iHeartMedia Q3 Earnings Call Highlights

Key Points

• iHeartMedia missed Q3 guidance: Revenue rose 3.3% to $1.03 billion, while adjusted EBITDA was $170 million, below its $180 million–$220 million forecast. Management cited weak radio advertising, delayed spending, programmatic shifts and a challenging economy.
• Podcasting and digital audio grew, but radio fell: Podcast revenue climbed 24.6% and Digital Audio Group revenue rose 13.8%, while Multiplatform revenue declined 4.9% and its adjusted EBITDA dropped to $68 million.
• The company forecast full-year adjusted EBITDA of $550 million–$600 million and about $50 million in free cash flow. Net debt was approximately $4.7 billion; management expects programmatic revenue to reach about $400 million in 2027, including $100 million of incremental broadcast-radio revenue.

iHeartMedia NASDAQ: IHRT reported third-quarter revenue and adjusted earnings below its guidance as weakness in its broadcast radio business outweighed growth in podcasting and digital audio.

Revenue rose 3.3% from a year earlier to $1.03 billion, below the company’s forecast for mid-single-digit growth. Adjusted EBITDA was $170 million, short of the projected range of $180 million to $220 million. Excluding political advertising, consolidated revenue increased 0.9%.

Chairman and CEO Bob Pittman attributed the shortfall to lower-than-expected political advertising on radio, some large advertisers delaying spending until after the election, a faster-than-expected shift toward programmatic ad buying and a difficult macroeconomic environment.

The company reported GAAP operating income of $73 million, compared with an operating loss of $116 million a year earlier. Free cash flow was negative $10 million, compared with negative $33 million in the prior-year quarter.

Radio Weakness Overshadows Podcast Growth

Revenue in the Multiplatform Group, which includes broadcast radio, networks and events, fell 4.9% to $562 million, below guidance for approximately flat revenue. Excluding political advertising, revenue declined 6.6%. Adjusted EBITDA fell to $68 million from $119 million.

Pittman said political advertising accounted for about a third of the segment’s revenue underperformance. The company had expected a robust political year, but he said local television broadcasters created more inventory and retained spending that might otherwise have gone to radio.

Non-cash marketing expenses associated with partnerships supporting iHeartMedia’s AudioGraph platform drove most of the decline in Multiplatform adjusted EBITDA, according to management.

By contrast, Digital Audio Group revenue rose 13.8% to $389 million. Podcast revenue increased 24.6% to $174 million, exceeding the company’s forecast for approximately 20% growth. Digital revenue excluding podcasting rose 6.3% to $215 million.

Digital Audio adjusted EBITDA declined 2.3% to $127 million, with higher non-cash marketing expenses weighing on results. The segment’s adjusted EBITDA margin narrowed to 32.8% from 38.1% a year earlier.

On the analyst call, Pittman said podcast growth reflected more inventory sold, better advertising rates and an expanding roster of shows. President and COO Rich Bressler added that more than half of podcast revenue now originates locally.

Audio & Media Services revenue rose 22.6% to $82 million, primarily due to television political advertising and digital audio and video growth. Its adjusted EBITDA increased 65.9% to $37 million.

AudioGraph Investment and 2027 Plans

Management expects AudioGraph, which is designed to make broadcast radio inventory easier to buy programmatically, to help the company capture advertising dollars that have shifted toward automated buying. Pittman said early campaigns had achieved their goals, while Bressler said the platform is generating revenue, though the current amount is immaterial.

The company expects approximately $200 million in total programmatic revenue in 2026 and approximately $400 million in 2027. Management expects the 2027 total to include approximately $100 million of incremental broadcast radio programmatic revenue.

iHeartMedia also plans to report podcasting as a separate segment beginning in 2027. Bressler declined to provide additional details about the standalone business’s margin profile during the call.

CFO Mike McGuinness said the company is no longer entering into the co-marketing partnerships used to support AudioGraph. He said the associated expense should be completely resolved by the first quarter of 2027, or the second quarter at the latest. Bressler said the spending had already been incorporated in the company’s forecasts.

Outlook and Debt

For the fourth quarter, iHeartMedia expects consolidated revenue to rise by a mid-single-digit percentage and adjusted EBITDA of $135 million to $185 million. That EBITDA forecast includes an approximately $100 million net negative impact from non-cash marketing. The company also expects approximately $130 million in quarterly free cash flow.

For the full year, the company adjusted its guidance to $550 million to $600 million in adjusted EBITDA and approximately $50 million in free cash flow. Bressler described the advertising environment as highly uncertain, making it difficult to narrow the expected range of results.

At quarter-end, net debt was approximately $4.7 billion and liquidity was $416 million. The company expects to repay $72 million of notes due in May 2027; another $277 million comes due in 2028, with more significant maturities in 2029, Bressler said.

About iHeartMedia (NASDAQ:IHRT)

iHeartMedia, Inc is an audio media company that provides broadcast radio, digital streaming, podcasting, audio advertising and live-event services. Its portfolio includes hundreds of radio stations across the United States, the iHeartRadio digital platform, nationally distributed audio programming and a broad range of podcasts.

The company serves audiences through terrestrial radio, websites, mobile applications, smart speakers and other connected devices. Its offerings include music, news, sports, talk and entertainment programming, as well as podcasts and digital audio content.

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