Gannett (GCI)

Stacy Cunningham Vice President, Financial Planning and Investor Relations
Bob Dickey President and Chief Executive Officer
Sharon Rowlands President, USA TODAY NETWORK; Marketing Solutions and Chief Executive Officer, ReachLocal
Alison Engel Chief Financial Officer and Treasurer
Douglas Arthur Huber Research Company
Call transcript
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Good day, ladies and gentlemen, and welcome to the Third Quarter 2018 Gannett Company Earnings Release Conference Call. At this time, all participants are in a listen-only mode. And later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to hand the call over to Ms. Cunningham. Stacy

proceed. may You

Stacy Cunningham

morning, Conference welcome Call. Good Quarter Gannett's XXXX Earnings everyone, you. to and Third Thank

As recorded and reminder, webcast. a this call is being

Chief Officer President of from Dickey, TODAY NETWORK, Chief Joining are and USA Officer; Executive Chief Solutions and Executive Financial Rowlands, today Engel, ReachLocal. Officer; Sharon us and Marketing Ali of Gannett President Bob

provision in the we identifies differ The Harbor provision Safe begin, to attention our release. may that I Before factors our materially press forward-looking risk would statements. our statements cause your Safe to results like Harbor contents to call results forward-looking financial for actual of from

non-GAAP for including metrics our For the a press Also, during and XXXX call, posted have affect measures. our our found may Reconciliations refer of Form been reported management's more release, our that include this between in GAAP to at investors.gannett.com. be results commentary description filings, Relations detailed financial website results risk and our financial we factors tables results, can release please the non-GAAP financial XX-K. our which press Investor will of results SEC into our

to I'd With the over turn the Bob these Dickey. way, like call formalities of out to

Bob Dickey

our ReachLocal on with financial Overall, quarter segment, results. conclude WordStream will detailed giving you our Thanks, Stacy. going Then an transformation results on ReachLocal, from the it acquisition. digital our progress for update to Ali start with solutions from over the quarter turn I'm reflect from and including and steady our will highlights by third marketing strong I organizations. consumer results to Sharon our

in moment. more our Publishing color weakness the During on I segment. within encountered will also quarter, provide a that we

focused efficiencies are our digital delivering cost these opportunity. growth fourth our remain quarter, expect business, revenue adjusted Despite digital and in we these therefore in the capitalizing the and we further trends continue guidance. EBITDA driving However, on lowering challenges, full-year to and on

that margins and client. strong driven reported exceeded ReachLocal revenue by solid segment, achieved to revenue growth we our in our Turning per growth average expectations,

WordStream, Additionally, provider in this quarter included marketing digital local July. that that acquired Software-as-a-Service solutions of was the first quarter we

revenues last We to media are our in Within three ceased opportunities. main exceeded we higher unprofitable we marketing our growth and reorganization; future we segment, our the solution remain some delivered of that have EBITDA pleased of partnerships within challenges category, truly that strongest WordStream the our market and optimistic the and local factors: digital position We expectations experienced set adjusted client quarterly digital local believe spending. digital the affiliate marketplace due about in year. Publishing weakness display; sales cycling QX in reflecting and

of First, sales structure, second to end the our on shifted our organizational post-sales new in organization. in accounts the structure and we at based reductions made reference quarter the

in they and beneficial long-term. affected sales While we the and changes to make strongly were fulfillment productivity believe these changes right near-term, the will be

We attention to developing now sales digital transition our to our higher and organization. performing turning training the needed are continue tools to a recruiting and

marketing of to new example, For consultative package to sale. go-to-market solutions we solution broad product brand, a set September, our LOCALiQ, in a enable launched better more

our paywalls within like marketing page local local more to products, reflecting and base. our downward subscriber our digital saw service from shift digital-only more weaker lower digital decision to trends a aggressively Second, display pay reflecting our we CPMs, on performance-based tighten to revenue marketing pressure display, views grow

sports, search; side-door of around market. across and paywalls, high and the on small- school our tested and we across social lowered via premium Specifically, one-third our markets; closed mid-sized content meters

