Townsquare Media (NYSE:TSQ) reported higher third-quarter revenue and adjusted earnings as digital advertising and political spending helped offset weakness in its traditional broadcast business. The company also suspended its dividend, citing pressure on cash flow and a slower-than-expected recovery in its digital subscription business.
Third-quarter net revenue rose 3.9% from a year earlier to $110.9 million, exceeding the company’s guidance range of $108 million to $110 million. Adjusted EBITDA increased 2.7% to $22.6 million, within its forecast range. Excluding political advertising, revenue rose 1.4%, while adjusted EBITDA fell 7.9%.
“Traditional media advertising remains incredibly soft, particularly for local businesses in our small and medium-sized markets,” CEO Bill Wilson said on the earnings call. He added that small and midsize businesses continue to face pressure from higher operating expenses.
Townsquare recorded a net loss of $4 million, or $0.23 per diluted share, including an $8.1 million non-cash impairment charge. That compared with a loss of $5.5 million, or $0.36 per diluted share, a year earlier. Adjusted net income rose to $0.12 per diluted share from $0.05.
Digital Advertising Growth Accelerates
Townsquare Ignite, the company’s digital advertising segment, generated $45.3 million in third-quarter revenue, up 12.7% year over year. Growth accelerated from 6.8% in the first quarter and 11% in the second. Programmatic revenue increased 22.5% in the latest quarter, CFO Stuart Rosenstein said.
Wilson said Townsquare expects digital advertising revenue to grow approximately 10% for the full year, with programmatic revenue rising more than 20%. Programmatic advertising accounts for approximately 70% of the segment’s revenue.
The company’s Media Partnerships business had 18 partners at the time of the call, up from 16 in the prior quarter. Wilson said those partnerships add 48 markets beyond Townsquare’s 74 owned-and-operated markets. He expects partnership revenue to exceed $13 million in 2026, compared with approximately $6 million in 2025, and reiterated a target of $50 million in revenue and $10 million in profit within four years.
Digital advertising’s third-quarter segment profit margin fell to 18.7% from 21.5% a year earlier, largely because of growth in the lower-margin Media Partnerships business. In response to an analyst’s question, Wilson said investors should expect an overall digital advertising margin of roughly 20% on a full-year basis.
Interactive Recovery Delayed as Broadcast Remains Weak
Townsquare Interactive, the company’s subscription-based digital marketing business, posted revenue of $17.1 million, down 8.5% from a year earlier. Its segment profit margin was 36%, but management no longer expects the business to return to sequential monthly revenue growth by year-end, as previously forecast.
Wilson said customer churn remained low, but sales were below expectations. He told analysts that Townsquare needed both more sellers and more sales per seller to return Interactive to growth.
The CEO said the inside sales team, which sells outside the company’s traditional markets, was still down about 25% in headcount following earlier changes. Townsquare had added roughly a couple dozen net sellers over the preceding 100 days, he said, noting that new sellers typically take nine to 12 months to fully ramp up and become profitable. Wilson expressed confidence that the business would return to sequential revenue growth in 2027.
Broadcast advertising revenue rose 0.4% to $47.2 million in the third quarter, supported by political spending. Excluding political advertising, it declined 5.2%. Wilson said fourth-quarter declines excluding political were pacing worse than the roughly 7% drop recorded in the first half, partly because political ads displaced other broadcast inventory.
Asked whether displaced advertisers were shifting their spending to Townsquare’s digital products, Wilson said the broadcast revenue was generally lost. Many customers already buy both broadcast and digital advertising, he said.
Dividend Suspension and Outlook
Rosenstein said suspending the dividend would preserve approximately $14 million annually. The company plans to use the cash for liquidity and debt service and may also pursue opportunities including broadcast acquisitions, share repurchases and digital investment.
Townsquare ended the quarter with $467.5 million in debt and $4.6 million in cash after drawing the remaining balance available on its revolving credit facility. Net leverage was 5.43 times, and the company was in compliance with its credit agreement covenants as of Sept. 30, Rosenstein said.
Because its term loan and revolving facility carry floating rates, a recent quarter-point rate increase will add approximately $1.2 million in annualized interest expense at the current debt balance, according to Rosenstein. He said another increase of the same size would have a similar effect.
For the fourth quarter, Townsquare forecast revenue of $107 million to $109 million and adjusted EBITDA of $23 million to $25 million. It raised its full-year revenue guidance to $430 million to $432 million from $425 million to $431 million, and narrowed its adjusted EBITDA forecast to $87 million to $89 million from $87 million to $90 million. The full-year outlook includes approximately $11 million in political revenue, above the company’s original $8 million projection.
About Townsquare Media (NYSE:TSQ)
Townsquare Media, Inc (NYSE: TSQ) is a local media and digital marketing company serving communities across the United States. Its operations are organized around local radio, digital media and events, providing audiences with news, entertainment, information and community-focused programming.
The company owns and operates radio stations in small and mid-sized markets, with programming distributed through broadcast and digital channels. Townsquare also publishes local websites and mobile content, offering advertising and promotional opportunities across audio, display, video, social media and other digital formats.
Through Townsquare Interactive and related services, the company provides digital marketing solutions to small and medium-sized businesses, including website development, search engine marketing, social media support and online reputation management.
