Revenue Performance - Total operating revenue decreased by $11.1 million, or 7.1%, to $144.6 million in the 2025 Quarter compared to the 2024 Quarter [64]. - Digital subscription revenue increased by 10.8% to $21.6 million, while print subscription revenue decreased by 16.3% to $43.4 million [66]. - Digital-only subscribers grew by 5% to a total of 774,000, contributing to a total subscription revenue of $65.0 million, down 8.9% from the previous year [66]. - Digital advertising and marketing services revenue totaled $46.7 million, a slight increase of 0.6%, representing 70.2% of total advertising and marketing services revenue [65]. - Total digital revenue, including digital advertising, subscription, and services, reached $73.4 million, an increase of 3.5% and representing 50.8% of total operating revenue [68]. Operating Expenses and Losses - Total operating expenses were $149.0 million, a decrease of 0.2% compared to the 2024 Quarter, with compensation expenses rising by 1.0% [70]. - The company reported an operating loss of $3.4 million in the 2025 Quarter, compared to an operating income of $7.8 million in the 2024 Quarter [75]. - Net loss was $16.2 million, with diluted loss per share of $2.80, compared to net income of $1.2 million and diluted earnings per share of $0.12 in the previous year [82]. - Adjusted EBITDA for the three months ended December 29, 2024, was $7.609 million, a decrease of 59.3% from $18.649 million in the prior year [89]. - Operating expenses for the three months ended December 29, 2024, were $149.036 million, slightly down from $149.386 million in the same period of 2023 [89]. Cash Flow and Liquidity - Cash required by operating activities totaled $7.3 million in the 2025 Period, a decrease of $7.4 million compared to cash provided by operating activities of $0.1 million in the 2024 Period [92]. - Cash provided by investing activities increased to $3.9 million in the 2025 Period from $2.1 million in the 2024 Period, driven by proceeds from the sale of non-core real estate [94]. - The company expects capital expenditures to total approximately $10.0 million in 2025, funded by internally generated funds [95]. - The company's liquidity, consisting of cash on the balance sheet, totaled $6.1 million on December 29, 2024 [99]. - No cash was required for financing activities in the 2025 Period, compared to $1.4 million in the 2024 Period, primarily for debt reduction [97]. Interest and Debt Management - Interest expense increased by 1.5% to $10.3 million, with a weighted average cost of debt of 9% [77]. - The company experienced a decrease in operating results of $13.6 million, adjusted for non-working capital items, partially offset by a $6.2 million increase in working capital [92]. - The company anticipates that all interest and principal payments due in the next twelve months will be satisfied by existing cash and cash flows [99].

Digital Revenue Performance - Total Digital Revenue increased by 5% year-over-year to $73 million, representing 51% of total operating revenue[4] - Digital-only subscription revenue rose by 14% year-over-year, totaling $22 million[4] - Amplified Digital Agency revenue reached $24 million, also up 14% year-over-year[1] - Digital advertising and marketing services revenue accounted for 70% of total advertising revenue, totaling $47 million[4] - The company expects full-year digital revenue growth to accelerate between 7% and 10%[2] - Total Digital Revenue includes digital advertising, marketing services, digital-only subscriptions, and digital services revenue[1] Financial Performance - The company reported a net loss of $16 million for the quarter, with Adjusted EBITDA of $8 million[4] - Operating revenue for the quarter was $145 million, a decrease of 7% compared to the prior year[4] - Adjusted EBITDA is defined as net income plus non-operating expenses, income tax, depreciation, and other adjustments, providing a clearer view of operating performance[3] - Cash Costs, which exclude non-cash expenses, are defined as compensation, newsprint, ink, and other operating expenses, aiding in understanding the company's cash-settled costs[4] Cost Management - The company has identified approximately $40 million in annualized cost reductions expected to be executed by the end of the second quarter[2] Debt and Financing - Total debt outstanding is $446 million, with favorable financing terms including a fixed annual interest rate of 9.0%[5] - The company's debt stands at $576 million under a term loan agreement with BH Finance LLC[5] Strategic Partnerships - A strategic partnership with Amazon Web Services (AWS) was announced to enhance digital transformation and optimize content delivery[1] Revenue Definitions - Same-store revenues are based on U.S. GAAP revenues, excluding exited operations such as business divestitures and discontinued print products[2] - Excess Cash Flow is defined as any cash exceeding $20 million on the balance sheet at the end of each fiscal quarter[6]