- offset year, digital resulted some the will I quarter finally, While we which expected time. the last as some fourth unprofitable mentioned of more digital over than programmatic loss saw shortfalls pay third the which strong during unprofitable subscriber than in had XXXX. affiliate quarter these display advertising changes And in we a eliminated greater advertising, growth, partners, we local implemented

revenues Publishing media segment, eliminated premium business double-digit driven very digital strong the growth, Publishing had and our another segment programmatic. sales grown digital within a revenues, affiliate quarter, strength media have would X.X%. On with national note, in our by revenue Excluding positive direct continued the

Additionally, and improved quickly and as U.K. advertising of in digital the their services momentum. ReachLocal at revenues marketing we launch saw services is Newsquest, products gaining

the organization, in in segment, As we within marketing digital while to quarter, digital expect our we ahead quarter, national trends weakness media, Publishing was the services in growth growth audience revenues, in part offset our outperform media. peer group. advertising muted more to the by local we look consumer and similar digital fourth continued with Shifting did

mentioned. a Our as our growth focus unique on to visitors million this cycle as compared a muted a The ago group. impacting publishers, flat that quarter, $XXX more grew is I pay all comScore that well previously X% reflects year subscriber strong peer news growth, to digital-only news year-over-year local

like see in revenue Total network views areas key year-over-year robust results the XX% more video. up even to very continue with strong growth We were growth. video

as our video native our Our and went content date XX% and redesigned consumer rates with to behavior report X we strong reached Other kind XX% have seen engagement into introduced our and users' usage have as We views franchises. location, quarter, with this more delivered I'm a views. player, the and in-app personalized pleased August monthly also rates content. viral, kind Show to in improved content, than around Alexa both to And billion Humankind, applications, from on new ads desktop video quarter, Facebook the front Animalkind. USA higher Facebook. In TODAY's videos to device. brands: XX In year our and suggested in quarter best redesign. extended video centered on product based over XX content kind with driving Militarykind; we million the monetization revenue efforts related more completion well for personalization the third

at our XX launched markets. engagement aimed front new the and redesign newsroom automated was more desktop via driving During top third across efficiencies our curation quarter,

to power cities, American content wanted It's podcast offering about centered an new within trailer, on Apple for on rates with first our on The City. Chicago few a a The of reality highlight the industry-first The I long-form has structures the launched group, over XX%. XX new Season September podcast X.X its million are number X. investigative reached top X episodes, ventures Finally, just achieved podcast and charts. completion City and augmented In XX the downloads, hidden quickly

global We well. transition making To We're beyond in the are digital, digital we for highly will are that have traditional this distribution set acquisitions strong channels. we to success and the progress potential performing goal differentiated sum and our excited recent always be its smooth. strong a to made our of team, have assets, but up, a early not path

steps Sharon highlights our strong the focused expense prudent taking over for future We for With that, Gannett. it to structure are quarter. are on ReachLocal turn and for to let relative a me

Sharon Rowlands

The solid our Bob. strong suite. brand quartet marketing solutions segment that delivered represents our and adjusted solutions marketing you, Thank launch BXB record of integrated revenue ReachLocal another LOCALiQ, growth, margin data-driven with the EBITDA product

addition advertising revenues broad Given discussing our of expanding subscription the digital and solution ReachLocal capabilities segment WordStream, we solution. categories: within two begin will with

advertising. focus piece divestiture Europe and North represents operation. our advertising, of of the the products our advertising and American represents Digital includes North as of streams. solutions, therefore Japan, of comment revenue, we advertising, smaller two XX% search remaining will with Subscription social our such a on engine now which display makes XX% about business. And which up revenue Additionally, international revenue, represents American

pricing. SEO products; existing software revenues management grew grew by and year-over-year secondly, have three, revenue categories. Firstly, the over well both which as subscription and acquisition website field services, a solution, solution. solutions increase other includes our service from we subscription and across and In growth as in XXX% which experienced SweetIQ, year-over-year, quarter software, advertising services lead new includes development listing WordStream and WordStream and Digital revenues management business presence presence XX% that reputation X% strong driven

