. And I think we can all acknowledge that those issues that you talked about exist on those platforms and certainly less regulated and brand safe than they would on our platforms. So I think there's a realization that the things that brands are shifting away from exist on all the platforms that they shifted to.

Our content is much safer than perhaps you would find on a TikTok or on Instagram, for example. I also think that when you have a brand like USA TODAY, that it's not just journalism in its traditional sense. We lean very heavily into sports. We have the second largest sports audience of anybody in the country behind only ESPN. Sports content is the place that brands want to be around. We have a very large entertainment audience. It's a very strong vertical for us. So there's a lot of very safe content verticals that brands are coming to as well.

Got it. Okay. That makes -- the arguments make a lot of sense there. So you kind of touched on Google and the Google lawsuit. I know you guys had a recent kind of court finding there, which you viewed as positive. Maybe outline us -- give us a little rundown of that, your view on it and maybe kind of the long-term impacts for your business and the ad tech space broadly.

Yes, absolutely. So Google has certainly been found to run a monopoly in many places. They've done it in the search space in a separate case. And with the case that the DOJ brought several years ago in the ad tech space, Google was found to create a monopoly for where publishers are selling their inventory. And we believe that Google maintains a monopoly in the ad tech space, controls how publishers can sell their inventory, creates depressed rates and that negatively impacts publishers' revenue and Google takes more of the profits. You mentioned a ruling in our case. So we brought a case against Google several years ago, very similar, a little bit more expansive than what the DOJ had that the DOJ was successful in prosecuting with the ruling earlier this year.

The judge in our case, Judge Castel issued a summary judgment ruling here in Q4, which says that, yes, in fact, what was found in the DOJ case that Google did create a monopoly in the ad tech space applies to our case. And so all of those claims that we have brought under -- that are similar to the DOJ, now shift from having to prove those claims. It's been accepted through that summary judgment. And now we just moved to the damages phase in that part of our trial. We have incremental claims that we've made above and beyond the DOJ. There's a state case with state Attorney Generals that will move forward here, we believe, in Q4, early next year.

We think that our case will go to trial at some point next year. We see that the actions that Google has taken has interfered with billions of dollars of revenue just for Gannett or just for USA TODAY alone, given the size of our audience and the size of our digital advertising revenue. And so we're certainly seeking damages for the revenue that's been interfered with. But we also think that once -- we will learn remedies in the DOJ case here in the next several months. Having a fair advertising ecosystem will benefit all publishers, USA TODAY included. And we're looking forward to operating in a more fair advertising tech space.

Great. That's great to hear. So I'd like to talk about kind of PLAY, which you talked about the kind of horizontal scale you guys have with a number of different publications. You talked about the different verticals, sports being very big, entertainment and the different types of revenue. I think PLAY is new versus games. Can you give us an update? It just launched in October. How is it going? How is engagement with the new service?

Yes. We're really pleased with the way that PLAY is performing. You're right. We just launched it in October. So it's very early days. but PLAY is a hub for people to come for casual entertainment. It's games, it's puzzles, it's comics, and we're seeing incredible engagement on our PLAY site. What's interesting is that it allows a lot of different types of monetization against an audience. We're seeing increased engagement. We're seeing increased time spent on site. And there's many ways for people to engage with that vertical.

You can have an ad-free version with a subscription. And so it introduces a new subscription offering into our portfolio. It introduces a subscription to an audience they may not typically subscribe to USA TODAY. We also have free versions, and we're really proud of the breadth of gaming that we have in an ad-supported manner. So we're early, early days, but it does give people the opportunity to stay on our platform, take a break from news and content and just have some casual entertainment on our site.

Got it. That's awesome. So you talked about kind of the engagement that it's bringing. Are you seeing it bring in kind of USA TODAY loyalists people who have kind of been on the platform for a while? Or is it opening up kind of a new audience that you haven't seen before?

Yes. So we currently reach 1 in 2 adults in the United States. So we have a pretty significant scale of audience as it is. PLAY certainly brings in new audiences for us, but we're already reaching what I would say is the majority of Americans currently. And so it's really about engagement. It's about giving people a new experience on our site, on our mobile apps and creating a new type of stickiness in that relationship. So we certainly hope that it brings in new eyeballs and new consumers, but it's really about increasing the engagement with the 185 million people who are already on our platform.

Got it. And then kind of on expanding the business by entering new verticals, do you think this is kind of a new growth vector for you guys in terms of kind of driving all of the new digital revenue streams. Is opening new verticals and new types of content that hasn't previously been provided by you guys something that can drive growth going forward?

Absolutely. We think that content and journalism is our bread and butter, and it's incredibly important. But I think when you think about USA TODAY and our USA TODAY NETWORK, we're so much more than just traditional journalism. And I mentioned earlier, sports is a huge vertical for us, and we have ambitions to be the largest sports audience in the country. And there are other verticals that are very strong for us and that we are leaning into. And so sports is an example of that. Entertainment is an excellent example of that.

People come to USA TODAY to live their life better. And so finance is an excellent example, too, and people want to know how to manage their mortgage and which credit card they want. And so there are so many different verticals that we are -- we have the right to win in. And a lot of them are video-first verticals as well. So when you think about sports, when you think about entertainment, those are really video-first verticals. And that's the way to really fuel our digital advertising revenue. So video CPMs are significantly higher than the traditional display advertising and people are increasingly wanting to engage with content in a video-first manner. And so we're providing that.

So absolutely, I think there's a lot of places that we have the right to win, a lot of verticals that we're leaning into and expanding that's really going to drive that audience growth that we've been seeing for many years and continue to drive improved engagement.

I love that you brought up video because video, I think, has been a large driver of kind of engagement and then monetization that kind of builds off of each other. You look at the kind of companies that offer short-form video, and they have super high engagement relative to kind of other media providers. How large do you think the video opportunity is for you guys across all of the applications?

Yes, we think it's enormous. One thing that's really interesting that our data shows is that people don't necessarily want to consume their news in video, but they want their content outside of news to be in video. And that's where USA TODAY is so strong. They want their sports to be in video. They want their entertainment news to be in video. They want their -- how do I do this around the house? How do I live my life to be in video. And so when you have a brand like USA TODAY that is so much more than just the great journalism that we provide, there's an enormous opportunity to continue to expand relevant video on our sites in the format that users want, and it's a great monetization opportunity for us.

Great. So you're transforming the company, going more digital than print for the first time ever. You have these new kind of revenue streams. And as part of that, you kind of recently rebranded from Gannett to USA TODAY. Is that kind of emblematic of kind of the new kind of growth vectors that you have?

Absolutely. So USA TODAY is a brand that's been known for innovation from the very beginning. It was the first national news brand. It was the first digital news brand. And so it's really a brand that's known for being innovative and digital first. And that's who we are as a company. We are innovative and we are digital first. It's also a brand that's known for bringing America together, and that's something that we're passionate about, too.

So I think the rebrand to USA TODAY really leans into the cornerstone, our largest masthead within our portfolio, and it's really emblematic of where we're going as a digital-first company. We're really excited about it, and it's been a great change for us.

Great. So I think you guys mentioned on the third quarter earnings call, you had a $100 million cost savings program that's now fully implemented. Can you just remind us kind of what costs were taken out of the business? How do you think about kind of cost reduction going forward?

Yes, absolutely. So maintaining our costs, moderating our costs, optimizing our cost is something that we have always been good at here at USA TODAY. And so we did take out $100 million of annualized costs that's fully in place in Q4 2025. The type of costs that we took out, we were really focused on finding efficiencies in our print business and also eliminating any duplication that we might still have in the organization, really optimizing back-of-the-house operations and making sure that we're leveraging new technology to really automate across our business.

The bigger things will be things like we closed 2 of our largest print facilities. So we'll continue to consolidate our print production. That really helps us find efficiencies in our print business. And so you'll start to see those expense reductions really fuel Q4. We think it will get us to EBITDA growth year-over-year in Q4 and then set us up well for 2026 as well.

Got it. So EBITDA growth in Q4, how do you think about EBITDA in 2026? I don't want to touch on guidance prematurely, but I'd love to hear some thoughts.

No, it's a fair question. We certainly think that we're set up well to be a growing company in 2026. Our revenue trends are improving. We're starting to add these really high dollar, high-margin AI licensing deals that are impactful in Q4 and more so in 2026. We've done cost takeout in Q4. So I think that sets us up for a really successful 2026.

Great. So taking out costs, I think you've also been very focused from a capital allocation perspective recently on kind of taking out debt. Do you think that's still the focus going forward?

Absolutely. Debt paydown remains our #1 focus for capital allocation. We've done a really great job of reducing our debt over the past several years. We fell below $1 billion of debt for the first time since the acquisition in Q3. We're expecting to pay down more than $135 million of debt here in 2025. We think getting our first lien net leverage closer to 1x is really important. So just like getting to 50% digital revenue is a huge milestone for the company, and we think really opens up shareholder value. Getting to sustainably growing revenue is another milestone, but also getting to that first -- that onetime first lien net leverage is incredibly important, and we think that really unlocks some share price as well. So that remains our #1 focus.

Last year, we did a refinancing. We took on a bit more first lien debt, and that allowed us to extend our maturities on our debt, but also take out the potential for a lot of dilution in our convertible notes. So we're going to continue to address our debt. It's our #1 priority. And as we get down to that first lien or that onetime first lien leverage, it will open up the opportunity to do a lot more with our cash, whether it's share buybacks or addressing the remaining convertible notes.

Got it. So I believe roughly a year ago, you guys sold some kind of assets based in Austin, Texas. How do you think about kind of asset sales going forward? Would that be more focused on the print side? Or does it kind of matter? It's just the kind of price that you guys are getting and the value you're getting that is the driving factor?