Financial Data and Key Metrics Changes - Total operating revenue for Q1 2025 was $145 million, with total digital revenue growing 5% year over year [17] - Digital subscription revenue grew 40% year over year, contributing to the overall digital revenue growth [10][17] - Digital revenue has grown more than 17% annually since FY21, translating to a 13% annual growth in digital gross margin, with a digital margin of 70% [16] Business Line Data and Key Metrics Changes - Total digital revenue was $302 million on a trailing twelve-month basis, with $102 million from Amplified Digital agency [10] - Digital subscription revenue and Amplified Digital revenue both grew 14% year over year [17] - Digital subscription units increased by 8%, totaling 774,000 [38] Market Data and Key Metrics Changes - Digital subscription revenue has nearly doubled compared to the nearest industry peer, growing 46% annually over the last three years [9] - Amplified Digital agency revenue has grown 33% annually over the past three years, significantly outpacing competitors [9] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance digital transformation and improve customer engagement [7][15] - A three-pillar growth strategy aims to achieve total digital revenue of over $450 million by 2028, with current annualized digital revenue at $302 million [24] - Investments in AI are expected to drive new revenue and maintain a dominant market position, with $40 million in annual cost reductions identified [20][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance for FY2025, citing growth in core digital businesses and AI initiatives [36][39] - The company anticipates digital revenue growth of 7% to 10% and adjusted EBITDA growth in the low single digits for the year [25] Other Important Information - The company has favorable credit terms with Berkshire Hathaway, allowing focus on strategic execution [21][22] - Over $5 million in asset sales were closed in Q1, with an additional $1 million deal completed since then [22] Q&A Session Summary Question: Plans to monetize AI library and value proposition for advertising customers - Management is evaluating the best opportunities to monetize their AI library and believes the AI Boost program will provide significant benefits to advertisers [32][34] Question: Information on cost initiatives and confidence in digital revenue growth - Management highlighted confidence in achieving guidance due to scale from core digital businesses, AI initiatives, and identified cost reductions of $40 million [36][39]

Financial Performance - Lee Enterprises reported a quarterly loss of $2.80 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.40, and compared to earnings of $0.12 per share a year ago, indicating an earnings surprise of -600% [1] - The company posted revenues of $144.56 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 3.98%, and down from $155.68 million year-over-year [2] - The current consensus EPS estimate for the upcoming quarter is -$1.48 on revenues of $142.59 million, and for the current fiscal year, it is -$2.77 on revenues of $593.43 million [7] Market Performance - Lee Enterprises shares have declined approximately 9.5% since the beginning of the year, while the S&P 500 has gained 3.1% [3] - The company has not surpassed consensus EPS estimates over the last four quarters, indicating a consistent underperformance [2][6] Industry Outlook - The Publishing - Newspapers industry, to which Lee Enterprises belongs, is currently ranked in the bottom 16% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [5]

Core Insights - Lee Enterprises reported a 5% year-over-year increase in Total Digital Revenue, which accounted for 51% of total revenue [1][7] - Digital-only subscription revenue rose by 14% year-over-year [1][7] - Amplified Digital® Agency revenue reached $24 million, also up 14% year-over-year [1][7] Financial Performance - Total operating revenue for the first quarter was $145 million, with Total Digital Revenue at $73 million [7][17] - Operating expenses were $149 million, with Cash Costs totaling $139 million, showing a 1% decrease compared to the prior year [7][8] - The company reported a net loss of $16 million and Adjusted EBITDA of $8 million [7][18] Strategic Initiatives - A strategic partnership with Amazon Web Services (AWS) was announced to enhance digital transformation and optimize content delivery [3] - The company anticipates digital revenue growth to accelerate, projecting a full-year growth rate between 7% and 10% [4] - Lee Enterprises has identified approximately $40 million in annualized cost reductions expected to be realized by the end of the second quarter [4] Debt and Cash Flow - The company has $446 million in outstanding debt with favorable terms, including a fixed annual interest rate of 9.0% [6][8] - Cash on the balance sheet totaled $6 million, resulting in net debt of $440 million [8]

