What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-05 compared with 2025-11-04 · 106 added, 170 removed, 90 unchanged (75% of the section changed)

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

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.

In addition, we have operations that provide programmatic advertising technology and services.

We are a media and advertising technology company.

Our media business owns and operates 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 news, information, and entertainment.

We serve our advertisers by providing marketing capabilities across broadcast and digital media.

Our advertising technology & services (ATS) business empowers advertisers, primarily mobile app developers, to grow their businesses globally.

We provide programmatic advertising solutions through two brands.

Smadex is a demand-side platform, which uses proprietary AI to automate media buying.

Adwake is a performance-based digital marketing agency.

We have organized our operations into two reportable segments.

Our media segment includes our television, radio and digital marketing operations.

Our advertising 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 September 30, 2025 was $120.6 million.

Of this amount, revenue generated by our media segment accounted for approximately 37%, and revenue generated by our advertising technology & services segment accounted for approximately 63% of total revenue.

During the third quarter of 2025, our revenue grew by double digits, driven primarily by revenue growth of 104% 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 third quarter of 2025:

• we amended our 2023 Credit Agreement to provide more financial flexibility and accelerate debt reduction.

Our media segment includes its television, radio and digital marketing operations.

Our ATS segment provides programmatic advertising and technology services through Smadex and Adwake.

Our net revenue for the three-months period ended March 31, 2026 was $197.0 million.

Of this amount, revenue generated by our media segment accounted for approximately 22%, and revenue generated by our ATS segment accounted for approximately 78% of total revenue.

During the first quarter of 2026, our revenue grew by triple digits, driven primarily by revenue growth in our ATS segment, partially offset by a decrease in revenue in our media segment compared to the comparable period of 2025.

In addition, during the first quarter of 2026:

• ATS revenue increased by 204% during the first quarter of 2026 compared to the first quarter of 2025, primarily due to increases in monthly active advertisers and revenue per monthly active advertiser, which were driven by i nvestments we made in the AI capabilities of our platform and increased sales capacity.

• we acquired Playback Rewards, a reward and loyalty platform to complement our Adwake business.

• we continued to reduce our debt by making a scheduled amortization payment of $5 million under our Credit Facility.

• management began to implement an ongoing organization design plan (the "Plan") to support revenue growth and reduce expenses, primarily in our media operations.

As management continues to implement the Plan, and evaluate its early results, further changes may be made if management believes that is appropriate.

For more details see Note 2 to Notes to Condensed Consolidated Financial Statements.

Relationship with TelevisaUnivision

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

Three- and Nine-Month Periods Ended September 30, 2025 and 2024

The following table sets forth selected data from our operating results for the three- and nine-month periods ended September 30, 2025 and 2024 (in thousands):

Three-Month Periods Ended March 31, 2026 and 2025

The following table sets forth selected data from our operating results for the three-month periods ended March 31, 2026 and 2025 (in thousands):

Three-Month Period

Nine-Month Period

Ended September 30,

Ended March 31,

Statements of Operations Data:

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Depreciation and amortization

Change in fair value of contingent consideration

Impairment charge

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Realized gain (loss) on marketable securities

Loss on debt extinguishment

Income before income (loss) taxes

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Consolidated Operations

Net revenue increased to $120.6 million for the three-month period ended September 30, 2025 from $97.2 million for the three-month period ended September 30, 2024.

This increase was primarily due to an increase of $38.8 million in net revenue from our advertising technology & services segment, partially offset by a decrease of $15.3 million in net revenue from our media segment.

Net revenue increased to $313.2 million for the nine-month period ended September 30, 2025 from $258.0 million for the nine-month period ended September 30, 2024.

This increase was primarily due to an increase of $79.1 million in net revenue from our advertising technology & services segment, partially offset by a decrease of $23.9 million in net revenue from our media segment.

Net revenue increased to $197.0 million for the three-month period ended March 31, 2026 from $91.9 million for the three-month period ended March 31, 2025.

This increase was primarily due to an increase of $1.4 million in net revenue from our media segment, and an increase of $103.7 million in net revenue from our ATS segment.

Cost of revenue.

Cost of revenue increased to $51.0 million for the three-month period ended September 30, 2025 from $26.8 million for the three-month period ended September 30, 2024.

