TSQ · Townsquare Media, Inc.

Revenue Mix Shift: Broadcast and Subscription Drag, Digital Advertising Bright Spot

Revenue decreased 1.9% to $96.8 million from $98.7 million in the prior year quarter. The decline was driven by decreases in Broadcast Advertising and Subscription Digital Marketing Solutions, partially offset by growth in Digital Advertising. Direct operating expenses increased, particularly in Digital Advertising, due to higher inventory and compensation costs.

Operating Loss Driven by Non-Cash Impairment

Net Income Swing and Tax Benefit

Net income improved to $2.8 million from a net loss of $2.0 million in the prior year. The swing was primarily due to a significant income tax benefit that more than offset the operating loss. Diluted earnings per share were $0.16, compared to a loss of $0.12 per share in the prior year.

Cash Flow Improvement and Capital Allocation

Impairment Risk and Outlook

The impairment charges were driven by increases in the discount rate applied in the valuation of FCC licenses due to an increase in the weighted average cost of capital, caused by an increase in industry bond yields. Management closely monitors capital and credit market conditions and their impact on liquidity and the ability to refinance in the future. Further impairment may occur if discount rates or revenue growth assumptions worsen.