Our North up addition driven XX% WordStream. the base in client quarter, by to grew year-on-year of American XX,XXX the

counts These WordStream are on to and larger slightly, were higher higher client down profitable clients smaller larger focus more continue churn have ARPU as Excluding rate. we acquiring client. client and retention our a to tend

client Excluding year-over-year average the in WordStream, just $X,XXX per over grew revenue quarter. XX% total our and

to a intelligence LOCALiQ marketing marked of trial by our for media proprietary our the quarter. location return including to driven and new channels display our launch various from and comparing business the their of within our LOCALiQ differentiate has without product how release empower marketing initiative presence, of we owned We're reputation guidance, to central and This digital website provide with outcomes helps as creates success, with greater a business. data data LOCALiQ the solutions marketing company return its across business' tool, auditing visitors its management be offerings. solution, including client around the launch which core of being investment. solutions improved our drive products, investment primarily market. LOCALiQ within retargeting, of that client; with brand product with sales, significant The faster a Gannett and a marketing, story driving insights a simplified and organization awareness specific internal client search is much development. a set with The our the dollars. in our elevating across a penetration, succeed by our our and upgraded also approaches recommendation vision marketing context LOCALiQ. of on on our defined of provides focusing the complete for sales also traditionally better local can served message quarter which operated presence marketing than digital business, ourselves and full and we smart has marketing to marketing technology a had leading new costly digital This launch teams to transformation can to the combined suite mentioned marketing last Key unifying engine across about recommendations organization; of the error sales central, milestone launch of BXB is is us to The budgets base, more performance-driven competitors. a online expected by a to that the technology help

reporting launch With the facing interfaces. tools LOCALiQ, rebranded client and of we our

our improvements easier also our it several when LOCALiQ. reporting, ROI, with working their to making We see made for to clients

four launch reporting customizable with in continuing to that provides and the We to quarter our of be scale better dashboard insights new a will even focus easily will clients.

LOCALiQ, that They system. more have to now contacts progress display and our API. quarter. than the of other continuing our to that X,XXX developing solution, were reporting product into tie in contact We and using agencies and own account, clients reports enabled API accounts and to our receive integration multi-location busy teams their improvements targeted addition development were new solution on website working the In our

have also new We hit market. solution advertising a social the

Our goal. spend platform three and contact; achieve leadership ads the very smart client to is our with optimization a this one automatically new select and that exceptional Shifting to team as engagement about their then optimizes specific or allows social given which reach, technology product of to excited strong acquisition, then gears WordStream, we're goals: offering. have

on are We product. mainly WordStream number were of Magazine, WordStream and begin, named to Facebook and the a solutions quarter, business listings management partner our the areas. Cultures client the at that the marketing Company also agency batched channel. the base, aimed Entrepreneur launched started Top fit to To first became they for a on During a work we center XXXX synergy reputation We're List. a new digital identified proud prospect

Our incremental plan growth clients. XXXX, and quarter and to these in of is launched WordStream more first yielding value delivering to the have integrated

large that back do-it Second, data to campaign when solution. learning working learning can the client so our data and thirdly, key platform, the across we've ReachLocal audience Gannett machine call lead began on for is WordStream, SMB WordStream looking have platform. this technology a And training we analyzing from drive both local centers feed a to science into WordStream performance our we from identify on organizations in team to yourself

that, and stronger client drive within on fourth turn foot the With growth new to solutions. the acquisition and on me focused quarter, build segment, talent performance, over we product let leading to we're digital. accelerating our our organization to capabilities Ali. on publishing within segment keeping ahead continue call the execution sales of ReachLocal pedal to in especially the our Within the to focused our industry integrated Looking

Alison Engel

good and Sharon, item you, Thank quick housekeeping everyone. start. One to morning,

$XX million quarter highest XX day of of The XX estimate Our third quarter was had this third million We a XXXX the the $X days. quarter approximately in had and while revenue revenue which day Sunday, for day. in days, adjusted extra is XXXX accounted extra our EBITDA.