This increase was primarily due to an increase of $0.1 million in cost of

revenue from our media segment, and an increase of $24.1 million in cost of revenue from our advertising technology & services segment.

Cost of revenue increased to $122.5 million for the nine-month period ended September 30, 2025 from $73.9 million for the nine-month period ended September 30, 2024.

This increase was primarily due to an increase of $1.0 million in cost of revenue from our media segment, and an increase of $47.5 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.

Cost of revenue increased to $102.0 million for the three-month period ended March 31, 2026 from $33.5 million for the three-month period ended March 31, 2025.

This increase was primarily due to an increase of $2.1 million in cost of revenue from our media segment, and an increase of $66.4 million in cost of revenue from our ATS segment.

Direct Operating Expenses.

Direct operating expenses increased to $41.2 million for the three-month period ended September 30, 2025 from $35.6 million for the three-month period ended September 30, 2024.

This increase was primarily due to an increase of $6.2 million in direct operating expenses in our advertising technology & services segment, partially offset by a decrease of $0.6 million in direct operating expenses in our media segment.

Direct operating expenses increased to $114.5 million for the nine-month period ended September 30, 2025 from $99.2 million for the nine-month period ended September 30, 2024.

This increase was primarily due to an increase of $15.8 million in direct operating expenses in our advertising technology & services segment, partially offset by a decrease of $0.5 million in direct operating expenses in our media segment.

Direct operating expenses increased to $44.8 million for the three-month period ended March 31, 2026 from $35.5 million for the three-month period ended March 31, 2025.

This increase was primarily due to an increase of $1.6 million in direct operating expenses in our media segment, and an increase of $7.7 million in direct operating expenses in our ATS segment.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased to $19.0 million for the three-month period ended September 30, 2025, from $17.1 million for the three-month period ended September 30, 2024.

This increase was primarily due to an increase of $0.7 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.

Selling, general and administrative expenses increased to $51.0 million for the nine-month period ended September 30, 2025, from $45.8 million for the nine-month period ended September 30, 2024.

This increase was primarily due to an increase of $2.8 million in selling, general and administrative expenses in our media segment, and an increase of $2.4 million in selling, general and administrative expenses in our advertising technology & services segment.

Selling, general and administrative expenses increased to $18.1 million for the three-month period ended March 31, 2026, from $15.5 million for the three-month period ended March 31, 2025.

This increase was primarily due to an increase of $0.5 million in selling, general and administrative expenses in our media segment, and an increase of $2.1 million in selling, general and administrative expenses in our ATS segment.

Corporate Expenses.

Corporate expenses decreased to $6.3 million for the three-month period ended September 30, 2025 from $6.9 million for the three-month period ended September 30, 2024.

This decrease was primarily due to a decrease of $0.3 million in audit fees, and a decrease of $0.3 million in rent expense.

Corporate expenses decreased to $20.5 million for the nine-month period ended September 30, 2025 from $30.0 million for the nine-month period ended September 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 $3.0 million in non-cash stock-based compensation, a decrease of $1.1 million in severance expense, a decrease of $0.9 million in audit fees, a decrease of $0.6 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.

Corporate expenses decreased to $7.2 million for the three-month period ended March 31, 2026 from $7.8 million for the three-month period ended March 31, 2025.

This decrease was primarily due to a decrease of $1.4 million in audit fees and other professional services, a decrease of $0.2 million in rent expense, and a decrease of $0.2 million in cloud expense, partially offset by an increase of $0.8 million in bonus expense and an increase of $0.5 million in non-cash stock-based compensation.

Depreciation and amortization.

Depreciation and amortization decreased to $3.1 million for the three-month period ended September 30, 2025 compared to $3.9 million for the three-month period ended September 30, 2024, primarily due to fully depreciated assets and fully amortized intangible assets.

Depreciation and amortization decreased to $9.6 million for the nine-month period ended September 30, 2025 compared to $13.0 million for the nine-month period ended September 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 $0.7 million and $0.6 million for the three- and nine-month periods ended September 30, 2024, respectively.

We recorded an impairment charge of $5.7 million for the nine-month period ended September 30, 2025, primarily related to assets held for sale.