Core Viewpoint - Lee Enterprises, Incorporated is set to release preliminary results for its quarter ended December 29, 2024, during a scheduled audio webcast and conference call on February 6, 2025 [1]. Company Overview - Lee Enterprises is a significant subscription and advertising platform, providing high-quality local news and information across 72 markets in 25 states [3]. - The company operates daily newspapers, rapidly growing digital products, and nearly 350 weekly and specialty publications [3]. - Key markets include St. Louis, MO; Buffalo, NY; Omaha, NE; Richmond, VA; Lincoln, NE; Madison, WI; Davenport, IA; and Tucson, AZ [3]. - Lee Common Stock is traded on NASDAQ under the symbol LEE [3].

Core Insights - Lee Enterprises has selected Amazon Web Services (AWS) as its Preferred Cloud Provider to modernize its cloud infrastructure and enhance generative AI (GenAI) capabilities [1][2][3] - The collaboration aims to improve subscriber experiences and advertising services through advanced technologies [1][3] Cloud Modernization - The partnership with AWS focuses on modernizing cloud infrastructure for greater scalability, flexibility, and speed [2][4] - AWS's on-demand infrastructure will support Lee Enterprises' growing subscriber base and evolving advertising ecosystem [4] Generative AI Development - Lee Enterprises will leverage AWS services like Amazon Bedrock and Amazon Redshift to develop innovative GenAI applications [2][5] - Amazon Bedrock will serve as the foundation for GenAI initiatives, enabling multi-modal content generation and enhanced targeting capabilities for advertisers [5][6] Digital Transformation Acceleration - The company is rapidly delivering new GenAI products and services, with initial offerings expected within the next year [7] - This initiative is part of a broader multi-year digital transformation strategy to redefine the local news media industry [8]

Digital Subscribers and Growth - Lee Enterprises serves 73 mid-sized communities across 26 states with over 771,000 digital subscribers[5] - Digital-only subscriptions increased by 7% in 2024, reaching over 771,000 subscribers[36] - Lee Enterprises aims to achieve over 1.2 million digital-only subscribers by 2028[37] - The St. Louis Post-Dispatch has 87,358 digital and print subscribers as of September 2024[42] Digital Revenue and Advertising - BLOX Digital revenue grew 10.4% in 2024, totaling $38.6 million[26] - The company’s digital advertising and marketing services remain a key strategic priority for 2025[14] - Amplified Digital Solutions uses AI-driven media planning for targeted advertising campaigns[39] - Advertising and marketing services account for 45% of the company's revenue, while subscription revenue accounts for 46%[79] Technology and Content Strategy - Lee Enterprises plans to invest in enhancing mobile platform user experience and personalizing content in 2025[34] - Lee Enterprises leverages generative AI to enhance content creation and subscriber engagement[8] - The company’s proprietary local content is designed to grow audiences and increase monetization opportunities[35] Financial and Operational Risks - The company faces risks from the shift in newspaper readership and advertising expenditures towards digital media, requiring significant capital investments[78] - The company's digital business growth depends on increasing digital audiences, attracting advertisers, and developing new technologies[80] - The company is exposed to risks from economic downturns, inflation, rising interest rates, and geopolitical events that could negatively impact its business[62] - The company's advertising revenues are highly sensitive to the strength of the economies in which it operates and the demographics of local communities[60] - The company faces risks from natural disasters, extreme weather conditions, and public health emergencies that could disrupt its operations[73] Debt and Financial Obligations - The company's Term Loan has an aggregate principal outstanding amount of $445.9 million, reduced from the initial $576.0 million[88] - The Term Loan carries a 9% annual interest rate and is collateralized by all company assets[88] - The company faces risks of default if it fails to meet debt service obligations, potentially leading to accelerated repayment of principal and interest[91] - The 2020 Refinancing imposes restrictions on incurring additional debt, issuing dividends, and repurchasing shares, limiting financial flexibility[90][92] Cybersecurity and Data Privacy - Cybersecurity risks could result in significant remediation costs, lost revenues, and legal claims if data breaches occur[96][98] - The company stores sensitive customer data, including payment card information, making network security critical[100][103] - The company relies on third-party service providers for network security, which could be compromised, leading to potential data breaches[100] - Payment card industry data security standards must be followed to avoid fines or loss of payment card acceptance capabilities[103] - The company may face legal and regulatory claims if it fails to comply with data breach notification or consumer privacy laws[104] Employee and Union Information - The company had 3,047 employees as of September 29, 2024, including 373 part-time employees, with 2,897 full-time equivalent employees and 366 represented by unions[46] Assets and Liabilities - The company's goodwill was valued at $328.0 million, mastheads at $10.9 million, and amortizable intangible assets at $59.2 million as of September 29, 2024[69] - Pension and postretirement plan liabilities could increase due to market volatility, higher discount rates, or changes in mortality estimates, reducing available cash[107] Internal Controls and Compliance - The company's internal controls over financial reporting are critical, and any material weaknesses could harm its stock price and investor confidence[66] - The integration of Generative AI presents risks related to security, intellectual property, ethical concerns, and competitive harm[76]

