Townsquare Media, Inc. (TSQ) Q2 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to Townsquare Media's Second Quarter 2026 Conference Call. As a reminder, today's call is being recorded, and your participation implies consent to such recording. [Operator Instructions] And with that, I would like to introduce the first speaker for today's call, Claire Yenicay, Executive Vice President.

Thank you, operator, and good morning to everyone. Thank you for joining us today. With me on the call are Bill Wilson, our CEO; and Stuart Rosenstein, our CFO and Executive Vice President. Please note that during this call, we may make statements that provide information other than historical information, including statements relating to the company's future expectations, plans and prospects. These statements are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties, including those that are detailed in the company's annual report on Form 10-K filed with the SEC. During this call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. Such non-GAAP financial measures should be used in conjunction with all the information contained in the quarterly, year-end and current reports available on our website. I would also encourage all participants to go to our corporate website and download our investor presentation, as Bill will reference some of those slides during our discussion this morning. At this time, I would like to turn the call over to Bill Wilson.

Thank you, Claire, and good morning, everyone. Thank you for joining us today. We are very pleased to share that our second quarter performed as we anticipated and telegraphed on our last earnings call. In Q2, we met the total net revenue and adjusted EBITDA guidance we provided, reflecting the continued execution of our digital-first local media strategy, the strength of our differentiated digital platform and the disciplined way our teams continue to manage the business. In the second quarter, Digital Advertising revenue accelerated meaningfully from Q1. Our media partnership business continued its impressive growth, Townsquare Interactive delivered another quarter of record-setting profitability and our broadcast business continued to generate significant cash flow while outperforming the industry. For many years, we've talked about transforming Townsquare from a traditional broadcast company into a digital-first local media company. Today, that transformation is no longer aspirational. It's simply who we are. Digital now represents approximately 59% of our total segment profit and approximately 57% of our total net revenue on a year-to-date basis. Levels we believe remain unmatched among our local media peers. As highlighted on Slide 10, our competitors have only, on average, 31% of their revenue coming from digital sources. That differentiation is the result of more than a decade of strategic decisions and investment in our technology, products, people and proprietary platforms rather than simply relying on third-party vendors and traditional media assets. Those investments are increasingly translating into stronger operating performance and expanding competitive advantages for us. As we've consistently said for many years, digital is Townsquare's growth engine, but I think it's fair to say today that we have evolved beyond a single digital growth engine. We now have multiple scalable digital businesses, each serving different customer needs, each generating attractive margins and each contributing to the long-term growth of our company. Our Digital Advertising business, Townsquare Ignite, continues to lead that growth. Second quarter Digital Advertising revenue increased plus 11% year-over-year, representing a meaningful acceleration from Q1's plus 7% year-over-year growth and one of the strongest quarterly performances we've delivered in recent years. This growth was driven by strategic execution across our numerous specialized verticals as well as our media partnership business. It represented a full funnel strategy that captured greater share from our large client base and a concentrated effort to maximize owned and operated opportunities with our most engaged audiences. As we've discussed previously, we believe our Digital Advertising platform is differentiated because we're much more than a digital reseller. We operate as a full-service digital marketing partner for local businesses, combining campaign strategy, creative development, sophisticated audience targeting, campaign optimization and omnichannel reporting into a single solution for our customers. Just as importantly, our local sales teams continue to execute at an exceptionally high level. Their ability to combine the trusted relationships they've built in our local markets with an increasingly sophisticated suite of digital products continues to differentiate Townsquare from both traditional local competitors and national digital platforms. Our customers aren't simply buying Digital Advertising inventory. They're buying measurable business outcomes, and that continues to drive healthy client retention, larger average customer spend and continued market share gains. One area I'm especially excited about is the continued momentum of our media partnership business. Just over 2 years ago, this business did not exist. Today, we have 16 media partners, contributing 41 incremental markets beyond our owned and operated footprint of 74 markets. And thus, we now provide digital programmatic advertising in 115 markets across the United States. We expect that media partnership revenue, which was approximately $6 million in 2025, will more than double in 2026. One major point of differentiation for this business is that our best-in-class sales talent integrates directly into our partners' local markets, leading 4-legged calls, mentoring sales teams by leveraging more than a decade of proven sales strategies to drive incremental digital revenue while simultaneously protecting our high-margin radio business. We also manage campaign strategy, creative development, media buying, optimization and customer support. Notably, this strategy has delivered 100% retention rate of our media partners client base over the past 2 years. Key of this model is that it allows us to expand well beyond our own market footprint with very little incremental capital investment while generating attractive returns for shareholders and importantly, attractive returns for our media company partners. Perhaps most importantly, it validates something we believe for many years that the capabilities that we've built internally are valuable not only to our own advertisers, but increasingly to other local media companies as well. I'm also very excited to report that we've completed our first licensing deal for our proprietary technology with one of our media partners, SummitMedia, further demonstrating that our partners