We recorded an impairment charge of $29.4 million for the nine-month period ended September 30, 2025, primarily related to assets held for sale.

See Note 2 to Notes to Condensed Consolidated Financial Statements.

Depreciation and amortization decreased to $3.0 million for the three-month period ended March 31, 2026 compared to $3.5 million for the three-month period ended March 31, 2025, primarily due to fully depreciated assets and fully amortized intangible assets.

For the three-month period ended March 31, 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.

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.

For the three-month period ended March 31, 2025, we incurred a loss on lease abandonment of $25.2 million related to our previous Santa Monica lease.

Restructuring costs.

During the third quarter of 2025 our management began to implement the Plan, intended to support revenue growth and reduce expenses, primarily in our media operations.

As a result, we recorded $3.2 million in restructuring costs for the three- and nine-month periods ended September 30, 2025.

See Note 2 to Notes to Condensed Consolidated Financial Statements.

For the three-month period ended March 31, 2026, we recorded $1.0 million in restructuring costs.

Foreign currency (gain) loss.

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 three-month period ended September 30, 2025 compared to a foreign currency gain of $0.1 million for the three-month period ended September 30, 2024.

We had a foreign currency loss of $0.1 million for each of the nine-month periods ended September 30, 2025 and 2024.

We had a foreign currency loss of $0.2 million for the three-month period ended March 31, 2026, and a de minimis foreign currency loss for the three-month period ended March 31, 2025.

Interest Expense, net.

Interest expense, net decreased to $3.2 million for the three-month period ended September 30, 2025 from $3.4 million for three-month period ended September 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 $9.7 million for the nine-month period ended September 30, 2025 from $10.8 million for nine-month period ended September 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.

Interest expense, net decreased to $3.0 million for the three-month period ended March 31, 2026 from $3.1 million for three-month period ended March 31, 2025.

This decrease was primarily due to lower interest rate on our debt and a lower principal balance.

Realized gain (loss) on marketable securities.

For each of the three-month periods ended September 30, 2025 and 2024 we recorded a de minimis amount of realized gain and loss, respectively, related to our available for sale securities.

For the nine-month period ended September 30, 2025 we recorded a de minimis amount of realized gain, related to our available for sale securities.

For the nine-month period ended September 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 loss on debt extinguishment of $0.2 million for each of the three-and nine-month periods ended September 30, 2025 due to a prepayment of $10.0 million of our Credit Facility made in the second quarter of 2025 and the amendment of our Credit Agreement in the third quarter of 2025.

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 of our Credit Facility.

For each of the three-month periods ended March 31, 2026 and 2025 we recorded a de minimis amount of realized gain related to our available for sale securities.

Income Tax Expense or Benefit.

Income tax benefit for the three-month period ended September 30, 2025 was $2.8 million.

The effective tax rate for the three-month period ended September 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, Global Intangible Low-Taxed Income, and transaction costs.

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, 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 nine-month period ended September 30, 2025 was $11.7 million.

The effective tax rate for the nine-month period ended September 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 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, 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 expense for the three-month period ended March 31, 2026 was $5.4 million, or 30% of our pre-tax income.

The effective tax rate for the three-month period ended March 31, 2026 was different from our statutory rate due to foreign and state taxes, non-deductible executive compensation, share-based compensation from foreign employees, and Net Controlled Foreign Corporation Tested Income.

Income tax benefit for the three-month period ended March 31, 2025 was $8.1 million, or 14% of our pre-tax loss.

The effective tax rate for the three-month period ended March 31, 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.

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 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 $18.2 million at September 30, 2025 will not be realized and therefore we have established a valuation allowance in that amount on those assets.

Foreign Tax Credit carryovers, and capital loss, management has determined that it is more likely than not that deferred tax assets of $18.4 million at March 31, 2026 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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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.

We recognized the tax effects of the OBBBA in the third quarter of 2025.

We determined that the OBBBA does

not have a material impact on our business and financial condition, and therefore, no material discrete tax adjustment was recorded in the third quarter of 2025.

In addition, the impact of the OBBBA did not result in a material change to the Company’s annual effective tax rate for 2025.

As of September 30, 2025 and December 31, 2024, we had unrecognized tax benefits of $25.3 million and $17.3 million.

