What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 140 added, 140 removed, 130 unchanged (68% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

With the sale of our EGP business during the second quarter of 2024, as discussed in more detail under “Highlights and Recent Developments” below and in Note 8 to Notes to Condensed Consolidated Financial Statements, we identify ourselves as a media and advertising technology company.

Our television and audio operations reach and engage U.S.

Hispanics in the United States.

We own and/or operate 49 primary television stations.

Our television operations comprise the largest affiliate group of both the top-ranked Univision television network and TelevisaUnivision’s UniMás network, with TelevisaUnivision-affiliated stations in 15 of the nation’s top 50 U.S.

Hispanic markets.

We own and operate one of the largest groups of primarily Spanish-language radio stations in the United States.

We own and operate 44 radio stations, consisting of 37 FM and 7 AM stations, in 14 U.S.

We own and/or operate media properties in 13 of the 20 highest-density U.S.

Hispanic markets.

Our advertising technology operations consist of:

• Smadex, our programmatic ad purchasing platform, that enables customers, primarily mobile app developers, to purchase advertising electronically and manage data-driven targeted advertising campaigns to audiences around the globe;

• Adwake, our mobile growth solutions business, which provides managed services similar to Smadex, except our sales teams use third-party programmatic platforms.

For financial reporting purposes, we currently report in three segments based upon the type of advertising medium:

digital, television and audio.

Our net revenue for the three-month period ended June 30, 2024 was $82.7 million.

Of this amount, revenue generated by our digital segment accounted for approximately 50%, revenue generated by our television segment accounted for approximately 34%, and revenue generated by our audio segment accounted for approximately 16% of total revenue.

Prior to the sale of our EGP business during the second quarter of 2024, our digital segment accounted for the majority of our revenue.

With the sale of our EGP business, we anticipate that net revenue will be significantly lower in future periods, at least for the foreseeable future, the percentage of revenue contributed by our remaining digital operations will be significantly lower in future periods and, correspondingly, the percentage of revenue contributed by our media operations will be significantly higher in future periods.

With the sale of our EGP business during the second quarter of 2024, as discussed in more detail in Note 8 to Notes to Condensed Consolidated Financial Statements, we identify ourselves as a media and advertising technology company, which is the basis that is now used for internal management reporting and how our CEO evaluates our business.

As a result, effective July 1, 2024, we have realigned our operating segments, and for financial reporting purposes, we report in two segments – media and advertising technology & services – consistent with our current operational and management structure.

Our media segment consists of sales of advertising through various media, including television, radio and digital.

We own and/or operate 49 primary television stations and 44 radio stations (37 FM and 7 AM), reaching and engaging U.S.

Our advertising technology & services segment consists of programmatic ad services through Smadex, our demand side programmatic ad platform, and Adwake, which includes BCNMonetize, our mobile growth solutions business.

Our net revenue for the three-month period ended September 30, 2024 was $97.2 million.

Of this amount, revenue generated by our media segment accounted for approximately 62%, and revenue generated by our advertising technology & services segment accounted for approximately 38%, of total revenue.

Prior to the sale of our EGP business during the second quarter of 2024, our advertising technology & services segment accounted for the majority of our revenue.

With the sale of our EGP business, we anticipate that net revenue in terms of total dollars will be significantly lower in future periods, at least for the foreseeable future.

As a result, cash flow from operations will be materially and adversely affected in future periods.

Highlights and Recent Developments

As a result of the communication from Meta on March 4, 2024, that it intended to wind down its ASP program globally and end its relationship with all of its ASPs, including us, by July 1, 2024, we conducted a thorough review of our digital strategy, operations and cost structure, and during the second quarter of 2024 made the decision to dispose of the operations of EGP, our digital commercial partnerships business.

In furtherance of this decision, during the second quarter of 2024, we:

• sold our 51% equity interest in Adsmurai back to its founders, terminated loans we had made previously to them in the principal amount of €12.3 million and terminated certain other agreements involving Adsmurai, for total consideration of €15.0 million (approximately $16.2 million on the date of the closing), of which amount €10.0 was paid at closing and €5.0 million will be paid within six months following the closing;

• sold 100% of the issued and outstanding shares of stock of Jack of Digital back to its founder, for cash consideration of $0.1 million;

• sold substantially all of the rest of our EGP business to IMS, for cash consideration of $16.4 million.

We used some of the net proceeds of these dispositions to satisfy a remaining contingent liability owed to the founders of MediaDonuts in the amount of $6.5 million and made a mandatory prepayment in the amount of $4.9 million under the terms of our 2023 Credit Facility.

We made certain additional prepayments in the aggregate amount of $5.1 million during the second quarter of 2024 under the terms of our 2023 Credit Facility.

We believe that the disposition of our digital commercial partnerships business will allow us to enhance our strategic focus on our media business and our advertising technology business.

We intend to continue to monitor our business operations and may make further adjustments if we believe that is appropriate, although we can provide no assurance that we will be successful in any such endeavors.

During the third quarter of 2024, we realigned our operations into two segments consistent with the way our recently-appointed CEO now evaluates our business, reassigned the responsibilities of certain personnel and made management changes consistent with our new operating structure.

Our revenue grew by double digits in the third quarter of 2024 compared to the comparable period of 2023, driven primarily by growth of political advertising revenue and Smadex.

Relationship with TelevisaUnivision

Our network affiliation agreement with TelevisaUnivision provides certain of our owned stations the exclusive right to broadcast TelevisaUnivision’s primary Univision network and UniMás network programming in their respective markets.

