Greetings. Welcome to the USA TODAY Company, Inc. Q4 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Matt Esposito, Head of Investor Relations. You may begin.

Thank you. Good morning, everyone, and thank you for joining our call today to discuss USA TODAY Company's Fourth Quarter 2025 Financial Results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer; Trisha Gosser, Chief Financial Officer; and Kristin Roberts, President of USA TODAY Media. If you navigate to the USA TODAY Company website, you will find that we have posted an earnings supplement in addition to our earlier press release. We will be referencing it today on the call as it provides you with additional detail on this quarter's performance and our 2026 business outlook. Before we begin, please let me remind you that this call is being recorded. In addition, certain statements made during this call are or may be deemed to be forward-looking statements as defined under the US federal securities laws, including those with respect to future results and events, and are based upon current expectations. These statements involve risks and uncertainties that may cause actual results and events to differ materially from those discussed today. We encourage you to read the cautionary statement regarding forward-looking statements in the earnings supplement as well as the risk factors described in our filings made with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call. Please keep in mind, all comparisons are on a year-over-year basis unless otherwise noted. In addition, we will be discussing non-GAAP financial information during the call, including same-store revenues, free cash flow, total adjusted EBITDA, total adjusted EBITDA margin, segment adjusted EBITDA, segment adjusted EBITDA margin, and adjusted net income attributable to USA TODAY Company. You can find reconciliations of our non-GAAP measures to the most comparable US GAAP measures in the earnings supplement. Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any USA TODAY Company securities. The webcast and audio cast are copyrighted material of USA TODAY Company and may not be duplicated, reproduced, or rebroadcast without our prior written consent. With that, I would like to turn the call over to Mike Reed, Chairman and CEO of USA TODAY Company.

I am pleased to report that Q4 was by far our strongest quarter in recent years, and we are excited to share our progress with you today. I want to begin by highlighting some very important themes that you will hear throughout this morning's call. We delivered our strongest profitability in 4 years, with total adjusted EBITDA surpassing $90 million and growing approximately 17% over the prior year period. Margin expanded 300 basis points to approximately 16% and represents our highest margin percentage in 5 years. Same-store revenue trends also achieved their strongest performance in nearly 4 years, driven by an expansion of digital revenues, which, importantly, returned to year-over-year growth on a same-store basis. Digital revenues represented more than 47% of total revenues, an all-time high. We also generated $32 million in free cash flow, reflecting significant growth over the prior year period. At the same time, we continue to strengthen our balance sheet with an increased cash position, further debt repayment, and First Lien Net Leverage reduced to 2.4x. We exited 2025 with good momentum across the business, reflecting our strategy to scale the largest audience in the nation, improve engagement, and maximize revenue growth. We expect this momentum to carry into 2026, including full-year growth in net income, total adjusted EBITDA, and free cash flow, improving same-store revenue trends, total digital revenue growth, and continued deleveraging. Furthermore, our fourth quarter performance capped off what we believe was a defining year for USA TODAY Co., highlighted by significant milestones and a successful rebrand that fully embraces the ethos of a dynamic media company. Before turning to our quarterly results, I want to highlight some of these milestones that help to reinforce our confidence as we move into 2026. We delivered our third consecutive year of free cash flow…

Thank you, Mike. 2025 was a year defined by innovation, resilience, and strong collaboration across our media business. We rallied around new ideas, new approaches, new opportunities, and we implemented meaningful change across the organization that generated strong momentum in our key metrics. We sustained one of the largest digital audiences in the media industry, generated more than 1 billion page views per month, marking 2 consecutive years at that level, and maintained our overall reach even as we implemented a new subscription strategy. We also closed the year as the #1 news and information provider among content producers in the country, based on unique visitors as measured by Comscore. Together, these results reinforce our position as the preferred platform for relevant and essential content, and that includes sports. In the fourth quarter, we continued to enhance our NFL and NCAA sports hubs with new features and richer data designed to deliver more immersive mobile-first experiences. As a result, we're driving stronger engagement as well as increased time spent with our content. And more broadly, these enhancements are elevating how we cover sports every day and how we show up during the moments that matter most to our sports readers and viewers. And from marquee events, that means activating the full strength of our platform to drive scale, to deepen engagement, to maximize monetization across the consumer journey. That approach was evident during the Winter Olympics, the NCAA Football Championship, and the Super Bowl. We generated millions of dollars in revenue across advertising, eCommerce, subscriptions, and merchandise, as well as visibility for the beloved USA TODAY Ad Meter. This is the tool recognized in the advertising industry for gauging consumer sentiment related to Super Bowl commercials. Importantly, we see similar opportunities with global events such as the FIFA World Cup.…