On January 5, 2026, the OECD released the “Side-by-Side” (SbS) Safe Harbor guidance, effective January 1, 2026.

This guidance provides a framework for coordinating the U.S.

tax system with Pillar 2 rules, potentially limiting top-up tax liabilities for qualifying periods.

The Company included the tax impact of Pillar 2 in the income tax for the three-month period ended March 31, 2026, based on the rules effective for that period, and continues to evaluate the impact of the Side-by-Side guidance on future periods.

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act, which made certain changes to the current tax law and extended certain other tax provisions.

We have analyzed the impact of these changes, noting that the main tax law changes that impacted us in 2026 are related to depreciation and Section 163(j) interest expense limitation.

We will not take bonus depreciation in 2026 since given our tax position, the impact on this is nil.

Regarding the Section 163(j) limitation, we believe that this will result in less taxable income to us.

As of March 31, 2026 and December 31, 2025, we had unrecognized tax benefits of $31.8 million and $31.7 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 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.

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

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

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 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.

Net revenue in our media segment decreased to $44.5 million for the three-month period ended September 30, 2025 from $59.8 million for the three-month period ended September 30, 2024.

This decrease was primarily due to a decrease of $14.5 million in broadcast advertising revenue, a decrease of $0.6 million in retransmission consent revenue, a decrease of $0.4 million in spectrum usage rights revenue, and a decrease of $0.3 million in other revenue, partially offset by an increase of $0.6 million in digital advertising revenue.

Net revenue in our media segment decreased to $130.9 million for the nine-month period ended September 30, 2025 from $154.8 million for the nine-month period ended September 30, 2024.

This decrease was primarily due to a decrease of $21.5 million in broadcast advertising revenue, a decrease of $2.8 million in retransmission consent revenue, a decrease of $0.2 million in spectrum usage rights revenue, and a decrease of $0.3 million in other revenue, partially offset by an increase of $1.0 million in digital advertising 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.

We earn retransmission consent revenue on a paid subscriber basis.

We are aware of a dispute between Alphabet and TelevisaUnivision regarding the decision by Alphabet to cease carrying Univision- and UniMás-affiliated television stations as part of the primary “bundle” on YouTube TV, which is owned by Alphabet.

We derive retransmission consent revenue from this carriage, which could be adversely affected if Alphabet were not to restore TelevisaUnivision to the YouTube TV primary “bundle”.

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

Our assets include 47 television stations and 44 radio stations (37 FM and 7 AM).

These stations are concentrated in 13 of the 20 highest-density Latino markets in the United States.

We are the largest affiliate group of the Spanish-language Univision and UniMás networks, which are owned by TelevisaUnivision.

We also provide digital marketing services for businesses targeting Latino consumers.

Our ATS segment provides global performance marketing solutions primarily to mobile app developers.

We operate this segment through two distinct business units:

Smadex, our programmatic advertising platform;

and Adwake, our performance-based marketing agency.

Net revenue in our media segment increased to $42.4 million for the three-month period ended March 31, 2026 from $41.0 million for the three-month period ended March 31, 2025.

This increase was primarily due to an increase of $3.3 million in digital advertising revenue, an increase of $0.3 million in retransmission consent revenue, and an increase of $0.2 million in other revenue, partially offset by a decrease of $1.3 million in broadcast advertising revenue and a decrease of $1.0 million in spectrum usage rights revenue.

In general, the traditional broadcast industry is continuing to experience dramatic transformation.

Most of our broadcast stations face declining audiences, which we believe is the situation 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 consume, including streaming and social media.

In particular, the radio broadcast industry remains in a general state of decline as a result of numerous factors, including technological advancements in how audiences consume audio content, such as podcasts overtaking talk radio, leading to fragmentation in radio audiences;

changing consumer preferences especially among younger audiences who tend to prefer interactive and on-demand experiences over the linear broadcast model;

economic pressures in the form of certain high fixed operational costs;

and competition with other forms of media, especially digital, for advertising revenue.

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

While we believe that none of these new technologies and services can completely replace local broadcast stations due to the element of localism that traditional broadcasting offers, the challenges we face in our broadcast operations from new technologies and services will persist and continue to present significant challenges, requiring attention, adaptability and action from management.

