Lee Enterprises (LEE) 12 Dec 242024 Q4 Earnings call transcript

Welcome to the Lee Enterprises' 2024 Fourth Quarter Webcast and Conference Call. This call is being recorded and will be available for replay at investors.lee.net. [Operator Instructions] Now I will turn the call over to your host, Jared Marks, Vice President, Finance.

Good morning, and thank you for joining us.

In addition to myself, speaking on this morning's call are Kevin Mowbray, President and Chief Executive Officer; Tim Millage, Vice President, Chief Financial Officer and Treasurer; and Les Ottolenghi, Chief Transformation and Commercial Officer. fourth President, questions. Earlier Audience news today, preliminary for Vice available is release Senior XXXX. results answer of to we our Bekke, Operations Strategy and also with Nathan quarter fiscal issued a It is as websites. as major financial at available lee.net well also presentation at includes our investors.lee.net, earnings information. to refer which Please found supplemental

differ current trends reminder, are to subject statements this include Such and As actual These that materially. discussion a cause forward-looking statements filings. described morning's certain risks, are expectations. will morning's based uncertainties could in on in our release news factors to our results this SEC and

the During the is Chief and Officer, to relevant refer the our certain Kevin to are Executive Mowbray. measures measures. open included in Reconciliations release. And the discussion call, GAAP the tables President non-GAAP we accompanying financial to now

Thank morning, you, achieving call, to future inflection our our where our company. you call we for point the strong In morning. thank print as foundation surpassed joining digital and continue important In our milestone, for shared Lee's an XXXX, digital-first lay Jared. this revenue. revenue revenue everyone, a we Good last

We've made in of fourth improvement mix revenue, digital further our XX% X-point year reaching over on representing a prior quarter. revenue total the quarter, the progress

digital Our fastest-growing same-store subscription had revenue revenue basis. media. digital growing in again an a the subscription platform business XX% These once on extremely year strong we're results prove local

XX% Digital annually. the grew million and Amplified Our approaching quarter basis as same-store in fiscal digital a is year marketing business, services XX% on Agency the and in known $XXX

lead Lee the continues to industry.

nearly presentation our grew XX% the strategic subscription nearest also peer. categories. in industry digital AI partnerships. years, the leadership results industry by doubling discuss with Our several new outpaced the demonstrating fourth later revenue over X the in we're digital last We'll how annually digital We key quarter

subscription digital-only In our of and XXXX. of X.X subscribers path a million to XXXX, our successfully XXX,XXX target achieved strong by we unit digital laid foundation

has in year, growth growth have digital competitor, approaching significantly growth fiscal XX% for revenue are the Industry-leading our streams Agency's led an impressive revenue Digital last over Amplified side, X represents annually total rates rate growing nearest years. these outpaced the million annually a and to $XXX years. which XX% advertising revenue digital the over On transformation the driving our X past

And I'll over it now pass to Tim.

a XXXX, Lee efforts our in record yielded Kevin. savings. Thanks, million cost cost And has in successful management. business effective transformation track $XX of

revenue advanced in and While drive we main artificial remain our priority market margin focused to profit, Therefore, in maintain talent invest growth. and business sustainable dominant local continue growing operational on our print and is intelligence, position. our driving excellence, we long-term revenue to drive legacy like to technology

to move balance the I'll sheet. Next,

calls, had a credit a we rate us runway, fixed a with we discussed interest relationship better-than-market allow As a to have agreement in on with terms that laser-focused favorable performance our strong includes strategy. no And and executing financial stay Berkshire. prior These relationship XX-year covenants.

an repayment. additional reduction. $XX monetize. opportunities We these monetization to asset debt sales identified of million to and year, closed assets assets our to this assets, of We will propel The $XX debt identify which facilitates also continue over have noncore noncore million noncore monetize of

than gross now revenue. Digital XX% XX% total margin. grown and of mentioned has annual has revenue since represents to revenue earlier, was growth our translated more XXXX digital As digital operating annually that XX% in

profitable. meaning is an digital our Our highly business is digital impressive XX%, margin also

point. profitable print are nearing revenue revenue with help and Replacing achieve will our growing sustainability, that digital long-term us we and

from the gross XXXX, digital company's our costs. the products by will SG&A margin exceed expect We

scratching subscriptions the addressable surface marketing The we market to growth in as expected digital the for services. our digital continue business digital still and is of are

million in strategy revenue of As more total achieve growth to poised a $XXX is digital X-pillar than reminder, Lee's XXXX.