see substantial value in our tech platform to the point of licensing it for their own use. SummitMedia's decision to adopt our in-house developed CRM software for their own sales team is strong third-party validation of our innovation and further differentiates us from the competition. Beyond creating a new recurring revenue stream, this deepens our integration into our partners' operations, making us an even more strategic and indispensable partner through a true 360-degree relationship. In addition to our current 16 partners, we expect that number to grow in the coming years as more and more media companies reach out to us to discuss replacing their current third-party solutions with our more comprehensive digital platform. We believe our media partnership business has a long runway for growth, and we continue to target $50 million of revenue at a 20% profit margin within the next 4 years. Given the growth and scale we've achieved to date and the significant long-term opportunity we see ahead, we've added a slide to our investor presentation highlighting our media partnership business, which you can now find on Slide 12. Our team's performance in the second quarter demonstrates just how resilient and diversified our Digital Advertising platform has become. Our programmatic revenue, which now represents approximately 70% of our year-to-date Digital Advertising revenue, increased by plus 27% year-over-year in the second quarter. In addition, the direct sales of our local owned and operated digital websites and mobile apps increased at a high single-digit year-over-year growth rate, just as we expected. Another positive note, which we have outlined on previous calls is that our digital audience and, therefore, our digital revenue, which is only approximately 6% of our year-to-date Digital Advertising revenue, has sequentially stabilized in 2026. And in Q3, we'll begin to lap the dramatic year-over-year audience and associated revenue declines that started last August 2025. Due to the moderation of this headwind, but more importantly, given the continued strength of our Digital Advertising solutions directly sold by our local sales teams, we expect Q3 Digital Advertising revenue will accelerate yet again with growth expected to be stronger than Q2's plus 11%. Let me now turn to our second digital business, Townsquare Interactive, our subscription-based digital marketing solutions SaaS-based business. As we've discussed over the past several quarters, our focus at Townsquare Interactive has been on building a business capable of delivering durable, profitable long-term growth rather than simply maximizing short-term revenue. I'm pleased to report that those efforts continue to produce strong profit results. During the second quarter, Townsquare Interactive performed exactly as I telegraphed on our last call and once again delivered record segment profit margins, reaching nearly 38% profit margins, reflecting the operational improvements we've made over the past several years. While revenue has sequentially stabilized, yet remained below where we ultimately expect it to be as we continue rebuilding our sales organization over the next 12 months, the quality of the business has never been stronger. We spent considerable time restructuring our customer service organization and leveraging artificial intelligence throughout the business to improve operational efficiency. At the same time, we've intentionally increased productivity expectations across our sales organization, creating a stronger and more efficient, although temporarily smaller sales force. The result is a business that is generating meaningfully higher profitability while positioning itself for future revenue growth. Importantly, customer retention remains healthy. Our service offering continues to resonate with small- and medium-sized businesses as evidenced by our current churn returning to historically low levels, and we continue to see a significant long-term addressable market. We remain very confident that Townsquare Interactive is well positioned to return to sustainable revenue growth while maintaining substantially stronger profitability than we've historically produced. And we still continue to expect to return to sequential monthly revenue growth by the end of the year and potentially as early as Q3. Together, Townsquare Ignite and Townsquare Interactive continue to demonstrate the strength of our digital-first strategy. One business is delivering strong top line and profit acceleration in 2026, while the other continues to improve profitability and operating efficiency, and we expect to return to revenue growth later this year. Both are benefiting from the investments we've made in technology, automation and AI over the past several years. Turning to Broadcast. It too performed exactly as we expected and shared on our last call. As we've consistently said, we continue to view local radio as an extremely valuable strategic asset. It delivers unmatched local reach, deep relations with our audiences and trusted partnerships with thousands of local advertisers across our markets. While we continue to expect advertising dollars to gradually shift from traditional media towards digital, our strategy has never been to simply defend broadcast. Instead, our objective has been to leverage the strength of our local brands and sales relationships to capture the share shift ourselves. Although Broadcast continues to operate in a challenging advertising environment, we once again outperformed the industry, according to Miller Kaplan estimates, in the year-to-date period, and our teams remain highly disciplined in managing expenses. And as a result, we continue to generate strong Broadcast profitability and meaningful cash flow despite ongoing industry headwinds. The combination of a durable broadcast cash flow business and multiple growing digital businesses creates a financial profile that we believe is unique within local media. As we look ahead to the balance of 2026, I remain very optimistic about our outlook. Digital Advertising has accelerated meaningfully during the first half of the year and will continue to do so in Q3. Townsquare Interactive is delivering record profitability while positioning itself for future sequential revenue growth. Broadcast continues to generate healthy margins and cash flow despite a challenging secular environment. Most importantly, I believe the investments we've made over the past decade are producing exactly the type of business we set out to build, a diversified digital-first local media company with multiple scalable growth platforms, recurring revenue, strong cash generation and significant opportunities to create long-term shareholder value. With that, I'll turn the call over to Stu to review our financial results and our outlook in more detail. All yours, Stu, take it away.

