Townsquare Media Inc.
11/04/2026 | Press release | Distributed by Public on 11/04/2026 05:09
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following management's discussion and analysis is intended to provide the reader with an overall understanding of our financial condition, results of operations, cash flows and sources and uses of cash. This section also includes general information about our business and a discussion of our management's analysis of certain trends, and risks and opportunities in our industry. In addition, we also provide a discussion of accounting policies that require critical judgments and estimates. This discussion should be read in conjunction with our Unaudited Consolidated Financial Statements and related notes appearing elsewhere in this quarterly report.
Note About Forward-Looking Statements
This report includes estimates, projections, statements relating to our business plans, objectives and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements often discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "aim," "anticipate," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "believe," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other words and terms. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include the impact of general economic conditions in the United States, or in the specific markets in which we currently do business including supply chain disruptions, inflation, labor shortages, tariffs, and the effect on advertising activity, industry conditions, including existing competition and future competitive technologies, including artificial intelligence, the popularity of radio as a broadcasting and advertising medium, cancellations, disruptions or postponements of advertising schedules in response to national or world events, our ability to develop and maintain digital technologies, including artificial intelligence, and hire and retain technical and sales talent, our dependence on key personnel, our capital expenditure requirements, our continued ability to identify suitable acquisition targets, and consummate and integrate any future acquisitions, legislative or regulatory requirements, risks and uncertainties relating to our leverage and changes in interest rates, our ability to obtain financing at times, in amounts and at rates considered appropriate by us, our ability to access the capital markets as and when needed and on terms that we consider favorable to us and other factors discussed in this section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report and under "Risk Factors" in our 2025 Annual Report on Form 10-K, as well as other risks discussed from time to time in our filings with the SEC. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. The forward-looking statements included in this report are made only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Format of Presentation
Townsquare is a community-focused digital and broadcast media and marketing solutions company principally focused outside the top 50 markets in the U.S. Townsquare Ignite, our robust digital advertising division, specializes in helping businesses of all sizes connect with their target audience through data-driven, results-based strategies, by utilizing a) our proprietary digital programmatic advertising technology stack with an in-house demand and data management platform and b) our owned and operated portfolio of more than 400 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data. Townsquare Interactive, our subscription digital marketing services business, partners with small and medium-sized businesses ("SMBs") to help manage their digital presence by providing a SaaS business management platform, website design, creation and hosting, search engine optimization and other digital services. And through our portfolio of local radio stations strategically situated outside the Top 50 markets in the United States, we provide effective advertising solutions for our clients and relevant local content for our audiences.
We believe that our diversified product offering substantially differentiates us from our competition. This diversification allows us to provide superior solutions to our advertisers and engaging experiences for our audience, underpins our growth strategy and, we believe, helps to mitigate the risks associated with advertising revenue dependency.
The Company has identified three segments, which are Digital Advertising, Subscription Digital Marketing Solutions, and Broadcast Advertising, and the remainder of our business is reported in an Other category.
Digital Advertising
Our Digital Advertising segment, marketed externally as Townsquare Ignite, is a combination of our proprietary digital programmatic advertising platform and our owned and operated digital properties, and an in-house demand and data management platform collecting valuable first party data.
Subscription Digital Marketing Solutions
Our Subscription Digital Marketing Solutions segment encompasses Townsquare Interactive, our subscription digital marketing solutions business. Townsquare Interactive offers digital marketing solutions, on a subscription basis, to SMBs in markets outside the top 50 across the United States, including but importantly not limited to the markets in which we operate radio stations. We offer a variety of digital marketing solutions, which enables SMBs to choose the optimal features for their specific business.
Broadcast Advertising
Our Broadcast Advertising segment includes our portfolio of 335 local terrestrial radio stations. Our primary source of Broadcast Advertising net revenue is the sale of advertising on our local radio stations primarily to local and regional spot advertisers and, to a lesser extent, national spot and national network advertisers. We believe we are the largest and best-capitalized owner and operator of radio stations focused solely on markets outside the top 50 markets in the United States. Given the stability of radio's audience, its broad reach and its relatively low cost as compared to competing advertising media such as television, we believe radio continues to offer an attractive value proposition to advertisers. The price point for radio advertising on a cost per thousand basis is lower than most other local media that deliver similar scale. This makes radio more affordable and accessible for the type of small and mid-sized businesses typically found in our local markets outside the top 50 markets in the U.S.