We also generate revenue under a marketing and sales agreement with TelevisaUnivision, which give us the right to manage the marketing and

sales operations of TelevisaUnivision-owned Univision affiliates in three markets – Albuquerque, Boston and Denver.

We also generate revenue under a marketing and sales agreement with TelevisaUnivision, which give us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in three markets – Albuquerque, Boston and Denver.

Under our proxy agreement with TelevisaUnivision, we grant TelevisaUnivision the right to negotiate the terms of retransmission consent agreements with multichannel video programming distributors, or MVPDs, for our Univision- and UniMás-affiliated television station signals.

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For further information on recently issued accounting pronouncements, see Note 2 to Notes to Condensed Consolidated Financial Statements.

Three- and Six-Month Periods Ended June 30, 2024 and 2023

The following table sets forth selected data from our operating results for the three- and six-month periods ended June 30, 2024 and 2023 (in thousands):

Three- and Nine-Month Periods Ended September 30, 2024 and 2023

The following table sets forth selected data from our operating results for the three- and nine-month periods ended September 30, 2024 and 2023 (in thousands):

Three-Month Period

Six-Month Period

Ended June 30,

Nine-Month Period

Ended September 30,

Statements of Operations Data:

Cost of revenue - digital

Cost of revenue

Direct operating expenses

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Change in fair value of contingent consideration

Impairment charge

Foreign currency (gain) loss

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Consolidated Operations

Net revenue increased to $82.7 million for the three-month period ended June 30, 2024 from $73.7 million for the three-month period ended June 30, 2023.

This increase was primarily attributable to an increase of $10.8 million in advertising revenue from our digital segment, partially offset by decreases of $1.4 million and $0.5 million in advertising revenue from our television and audio segments, respectively.

Net revenue increased to $160.8 million for the six-month period ended June 30, 2024 from $141.4 million for the six-month period ended June 30, 2023.

This increase was primarily attributable to an increase of $23.9 million in advertising revenue from our digital segment, partially offset by decreases of $3.1 million and $1.3 million in advertising revenue from our television and audio segments, respectively.

Cost of revenue-Digital.

Cost of revenue in our digital segment increased to $24.4 million for the three-month period ended June 30, 2024 from $19.6 million for the three-month period ended June 30, 2023, primarily due to the increase in digital advertising revenue.

Cost of revenue in our digital segment increased to $47.1 million for the six-month period ended June 30, 2024 from $36.5 million for the six-month period ended June 30, 2023, primarily due to the increase in digital advertising revenue.

Net revenue increased to $97.2 million for the three-month period ended September 30, 2024 from $77.4 million for the three-month period ended September 30, 2023.

This increase was primarily attributable to an increase of $11.1 million in advertising revenue from our media segment, and an increase of $8.7 million in advertising revenue from our advertising technology & services segment.

Net revenue increased to $258.0 million for the nine-month period ended September 30, 2024 from $218.8 million for the nine-month period ended September 30, 2023.

This increase was primarily attributable to an increase of $10.2 million in advertising revenue from our media segment, and an increase of $29.0 million in advertising revenue from our advertising technology & services segment.

Cost of revenue.

Cost of revenue increased to $26.8 million for the three-month period ended September 30, 2024 from $21.4 million for the three-month period ended September 30, 2023.

This increase was primarily attributable to an increase of $2.0 million

in cost of revenue from our media segment, and an increase of $3.4 million in cost of revenue from our advertising technology & services segment.

Cost of revenue increased to $73.9 million for the nine-month period ended September 30, 2024 from $57.9 million for the nine-month period ended September 30, 2023.

This increase was primarily attributable to an increase of $4.2 million in cost of revenue from our media segment, and an increase of $11.8 million in cost of revenue from our advertising technology & services segment.

Direct Operating Expenses.

Direct operating expenses increased to $31.8 million for the three-month period ended June 30, 2024, from $28.9 million for the three-month period ended June 30, 2023.

This increase was primarily attributable to an increase of $1.4 million in direct operating expenses in our digital segment and $1.9 million in direct operating expenses in our television segment, partially offset by a decrease of $0.4 million in direct operating expenses in our audio segment.

Direct operating expenses increased to $63.6 million for the six-month period ended June 30, 2024, from $55.5 million for the six-month period ended June 30, 2023.

This increase was primarily attributable to an increase of $3.6 million in direct operating expenses in our digital segment, $4.1 million in direct operating expenses in our television segment, and $0.4 million in direct operating expenses in our audio segment.

Effective July 1, 2024, with the realignment of our operations and reassignment of certain responsibilities, certain costs that were previously included as corporate expenses, primarily salaries, are now included in direct operating expenses and in selling, general and administrative expenses.

Direct operating expenses increased to $35.6 million for the three-month period ended September 30, 2024, from $28.7 million for the three-month period ended September 30, 2023.

This increase was primarily attributable to an increase of $5.1 million in direct operating expenses in our media segment and an increase of $1.8 million in direct operating expenses in our advertising technology & services segment.

Direct operating expenses increased to $99.2 million for the nine-month period ended September 30, 2024, from $84.2 million for the nine-month period ended September 30, 2023.

This increase was primarily attributable to an increase of $10.4 million in direct operating expenses in our media segment and an increase of $4.6 million in direct operating expenses in our advertising technology & services segment.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased to $14.4 million for the three-month period ended June 30, 2024 from $12.6 million for the three-month period ended June 30, 2023.

This increase was primarily attributable to an increase of $1.5 million in selling, general and administrative expenses in our digital segment and $0.8 million in selling, general and administrative expenses in our television segment, partially offset by a decrease of $0.6 million in selling, general and administrative expenses in our audio segment.

