Dallasnews Corporation ((DALN)) has held its Q1 earnings call. Read on for the main highlights of the call.
In a recent earnings call, DallasNews Corporation presented a mixed bag of results, reflecting both achievements and challenges. While the company celebrated a significant improvement in net income and the successful funding of its pension plan, it also faced hurdles with declining overall revenue, particularly in print advertising and circulation. The growth in digital subscriptions and the profitability of the Medium Giant agency provided some positive momentum, but the overall performance was a blend of highs and lows.
Significant Net Income Improvement
DallasNews Corporation reported a remarkable turnaround in its financial performance, with a net income of $28.3 million compared to a net loss of $1.4 million in the first quarter of the previous year. This improvement was largely driven by a net gain of $36.2 million from the sale of the Plano printing facility, marking a significant milestone for the company.
Pension Plan Fully Funded
The company took a major step in securing its financial future by fully funding its pension obligations. Utilizing approximately $10 million of company funds along with $132 million in plan assets, DallasNews purchased an annuity contract, ensuring the stability of its pension plan.
Digital Subscription Growth
Digital subscriptions continued to be a bright spot for DallasNews, with a 4.2% year-over-year growth. The implementation of a new dynamic paywall led to a notable 16% increase in subscription starts, underscoring the company’s strategic focus on digital expansion.
Medium Giant Agency Profitability
The Medium Giant agency contributed positively to the company’s financials, achieving an operating income increase of $600,000. This was attributed to a focus on larger, more profitable accounts and disciplined expense management, highlighting the agency’s role in the company’s profitability.
Overall Revenue Decline
Despite the positive developments, DallasNews faced a decline in total revenue, which decreased by $2 million compared to the previous year. Advertising and marketing services revenue fell by 7.2%, while circulation revenue dropped by 5.2%, reflecting the challenges in the traditional print sector.
Print Advertising Revenue Drop
Print advertising revenue saw a significant decline of $700,000, or 12.2%, contributing to the overall decrease in advertising and marketing services revenue. This drop underscores the ongoing challenges faced by the print advertising industry.
Print Circulation Revenue Decrease
Print circulation revenue decreased by $700,000, or 6%, significantly impacting the overall circulation revenue. This decline highlights the challenges in maintaining print circulation in a digital age.
Adjusted Operating Loss
On a non-GAAP basis, DallasNews reported an adjusted operating loss of $1.2 million, an increase from a loss of $800,000 in the previous year. This reflects the financial pressures the company is under, despite some areas of growth.
Forward-Looking Guidance
Looking ahead, DallasNews Corporation emphasized its strategic focus on digital growth, supported by a 16% increase in starts from a new AI-driven paywall and ongoing investments in digital engagement tools. The company also plans to realize further expense savings from transitioning print operations to a more efficient facility and is considering investments to drive digital revenue growth. The recent sale of the Plano property has strengthened its balance sheet, with cash and cash equivalents reported at $36 million following pension funding.
In summary, DallasNews Corporation’s recent earnings call highlighted a mixed performance, with significant achievements in net income improvement and pension funding, counterbalanced by challenges in revenue decline and print sector struggles. The company’s focus on digital growth and strategic investments offers a promising path forward, despite the hurdles in traditional revenue streams.