Other
We report the remainder of our revenue in the Other category, and it includes revenue from our live events, which includes concerts, expositions, and other experiential events. Our live events portfolio includes iconic local events such as WYRK's Taste of Country, the Boise Music Festival, the Red Dirt BBQ & Music Festival and Taste of Fort Collins. Our primary source of live events net revenue is ticket sales. Our live events also generate revenue through the sale of sponsorships, food and other concessions, merchandise and other ancillary products and services.
Overall
We generate a majority of our advertising revenue by selling directly to local advertisers, as well as to local and regional advertising agencies which affords us the opportunity to better present our products, cross-sell products and more directly influence their advertising and marketing expenditure decisions. A significant percentage of our advertising revenue is generated from the sale of advertising to the automotive, financial services, health services, entertainment, and retail industries.
Our most significant expenses are sales personnel, programming, digital, marketing and promotional, engineering, and general and administrative expenses. We strive to control these expenses by closely monitoring and managing each of our local markets and through efficiencies gained from the centralization of finance, accounting, legal and human resources functions and management information systems. We also use our scale and diversified geographic portfolio to negotiate favorable rates with vendors where feasible.
A portion of our expenses are variable. These variable expenses primarily relate to sales costs, such as commissions and inventory costs, as well as certain programming costs, such as music license fees, and certain costs related to production. Other programming, digital, engineering and general and administrative expenses are primarily fixed costs.
Seasonality
Our revenue varies throughout the year. Typically, we expect that our first calendar quarter will produce the lowest net revenue for the year, as advertising expenditures generally decline following the winter holidays. During even-numbered years, net revenue generally includes increased advertising expenditures by political candidates, political parties and special interest groups. Political spending is typically highest during the fourth quarter. Our operating results in any period may be affected by the incurrence of advertising and promotion expenses that typically do not have an effect on net revenue generation until future periods, if at all.
Macroeconomic Indicators
Current economic challenges, including high and sustained inflation and interest rates, and proposed and enacted tariffs have caused and could continue to cause economic uncertainty and volatility. These factors could result in advertising and subscription digital marketing solutions cancellations, declines in the purchase of new advertising by our clients, declines in the addition of new digital marketing solutions subscribers, and increases to our operating expenses. We monitor economic conditions closely, and in response to observed or anticipated reductions in revenue, we may institute precautionary measures to address the potential impact to our consolidated financial position, consolidated results of operations, and liquidity, including wage reduction efforts and controlling non-essential capital expenditures.
The extent of the impact of current economic conditions will depend on future actions and outcomes, all of which remain fluid and cannot be predicted with confidence (including effects on advertising activity, consumer discretionary spending and our employees in the markets in which we operate).
OVERVIEW OF OUR PERFORMANCE
Highlights of Our Financial Performance
Certain key financial developments in our business for the three months ended September 30, 2026 as compared to the same period in 2025 are summarized below:
•Net revenue increased $4.2 million, or 3.9%, primarily driven by a $5.1 million increase in our Digital Advertising net revenue, a $0.5 million increase in Other net revenue and a $0.2 million increase in our Broadcast Advertising net revenue. These increases were partially offset by a $1.6 million decrease in Subscription Digital Marketing Solutions net revenue.
•Excluding political revenue of $2.9 million and $0.2 million for the three months ended September 30, 2026 and 2025, respectively, net revenue increased $1.5 million, or 1.4%, to $108.0 million. Digital Advertising net revenue increased $5.0 million, or 12.4%, to $45.2 million, and Broadcast Advertising net revenue decreased $2.4 million, or 5.2%, to $44.4 million.
•Operating income decreased $0.4 million to $5.5 million for the three months ended September 30, 2026. The decrease was primarily driven by a $5.0 million increase in non-cash impairment charges, a $3.5 million increase in direct operating expenses and a $1.6 million decrease in net gain on sale and retirement of assets, partially offset by a $5.8 million decrease in transaction and business realignment costs and the $4.2 million increase in net revenue discussed above.
•Digital Advertising reported operating income of $7.7 million for the three months ended September 30, 2026, an increase of $2.9 million, as compared to the same period in 2025, primarily due to a non-cash goodwill impairment charge of $3.0 million that was incurred in 2025. Subscription Digital Marketing Solutions reported operating income of $5.3 million, a decrease of $0.4 million from the three months ended September 30, 2025. Broadcast Advertising reported operating income of $3.1 million for the three months ended September 30, 2026, which represents a decrease of $8.7 million, as compared to operating income of $11.8 million for the same period in 2025.
