iHeartMedia Shares Fall 36% After Quarterly Results, Outlook

Shares of iHeartMedia fell 36.1% on Thursday after the company's first-quarter earnings showed continued uncertainty in broadcast advertising combined with improvements in its digital business.

iHeartMedia's loss of 12 cents per share beat analysts' estimate of a loss of 55 cents per share. according to MarketWatchand its revenue ($799 million) and adjusted earnings before interest, taxes, depreciation and amortization ($105 million) both fell within the guidance it provided.

CEO Bob Pittman and COO and CFO Rich Bressler reminded listeners of Thursday's earnings call that the first quarter is historically the slowest time of the year. They also reiterated the company's optimism for 2024 and expected benefits from political advertising in the second half of the year.

“While the market remains dynamic, with a changing outlook for interest rates, inflation trends and global and domestic uncertainty, we remain confident that this is a year of recovery underpinned by strong momentum and our podcast business and sequentially improving our multiples The platform teams adjusted EBITDA performance each year,” said Pittman.

The current quarter may be an improvement over the first quarter, but iHeartMedia doesn't expect much improvement in 2023. Thursday's second-quarter revenue guidance was “roughly flat” compared to the previous quarter's revenue of 920 million was slightly below the analyst consensus of $935 million, according to Zacks Equity Research. April revenue is expected to fall 0.4 percent, Bressler said, and the multi-platform group's gross revenue is expected to be in the “mid single digits” in the second quarter.

Shares of iHeartMedia fell to $1.38 on Thursday, extending their year-to-date loss to 48.3%. Thursday's closing price was 70.8% below the stock's 52-week high of $4.73 set on July 31, 2023.

Another downside was that first-quarter free cash flow (FCF) was negative $88 million, although it was an improvement from negative $133 million in the year-ago quarter. First-quarter FCF did not include the $101 million iHeartMedia received from the sale of BMI to New Mountain Capital in February.

Total revenue of $799 million was down 1.5% from last year's period. The multi-platform group, which includes iHeartMedia's broadcast radio networks and events operations, suffered the biggest decline: revenue fell 6.7% to $493 million and adjusted EBITDA fell 11% to $77 million.

Driven by podcast growth, digital audio group revenue increased 7.0% to $239 million and adjusted EBITDA increased 25.9% to $68.1 million. In the audio and media services segment, revenue improved 12.7% to $69.2 million and adjusted EBITDA increased 54.4% to $23.7 million.