Prepared remarks
Afternoon and welcome to iHeartMedia's Second Quarter 2026 Earnings Call. All participants are in a listen-only mode. After the speakers' remarks, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded. I would now like to turn the call over to Andrey Hart, Senior Vice President of Investor Relations. You may go ahead.
Good afternoon, everyone. And thank you for taking the time to join us for our second quarter 2026 earnings call. Joining me for today's discussion are Bob Pittman, our Chairman and CEO; Richard J. Bressler, our President and COO; and Michael McGuinness, our CFO. At the conclusion of our prepared remarks, management will take your questions. In addition to our press release, we have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward-looking statements regarding our financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings, including our recent 8-K filing. Additionally, during this call, we will refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release, earnings presentation, and our SEC filings, which are available in the Investor Relations section of our website. And now, I will turn the call over to Bob.
Thanks, Andrey, and good afternoon, everyone. In the second quarter, our consolidated revenue was $977 million, up 4.7% compared to the prior year quarter and above our guidance of up low-single digits. Excluding the impact of political, our consolidated revenue was up 3.5%. We generated adjusted EBITDA of $152 million in the second quarter, slightly above the midpoint of our previously provided guidance range of $140 million to $160 million. We generated $46 million of free cash flow in the quarter compared to negative $13 million free cash flow in the prior year quarter. Significantly, our work in building our digital assets, including podcasting, continues to pay off. This will be the sixth quarter in a row in which the Digital Audio Group adjusted EBITDA is larger than the Multiplatform Group adjusted EBITDA. And even when we get the Multiplatform Group back to growth, we expect this trend to continue. Additionally, we continue our drive for efficiencies in all areas of the company using AI and other technology tools. Turning to our individual operating segments, the Digital Audio Group generated second quarter revenue of $364 million, up 12.4% versus prior year and ahead of our previously provided guidance of up approximately 10%. The Digital Audio Group generated second quarter adjusted EBITDA of $123 million, up 14.5% versus prior year. The adjusted EBITDA margins were 33.8%. And as a reminder, we expect to see the Digital Audio Group's full year adjusted EBITDA margins to be in the mid-30s. Within the Digital Audio Group, our podcast revenue momentum continues. It was $162 million for the quarter, up 20.7% compared to prior year of $134 million and in line with our guidance of up in the low-20s. Ending Q2, approximately 50% of our podcast revenue was again generated by our local markets sales force, which provides an additional vector of growth for podcast revenue and sets us apart from our podcast competitors. Our podcasting adjusted EBITDA margins remain accretive to our total company adjusted EBITDA margins, and we believe we are the most profitable podcasting business in the United States, driven by both having the number one audience in podcasting as measured by both Podtrac and Triton and by applying rigorous financial discipline. We built and continue to build our podcast audience by using our unparalleled audience reach in broadcast radio. In addition to driving the audio-only podcast marketplace, those radio assets have also allowed us to develop and drive the new video podcast marketplace, a new and meaningful growth opportunity. As the number one podcast publisher, we are now producing video versions of many of our own podcasts and distributing them on our iHeartRadio service as well as on a number of other select podcast platforms. We are also expanding the distribution of our video podcasts to streaming video services including Netflix and others. In fact, iHeart has become the most successful video podcaster on Netflix, and we are expanding that relationship to now include podcasts from Kate Hudson and Oliver Hudson, Lilly Singh, and Martha Stewart, as well as The Breakfast Club with Charlamagne becoming the only live daily show on Netflix. We announced this morning that we are bringing six iHeart titles to Disney's Hulu streaming video service, including video episodes of Hey, Jonas and Pod Meets World. In the second quarter, digital ex-podcast revenue grew 6.6% compared to prior year, above our previously provided guidance of up low-single digits. Turning now to the Multiplatform Group, which includes our broadcast radio, networks, and events business, second quarter revenue was $536 million, down 1.6% versus prior year and slightly below our guidance range of approximately flat. Excluding the impact of political advertising, Multiplatform Group revenue was down 2.8%. The Multiplatform Group's adjusted EBITDA was $59 million compared to $96 million in the prior year. Like many other companies, we are not immune to macroeconomic uncertainty, in particular gas and diesel prices, which have an impact on the entire economy. We believe the revenue of the Multiplatform Group and indeed