The decrease is primarily due to incremental non-cash impairment charges of $8.0 million and a $1.6 million decrease in net gain on sales and retirements of assets, partially offset by a $1.2 million increase in segment profit.
Certain key financial developments in our business for the nine months ended September 30, 2026, as compared to the same period in 2025 are summarized below:
•Net revenue for the nine months ended September 30, 2026 as compared to the same period in 2025 increased $2.2 million, or 0.7%, primarily driven by a $12.3 million increase in Digital Advertising net revenue, which was partially offset by a $5.2 million decrease in Broadcast Advertising net revenue and a $4.7 million decrease in our Subscription Digital Marketing Solutions net revenue.
•Excluding political revenue of $4.9 million and $1.3 million for the nine months ended September 30, 2026 and 2025, respectively, net revenue decreased $1.4 million, or 0.4% to $318.2 million, Broadcast Advertising net revenue decreased $8.8 million, or 6.4%, to $127.7 million, and Digital Advertising net revenue increased $12.2 million, or 10.3%, to $131.6 million.
•Operating income decreased $42.2 million for the nine months ended September 30, 2026, to an operating loss of $8.1 million, primarily due to a $38.7 million increase in non-cash impairment charges, a $7.2 million decrease in net gain on sales and retirements of assets and a $5.0 million increase in direct operating expenses. These changes were partially offset by a $6.3 million decrease in transaction and business realignment costs and the $2.2 million increase in net revenue.
Consolidated Results of Operations
Three months ended September 30, 2026 compared to three months ended September 30, 2025
The following table summarizes our historical consolidated results of operations:
| ($ in thousands) | Three Months Ended September 30, | ||||||||||||||||||||||
| Statement of Operations Data: | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Net revenue | $ | 110,948 | $ | 106,759 | $ | 4,189 | 3.9 | % | |||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Direct operating expenses, excluding depreciation, amortization, and stock-based compensation | 82,270 | 78,758 | 3,512 | 4.5 | % | ||||||||||||||||||
| Depreciation and amortization | 4,861 | 4,646 | 215 | 4.6 | % | ||||||||||||||||||
| Corporate expenses | 6,073 | 5,985 | 88 | 1.5 | % | ||||||||||||||||||
| Stock-based compensation | 3,099 | 3,066 | 33 | 1.1 | % | ||||||||||||||||||
| Transaction and business realignment costs | 1,063 | 6,891 | (5,828) | (84.6) | % | ||||||||||||||||||
|
Impairment of intangible assets, goodwill and long-lived assets
|
8,100 | 3,098 | 5,002 | 161.5 | % | ||||||||||||||||||
| Net gain on sales and retirement of assets | (22) | (1,621) | 1,599 | (98.6) | % | ||||||||||||||||||
| Total operating costs and expenses | 105,444 | 100,823 | 4,621 | 4.6 | % | ||||||||||||||||||
| Operating income | 5,504 | 5,936 | (432) | (7.3) | % | ||||||||||||||||||
| Other expense: | |||||||||||||||||||||||
| Interest expense, net | 11,934 | 12,606 | (672) | (5.3) | % | ||||||||||||||||||
| Gain on extinguishment of debt | - | (247) | 247 | (100.0) | % | ||||||||||||||||||
| Other (income) expense, net | (530) | 135 | (665) | (492.6) | % | ||||||||||||||||||
| Loss from operations | (5,900) | (6,558) | 658 | (10.0) | % | ||||||||||||||||||
| Income tax benefit | (1,914) | (1,060) | (854) | 80.6 | % | ||||||||||||||||||
| Net loss | $ | (3,986) | $ | (5,498) | $ | 1,512 | (27.5) | % | |||||||||||||||
Segment Results
The following table presents the Company's reportable segment net revenue, direct operating expenses and segment profit for the three months ended September 30, 2026 and 2025 (in thousands):
| Net Revenue | Direct Operating Expenses | Segment Profit (Loss) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Three Months Ended September 30, |
Three Months Ended September 30, |
Three Months Ended September 30, |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Digital Advertising | $ | 45,348 | $ | 40,228 | $ | 5,120 | 12.7 | % | $ | 36,861 | $ | 31,590 | $ | 5,271 | 16.7 | % | $ | 8,487 | $ | 8,638 | $ | (151) | (1.7) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscription Digital Marketing Solutions | 17,071 | 18,649 | (1,578) | (8.5) | % | 10,875 | 12,442 | (1,567) | (12.6) | % | 6,196 | 6,207 | (11) | (0.2) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Broadcast Advertising | 47,186 | 46,997 | 189 | 0.4 | % | 32,622 | 33,633 | (1,011) | (3.0) | % | 14,564 | 13,364 | 1,200 | 9.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 1,343 | 885 | 458 | 51.8 | % | 1,912 | 1,093 | 819 | 74.9 | % | (569) | (208) | (361) | 173.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 110,948 | $ | 106,759 | $ | 4,189 | 3.9 | % | $ | 82,270 | $ | 78,758 | $ | 3,512 | 4.5 | % | $ | 28,678 | $ | 28,001 | $ | 677 | 2.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net Revenue
Net revenue for the three months ended September 30, 2026 increased $4.2 million, or 3.9%, as compared to the same period in 2025. Digital Advertising net revenue increased $5.1 million, or 12.7%, due to increases in the purchases of advertising by our clients, other net revenue increased $0.5 million, or 51.8%, due to the timing of certain events in the current period as compared to the same period a year ago, and Broadcast Advertising net revenue increased $0.2 million, or 0.4% due to an increase in political revenue. These increases were partially offset by a $1.6 million, or 8.5%, decrease in Subscription Digital Marketing Solutions net revenue, due to reduced sales velocity as a result of lower sales headcount.
