Saga Communications Q1 Earnings Call Highlights

Key Points

• Saga Communications’ Q1 revenue fell 5.6% to $22.9 million as declines in traditional advertising and other income outweighed a 25.2% jump in digital revenue to $4.4 million.
• Management is investing heavily in its digital transformation, adding sales and infrastructure resources that are expected to lift 2026 market expenses by about $1.5 million even though the effort should improve competitiveness and client retention over time.
• Blended digital-radio offerings are growing quickly, with blended revenue up 59% year over year in Q1 and digital-only blended revenue more than doubling, but attrition in non-blended accounts and weakness in streaming categories remain challenges.

Saga Communications NASDAQ: SGA reported lower first-quarter revenue as weakness in traditional advertising offset continued growth in digital products, while management said the company is continuing to invest in its digital transformation despite near-term pressure on expenses.

Executive Vice President and Chief Financial Officer Samuel Bush said net revenue for the quarter ended March 31, 2026, declined $1.3 million, or 5.6%, to $22.9 million, compared with $24.2 million in the prior-year period. He said political advertising was not a significant factor in the quarter, with gross political revenue of $275,000 in the first quarter of 2026 compared with $271,000 in the first quarter of 2025.

Digital revenue increased $900,000, or 25.2%, to $4.4 million from $3.5 million a year earlier. However, Bush said that growth “was not enough to surpass the decline” in traditional advertising revenue, including national, local direct and local agency sales. Other income declined by about $200,000, primarily due to lower rental income following the sale of tower sites in the fourth quarter of last year.

Expenses Flat in Quarter, But Digital Investments Set to Lift Costs

Station operating expenses were approximately flat with the prior-year quarter at $22 million. Bush said Saga expects station operating expenses to increase 1.5% to 2.5% for the full year, including costs tied to building infrastructure for its digital transformation. Corporate general and administrative expense is expected to be approximately flat with last year at $12.3 million.

Bush said Saga is adding resources to support its blended sales strategy, including digital infrastructure, sales managers and digital campaign managers in markets that do not already have them. He said the initiative is intended to allow media advisors to spend more time calling on existing and potential clients while improving campaign execution and retention.

“The expense of this initiative will initially be more costly than the revenue it will bring, but it is a necessary expenditure to be competitive with other digital companies and to better serve our clients,” Bush said. He estimated the effort will increase market expenses by about $1.5 million in 2026.

Management Points to Blended Advertising Growth

Chris Forgy, who led much of the company’s operational commentary, said Saga has spent roughly two and a half years training general managers, sales managers, media advisors and content creators across its 27 markets for the digital shift. He described the company’s strategy as “customer-first” rather than “digital-first,” combining radio with search and display advertising.

Forgy said Saga’s digital-only blended revenue rose more than $1 million, or 103%, year over year in the first quarter. Local direct revenue attached to blended products, defined as search and display, increased 29%. He also said the average blended local direct radio buy was 70% larger than the average non-blended local direct radio buy, while the average total blended buy per client was three times larger than the average non-blended local radio buy.

At the same time, Forgy said account attrition remains a challenge. Saga gained 158 blended accounts but lost 419 non-blended accounts in the quarter. “Significant attrition is real,” he said.

Revenue from blended digital and radio together totaled $3.6 million in the first quarter, up $1.3 million, or 59%, from the prior-year period. Still, Forgy said that lift did not offset the company’s overall revenue decline, with total gross revenue down 6% and total net revenue down 5.6%.

Digital Categories Show Mixed Performance

Forgy highlighted several areas of growth within Saga’s digital portfolio. He said local e-commerce revenue increased 23.2% in the first quarter, and April e-commerce reached a record $347,000. For January through April, e-commerce revenue was up 24% year over year, and trailing 12-month revenue on the e-commerce platform was nearly $3 million.

Interactive digital revenue increased 25.2% in the quarter. Within that category, Forgy said SEM and search revenue rose 105% year over year, targeted display rose 120% and social media rose 108%.

Other digital areas were weaker. Forgy said national streaming revenue fell 31.5%, primarily due to a change in third-party provider processes and algorithms. Local streaming revenue declined 7%, while online news sites were also down 7.2%. Mobile streaming revenue increased 116%.

Political Revenue and Capital Allocation

Bush said Saga currently has $1.4 million in gross political revenue on its books for 2026, compared with $650,000 for all of 2025 and $3.3 million in 2024. He said the company expects political spending to pick up later in the cycle, particularly in the late third and early fourth quarters.

The company paid a quarterly dividend of $0.25 per share on March 20, with an aggregate value of about $1.6 million. Bush said Saga’s board declared another quarterly dividend of $0.25 per share on May 6, payable June 12 to shareholders of record as of May 22. Including the newly declared dividend, Saga will have paid more than $145 million in dividends since its first special dividend in 2012, Bush said.

Saga reported $30.4 million in cash and short-term investments as of March 31, 2025, and $27.8 million as of May 4, 2026, according to Bush’s remarks. Capital expenditures were $780,000 in the quarter, compared with $700,000 a year earlier. The company expects about $3.5 million in capital expenditures for 2026.

Bush also said Saga continues to evaluate non-productive assets for possible monetization. The company previously sold excess land at an Iowa tower site for a little over $200,000 and sold an old studio site in Springfield, Massachusetts, for approximately $500,000 at the end of the quarter.

Second Quarter Pacing Lower

Bush said second-quarter revenue is currently pacing down in the high single digits, with digital revenue up 10.2%. Management said the company is working to bring some digital offerings currently handled by third-party providers in-house, which Forgy said should reduce costs and improve margins over time. He also said Saga has deployed artificial intelligence in on-air and online products, including online news, to create operational efficiencies.

Asked about the biggest risks over the next 12 to 24 months, Forgy pointed to the speed of execution and the broader weakness in traditional advertising. Bush said Saga’s priority amid potential industry consolidation is to strengthen the markets it already serves rather than expand simply to become larger.

About Saga Communications NASDAQ: SGA

Saga Communications, Inc NASDAQ: SGA is an independent radio broadcasting company that owns and operates a portfolio of local radio stations across the United States. Headquartered in Grosse Pointe Farms, Michigan, the company focuses on full‐service radio properties offering a variety of formats, including music, news‐talk and sports programming. In addition to traditional over‐the‐air broadcasts, Saga leverages web streaming and mobile platforms to broaden listener reach and provide advertisers with multimedia opportunities.

Founded in 1985 by Edward J.

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