Thank you, Bill, and good morning everyone. It's great to speak to you today. We are very pleased to report that our second quarter results met our revenue and adjusted EBITDA guidance. Second quarter net revenue was approximately flat year-over-year at $115.4 million, above the midpoint of our guidance range of $114 million to $116 million. Political revenue was $1.3 million in the second quarter and $2 million in the year-to-date period. Through June, 2026's political revenue is 2% greater than 2022's political revenue of $1.9 million. Second quarter adjusted EBITDA was also above the midpoint of our guidance range of $24 million to $25 million, coming in at $24.8 million. This represented a year-over-year decline of 6.2%. We had another very impressive quarter at Townsquare Ignite, our Digital Advertising segment, where revenue growth rates meaningfully strengthened from 6.8% year-over-year in Q1 of 2026 to strong year-over-year revenue growth of 11% in Q2 of 2026. As Bill noted, looking ahead to the third quarter, we expect Digital Advertising revenue growth to further strengthen and be even higher than Q2's growth rate. As expected and previously projected, Townsquare Interactive, our subscription Digital Marketing Solutions segment's Q2 net revenue declined 8.5% year-over-year to $17.2 million. Importantly, TSI revenue stabilized in the quarter at approximately $5.7 million of revenue in each month of Q2. We expect Q3's revenue to be roughly flat on a sequential basis and expect to return to month-over-month revenue growth by year-end. We're pleased to share that Townsquare Interactive segment profit margins increased year-over-year to 37.6%, representing the strongest profit margin in Townsquare Interactive's history. We're very confident that our profit margins will exceed 2025's record-setting profit margins for the remainder of 2026 due to the efficiencies and cost savings, including those enabled by AI that have been implemented. Broadcast advertising net revenue declines moderated slightly as compared to 2025 with and without political. In the second quarter, total Broadcast revenue declined 5.5% and 7.2% excluding political revenue, each as compared to the prior year. We believe that Broadcast ex political declines will be in line with this result in the third quarter as well. As a reminder, this is compared to the consistent 8% ex political broadcast revenue declines we experienced in each quarter of 2025. Broadcast segment profit margins were 30% in the third quarter. We expect that our Broadcast segment profit margins will be in the high 20s for the remainder of the year, averaging out to the mid-20s for the full year, which is consistent with 2025 profit margins. In the second quarter of 2026, we had non-cash impairment charges of $26.6 million related to our FCC licenses and $35.2 million in the year-to-date period. The impairments in the first quarter were caused by an increase in the discount rate used in our calculations due to rising debt yields of our broadcasting peers. While the impairments in the second quarter were driven by decreases in third-party industry broadcast revenue forecast. Given the way that these non-cash impairments are mathematically determined, we expect the value of our FCC licenses to continue to be written down regularly over time. These write-downs of decade-old purchase price calculations have no bearing on our cash position, our operating revenue, operating expenses, our profitability or the company's future prospects. They are nothing more than non-cash accounting charges affecting only the historically recorded purchase price allocations made when we bought our radio station assets roughly a decade or more ago. Our second quarter net loss was $41.8 million or $2.36 per diluted share. The loss was primarily driven by the FCC non-cash impairment charges of $26.6 million and an $18 million income tax expense taken for financial statement purposes only. Adjusted net income per share was $0.21 per share as compared to adjusted net income per share of $0.22 in the prior year period. We'd like to remind you that any benefit or provision for income taxes included on the face of the income statement is for GAAP financial statement purposes only. We maintain significant tax attributes, including approximately $121 million of federal NOL carryforwards and other substantial tax shields related to the tax amortization of our intangible assets. We continue to believe that we will not be a material cash taxpayer until approximately the end of 2028. One of our business model's strongest attributes is our consistent cash flow generation. In the first 6 months of 2026, we generated $7.8 million of cash flow from operations. We ended the quarter with $462 million of debt outstanding. As of June 30, our net leverage was 5.44x. We anticipate our net leverage will tick back down in the second half of 2026 as EBITDA returns to year-over-year growth. As always, our #1 priority is to invest in our local businesses through organic internal investments that support our revenue and profit growth, particularly our digital growth engine. We plan to continue to invest in our digital product technology, sales, content and support teams, specifically in our Townsquare Interactive and Townsquare Ignite businesses to maintain our strong competitive advantage in our markets outside the top 50 cities. In addition, we plan to use our excess cash flow to reduce our debt through both mandatory and voluntary debt repayments and, of course, support our high-yielding dividend. Our Board has approved our next quarterly dividend payable on November 2 to shareholders of record as of October 26. The dividend of $0.20 per share equates to $0.80 per share on an annualized basis and implies an annual payment of approximately $14 million based on our current share count and a dividend yield of approximately 13% based on our current share price. As we mentioned on our last earnings call, it's both management's and the Board's belief that our current share price does not reflect the inherent value of Townsquare. Therefore, we are not concerned about the implied dividend yield as we believe it will come down as and when our business is better understood by investors and our business returns to consistent profit growth. Turning now to the third quarter. We expect third quarter net revenue to be between $108 million and $110 million, which at the midpoint represents low single-digit year-over-year growth. We expect third quarter adjusted EBITDA to be between $22.5 million and $23.5 million, which at the midpoint represents mid-single-digit year-over-year growth. For the full year, we are narrowing our guidance range to be more precise now that we are at the halfway point. We expect net revenue will be between $425 million and $431 million, and we expect adjusted EBITDA will be between $87 million and $90 million. Importantly, this guidance is within the ranges we provided at the start of the year. As a reminder, embedded in this guidance is forecasted political revenue of approximately $8 million, which is in line with the $7.5 million of political revenue we received during the 2022 election cycle. And with that, I will now turn the call back over to Bill.