Yes. We're really happy with the size of our network. We're really happy with the size of our audience. We think that scale is important in this industry. And so we're not actively looking to divest any of our properties. That being said, if the right multiple comes along for the right property, we're always going to entertain that like we did with Austin. But for now, we're really happy with the size of our audience, with the size of our network. And as our free cash flow continues to grow, we have the ability to address our debt with the free cash flow that we're going to generate.

Great. So I guess, on the opposite, but same angle of that, how about acquisitions and kind of adding new networks?

Yes. I think that we'll be opportunistic if the right thing comes along and there was something that we need to tuck in. I think that we, again, have the right scale that we need, and we're finding that we can grow our business more quickly and with less capital through things like partnerships and licensing deals. And so I think our priority is going to remain on paying down debt with our cash.

Great. And I meant -- touched on this earlier, but I think Newsquest has been growing very well in the U.K. Can you kind of talk about what has kind of driven that outsized growth and how you expect that to go going forward?

Yes. Newsquest is a fantastic business for us. They're the second largest publisher in the U.K. You're right, they are consistently either a flat to growing media company. And I think that, that is really telling of the potential of our entire portfolio. It's a very profitable business, really high cash flow. And I think that they do an excellent job of representing the communities that they serve in the U.K. And there's a lot of benefit in having the scale of the U.S. and the U.K. I think it helps in things like licensing deals, for example, where you can provide a great breadth of content. So Newsquest is an excellent business. It's a big part of our audience and a big part of our growth going forward.

Great. So I guess, kind of lastly, do you have kind of any additional comments or insights you'd like to leave with investors to kind of reinforce the optimism that you guys have for the business?

Yes. We're really excited. I think we're really at a pivotal moment for us here at USA TODAY. We've touched a little bit about the fact that we're approaching that 50% digital mark. And so we're going -- we're expecting to be a predominantly digital business here in 2026. We think with that comes overall growth in our total revenue. So we're a predominantly digital business, growing revenue, sustainably growing EBITDA. We've been growing our EBITDA for the last 3 years. Growing our EBITDA, growing our free cash flow. That's a really valuable business.

We've got the largest audience in the U.S. and across the U.K. And with that audience comes incredible opportunity to further monetize, whether it's through digital advertising or through AI licensing. And then we also think we're on the cusp of something changing in the digital ad tech space. And when you have an audience of our size and digital advertising of our scale, that's a real opportunity for us. And so we see all of these things kind of converging at the same time, along with continued debt paydown. And we think that there's so much opportunity for shareholder value as all of those things come together.

Great. Why don't we leave it there? All right. Thanks, Trisha.

All right. Fantastic. Thank you.

Greetings. Welcome to the Gannett Company Q3 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Matt Esposito, Head of Investor Relations. You may begin.

Thank you. Good morning, everyone, and thank you for joining our call today to discuss Gannett's third quarter 2025 financial results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer; Trisha Gosser, Chief Financial Officer; and Kristin Roberts, President of Gannett Media. If you navigate to the Gannett 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 and our full year 2025 business outlook. 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 Gannett's 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, adjusted EBITDA margin and adjusted net income attributable to Gannett. You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the earnings supplement. Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any Gannett securities. The webcast and audio cast are copyrighted material of Gannett and may not be duplicated, reproduced or rebroadcasted without our prior written consent. With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO.

Thank you, Matt, and good morning, everyone. I'd like to start this morning by drawing your attention to some very notable highlights from the third quarter and subsequent to the quarter end. First, we accomplished a significant milestone within the quarter with our total debt falling below $1 billion for the first time since our merger in late 2019. And we are nearing another milestone with total digital revenues growing to 47% of total company revenues in the quarter, an all-time high, and we believe that we'll close in on 50% in the fourth quarter. Our $100 million cost program is now fully implemented. And as a result, we expect to start realizing the full benefit in Q4, and that is expected to drive significant year-over-year growth in adjusted EBITDA in the quarter.

We had a few large digital clients shift spend from the third quarter to the fourth quarter, and those clients have begun their campaigns in October. While that influenced Q3 results, it positions us well for a strong fourth quarter.

And finally, we were pleased with Judge Castell's partial summary judgment ruling earlier this week in our lawsuit against Google. The decision represents an important step forward as it establishes liability on certain claims. We remain encouraged by the continued legal progress addressing Google's monopolistic practices and are optimistic about what this means for both Gannett and the broader publishing industry.

Turning to the business. We remain confident in our strategy, our execution and the sustained progress we are making toward our long-term growth objectives. Let me call out a few more important highlights from the third quarter. Our audience grew sequentially on what was already an extremely large base, and we delivered another quarter of year-over-year growth in digital advertising revenues. In our digital-only subscription business, digital-only ARPU reached a new high, and we saw digital-only subscription revenue improve in Q3 from Q2, movement in the right direction after our strategy shift this year. And our DMS business saw improved year-over-year trends in core platform revenue and average customer count, while core platform ARPU remained near all-time highs.

Subsequent to the quarter end, we had a couple of nice developments on the licensing front. First, on October 8, we had the full launch of our Perplexity deal timed with the launch of their Comet browser. And we are very excited to announce this morning our new AI licensing deal with Microsoft. This new deal is timed with Microsoft to support the upcoming launch of its publisher content marketplace, which you'll hear more about later in the call. We are hopeful to keep building on our growing portfolio of AI licensing deals with the announcement of additional partnerships. Debt reduction continues to be a top priority for us. And for the first time since our merger in 2019, total debt fell below $1 billion, which marks a significant milestone in strengthening our balance sheet and reducing leverage.

With regard to financial performance in the third quarter, it's important to note that revenue was influenced by several large customers shifting their spend from Q3 into Q4, the largest of which was Perplexity. Adjusted EBITDA was impacted in the quarter by approximately $7 million versus our expectations, driven by revenue moving into Q4 and incremental expenses, primarily a pull forward of expenses associated with our cost reduction actions, including medical and benefit-related costs tied to employee exits from the organization. While these factors created some noise in the quarter, most of our key fundamentals and metrics remain strong and the drivers we were most excited about for the second half of the year continue to hold, including the momentum across our audience in terms of growth and engagement, our diversified growing digital product portfolio as well as our $100 million cost reduction program.

With these items in place, we expect to drive meaningful year-over-year adjusted EBITDA growth in Q4, along with solid growth in total digital revenues and free cash flow. Based on what we are seeing already in October, we expect to deliver a strong fourth quarter.

Now let's discuss a few key operational highlights from the third quarter. Our digital strategy focuses on expanding our audience, deepening engagement and maximizing monetization across the customer journey. In Q3, we continued to drive one of the largest digital audiences in the media industry with 187 million average monthly unique visitors, which grew more than 3% compared to Q2. This significant scale, combined with our unique ability to stay closely aligned with our readers' preferences, drove another quarter of at least 1 billion page views per month domestically. As a result, digital advertising revenues recorded another quarter of year-over-year growth. And moving forward, we expect to accelerate this momentum into Q4 as several new advertising deals have now moved through the pipeline. Separately, the focus in 2025 on the quality of our digital subscriber acquisition strategy is showing positive results. Digital-only ARPU achieved a new high of $8.80 in the third quarter, up approximately 8% year-over-year. Q3 also returned to sequential growth over Q2 for digital-only subscription revenue. While it will take a few more quarters to return to volume growth, these wins show that our intentional actions are working. And moving forward, we will continue focusing on acquiring high-value subscribers in our core local markets, where we offer a differentiated product, trusted brand and create meaningful value for our customers as evidenced by the growth in digital-only ARPU. With the innovative work Kristin and her teams are doing to expand our content experiences and product portfolio, we believe we have a strong value proposition for our consumers and advertisers.

And with that, I will turn the call over to Kristin to share more work underway to strengthen our media business. Kristin?

Thank you, Mike. Gannett Media continues to lead with purpose by providing essential content that informs, engages and entertains audiences across the country. By listening to our audience and leveraging data to understand how they interact with our platforms, we maintained our position as one of the nation's leading news and information providers among content creators. We also continue to keep our readers deeply engaged as we delivered another quarter with more than 1 billion page views per month across our network.

As we enter the final months of the year, we recognize that sustaining audience growth and engagement requires an innovative approach. Video is undeniably the most critical format for our future as Americans increasingly turn to video platforms for their news and information. Thanks to the work our unified video team has done over the past year, we are well positioned to meet audiences where they are and deliver content in the format they prefer most. One of the areas where we have seen tremendous success with video is through our sports coverage and OneTEAM Sports. In the third quarter, we launched a comprehensive suite of sports hubs for the Big Ten, SEC and NFL that brings fans closer to the action through vertical video and story carousels that create an immersive mobile native experience. These hubs also feature real-time scores, player stats and standings that give fans immediate access to the information they care about most. Early results show that time spent within these hubs is double compared to traditional browsing on our platforms, along with higher engagement levels, which in turn creates a promising opportunity to further monetize our loyal sports audience.

We're taking the same approach to new categories that spark passion and loyalty, whether it's entertainment or our recently launched USA TODAY Pets, which debuted in July with new branding, a fresh design and a video-first content strategy that spans the full journey of pet ownership. As we grow this passionate audience, our teams are expanding monetization opportunities through affiliate partnerships and sponsorships, while enhancing the platform with new features such as vertical video support and additional storytelling formats that are designed to deepen engagement and give our readers more reasons to register and subscribe.

On that note, our digital-only paid subscription volumes continue to reflect the deliberate actions of our refined acquisition strategy. I'm encouraged to see new highs in digital-only ARPU, which drove sequential growth in digital-only subscription revenues from Q2 to Q3. As I mentioned on the prior call, games remain a key focus for us in the back half of the year, and that progress is evident with the launch of PLAY, a unified digital hub for casual entertainment and gaming. Designed to align with the daily habits of USA TODAY readers, PLAY brings together everything from morning horoscopes and comics to afternoon puzzles in one convenient destination.

