Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We own and operate one of the largest groups of Spanish language television and radio stations in the United States. Our mission is to serve our Latino audience as a trusted provider of useful news, information and entertainment and to serve our advertisers by providing multi-channel marketing capabilities to engage our audience. We also own and operate a smaller group of television stations that broadcast English language programming and have operations that provide programmatic advertising technology and services.
We have organized our operations into two reportable segments. Our media segment includes our television, radio and digital marketing operations. Our advertising and technology services segment provides programmatic advertising and technology services through Smadex, our demand-side programmatic advertising purchasing platform, and Adwake, our performance-based media advertising agency.
In 2024, we discontinued and divested a significant portion of our operations, which consisted primarily of several acquisitions that had been completed prior to 2024, and which operations comprised the majority of our former digital segment.
Our net revenue for the three-months period ended June 30, 2025 was $100.7 million. Of this amount, revenue generated by our media segment accounted for approximately 45%, and revenue generated by our advertising technology & services segment accounted for approximately 55% of total revenue.
Highlights
During the second quarter of 2025, our revenue grew by double digits, driven primarily by revenue growth of 66% in our advertising technology & services segment, partially offset by a decrease in revenue in our media segment compared to the comparable period of 2024. In addition, during the second quarter of 2025 we:
• continued to reduce certain expenses, consisting primarily of a reduction in the base salary and cash bonus components of our three most senior executives' compensation; and
• continued to reduce our debt by making a voluntary prepayment of $10 million under our Credit Facility.
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 gives 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. Revenue generated from retransmission consent agreements represents payments from MVPDs for access to our television station signals so that they may rebroadcast our signals and charge their subscribers for this programming. The term of each of these current agreements expires on December 31, 2026 for all of our Univision and UniMás network affiliate stations. TelevisaUnivision also owns approximately 10% of our common stock on a fully-converted basis. For more information regarding these agreements and the stock that TelevisaUnivision owns, see Note 2 to Notes to Condensed Consolidated Financial Statements.
Critical Accounting Policies
For a description of our critical accounting policies, please refer to “Application of Critical Accounting Policies and Accounting Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 10-K.
Recent Accounting Pronouncements
For further information on recently issued accounting pronouncements, see Note 2 to Notes to Condensed Consolidated Financial Statements.
28
Three- and Six-Month Periods Ended June 30, 2025 and 2024
The following table sets forth selected data from our operating results for the three- and six-month periods ended June 30, 2025 and 2024 (in thousands):
Three-Month Period
Six-Month Period
Ended June 30,
%
Ended June 30,
%
2025
2024
Change
2025
2024
Change
Statements of Operations Data:
Net Revenue
$
100,735
$
82,654
22
%
$
192,586
$
160,830
20
%
Cost of revenue
38,010
24,424
56
%
71,482
47,082
52
%
Direct operating expenses
37,712
31,756
19
%
73,214
63,557
15
%
Selling, general and administrative expenses
16,453
14,363
15
%
31,959
28,697
11
%
Corporate expenses
6,375
10,811
(41
)%
14,163
23,059
(39
)%
Depreciation and amortization
3,027
4,428
(32
)%
6,504
9,167
(29
)%
Change in fair value of contingent consideration
-
240
(100
)%
-
20
(100
)%
Impairment charge
-
-
*
23,673
-
*
Loss on lease abandonment
-
-
*
25,191
-
*
Foreign currency (gain) loss
6
(24
)
*
18
241
(93
)%
Total expenses
101,583
85,998
18
%
246,204
171,823
43
%
Operating income (loss)
(848
)
(3,344
)
(75
)%
(53,618
)
(10,993
)
388
%
Interest expense
(4,037
)
(4,118
)
(2
)%
(7,700
)
(8,561
)
(10
)%
Interest income
619
577
7
%
1,224
1,155
6
%
Dividend income
1
-
*
1
10
(90
)%
Realized gain (loss) on marketable securities
3
4
(25
)%
4
(109
)
*
Loss on debt extinguishment
(38
)
(51
)
(25
)%
(38
)
(91
)
(58
)%
Income before income (loss) taxes
(4,300
)
(6,932
)
(38
)%
(60,127
)
(18,589
)
223
%
Income tax benefit (expense)
800
10,664
(92
)%
8,852
14,811
(40
)%
Net income (loss) from continuing operations
(3,500
)
3,732
*
(51,275
)
(3,778
)
1257
%
Net income (loss) from discontinued operations, net of tax
163
(35,412
)
*
(28
)
(76,792
)
(100
)%
Net income (loss) attributable to common stockholders
$
(3,337
)
$
(31,680
)
(89
)%
$
(51,303
)
$
(80,570
)
(36
)%
Other Data:
Capital expenditures
$
2,271
$
1,723
4,655
3,793
Net cash provided by (used in) operating activities
(7,416
)
51,071
Net cash provided by (used in) investing activities
(4,822
)
(26,937
)
Net cash provided by (used in) financing activities
(19,163
)
(44,726
)
Consolidated Operations
Net Revenue. Net revenue increased to $100.7 million for the three-month period ended June 30, 2025 from $82.7 million for the three-month period ended June 30, 2024. This increase was primarily due to an increase of $21.9 million in net revenue from our advertising technology & services segment, partially offset by a decrease of $3.8 million in net revenue from our media segment.