by fueled we Amplified achieve expect and We be will and long-term believe this monetization AI growth, our new opportunities. help Digital growth digital a in bit. on for presents exciting subscription new outlook that AI growth Agency More come revenue to that us revenue digital will XXXX.

to EBITDA. more point everyone total digital specifically to outlook XXXX, would our I revenue and to for like Looking adjusted

We revenue expect to the EBITDA single X% range in expect total grow to digital year. to next digits. And grow XX% of low we in adjusted the

an to And Kevin will with partnerships. I on recently that, turn update it to AI announced provide

the partnerships industry AI-driven general Through search has We the there's drop growth, tectonic precipitous we're a era way as as seen just engines. XX to isn't a by Lee paving AI-powered months shift focus relentless XX% trend, driven by upon drop innovation, X shift last search search AI over transformation. in to all in of paradigm underway. and a strategic explosive know the for a in Traditional this shift months. growth it's technology applications. generative lead impact This Google's consumers to next Gartner and predicts the the

Copilot and our behavior by Microsoft's news critical. personalized search Lee's information. role redefining content-rich about consuming only OpenAI, ecosystem This experience accurate user are summaries. Platforms new is Perplexity, results highly consumers like and for are technology, opting with shift the providing tools Gemini also but and in in as not this is Quad, about AI-powered

various and advertising. you're battles, costly the often are now to time while is trusted tied at of the and for come. up necessary hyper-personalized forefront get creating The We're and to local, lawsuits years to sometimes in very court act likely time-consuming, legal content

leaders is last collaborators the this We're uniquely focused position AI-driven to positioned and that transformation. us content become and in economy. advertising intermediary as in Lee mile on strategies

markets. connective We and are the tissue subscribers between advertisers, local

assets replicate. are content can hyperlocal algorithm no trusted Our relationships and

Our and loyalty our and ad AI-driven paywall through to We'll audience. dynamically content deliver us local new rooted creative subscriptions, enhance monetize tailored will campaigns trusted our building enhanced to brands AI hyper-targeted in enable partnerships relevance.

new a is driving working on the reflected and the and language AI now of large playbook our massive the wave is innovation partners and revenue. is chart. This and content the investments acting We're between Partnerships in models illustrated and message with on clear. winning providers are next private

news economy. strategic trusted framework AI the sustainable, tools and create a of for combination evolving and scalable will information, in economics partnership Our digital

these this over the economics modeling We're partnerships months year. revenue beyond. evolve for We generate and fiscal they expect early next XX as to

thank Les I'd here Commercial Ottolenghi, our and up our shifts, like but its not shaping to done future. work of us and tireless survivors position, leaders has as today. especially Chief the on partnerships Transformation getting for of as Officer team in teamed a the Les and these the digital masterful getting job advancing just

turn on recent our to in through partnerships. to more now AI call details the like And I'd to these announcements Les the over around walk detail

exciting is of to leadership, artificial Enterprises' Good becoming fast ethical by opportunities Enterprises morning. share news artificial power intelligence. partnerships progress developments It new in advanced engagement, use Lee a intelligence. and artificial pioneer Lee user a and create and that the pleasure about economic drive the Lee advertising ecosystem the deliver growth leveraging allow intelligence to is through in

advertising necessary As to very AI X rapidly this industry-leading more content with web At market consumers powerful answer AI with advertising importantly, connecting advanced and companies market provide at partnerships partnerships AI But and our new the and search far-reaching has in capture the with traditional pivot the leading social partnerships systems forged Perplexity, recognized Services. culminating stage, shift Lee's during to level, platforms, first-to-market has enrich search business hyperpersonalization the AI news, away channels. And Amazon media, access past provide these and media Lee early market Lee's months and Lee the technologies. to core Lee from share partnerships these and Web these from and distribution by expand this local ProRata.ai, local legacy agreements positions.