Selling, general and administrative expenses increased to $28.7 million for the six-month period ended June 30, 2024 from $25.4 million for the six-month period ended June 30, 2023.

This increase was primarily attributable to an increase of $3.0 million in selling, general and administrative expenses in our digital segment and $1.5 million in selling, general and administrative expenses in our television segment, partially offset by a decrease of $1.2 million in selling, general and administrative expenses in our audio segment.

Selling, general and administrative expenses increased to $17.1 million for the three-month period ended September 30, 2024 from $11.9 million for the three-month period ended September 30, 2023.

This increase was primarily attributable to an increase of $2.2 million in selling, general and administrative expenses in our media segment and an increase of $3.0 million in selling, general and administrative expenses in our advertising technology & services segment.

Selling, general and administrative expenses increased to $45.8 million for the nine-month period ended September 30, 2024 from $37.4 million for the nine-month period ended September 30, 2023.

This increase was primarily attributable to an increase of $3.6 million in selling, general and administrative expenses in our media segment and an increase of $4.9 million in selling, general and administrative expenses in our advertising technology & services segment.

Corporate Expenses.

Corporate expenses decreased to $10.8 million for the three-month period ended June 30, 2024 from $12.0 million for the three-month period ended June 30, 2023.

This decrease was primarily due to a decrease of $1.9 million in professional services expense, and a decrease of $0.5 million in non-cash stock-based compensation, partially offset by an increase of $1.1 million in severance expense.

Corporate expenses increased to $23.1 million for the six-month period ended June 30, 2024 from $22.5 million for the six-month period ended June 30, 2023.

This increase was primarily due to an increase of $1.1 million in severance expense, an increase of $1.0 million in non-cash stock-based compensation, and an increase of $0.7 million in salaries, partially offset by a decrease of $2.2 million in professional services expense.

Depreciation and amortization increased to $4.4 million for the three-month period ended June 30, 2024 compared to $3.7 million for the three-month period ended June 30, 2023.

Of this increase, $0.3 million was attributable to the acquisition of BCNMonetize, which did not fully contribute to our financial results in the comparable prior period, and $0.4 million was attributable to depreciation expense related to our new corporate headquarters.

Depreciation and amortization increased to $9.2 million for the six-month period ended June 30, 2024 compared to $7.2 million for the six-month period ended June 30, 2023.

Corporate expenses decreased to $6.9 million for the three-month period ended September 30, 2024 from $13.3 million for the three-month period ended September 30, 2023.

This decrease was primarily due to a decrease of $2.0 million in salaries and bonus expense, a decrease of $2.0 million in non-cash stock-based compensation, a decrease of $0.4 million in professional services expense, and a decrease of $2.5 million in corporate expenses due to the realignment of our operations as noted above.

This decrease was partially offset by an increase of $0.6 million in audit fees.

Corporate expenses decreased to $30.0 million for the nine-month period ended September 30, 2024 from $35.8 million for the nine-month period ended September 30, 2023.

This decrease was primarily due to a decrease of $0.5 million in salaries and bonus expense, a decrease of $1.1 million in non-cash stock-based compensation, a decrease of $2.7 million in professional services expense, and a decrease of $2.5 million in corporate expenses due to the realignment of our operations as noted above.

This decrease was partially offset by an increase of $1.1 million in severance expense.

Depreciation and amortization decreased to $3.9 million for the three-month period ended September 30, 2024 compared to $4.7 million for the three-month period ended September 30, 2023, primarily due to fully amortized intangible assets.

Depreciation and amortization increased to $13.0 million for the nine-month period ended September 30, 2024 compared to $11.9 million for the nine-month period ended September 30, 2023.

Of this increase, $0.5 million was attributable to the acquisition of BCNMonetize, which did not fully contribute to our financial results in the comparable prior period, and $0.6 million was attributable to depreciation expense related to our new corporate headquarters.

Change in fair value of contingent consideration.

As a result of the change in fair value of the contingent consideration related to the acquisition of BCNMonetize, we recognized an expense of $0.2 million and a de minimis amount for the three-month periods ended June 30, 2024 and 2023, respectively.

As a result of the change in fair value of the contingent consideration, we recognized a de minimis amount related to the acquisition of BCNMonetize for the six-month period ended June 30, 2024, and we recognized an expense of $0.7 million related to a previous acquisition for the six-month period ended June 30, 2023.

As a result of the change in fair value of the contingent consideration, we recognized income of $0.7 million for the three-month period ended September 30, 2024, primarily related to an earnout of a past acquisition, and we recognized income of $0.1 million for the three-month period ended September 30, 2023, related to the acquisition of BCNMonetize.

As a result of the change in fair value of the contingent consideration, we recognized income of $0.6 million for the nine-month period ended September 30, 2024, primarily related to an earnout of a past acquisition, and we recognized an expense of $0.6 million for the nine-month period ended September 30, 2023, related to the acquisition of BCNMonetize.

Foreign currency (gain) loss.

We had a de minimis amount of foreign currency gain for the three-month period ended June 30, 2024 compared to a foreign currency loss of $0.8 million for the three-month period ended June 30, 2023.

Foreign currency gains and losses are primarily due to currency fluctuations that affect our digital segment operations located outside the United States.

We had a foreign currency loss of $0.2 million for the six-month period ended June 30, 2024 compared to a foreign currency loss of $1.0 million for the six-month period ended June 30, 2023.

Foreign currency gains and losses are primarily due to currency fluctuations that affect our digital segment operations located outside the United States.