Thanks, Kristin. It's exciting to see the key initiatives underway to deepen engagement and enhance the overall monetization across our platform. It's so important to our overall digital revenue growth strategy. Now I want to turn to AI. High-quality, trustworthy content is foundational to a healthy open web, particularly as AI agents become more common to help people discover and consume information. Our strategy in this evolving landscape is straightforward, engage early with foundational partners, help shape the framework, maintain flexibility as monetization models evolve, and protect our long-term upside in this emerging ecosystem. Consistent with that approach, in the fourth quarter, we entered into a multiyear strategic partnership with Meta to license both new and archival content from the USA TODAY NETWORK. This partnership enables Meta's family of apps and devices to incorporate accurate, timely information rooted in incredible local and national journalism. This multiyear AI licensing agreement, as well as the agreement we signed with Microsoft back in October, is high-margin and will contribute meaningfully to expected year-over-year revenue growth in digital other revenue. And while we continue to engage with foundational partners and evaluate additional opportunities in this space, we are doing so with a disciplined long-term lens. Excluding Google, we currently block more than 99% of verified and unverified AI bots attempting to scrape our content without licensing agreements in place. As we look ahead to 2026, we will continue to take an aggressive approach by actively sourcing AI-related revenue opportunities while continuing to protect the value of our content. And given the scale of our national and local footprint across the US and the U.K., we are uniquely positioned to be a leading provider of real-time trusted content to these various technology companies. Now turning to our LocaliQ segment. In the fourth quarter, segment adjusted…

Thank you, Mike. Good morning, everyone. Please keep in mind, all comparisons are on a year-over-year basis, unless otherwise noted. In the fourth quarter, total revenues were $585 million, a decrease of 5.8% or 3.9% on a same-store basis, which marks a 290 basis point improvement over Q3 same-store trends. The strength in revenue was driven by renewed momentum across our digital portfolio, with 3 of 4 categories growing over the prior quarter. Importantly, this progress reflects both the early success and long-term potential of the strategic initiatives we've been building in 2025, including AI licensing agreements, more targeted subscription efforts, and expanded content in high-interest verticals such as sports and entertainment, where advertising performance and audience engagement remain strong. Together, these initiatives reinforce our integrated model, enabling us to drive the highest possible digital revenue per user across all streams. Total adjusted EBITDA was $91.1 million in the fourth quarter, an increase of 16.6% or $13 million. Total adjusted EBITDA margin expanded to 15.6% in Q4 compared to 12.6% in the prior year quarter. The growth in total adjusted EBITDA was driven by the improving revenue trends, ongoing cost discipline, and continued execution against our operational priorities. Expense management remains a critical priority. And in the fourth quarter, we drove a 9% reduction in operating costs and SG&A expenses compared to the prior year. Total digital revenues in the fourth quarter were $277.5 million, growing 5.6% sequentially and up slightly on a same-store basis. In the fourth quarter, total digital revenues surpassed 47% of total revenues. Digital advertising revenues increased 1.8% in the fourth quarter, marking the third consecutive quarter of year-over-year growth. This momentum was primarily driven by improved sell-through and stronger yield performance as our B2B sales teams more effectively leverage the USA TODAY co-brand, attract new…

[Operator Instructions] The first question today is coming from Giuliano Bologna from Compass Point.

Great to see the continued performance. As the first question, the fourth quarter showed great revenue improvement. Do you expect that to continue in '26? And what do you think will drive that?

The answer is yes. And from a high level, the driver is continued digital revenue growth, digital revenue improvement. But let me be a little more specific, and these are all items that we actually covered in the call this morning. First is our focus on the scale, the size of our audience, and continuing to grow that audience, but more importantly, improving engagement with those folks coming to our platform. And that is leading and will continue in '26 to lead to improved consumer revenue. And we look at total ARPU across the platform, which comes from advertising, subscription, and affiliate. And we're looking to continue to grow that total ARPU per consumer on the platform through improved engagement, as well as growing the number of users on the platform. Second, we talked about it a bit in our remarks here this morning, is both our current AI licensing deals and any new AI deals we do this year will lead to growth here in 2026 and improve our revenue trends. And third, I'd highlight our improved digital subscription revenue trends. We started to really see that shine in the fourth quarter, including growth that we saw in December from a year-over-year perspective. So with that return to growth, we expect those revenue trends to be much improved in 2026, leading to overall revenue improvement on the digital side. And then finally, we do expect to improve our DMS revenue trends. We expect to return to growth later in the year, second half of 2026. And we outlined the various action items we have underway in the DMS business as well. I think to summarize this, the good news here is these are all action items that we have been putting in place during 2024 and '25. They're not things that we yet need to do. So there are things that we're starting to reap the rewards for in our financial statements now, as we really started to see in Q4. And these things will all drive better, improved trends in growth in 2026. So pretty excited about the outlook.