Thank you, Stu. Great job. Before we open the line for questions, I'd like to leave you with a few final thoughts. At Townsquare, we've spent more than a decade transforming this company into a digital-first local media business. Quarter after quarter, that strategy continues to deliver results. Today, digital represents the majority of our profit and the majority of our revenue and the driver of our future growth. At the same time, our Broadcast business continues to generate meaningful cash flow and strengthen the local relationships that remain at the core of our company. Together, these businesses create a differentiated model that we believe positions Townsquare exceptionally well for the future. I'm particularly encouraged by the momentum we're seeing across our digital platform. Digital Advertising accelerated again in the second quarter. Our media partnership business continues to expand into new markets through a highly scalable capital-light model, further increasing our confidence of our Partnership division growing to $50 million in revenue and $10 million in profits within 4 years and then growing meaningfully from there. And Townsquare Interactive is delivering record profitability while positioning itself for the next phase of growth. These are all businesses that we believe have substantial runway ahead of them. Just as importantly, our disciplined approach to expense management, capital allocation and balance sheet improvement continues to provide us with the flexibility to invest in our highest return opportunities while creating long-term value for our shareholders. Our strategy is working. Our competitive position continues to strengthen. And I remain incredibly proud of the execution, passion and commitment of our Townsquare teammates across the country, whose dedication make these results possible every quarter. We believe our best days remain ahead of us, and we remain focused on executing our strategy, strengthening our competitive position and creating sustainable long-term shareholder value. With that, operator, please open the line for all questions.