Direct Operating Expenses
Direct operating expenses for the three months ended September 30, 2026 increased by $3.5 million, or 4.5%, as compared to the same period in 2025. Digital Advertising direct operating expenses increased by $5.3 million, or 16.7%, as a result of higher costs associated with acquiring digital advertising inventory, partially driven by the increase in net revenue discussed above. Other direct operating expenses increased $0.8 million, or 74.9%, primarily due to higher talent and production costs. These increases were partially offset by a decrease of $1.6 million, or 12.6% of Subscription Digital Marketing Solutions direct operating expenses primarily due to lower compensation, and a $1.0 million, or 3.0%, decrease in Broadcast Advertising direct operating expenses primarily due to lower compensation, each as compared to the same period a year ago.
Segment Profit
Segment profit for the three months ended September 30, 2026 increased by $0.7 million, or 2.4%, when compared with the same period in 2025. Broadcast Advertising segment profit increased $1.2 million, or 9.0%, primarily due to the decrease in direct operating expenses. Our Other segment profit decreased $0.4 million, primarily due to the increase in direct operating expenses discussed above.
Transaction and Business Realignment Costs
Transaction and business realignment costs for the three months ended September 30, 2026 decreased $5.8 million, or 84.6%, as compared to the same period in 2025, primarily due to costs incurred in 2025 related to a change in the provider for listing management tools supporting the Subscription Digital Marketing Solutions segment and the August 2025 settlement between the Radio Music License Committee and performing rights organizations related to music license royalty payments from 2022 through June of 2025. These costs were not incurred in 2026.
Impairment of intangible assets, goodwill and long-lived assets
The Company incurred $8.1 million of non-cash impairment charges related to FCC licenses during the three months ended September 30, 2026, as compared to no impairment charges related to FCC licenses for the same period in 2025. The impairment charge was primarily driven by an increase in the weighted average cost of capital, caused by an increase in U.S. treasury and industry bond yields. For further discussion, see Note 5, Goodwill and Other Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements.
During the third quarter of 2025, the Company concluded that the carrying amount of the National Digital reporting unit exceeded its fair value resulting in the recognition of a non-cash goodwill impairment charge of $3.0 million.
Unfavorable changes in key assumptions utilized in the impairment assessment of our FCC licenses may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the weighted average cost of capital as of the date of our last quantitative assessment would cause the estimated fair values of our FCC licenses to decrease by $14.7 million which would have resulted in an incremental impairment charge of $8.8 million as of September 30, 2026. A 100-basis point decline in the long-term revenue growth rate would cause the estimated fair values of our FCC licenses to decrease by $8.5 million which would have resulted in an incremental impairment charge of $4.5 million as of September 30, 2026. Finally, a 100-basis point decline in operating profit margins would result in a decrease in the estimated fair values of our FCC licenses of $8.9 million which would result in an incremental impairment charge of $4.5 million. Assumptions used to estimate the fair value of our FCC licenses are also dependent upon the expected performance and growth of our traditional broadcast radio operations. In the event broadcast radio revenue experiences actual or anticipated declines in excess of these assumptions, such declines will have a negative impact on the estimated fair value of our FCC licenses, and the Company could recognize additional impairment charges, which could be material.