Net revenue increased to $192.6 million for the six-month period ended June 30, 2025 from $160.8 million for the six-month period ended June 30, 2024. This increase was primarily due to an increase of $40.4 million in net revenue from our advertising technology & services segment, partially offset by a decrease of $8.6 million in net revenue from our media segment.
Cost of revenue. Cost of revenue increased to $38.0 million for the three-month period ended June 30, 2025 from $24.4 million for the three-month period ended June 30, 2024. This increase was primarily due to an increase of $0.5 million in cost of revenue from our media segment, and an increase of $13.1 million in cost of revenue from our advertising technology & services segment.
Cost of revenue increased to $71.5 million for the six-month period ended June 30, 2025 from $47.1 million for the six-month period ended June 30, 2024. This increase was primarily due to an increase of $0.9 million in cost of revenue from our media segment, and an increase of $23.5 million in cost of revenue from our advertising technology & services 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.
29
Direct Operating Expenses. Direct operating expenses increased to $37.7 million for the three-month period ended June 30, 2025 from $31.8 million for the three-month period ended June 30, 2024. This increase was primarily due to an increase of $0.7 million in direct operating expenses in our media segment, and an increase of $5.3 million in direct operating expenses in our advertising technology & services segment.
Direct operating expenses increased to $73.2 million for the six-month period ended June 30, 2025 from $63.6 million for the six-month period ended June 30, 2024. This increase was primarily due to an increase of $0.6 million in direct operating expenses in our media segment, and an increase of $9.1 million in direct operating expenses in our advertising technology & services segment.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $16.5 million for the three-month period ended June 30, 2025, from $14.4 million for the three-month period ended June 30, 2024. This increase was primarily due to an increase of $1.2 million in selling, general and administrative expenses in our media segment, and an increase of $0.8 million in selling, general and administrative expenses in our advertising technology & services segment.
Selling, general and administrative expenses increased to $32.0 million for the six-month period ended June 30, 2025, from $28.7 million for the six-month period ended June 30, 2024. This increase was primarily due to an increase of $2.1 million in selling, general and administrative expenses in our media segment, and an increase of $1.2 million in selling, general and administrative expenses in our advertising technology & services segment.
Corporate Expenses. Corporate expenses decreased to $6.4 million for the three-month period ended June 30, 2025 from $10.8 million for the three-month period ended June 30, 2024. This decrease was primarily due to a decrease of $1.3 million in salaries, including a reduction in the base salary and cash bonus components of our three most senior executives' compensation, a decrease of $1.1 million in severance expenses that did not recur in the three-month period ended June 30, 2025, a decrease of $1.1 million in non-cash stock-based compensation, a decrease of $0.3 million in rent expense, and a decrease of $0.7 million in corporate expenses due to the realignment of our operations as noted above.
Corporate expenses decreased to $14.2 million for the six-month period ended June 30, 2025 from $23.1 million for the six-month period ended June 30, 2024. This decrease was primarily due to a decrease of $2.6 million in salaries, including a reduction in the base salary and cash bonus components of our three most senior executives' compensation, a decrease of $3.2 million in non-cash stock-based compensation, a decrease of $0.6 million in audit fees, a decrease of $0.3 million in rent expense, a decrease of $1.5 million in corporate expenses due to the realignment of our operations as noted above, and other items which were individually immateri al.
