0002026478-25-000042
SEC filingRevenue grew 4.0% to $45.3M, but gross margin contracted to 35.3% due to higher programming costs, widening net loss.
For the three months ended September 30, 2025, Newsmax reported total revenue of $45.3 million, a 4.0% increase from $43.5 million in the same period last year. The growth was primarily driven by a 22.3% surge in affiliate fee revenue to $8.1 million, reflecting new contractual relationships and rate increases that took effect in 2025. Advertising revenue, which remains the largest component at 60.9% of total revenue, declined slightly by 1.6% to $27.6 million, as a reduction in digital advertising (due to 2024 being an election year) was partially offset by higher linear cable and satellite advertising revenue from expanded reach. Subscription revenue was essentially flat at $6.9 million, as growth in Newsmax+ subscribers was offset by declines in publication subscriptions. Other revenue increased significantly to $1.2 million from $0.5 million, driven by an amendment to a licensing agreement.
Gross profit fell 19.2% to $16.0 million, and gross margin contracted sharply to 35.3% from 45.4% a year ago. The decline was driven by a 23.4% increase in cost of revenues to $29.3 million, attributed to higher headcount, programming and production costs on the main Newsmax TV channel, continued investment in Newsmax2 for OTT, stock-based compensation, and costs for remote news coverage. General and administrative expenses decreased 18.9% to $23.2 million, primarily due to lower legal expenses related to the Dominion case, which was settled in August 2025. Other income swung to a gain of $3.1 million from a loss of $1.0 million, driven by interest and dividend income and a reduction in one-time expenses related to becoming a public company. Net loss improved to $4.1 million from $9.8 million in Q3 2024.
The Broadcasting segment generated $36.6 million in revenue, up 10.1% year-over-year, driven by higher advertising revenue (+3.3%), affiliate fees (+22.3%), and subscription revenue (+12.5%) from Newsmax+. However, Segment Adjusted EBITDA for Broadcasting plunged 76.6% to $1.1 million, as cost of revenues rose 20.4% and G&A expenses increased 31.8%, reflecting investments in programming, production, and marketing for TV and Newsmax2.
The Digital segment saw revenue decline 15.6% to $8.7 million, with advertising revenue falling 23.1% and subscription revenue dropping 12.1%, both impacted by the comparison to a strong election-year 2024. Product sales were flat. Digital Segment Adjusted EBITDA worsened to a loss of $2.9 million from a loss of $2.0 million, as the revenue decline was only partially offset by lower cost of revenues and G&A.
Management's outlook focuses on maintaining and enhancing its leading position in news content, increasing revenue through premium content delivery, and expanding television and digital distribution. Key strategic priorities include maximizing subscriber penetration on traditional cable platforms, growing the Newsmax+ subscriber base, increasing audiences for news channels, and developing international markets. The company notes that affiliate fees, a revenue stream that began in November 2023, are expected to continue growing. However, the MD&A also highlights industry headwinds, including ongoing declines in MVPD subscribers and shifts in advertising spending toward digital and mobile offerings. The company believes its current cash and cash equivalents of $14.2 million and investments of $116.2 million are sufficient to meet operating requirements and capital expenditures for the next 12 months, and it does not anticipate needing to raise additional capital. The significant legal settlements with Dominion ($67 million) and Smartmatic ($40 million) represent material cash outflows over the next two years.
As of September 30, 2025, Newsmax's balance sheet shows significant liquidity with cash and cash equivalents of $14.2 million and marketable securities (investments) of $116.2 million, totaling $130.4 million. This includes $40.0 million in restricted escrow funds for the Dominion settlement. Total debt is minimal at $5.2 million (operating and finance leases), resulting in a net cash position. Shareholders' equity improved substantially to $106.0 million from a deficit of $137.6 million at year-end 2024, driven by the IPO and conversion of preferred stock.
Newsmax has material firm commitments under talent agreements totaling $11.9 million through 2027, with $2.4 million due in the remainder of 2025, $6.7 million in 2026, and $2.8 million in 2027. Additionally, the company has significant settlement liabilities: $40.0 million for the Dominion settlement (payable in two installments in 2026 and 2027) and $31.1 million remaining on a commercial counterparty settlement (undiscounted $71.1 million total, but discounted carrying amount of $25.8 million at 9.75%). These obligations will require substantial cash outflows over the next few years.
Capital allocation activities include a share repurchase liability of $6.4 million, indicating recent buyback activity, and dividend payments of $0.9 million during the nine months. Capital expenditures were $1.8 million (1.3% of revenue), primarily for property and equipment. The company has no outstanding borrowings on its $9.0 million line of credit. Post-IPO, Newsmax also entered into a $1.2 billion Standby Equity Purchase Agreement, though no shares have been issued under it.
Newsmax operates two segments: Broadcasting and Digital. For the nine months ended September 30, 2025, Broadcast revenue grew 19.3% YoY to $110.8 million, with Segment Adjusted EBITDA of $5.8 million (5.3% margin). Digital revenue declined 13.8% to $26.2 million, with a negative Segment Adjusted EBITDA of -$11.0 million (-42.0% margin). The broadcasting segment is the primary profit driver, while digital remains a drag. No geographic breakdown is provided.
Net loss widened to -$96.5M from -$65.3M, while operating cash flow deteriorated sharply to -$107.1M from -$21.2M, indicating a significant cash burn relative to net income. The primary driver was a $40.0M funding of settlement escrow and a $16.5M increase in settlement liability, alongside working capital outflows in accounts receivable and prepaid expenses. Non-cash adjustments included $8.5M stock-based compensation, $6.1M derivative liability fair value change, and $4.6M depreciation.
Capex remained modest at $1.8M (up from $0.5M), representing less than 2% of operating cash outflow. Free cash flow (not explicitly stated) would be deeply negative given the operating cash deficit. Financing activities provided $154.0M, dominated by IPO proceeds ($66.4M) and convertible preferred stock ($80.7M), offset by $0.9M in dividends. The company's cash balance fell by $9.9M to $14.2M.
Anomalies include the $40.0M settlement escrow funding and a $16.5M settlement liability increase, which are non-recurring items that significantly distorted operating cash flow. The $8.5M stock-based compensation and $0.5M SEPA expense are non-cash but recurring. Overall, cash flow quality is weak, with operating cash flow trailing net loss and heavy reliance on external financing.