Net Gain on Sale and Retirement of Assets
During the three months ended September 30, 2025, the Company recognized $1.6 million in net gains on the sales of property and leased assets in several markets, including a $0.7 million gain on the sale of property in the Bismarck, ND market.
Interest Expense, net
The following table illustrates the components of our interest expense, net for the periods indicated (in thousands):
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Term Loan | $ | 10,061 | $ | 11,061 | |||||||
| Revolver | 235 | 85 | |||||||||
| Finance leases and other | 245 | 212 | |||||||||
| Deferred financing costs | 264 | 237 | |||||||||
| Debt discount amortization | 1,129 | 1,011 | |||||||||
| Interest expense, net | $ | 11,934 | $ | 12,606 | |||||||
Interest expense decreased primarily due to a lower effective interest rate on the term loan, reflecting a decline in SOFR compared to the prior-year period, and lower outstanding term loan principal balances resulting from scheduled quarterly and voluntary repayments. These decreases were partially offset by higher interest expense on the revolving credit facility due to higher average outstanding borrowings. For additional information regarding the terms of the credit agreement and effective interest rates, see Note 6, Long-Term Debt, in the Notes to Unaudited Consolidated Financial Statements.
Income tax benefit
We recognized an income tax benefit of $1.9 million for the three months ended September 30, 2026, as compared to $1.1 million for the same period in 2025. Our effective tax rate for the three months ended September 30, 2026 and 2025 was approximately 32.4% and 16.2%, respectively. The effective tax rate and tax provision for the three months ended September 30, 2026 is driven by the valuation allowance for interest expense carryforwards, non-deductible compensation and the effects of non-cash impairment charges recognized for the three months ended September 30, 2026.
Our effective tax rate may vary significantly from period to period and can be influenced by many factors. These factors include, but are not limited to, changes to statutory rates in the jurisdictions where we have operations and changes in the valuation of deferred tax assets and liabilities. The difference between the effective tax rate and the federal statutory rate of 21.0%, primarily relates to certain non-deductible items, state and local income taxes and the valuation allowance for deferred tax assets.
Consolidated Results of Operations
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
The following table summarizes our historical consolidated results of operations:
| ($ in thousands) |
Nine Months Ended September 30, |
||||||||||||||||||||||
| Statement of Operations Data: | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Net revenue | $ | 323,082 | $ | 320,882 | $ | 2,200 | 0.7 | % | |||||||||||||||
| Direct operating expenses, excluding depreciation, amortization, and stock-based compensation | 242,357 | 237,403 | 4,954 | 2.1 | % | ||||||||||||||||||
| Depreciation and amortization | 14,340 | 13,619 | 721 | 5.3 | % | ||||||||||||||||||
| Corporate expenses | 16,947 | 16,905 | 42 | 0.2 | % | ||||||||||||||||||
| Stock-based compensation | 10,132 | 11,044 | (912) | (8.3) | % | ||||||||||||||||||
| Transaction and business realignment costs | 4,377 | 10,718 | (6,341) | (59.2) | % | ||||||||||||||||||
|
Impairment of intangible assets, goodwill and long-lived assets
|
43,331 | 4,598 | 38,733 | 842.4 | % | ||||||||||||||||||
| Net gain on sales and retirement of assets | (340) | (7,524) | 7,184 | (95.5) | % | ||||||||||||||||||
| Total operating costs and expenses | 331,144 | 286,763 | 44,381 | 15.5 | % | ||||||||||||||||||
| Operating (loss) income | (8,062) | 34,119 | (42,181) | (123.6) | % | ||||||||||||||||||
| Other expense: | |||||||||||||||||||||||
| Interest expense, net | 34,693 | 35,497 | (804) | (2.3) | % | ||||||||||||||||||
| Loss on extinguishment of debt | - | 1,205 | (1,205) | (100.0) | % | ||||||||||||||||||
| Other (income) expense, net | (371) | 226 | (597) | (264.2) | % | ||||||||||||||||||
| (Loss) income from operations | (42,384) | (2,809) | (39,575) | 1,408.9 | % | ||||||||||||||||||
| Income tax provision | 451 | 2,191 | (1,740) | (79.4) | % | ||||||||||||||||||
| Net loss | $ | (42,835) | $ | (5,000) | $ | (37,835) | 756.7 | % | |||||||||||||||
Segment Results
The following table presents the Company's reportable segment net revenue, direct operating expenses and segment profit for the nine months ended September 30, 2026 and 2025 (in thousands):
| Net Revenue | Direct Operating Expenses | Segment Profit (Loss) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Nine Months Ended September 30, |