Depreciation and amortization. Depreciation and amortization decreased to $3.0 million for the three-month period ended June 30, 2025 compared to $4.4 million for the three-month period ended June 30, 2024, primarily due to fully depreciated assets and fully amortized intangible assets.
Depreciation and amortization decreased to $6.5 million for the six-month period ended June 30, 2025 compared to $9.2 million for the six-month period ended June 30, 2024, primarily due to fully depreciated assets and fully amortized intangible assets.
Change in fair value of contingent consideration. As a result of the change in fair value of the contingent consideration, primarily related to earnouts of certain past acquisitions, we recognized income of $0.2 million and a de minimis amount for the three- and six-month periods ended June 30, 2024, respectively.
Impairment. During the first quarter of 2025, we incurred an impairment charge of $23.7 million related to broadcast licenses and fixed assets of the two television stations in Mexico that are held for sale. See Note 2 to Notes to Condensed Consolidated Financial Statements.
Loss on lease abandonment. During the first quarter of 2025, we incurred a loss on lease abandonment of $25.2 million related to our previous Santa Monica lease. See Note 2 to Notes to Condensed Consolidated Financial Statements.
Foreign currency (gain) loss. We had a de minimis foreign currency loss for the three-month period ended June 30, 2025 compared to a de minimis foreign currency gain for the three-month period ended June 30, 2024. Foreign currency gains and losses are primarily due to currency fluctuations that affect our operations located outside the United States.
We had a de minimis foreign currency loss for the six-month period ended June 30, 2025 compared to a foreign currency loss of $0.2 million for the six-month period ended June 30, 2024. 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 decreased to $3.4 million for the three-month period ended June 30, 2025 from $3.5 million for three-month period ended June 30, 2024. This decrease was primarily due to lower interest rate on our debt and a lower principal balance due to prepayments on our Credit Facility totaling $20.0 million, which were made in the first half of 2024, and a prepayment of $10.0 million which was made in the second quarter of 2025.
Interest expense, net decreased to $6.5 million for the six-month period ended June 30, 2025 from $7.4 million for six-month period ended June 30, 2024. This decrease was primarily due to 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, and a prepayment of $10 million which was made in the second quarter of 2025.
30
Realized gain (loss) on marketable securities. For each of the three-month periods ended June 30, 2025 and 2024 we recorded a de minimis amount of realized gain, related to our available for sale securities.
For the six-month period ended June 30, 2025 we recorded a de minimis amount of realized gain, related to our available for sale securities. For the six-month period ended June 30, 2024 we recorded $0.1 million of realized loss, related to our available for sale securities.
Gain (loss) on debt extinguishment. We recorded a de minimis amount of a loss on debt extinguishment for the three-and six-month periods ended June 30, 2025 due to a prepayment of $10.0 million of our Credit Facility.
We recorded a loss on debt extinguishment of $0.1 million for the three- and six-month periods ended June 30, 2024 due to prepayments of $10.0 million and $20.0 million, respectively, of our Credit Facility.
Income Tax Expense or Benefit. Income tax benefit for the three-month period ended June 30, 2025 was $0.8 million. The effective tax rate for the three-month period ended June 30, 2025 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, share-based compensation from foreign employees, and transaction costs. 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, change 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, 2025 was $8.9 million. The effective tax rate for the six-month period ended June 30, 2025 was different from our statutory rate due to foreign and state taxes, changes in valuation allowances on deferred tax assets, non-deductible executive compensation, share-based compensation from foreign employees, and transaction costs. 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, change 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.
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. Valuation allowances are established and maintained for deferred tax assets on a “more likely than not” threshold. The process of evaluating the need to maintain a valuation allowance for deferred tax assets and the amount maintained in any such allowance is highly subjective and is based on many factors, several of which are subject to significant judgment calls.