the whole company was impacted in Q2 by this uncertainty. On the expense side, the noncash marketing expenses that we discussed in the last few earnings calls drove the majority of our lower Multiplatform Group adjusted EBITDA in this quarter. On the consumer side of the Multiplatform Group business, the company continues to do well. Unlike other traditional media, we have more use of broadcast radio today than we did 20 years ago. Indeed, our broadcast radio now has 2x the audience of the largest TV network and 4x the audience reach of the largest digital-only ad-supported audio service. I have said before, we do not have a broadcast radio audience challenge; we have a broadcast radio monetization challenge, which seems counterintuitive given radio's strength with the consumer. We recognize that the reason for this is that advertisers are giving preference to services that are within their digital buying platforms. In response, we are now adding our broadcast radio inventory to DSPs, including Amazon, Google, and Yahoo, as well as developing offerings for other digital planning and buying platforms through our Audio Graph and programmatic offerings, and we feel confident that our broadcast radio participation in these digital platforms will significantly improve our radio revenue performance and will help the entire radio industry as well. Turning to the Audio and Media Services Group, revenue was $80 million, up 18.8% year over year, driven primarily by the growth of the digital audio and video revenues. Excluding the impact of political revenue, the Audio and Media Services Group's revenue was up 10.6%. Adjusted EBITDA was $37 million, up 54.6% compared to the prior year. This segment includes our Katz TV, Katz Radio, and RCS businesses and has continued to grow adjusted EBITDA over time with a focus on an increasingly meaningful digital business and operating efficiencies. I also wanted to briefly touch on political advertising, which will be a major driver of adjusted EBITDA and free cash flow for this company in the back half of the year. As a reminder, historically, the vast majority of our political revenue comes in the back half of the year, and the majority of that is in Q4. We continue to believe that this will be a robust midterm election year in terms of generating political revenue. And with that, I will turn it over to Rich.
Thanks, Bob, and good afternoon. Our Q2 2026 consolidated revenue was up 4.7% compared to the prior year quarter and above our guidance of up low-single digits.
Although we saw some softness that appeared to correlate with the conflict in the Middle East and the associated economic impacts, we were able to slightly beat our Q2 revenue guidance and the midpoint of our adjusted EBITDA guidance.
Let me provide you with some additional detail on our advertising revenue performance in the second quarter. As a reminder, one of our strengths is our diversified advertising revenues. There is no advertising category greater than about 5% of our total advertising revenue and no individual advertiser that is more than 2% of our total advertising revenue. In the second quarter, the largest category gainers in terms of absolute dollars were political, gambling, computers, electronics, appliances, and professional services. And the four categories that declined the most in terms of absolute dollars were telecom, financial services, auto, and food and beverage. In the second quarter, our five largest advertising categories in terms of absolute dollars were home building and improvement, financial services, health care, auto, and professional services. Our consolidated direct operating expenses increased 2.4% for the quarter. This increase was primarily driven by higher variable content costs, including higher third-party digital costs related to the increase in digital revenues. Our consolidated SG&A expenses increased 11.8% for the quarter. This increase was primarily driven by expenses related to our noncash co-marketing partnerships. We generated second quarter GAAP operating income of $35.5 million compared to GAAP operating income of $35.4 million in the prior year quarter. We generated adjusted EBITDA of $152 million in the second quarter, slightly above the midpoint of our previously provided guidance range of $140 million to $160 million. As we have previously discussed, some of the investment in our proprietary audience database, which is the foundation of our broadcast programmatic and Audio Graph offerings, takes the form of noncash co-marketing partnerships to drive engagement with the iHeartRadio digital service. We continue to view these marketing activities as critical to the success of our Audio Graph and broadcast programmatic initiatives. And as a reminder, this is all in support of our efforts to make our broadcast inventory as easy for our advertising partners to transact as our digital inventory. This is one of the important steps to returning the Multiplatform Group back to adjusted EBITDA growth. As discussed on the Q1 call, we continued these partnerships in Q2, and they will start to decrease in the second half of the year. As we have discussed before, all the revenue and expense associated with each partnership has zero impact on adjusted EBITDA over time. And as a reminder, the majority of this revenue and