We had a foreign currency gain of $0.1 million for the three-month period ended September 30, 2024 compared to a foreign currency loss of $0.3 million for the three-month period ended September 30, 2023.

Foreign currency gains and losses are primarily due to currency fluctuations that affect our operations located outside the United States.

We had a foreign currency loss of $0.1 million for the nine-month period ended September 30, 2024 compared to a foreign currency loss of $1.3 million for the nine-month period ended September 30, 2023.

Foreign currency gains and losses are primarily due to currency fluctuations that affect our operations located outside the United States.

Interest Expense, net.

Interest expense, net remained constant at $3.5 million for each of the three-month periods ended June 30, 2024 and 2023.

Interest expense, net increased to $7.4 million for the six-month period ended June 30, 2024 from $6.8 million for the six-month period ended June 30, 2023.

This increase was primarily due to a higher interest rate on our debt and a lower interest income.

Interest expense, net increased to $3.4 million for the three-month period ended September 30, 2024 from $3.3 million for three-month period ended September 30, 2023.

This increase was primarily due to lower interest income, partially offset by a lower interest rate on our debt and a lower principal balance due to prepayments totaling $20 million, which were made in the first half of 2024.

Interest expense, net increased to $10.8 million for the nine-month period ended September 30, 2024 from $10.1 million for the nine-month period ended September 30, 2023.

This increase was primarily due to a higher interest rate on our debt and lower interest income.

Gain (loss) on debt extinguishment.

We recorded a loss on debt extinguishment of $0.1 million for the three-month period ended June 30, 2024 due to a prepayment of $10.0 million of our 2023 Credit Facility.

We recorded a loss on debt extinguishment of $0.1 million for the six-month period ended June 30, 2024 due to prepayments totaling $20.0 million of our 2023 Credit Facility.

We recorded a loss on debt extinguishment of $1.6 million for the six-month period ended June 30, 2023 due to the refinancing of our previous credit facility with our 2023 Credit Facility.

We recorded a loss on debt extinguishment of $0.1 million for the nine-month period ended September 30, 2024 due to prepayments totaling $20.0 million under our 2023 Credit Facility.

We recorded a loss on debt extinguishment of $1.6 million for the nine-month period ended September 30, 2023 due to the refinancing of our previous credit facility with our 2023 Credit Facility.

Realized gain (loss) on marketable securities.

For each of the three-month periods ended June 30, 2024 and 2023 we recorded a de minimis amount of realized gain and loss, respectively, related to our available for sale securities.

For each of the six-month periods ended June 30, 2024 and 2023 we recorded $0.1 million of realized loss, related to our available for sale securities.

For each of the three-month periods ended September 30, 2024 and 2023 we recorded a de minimis amount of realized gain and loss, respectively, related to our available for sale securities.

For each of the nine-month periods ended September 30, 2024 and 2023 we recorded $0.1 million of realized loss, related to our available for sale securities.

Income Tax Expense or Benefit.

Income tax benefit for the three-month period ended June 30, 2024 was $10.7 million.

The effective tax rate for the three-month period ended June 30, 2024 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability, goodwill impairment, and non-taxable non-territorial income.

Income tax benefit for the three-month period ended June 30, 2023 was $1.6 million.

The effective tax rate for the three-month period ended June 30, 2023 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income.

Income tax benefit for the six-month period ended June 30, 2024 was $14.8 million.

The effective tax rate for the six-month period ended June 30, 2024 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability, goodwill impairment, and non-taxable non-territorial income.

Income tax benefit for the six-month period ended June 30, 2023 was $2.0 million.

The effective tax rate for the six-month period ended June 30, 2023 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income.

Income tax expense for the three-month period ended September 30, 2024 was $15.0 million.

The effective tax rate for the three-month period ended September 30, 2024 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income.

Income tax benefit for the three-month period ended September 30, 2023 was $1.0 million.

The effective tax rate for the three-month period ended September 30, 2023 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income.

Income tax expense for the nine-month period ended September 30, 2024 was $0.2 million.

The effective tax rate for the nine-month period ended September 30, 2024 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income.

Income tax benefit for the nine-month period ended September 30, 2023 was $3.1 million.

The effective tax rate for the nine-month period ended September 30, 2023 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial income.

Our management periodically evaluates the realizability of the deferred tax assets and, if it is determined that it is more likely than not that the deferred tax assets are, or are not, realizable, adjusts the valuation allowance accordingly.

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As a result of historical losses from our digital operations primarily in Spain, Uruguay, Mexico and Argentina, certain U.S.

Foreign Tax Credit carryovers and capital losses due to sale of subsidiaries management has determined that it is more likely than not that deferred tax assets of $31.3 million at June 30, 2024 will not be realized and therefore we have established a valuation allowance in that amount on those assets.

Foreign Tax Credit carryovers and capital losses due to sale of subsidiaries management has determined that it is more likely than not that deferred tax assets of $31.6 million at September 30, 2024 will not be realized and therefore we have established a valuation allowance in that amount on those assets.

The Organization for Economic Co-operation and Development (“OECD”) Pillar 2 guidelines address the increasing digitalization of the global economy, re-allocating taxing rights among countries.

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Segment Operations

Net revenue in our digital segment increased to $41.1 million for the three-month period ended June 30, 2024 from $30.2 million for the three-month period ended June 30, 2023.

The increase was primarily due to increases in advertising revenue from Smadex.

Net revenue in our digital segment increased to $79.3 million for the six-month period ended June 30, 2024 from $55.4 million for the six-month period ended June 30, 2023.