Based on our analysis, we determined that it was more likely than not that our deferred tax assets would be realized for all jurisdictions with the exception of certain of our digital operations, certain U.S. Foreign Tax Credit carryovers and certain states deferred tax assets . As a result of historical losses from our digital operations primarily in Uruguay, Mexico and Argentina, certain U.S. Foreign Tax Credit carryovers, and capital loss, management has determined that it is more likely than not that deferred tax assets of $17.9 million at June 30, 2025 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. The OECD, many other member states and various other governments have adopted, or are in the process of adopting, Pillar 2 which calls for a global minimum tax of 15% to be effective for tax years beginning in 2024. The OECD guidelines published to date include transition and safe harbor rules around the implementation of the Pillar 2, global minimum tax. We are monitoring developments and evaluating the impacts these new rules will have on our tax rate, including eligibility to qualify for these safe harbor rules.
The One Big Beautiful Bill Act (the “OBBBA”) was signed into law on July 4, 2025. The OBBBA introduced certain changes to the U.S. tax code. Since the OBBBA was enacted after the end of the period ended June 30, 2025, our financial statements for the period ended June 30, 2025 do not reflect the impact of the tax law changes as a result of the OBBBA. We are evaluating the impact of the OBBBA on our business and financial condition. Our preliminary assessment of the OBBBA’s impact on our business and financial condition is that it is not expected to be material.
As of June 30, 2025 and December 31, 2024, we had unrecognized tax benefits of $25.3 million and $17.3 million. We will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.
Segment Operations
In our former EGP business, we acted as an intermediary between primarily global media companies and advertisers, which consisted of either the enterprise or its ad agency running the advertisement. Our customers were both these primarily global media companies and advertisers. On March 4, 2024, we received a communication from Meta 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. As a result of this communication from Meta, our CEO, who is also our CODM, 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. Following this decision, during the second quarter of 2024, we entered into a definitive agreement to sell
31
substantially all of our EGP business to IMS. The transaction was completed on June 28, 2024. The remaining parts of our EGP business, Jack of Digital and Adsmurai, were each sold back to their respective founders in separate transactions during the second quarter of 2024.
Prior to the sale of the EGP business, for financial reporting purposes we reported in three segments – digital, television and audio, based on the type of medium in which we sold advertising. The sale of the EGP business has allowed 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. As a result of the sale of our EGP business, 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, as well as the basis that is now used for internal management reporting and how our CEO evaluates our business. Our reportable segments are the same as our operating segments. Prior periods have been recast to conform to this presentation.
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 Latinos in the United States. 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. Latino markets. We own and operate one of the largest groups of primarily Spanish-language radio stations in the United States. We provide digital marketing operations in all of the U.S. markets where we have broadcast operations.
Our advertising technology & services segment consists of programmatic ad services through Smadex, our demand-side programmatic ad platform, and Adwake, our mobile growth solutions business.
Media
Net Revenue. Net revenue in our media segment decreased to $45.4 million for the three-month period ended June 30, 2025 from $49.2 million for the three-month period ended June 30, 2024. This decrease was primarily due to a decrease of $3.2 million in broadcast advertising revenue, and a decrease of $1.1 million in retransmission consent revenue, partially offset by an increase of $0.3 million in digital advertising revenue, and an increase of $0.2 million in spectrum usage rights revenue.
Net revenue in our media segment decreased to $86.4 million for the six-month period ended June 30, 2025 from $95.0 million for the six-month period ended June 30, 2024. This decrease was primarily due to a decrease of $7.0 million in broadcast advertising revenue, and a decrease of $2.2 million in retransmission consent revenue, partially offset by an increase of $0.4 million in digital advertising revenue and an increase of $0.2 million in spectrum usage rights revenue.
In general, many of our broadcast stations face declining audiences, which we believe is present across the traditional 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 consume, 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. While we believe that none of these new technologies and services can completely replace local broadcast stations due to the element of localism that broadcasting offers, the challenges we face in our broadcast operations from new technologies and services will continue to require attention from management. We must continue to remain vigilant to meet these changes, including the need to further adjust our business strategies accordingly, including through an emphasis on local news and increased digital offerings, and their integration with our broadcast offerings. No assurances can be given that such strategies will be successful.
Cost of revenue . Cost of revenue in our media segment increased to $4.7 million for the three-month period ended June 30, 2025 from $4.1 million for the three-month period ended June 30, 2024, primarily due to the increase in digital advertising revenue and a decrease in gross margins.
Cost of revenue in our media segment increased to $7.9 million for the six-month period ended June 30, 2025 from $7.0 million for the six-month period ended June 30, 2024, primarily due to the increase in digital advertising revenue and a decrease in gross margins.
