IHRT Q1 Earnings Call: Digital Audio Growth Offset by Weakness in Traditional Segments

Global media and entertainment company iHeartMedia (NASDAQ:IHRT) exceeded Wall Street’s revenue expectations in Q1 CY2025 as sales only rose 1% year on year to $807.1 million. Its GAAP loss of $1.84 per share decreased from -$0.12 in the same quarter last year.

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StockStory’s Take

iHeartMedia’s Q1 results reflected uneven performance across its core businesses. The company reported a GAAP operating loss of $25.4 million and generated adjusted EBITDA of $105 million, flat year-over-year. Digital audio and podcasting drove revenue growth, with the Digital Audio Group, particularly podcasting, seeing 28% year-on-year revenue growth, while traditional broadcast and media services lagged. CEO Bob Pittman pointed to the effectiveness of leveraging new technologies and operational efficiencies, highlighting the company’s progress in cost containment through ongoing modernization initiatives. Despite headwinds in the broader advertising market, Pittman emphasized iHeartMedia’s expanding market share in radio advertising and the continued move toward programmatic and AI-driven platforms. CFO Rich Bressler stated, “Our Q1 results included the benefit of $27 million of net savings,” underscoring the importance of cost controls in the current environment.

Looking ahead, iHeartMedia’s guidance reflects cautious expectations for the coming quarters amid continued macroeconomic uncertainty. Management signaled that growth will hinge on further digital expansion, podcast monetization, and the successful execution of cost-saving measures. Pittman described the advertising landscape as volatile and noted, “We of course continue to monitor [ad spend] closely due to the lack of visibility.” The company’s outlook for Q2 includes ongoing investment in technology and content, with specific attention to podcasting and programmatic advertising solutions. However, Bressler cautioned that full-year guidance remains dependent on improvements in the advertising environment, stating, “For us to date our full year guidance, we will need some positive movement in the macro…to avoid the possible negative impact on the advertising marketplace for audio.”

Key Insights from Management’s Remarks

Management attributed Q1’s performance to digital audio strength and ongoing cost savings, while citing softness in legacy businesses and macro headwinds that led to results below Wall Street’s expectations.

• Podcasting Outperformance: The Digital Audio Group’s podcasting division delivered 28% year-on-year revenue growth, driven by a broad portfolio and increased demand from larger advertisers. Management credited promotional advantages from broadcast radio and a focus on high-margin podcast publishing.

• Broadcast Radio Stabilization: While Multiplatform Group revenue declined, management highlighted a return to growth in national broadcast via Premiere Networks. Pittman noted that larger advertisers remained engaged, offsetting weakness from small and medium businesses.

• Cost Savings from Modernization: The quarter benefited from $27 million in cost reductions as part of a broader $150 million savings plan for 2025, achieved mainly through automation, AI adoption, and workforce optimization.

• Programmatic and Ad Tech Progress: iHeartMedia continued expanding programmatic sales channels, with significant progress integrating digital and broadcast inventory onto major demand-side platforms (DSPs), though management acknowledged the impact on revenue was not yet material.

• Segment Divergence: The Audio & Media Services Group, particularly Katz Television, saw double-digit revenue and EBITDA declines, contrasting with gains in digital and podcasting. Management described this as a result of shifting advertiser preferences and market fragmentation.

Drivers of Future Performance

iHeartMedia’s forward outlook centers on digital growth, cost discipline, and resilience against advertising market volatility, with management highlighting several risks and execution priorities.

• Digital and Podcast Expansion: Management expects continued double-digit growth in digital audio and podcasting, underpinned by broad content offerings, cross-promotion with broadcast assets, and further scaling of ad tech capabilities. The company is focused on maintaining leadership in podcasting through both audience reach and monetization improvements.

• Cost Management and AI Integration: The company’s $150 million cost savings initiative is expected to drive margin improvements throughout 2025. Leadership plans to leverage AI and automation to further reduce expenses, while remaining prepared to enact additional cost controls if revenue growth falters.

• Advertising Market Uncertainty: Management acknowledged that macroeconomic headwinds and limited advertiser visibility could constrain growth, particularly in broadcast and media services. The outlook for the remainder of the year remains cautious, with guidance contingent on stabilization or improvement in the advertising environment.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be closely monitoring (1) the pace of digital and podcast revenue growth, (2) the company’s ability to deliver targeted cost savings and margin improvements through AI and modernization, and (3) signs of stabilization or improvement in traditional broadcast and media services revenue. Execution in programmatic advertising and further share gains in core markets will also be key indicators of progress.

iHeartMedia currently trades at a forward EV-to-EBITDA ratio of 0.3×. In the wake of earnings, is it a buy or sell? See for yourself in our full research report (it’s free).

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