What's most exciting is the promising upside we see in games as a new consumer revenue stream. Nearly 1/3 of our readers already play games online, but only a small share are currently doing so on PLAY. That means every incremental gain and engagement has an outsized impact. For instance, if we can get 1 more percent of our audience to play games at our current play ARPU rates, that equates to an additional $10 million annually in digital-only subscription and digital advertising revenue. Overall, this presents a great opportunity to expand our audience, deepen engagement and drive incremental revenue as we continue introducing new features and promoting PLAY across our network.

Across every initiative, from video to new verticals to games, our teams are working with creativity, focus and urgency to meet audiences where they are and deliver experiences that truly resonate. I want to thank our teams for their continued collaboration and determination. We are building meaningful momentum, and I am confident that our collective efforts are setting the stage for a strong finish to the year. Back to you, Mike.

Thanks, Kristin. It's exciting to hear about all you and your teams have going on and especially exciting to see our PLAY business launch, which we believe has tremendous potential.

Now shifting gears to AI. The value of real-time trusted content continues to increase, and we are excited to partner with Microsoft on the upcoming launch of their publisher content marketplace. We are proud to be one of the select few U.S. publishers participating in their pilot program with Microsoft Copilot. And this exciting new initiative represents one of the first large-scale efforts to fairly compensate publishers for AI usage of their content to ground AI-powered features and results with trusted output.

With regard to our AI content monetization strategy, in addition to creating valuable trusted content at scale and licensing at fair value is our new approach to deploying technology to block AI bots that try to scrape our content. Today, we are blocking over 99% of AI verified bots other than Google that try to scrape our content without licensing agreements in place. In September alone, we blocked 75 million AI bots across our local and USA TODAY platforms, the vast majority of which were seeking to scrape our local content and about 70 million of those came from OpenAI. This is a clear signal of just how valuable our content is to these AI engines, especially our local content, which we are uniquely positioned to deliver at scale.

We will continue to partner with and provide access to companies that are interested in licensing our content responsibly and fairly. However, current structures limit publishers' ability to control how some major platforms such as Google use unlicensed content, an issue we continue to advocate for as part of building a fair and transparent AI ecosystem. Additionally, in Q3, we announced that DeeperDive, our industry-first Gen AI answer engine is now fully implemented on USA TODAY. Following a successful beta in Q2, DeeperDive brings the power of Gen AI conversations directly on USA TODAY's platform for all users, tapping into years of proprietary real-time, high-quality content created by journalists and editors at USA TODAY and across the USA TODAY Network. Since launching in mid-September, readers have asked more than 3 million questions with average daily activity well over 50,000 interactions. These early results show strong traction and highlight the meaningful opportunities to drive higher readership, deeper engagement and in turn, enhanced monetization on our platform.

Now turning to our DMS segment. We continue to see encouraging stabilization across our key metrics with year-over-year trend improvement on our core platform, which includes revenue and average customer count, while ARPU remained near all-time highs. These gains reflect the positive impact of our strategic initiatives such as AI smart bidding and enhancements to our AI-powered software solution, Dash.

For those who have been following our progress, I would like to provide a quick update on where these key initiatives currently stand. Starting with AI smart bidding. Search remains a key lead gen tool for our SMBs, and we've created greater efficiencies through the use of AI smart bidding. The adoption continues to ramp. And by year-end, we expect close to half of our U.S. budgets to be leveraging it. We are seeing encouraging results so far as it delivers a better cost per lead versus traditional integration strategies.

Turning to Dash. We continue to see strong momentum with our voice and SMS agents managing a growing volume of customer interactions. Our voice agents are managing 15% of calls for enabled customers. As a result, we are driving greater efficiency and simplifying daily operations for the SMBs we serve.

In parallel, for customers whose needs fall outside our core platform's ideal profile, particularly larger bespoke or media-heavy programs, we are increasingly serving them through capabilities in our Media segment. This approach puts each customer on the best fit solution, protects platform unit economics and enables us to grow DMS at the company level while concentrating incremental investment where ROI is highest on our own platform. Together, these efforts are building a stronger, stickier and more resilient DMS business, and we see a clear path to sustained growth.

I'd now like to turn the call over to Trisha to provide additional details and color around our 2025 third quarter financials. Trisha?

Thank you, Mike, and good morning, everyone. Please keep in mind, all comparisons are on a year-over-year basis unless otherwise noted. In the third quarter, total revenues were $560.8 million, a decrease of 8.4% or 6.8% on a same-store basis. Despite the static revenue trends in Q3, we expect notable improvement in the fourth quarter, which is driven by a more significant impact from AI licensing revenue and larger digital advertising campaigns, along with targeted subscription pricing adjustments and platform enhancements.

In Q3, operating costs and SG&A expenses decreased approximately 8%, reflecting our ongoing focus on disciplined cost management. That being said, Q3 expenses reflect incremental costs associated with our cost reduction program, which removed $100 million in annualized costs from our base. We believe the reduction of expenses, primarily associated with our headcount reductions, also accelerated some costs into the third quarter in areas such as medical and other benefit-related programs, which traditionally we would have expected to incur in the fourth quarter.

Total adjusted EBITDA was $57.2 million in the third quarter, representing a 10.2% margin. These results were impacted by the timing of large drivers of revenue and adjusted EBITDA that shifted into the fourth quarter as well as the expense impacts I just mentioned. Many of our most profitable revenue drivers will contribute more meaningfully in Q4 rather than Q3, and our cost reduction program is fully in place as we enter the fourth quarter. As a result, we expect robust year-over-year growth in adjusted EBITDA in the fourth quarter as well as our third consecutive year of full year adjusted EBITDA growth.

Total digital revenues in the third quarter were $262.7 million, a decrease of 5.3% or 4.1% on a same-store basis and represented 47% of total company revenue. Within digital, advertising revenues increased 2.9%, driven by a continued improvement in client retention and our large audience base. We anticipate even stronger results in the fourth quarter, fueled by strong advertiser response to our sports, pets and other high engagement verticals.

In Q3, digital-only subscription revenues totaled $43.7 million, representing sequential growth of 2.4%. As a reminder, we faced our toughest year-over-year comparisons in Q3 as we cycled the prior year's benefit from system conversions and grace relief. Digital-only paid subscriptions also continue to reflect the intentional actions to optimize our acquisition costs by prioritizing long-term monetization versus shorter-term volumes. We believe these deliberate actions are paying off, evidenced by digital-only ARPU achieving a record high of $8.80 and growing approximately 8%. We expect digital-only ARPU to increase in the upcoming quarters as we maintain our focus on attracting and retaining more profitable subscribers.

Looking at the Domestic Gannett Media segment. In Q3, segment adjusted EBITDA was $35.4 million, representing a margin of 8.5%. Revenue trends in Q3 on a reported basis continue to reflect the sale of the Austin American-Statesman in Q1 and businesses divested in late 2024.

Turning to Newsquest. In Q3, segment adjusted EBITDA totaled $14.6 million, up 4.6%, while segment adjusted EBITDA margins increased 50 basis points to 23.9%. Revenue trends also posted their second consecutive quarter of growth, increasing 2.5% year-over-year.

In our Digital Marketing Solutions segment, Core Platform revenue in the third quarter was $114 million. Segment adjusted EBITDA was $9.8 million. We ended the quarter with approximately 13,400 core platform customers and core platform ARPU remained near record highs at approximately $2,800, which reflects growth of 2%. We see encouraging signs of stabilization. And in Q4, we expect year-over-year improvement in both core platform revenue and segment adjusted EBITDA. and to better serve our customers in certain categories, particularly large multi-location businesses, we have transitioned some of these clients to be serviced through our Media segment, where they can leverage additional tools and capabilities.

Now let's shift to the balance sheet. At the end of the third quarter, our cash balance was $75.2 million and outstanding net debt was approximately $921 million. Debt reduction remains a top priority, and we continue to make meaningful progress during the period. In Q3, we repaid $18.5 million of debt and generated $4.9 million of free cash flow. For the 9 months, we have repaid $116.4 million in debt, which brings our total debt to below $1 billion, and we expect to repay over $135 million in debt during 2025.

As we look at the full year, several large revenue drivers that were originally expected to contribute to the third quarter are now expected to start in the fourth quarter. As a result, we now anticipate digital revenue to be down in the low single digits for the full year on a same-store basis, with growth in the low single digits in the fourth quarter. We believe the expected strength of the fourth quarter, combined with continued expense discipline, positions us to achieve full year growth in adjusted EBITDA and 30% growth in free cash flow. We know there is more work ahead to strengthen our financial results, but the third quarter also underscores the progress we're making to build a more durable and diversified business.

With the scale of our audience, the strength of our brands and the ability to leverage our content across multiple revenue streams, we believe Gannett is well positioned to create lasting value. Combined with an ever-improving balance sheet and a disciplined focus on the execution of our strategy, we believe we are laying the foundation for long-term value creation. I will now hand it back to the operator for questions, and then we will go back to Mike for some closing thoughts.

[Operator Instructions] Your first question for today is from Giuliano Bologna with Compass Point.

Congrats on the continued execution, especially on the securing another important AI licensing deal. As a first question, you referenced some of the developments this week in the Google antitrust lawsuit that you have outstanding. Can you share what the development was and how you think it impacts the case and how the case should move forward as a result of that development?

Hey, Giuliano, good morning. Thanks. Yes, let me start by explaining that or actually emphasizing that this is a very positive development for Gannett as it relates to our case against Google. And so a little more detail on what happened on Tuesday this week, Judge Castell the federal judge in New York issued a summary judgment ruling in our case against Google. And effectively, the court agreed with the Department of Justice's earlier findings earlier this year that Google illegally monopolized the digital advertising market and ruled that Google can't relitigate those issues in our case. So Judge Castell said Google basically -- said Google can't relitigate the issues in our case. That was a big win for us.

