Earnings Labs

Entravision Communications Corporation (EVC)

Q2 2024 Earnings Call· Fri, Aug 9, 2024

$3.85

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Transcript

Operator

Operator

Greetings, and welcome to the Entravision Second Quarter 2024 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Roy Nir, Vice President, Financial Reporting, and Investor Relations. Thank you. You may begin.

Roy Nir

Management

Good afternoon everyone, and welcome to Entravision's second quarter 2024 earnings conference call. Joining me today are Michael Christenson, Chief Executive Officer and Mark Boelke, Chief Financial Officer. Before we begin, I must inform you that this conference call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Entravision’s SEC filings for a list of risks and uncertainties that could impact actual results. This call will also include non-GAAP financial measures. The Company has provided a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures in today's press release. The press release is available on the Company's Investor Relations page and was filed with the SEC on Form 8-K. I will now turn the call over to Michael Christenson.

Michael Christenson

Management

Thank you, Roy, and thank you to all of you for joining us on this call today. In our second quarter of 2024 we completed the transformation that we outlined for you in our first quarter report. We reached an agreement to divest our digital platform representation business to Aleph Group and we closed that transaction on June 28. The transaction included all of our digital platform representation operations including those in Latin America and Asia, more than 320 people in 32 countries serving a dozen digital advertising platforms. Earlier in the second quarter, on May 6, we sold our controlling 51% interest in Adsmurai, a marketing technology and services company based in Barcelona to our partners who owned the other 49%. That transaction included another 350 people in two countries. These actions represent a positive step forward for Entravision. We now have the opportunity to focus on our core U.S. media business at a critical time as we navigate the unprecedented changes in the broadcast industry. Entravision is a trusted source of news, information and entertainment for our Latino audience. This is an audience that we have served for three decades. We have made significant investments this year to expand our news production capabilities and the amount of news that we provide for our audience. We now have morning, midday, early evening and late news in all of our markets and we have weekend early evening and late news in San Diego, Las Vegas, Denver, El Paso, and McAllen, Texas. We have also invested in our sales organization to build a team that can engage directly with political decision makers and educate them about our audience and how Entravision can help them reach our audience. One in five of the Latinos in America are in our broadcast markets. We believe our audience will be critical to determining the outcome of the 2024 elections and future elections. In addition to our investments in U.S. media, we are also making significant investments in our remaining advertising technology and services businesses, Smadex and Adwake to improve their platforms and operational capabilities. Both of these businesses are now growing faster than their industry growth rates and they are profitable. These combined actions are all good for Entravision. They put us in a stronger financial position with positive momentum. We are excited about the opportunities ahead, and we are looking forward to building value for our Company and our shareholders. Now I will pass the call over to Mark Boelke, our CFO to provide the financial report.

Mark Boelke

Operator

Thanks Mike. As Mike stated, during the second quarter of 2024, Entravision completed the sale of our global sales representation business known as "Entravision Global Partners", or EGP. As a result of this sale, financial results for EGP are reported in our financial statements as discontinued operations, for both the second quarter and prior periods, and I will review second quarter financial results for our continuing operations. On a consolidated basis, revenue for the second quarter was $82.7 million, up 12% compared to the second quarter of 2023. The increase was driven primarily by our Digital segment and political advertising revenue in our Television and Audio segments, partially offset by decreases in overall advertising revenue, spectrum rights usage revenue, and retransmission consent revenue. I’ll now review each of our operating segments. Starting with our Digital segment, revenue for the second quarter was $41.1 million, up 36% compared to the second quarter of 2023. The growth in the Digital segment was driven primarily by Smadex, our programmatic ad purchasing platform and Adwake, our mobile growth solutions business. During the second quarter, operating margin for the Digital segment was 6%, compared to negative 1% in the second quarter of 2023. Operating margin on net revenues, minus the cost of revenue, was 16%, compared to negative 2% in the second quarter of 2023. The improvement in Digital segment operating margins was attributed to better performance and margins in Smadex and Adwake. Looking ahead to the third quarter, revenue from our Digital segment is currently pacing plus 17% compared to the third quarter of 2023. Moving on to our Television segment, revenue for the second quarter was $28.6 million, down 5% compared to the second quarter of 2023. The decrease in television revenue was driven by decreases in overall advertising revenue, spectrum rights usage…