full million access digital reminder, fewer Consolidated partially Looking XX% of revenue day XXXX. last total fourth third fourth as store, environment, were X% the to quarter, circulation services single $XXX quarter third pricing marketing X.X% advertising year's grew and will challenge a The to a million Total XX% from quarter. and revenues reflects in the advertising acquisition, six compared in the we digital and compared of as revenues ago. $XXX the WordStream decline revenue same revenues quarter. to the a revenue, subscriber of initiatives, growth. and the offset million, represented declined adjusted have by $XXX days copy quarter On in up year of total basis, print

day and in part facility and consolidations our newsprint revenues, marketing Adjusted approximately from in XX%, down related ReachLocal segment lower totaled fell reflecting higher payroll Our higher the entirely tariffs. Total productions X% for store our did same expenses and first year-over-year, $XXX operating reflecting offset total segment The store, pressures and pricing to addition last X% hitting revenues $XX largely quarter the of production expenses. XX% and milestone. services million Publishing digital and reached the increase rose revenues, advertising associated revenue and in benefits marketing by of growth EBITDA million for due XX.X% expenses advertising nearly pressures in ReachLocal expense total offset newsprint These and time year. not within segment. of same savings quarter, were distribution to years, WordStream that X% the the of an and with solid the adjusted services

incurred we higher several reflecting bad anticipated the debt quarter, Additionally, than bankruptcies. retail in major

have revenue as down the X% Turning to were with the were which results, on our basis. Publishing segment, we store, discussed, day we same disappointed adjusted

the X% digital after marketing spot, range. only services same year-on-year basis. day Digital our Specifically a in X% grew adjusted first services a and the bright half revenues store, continue up quarter, day store, advertising XX% revenues in same be marketing adjusted growth on to

Within discussed. Our national both and premium auto, year-over-year. client financial counts local, At by and fell day average weakness our per digital client adjusted revenue same a strongest categories with which media growth basis a strong our programmatic national, strong and on revenues services. results technology performance Bob at and solid offset store, channels delivered showed X.X% were both

did marketing improvement digital The classifieds result, some quarter. continue from category services to impact the digital As our weakest. negatively expected, be to continues employment second overall advertising and they although show our

mentioned segment in print marketing If exclude publishing you affiliate were the expected. to digital year, a classifieds basis and quarter. last up business fell advertising and Same adjusted XX% day store, day advertising the services were in after unprofitable on store, adjusted quarter same digital the revenues as from XX% revenues

X% circulation, employment trends than trends. better of national the within from our Switching continue down classified. We same see some print and largest quarter to to adjusted to auto pre-print the and declines advertisers, revenue day improve on of areas store, a second

Bob. only markets because full local expected. our per the today tactics at remain discussed by access new local with several pricing circulation in within remained targeting we the marketing weak, our best results as down as copy in initiatives both of Single markets via to quarter quarter. subscribers trends growth U.S. $XXX,XXX, digital year-over-year delivered only are premium and revenues new new X%, the additions and USA third Digital volume previously of aggressively robust XX% subscriber Our as

European basis store, strong continue WordStream's organic the Turning XX% adjusted ReachLocal client by million the day of revenue. grew and we revenues reached divestiture see impact driven million, the segment fair in growth of continues year-over-year as per negative offset ReachLocal third to WordStream X%, value products of and our $X a revenue On per segment, to $XXX our business same client, by growth revenue quarter of addition solid deferred average grow. the to adjustment number to up

driving margin in our only There another reaching in segment XX%, up early adjusted X% year As business margin sale expected of the EBITDA several performance. close quarter. we Japan The factors ReachLocal the in the October. on are strong ago did from delivered

strong This the cost. products strategic support increasing scale average margin First, and of we are by client, focus within per higher client seeing spending growth our ARPU quarter. in sales added a revenue driven addition an of client. driving WordStream And is number percentage per growth on the the in in X and to approximately secondly, points

We for so will need continued the are deliver to very with margins, growth, revenue also the mindful of but pleased this careful be to we strong balance. monitor investment

year resulted $XX of write-off was the foreign income from entities. benefit that worthless Our in down tax debt quarter million, year GAAP the of net the $XX reflecting ago a certain for tax and million stock ago $XX from ReachLocal million

balance debt drawn we the ended quarter revolver. to on including sheet, our in convertible the with debt, and $XXX $XXX the million million Turning