But trying to simplify it, what it means for us. It means the court has already established liability on key aspects of our claims. And the case really now focuses on damages and remedies for these claims. And this is another important point, Giuliano. We believe this ruling has the potential to move the case forward more quickly now, allowing us really to concentrate on demonstrating the harm caused and the remedies we're seeking, which obviously include compensation for the damages done to us. So it was a significant win for Gannett that establishes liability, and we think moves the case along quicker and also will lead to a more fair and open digital marketplace eventually. So this was a really positive milestone for us, and we're excited about the developments this week, but also staying really focused on the next steps of the process in this case.

That's very helpful. Maybe shifting gears a little bit. You noted some of the large revenue drivers shifting, yes, from 3Q into 4Q. Can you unpack what's driving that timing and whether it reflects broader trends you're seeing in advertiser demand or digital monetization or onetime shift.

Yes, sure thing. I think the first point I really want to emphasize here is we do think based on October's activity that it is simply a timing shift. And I'll start with Perplexity, and that was really not -- that was just due to a product launch timing shift. We signed the deal with them, as you know, towards the beginning of the third quarter, and their common browser was scheduled to launch in September, and that got pushed to early October. And so the revenue that we had planned on for September from that licensing deal didn't begin until October. So truly a timing shift tied to a product launch. The good news is it launched in early October, and we are enjoying that partnership now with Perplexity, and it will help the fourth quarter now.

We also saw a number of digital advertising deals that were in the pipeline shift from Q3 spend to Q4 spend. And again, the good news here is that we're successfully seeing those deals up and running in October and running their messaging and contributing to revenue in October. So we do believe that there's not more to it than a timing shift, both for the advertising customers that shifted as well as Perplexity. So we feel good about -- feel disappointed that it impacted the third quarter, but really excited about the positive impact it's going to have for us on the fourth quarter.

That is very helpful. I appreciate it. I guess can you give some more color on the incremental expenses that you incurred during the third quarter? And do you think any of these will continue to have an impact going forward?

Hey, good morning, Giuliano, this is Tricia. Yes, the biggest component of the incremental expenses that we saw compared to what our expectations were for the quarter were associated with the headcount reductions that we completed in the quarter. So that was tied to that $100 million cost takeout that we did. So we saw things like medical and other employee benefits programs spike up in the quarter. And we really think that, that was tied to people exiting the organization. And to your question about whether we think that continues, I don't think so. I actually think it has the ability to have a favorable impact on Q4. Generally, we see a spike in claims towards the end of the year, and we really think that, that was pulled forward into the third quarter as people exited the organization.

The other thing I would highlight that's really important is that cost program is now fully implemented. So we're going to see the full benefit of that impact in the fourth quarter, and that really should set us up to have a strong year-over-year EBITDA growth in the fourth quarter.

That is very helpful. I appreciate that. And then next question, given that the digital revenue mix is now approaching 50% of revenue, how do you see that evolving into '26? And what gives you confidence in the durability of those revenue streams?

Yes. As you know, in Q3, we were about 47% of total revenues coming from our digital businesses. We expect that to be closer to 50% in the fourth quarter and then expect that to surpass 50% in 2026. And I think it's important to note that the makeup of our digital revenue is much more diverse today than it has ever been. You heard Mike talk about Perplexity launched earlier this month. We announced a Microsoft AI licensing deal just this morning. We've signed agreements with AI licensing partners throughout the year. We think there are more AI deals to be coming in the coming quarters and months.

You heard Kristin reference the launch of PLAY, and we think that could be a good contributor from both the digital advertising and a subscription standpoint. And so we continue to develop these new revenue streams that can be created from the content and the core competencies we already have, creating high-quality content at scale and attracting this massive audience. And so we have all these new revenue streams taking hold, and we're also seeing some progress in our foundational revenue streams. The DMS initiatives that Mike mentioned, the fact that our digital-only subscription ARPU continues to grow and to reach new highs as our strategy takes hold. Our digital advertising deals have been strong as we enter the fourth quarter, and that ladders on top of what's already been a growing business. So we've got this really diverse digital revenue profile. We've got this really strong audience and the direction of each of these components is headed in the right direction, and that gives us a lot of optimism on the fourth quarter, but getting to that 50% plus composition in 2026.

That's very helpful. And then maybe the last one, touching on the AI side. You referenced the new AI partnership, including Microsoft. Can you elaborate on how those partnerships translate to monetization? And what do you see as next steps?

Sure.

Trisha, I'll take this one. This is Kristin. And first of all, thank you, Giuliano. I'm always very, very happy to talk about the value of these partnerships. I think that what is foundational to a healthy future for AI on the web is content that is high quality, of course, also trustworthy and factual. And so the way we're thinking about this is that as AI agents become sort of central to how people are discovering and consuming content, we -- alongside companies such as Microsoft, we believe that publishers play a critical role in determining the value of their content in these experiences.

So now Microsoft is focused on building a scalable and equitable solution, one that is going to ensure that publishers are fairly compensated for the value that they're delivering through their content offerings, their premium content offerings. And so to this end, they are piloting this publisher content marketplace. They're doing this with a number of select U.S. publishing partners, and the aim here is to learn and to shape the tools and the policies and the pricing models really that are going to define this era.

I'm certainly happy -- I think we're all very happy to be participating in creating that marketplace, creating it with Microsoft and with Perplexity and other partners. Each of our licensing deals, Giuliano, is structured a bit differently. Some of them include direct licensing fees, others include revenues sharing components. What I would say is that they all expand the ways that we can monetize the content we already produce and do it at fair value. So we see significant long-term opportunity in the space. The AI content marketplace certainly is still developing. I think the ultimate models for monetization are not quite fully defined yet. So our approach is to participate early, help shape the framework and then ensure that our agreements do not trade off the long-term upside of this evolving ecosystem.

So I'd just say that overall, we view these partnerships as early building blocks for a more sustainable, more balanced digital ecosystem and one where publishers are rewarded for the value they are creating. I hope that helps.

Your next question for today is from Matt Condon with Citizens.

My first one is, just can you elaborate on what you're seeing as far as traffic coming from these AI platforms? Are you seeing meaningful click-through rates and meaningful traffic coming to your sites from these platforms, then thinking specifically about Perplexity just as that deal is launched in the early days here?

Yes, Matt, thanks, and thanks for the question. No, there's not meaningful traffic coming from AI search companies. And that's really why the value from a monetization standpoint for publishers like Gannett has to be from the licensing of our content. The whole model of answers on AI search platforms is they get the full answer on that platform. So the Google model of the blue links click back to the publisher's site is not the same model inside of the AI platform. So that's why we've been so focused on these monetization deals, these licensing deals because we don't see the traffic coming back.

The other point I would make, Matt, is that we are actually blocking 99% of all the AI bots trying to scrape our content, other than for those platforms that we have to deal with or, as I mentioned early on the call, with Google for which we can't block because we still need that search traffic from the blue links, even though they don't distinguish and let us authorize content for the blue links only and not for AI, which is the problem I mentioned in the ecosystem that I mentioned earlier in the call. So the short answer is no, there's not a lot of traffic coming from the AI search platforms. That's why the licensing deals are so important. However, what's also important is that we're blocking the scrapers. And so in order to get traffic on their sites based on our content, they need to pay us for that content. And we continue, as you hear from Kristin on these quarterly calls, we're continuing to develop ways to go direct to the consumer and bring the consumers directly to our platform and also using other social media ways to bring consumers to our platform.

And I think the final point I would make is despite not getting traffic necessarily from the AI search platforms, we're not having an issue with overall traffic. You heard this morning we had 187 million uniques on average on our platform in the third quarter, and that was up from 181 million uniques in the second quarter. So we're doing a great job creating the right content and doing the right -- doing a great job in driving consumers to our platform.

Great. And maybe just a follow-up on that. It's just obviously, one of the major companies that you're blocking is OpenAI. And can you just talk about just their willingness to come to the table, maybe other AI platforms that you don't have partnerships today, their willingness to come to the platform and negotiate deals where you do feel like you'll get fair value for your content. Just how is that pipeline developing here today?

Yes. OpenAI, as you heard, was -- is the biggest offender in terms of trying to scrape. I mentioned we had 75 million AI bots we blocked and about 70 million of them were OpenAI. Another interesting data point there is that we're rounding down, it was a little more than 70 million. 69.9 million of the AI bots from OpenAI that we blocked were seeking our local content, really interesting. They really want our local content. We blocked them 69.9 million times in September.

OpenAI is not willing to cut a fair deal at this point. We continue to talk to them, and we'll continue to block them. And we do know that there's value in our content. Otherwise you wouldn't have seen over 70 million attempted scrapes in the month of September alone. So short answer, Matt, no, we haven't gotten to a good place with them yet. We're really hopeful to. Our goal is to be -- and you heard it in Kristin's discussion and answer to the question Giuliano asked is we want to be proactive in creating the right solutions here with our AI partners. And so that remains the path we'd like to take, and we'd love to take that path with somebody like OpenAI.

That's interesting. And then maybe just shifting gears here to the DMS side of the business. Can you just elaborate on what you were talking about, about pushing certain clients to the Media segment? Talk about the benefits there are both for those clients and for Gannett, just, yes, how, just how that strategy will develop over the long term.

Yes. Matt, this is Trisha. Good morning. I think there's 2 things here. First is how do we invest with the highest ROI in our platform? Who is the right ideal customer for our DMS platform? And how do we focus our investments to make sure that we are delivering the best experience and the lowest cost per lead for those customers on our platform. And we think we've identified what that ideal customer profile looks like.

For those who sit outside of that, so you heard us talk about really large customers that are multi-location. There are tools on the market today that allow us to do that more quickly, get those campaigns up and running with more speed and to manage many, many different locations at scale, still leveraging some of the knowledge we have within the company and within the platform. But rather than develop that on our own platform, we're starting to leverage some tools in the media space that allow us to serve not just the ideal customer on our DMS platform, but a broader category of DMS advertisers. We also see that there's a percentage of DMS customers who want a predominant media buy. So a lot of our customers buy across our platform. But when somebody wants a predominant media buy with DMS, we can use some of these tools to service that buy more effectively. So it's really about how do we get the most value out of our platform and how do we deliver the best experience for our customers.