The increase was primarily due to increases in advertising revenue from Smadex.

Earlier this year, our recently appointed CEO, who is also our chief operating decision maker, led a thorough review of our operations, cost structure, digital strategy and organization of our business.

This review led to the decision to sell the enterprises comprising our EGP business - the largest business unit of what was then our digital segment .

Those sales were completed during the

second quarter of 2024.

Our EGP business generated 73%, and 70% of consolidated revenue for the year ended December 31, 2023 and the six-month period ended June 30, 2024, respectively.

The sale of our EGP business allows us to focus our operations on the products and services we sell instead of the type of advertising medium in which we sell them, which had been our historic operational approach.

We have realigned our management structure accordingly.

With the sale of our EGP business, we identify ourselves and operate as a media and advertising technology company, which is the basis that is now used for internal management reporting and how our CEO evaluates our business.

As a result, effective July 1, 2024, we have realigned our operating segments into two segments – media and advertising technology & services – consistent with our current operational and management structure.

Our media segment consists of sales of advertising through various media, including television, radio and digital.

We own and/or operate 49 primary television stations and 44 radio stations (37 FM and 7 AM), reaching and engaging U.S.

Our reportable segments are the same as our operating segments.

Prior periods have been recast to conform to this presentation.

Net revenue in our media segment increased to $59.8 million for the three-month period ended September 30, 2024 from $48.7 million for the three-month period ended September 30, 2023.

This increase was primarily due to an increase of $9.2 million in broadcast advertising revenue, driven by political advertising revenue, an increase of $2.7 million in digital advertising revenue, and an increase of $0.4 million in other revenue, partially offset by a decrease of $0.4 million in spectrum usage rights revenue and a decrease of $0.9 million in retransmission consent revenue.

Net revenue in our media segment increased to $154.8 million for the nine-month period ended September 30, 2024 from $144.6 million for the nine-month period ended September 30, 2023.

This increase was primarily due to an increase of $6.3 million in broadcast advertising revenue, driven by political advertising revenue, an increase of $6.3 million in digital advertising revenue, and an increase of $0.7 million in other revenue, partially offset by a decrease of $1.2 million in spectrum usage rights revenue and a decrease of $1.9 million in retransmission consent revenue.

In general, most of our media operations face declining audiences, which we believe is present across the broadcast industry, competitive factors with the other major Spanish-language broadcasters, and changing demographics and preferences of audiences, particularly younger audiences, in terms of the media they prefer to view, including streaming and social media.

We anticipate that these changes in viewer habits will persist at least for the foreseeable future and possibly permanently.

Additionally, we have previously noted a trend for advertising to move increasingly from traditional media, such as television and radio, to new media, such as digital media, and we expect this trend will also continue.

Cost of revenue .

We have previously noted a trend in our digital operations globally whereby revenue is shifting more to programmatic revenue.

Cost of revenue in our media segment increased to $4.9 million for the three-month period ended September 30, 2024 from $2.8 million for the three-month period ended September 30, 2023, primarily due to the increase in digital advertising revenue.

Cost of revenue in our media segment increased to $11.9 million for the nine-month period ended September 30, 2024 from $7.7 million for the nine-month period ended September 30, 2023, primarily due to the increase in digital advertising revenue.

Direct Operating Expenses.

Direct operating expenses in our media segment increased to $29.2 million for the three-month period ended September 30, 2024 from $24.1 million for the three-month period ended September 30, 2023, primarily due to an increase of $2.3 million in salaries, primarily associated with the expansion of our news programming in anticipation of this year's election cycle, an increase of $1.3 million in corporate expenses due to the realignment of our operations as noted above, and an increase of $1.2 million in other costs associated with the increase in revenue.

The remaining increase was due to other items which were individually immaterial.

Direct operating expenses in our media segment increased to $82.4 million for the nine-month period ended September 30, 2024 from $72.0 million for the nine-month period ended September 30, 2023, primarily due to an increase of $6.9 million in salaries, primarily associated with the expansion of our news programming in anticipation of this year's election cycle, an increase of $1.3 million in corporate expenses due to the realignment of our operations as noted above, an increase of $0.6 million in ratings services, and an increase of $1.2 million in other costs associated with the increase in revenue.

The remaining increase was due to other items which were individually immaterial.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses in our media segment increased to $10.9 million for the three-month period ended September 30, 2024 from $8.7 million for the three-month period ended September 30, 2023, primarily due to an increase of $0.7 million in salaries and other employee benefits, and an increase of $1.2 million in corporate expenses due to the realignment of our operations as noted above.

The remaining increase was due to other items which were individually immaterial.

Selling, general and administrative expenses in our media segment increased to $30.6 million for the nine-month period ended September 30, 2024 from $27.0 million for the nine-month period ended September 30, 2023, primarily due to an increase of $2.0 million in salaries and other employee benefits, and an increase of $1.2 million in corporate expenses due to the realignment of our operations as noted above.

The remaining increase was due to other items which were individually immaterial.

Advertising Technology & Services

Net revenue in our advertising technology & services segment increased to $37.4 million for the three-month period ended September 30, 2024 from $28.7 million for the three-month period ended September 30, 2023.

The increase was primarily due to increases in advertising revenue from Smadex and Adwake, which includes BCNMonetize.

Net revenue in our advertising technology & services segment increased to $103.2 million for the nine-month period ended September 30, 2024 from $74.2 million for the nine-month period ended September 30, 2023.

The increase was primarily due to increases in advertising revenue from Smadex and Adwake, which includes BCNMonetize.