We must continue to address these changes, including the need to further adjust our business strategies accordingly.

Among the steps we have taken so far has been an emphasis on increasing local news and digital offerings, and their integration with our broadcast offerings.

No assurances can be given that these or other strategies will be successful in meeting the changes and challenges we face.

Cost of revenue .

Cost of revenue in our media segment increased to $5.0 million for the three-month period ended September 30, 2025 from $4.9 million for the three-month period ended September 30, 2024, primarily due to the increase in digital advertising revenue.

Cost of revenue in our media segment increased to $12.9 million for the nine-month period ended September 30, 2025 from $11.9 million for the nine-month period ended September 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 $5.4 million for the three-month period ended March 31, 2026 from $3.3 million for the three-month period ended March 31, 2025, primarily due to the increase in costs associated with the increase in digital advertising revenue and a decrease in gross margins.

Direct Operating Expenses.

Direct operating expenses in our media segment decreased to $28.6 million for the three-month period ended September 30, 2025 from $29.2 million for the three-month period ended September 30, 2024, primarily due to a decrease of $1.4 million in expenses associated with the decrease in revenue and a decrease of $1.0 million in non-cash stock-based compensation, partially offset by an increase of $1.6 million in music license fees and other items which were individually immateri al.

Direct operating expenses in our media segment decreased to $81.9 million for the nine-month period ended September 30, 2025 from $82.4 million for the nine-month period ended September 30, 2024, primarily due to a decrease of $1.5 million in expenses associated with the decrease in revenue and a decrease of $1.1 million in non-cash stock-based compensation, partially offset by an increase of $1.0 million in salaries and other employee benefits, an increase of $0.2 million in expenses due to the realignment of our operations as noted above, and an increase of $0.8 million in other items which were individually immateri al.

Direct operating expenses in our media segment increased to $28.1 million for the three-month period ended March 31, 2026 from $26.6 million for the three-month period ended March 31, 2025, primarily due to an increase of $1.0 million in expenses associated with the increase in revenue, an increase of $0.1 million in salaries and other employee benefits, and an increase of $0.7 million in other items which were individually immaterial, partially offset by a decrease of $0.3 million in non-cash stock-based compensation.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses in our media segment increased to $11.6 million for the three-month period ended September 30, 2025 from $10.9 million for the three-month period ended September 30, 2024, primarily due to an increase of $0.7 million in salaries and other employee benefits.

Selling, general and administrative expenses in our media segment increased to $33.4 million for the nine-month period ended September 30, 2025 from $30.6 million for the nine-month period ended September 30, 2024, primarily due to an increase of $1.7 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 $0.3 million in bad debt expense .

Selling, general and administrative expenses in our media segment increased to $11.4 million for the three-month period ended March 31, 2026 from $10.8 million for the three-month period ended March 31, 2025, primarily due to an increase of $0.3 million in salaries and other employee benefits, an increase of $0.5 million in bad debt expense, and an increase of $0.2 million in other items which were individually immaterial, partially offset by a decrease in rent expense of $0.4 million.

Advertising Technology & Services

Net revenue in our advertising technology & services segment increased to $76.1 million for the three-month period ended September 30, 2025 from $37.4 million for the three-month period ended September 30, 2024.

The increase was primarily due to an increase in advertising revenue from Smadex, including a large new customer that was acquired recently;

i nvestments in the AI capabilities of our platform;

and increased sales capacity, which enabled increased monthly active advertisers and revenue per monthly active advertiser .

Net revenue in our advertising technology & services segment increased to $182.3 million for the nine-month period ended September 30, 2025 from $103.2 million for the nine-month period ended September 30, 2024.

The increase was primarily due to increase in advertising revenue from Smadex, including a large new customer that was acquired recently;

i nvestments in the AI capabilities of our platform;

and increased sales capacity, which enabled increased monthly active advertisers and revenue per monthly active advertiser, and increase in advertising revenue from Adwake.

Net revenue in our ATS segment increased to $154.6 million for the three-month period ended March 31, 2026 from $50.9 million for the three-month period ended March 31, 2025.

The increase was primarily due to an increase in advertising revenue from Smadex, including a large customer in Asia that we acquired in the second half of 2025, and an increase in advertising revenue from Adwake.