Great. That's very helpful. And then maybe just one last one for me. Just great to see debt below $1 billion for the first time since the merger. Can you just talk about where we sit today as far as just real estate and asset sales and further debt paydowns?

Yes. So we're at $116 million of debt paydown through the year. We feel very comfortable that we'll get to $135 million or above for the full year. We still have a few small to midsized real estate deals in our pipeline that we expect to get through Q4, maybe Q1. We know we've talked about this before. We will always have some things in our portfolio that we're able to monetize. But I think once we get through this next chunk, we've largely monetized our real estate portfolio. But we also see that we're generating a good amount of free cash flow. We have several drivers for improved free cash flow next year. This year, we'll be up 30%. Next year with a lower debt balance and lower interest rates as well as the improving trends in our revenue and our EBITDA, we'll have a significant amount of free cash flow to address our debt. So there's always something in our portfolio. But I think from the real estate perspective, we've got one more small chunk, and then we've largely monetized that.

Your next question is from [ William Kavaler ] with [ Odeon Capital ].

Going back to licensing, this is obviously becoming a critical or is expected to become a critical revenue stream. Do you guys have any intention of breaking out that licensing revenue so that we can kind of look at that, say, like a library cash flow kind of revenue stream?

Yes. Great question. I think 2 thoughts there. One, and Kristin mentioned this earlier too, is the business model for our AI partners is still developing. And I think the long-term play for us on how we monetize the AI partnerships with the most upside is still developing. And so I think we want to see how those 2 things develop, and it does have to become a bit more of a meaningful piece of our overall revenue streams. But the short answer to your question is, yes, I could see us breaking licensing fees out at the right time as it becomes a more significant part of our overall digital revenue stream and as we have more confidence in what the sustainable revenue model is for us.

We have reached the end of the question-and-answer session, and I will now turn the call back over to Mike for closing remarks.

Yes. Thank you, and thanks for being with us today. And as we part, let me leave you with a few thoughts to wrap up this morning.

As you heard from us this morning, we're very optimistic about a strong fourth quarter, and we're nearing a month into that quarter, and we're encouraged by what we're seeing in October.

To summarize, we had some clients shift digital spend from Q3 into Q4, and we'll realize the full benefit of our $100 million cost reduction program in the quarter. And that's all on top of what is typically a strong quarter for us from a seasonality standpoint. So high expectations for the fourth quarter. We're thrilled to have our Perplexity licensing deal up and running now in October and also really excited to be able to announce our next licensing deal with Microsoft this morning. And as I mentioned on the call, we do expect to announce a couple more AI partnerships over the next couple of months or a couple of quarters. We're encouraged by the pipeline there.

And also, this came up just a minute ago, but we're really excited about how we continue to strengthen the balance sheet and continue to reduce debt. we're particularly excited to see our total gross debt drop below $1 billion. And with interest rates declining and lower debt balances, Trisha just mentioned, we expect that to lower our interest costs quite a bit in 2026, and that will be a big contributor to our free cash flow growth next year, which that free cash flow growth will allow us to continue to pay down debt above and beyond what our normal amortization is.

And then final thought is just we're pleased, as you might expect, to see Judge Castell's ruling on Tuesday in favor of our partial summary judgment filing in our case against Google. This establishes liability for Google and moves our case an upcoming trial to a damages case for our key claims. And we're hoping a trial date gets set very soon. Although we think -- altogether, we think this sets us up for a strong fourth quarter and a strong future, and we look forward to updating you on the fourth quarter results early next year. Thanks for joining us today.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Welcome to the Gannett Company Q2 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I would now like to turn the conference over to your host, Matt Esposito, Head of Investor Relations. You may begin.

Thank you. Good morning, everyone, and thank you for joining our call today to discuss Gannett's second quarter 2025 financial results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer; Trisha Gosser, Chief Financial Officer; and Kristin Roberts, President of Gannett Media.

If you navigate to the Gannett 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 and our full year 2025 business outlook.

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 Gannett's 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, adjusted EBITDA margin and adjusted net income attributable to Gannett. You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the earnings supplement.

Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or a solicitation of offer to purchase any Gannett securities. The webcast and audio cast are copyrighted material of Gannett and may not be duplicated, reproduced or rebroadcasted without our prior written consent.

With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO.

Thank you, Matt. Good morning, everyone. The second quarter reflects continued progress across most all facets of our strategy. During the call this morning, you'll hear a lot about the sequential improvements in our financial results from the first quarter to the second quarter.

As we mentioned last quarter, 2025 will unfold as a year of 2 halves, and we are now beginning to see that shift take place. While the first half of the year didn't fully meet our expectations, momentum is building across key areas of the business, and you'll hear today about the operational and strategic initiatives that are improving our current trends and positioning us for stronger performance in the second half of the year. Stronger performance will also be driven by our recently announced $100 million cost reduction program and the strategic AI content licensing agreement we announced yesterday with Perplexity.

Trisha will walk through details later in the call, but a few key highlights I want to address upfront this morning that we expect in the second half of the year. Those include same-store digital revenue growth between 3% and 5% year-over-year, meaningful total adjusted EBITDA growth compared to the prior year, and free cash flow growth of over 100% versus the prior year.

We are seeing our key financial metrics move in the right direction. We saw that in Q2, and I'll run through a few of those in a second. We are also seeing that momentum and improvement carry into the third quarter, which we believe positions us well for the back half of the year.

Looking at Q2, we drove sequential improvement across our key financial metrics. These include total adjusted EBITDA of $64.2 million, reflecting a sequential increase of 27%. We generated $17.6 million in free cash flow, representing sequential growth of 73%. We repaid $23.4 million of debt in the second quarter. And for the first 6 months, we have repaid close to $100 million of debt.

Same-store revenue trends also improved sequentially, driven by momentum across our digital portfolio. 3 of our 4 digital revenue categories posted sequential growth, and our overall digital revenue performance strengthened as the quarter progressed. Separately, digital advertising revenues grew 4% year-over-year as compared to being down slightly in the first quarter. Realizing these improvements in the second half of the year is critical to our ongoing transformation, and we believe our progress and current trends position us to accomplish this.

Further, in the third quarter, we began implementing a cost reduction program targeting approximately $100 million in annualized expense reductions. And as a result, we expect total adjusted EBITDA to grow for the full year of 2025 over 2024 with meaningful growth in the back half of the year. And we believe this cost reduction program positions us to deliver solid total adjusted EBITDA growth again in 2026 and will lead to continued expansion of adjusted EBITDA margins.

We expect the majority of these efficiencies will be implemented by the end of the third quarter with a small portion expected to carry into the fourth quarter. These actions are targeted, near-term and are already in motion, which, along with the green shoots across our digital portfolio that we are seeing, reinforce our confidence to drive much stronger performance in the second half of the year.

Now let's turn to some key operational highlights from the second quarter. Our diversified digital revenue strategy is rooted in having an audience at scale with improving engagement in order to provide a foundation for sustainable growth. In the second quarter, which marked the first quarter the audience from the Austin American-Statesman was excluded, we maintained our position as one of the leading news and information providers among content creators with 181 million average monthly unique visitors coming to our platform.

This underscores the continued strength of our overall reach. We also improved our engagement with that audience, evidenced by another quarter of page view growth compared to the prior year. We believe our heightened focus on monetizing the full spectrum of our audience through personalized experiences and diverse revenue streams positions us to drive meaningful improvement across our digital portfolio.

A clear example of this progress is our digital advertising business, which returned to year-over-year growth in the second quarter. We've consistently seen how scaled audience growth and increased engagement directly drive programmatic yield and revenue. However, the more meaningful upside lies in our ability to convert that audience into premium, high CPM direct campaigns that align with advertiser objectives.

We believe we will continue to benefit from the stability we are seeing across the broader advertising marketplace and that our growth will accelerate as we further leverage the strength of the USA TODAY brand and the reach of our national sales organization. We believe publishers in general, but USA TODAY NETWORK in particular, provide an attractive brand-safe platform. And as a result, we see significant potential to unlock additional demand for large marketing budgets.

Turning to our digital-only subscription business. The last 6 months have been a reset, hard but healthy. As we've evaluated the data on churn, we made the decision to stop acquisition that delivered volume without long-term subscriber value. We have calibrated our focus on high-value subscribers and are prioritizing ARPU and sustainable growth. That means some pain in the short-term, but this is an intentional necessary shift that is already starting to show positive signs of improvement. Our local subscriptions continue to be our highest ARPU group, and we are doubling down on this core, where we have a differentiated product, strong brand trust and significant pricing power.

Last year, we largely priced across the board. This year, we're localizing our approach, raising prices in markets with higher engagement and being flexible where needed. It's not a one size fit all, and we're getting more sophisticated in our approach. As we grow this business, we will continue to calibrate our focus on volume and profitability over the long-term. We remain committed to growing digital-only subscriptions, but we are building our subscriber base with intention.

This is important as we are seeing positive traction from this approach as digital-only ARPU increased both sequentially and year-over-year. We believe there is continued upside in ARPU, and we expect sequential improvement in digital-only subscription revenue for both the third quarter and the fourth quarter as we continue to build our base of loyal core subscribers.

With that, I'll turn the call over to Kristin to outline some of the strategic initiatives in motion for Gannett Media during the second half of the year.

Thank you, Mike. Gannett Media continues to lead as an organization that prioritizes its audience, experiments with purpose and intent and moves at the speed of news. The results speak for themselves as we continue to have one of the largest digital audiences among content creators in the country.