BCNMonetize, which we acquired in May 2023, did not fully contribute to our financial results in the comparable prior period.

Cost of revenue .

Cost of revenue in our advertising technology & services segment increased to $21.9 million for the three-month period ended September 30, 2024 from $18.6 million for the three-month period ended September 30, 2023, primarily due to the increase in digital advertising revenue.

Cost of revenue in our advertising technology & services segment increased to $62.0 million for the nine-month period ended September 30, 2024 from $50.2 million for the nine-month period ended September 30, 2023, primarily due to the increase in digital advertising revenue.

We have previously noted a trend on a global basis in our advertising technology & services operations whereby revenue is shifting more to programmatic revenue.

As a result, advertisers are demanding more efficiency and lower cost from intermediaries like us.

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Direct operating expenses .

Direct operating expenses in our digital segment increased to $7.4 million for the three-month period ended June 30, 2024 from $6.1 million for the three-month period ended June 30, 2023, primarily due to an increase in cloud infrastructure expenses associated with the increase in digital advertising revenue.

Direct operating expenses in our digital segment increased to $14.4 million for the six-month period ended June 30, 2024 from $10.8 million for the six-month period ended June 30, 2023, primarily due to an increase of $2.6 million in cloud infrastructure expenses and an increase of $1.0 million in salaries associated with the increase in digital advertising revenue.

Selling, general and administrative expenses .

Selling, general and administrative expenses in our digital segment increased to $5.4 million for the three-month period ended June 30, 2024, from $3.8 million for the three-month period ended June 30, 2023, primarily due to an increase in salaries.

Selling, general and administrative expenses in our digital segment increased to $10.3 million for the six-month period ended June 30, 2024, from $7.4 million for the six-month period ended June 30, 2023, primarily due to an increase in salaries.

Net revenue in our television segment decreased to $28.6 million for the three-month period ended June 30, 2024 from $29.9 million for the three-month period ended June 30, 2023.

This decrease was primarily due to a decrease of $1.5 million in advertising revenue, a decrease of $0.5 million in spectrum usage rights revenue and a decrease of $0.5 million in retransmission consent revenue, partially offset by an increase of $1.2 million in political advertising revenue.

Net revenue in our television segment decreased to $57.1 million for the six-month period ended June 30, 2024 from $60.3 million for the six-month period ended June 30, 2023.

This decrease was primarily due to a decrease of $2.8 million in advertising revenue, a decrease of $0.8 million in spectrum usage rights revenue and a decrease of $1.0 million in retransmission consent revenue, partially offset by an increase of $1.4 million in political advertising revenue.

In general, our television segment faces declining audiences, which we believe is present across the industry, competitive factors with the other major Spanish-language broadcasters, and changing demographics and preferences of audiences, particularly younger audiences, in terms of the media they prefer to view, including streaming and social media.

We anticipate that these changes in viewer habits will persist at least for the foreseeable future and possibly permanently.

Additionally, we have previously noted a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media, and we expect this trend will also continue.

Direct Operating Expenses.

Direct operating expenses in our television segment increased to $17.0 million for the three-month period ended June 30, 2024 from $15.0 million for the three-month period ended June 30, 2023, primarily due to an increase in salaries, primarily associated with the expansion of our news programming in anticipation of this year's election cycle.

Direct operating expenses in our television segment increased to $33.9 million for the six-month period ended June 30, 2024 from $29.8 million for the six-month period ended June 30, 2023, primarily due to an increase of $3.6 million in salaries, primarily associated with the expansion of our news programming in anticipation of this year's election cycle, and $0.2 million in programming fees.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses in our television segment increased to $5.7 million for the three-month period ended June 30, 2024 from $4.8 million for the three-month period ended June 30, 2023, primarily due to an increase in salaries and other employee benefits.

Selling, general and administrative expenses in our television segment decreased to $11.7 million for the six-month period ended June 30, 2024 from $10.2 million for the three-month period ended June 30, 2023, primarily due to an increase in salaries and other employee benefits.

Net Revenue .

Net revenue in our audio segment decreased to $13.0 million for the three-month period ended June 30, 2024 from $13.5 million for the three-month period ended June 30, 2023.

This decrease was primarily due to a decrease of $0.8 million in advertising revenue, partially offset by an increase of $0.3 million in political advertising revenue.

Net revenue in our audio segment decreased to $24.4 million for the six-month period ended June 30, 2024 from $25.8 million for the six-month period ended June 30, 2023.

This decrease was primarily due to a decrease of $1.9 million in advertising revenue, partially offset by an increase of $0.5 million in political advertising revenue.

In general, our audio segment faces declining audiences, which we believe is present across the industry, competitive factors with other major Spanish-language broadcasters, and changing demographics and preferences of listening audiences, particularly younger audiences, including podcasts and other streaming services.

We anticipate that these changes in listener habits will persist at least for at least for the foreseeable future and possibly permanently.

Additionally, we have previously noted a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media, and we expect this trend will also continue.

While we believe that none of these new technologies and services can completely replace local broadcast radio stations due to the element of localism that broadcast radio offers, the challenges we face in our radio operations from new technologies and services will continue to require attention from management.

Direct Operating Expenses.

Direct operating expenses in our audio segment decreased to $7.4 million for the three-month period ended June 30, 2024 from $7.8 million for the three-month period ended June 30, 2023, primarily due to a decrease of $0.7 million in expenses associated with the decrease in advertising revenue, partially offset by an increase of $0.2 million in ratings services expense.