expense impacts the Multiplatform Group segment. Turning now to the performance of our operating segments. In the second quarter, the Digital Audio Group's revenue was $364 million, up 12.4% year over year and ahead of our previously provided guidance of up approximately 10%. The Digital Audio Group's adjusted EBITDA was $123 million, up 14.5% from the prior year. And as Bob mentioned, this is the sixth quarter in a row in which our Digital Audio Group adjusted EBITDA is larger than our Multiplatform Group adjusted EBITDA. Our Q2 adjusted EBITDA margins were 33.8%, compared to 33.2% in the prior year. Within the Digital Audio Group, our podcasting revenue was $162 million, which grew 20.7% year over year and in line with the guidance we provided of low twenties. Our second quarter Digital Audio Group ex-podcasting revenue grew 6.6% year over year to $202 million. Turning now to the Multiplatform Group, revenue was $536 million, down 1.6% compared to prior year, slightly below our guidance range of approximately flat. Adjusted EBITDA was $59 million, down from $96 million in the prior year quarter. Turning to the Audio and Media Services Group, which includes Katz TV, which, as you know, has a much bigger revenue swing in political years, revenue was $80 million, up 18.8% year over year driven primarily by the growth of the digital audio and video revenues. Excluding the impact of political revenue, the Audio and Media Services Group's revenue was up 10.6%. Adjusted EBITDA was $37 million, up 54.6% compared to the prior year. In the second quarter, our company's free cash flow was $46 million compared to negative $13 million in the prior year quarter. In fact, the strong free cash flow in this quarter gives us additional confidence about our free cash flow for the full year. And a political year like this also helps drive our free cash flow because political advertisers pay upfront. At quarter end, our net debt was approximately $4.7 billion. Our total liquidity was $457 million, and our cash balance was $174 million, which included $125 million borrowed under the ABL facility. We expect to pay down that balance by the end of 2026 with our free cash flow generation. As noted on our prior call on May 1, we repaid the $51.2 million remaining balances of our 6 and 3/8 notes as well as the term loan and incremental term loan, fully retiring those stub facilities. Additionally, we are pleased to report that this month we amended and extended our current ABL facility. We maintained both the current $450 million size of the facility and the pricing of the facility at current interest rates, and we extended the maturity date from May 17, 2027 to January 30, 2029. Let me now turn to our guidance for the third quarter and full year. For the third quarter, we expect to generate adjusted EBITDA between $180 million and $220 million. We expect our consolidated revenue to be up mid-single digits compared to the prior year. We are still closing July, but we expect revenue to be up low-single digits year over year. Turning to the individual segments, we expect the Digital Audio Group's revenue to be up in the low teens year over year, with podcast revenue expected to be up approximately 20% and digital ex-podcast to be up mid-single digits. We expect the Multiplatform Group's revenue to be approximately flat compared to the prior year. We expect the Audio and Media Services Group's revenue to be up approximately 20% year over year. Turning to the full year, we are reaffirming our full year adjusted EBITDA guidance of $800 million and our free cash flow guide of $200 million, predicated on some improvement in the macroeconomic and advertising environments especially in Q4, and the expected strong performance of political. Embedded in our adjusted EBITDA guidance are the following. We expect to generate approximately $200 million of overall programmatic revenue in 2026, up approximately 50% from $135 million in 2025. And as a reminder, we expect our broadcast programmatic revenue trajectory to be similar to that of the growth we experienced in podcasting revenue. We expect podcasting revenue to continue its strong momentum. We expect this to be a robust midterm election year in terms of generating political revenue, and the vast majority of our political revenue occurs in Q3 and Q4. Our adjusted EBITDA guidance also includes the benefit of our cost savings programs. Let me provide some additional inputs embedded in our free cash flow guidance. Interest expense will be approximately $440 million. Minimal cash taxes this year and for the next few years as long as the current tax laws are in effect — this is a great outcome and will help us avoid approximately $150 million to $200 million of cash taxes over the next three years. Capital expenditures are expected to be approximately $90 million. Cash restructuring expenses to be approximately $50 million. We expect our net leverage ratio at the end of 2026 to be in the mid-5s, which would be more than a full turn improvement year over year. Now we will turn it over to the operator to take your questions.
Questions and answers
Thank you. As a reminder, to ask a question, please press star followed by the number 1 on your telephone. Our first question comes from Stephen Laszczyk from Goldman Sachs. Please go ahead. Your line is open.