Nine Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Digital Advertising | $ | 131,833 | $ | 119,517 | $ | 12,316 | 10.3 | % | $ | 104,947 | $ | 92,082 | $ | 12,865 | 14.0 | % | $ | 26,886 | $ | 27,435 | $ | (549) | (2.0) | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscription Digital Marketing Solutions | 51,747 | 56,438 | (4,691) | (8.3) | % | 33,196 | 37,812 | (4,616) | (12.2) | % | 18,551 | 18,626 | (75) | (0.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Broadcast Advertising | 132,344 | 137,581 | (5,237) | (3.8) | % | 96,353 | 100,583 | (4,230) | (4.2) | % | 35,991 | 36,998 | (1,007) | (2.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 7,158 | 7,346 | (188) | (2.6) | % | 7,861 | 6,926 | 935 | 13.5 | % | (703) | 420 | (1,123) | ** | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 323,082 | $ | 320,882 | $ | 2,200 | 0.7 | % | $ | 242,357 | $ | 237,403 | $ | 4,954 | 2.1 | % | $ | 80,725 | $ | 83,479 | $ | (2,754) | (3.3) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net Revenue
Net revenue for the nine months ended September 30, 2026 increased $2.2 million, or 0.7%, as compared to the same period in 2025. Digital Advertising net revenue increased $12.3 million, or 10.3%, due to increases in the purchases of advertising by our clients. This increase was partially offset by a $5.2 million, or 3.8%, decrease in Broadcast Advertising net revenue due to decreases in the purchases of advertising by our clients, which was partially offset by increased political revenue, a $4.7 million, or 8.3%, decrease in Subscription Digital Marketing Solutions net revenue due to reduced sales velocity, and a $0.2 million, or 2.6%, decrease in Other net revenue.
Direct Operating Expenses
Direct operating expenses for the nine months ended September 30, 2026 increased by $5.0 million, or 2.1%, as compared to the same period in 2025. Digital Advertising direct operating expenses increased $12.9 million, or 14.0%, primarily due to higher inventory and compensation costs. Other direct operating expenses increased $0.9 million, or 13.5%, primarily due to higher talent fees in 2026 as compared to 2025. These increases were partially offset by a decrease in Subscription Digital Marketing Solutions direct operating expenses of $4.6 million or 12.2%, and a decrease in Broadcast Advertising direct operating expenses of $4.2 million, or 4.2%, each primarily due to lower compensation.
Segment Profit
Segment profit for the nine months ended September 30, 2026 decreased by $2.8 million, or 3.3%, as compared to the same period in 2025. Other segment profit decreased by $1.1 million, primarily due to higher talent fees, and Broadcast Advertising segment profit decreased $1.0 million, or 2.7%, primarily due to the decline in net revenue. Digital Advertising segment profit decreased $0.5 million, or 2.0%, primarily due to the increases in inventory and compensation costs discussed above.
Transaction and business realignment costs
Transaction and business realignment costs for the nine months ended September 30, 2026 decreased $6.3 million or 59.2% , as compared to the same period in 2025, due to the costs incurred in the prior year period associated with a change in the provider for listing management tools supporting the Subscription Digital Marketing Solutions segment and the August 2025 settlement between the Radio Music License Committee and performing rights organizations related to music license royalty payments from 2022 through June of 2025. These costs were not incurred in 2026.
Impairment of intangible assets, goodwill and long-lived assets
The Company incurred a total of $43.3 million in non-cash impairment charges related to FCC licenses in 21 of our 74 local markets during the nine months ended September 30, 2026, as compared to non-cash impairment charges of $1.5 million for FCC licenses in 4 of our 74 local markets during the nine months ended September 30, 2025. The non-cash impairment charges in 2026 were primarily driven by decreases in third-party forecasts of broadcast revenue and increases in the discount rate applied in the valuation of our FCC licenses due to an increase in the weighted average cost of capital, caused by increases in U.S. treasury and industry bond yields.
During the nine months ended September 30, 2025, the Company concluded that the carrying amount of the National Digital reporting unit exceeded its fair value resulting in the recognition of a non-cash goodwill impairment charge of $3.0 million.
For further discussion, see Note 5, Goodwill and Other Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements.
Net Gain on Sale and Retirement of Assets
During the nine months ended September 30, 2026, the Company recognized $0.3 million in net gain on the sale and retirement of assets, as compared to net gain on the sale and retirement of assets of $7.5 million during the same period in 2025, which included a $5.6 million and $0.7 million gain on the sales of property in the Boise, ID and Bismarck, ND markets, respectively, during the nine months ended September 30, 2025.