Direct operating expenses in our audio segment increased to $15.3 million for the six-month period ended June 30, 2024 from $14.9 million for the six-month period ended June 30, 2023, primarily due to an increase of $0.4 million in salaries expense and $0.4 million in ratings services expense, partially offset by a decrease of $0.5 million in expenses associated with the decrease in advertising revenue.

Direct operating expenses in our advertising technology & services segment increased to $6.4 million for the three-month period ended September 30, 2024 from $4.6 million for the three-month period ended September 30, 2023, primarily due to an increase of $0.8 million in cloud infrastructure expenses associated with the increase in revenue, an increase of $0.5 million in salaries, and severance expense of $0.4 million.

Direct operating expenses in our advertising technology & services segment increased to $16.8 million for the nine-month period ended September 30, 2024 from $12.2 million for the nine-month period ended September 30, 2023, primarily due to an increase of $2.9 million in cloud infrastructure expenses, an increase of $1.0 million in salaries, and severance expense of $0.4 million.

Selling, general and administrative expenses .

Selling, general and administrative expenses in our audio segment decreased to $3.3 million for the three-month period ended June 30, 2024 from $4.0 million for the three-month period ended June 30, 2023, primarily due to a decrease in rent expense.

Selling, general and administrative expenses in our audio segment decreased to $6.7 million for the six-month period ended June 30, 2024 from $7.9 million for the six-month period ended June 30, 2023, primarily due to a decrease in rent expense.

Selling, general and administrative expenses in our advertising technology & services segment increased to $6.3 million for the three-month period ended September 30, 2024, from $3.3 million for the three-month period ended September 30, 2023, primarily due to an increase of $1.9 million in salaries and severance expense of $0.9 million.

Selling, general and administrative expenses in our advertising technology & services segment increased to $15.2 million for the nine-month period ended September 30, 2024, from $10.3 million for the nine-month period ended September 30, 2023, primarily due to an increase of $4.0 million in salaries and severance expense of $0.9 million.

Liquidity and Capital Resources

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We had positive cash flow from operations of $75.2 million, $78.9 million and $65.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

We had positive cash flow from operations of $51.1 million for the six-month period ended June 30, 2024.

We had positive cash flow from operations of $61.9 million for the nine-month period ended September 30, 2024.

For at least the next twelve months, we expect to fund our working capital requirements, capital expenditures and payments of principal and interest on outstanding indebtedness, with cash on hand and cash flows from operations.

We currently believe that our cash position is capable of meeting our operating and capital expenses and debt service requirements for at least the next twelve months from the issuance of this report.

We believe that our position is strengthened by cash and cash equivalents on hand, in the amount of $85.1 million, and available for sale marketable securities in the additional amount of $3.2 million, as of June 30, 2024.

We believe that our position is strengthened by cash and cash equivalents on hand, in the amount of $90.3 million, and available for sale marketable securities in the additional amount of

$2.8 million, as of September 30, 2024.

Our liquidity is not materially affected by the amounts held in accounts outside the United States.

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As a result, we conducted a thorough review of our digital strategy, operations and cost structure, and during the second quarter of 2024 made the decision to dispose of the operations of EGP, our digital commercial partnerships business, which was completed during the second quarter of 2024.

We expect that the disposition of our EGP business, the largest business unit of our digital segment, will have a material effect on our results of operations in that total revenue from our digital segment is expected to be significantly lower than it was prior to the disposition of our EGP business.

Additionally, cash flow from operations will be materially and adversely affected in future periods, which could also adversely affect our liquidity.

The disposition of our EGP business, the largest business unit of what was then our digital segment, will have a material effect on our results of operations in that total revenue from our advertising technology & services operations is expected to be significantly lower than it was prior to the disposition of our EGP business.

As a result, cash flow from operations will be materially and adversely affected in future periods, which could also adversely affect our liquidity.

To the extent that our then-current liquidity is insufficient to fund our business activities or if we do not remain in compliance with our financial covenants under the 2023 Credit Agreement, whether as a direct or indirect result of the disposition of our EGP business or otherwise, we may be required to seek additional equity or debt financing in the future to satisfy capital requirements.

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A reconciliation of this non-GAAP measure to its most directly comparable GAAP financial measure follows (in thousands):

Six-Month Period

Ended June 30,

Nine-Month Period

Ended September 30,

Net income (loss) attributable to common stockholders

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Change in fair value of contingent consideration - discontinued operations

Impairment charge

Impairment charge - discontinued operations

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(1) Consolidated EBITDA is presented in accordance with the definition provided in our 2023 Credit Facility.

Net cash flow provided by operating activities was $51.1 million for the six-month period ended June 30, 2024, compared to $47.1 million for the three-month period ended June 30, 2023.

The increase in cash flow from operating activities was primarily due to net changes in our working capital of $29.9 million for the six-months periods ended June 30, 2024 compared to $25.7 million for the six-months periods ended June 30, 2023.

The net changes in working were primarily due to the timing of cash payments to publishers in the EGP business and timing of collections in the EGP business.

The increase in cash flow provided by operating activities was partially offset by a decrease in net income after adjusting for non-cash items.

Significant non-cash items in the six-month period ended June 30, 2024 included the loss on sale related to the EGP business of $45.0 million, impairment charges of $49.4 million, depreciation and amortization expense of $13.1 million, non-cash stock based compensation of $8.7 million, and income related to the change in fair value of contingent consideration of $12.5 million.

Significant non-cash items in the six-month period ended June 30, 2023 included depreciation and amortization expense of $13.0 million, non-cash stock based compensation of $10.0 million, and income related to the change in fair value of contingent consideration of $2.9 million.