Our as cash in of debt reflecting were net no balance product consolidations. was $XXX supporting million Capital of were expenditures well purchased to as third this development product quarter, the $XXX related in investments million $XX digital for facility end million. million projects - the $XX shares dividends. at paid There ongoing totaled quarter the we quarter, and our resulting

our year to Turning outlook. full

operations WordStream to anticipate marketing and In we higher the revenue the billion, $XXX declines access within circulation largely than we're the Considering our to our modest these and segment, improvement and the in exception program are until early program, to to lowering benefit more and of and on revenue million the anticipating have services investment initiatives. double-digit outsourcing quarter quarter pricing will EBITDA our digital be selectable to need to service premium digital we quarter our of revenues, by structure announced Publishing continued pricing the albeit $X.XX the $XXX are of softer significant XXXX, the In two customer growth fourth anticipate similar where divestiture margins ReachLocal by modest the third quarter and challenges on with continued some initiatives Japanese early retirement the from instituting but of in million revenue to revenues due an the third reflecting will December. addition another $X.X initiatives that have in expected driven edition our than adjusted outlook and quarter within technology. expected expect advertising segment, and the cost revenue we savings Publishing offset We billion guidance segment. our have fourth European overall not clarity We we future levels. for retirement

disappointed are our marketing turn we moves While believe reorganization, the I we digital that, revenue we with the time. our over new will right will further with subscribers weaker-than-expected increased services focus propel advertising questions. and sales the over product development and digital digital that strategic for With operator on it transformation are results, making to


the from Thank Instructions] of first comes you. Huber Arthur Our Doug Research. [Operator line question of

Your line is open.

Douglas Arthur

Yeah, here. break thanks. down to everything Still trying

detail Just two Ali, the you on update do questions. pension have liability? an

Alison Engel

change detail - in file obviously, have all and with that our have, update end quarter. of the We have third We'll the where assumptions, this will rate year, quarter. have file change associated we the And the Q discount I more third we'll later meaningful, at But our XX-Q Doug. a significant the material think all later will significant the a the be it. in or that we'll afternoon

Douglas Arthur

growth small, terms of You like subscriptions, XXX,XXX.XX. looks some cetera. in The on then, initiatives certainly it read on Okay. the Is meter, I anything expected? et what accelerated sequentially. to well, digital is the track that? different Is there into still that you of the number mentioned And - somewhat mean,

Bob Dickey

day, that the getting we et just cetera. - meters, The doing we're continue our a doing with with a we we're channel, way, our are every tightening some we every an content. various Doug. just month, we job better side-doors great that communicating pricing, marketing in sales excellent contribute to better getting sophisticated week, targeting Bob. and the of every the consistently are with of Also side-door Hey, test - closing both We're more plus much are as journalism job of It's newsrooms things. the just the team, big providing. in And our readers content providing, about better with

engagement seeing we're So improvements.

uniques overall the better you saw, than group. As peer our were

coming really how combination team side. Carroll a just of on it's organization market So to his are Andy really and the in Nicole and digital along. on getting the Maribel getting And news smarter

think saw great you third a we the trajectory in So is what very indication positive that as XXXX of for quarter a well.

Douglas Arthur

the larger in toward mix number Yeah, assume? I does markets, the skewed that growth of the

Bob Dickey

It seeing that. Phoenix, some nice happy pops does. about Milwaukee, we're like really Nashville, so Yeah, markets Indianapolis, in we're

the coming. larger coming have that really town, some university communities our right, The and of size a is actually also digitals. college put which numbers But for are very Fort you're We like its in where from market a midsized our it small tech-savvy of markets, our outperforms bigger Collins, focus. we is number are

Douglas Arthur

in I'll you. thank jump queue. Great, Okay. back

Bob Dickey

Thanks, Doug.


Thank your [Operator gentlemen, program. you. today's for time, Instructions] does the you I'm showing no And thank This at and Ladies questions. conference. participation further conclude this in

Everyone, have disconnect. great day. You may now a