step agreement engine first million the extending Lee Consequently, Lee's announcement a searches over its XXX Perplexity. and networks on ad-supported month $X is December to models. search payment is value AI AI The Perplexity X, based growth fastest-growing million Lee its distribution reach. content astounding valuation and the with with an partnership per founded into towards of robust took upon in with distribution billion content of with on $XXX the from Perplexity

it agreement and the Lee and systems AI answer X, December in advanced content as local search with announced ProRata attribution and payment engines. most as specializes well On an

highly use share. advertising our of in local the through greater search hyperpersonalized local traditional markets will ProRata need community-focused dismantling information. the advantage capture ProRata take Lee enable Consequently, market and and consumers' the that perspective in AI content and Lee news and of our agreement to Lee even aligned are on for enables to

AI a support very announcement agreement an we week, with exciting technical the generative of state-of-the-art for advertising. next our have AI-based to all tools we formalized including Services to Finally, Amazon access for Web AI partnerships, demands with

world At the heart mile is consumer all and the as Lee is bridge the of we attention. in that content. stand the consumers' the the the X between last agreements AI the interface to recognition of

value that markets. local in AI competitive is the drivers advantage shareholders. and to partnerships Lee position our new ability for through leverage reputation expertise, our gives Our It deliver

co-development new share exciting announcements, coming In quarter, opportunity the including quarter look news We of to partnership we product additional expect Lee's distribution the about and to more and forward next future. channels. AI

turn With that, Kevin. back over to I'll it

our remain innovation, in have. way the AI remarks. will focus partnerships concludes industry team online to relentless we're Through digital strategic Les. for may This The and Lee growth, you, any you Thank the on questions transformation. for paving of this lead era

open questions. please Operator, the for line

& first our And Instructions] Sidoti Harriman with comes Company. Daniel from [Operator question

investment being, then but But have these we AI early but subscriber innings your we or see are in quarter. by And if as digital count these goal that as very it, recently? how realize missed kind if announcements in you you the with any to again, of should the finally, the broadly us then know able realizing you've we XXXX kind number future I of that the announcements for reached expect assume just and early investment Just impact just technology along be time digital with partnerships here, been be I significant year, the of up to out. let And goals on sorry, your come same But you're saying it's terms the could helpful. fourth at for still And partnering AI. the lines, fiscal really in these save that, I I'm companies? just I leading exact would of and you didn't know should going look should of same

investments. the What your technology our to I'll level on of don't the access had us long-term optimism AI AI investment, as to perspective. partnerships early increase for that Great. model, these model our before achieving anticipated it these say the They turn results. I'll give operational Thanks said, one for from overall provide to necessarily last in I'd to I search our shift. well AI traditional our access not he is to to. if advertising this a growth see All early our in provide we which start long-term would use have targets. partnerships They has give . Also But anything into in is an ad add second as question use significantly commercial regarding access question. decline. confidence regarding and and forward-looking as of digital us your economics change grow with strategic do us but also else answer question, over partnerships is our us Les to lot your partnerships Daniel. that it first These targets. to

models that really these to our add and keeping us revenue and lets upfront growth our within pay-per-use while costs leveraging tied would I approach technology revenue-sharing This partnerships agreements. scale spending budget by Yes. constraints. minimize

Appreciate on question the XXX,XXX. the your were And questions, last Daniel. digital then subscription

I recent And these on appreciate it. announcements. congrats

web. We question an our take will operating profitable is, is the print on question revenue The from first now basis?

secular Kevin declining to no of remarks. print that about our and to for our we digital continue growth more quarter trends margin. it's in X point see I the good supplement the to manage would that on closing questions. you Clearly, between . With and we as margin talks Yes, turn earnings best that the is our that, it any a result And margin business. digital profitable it's of can. can trend overall you to fourth the have we I'll Slide question. due a difference

joining the in for time. interest for you Lee. really I thank your call, your Thank and you appreciate

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