Great. Thanks for taking the questions. Bob or Rich, I was curious with just a few months time from now, the midterm elections coming up. I was curious if you could speak a little bit more about your go-to-market strategy, as well as how activity is building on the political front going into the November cycle. I think two cycles ago, in and around the midterms, we did about $130 million of political revenues. Just curious how you are looking at the outlook for this year?
I think it is shaping up to be a big political year. Some people are saying it may be as big as a presidential year as opposed to a typical midterm; that yet has to be seen, although the early indications are it is probably performing at that level. Our go-to-market is to be in touch with everybody from candidates to PACs to everyone else associated with the campaigns that can make a decision, and stay on top of it both at a local level and the national level. One other data point I might add: if you look at the last couple of days or last week, you saw a lot of TV broadcasters come out and they talked about very strong political numbers. That historically, and this year should be no different, bodes very well. If the inventory starts to shrink there and they sell off a lot of their inventory, broadcast radio tends to be a big beneficiary of that.
And then maybe separately, you spoke a good bit about the opportunities in video podcasting in the prepared remarks. So I was just wondering if you could speak a little bit more about the Disney Hulu podcast partnership from today. Then would be curious how that approach with Disney is maybe either different or similar to the approach that you are taking with Netflix. And then, ultimately, looking out here over the next couple of years, how you see both of these relationships evolving?
Well, look, both Netflix and Hulu — we are trying to meet their needs, so we are crafting deals that work for them and their overall program strategy. As you know, Netflix has taken The Breakfast Club; Charlamagne in the morning has turned it into a live daily show. That was kind of unexpected when we went into this, but it is how the relationship evolves as we find opportunities. I suspect with Hulu we will see the same thing: as we get in with them and they see how it is performing, we will figure out how we craft the right relationship with them. And, obviously, there are other people that are carrying video podcasts as well, and we continue to have discussions there as well.
Great. Thank you very much.
Our next question comes from Aaron Watts from Deutsche Bank. Please go ahead. Your line is open.
Hi. Thanks for having me on. Two questions for me. On advertising, if we strip away some of the movement due to trade and barter, can you talk a bit more about the health of the underlying ad environment as we roll from Q2 into the back half of the year? And is there anything you are seeing that gives you confidence that there will be some improvement as we close out the year?
Well, there cannot be any more uncertainty — that is for sure — so we are baking that in. But I have been kind of surprised with all the uncertainty in the market how resilient the ad market has been. There is a body of thought which says, hey, this is the new normal and everybody's got to sell their products and they gotta build their brands, and they cannot let that get in the way of it. I think we are seeing ample evidence of that. Certainly, there are businesses that are being hit by the high cost of diesel and fuel and other important products for them, but there are also businesses that are immune from it and see this as an opportunity. So I think on the whole we are cautiously optimistic about the second half of the year, and talking to advertisers we kind of sense that. If you see some of the discussions from the agency front, you are seeing the same, which is what we are hearing from them directly as well. I think we have to give people a reason why if they spend a dollar on advertising, they get more than a dollar back on their bottom line, and it is all about return on investment. So I think if we stick to that and not be distracted, it is probably our best strategy and the one we are going with. The other piece is really adding the Audio Graph and the programmatic components for our broadcast radio. Again, as I mentioned in our script, it is counterintuitive that broadcast radio is so incredibly strong with the consumer and, by the way, in all measurements, delivers extraordinarily strong results for advertisers, and that is the slowest revenue stream we have. We think that is because advertisers want everything to fit within that digital buying construct, so the Audio Graph and programmatic will give us that. We are rolling it out to DSPs, but there are other buying platforms emerging as well, and we fully intend to service those as well.
One piece I may add to what Bob just said is that in these environments you do see advertisers looking to reduce the number of their go-to partners and overall partners they have. Because of our ability on a multi-platform basis — between our broadcast, podcasting, streaming, and events — they can meet a lot of their needs by coming to us. Also, measurability becomes critically important to be able to deliver measurable results, as Bob talked about — getting the right ROI. Now that we can do that with broadcast and our digital assets, we are very well suited to navigate this environment the best we have ever been.
Okay. That is really helpful context. Thank you for that. If I could ask just one more question, and maybe this is pointed at you, Richard. But based on your third quarter guidance, it implies a very robust fourth quarter in order to achieve the $800 million full-year target. If I think all the way back to the fourth quarter of 2022, the last midterm election, I think you guys did $315 million of EBITDA. This year, you are suggesting it will be better. Can you just talk a little bit more about some of the components that go into that — be it core advertising, the political you had just discussed, barter impact easing, cost savings — just the various elements that you see going into helping us bridge that $800 million target for the year?