[Operator Instructions] Your first question comes from the line of Michael Kupinski from NOBLE Capital Markets.

Congratulations on a good quarter. A couple of things. Bill, I know that you talked a little bit in the past about AI and you gave some guidance and thoughts about Q3. I was just wondering, can you give us an update on how AI search is now that it's at an all-time high? How that might look like as we kind of go not just through Q3, but going forward?

Yes, Michael. Thank you for that. As we detailed in great detail, I think, on our year-end call back in March and then reiterated it on our May call. The great news is that our audience has actually grown from Q4 of 2025 into the first half of the year. That's because we're getting more and more traffic from either direct sources like our newsletters and our mobile apps that people have downloaded as well as through social traffic, including Facebook and X and other means. So we feel great. As I shared on the call as well, the remnant piece of our Digital Advertising is now just 6% of our total Digital Advertising, while our programmatic Digital Advertising, which grew 27% in the quarter, is now 70% approximately of our Digital Advertising. So we see sequentially now stability in our audience after having declined because of that AI search hit that a lot of at-scale publishers faced, but we also see some modest growth overall. So search volumes continue to come down, but our other sources of traffic, including what I just outlined in terms of direct and social continue to climb. And as an end result, we're seeing audience growth. We're seeing stability in our remnant revenue, which will lap in August. And that's one of the reasons that our Q3 Digital Advertising outlook is even stronger than our plus 11% in Q2. So a lot of positives on the Digital Advertising front. We're selling our owned and operated websites and mobile apps incredibly well. And I think it just speaks to the benefits of having at-scale publisher, tremendous amount of first-party data and just a full funnel solution set that we believe is quite differentiated vis-a-vis others in the marketplace. And it's really -- I mean, we obviously pivoted based on the AI search issues that all publishers face and I couldn't be more proud of the team leaning in, really throwing out the old playbook, generating a new playbook and executing at a very high level. And then as we talked about, on the flip side of the challenge of AI in terms of search volumes, the team has really embraced building AI tools internally as well as utilizing AI tools externally that are available to create tremendous efficiency throughout our organization and to be able to target customers better, to be able to serve customers better just to operate much more efficiently. So the negative, I think, is much more outweighed by the positive of what we've come. And I think we've proven that we've got a different playbook to maintain, if not grow, our audience over time. I couldn't be more proud of the team, but I'll turn it back to you, Michael.

Obviously, on Ignite, that business is scaling nationwide. I think you mentioned 115 markets, which is just incredible. What is the percent of Ignite? And I'm sure that it's kind of transitioning. What percentage of customers are originating through relationships by the broadcast operations? I would assume that it's kind of moving beyond just the broadcast now at this juncture.

Yes. So I mean, I couldn't be more proud. We added Slide 12 to the investor deck just because the size and scale of this business and what we expect over the next decade is quite substantial. Couldn't be more proud of the partners that we've already partnered with. We're honored to be partners with them. As a recap for everybody on the call, this division really started in the beginning of '24. So we're just literally just over 2 years old. We have $1 million in revenue in 2024, $6 million in revenue through our media partners last year. And as I've shared since the beginning of the year, our expectation is that we've more than doubled that $6 million to over $12 million, and we're on that trajectory to do so. Probably more importantly than the revenue piece is our partners are scaling incredibly quickly beyond my expectation, not because of the appetite from others, just I think we've been able to scale this quicker than I thought internally. So we're now at 16 partners. We with this capital-light model, where we're entering, in essence, 41 incremental markets to Townsquare's own footprint of 74. So as you just said, we're now in 115 markets, providing very sophisticated, differentiated digital programmatic solutions. So as I shared on our last call, the inbound interest in partnering with Townsquare from other companies to help their digital advertising couldn't be more strong. I mean we're literally fielding dozens and dozens of new inquiries on a monthly basis. So that's just continuing to validate our own beliefs and how differentiated this is for ourselves. But we're seeing each partner that we had in 2025 has doubled or more than doubled their own digital advertising revenue partnering with us. So it's great for our partners, and it's great for us. The other thing I'd highlight, we mentioned it very briefly on the call, but I think it's a significant development that will really help us and our partners over the next 5 years. We entered into our first software licensing deal with SummitMedia. They licensed our CRM that we utilized and built in-house for our own sales team. It's called Blueprint. And they're now -- they had a CRM to a third-party. Once they saw our CRM and all of the things it can do, not only in terms of managing the customer database, but things like lead flow, we're able to provide our AEs leads automatically based on geo, based on ZIP code, so forth and so on, including marketing spend. It's a very sophisticated CRM and prospecting tool. So it's really nice that we've got partners now interested in licensing our tech stack. So I couldn't be more proud of the entire Townsquare team. As you said, Ignite itself is literally on fire, our Digital Advertising overall and then programmatic growing 27% in the quarter. Expecting that similar type of growth in Q3 on the programmatic side and then continued strength in the Media Partnership division. So mostly radio companies, to your point, we are speaking to television operators currently. We haven't announced any deals on that front. We are also talking to some outdoor and smaller newspaper companies. So time will tell who else we partner with, but we're honored by those who've chosen to partner with us to date, and we look forward to scaling the number of partners over the next several years, Michael.