Lee Enterprises Reports Fourth Quarter and Full-Year FY24 results (1) Total Digital Revenue was 51% of revenue in the quarter, representing $82M Digital-only subscription revenue increased 30% in the quarter Amplified Digital Agency revenue totaled $28M in the quarter, up 21% YOY , approaching $100M for the fiscal year (2) ® (2) DAVENPORT, Iowa (December 12, 2024) — Lee Enterprises, Incorporated (NASDAQ: LEE), a digital-first subscription platform providing high quality, trusted, local news, information and ...

Financial Data and Key Metrics Changes - In Q4 2024, digital revenues surpassed print revenues, reaching 51% of total revenue, a 7-point improvement year-over-year [8] - Digital subscription revenue grew by 41% on a same-store basis, with total digital revenue approaching $300 million for the fiscal year, representing a 17% annual growth rate over the last three years [9][12] - The digital margin stands at 72%, indicating high profitability in the digital business [18] Business Line Data and Key Metrics Changes - The digital marketing services business, Amplify Digital Agency, grew 11% for the fiscal year and 21% in Q4 on a same-store basis, nearing $100 million in annual revenue [9] - Digital subscription units reached 771,000, with a target of 1.2 million digital-only subscribers by 2028 [11] Market Data and Key Metrics Changes - Lee Enterprises has outpaced the industry in key digital categories, with digital subscription revenue renewal increasing by 46% annually over the last three years [10] - The company expects total digital revenue to grow between 7% to 10% in 2025 [21] Company Strategy and Development Direction - The company is focused on becoming a digital-first entity, leveraging AI partnerships to enhance content and advertising capabilities [7][22] - Lee's three-pillar growth strategy aims for total digital revenue exceeding $450 million by 2028, driven by Amplify Digital Agency growth, digital subscriptions, and new AI revenue opportunities [19] Management's Comments on Operating Environment and Future Outlook - Management highlighted a significant shift in consumer behavior towards AI-powered search engines, predicting a decline in traditional search usage [23] - The company is optimistic about the future, citing partnerships with leading AI platforms as a means to enhance user engagement and advertising opportunities [31][32] Other Important Information - The company has identified $25 million in additional non-core assets for monetization, contributing to debt reduction efforts [16] - Lee Enterprises has a favorable credit agreement with Berkshire, allowing for strategic focus without financial performance covenants [15] Q&A Session Summary Question: Future savings and investments from AI partnerships - Management indicated that partnerships provide access to AI technology without changing the level of investment, enhancing confidence in long-term growth targets [44][45] Question: Digital subscription numbers - The current digital subscription count is 771,000 [48] Question: Profitability of print revenue - Print revenue remains profitable on an operating basis but is on a declining trend due to secular changes [51]