Lee Enterprises(LEE) - 2025 Q1 - Earnings Call Transcript

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]