Bill, is there any gating factors in terms of the capacity or anything like that, in terms of those media partnerships?

The greatest gating factor is our own internal team members and how many people we can deploy and dedicate to our partners. The model is quite unique because we treat these partners as if they're another market of Townsquare like we're integrated into their operation quite extensively. Our salespeople are the people who do all the sales calls with our partners. So there -- we're doing 4-legged calls in these 41 markets right alongside the partners' AEs. So really, it's about how many salespeople that we have internally who perfected the solution set that we can deploy against partners. It's other personnel like media buyers, our data scientists, our reporting team. So it's simply just adding people to our team, but when we deploy to our partners, we're really utilizing what I would call the SEAL team, just the best of the best. So the only gating factor is how quickly we can scale and build our team, which we're doing quite aggressively right now. I'm quite proud of the team. So that's really the gating factor. It simply -- there's not -- the investment on our side is into people. So that's a real capital-light model that allows us to scale and give us confidence that within 4 years, we'll be at $50 million in revenue through this division at a 20% profit margin, so $10 million in incremental profit. But more importantly, we think that's just the starting point. We see this continuing to scale from there. That was just the initial goal that we set a year ago. So the gating factor, Michael, is just how quickly we can add to our team, which we're doing quite aggressively right now and couldn't be more proud of that.

And just a couple of quick questions here. SiriusXM said in their Q2 that they see opportunities in media and local markets and are looking to expand there. I was just wondering any concerns, any thoughts about their plans?

I didn't hear the name of the company. Can you say it again?

SiriusXM.

No, no concern. I saw some of the things that happened with Audacy licensing some of their stations. But I think that speaks to Sirius is obviously a real national play. Our bread and butter and one of the reasons we love radio and we embrace radio as the highest reach medium in the United States. The emotional connection is unparalleled. We believe our brands and the strength of our brands is one of the reasons our digital business is as differentiated and strong as it is. So we are hyperlocal. We're hyperlocal if you go to any one of our mobile apps or websites, and we're hyperlocal on our radio station broadcast. And as we've talked about in great detail over the last several years, from just a pure radio standpoint; a, we're gaining share; b, we're reaching on average in our 74 markets, 50%, 5-0, of the adult population just through our AM/FM signal. So that is incredibly powerful. Obviously, SiriusXM has nowhere near that type of reach and it would be inconsequential reach in our markets. So not concerned at all. I couldn't be more proud of our content contributors, what we call the original social influencers. We talked about our Broadcast performance ex political is moderating slightly from last year. Each quarter, as Stu mentioned, we were down last year, negative 8%. We're now in the first 2 quarters, negative 7%. I think what's not evident based on those numbers is the strength we're seeing in our local direct, selling broadcast traditional advertising to local clients. That is actually getting close to, I'd say, even on the year. We're right now down low single digits year-over-year. What really -- the reason that we're at negative 7% versus mid to low single digits is our national network business was down high teens and our agency business was down as well pretty aggressively. So those pieces of our Broadcast business specifically, our national network and local agency are now the minority of our business, where 3 years ago, they were the majority of our Broadcast business. So we're quite -- as we look out over the next 3 to 5 years and the strength of our local direct, the strength of our local brands and the strength of the reach in radio, we think we're again, we treat it as a cash cow business. We love radio, and we love the cash characteristics. We love the emotional connection, but we're not concerned by SiriusXM. It's kind of similar to Spotify, right? Spotify is a great music service, but that's not the value proposition that we're providing over our AM/FM signals to our local communities, particularly, as you know, Michael, but for the benefit of everybody on the call, in our markets, what I would classify the majority of them at their news deserts. Newspapers have literally stopped serving these communities. So we've moved in. We've hired a lot of people who used to work in the newspaper to provide on-air content as well as online content that's hyperlocal, and that's serving us quite well. So I'll turn it back to you, Michael, if you have any other questions.