That's very helpful. And just as a follow-up, you gave strong guidance for 1Q and 2026 free cash flow and also 2026 free cash flow guidance, but it was indicated a slight usage of cash in the first quarter. What's driving that?

Giuliano, this is Trisha. Yes, the usage of cash in Q1, it's largely seasonality and timing. It's consistent, I think, with what you've seen historically from a working capital perspective from us. And year-over-year, there's also some minor timing changes in our interest payments. But you're right, we did guide to a pretty strong quarter for Q1. We took a really meaningful step forward in our same-store revenue trends in Q4, almost 3 percentage points. And we expect, as Mike mentioned, to take another step forward here in Q1. And then if you look at our Q4 adjusted EBITDA, we grew about 17% year-over-year and above 20% if you take out the impact of the asset sales we made earlier this year, mainly in Austin. So we'll cycle Austin, the sale of Austin, mid-quarter in Q1. And so you take that with the strong revenue and the flow-through of the cost actions that we put in place in Q3, we expect similar to higher EBITDA growth in Q1 on a percentage basis in Q4. So as Mike said, we've been building on this for '24 and '25, and it's really encouraging that we're starting to see the impact of our strategy play out in our results. The steps we took on subscription revenue are resulting in a more sustainable, growing digital business. The efforts we've taken to monetize our content in multiple ways, including these licensing deals, leading to improving revenue trends and what we think is going to be a really strong Q1 and, over the long term, sustainable growth.

That's very helpful. And congrats on the new high in digital ARPU. As it approaches $10, do you see more upside from there?

Mike, I'm going to take this one.?Giuliano, it's Kristin. We feel really great about the progress, only ARPU hitting $9.81 in Q4, and that's up 24% year-over-year, and Digital-Only Subscription revenue growing sequentially again. So in terms of upside, I think we continue to see room to grow ARPU in 2026, and I think we're going to do that through a couple of levers. There's smarter pricing and smarter packaging across the portfolio. There's better retention and life cycle marketing. I think there's also an expanding product set like PLAY, right? And we're using PLAY and these other products to drive habitual engagement and, in turn, some incremental monetization there. On the ARPU versus volume issue, our philosophy remains to optimize long-term value, optimize long-term predictability. We did intentionally trade off some short-term volume earlier in '25. But what you're seeing now is a healthier and more sustainable subscriber base. And we do expect that Digital-Only Subscription revenue will continue to grow year-over-year as we execute on this strategy. So I hope that helps, Giuliano.

That's very helpful. And switching over to kind of the meta topic, but you announced the Meta AI deal in 4Q. And how should we think about AI licensing revenue in 2026?

Yes. Giuliano, it will be a good growth category. And I would think about it in terms of '26 and beyond. It's a multiyear good growth category for us, we believe. I would like to introduce just a little bit of caution here as we think about the AI licensing revenue opportunity. We do expect significant growth in 2026, but it's still a developing marketplace. And so we're learning a lot as we go forward. We have learned that the deals can be lumpy and they can take some time to get done. So the past 12 months, we have made a lot of progress. We have some great deals in place now. So we do expect nice growth in 2026. But our eye on the prize here is the longer-term opportunity, which we see from more deals to come as this overall business model in this ecosystem continues to evolve. So pretty excited, but a little bit cautious in the near term. It's a growth category, but it's also still an evolving category, and we're playing the long game here, too.

That's helpful. And when you talk about kind of like the growth expected in '26, is that mostly from the existing contracts you've already signed? Or are you considering potential new deals that you could sign in '26?

Yes, it's both, Giuliano. It's existing deals. So we have some banked growth already with the deals we've signed, but we do expect additional growth through more deals to be signed and more deals to come. So both.