Interest Expense, net
The following table illustrates the components of our interest expense, net for the periods indicated (in thousands):
|
Nine Months Ended September 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| 2026 Notes | $ | - | $ | 4,282 | |||||||
| Term Loan | 29,773 | 26,893 | |||||||||
| Revolver | 493 | 362 | |||||||||
| Finance leases and other | 669 | 702 | |||||||||
| Deferred financing costs | 713 | 802 | |||||||||
| Debt discount amortization | 3,045 | 2,456 | |||||||||
| Interest expense, net | $ | 34,693 | $ | 35,497 | |||||||
Interest expense, net decreased $0.8 million, or 2.3%, for the nine months ended September 30, 2026 compared to the same period in 2025, primarily due to the absence of interest expense associated with the 2026 Notes, which were refinanced on February 19, 2025, and were partially offset by higher Term Loan interest expense and increased amortization of debt discount. The increase in Term Loan interest expense was primarily attributable to the Term Loan being outstanding for the full nine-month period in 2026, compared to the period beginning February 19, 2025, partially offset by declines in SOFR and reductions in outstanding principal resulting from scheduled quarterly and voluntary repayments. For further discussion of our debt arrangements, see Note 6, Long-Term Debt, in the Notes to Unaudited Consolidated Financial Statements.
Loss on Extinguishment of Debt
During the nine months ended September 30, 2025, the Company recognized a $1.2 million net loss on the early extinguishment of debt, comprised of the write-off of $1.5 million of unamortized deferred financing fees previously capitalized in connection with the Company's 2026 Notes, partially offset by a $0.2 million net gain on the voluntary repayment of an aggregate $5.8 million principal amount of Term Loan below par, plus accrued interest during the nine months ended September 30, 2025.
Income tax provision
We recognized a provision for income taxes of $0.5 million for the nine months ended September 30, 2026, as compared to $2.2 million for the same period in 2025. Our effective tax rate for the period was approximately 1.1% for the nine months ended September 30, 2026 as compared to 78.0% for the nine months ended September 30, 2025. The effective tax rate and provision for the nine months ended September 30, 2026 is driven by the valuation allowance for interest expense carryforwards, non-deductible compensation and the effects of non-cash impairment charges recognized for the nine months ended September 30, 2026.
Our effective tax rate may vary significantly from period to period and can be influenced by many factors. These factors include, but are not limited to, changes to statutory rates in the jurisdictions where we have operations and changes in the valuation of deferred tax assets and liabilities. The difference between the effective tax rate and the federal statutory rate of 21.0%, primarily relates to certain non-deductible items, state and local income taxes and the valuation allowance for deferred tax assets.
Liquidity and Capital Resources
The following table summarizes our change in cash and cash equivalents (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
|
Cash and cash equivalents
|
$ | 4,610 | $ | 3,211 | |||||||
|
Restricted cash
|
323 | 323 | |||||||||
|
Cash provided by operating activities
|
12,900 | 18,009 | |||||||||
|
Cash used in investing activities
|
(9,005) | (3,391) | |||||||||
|
Cash used in financing activities
|
(3,779) | (44,074) | |||||||||
|
Net increase (decrease) in cash and cash equivalents and restricted cash
|
$ | 116 | $ | (29,456) | |||||||
Operating Activities
Net cash provided by operating activities was approximately $12.9 million for the nine months ended September 30, 2026, as compared to $18.0 million for the same period in 2025. The decrease was primarily related to net changes in working capital balances, particularly accounts receivable, accounts payable and accrued expenses, partially offset by lower cash interest payments in 2026.
Investing Activities
Net cash used in investing activities was $9.0 million for the nine months ended September 30, 2026, as compared to $3.4 million for the same period in 2025. The increase in net cash used in investing activities was primarily due to a $7.6 million decrease in net proceeds from sales of assets in 2026, partially offset by a $1.9 million decrease in purchases of property and equipment.
Financing Activities
Net cash used in financing activities was $3.8 million for the nine months ended September 30, 2026 as compared to $44.1 million for the same period in 2025. The primary differences in net cash used in financing activities include:
•$25.7 million of net cash utilized in the February 2025 debt refinancing transactions, including fees and expenses;
•$18.0 million in borrowings under the Revolver during the nine months ended September 30, 2026, as compared to $5.0 million in net borrowings during the same period in 2025;
•Fixed term loan repayments of $8.8 million in 2026, as compared to total repayments of $11.1 million in 2025;
•$1.5 million of shares repurchased to cover employee tax withholdings on restricted stock that vested during the nine months ended September 30, 2025, which did not recur in 2026; and
•$10.9 million of dividend payments in 2026, as compared to $9.8 million of dividend payments in 2025.