Net cash flow provided by operating activities was $61.9 million for the nine-month period ended September 30, 2024, compared to $69.1 million for the nine-month period ended September 30, 2023.

The decrease in cash flow from operating activities was primarily due to a decrease in net income after adjusting for non-cash items.

Significant non-cash items in the nine-month period ended September 30, 2024 included the loss on sale related to the EGP business of $45.1 million, impairment charges of $49.4 million, depreciation and amortization expense of $17.0 million, non-cash stock based compensation of $12.4 million, income related to the change in fair value of contingent consideration of $13.2 million, deferred income taxes of $3.3 million, and income attributable to redeemable noncontrolling interest of $2.8 million.

Significant non-cash items in the nine-month period ended September 30, 2023 included depreciation and amortization expense of $20.3 million, non-cash stock based compensation of $17.1 million, and income related to the change in fair value of contingent consideration of $8.9 million.

We expect to have positive cash flow from operating activities for the 2024 year.

Net cash flow used in investing activities was $26.9 million for the six-month period ended June 30, 2024, compared to $12.1 million for the six-month period ended June 30, 2023.

The increase in cash flow used in investing activities was primarily due to net cash divested in the sale of the EGP business of $43.0 million for the six-month period ended June 30, 2024 compared to $6.9 million spent on the purchase of businesses for the six-month period ended June 30, 2023, and a reduction in proceeds from the sale of marketable securities to $10.0 million for the six-month period ended June 30, 2024 compared to $28.1 million for the six-month period ended June 30, 2023.

The increase in cash flow used in operating activities was partially offset by a reduction in capital expenditures to $4.7 million for the six-month period ended June 30, 2024 compared to $14.9 million for the six-month period ended June 30, 2023 as a result of the build out of our corporate headquarters in the prior year period, no spend on purchases of marketable securities for the six-month period ended June 30, 2024 compared to $10.2 million for the six-month period ended June 30, 2023, and proceeds from a loan receivable associated with the sale of the EGP business of $10.7 million for the six-month period ended June 30, 2024 compared to the issuance of a loan receivable of $8.1 million for the six-month period ended June 30, 2023.

The decrease in cash flow provided by operating activities was partially offset by increase in net changes in our working capital of $49.1 million for the nine-months periods ended September 30, 2024 compared to $35.5 million for the nine-months periods ended September 30, 2023.

The net changes in working were primarily due to the timing of cash payments to publishers in the EGP business and timing of collections in the EGP business.

Net cash flow used in investing activities was $28.1 million for the nine-month period ended September 30, 2024, compared to $13.9 million for the nine-month period ended September 30, 2023.

The increase in cash flow used in investing activities was primarily due to net cash divested in the sale of the EGP business of $43.0 million for the nine-month period ended September 30, 2024 compared to $6.9 million spent on the purchase of businesses for the nine-month period ended September 30, 2023, and a reduction in proceeds from the sale of marketable securities to $10.4 million for the nine-month period ended September 30, 2024 compared to $38.1 million for the nine-month period ended September 30, 2023.

The increase in cash flow used in investing activities was partially offset by a reduction in capital expenditures to $6.3 million for the nine-month period ended September 30, 2024 compared to $19.9 million for the nine-month period ended September 30, 2023 as a result of the build out of our corporate headquarters in the prior year period, no spend on purchases of marketable securities for the nine-month period ended September 30, 2024 compared to $11.4 million for the nine-month period ended September 30, 2023, and proceeds from a loan receivable associated with the sale of the EGP business of $10.7 million for the nine-month period ended September 30, 2024 compared to the issuance of a loan receivable of $13.6 million for the nine-month period ended September 30, 2023.

We anticipate that our capital expenditures will be approximately $7.0 million during the full year 2024.

The amount of our anticipated capital expenditures may change based on future changes in business plans and our financial condition and general economic conditions.

The amount of our anticipated capital expenditures may change based on

future changes in business plans and our financial condition and general economic conditions.

We expect to fund capital expenditures with cash on hand and net cash flow from operations.

Net cash flow used in financing activities was $44.7 million for the six-month period ended June 30, 2024, compared to $46.1 million for the six-month period ended June 30, 2023.

The decrease in cash flow used in financing activities was primarily due to payments of contingent consideration of $14.3 million for the six-month period ended June 30, 2024 compared to $31.7 million for the six-month period ended June 30, 2023, distributions to noncontrolling interest of $1.1 million for the six-month period ended June 30, 2024 compared to $3.4 million for the six-month period ended June 30, 2023, and payments of $1.8 million of debt issuance costs for the six-month period ended June 30, 2023 as a result of the refinancing of our credit facility.

The decrease in cash flow used in financing activities was partially offset by $20.0 million of debt prepayments during the six-month period ended June 30, 2024.

Net cash flow used in financing activities was $49.3 million for the nine-month period ended September 30, 2024, compared to $55.2 million for the nine-month period ended September 30, 2023.

The decrease in cash flow used in financing activities was primarily due to payments of contingent consideration of $14.3 million for the nine-month period ended September 30, 2024 compared to $35.1 million for the nine-month period ended September 30, 2023, distributions to noncontrolling interest of $1.1 million for the nine-month period ended September 30, 2024 compared to $3.4 million for the nine-month period ended September 30, 2023, and payments of $1.8 million of debt issuance costs for the nine-month period ended September 30, 2023 as a result of the refinancing of our credit facility.

The decrease in cash flow used in financing activities was partially offset by $20.0 million of debt prepayments during the nine-month period ended September 30, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis