Welcome to the Lee Enterprises 2025 Third Quarter Webcast and Conference Call. The call is being recorded and will be available for replay at investors.lee.net. [Operator Instructions] A link to the webcast can be found at investors.lee.net. Now I will turn the call over to your host, Jared Marks, Vice President of Finance.

Good morning. Thank you for joining us. In addition to myself, speaking on this morning's call are Kevin Mowbray, President and Chief Executive Officer; and Tim Millage, Vice President, Chief Financial Officer and Treasurer. Earlier today, we issued a news release with preliminary results for our third fiscal quarter of 2025. It is available at lee.net as well as major financial websites. Please also refer to our earnings presentation found at investors.lee.net, which includes supplemental information. As a reminder, this morning's discussion will include forward-looking statements based on our current expectations. These statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially. Such factors are described in this morning's news release and in our SEC filings. During the call, we refer to certain non-GAAP financial measures. Reconciliations to the relevant GAAP measures are included in the tables accompanying the release. And now to open the discussion is our President and Chief Executive Officer, Kevin Mowbray.

Thanks, Jared, and good morning, everyone. During this call, I'm pleased to share an update on our digital transformation as well as our third quarter operating results, which represented significant growth in adjusted EBITDA over Q2. We also have an important update on our management team. Nathan Bekke was named Chief Operating Officer, with a strong background in strategic leadership and operational excellence, Nathan will continue to play a pivotal role in driving our digital growth and innovation. The third quarter demonstrated solid growth amid continued recovery from last quarter's cyber event. Notably, local advertising revenue trends showed meaningful improvement with the year-over-year trend favorable 7 points fueled by sustained strength across our core base of 20,000 local advertisers. We launched our first-to-market AI-powered suite in Q2. Our AI enablement program offers a full suite of AI products. Since our last update in partnership with WeLevel, Amplified Agency has launched an expanded suite of AI-powered packages designed to drive lead capture, customer engagement and business automation. These packages are called Smart Answer, Smart Team and Smart Suite HQ, designed to provide scalable solutions for businesses at every stage from handling inbound calls to fully automating content, communications and sales workflows. This rollout marks a pivotal step in evolving our product catalog into a portfolio of industry-leading AI tools and solutions. We expect the growth of our AI product suite to be a key catalyst for accelerating digital advertising growth as we advance towards our long-term targets. On the digital subscription front, we delivered same-store revenue growth of 16% year-over-year, driven by an impressive 28% growth in ARPU. We ended June with 670,000 digitally-only subscribers, which is down sequentially, reflecting the continued residual impact from the cyber event. However, as we've said before, unit growth may not be linear quarter-to-quarter. We…

Thank you, Kevin. Our core digital business has driven digital revenue growth of more than 17% annually from fiscal 2021 to fiscal 2024, and that has translated to comparable annual growth in digital gross margins. Replacing our print revenue with growing and profitable digital revenue sets us up to achieve long-term sustainability, and we are nearing this sustainability point. As Kevin alluded to and as we shared in our last call, we launched our suite of AI products last quarter designed to provide local businesses with the tools they need to thrive in a competitive environment. This innovative offering comes from Amplified Digital Agency and leverages cutting-edge artificial intelligence technology. We are excited about this AI product suite in terms of our long-term digital revenue outlook. While the February cyber incident interrupted efforts on this project, we believe that AI products will provide a nice lift to our FY '25 digital revenue and more importantly, help us over the long term to reach sustainability from digital revenue. Speaking to this quarter's results, total operating revenue in the third quarter was $141 million, which represented a year-over-year trend in line with our second quarter operating results. Third quarter trends were impacted by the aftereffects of the cyber incident, particularly on the subscription side. We mentioned on our last call that our normal process for activating new digital subscribers was hampered, which significantly impacted units in the quarter. Despite the unit challenges, digital subscription revenue grew 16% on a same-store basis due to a multitude of successes on the pricing side. For Amplified Digital Agency, we saw a nice pickup in revenue trends, a percentage point better than prior quarter and a promising return to double-digit growth year-over-year. This all led to $78 million of total digital revenue in the third quarter,…

Thanks, Tim. I'd like to reiterate my thanks to the entire Lee team for their tremendous efforts during the quarter, driving our progress on our digital transformation. We're paving the way for Lee to lead the industry in this era of AI digital transformation. This concludes our remarks. The team will remain on the line for questions you may have.

[Operator Instructions]

I will now read our first question from the web. Recent trends suggest readers are spending less time per visit on news websites. How is Lee addressing this shift in how readers consume news?

I can start. Certainly, thanks for the question. One of the competitive advantages that Lee has over kind of the national media is our asset portfolio, which typically does not act in the same manner as certainly as major metros. In fact, we have seen some strong metrics specifically from our loyal reader base in terms of engagement. Additionally, we are hyper-focused on enhancing our digital user experience by providing state-of-the-art digital products. We're also focused on expanding the depth and breadth of local content and growing subscribers and driving subscription revenue. So that's how we're aiming to address changes in consumer behavior.

We have no more questions from our participants. I'll turn it back to Kevin for closing remarks.

Well, thank you all for joining us this morning. Our focus remains on transforming our business for the long-term benefit of our shareholders, our employees, our readers and our advertisers. We appreciate your time and your interest in Lee. Thank you again.

Thank you. At this time, we have reached the end of our question-and-answer session. This concludes our call, and you may now disconnect.