Cost of revenue .

Cost of revenue in our advertising technology & services segment increased to $46.0 million for the three-month period ended September 30, 2025 from $21.9 million for the three-month period ended September 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 $109.5 million for the nine-month period ended September 30, 2025 from $62.0 million for the nine-month period ended September 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.

Cost of revenue in our ATS segment increased to $96.6 million for the three-month period ended March 31, 2026 from $30.2 million for the three-month period ended March 31, 2025, primarily due to costs associated with the increase in digital advertising revenue.

We have previously noted a trend on a global basis in our ATS operations whereby advertisers are demanding more efficiency and lower cost from intermediaries like us.

In response to this general trend, we have been offering our programmatic purchasing platform, Smadex, to advertisers, which lowers cost to our advertising customers.

Among other things, this has led to lower margins in the products and services we sell, which we anticipate will persist for at least the foreseeable future and possibly permanently.

The digital advertising industry as a whole remains dynamic and continues 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.

We must continue to address these dynamic and rapid changes, including the need to further adjust our business strategies, make appropriate investments in our technology and offer new products and services, as appropriate.

No assurances can be given that the strategies we have pursued and investments we have made, and those we may pursue or make in the future will be successful.

Direct operating expenses .

Direct operating expenses in our advertising technology & services segment increased to $12.7 million for the three-month period ended September 30, 2025 from $6.4 million for the three-month period ended September 30, 2024,

primarily due to an increase of $6.8 million in cloud infrastructure expenses, partially offset by a decrease of $0.6 million in salaries and bonus expense.

Direct operating expenses in our advertising technology & services segment increased to $32.5 million for the nine-month period ended September 30, 2025 from $16.8 million for the nine-month period ended September 30, 2024, primarily due to an increase of $12.0 million in cloud infrastructure expenses and an increase of $3.7 million in salaries and bonus expense.

Direct operating expenses in our ATS segment increased to $16.7 million for the three-month period ended March 31, 2026 from $9.0 million for the three-month period ended March 31, 2025, primarily due to an increase of $4.5

million in cloud infrastructure expenses, an increase of $2.9 million in salaries and bonus expense, and an increase of $0.3 million in other items which were individually immaterial.

Selling, general and administrative expenses .

Selling, general and administrative expenses in our advertising technology & services segment increased to $7.4 million for the three-month period ended September 30, 2025, from $6.3 million for the three-month period ended September 30, 2024, primarily due to an increase of $0.9 million in salaries and an increase of $0.3 million in bad debt expense.

Selling, general and administrative expenses in our advertising technology & services segment increased to $17.6 million for the nine-month period ended September 30, 2025, from $15.2 million for the nine-month period ended September 30, 2024, primarily due to salaries expense.

Selling, general and administrative expenses in our ATS segment increased to $6.8 million for the three-month period ended March 31, 2026, from $4.7 million for the three-month period ended March 31, 2025, primarily due to an increase of $1.8 million in salaries and an increase of $0.3 million in on-premise software 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 net loss attributable to common stockholders of $79.2 million, $148.9 million and $15.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.

We had positive cash flow from operations of $10.6 million, $74.7 million and $75.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

We had positive cash flow from operations of $0.9 million for the nine-month period ended September 30, 2025.

We had positive cash flow from operations of $21.8 million for the three-month period ended March 31, 2026.

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 $61.8 million, and available for sale marketable securities in the additional amount of $4.7 million, as of September 30, 2025.

We currently believe that our cash position is sufficient to meet 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 $68.2 million, and available for sale marketable securities in the additional amount of $3.0 million, as of March 31, 2026.

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

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.

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 Credit Agreement, 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.

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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.

On March 17, 2023, we entered into our 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 under the Credit Facility.

In June 2024, we made an additional prepayment of $10.0 million under the Credit Facility, of which $4.9 million was a mandatory prepayment as a result of the EGP disposition.

In June 2025, we made an additional prepayment of $10.0 million under the Credit Facility.

On July 15, 2025, our lenders and we entered into the Amended 2023 Credit Agreement.

The Original 2023 Credit Agreement was amended as of July 15, 2025, effective as of June 30, 2025, with respect to certain financial covenants and certain other provisions of our Credit Facility and was further amended as of March 18, 2026, with respect to a certain administrative clarification of the calculation of financial covenants.