Direct Operating Expenses. Direct operating expenses in our media segment increased to $26.8 million for the three-month period ended June 30, 2025 from $26.1 million for the three-month period ended June 30, 2024, primarily due to an increase of $0.3 million in salaries and other employee benefits, an increase of $0.1 million due to the realignment of our operations as noted above, and other items which were individually immateri al.
Direct operating expenses in our media segment increased to $53.4 million for the six-month period ended June 30, 2025 from $52.8 million for the six-month period ended June 30, 2024, primarily due to items which were individually immateri al.
Selling, General and Administrative Expenses. Selling, general and administrative expenses in our media segment increased to $11.0 million for the three-month period ended June 30, 2025 from $9.8 million for the three-month period ended June 30, 2024,
32
primarily due to an increase of $0.6 million in expenses due to the realignment of our operations as noted above and other items which were individually immateri al.
Selling, general and administrative expenses in our media segment increased to $21.8 million for the six-month period ended June 30, 2025 from $19.7 million for the six-month period ended June 30, 2024, primarily due to an increase of $1.0 million in salaries and other employee benefits, and an increase of $1.3 million in expenses due to the realignment of our operations as noted above. The increase was offset by a decrease of $0.5 million in bad debt expense and other items which were individually immateri al.
Advertising Technology & Services
Net Revenue. Net revenue in our advertising technology & services segment increased to $55.3 million for the three-month period ended June 30, 2025 from $33.4 million for the three-month period ended June 30, 2024. The increase was primarily due to increases in advertising revenue from Smadex and Adwake.
Net revenue in our advertising technology & services segment increased to $106.2 million for the six-month period ended June 30, 2025 from $65.8 million for the six-month period ended June 30, 2024. The increase was primarily due to increases in advertising revenue from Smadex and Adwake.
Cost of revenue . Cost of revenue in our advertising technology & services segment increased to $33.4 million for the three-month period ended June 30, 2025 from $20.3 million for the three-month period ended June 30, 2024, primarily due to costs associated with the increase in digital advertising revenue.
Cost of revenue in our advertising technology & services segment increased to $63.6 million for the six-month period ended June 30, 2025 from $40.1 million for the six-month period ended June 30, 2024, primarily due to costs associated with 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. In response to this trend, we have been offering our programmatic purchasing platform, Smadex, to advertisers. The digital advertising industry remains dynamic and is continuing to undergo rapid changes in technology, customer expectation and competition. We expect this trend to continue and possibly accelerate. We must continue to remain vigilant to meet these dynamic and rapid changes, including the need to further adjust our business strategies accordingly. No assurances can be given that such strategies will be successful.
Direct operating expenses . Direct operating expenses in our advertising technology & services segment increased to $10.9 million for the three-month period ended June 30, 2025 from $5.6 million for the three-month period ended June 30, 2024, primarily due to an increase of $1.9 million in cloud infrastructure expenses and an increase of $3.4 million in salaries and bonus expense.
Direct operating expenses in our advertising technology & services segment increased to $19.9 million for the six-month period ended June 30, 2025 from $10.8 million for the six-month period ended June 30, 2024, primarily due to an increase of $5.3 million in cloud infrastructure expenses and an increase of $3.8 million in salaries and bonus expense.
Selling, general and administrative expenses . Selling, general and administrative expenses in our advertising technology & services segment increased to $5.4 million for the three-month period ended June 30, 2025, from $4.6 million for the three-month period ended June 30, 2024, primarily due to an increase of $0.6 million in bad debt expense and $0.2 million of payroll tax expense.
Selling, general and administrative expenses in our advertising technology & services segment increased to $10.1 million for the six-month period ended June 30, 2025, from $9.0 million for the six-month period ended June 30, 2024, primarily due to salaries expense.
Liquidity and Capital Resources
While we have a history of operating losses in some periods and operating income in other periods, we also have a history of generating significant positive cash flows from our operations. We had net loss attributable to common stockholders of $148.9 million and $15.4 million for the years ended December 31, 2024 and 2023, respectively, and net income attributable to common stockholders of $18.1 million for the year ended December 31, 2022. We had positive cash flow from operations of $74.7 million, $75.2 million and $78.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. We had negative cash flow from operations of $7.4 million for the six-month period ended June 30, 2025. 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 $64.5 million, and available for sale marketable securities in the additional amount of $4.8 million, as of June 30, 2025. Our liquidity is not materially affected by the amounts held in accounts outside the United States.