That's very helpful. And then, as a final one, you made very strong progress on debt reduction in '25. Can you provide a little more detail on 2026 debt paydown expectations and what you're targeting from a First Lien Debt leverage perspective?

Yes, absolutely. You're right, we did make great progress in 2025. We repaid approximately $135 million of long-term debt in the year, and that brought us down to about 2.4x First Lien Net leverage to the end of the year, and we remain focused on bringing that number down again in 2026. So our approach this year is going to be that debt is funded primarily through our operating performance and our free cash flow. We guided to double-digit growth in free cash flow in 2026. So, less reliance on asset sales and more reliance on the cash flow that we're throwing off. We guided to full-year growth in total adjusted EBITDA and in free cash flow based on those improving revenue trends. And so, all of that's going to support our deleveraging. So we're thinking about 2026 as the year that we continue to improve the business, and we use that cash to bring down our debt. I think that will put us much closer to that 2x First Lien Net leverage to end the year here in 2026.

The next question will be from Matt Condon from Citizens.

My first one, just some of your peers, just in the publishing industry, have called out just the AI overview impact on just programmatic revenue. Are you seeing any sort of impact or click-through rates, or traffic? Or is there anything to call out there? And then I have some follow-ups.

Yes. Matt, good to talk to you. Our click-throughs from Google from the search perspective have remained flat. So we've done a pretty good job of continuing to have a great ranking in the search ecosystem there with regard to Google. But with regard to AI overviews, pretty much all of the AI platforms, the amount of traffic that comes back to publishers is almost nothing. So the user stays on the AI platform in those experiences. So, our path to monetization is by licensing content for use in those AI platforms. It's not through clickbacks to us. But with regard to the publishing industry has seen a lot of declines in traffic from search. We've been fortunate enough to be proactive from a strategy perspective over the last 2 years, we've been able to maintain a flat number with regard to search from Google blue links. And then we've been really good at growing traffic to our platform from other means, social media being one of the biggest drivers, and then also more direct engagement with consumers coming directly to our platform. So overall, our page views remain strong. Audience remains strong, and we're battling through some of the challenges the industry is facing from declining search.

That's very helpful. And then a follow-up. There's more and more AI, and it's improving internal workflows across, I think, all companies. Just as you look at the business, obviously, you've implemented the $100 million in annualized cost savings. Are you seeing increased opportunity to implement AI internally just to further those cost reductions and run the business leaner?

Matt, the answer is yes. And we do have an AI task force that's working on deploying AI in every single facet of our business. And so we do see future cost efficiency opportunities that come from the use of AI technology. But I would say, Matt, we're actually more excited about the use of AI technology to improve our revenue performance, our ability to do better lead gen work, our ability to do better presentations with customers to tell the story better to improve ROIs for customer usage on the deployment of AI technology inside our company. That will be the big win for us. But to answer your question, we do see further cost efficiencies as well.

Great. And then maybe just the last one. Can we just get an update on the Google lawsuit? I don't know if there's anything updated there. And I think investors would just love to hear just the timetable and where we sit here today.

Yes, Matt, thanks. So yes, Judge Castel, the judge in our case last October, granted our partial summary judgment in the case, which was a great, important step for us because it established liability on certain claims. So we're really excited about that. In January of this year, Google filed its own motion for summary judgment. We expected that. It was all in the normal course. We believe their motion lacks any merit, and we expect a favorable ruling on that motion, favorable for us. We anticipate that motion being ruled on later spring or summer of this year. And then we expect to have our jury trial set later this year, and we expect the jury trial to be set for the end of '26 or early '27 at the latest. As far as other milestones in the case, similar to what we talked about on previous calls, we do expect the remedies ruling to be issued very soon for the DOJ case. And we expect once the remedies are ruled on, we expect the case out of Texas to go to trial. So that should happen shortly after the remedies are announced. So, we are expecting quite a bit of progress here or quite a few milestone announcements to come over the next several months. The DOJ remedies ruling, the Texas case going to trial, a summary judgment ruling on Google's summary judgment filing in our case, and then a jury trial being set. So we feel very, very positive about our case. That hasn't changed, and we think there's a lot of good momentum to come here in 2026.

And the next question is coming from Barton Crockett from Rosenblat.