For more information, see Note 2 to Notes to Condensed Consolidated Financial Statements.

Net cash flow provided by operating activities was $0.9 million for the nine-month period ended September 30, 2025, compared to net cash flow provided by operating activities of $61.9 million for the nine-month period ended September 30, 2024.

The decrease in cash flow from operating activities was primarily due to a decrease in net changes in our working capital of positive $0.6 million for the nine-month period ended September 30, 2025 compared to positive $49.1 million for the nine-month period ended September 30, 2024.

Net cash flow provided by operating activities was $21.8 million for the three-month period ended March 31, 2026, compared to net cash flow used in operating activities of $15.2 million for the three-month period ended March 31, 2025.

The change in cash flow from operating activities was primarily due to an increase in net changes in our working capital of positive $2.4 million for the three-month period ended March 31, 2026 compared to negative $20.9 million for the three-month period ended March 31, 2025.

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 a decrease in net income after adjusting for non-cash items.

Significant non-cash items in the nine-month period ended September 30, 2025 included impairment charges of $29.4 million, loss on lease abandonment charges of $25.2 million, depreciation and amortization expense of $9.6 million, deferred income tax benefit of $12.3 million, and non-cash stock based compensation of $8.1 million.

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 tax benefit of $3.3 million, and income attributable to redeemable noncontrolling interest of $2.8 million.

The increase in cash flow from operating activities was also due to an increase in net income after adjusting for non-cash items.

Significant non-cash items in the three-month period ended March 31, 2026 included depreciation and amortization expense of $3.0 million, and non-cash stock based compensation of $3.3 million.

Significant non-cash items in the three-month period ended March 31, 2025 included impairment charges of $23.7 million, loss on lease abandonment charges of $25.2 million, depreciation and amortization

expense of $3.5 million, deferred income taxes of $1.5 million, and non-cash stock based compensation of $2.6 million.

We expect to have positive cash flow from operating activities for the full year 2026.

Net cash flow used in investing activities was $5.9 million for the nine-month period ended September 30, 2025, compared to net cash flow used in investing activities of $28.1 million for the nine-month period ended September 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 nine-month period ended September 30, 2024, related to the sale of our former EGP business, which did not recur in the nine-month period ended September 30, 2025.

Additionally, the decrease in net cash flow used in investing activities was partially offset by purchase of marketable securities of $1.5 million for the nine-month period ended September 30, 2025, and reduction in proceeds from the sale of marketable securities to $1.6 million for the nine-month period ended September 30, 2025 compared to $10.4 million for the nine-month period ended September 30, 2024.

Net cash flow used in investing activities was $2.9 million for the three-month period ended March 31, 2026, compared to net cash flow used in investing activities of $2.5 million for the three-month period ended March 31, 2025.

The change in net cash flow used in investing activities was primarily due to purchases of property and equipment of $3.6 million for the three-month period ended March 31, 2026 compared to $2.6 million for the three-month period ended March 31, 2025, partially offset by proceeds from the sale of marketable securities of $0.8 million for the three-month period ended March 31, 2026 compared to $0.4 million for the three-month period ended March 31, 2025.

We anticipate that our capital expenditures will be approximately $9.0 million during the full year 2026.

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

Net cash flow used in financing activities was $29.1 million for the nine-month period ended September 30, 2025, compared to $49.3 million for the nine-month period ended September 30, 2024.

The decrease in cash flow used in financing activities was primarily due to $15.0 million of payments on debt, and $0.3 million of payments of debt issuance costs during the nine-month period ended September 30, 2025 compared to $20.3 million of payments on debt during the nine-month period ended September 30, 2024.

In addition, during the nine-month period ended September 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 nine-month period ended September 30, 2025.

Net cash flow used in financing activities was $10.2 million for the three-month period ended March 31, 2026, compared to $4.6 million for the three-month period ended March 31, 2025.

The change in cash flow used in financing activities was primarily due to $5.0 million of payments on debt and $0.5 million of tax payments related to shares withheld for share-based compensation during the three-month period ended March 31, 2026, both of which did not occur in the three-month period ended March 31, 2025.

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