I just have one quick question, and I'm sorry for taking so much time here. Political advertising, it seems to be trending a little light. I would have expected it would be kind of competitive races and so forth. Is it just a function of not being in competitive markets? Or do you think that there's a secular issue that maybe dollars are being allocated to other mediums, including digital?

There's definitely more dollars and more dollars going to digital. I think that's obviously true in political. It's obviously true in advertising in general. Roughly 70% of all local media dollars are being spent in digital. That's why we're quite proud of the fact that we now are a digital-first local media company. I think that's now undeniable with 59% of our profit coming from digital and 57% of our revenue coming from digital. So that, I believe, is a factor in political as it is in the overall advertising. As it relates to our political, as Stu said a few minutes ago, through the first half of the year, we're up about 2% over 2022, which was our benchmark. In 2022, we did about $7.5 million in political. As we've said consistently since the beginning of the year and reiterated by Stu earlier, our expectation is $8 million for the full year. So we don't -- we're actually quite pleased where we sit today. Obviously, a lot of the political dollars are going to be being placed in the future months. Obviously, Michigan, obviously, a lot of headlines this week around the primary there on the Democratic side. So we have great markets in Michigan, Flint, Kalamazoo, Grand Rapids, Battle Creek, Lansing. And we're also in Maine, and there's obviously a tight Senate race with Collins and a lot of disruption in that race. And also Texas, where we have a dozen markets throughout, including El Paso and Tyler and so on. So we're well situated in terms of the map as well as the issue money. And as we sit here today, on August 6, we believe we're on the trajectory of that $8 million goal that we set in the beginning of the year. But we're not seeing any less political or share shift that we didn't anticipate going to digital. And we think we're actually seeing some of -- you may have seen the Supreme Court ruling around lowest average unit rate, which we think will create even more demand over time and have more of a crowd out effect on TV. Obviously, TV continues to get a tremendous amount of political dollars, which is interesting just given how much the audience has declined. But we are well positioned to hit our political goal. Did that answer your question, Michael?

[Operator Instructions] Your next question comes from the line of Patrick Sholl from Barrington Research.

If I could first follow-up on the media partnership side. You mentioned providing the CRM product to SummitMedia. Can you just maybe talk about like the overall opportunity in providing kind of software solutions to some of your media partners and if that could be meaningfully incremental to that $50 million target with the existing partner set?

Did I cut you off, Patrick? Or was that the question?

No, go ahead.