Sources of Liquidity and Anticipated Cash Requirements
We fund our working capital requirements through a combination of cash flows from our operating, investing, and financing activities. Based on current and anticipated levels of operations and conditions in our markets and industry, we believe that our cash on hand and cash flows from our operating, investing, and financing activities will enable us to meet our working capital, capital expenditures, debt service, and other funding requirements for at least one year from the date of this report. Future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, some of which are beyond our control. We have focused on and will continue to monitor our liquidity in response to current and future economic challenges and uncertainty.
As of September 30, 2026, we had $446.7 million of outstanding indebtedness, net of unamortized discount and deferred financing costs of $20.8 million.
Based on the terms of our Senior Secured Credit Facility, as of September 30, 2026, we expect our mandatory debt service requirements to be approximately $53.4 million over the next twelve months. See Note 6, Long-Term Debt, in our Notes to Consolidated Financial Statements for additional information related to our Senior Secured Credit Facility.
As of September 30, 2026 we had $4.6 million of cash and cash equivalents, and $57.6 million of receivables from customers, which historically have had an average collection cycle of approximately 50 days. As of September 30, 2026, the Company had no amount available under its revolving credit facility. Amounts borrowed under the revolving credit facility above an aggregate $6.0 million as of the end of each fiscal quarter require compliance with a net leverage ratio covenant, which could limit the Company's ability to access the full amount of the facility in future periods.
On October 29, 2025, the board of directors approved a quarterly cash dividend of $0.20 per share. The dividend of $3.3 million was paid to holders of record as of January 26, 2026 on February 2, 2026.
On March 4, 2026, the board of directors approved a quarterly dividend of $0.20 per share. The dividend of $3.6 million was paid to holders of record as of April 27, 2026 on May 4, 2026.
On May 1, 2026, the board of directors approved a quarterly cash dividend of $0.20 per share. The dividend of $3.6 million was paid to holders of record as of July 27, 2026 on August 3, 2026.
On August 4, 2026, the board of directors approved a quarterly cash dividend of $0.20 per share. The $3.6 million dividend was paid on November 2, 2026 to shareholders of record as of the close of business on October 26, 2026.
Our anticipated uses of cash in the near term include working capital needs, interest payments, debt amortization payments, excess cashflow payments that may be required under the terms of the Credit Agreement, other obligations, and capital expenditures. The Company believes that the cash generated by its operations should be sufficient to meet its liquidity needs for at least the next 12 months. However, our ability to fund our working capital needs, interest payments, debt payments, other obligations, capital expenditures, and to comply with financial covenants under our debt agreements, depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions, increases or decreases in advertising spending, changes in the highly competitive industry in which we operate, which may be rapid, and other factors, many of which are beyond our control. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of debt financing would result in additional debt service obligations. Such debt instruments could introduce covenants that might restrict our operations. We cannot assure you that we could obtain additional financing on favorable terms or at all.
In November 2026, the Company's Board of Directors approved the suspension of its quarterly cash dividend in order to redirect capital toward general corporate liquidity and strategic growth opportunities. Any future declaration of dividends will be at the discretion of the Board of Directors.
In October of 2026, the Company closed on the sale of property in Lake Charles, LA for approximately $4.6 million.
Additionally, on a continuing basis, we evaluate and consider strategic acquisitions and divestitures to enhance our strategic and competitive position as well as our financial performance. Any future acquisitions, joint ventures or other similar transactions may require additional capital, which may not be available to us on acceptable terms, if at all.
We closely monitor the impact of capital and credit market conditions on our liquidity and our ability to refinance in the future. We also routinely monitor the changes in the financial condition of our customers and the potential impact on our results of operations.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements or transactions.
Critical Accounting Policies and Estimates
We believe the accounting policies and estimates discussed within "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report on Form 10-K reflects our more significant judgments and estimates used in the preparation of the Consolidated Financial Statements. There have been no material changes to the critical accounting policies and estimates as filed in such report.
Recent Accounting Standards
For a discussion of accounting standards updates that have been adopted or will be adopted in the future, please refer to Note 2, Summary of Significant Accounting Policies of the Notes to Unaudited Consolidated Financial Statements included under Item 1.
Townsquare Media Inc. published this content on November 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 04, 2026 at 11:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]