I wanted to ask about the steps that Google took earlier this year to make a blog post saying that they would take some steps to allow separation of presence in AI overviews from search, seems to be in response to some U.K. actions, but it would seem to be a global statement of ambition to do something that was applauded by your trade group here. That would seem to be potentially very interesting, maybe providing some leverage to have a stronger licensing conversation with them if that proceeded. But I was wondering if you could give us your thoughts on what you think about that, and if you have any reason for optimism that, there could be something that could move the needle forward there.

Yes. Thanks, Barton. We are encouraged by that blog post, and nothing has happened to date. We probably should be clear about that. But the blog post was encouraging. We think it's the right move. It would move the playing field toward clear publisher control and directionally, it'd be constructive for sure. Our guiding principle remains the same. Trusted high-quality journalism has real value. And if that content is being used to power AI experiences with no compensation to the publishers, it's illegal. And so, we believe there should be a level playing field, fair compensation for our content, and certainly, Google distinguishing between blue link search and usage in their AI products it would be a really positive development. So we're encouraged by that. We think it's the right thing to do. And you're right, it would lead to, we think, a better licensing discussion around licensing our content for usage in AI. So it could be a real positive development. We're hesitant to say anything too optimistic right now because we just don't really know what they'll do.

Yes. I mean to follow up on that, they made a blog post. Is there an opening for a discussion with them on your part or industry-wide, or not at this point, do you think?

Well, I wouldn't say that we don't have discussions. I wouldn't want to get into any kind of confidential information for ongoing discussions we have with any potential AI licensing partners. But I would suffice it to say that we do have a lot of conversations going on with a lot of different technology companies.

Okay. Now, one of the things I was also curious about was your monthly unique visitors. I think the number was 179 million, I think, which is down a bit from the third quarter, down year-over-year. What's driving the dip there? I mean, you said search is steady. So what is it that's driving that?

Kristin, do you want to take that?

Yes, I'm happy too. We made some intentional steps over the course of 2025 to maintain our audience reach at more than 1 billion page views per month, so that we could begin to turn the dials on our subscription strategy and begin to do some testing and some experimenting around various tactics that would improve engagement, improve registration, and then improve take-up and then pay up on our subscription offers. So, I think what you're seeing is a reflection of some deliberate actions that we're taking to stabilize around 1 billion page views per month, which gives us the breathing room to be testing around different subscriber thresholds in the attempt to build back a healthier long-term subscriber base in the digital-only category. Does that help answer the question?

Yes. Yes, that helps. And then one other topic I was wondering about in terms of the court schedule, if I could. I was wondering if there's also one other key milestone that you can see in terms of timing, and that might be important in terms of getting your jury seated. And that is a decision by the judge of which witnesses would be allowed for a trial proceeding. There's a term of ours for that, and I'm not a lawyer, so I forget what it is. But is that something that we should also be looking for as a marker that would signal that things are about to get started?

Yes, I do. And I'd say late summer, fall, we should have more clarity on that. So it's right to look for it. And I would say that's another milestone to look for as we get to the summer this year.

And that concludes today's Q&A session. I will now hand the call over to Mike Reed for closing remarks.

Yes. Thank you. Thanks, everybody, for joining us this morning. Let me just quickly recap a few of the most important highlights from this morning's call. And I'll start with, as mentioned, Q4 felt good because it was the best quarter we've had in several years. And so many of the initiatives that we've been working on really started to show up in the financials, and we're encouraged by that and how that's going to roll into '26. We delivered our strongest profitability in 4 years. And as a result, in the fourth quarter, adjusted EBITDA returned to meaningful year-over-year growth. And also on the total digital revenue side, we returned to growth, which was great on a same-store basis. More than 47% of our revenue came from digital, and we do expect to surpass 50% here in 2026. And you saw a real step forward on same-store revenue trends in the fourth quarter, improving by about 300 basis points, and it was the best trend we've had in several years. And you heard this morning, we expect that to continue into 2026 and Q1 as well. We did deliver our third straight year of free cash flow growth, and that was great, and we continue to expect double-digit growth again in 2026 for free cash flow. And when you take all these things together to reflect improving revenue momentum, expanding margins, strong cash generation, and deleveraging, we continue to think we're going to create great value for shareholders. And finally, I would just say, as you heard from Trisha, we are expecting a stronger Q1 across most all trends, feeding off of the Q4 we just delivered. So we look forward to getting back together with you all in 2 months to update you on our progress and fill you in on our Q1 results. And so, thanks for joining us this morning, and everyone, have a great day.

Thank you.?This does conclude today's conference, and you may disconnect your lines at this time. Thank you for your participation.