Okay. Great. Thank you, and thanks for joining us this morning. Always appreciate that, Patrick. Yes, as I said, just couldn't be more proud of our Media Partnership division. And although it's obviously scratching the surface with our first software licensing deal with Summit, they've been a tremendous partner from the beginning with us. And as they saw throughout the organization, as their account executives in addition to their executive team were given visibility into all the tool sets we have. The -- quite honestly, I think we talked about this on an earlier call, really blown away by our capabilities and the solutions that our amazing technology team in-house has built. So I believe it can be a meaningful contribution to the overall revenue and profitability because not only are we talking to the other 16 partners about licensing our CRM, but we have other tools that we utilize internally for our sales teams as well as for other aspects of our business including customer service, that are real sophisticated solutions that we provided to our partners, not on a license level, but just given visibility of like, hey, this is how we go to market. This is how we prospect for new clients. This is how we do our client needs assessment. This is how we do our reporting. And a lot of that is now software-based and that we can license to others. So we have great data about our clients that we have built through some AI tools, some third-party attribution as well. So I think over the next 3 to 5 years, the ability to license more and more of our own tech to our partners is a meaningful opportunity that will contribute to that $50 million goal plus some. The other thing I would highlight, Patrick, is putting aside the revenue of this incremental software licensing opportunity is really the -- how intertwined the partners become with us. As I mentioned on the prepared remarks, we're quite proud of the 16 partners who have chosen to partner with us for their digital advertising. But now -- and we haven't had any attrition. We're getting -- quite honestly, one of the greatest referral sources is them telling others in the industry what a great partner we are, and we appreciate and thank them for that. But as we license more and more technology to these partners, they become even more ingrained to our company. So I think it's a double win. There's a revenue opportunity, a profit opportunity. But I would argue even more importantly for the future longevity of this business, we become more intertwined. And our solutions, we believe, are one of the reasons that we're having outpaced digital success, right, at 59% of the total company and the growth rate of growing Digital Advertising plus 11% in Q2 with programmatic up plus 27%. So I think that's the second part of it. I think having these partners more ingrained with us and really looking at us as almost like an extension of their team is also highly differentiated and important. So I'll turn it back to you, Patrick, if you have any other questions.

Sure. And on Interactive, could you provide like just a little bit more color on like the subscriber trends, whether within your own markets or outside your own markets and where kind of the restructuring of the sales team is being felt most immediately?

Yes. Thank you, Patrick. I couldn't be more proud of the Townsquare Interactive team. I continue to be down there in Charlotte. We have an office in Phoenix as well. And just the fact that our profit margin last Q2 of '25, we were roughly 33% profit margin. Now we're sitting at 38% profit margin. And as Stu said, we expect to be in that zone for the entire year, is quite incredible. As I mentioned in the prepared remarks, our churn is back to historically low levels. I couldn't be more proud of attacking -- for the last 2 years, we really attacked our -- how we were serving our customers and rebuilt that entirely from the ground up. And we knew it would be disruptive, and that's why it was a shaky year in 2024 for us, but we added close to $4 million in profit last year. And then our focus this year was really redoing the sales piece of the equation from top to bottom. And that's having great success. We're seeing increased sales velocity in our market. We're seeing increased sales velocity per seller outside of our market. And as Stu mentioned, we had revenue stability in Q2. So after having a long time declining sequentially as well as year-over-year, in Q2, our monthly revenue at Townsquare Interactive was approximately $5.7 million for April, May and June. And as I shared this at the beginning of the year, I said I expected to see sequential revenue growth by the end of the year, and we're still expecting that by the end of 2026 and potentially in Q3, but if not in Q3, by the end of the year. And that's a combination. Really for us, the only reason the revenue is not growing quicker is that -- I know you know this, Patrick, but as a reminder for everybody on the call, our sales force declined by 40% from its highest level, and we're building that back. And we're building it back quite nicely, but we're building it back judiciously, so we're onboarding new people appropriately. So as I shared on our last earnings call, I don't expect to get back to the level of salespeople until 2027 in terms of where we want to be and where we were historically. But as a result, we're seeing stability on the revenue side, and that, in essence, implies stability on the subscriber side and then therefore, growth in the back half of the year as we return to sequential growth. So we're -- I couldn't be more proud of the Townsquare Interactive team. They're doing a tremendous amount of outbound marketing, e-mail marketing, text-based marketing and now digital marketing using data from the CRM that we deployed a few years ago to our Townsquare Interactive clients and doing things like lookalike Digital Advertising targeting for our clients. So more and more value proposition for those clients and churn at a historically low level. And it's just a matter of how quickly we add salespeople, which we're doing quite nicely now, but you'll see sequential revenue growth towards the end of the year and then future revenue growth next year. So let me know if that answered your question, Patrick, on Interactive. Any other questions, Patrick?

Thank you. There are no further questions at this time. I would like to turn the call back to Bill Wilson for closing comments. Sir, please go ahead.

Thank you, Constantine. Thank you, everybody, for joining this morning to get updated not only on our Q2 results, but importantly, what our outlook is for the rest of the year and onward into 2027. I couldn't be more proud and thankful of the Townsquare team overall, and we look forward to updating everybody in 3 months from now. So I hope everybody has a great day. Thank you for joining this morning.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.