Lee Enterprises, Incorporated (NASDAQ: LEE), a prominent digital-first subscription platform that serves 72 markets across the United States, has announced its preliminary financial results for the first quarter of fiscal 2025, concluding on December 29, 2024. The company continues to demonstrate resilience and adaptability, focusing on digital transformation even amid challenging market conditions.

1. Strong Digital Revenue Growth

In a statement, Kevin Mowbray, President and Chief Executive Officer of Lee Enterprises, emphasized the company's commitment to digital transformation, revealing that total digital revenue exceeded $300 million over the last twelve months. Notably, the revenue generated from the Amplified Digital Agency® surpassed $100 million. Mowbray expressed optimism about the future, stating, "Our first quarter results demonstrate the continued progression of our digital transformation."

The partnership with Amazon Web Services (AWS) was highlighted as a pivotal move to optimize content delivery and enhance customer engagement. Mowbray noted, "This partnership highlights our commitment to embracing advanced technologies to meet the evolving needs of our audience and advertisers while achieving long-term growth and scalability."

2. Financial Highlights of Q1

Revenue Breakdown

Total Operating Revenue: $145 million

Total Digital Revenue: $73 million, a 5% increase year-over-year, now representing 51% of total operating revenue.

Digital-Only Subscriber Revenue: $22 million, up 14% compared to the previous year.

Digital Advertising and Marketing Services Revenue: $47 million, accounting for 70% of total advertising revenue.

Operating Expenses: Totaled $149 million, while cash costs remained stable at $139 million, reflecting a 1% decrease from the prior year.

Net Loss: Recorded at $16 million, with Adjusted EBITDA reported at $8 million.

Cost Management Initiatives

Mowbray announced that the company has identified approximately $40 million in annualized cost reductions, which are expected to be fully implemented by the end of the second quarter. This strategic focus on cost management is anticipated to complement strong digital revenue growth, keeping the company on track to meet its Adjusted EBITDA guidance for the fiscal year.

3. Debt and Cash Flow Management

Lee Enterprises continues to manage its debt effectively, with a total outstanding debt of $446 million under a credit agreement with BH Finance. The financing terms are favorable, featuring a 25-year maturity and a fixed annual interest rate of 9.0%, with no fixed principal payments required. As of the end of the quarter, the company reported $6 million in cash on its balance sheet, resulting in net debt of $440 million.

The company also anticipates capital expenditures of up to $12 million for fiscal year 2025, while projecting cash payments for income taxes to range between $4 million and $10 million.

4. Conference Call and Future Outlook

Lee Enterprises will hold an earnings conference call at 9 a.m. Central Time following the release of these results, providing an opportunity for analysts and investors to engage with company leadership. Mowbray indicated that the company expects digital revenue growth to accelerate, projecting full-year growth between 7% and 10%.

As Lee Enterprises navigates the complexities of the media landscape, its strategic investments in digital capabilities and partnerships position it to capitalize on emerging opportunities and deliver value to shareholders. The company remains committed to providing high-quality, trusted local news while adapting to the ever-evolving demands of its audience and advertisers.

Original press release