33
On March 4, 2024, we received a communication from Meta that it intended to wind down its authorized sales partner, or ASP, program globally and end its relationship with all of its ASPs, including us, by July 1, 2024. 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.
The disposition of our EGP business, the largest business unit of what was then our digital segment, has had, and will continue to have, a material effect on our results of operations in that total revenue from our advertising technology & services operations, and consolidated revenue, has been, and is expected to remain, significantly lower than it was prior to the disposition of our EGP business. As a result, cash flow from operations will be materially 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 Amended 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. There is no guarantee that any such capital would be available to us on favorable terms, or at all. The failure to obtain any required capital could have a material adverse effect on our operations and financial condition.
Credit Facility
On March 17, 2023, we entered into the Credit Facility, pursuant to the Original 2023 Credit Agreement, by and among us, Bank of America, N.A., as Administrative Agent, and the Lenders. The Original 2023 Credit Agreement amended, restated and replaced in its entirety our previous credit agreement. The Original 2023 Credit Agreement was amended on July 15, 2025, effective as of June 30, 2025 with respect to certain financial covenants and certain other provisions of the Credit Facility.
In March 2024, we made a prepayment of $10.0 million, of which $8.75 million was applied to the upcoming quarterly principal payments in 2024 under the Term A Facility, and $1.25 million was applied to the Revolving Credit Facility.
In June 2024, we made an additional prepayment of $10.0 million, of which $4.9 million was a mandatory prepayment as a result of the EGP disposition. The prepayment was applied to the quarterly principal payments in 2025 under the Term A Facility.
In June 2025, we made an additional prepayment of $10.0 million, which was applied to the principal due at maturity under the Term A Facility.
For more information, see Notes 2 and 8 to Notes to Condensed Consolidated Financial Statements.
Cash Flow
Net cash flow used in operating activities was $7.4 million for the six-month period ended June 30, 2025, compared to net cash flow provided by operating activities of $51.1 million for the six-month period ended June 30, 2024. The decrease in cash flow from operating activities was primarily due to a decrease in net changes in our working capital of negative $10.5 million for the six-month period ended June 30, 2025 compared to positive $29.9 million for the six-months periods ended June 30, 2024. The net changes in working capital were primarily due to the timing of cash payments to publishers and collections from customers. The decrease in cash flow from operating activities was also due to an increase in net loss after adjusting for non-cash items. Significant non-cash items in the six-month period ended June 30, 2025 included impairment charges of $23.7 million, loss on lease abandonment charges of $25.2 million, depreciation and amortization expense of $6.5 million, deferred income taxes benefit of $6.9 million, and non-cash stock based compensation of $5.3 million. Significant non-cash items in the six-month period ended June 30, 2024 included the loss on sale related to our former 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. We expect to have positive cash flow from operating activities for the full year 2025.
Net cash flow used in investing activities was $4.8 million for the six-month period ended June 30, 2025, compared to net cash flow used in investing activities of $26.9 million for the six-month period ended June 30, 2024. The decrease in net cash flow used in investing activities was primarily due to cash divested of $43.0 million, partially offset by proceeds from loan receivable of $10.7 million for the six-month period ended June 30, 2024, related to the sale of our former EGP business, which did not recur in the six-month period ended June 30, 2025, and reduction in proceeds from the sale of marketable securities to $0.9 million for the six-month period ended June 30, 2025 compared to $10.0 million for the six-month period ended June 30, 2024.
We anticipate that our capital expenditures will be approximately $7.5 million during the full year 2025. 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 $19.2 million for the six-month period ended June 30, 2025, compared to $44.7 million for the six-month period ended June 30, 2024. The decrease in cash flow used in financing activities was primarily due to $10.0 million of payments on debt during the six-month period ended June 30, 2025 compared to $20.3 million of payments on debt during the six-month period ended June 30, 2024. In addition, during the six-month period ended June 30, 2024 we had payments of contingent consideration of $14.3 million and distributions to noncontrolling interest of $1.1 million, which did not recur in the six-month period ended June 30, 2025.
34
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.