As I outlined earlier this year, our focus in 2025 is engagement. We will continue to lean in on highly engaging verticals such as sports, where OneTEAM Sports continues to demonstrate its dominance. In the mold of the Paris Olympics, we have successfully created an effective and repeatable playbook to dominate the biggest tentpole events. The power of our success was evident during major sporting events such as the Kentucky Derby, Indy 500 the College World Series, where we generated notable increases in audience, page views and readership per story.

Our goal when we launched OneTEAM Sports was to drive repeatable audience growth as we strive to become the nation's most read sports network. And our results in the first half of the year show that we are on our way. Importantly, this passionate and highly engaged audience drives meaningful scale and delivers tremendous value to our advertising partners.

Now with the football season quickly approaching, this gives us another chance to engage some of our most loyal readers and viewers with unmatched expertise and authority. Our mission for this season remains the same, delivering content that matters to them in the moment every time while opening new windows for readers to see the endless inventory of exceptional content and programming opportunities that we have throughout the network.

This includes expanding our high school football content portfolio, which is a key driver of local digital-only subscriptions, also refining and expanding the NFL picks experience and leveraging newsletters to capitalize on our success with college football.

We also have ambitious plans to become the leading force in entertainment. We have recently made a strategic hire, Wendy Naugle as our USA TODAY NETWORK Executive Editor of Entertainment. Wendy most recently served as the Editor and Chief for People, and she brings over 25 years of editorial growth and strategy development to our organization.

Entertainment presents an exciting opportunity to expand our audience to deliver more personalized and relevant experiences and to drive higher digital revenue per user and per visit. We are moving quickly to execute our strategy that creates standout experiences around the topics our readers love, such as celebrities, fashion and style and doing so in the formats and platforms they prefer. This deepens their connection with our products and entices them to take another step in their journey.

Similar to sports, entertainment is a powerful draw for our advertisers and also offers a compelling opportunity to grow our e-commerce business. On that note, our digital-only subscription volumes in Q2 reinforces that we still have work ahead to fully unlock the company's potential. I'm encouraged that our refined acquisition strategy drove both sequential and year-over-year growth in digital-only ARPU.

Smart pricing plays a key role in our strategy, and we expect the back half of the year to benefit from a shift away from low-priced introductory offers, which based on our experience, generates minimal revenue and results in higher churn to a series of annual subscription offers that are expected to drive near-term revenue, reduce churn, strengthen our base of loyal readers.

That said, we recognize that a portion of our audience will always remain relatively light consumers of our content rather than bringing them into the funnel through these high churn, lower intro offers, we plan to introduce pay-per-article options that better align with their consumption habits.

We also are taking a more dynamic approach to pricing by implementing models that better reflect the unique characteristics of our local markets. In parallel, we also see multiple opportunities to accelerate overall consumer monetization. We recently launched stacked products, which enables multi-product subscriptions. It's in beta across a few markets, and that is a foundational step with long-term potential.

And as we look to more fully monetize our enormous audience, we also expect to lean more heavily into games to broaden our consumer revenue portfolio. To put it concisely, we are moving with speed and executing with precision, and we will continue to try new things, some that will have an immediate impact and some that will take time to scale as we work to reenergize our local consumer base and accelerate total consumer monetization.

Back to you, Mike.

Thanks, Kristin. It's exciting to hear you share more about the key initiatives underway to deepen engagement and enhance the overall monetization across our digital advertising and digital-only subscription categories.

Now shifting gears to AI. We are leveraging every opportunity to lead through innovation and strengthen our competitive position in today's dynamic digital landscape. You might have seen yesterday that we announced an exciting new deal with Perplexity, the AI-powered answer engine to license content from USA TODAY and the USA TODAY NETWORK of over 200 local publications.

Gannett's premium content and trusted journalism will be integrated into Perplexity's AI-powered search experiences, including its newly released agentic web browser, Comet. The deal is comprised of both licensing fees and advertising revenue share and importantly, represents what we believe is fair value for our content. This strategic alliance with Perplexity exemplifies our continued leadership in embracing transformative technology and reflects our belief that innovation and responsible stewardship must go hand-in-hand, setting a standard for the way quality content and trusted journalism should be valued.

Additionally, in the second quarter, we became the first publisher in the U.S. to launch Taboola's generative AI answer engine, Deeper Dive within USA TODAY. While still in beta, we are expanding this technology to a broader audience to connect readers with clear answers to their questions and surface real-time content exclusively from our trusted USA TODAY NETWORK.

We are proud to bring this innovative experience to our audience, which we expect to increase time on site and deepen reader loyalty. Importantly, Deeper Dive also creates a new monetization channel by inserting contextually relevant high-intent ads directly into the AI-powered results page and in turn, allows us to capture search-like advertising revenue on our platform.

Early performance has exceeded our expectations, and we are continuously expanding the beta launch to additional users. Furthermore, the growing volume of our user queries is expected to provide real-time insights that can actively inform our content strategy. As we gain a deeper understanding of the topics users are searching for, we can deliver timely, relevant content, which in turn is expected to drive stronger advertising CPMs and increased engagement from readers who are more likely to become subscribers.

To protect and monetize the value of our journalism and content in the AI era, we are taking a two-pronged approach. First, by onboarding to the Snowflake Marketplace, we provide enterprise developers a straightforward, fully licensed way to train and deploy AI models on our content under transparent usage-based terms.

Second, we have implemented new measures to prevent unauthorized data collection and scraping and direct such activities to a specific page for licensing information. This technology, which is now being adopted more broadly across the industry, is already reducing unauthorized use and highlights the premium attached to our trusted real-time news content.

Over time, we expect the industry-wide shift to tip the scales toward paid access. And as changes to industry dynamics have tempered the growth we initially expected from partnerships, we have redirected those efforts toward building high-value advertising verticals on our platform. An example of that is our recently announced multi-year agreement with AddressUSA to power an online real estate portal across the USA TODAY NETWORK.

As one of our largest multi-year agreements, AddressUSA's listings have been integrated throughout our network alongside editorial content, including topics such as home buying, selling, decorating and improvement. We are excited to partner on this innovative new real estate marketplace hub, giving our readers the information they need while generating immediate revenue opportunities at a very high margin.

Now turning to our DMS business. We had a solid quarter with noticeable improvement across key areas of the business. We saw sequential growth in core platform revenue, segment adjusted EBITDA and client count. We also achieved a record high in quarterly core platform ARPU, which grew both year-over-year and sequentially. These positive signals, along with the strategic initiatives underway to enhance the product suite, reinforce our optimism for the second half of the year.

These strategic initiatives include. First, strengthening our search optimization capabilities. Search remains an important component of advertising budgets, and we are leveraging tools such as Google AI Smart Bidding to better position our clients in search results. This initiative is expected to deliver measurable improvements in campaign performance and customer retention across our broader portfolio.

Second, we established a CRM integration in the second quarter to deliver more targeted personalized campaigns and generate stronger insights for our customers, which we believe will lead to higher ARPU and better retention. Early results are encouraging as campaigns with this new integration have seen immediate measurable improvements to their marketing ROI.

And then lastly, we launched our conversational AI voice agent within Dash to create a seamless and innovative omnichannel customer engagement experience. We view this as a significant opportunity for our DMS business and a key enhancement to our core product offering. These initiatives are all early stage, but we are already seeing a positive impact on ARPU, retention and customer growth.

As we continue to scale them across our customer base, we expect these efforts to contribute meaningfully to the expected revenue growth during the second half of the year as well as 2026.

I'd now like to turn the call over to Trisha to provide additional details and color around our 2025 second quarter financials, as well as the details on our updated full year 2025 guidance. Trisha?

Thank you, Mike. Good morning, everyone. Please keep in mind, all comparisons are on a year-over-year basis unless otherwise noted. In the second quarter, total revenues were $584.9 million, a decrease of 8.6% or 6.4% on a same-store basis. This represents a 130 basis point improvement from Q1 same-store revenue trends. While we are pleased to see the improvement, we are not yet improving our revenue trends at the pace needed.

As a result, we expect to continue to align our expense structure with our revenue trends. In Q2, operating costs, combined with SG&A expenses decreased approximately 8%, reflecting our commitment to prudent cost management. Building on that momentum, in Q3, we began a cost program targeting $100 million in annualized cost savings, which is expected to lead to improved total adjusted EBITDA in the second half of the year. These initiatives give us near-term flexibility while supporting our digital transformation.

We are focused on transformative cost reductions that continue to variabilize our cost structure, including an increased reliance on automation and third-party resource providers to reshape the organization into a leaner, more efficient company. Crucially, this is a moment to tap into AI-driven automation across our workflows and back-office processes, which is expected to unlock an additional layer of operating efficiency.

We have also announced the closure of 2 of our largest production facilities, both slated to shutter later this year. The consolidation of these plants into other facilities, along with ongoing mail delivery conversions is expected to have a positive impact on our expense run rate going forward.

Total adjusted EBITDA was $64.2 million in the second quarter, representing a margin of 11%. On a sequential basis, total adjusted EBITDA increased $13.7 million. While total adjusted EBITDA remains lower than the prior year, we expect to see year-over-year growth in Q3, Q4 and for the full year as a result of the expected improvement in revenue trends and the impact of the cost management program.

On the bottom line, we reported a net income of $78.4 million in the second quarter, representing an improvement of $64.6 million. Our results also improved on an adjusted basis with adjusted net income attributable to Gannett of $84.5 million, increasing by $55.3 million. The net income of $78.4 million is heavily impacted by a tax benefit of $87.5 million, which reflects large quarterly variability expected across the year tied to the pre-tax results of each quarter. We expect to have a tax provision for the year and given the tax benefit of approximately $94 million year-to-date, we expect an exceptionally large provision in the back half of the year, largely in the fourth quarter.

Total digital revenues in Q2 were $265.4 million, down 4.6% or 2.8% on a same-store basis and represented over 45% of total revenues. We saw a 100 basis point improvement in same-store digital trends from Q1 to Q2, while the digital share of our revenue expanded 160 basis points over Q1. Within digital revenues, digital advertising returned to growth due to solid performance in our page views, programmatic revenue and improvement in direct sales from our national teams.

In Q2, our digital-only subscription revenues totaled $42.7 million. We continue to feel the impact of rebuilding our subscriber base, tightening offers and implementing a shorter grace period. While we believe the largest sequential impacts from grace changes are behind us, it will take a few quarters to return the digital-only subscription business to year-over-year growth. That said, we are seeing early signs of progress from our more intentional acquisition strategy, evidenced by our digital-only subscription ARPU of $7.79 in Q2, returning to growth both sequentially and year-over-year.

And our strategic efforts to enhance the quality and the value proposition of our print product continue to demonstrate results. While we all know that print and commercial revenues continue to be a declining category for us, we are managing the long tail as effectively as possible. And the actions we've implemented to improve the subscriber experience have tempered declines over the last few quarters. We are committed to managing the print products and related secular declines as efficiently and profitably as possible, and we expect to carry this momentum into the back half of the year.

Turning our attention to the Domestic Gannett Media segment. Revenue trends in Q2 on a reported basis were influenced by the performance in digital-only subscriptions and digital marketing services as well as the first full quarter without revenue from the Austin American-Statesman. In Q2, segment adjusted EBITDA was $43.2 million, up 30.3% compared to Q1. Segment adjusted EBITDA margins of 9.8% also saw sequential growth, increasing by 230 basis points.

Turning to Newsquest. Revenue trends returned to slight growth in Q2, a result of favorable currency rates. Segment adjusted EBITDA was $14.9 million, up 5.3% to the prior year, while segment adjusted EBITDA margins totaled 24.3%.

In our Digital Marketing Solutions segment, revenue remained lower year-over-year, but Q2 showed sequential improvement in both revenue and segment adjusted EBITDA margin through growth in both client count and ARPU. We are pleased with the sequential momentum from Q1 to Q2, which is reflected in the following key areas.

Total core platform revenue was $116.9 million, up 8.1%. Segment adjusted EBITDA totaled $11.5 million, reflecting growth of 35.8% and our margin of approximately 10% also expanded over Q1. Average customer count increased nearly 400, an increase of 2.8% and core platform ARPU reached a new quarterly high in Q2 of $2,830, up 5.1%.

Now let's shift to the balance sheet. At the end of the first quarter, our cash balance stood at $88.5 million, and our outstanding net debt was approximately $926 million. In Q2, free cash flow totaled $17.6 million, up 73% compared to Q1. There continues to be variability in our free cash flow each quarter, so while we expect Q3 free cash flow to decrease both sequentially and year-over-year, we expect free cash flow growth in Q4 and for the full year.

We ended Q2 with approximately $1 billion of total debt, reflecting $23.4 million of total debt paydown for the quarter. We currently have approximately $20 million in real estate assets in various stages of the sales pipeline, and we are increasing our expectation on debt paydown to $135 million for the year.

And in light of slower-than-expected pace of revenue improvement, we are updating our full year outlook. We now anticipate digital revenue to be roughly flat on a same-store basis with growth of 3% to 5% year-over-year in the last 6 months of the year, driven by ongoing digital advertising growth, accelerating DMS trends and the impacts of incremental AI licensing.

Even with our full year revision, digital should still represent nearly 50% of total company revenue by year-end. And as a result, we now project total same-store revenues to decrease in the low to mid single-digit range for 2025 and low single-digits over the last half of the year, which we believe positions revenue to be flat in early 2026.

In part due to the $100 million cost reduction program already underway, we continue to expect year-over-year improvement in net income or a narrower net loss and growth in adjusted EBITDA. We also still forecast free cash flow to increase roughly 30% versus 2024, though we have trimmed the expectations slightly to reflect the near-term cash required to implement those cost initiatives.

As we look ahead, our priorities are clear: to ensure stability on executing on the basics, grow and engage our audience and maximize the sizable revenue streams this audience generates across multiple channels. The sequential gains that we have [ already posted ] give us confidence that momentum will compound into year-over-year growth. We are optimistic and encouraged by our continued transformation into a digital-first business, which we believe will drive enhanced shareholder returns and ensure a long future for journalism.

I will now hand it back to the operator for questions, and then we will go back to Mike for some closing thoughts.

[Operator Instructions] Your first question for today is from Giuliano Bologna with Compass Bank.

Congrats on the continued execution. Maybe to start off, your financial guidance for trends for the back half of 2025 are strong and revenue trends are moving in the right direction. What do you think -- sorry, when do you think your revenues will turn flat?

Thanks, Giuliano. Nice to talk to you again. Yes, we have some pretty exciting opportunities ahead of us here in the third and fourth quarter and as we move into 2026. There's a variety of factors, as you heard on the call, that are really driving our optimism.

One, we didn't spend a lot of time on, but we're actually seeing improvement in our print trends. We've seen that 3 consecutive quarters. So the efforts we're making there to harvest that business and that cash flow are showing continued signs of improvement. So we're optimistic about those being contributors to our overall improving trends. But more importantly, the digital advertising marketplace is very strong right now. And as you heard, we saw a 5 point improvement in the second quarter alone from the first quarter. And so we expect a robust back half of the year with regard to digital advertising, really on the back of our large audiences and large page views.

And then very exciting, the underlying initiatives that we mentioned on the call that are really showing promising signs already, both in the DMS business and the digital circulation business. We expect both of those to drive improvement in trends in the back half of the year.

And then finally, on revenue, just the AI licensing deal we announced yesterday, the AddressUSA deal we announced a few weeks ago, those will start to contribute as the back half of the year goes on to revenue. So all of those things give us the confidence that our Q3 revenue trend will improve versus Q2 and Q4 will improve versus Q3.

And then to answer the end of your question there, we expect to get revenues flat in the early stages of 2026. And then finally, on the strength in the back half of the year and for 2026, combined with the improving revenue trends, we also mentioned or announced this morning a $100 million cost reduction program, and that's going to help lead to much more meaningful EBITDA growth back half of this year and next year as well as really significant free cash flow growth.

As we mentioned this morning in our guidance, we expect it to grow about 100% in the back half of this year and expect really strong growth again next year. So positioned on both the revenue and the expense side to deliver a strong back half of the year and have that carry into 2026.

That's very helpful. Maybe continuing on that point. Can you provide any more details around the cost reduction program in terms of what kind of things you might be reducing or cutting back on?

Yes, absolutely. This is Trisha. I'll walk you through that. So the cost program is really focused on the areas that we can automate, areas that we can outsource and then areas where we may still have some duplication in our organization. And the focus is on places where we can add variability to our cost structure. That's especially true as it relates to our print and our commercial businesses, where we think we have a lot of opportunity to capture that long tail that Mike was talking about that exists for our revenue and for our profitability. And you heard me mention that we're shuttering 2 of our largest print facilities later this year, and we'll also continue to move some of our products to mail delivery where it makes economic sense.

And then payroll is going to be a component of this. but we're really focused on the areas that are ripe for automation and in the areas that we can leverage AI to improve the processes and the workflows that we have in the organization. So we believe that these changes are really intentional, they're really methodical. And what they allow us to do is stay really committed to our product. We get to stay really committed to our content, and that leads to a commitment to our overall growth still.

That's very helpful. As mentioned, we've seen headlines recently about publisher audience and traffic funding because AI search and Google AI search is sending most of the traffic -- or sorry, is not sending the traffic back to content sites. I'm curious what your experience has been on your side.

Sure. It's Kristin. I'll take this one, Mike, if you don't mind. I think

Yes, please.

This is a great question, Giuliano. I think despite this backdrop, I think what you can see in our numbers is that we're continuing to grow. We continue to have one of the largest digital audiences and we are consistently generating at least 1 billion page views per month every month, and we're growing year-over-year. So our audience and page view growth show that we are not seeing declining trends.

And I think that's the result of planning. It's the result of a proactive strategy. And we're leaning into automation and diversification as we lessen our reliance on Google. So we've focused on growing referrals from Facebook and Instagram and Reddit and Threads. But we also see that our service journalism, our connect teams are really deepening engagement, and that has a direct positive impact on the number of people who come to us directly.

I would also say here, Giuliano, that we have not buried our head in the sand. We are using technology to block unauthorized scraping from AI bots. And as the industry adopts it over time, we can create a new marketplace for publishers, as Mike mentioned earlier. And I think our partnership with Perplexity is an absolutely fantastic example of this. We are compensated for our content. We receive attribution, and we share in the advertising dollars.

So AI has, I think, the potential to be disruptive, but we're being proactive. We're being strategic in our approach. And we think it actually has the potential to be highly beneficial in the long-term as well. So I hope that helps, Giuliano.

That is very helpful, and I appreciate it. Next one, I'm curious if there are any updates on the ad tech antitrust case with Google.

Yes. Thanks for that. The various ad tech cases that are out there are continuing to move forward positively in our view. And just as a reminder for backdrop, in April, the judge ruled in favor of the DOJ on all publisher-facing conduct claims that the DOJ brought to trial. So that was a positive development for us. And since that decision, both the DOJ and Google have submitted proposed remedies and that remedies hearing is now scheduled for September with a ruling expected actually later this year. So that's also a very positive development.

And there's other -- another big case is Texas, which has, I think, 17 states attached to it. And that trial scheduled for Q3 has actually been pushed to Q4 simply because they want to see the DOJ remedies trial or hearing happen first. So we do expect that trial to start in the fourth quarter.

And then with regard to our case, we do expect that our case will be scheduled. The trial date will be set, and it will be in 2026. We're not exactly sure when yet, but we think it is getting closer now and it will happen next year. So really, we remain very confident in our case and with how things are progressing and actually believe that the broader developments are all moving in the right direction as well. So overall, seeing positive movement, and we remain very confident in our position.

That's very helpful. And I guess maybe on the digital side with the changes you've made to digital subscriber customer acquisition strategy, when do you think you'll return to year-over-year growth for digital subscriber revenue?

Kristin again here. Listen, the way to think about this is this, we are being much more intentional in our acquisition strategy because we want to ensure that our base of subscribers is sustainable and that it's predictable, but really most importantly, that it's profitable. And our experience is showing that both those low introductory offers and these network-wide pricing actions, they lead to more elevated churn.

So we stepped back a bit from both of these practices, and we're leaning into the value of our local news subscription, which then can be the foundation to what we're calling stacked products. Also, we're utilizing more stable levers like annual offer strategies. We're using more strategic pricing. And we believe -- in addition to that, we'll be able to capture the dollars that were coming to us from high churn subscribers, like people who onboarded through those offers like $1 for 6 months by offering those same casual readers pay-per-article options.

And there were positive signs in the quarter that the strategy is starting to take hold. So we grew digital-only ARPU sequentially. We also grew it year-over-year. And this is the first sequential growth since Q3 of '24. So we expect all of that really to lead to sequential growth in the third and the fourth quarters, and we see overall growth next year.

That's very helpful. Maybe one last one. You obviously -- it's very good to see the Perplexity content partnership announcement. I'm curious, I mean there's a lot of news out there and a lot of articles talking about deals that are being signed around the industry and it seems to be a lot more focus on AI platforms signing content deals. I'm curious on your side, if you're seeing any trends or any changes in discussions or the willingness of AI platforms to come to the table and negotiate potential AI content partnership deals.

Yes. Great question, Giuliano. Actually, we do think there's kind of a momentum swing now more towards publishers. And it's not just publishers speak or publishers talk in their book. We're now seeing a variety of technology companies who also are taking the view that, that unauthorized use of copyright protected content is not right. And these companies are putting their money to work to help develop technologies that allow for the blocking -- complete blocking of AI scrapers. And there are technology companies that are now creating marketplaces for the fair licensing of content for LLMs and things of that nature.

And so an example is our partnership with Snowflake, where we're now on their platform for all their customers who are working on AI models, and they have access to our content through fair licensing deals. Perplexity is an example now of a partnership we've developed. We are talking to Cloudflare, and we have a partnership with Fastly on the technology side that allow us to do proper blocking now of unauthorized scrapers.

And all of that is kind of creating a momentum shift towards having more conversations now with the AI companies that actually do need our content, especially as AI morphs into an answer or search business where real-time updated information is that much more necessary.

So I wouldn't say that it's -- you're going to see a flurry of deals in the next 30 days, but there's definitely a very momentous shift happening moving towards content creators and AI platforms coming together to figure out fair deals. So we're encouraged by that. And I would say over the next 12 months as we finish this year and get into next year, we hope there's quite a few more deals to do.

Your next question for today is from Matt Condon with Citizens.

My first one is just on digital advertising revenue. Understood it was page view growth, programmatic revenue and direct sales that really drove the upside in the quarter. But can we maybe just dig in on each one of those? Were there certain formats that outperformed or different product releases that you guys did in the quarter that really drove that improvement?

Yes. This is Trisha. Yes, a few things. I think you've heard Kristin talk about the consistent page view growth that we've had and the way that we're focused in and in tune with the engagement and the propensity of our customers and our readers. And so that's really driving our programmatic revenue as we continue to increase our page views year-over-year.

One of the things that we're really starting to see take hold is the strength of our national brand and that we have a very brand-safe platform. We have an incredibly wide and diverse portfolio and audience reaching 180 million uniques. And so we're really starting to see, and I think we're at early stages, the benefit of our national brand and some of the larger deals that we're seeing come into our pipeline and take hold. So I think you're going to see more of that as folks really start to see the benefit of the USA TODAY NETWORK brand. And so that's having an impact in our digital advertising as well.

Matt, this is Mike. I would add one more thing. And this is similar to what we're seeing in the AI landscape. We're also seeing momentum in the country coming from the advertising agency side towards maybe moving back to journalism as a place to advertise because the ROI is so healthy. And there's been a movement away from that over the last 20 years, as everyone knows, as technology and the Internet has exploded.

But there's a Stagwell, very well-known company, has put a lot of money behind research that is demonstrating that actually the ROI is one of the best compared to where national advertisers are advertising today. And so there are others in the industry -- others in the advertising ecosystem that are now not just us talking about the benefit of advertising on our platform, but there are others who control budgets and control spend that are putting money to work on research that are showing that there's actually a really good ROI on publisher platform.

So I think that's going to lead to much more significant national advertising opportunities in 2026. And I think we'll be able to get into a lot more advertisers' budgets as a result of that work and us continuing to tell our story and develop our brands. So we're quite encouraged by both a very robust advertising marketplace in the country, combined with our reach and our audience and our scale and the data we have on our audience, combined with the third leg being that there is momentum out there in the advertising ecosystem towards moving back to journalism and to publishers.

Great. That's very helpful. And then I wanted to ask just on the DMS business. Obviously, there is signs of improving trends, which are great there. And I know the strategy is shifting there. But maybe we can just dig in on what is actually taking place in the strategy, both from a sales perspective and bringing new clients into the DMS portfolio, but also just what you're doing from a product perspective, maybe just digging in on each one of those things.

Yes. I'll start with your second question first on the product perspective. So we still see that search is a very important piece of the advertising -- the advertisers' budget. And so we've been doing a lot of work to improve that product. We've implemented AI smart bidding for some of our search customers, and that's lowering the cost of acquisition for them. That's improving the number of leads that they're getting. We also completed in Q2 a CRM integration, and that's been great on the search front as well as it allows for much more targeted, much more fine-tuned targeting for our customers.

And so they're seeing better results there. It's also a much stickier experience as you bring somebody's CRM into our platform. And then I'm sure you've seen that we released the voice agent on our Dash product in Q2, and that's had really great early reviews from our customers who are using that. And it really allows them to use our voice agent to connect with the leads that are coming in, the leads that they don't have the capacity to get to.

So there's a lot underway on the product, both on the core platform side and on continued updates to Dash. So a lot of positive momentum there as we go into the second half of the year. And then as we're bringing in new customers onto our platform, we've been working -- we've been talking about this, and we've been working for over a year now to continue to expand the verticals that we are experts in, and that continues to be a focus for us.

We're also bringing together a bit more closely our media sales teams and our DMS sales teams to really open up our reach and our scale of the customers that we're reaching and the customers that have access to our DMS portfolio. So I think both of those things are going to create a lot of momentum for us, and we're already seeing it in Q2, but into the back half of the year.

Matt, I think one of the simplest ways to think about it is the new products we're developing that are focused on leading to higher ROI for our own customers. So more leads, more conversions and more business for them. But we're developing products that are not just enabling better search results, but are integrating us more with the customer so that we become more sticky. And that's kind of what Trisha was talking about. So the CRM integration, not only do we improve the ROI for our customer improving our retention with that -- with those customers. But we just become more sticky because of the integration of our products with the customer.

And then the second thing that we're really trying to do, which to simplify it is we're trying to help our customers follow up on every lead. Right now, 3 out of every 10 leads that come to customers through search never get followed up on. And so we're with our AI voice agent and our AI product Dash, we're actually allowing our customers to follow up on 10 out of 10 leads.

And so follow up on leads, set appointments, do all of that work for our customer and then we become much more sticky and their ROI improves because they're now following up on 10 out of 10 leads. So a simple way to do it is we're developing products that not only improve ROI, but make us more sticky with the client because we're integrated with them, both from a CRM perspective and a lead follow-up perspective.

Great. And maybe just last one for me. Just on affiliate revenue. I know there was the changes last quarter from Google that impacted the business. Are we just -- are we over that at this point? Is that just -- is that in the rearview mirror? And now is it just a go forward? Or just what context can you give and what happened in 2Q?

Yes. I'd say it's pretty much in the rearview mirror. We still have affiliate partnerships and -- but we create more of the content, and we're still generating revenues from that business, but it's not the same business that we had a year ago before the Google manual actions.

And so as we said on the call, we're focused on different verticals now and bringing new partnerships in like AddressUSA, where we have -- AddressUSA is actually a bigger opportunity than any affiliate deal we had ever signed. And so we're turning our attention actually to those kind of deals moving away from the affiliate deals.

We have reached the end of the question-and-answer session, and I will now turn the call back over to Mike for closing remarks.

Thanks. So as you heard today, we have a lot to be excited about as we enter the second half of the year. We're very optimistic about how things are going really across the board. And I just want to recap a few of those things and leave those as takeaways for you.

First, we're seeing positive results from all of the actions that are improving our trends for both the DMS business and the digital-only subscription business. Also, our digital advertising results were solid. We saw a nice improvement in the quarter, and we see that improvement continuing into the back half of the year. Overall, we're projecting 3% to 5% digital revenue growth in [ the off ] of a down 2.8% in the second quarter, and we'll end the year with about 50% of total revenue coming from digital.

Our new cost reduction program positions us for adjusted EBITDA growth in the back half of 2025 and for full year 2026. We see strong free cash flow growth, both for 2025 and 2026. Debt repayment has been strong. We noted we paid back $100 million in the first half of the year. Our leverage is declining. We will continue to work on delevering and debt repayment.

And a couple of our new deals that we announced recently with AddressUSA and Perplexity, they add high-margin revenues to our portfolio. We'll start to see all revenues during the back half of the year from those deals. And we're actively embracing technology to block the AI scrapers that don't have licensing deals with us. And we're joining AI marketplaces such as Snowflake to offer our content at fair value.

So we have a lot to be optimistic about, a lot of exciting developments, and we're really looking forward to the back half of this year. And thanks all. Thanks, everybody, for joining the call this morning, and we look forward to updating you on all of our progress when we get together again in October. Thanks.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.