Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Entravision Communications Corp (NYSE:EVC) reported a 25% increase in revenue for the third quarter compared to the same period in 2023, driven by political advertising and growth in their advertising technology and services segment.
• The company's media segment revenue increased by 23% in the third quarter, primarily due to political advertising revenue.
• Entravision's advertising technology and services segment saw a 30% revenue growth, with improved operating margins attributed to better performance in Smadex and Adwake businesses.
• The company successfully expanded its news production capabilities, doubling the amount of news provided to its audience, which was profitable in its first full quarter.
• Entravision's strategic investments in media and political sales have positioned it as a critical player in reaching Latino audiences, with political revenue for 2024 expected to surpass previous highs.

Negative Points

• Entravision Communications Corp (NYSE:EVC) reported a net loss of $12 million attributable to common stockholders in the third quarter, compared to a net income of $2.7 million in the prior year.
• The decline in net income was primarily due to an income tax loss incurred in the third quarter of 2024.
• The sale of the Entravision Global Partners business impacted the timing of quarterly tax expenses, contributing to financial volatility.
• Free cash flow decreased to $9.3 million in the third quarter of 2024 from $17 million in the same period of 2023, largely due to the absence of cash flow from the sold EGP business.
• Despite increased political revenue, the amount spent on key races was lower than expected, not meeting the company's most ambitious revenue expectations.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with EVC.

Q: Can you elaborate on the strategic investments Entravision has made in its media business this year? A: Michael Christenson, CEO: We have significantly expanded our news production capabilities, doubling the amount of news provided to our audience. This includes morning, midday, early evening, and late news across all markets, with additional weekend news in select cities. These investments have already proven profitable in their first full quarter. Additionally, we have strengthened our sales organization to engage with political decision-makers, aiming to increase political revenue and civic engagement among our Latino audience.

Q: How did Entravision's political revenue for 2024 compare to previous years? A: Michael Christenson, CEO: Our political revenue for 2024 surpassed our previous high in 2022, although it did not meet our most ambitious expectations. The allocation to Spanish language media in key races was higher than the percentage of Latino registered voters, which is a positive outcome.

Q: What changes have been made to Entravision's financial reporting structure? A: Mark Boelke, CFO: We have realigned our financial reporting into two operating segments: Media, which includes television, radio, and digital media, and Advertising Technology and Services, which includes Smadex and Adwake. This restructuring aligns with our management and operational structure.

Q: Can you provide details on the financial performance of Entravision's media segment in Q3 2024? A: Mark Boelke, CFO: The media segment's revenue was $59.8 million, up 23% from Q3 2023, driven by political advertising revenue. Operating profit was $11.7 million, with an operating margin of 20%. Looking ahead, media segment revenue is pacing at a 28% increase for Q4 2024 compared to Q4 2023.

Q: How did the Advertising Technology and Services segment perform in Q3 2024? A: Mark Boelke, CFO: Revenue for this segment was $37.4 million, a 30% increase from Q3 2023, driven by growth in both Smadex and Adwake. The operating margin improved to 5%, up from 3% in the previous year, with net revenue margins increasing to 13%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.