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Profitability jumped: Q1 adjusted EBITDA rose 44.7% to $73.1M and margin expanded to 13.3%, helped by a ~$100M cost program and first‑lien net leverage falling to 2.3x (management aims <2x).
Digital momentum: Digital revenues were an all‑time high at 47.8% of total revenue (up 5.2% same‑store), digital‑only subscriptions grew 6.2% with ARPU at a record $10.30, and the company is targeting a 50% digital mix in 2026.
AI/licensing tailwinds but lumpy: "Digital other" (AI, syndication, affiliate) jumped 125.6% to $18.8M, driven by deals with partners like Meta and Microsoft, though management warns AI licensing revenue can be irregular quarter to quarter.
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USA Today (NYSE:TDAY) reported what management described as its strongest start to the year in several years, citing improving revenue trends, rising digital contribution, and sharply higher profitability in the first quarter of 2026. Chairman and CEO Mike Reed said the company is “nearing” several inflection points it has discussed over the past two years, including stabilizing total revenue and pushing digital revenue toward half of the overall mix.
Chief Financial Officer Trisha Gosser said total revenues in Q1 were $548.5 million, down 4% year-over-year, or down 1.8% on a same-store basis. Gosser called that a 210 basis-point improvement from Q4 and the second straight quarter of top-line trend improvement.
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Reed highlighted the same-store decline of less than 2% as the company’s “strongest performance in four years,” attributing the improvement to a return to year-over-year growth in digital-only subscription revenue and continued contributions from AI partnership agreements.
Total digital revenues were $261.9 million, up 5.2% on a same-store basis, and represented 47.8% of total revenue, up 400 basis points from the prior-year quarter. Reed said digital accounted for 48% of total revenues, an “all-time high,” and reiterated management’s goal of reaching 50% in 2026.
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Total adjusted EBITDA was $73.1 million, up 44.7% year-over-year, and adjusted EBITDA margin expanded to 13.3% from 8.8%, according to Gosser. She said the increase was driven by improving revenue trends, the impact of the 2025 cost reduction program, and “ongoing cost discipline.”
Gosser reported an 8.8% reduction in operating costs and SG&A versus the prior-year quarter. In response to an analyst question about additional cost opportunities, she said the company “took $100 million out of the business” last year and expects to continue optimizing expenses, including print infrastructure and delivery changes, while also pursuing efficiencies through vendors, partners, and technology.
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On the bottom line, net income totaled $19.9 million, up $27.2 million, or 371.3% year-over-year. Free cash flow was $6.4 million in Q1. The company ended the quarter with $85.2 million in cash and net debt of $903.1 million, and Gosser said total debt declined by $4 million in the quarter.
Reed said first lien net leverage declined to 2.3 times, and he reiterated the company’s aim to get below 2 times over time.
Digital-only subscription revenue totaled $45.9 million, up 6.2% year-over-year and the third consecutive quarter of sequential growth, Gosser said. Reed said digital-only subscriptions “turned the corner,” while Gosser added that volume declines slowed in Q1 and that new starts approached parity with stops late in the quarter, which management views as a sign of stabilization.
Average revenue per user (ARPU) reached a record $10.30, up 42.7% year-over-year, Gosser said. Reed similarly highlighted digital-only ARPU hitting a new high, up 43% year-over-year and 5% sequentially.
Meanwhile, “digital other” revenue—which includes digital content syndication, affiliate content, and AI partnerships and licensing—rose 125.6% to $18.8 million, Gosser said. She cautioned that timing and recognition can vary due to agreement structures, with Q1 reflecting a strong contribution.
Reed said existing AI agreements, including with Meta and Microsoft, had a “notable impact” on Q1 results, and that the company maintains an active pipeline across foundational model providers, startups, and emerging licensing platforms. He emphasized the category’s potential but said deals are “lumpy in nature” and difficult to time.
In the Q&A, Reed told analysts he believes the value of licensing agreements should rise over time, arguing that “the real value in the content we produce is we produce it at scale…and it’s new every single day,” as AI products need to be refreshed continuously. He also said the company is digitizing more of its archive and deploying blocking technology to prevent unauthorized scraping.
Addressing a question about separating search crawl and AI crawl, Reed said the company is “very supportive” of that concept, adding that he expects any movement may occur in the U.K. before the U.S., though he noted there had not been progress to date.
Digital advertising revenue declined 3% in Q1, which Gosser attributed to softness in page views and programmatic revenue. She said page views were down modestly year-over-year, primarily on local sites, due to lower referrals from Google Discover and deliberate actions to increase paywall encounters and shift traffic toward “higher value monetizable experiences.” Gosser said the company is seeing improved conversion rates and believes the trade-off is appropriate as it optimizes revenue per user.
Roberts told analysts that AI Overviews have had an impact “primarily in local,” but said the effect has been “much more muted than what much of the industry has been reporting.” She characterized Google Discover and AI Overviews as “separate issues,” and said Google Discover has been surfacing less local content, creating what she called a “new norm,” though she said the company has begun to see some calibration.
She added the company is shifting resources toward categories that continue to perform, including sports, breaking news, local opinion, service journalism, entertainment, and lifestyle, and said video is “increasingly driving audience” after an expanded video catalog effort last year.
Despite Q1 advertising pressure, Gosser said the company delivered its “strongest quarter of new digital business signings” and expects that, combined with stabilizing retention, to drive “a notable improvement” in Q2 digital advertising and digital marketing services (DMS) trends.
Reed said LocaliQ’s return to growth has been “slower than anticipated,” but management expects progress from shifting the business toward a results-driven approach, expanding social offerings, owned inventory, targeted email, and deeper CRM integrations. He said the company expects LocaliQ initiatives to improve revenue trends and support growth in the second half of 2026.
Gosser reported LocaliQ core platform revenue of $99.3 million in Q1 and segment adjusted EBITDA of $6.8 million, noting first-quarter seasonality. Average core platform customer count ended at approximately 11,900 and ARPU was near record highs at about $2,800.
At Newsquest, Gosser said Q1 revenues rose 7% to $59.8 million, marking the fourth consecutive quarter of revenue growth, while segment adjusted EBITDA increased 6.6% to $14.9 million.
Management reaffirmed its full-year 2026 business outlook. Gosser said Q2 total revenue and same-store trends are expected to remain largely in line with Q1, while adjusted EBITDA should grow year-over-year “at a notably more moderate pace” due to mix, including higher DMS contribution and lower licensing contribution. She also said the company expects “significantly higher” free cash flow generation quarter-over-quarter.
Reed said the company is “looking ahead to a really strong second quarter,” with digital-only subscriptions and “digital other” expected to remain key contributors.
Gannett Co, Inc (NYSE: GCI) is a media and marketing solutions company headquartered in McLean, Virginia. As the largest U.S. newspaper publisher by circulation, Gannett publishes USA Today alongside more than 260 local news brands. The company’s multimedia platforms include daily and weekly newspapers, websites, mobile apps and a network of subscription-based digital products.
In addition to journalism and content production, Gannett offers a suite of digital marketing services designed to help small and medium-sized businesses grow online.
The article "USA Today Q1 Earnings Call Highlights" was originally published by MarketBeat.