There is a lot in that question. I will start and then Bob could jump in. One of the reasons we go through what I mentioned during my remarks is to explain what is embedded in our guidance. First, we have talked about political: we are about where we were in 2024 on political terms of revenue. As we all know, this is a non-presidential political year, and you heard what all the TV companies said about the strength they are seeing from political; we expect to be a beneficiary of that as historically proves true. Strong political is a core piece. Second, our cost programs are all in place now, so you get the full benefit of those cost savings. Then, as we said, the advertising environment has macro issues, which is why part of our guidance assumes some more stability. Remember, we have less than no advertising category greater than 5% of our advertising, and no individual advertiser greater than 2%, so that diversity plays into our hands. We also spent a fair amount of time talking about Audio Graph and the ability to put our broadcast inventory into the same systems digital buyers use. Bob mentioned being in DSPs and working directly with agencies. As a reminder, we are going to be in the Amazon DSP at the beginning of the fourth quarter. Amazon is also one of our biggest advertisers as a company. We also have the video podcasting opportunities: Netflix and the Disney Hulu announcement are incremental opportunities. We reported 20.7% revenue growth for podcasting in the quarter, so podcasting shows no sign of abating. When you look at all those pieces together — political, the cost programs, programmatic and Audio Graph traction, and podcast momentum — you can see how the math supports the fourth quarter being strong. Also, we are not the same company we were in prior years in terms of assets, ad technology, and how we go to market and execute.
If I could just add a couple of things: you can tell this is an area we have had a lot of internal discussion about and we spend a lot of time analyzing. Rich talked about TV in a big political year: TV pushes out or sells out; they have to go to radio. But it also pushes out other advertisers — there is no room for them. Toward the end of that cycle, almost all the advertising on TV is political advertising. It has to go somewhere, and people still have to sell their products. Radio has historically benefited from that, and in 2022, which was a very strong political year, we did see that happen and we were the beneficiary. That is embedded here. I think the other thing is in a year like this with uncertainty, advertisers do save some money and hold some back, but if at the end of the year the economy looks like the uncertainty is leaving and stability is returning, you generally see that expressed in December. Our hope is that some of the money we missed in the first part of the year because of uncertainty shows up at the back end. Finally, once you get past the midterm, I think it will have a very positive impact for the economy insofar as uncertainty leaving, and that is extremely helpful.
That is extremely helpful. Thank you both.
Thank you. Our next question comes from Patrick Sholl from Barrington Research. Please go ahead. Your line is open.
Hi. Thanks for taking the question. On podcasting, as you have delivered more of these podcasts to or partnered with more video distributors to distribute your podcasts, I'm just curious on any kind of impact that has had on advertiser interest on the audio side or what you are seeing in terms of overall listenership?
I think it is additive. We find that probably less than 5% of people are video-podcast consumers only, and the biggest category is obviously audio-only. But when people are in a video environment and can look at something, they often will; sometimes they will do both. When somebody says, 'look at this thing,' they will look up at the screen to see what it is. So we think the two work very well together. Video is putting podcasting into a video environment, which at first we said podcasting fills spots where you cannot look at video. Now podcasting is strong enough that it can compete with video and we can put it in that environment too. That not only helps audience, it also helps revenue. Video comes with a really nice CPM premium pricing. The costs of producing video podcasts today are not very high compared to full-on TV production. So all those things work in our favor. We think this is opening up a new marketplace; it is not a transformative replacement of audio — it is additive.
Okay. Thank you. And then on the ad category trends, is there any kind of breakout between advertiser categories that are more likely to adopt some of the programmatic buying efforts that you guys have been working on?
I do not think it is category-specific. Remember why we built out programmatic and Audio Graph efforts: overwhelmingly the resiliency of our medium and the engagement we have. We do not have a listener challenge; we had to meet the advertising world the way they want to transact so they could plan, monitor, and measure campaigns. We needed to come and say you can do that with our broadcast inventory also. So it is not about specific categories; it is about the way the advertising industry wants to engage and transact business.
And you will find some advertisers are more apt to go to programmatic directly and not go through agencies. There is a diversification in how people use it; we are prepared to deal with all of those approaches.
Okay. Thank you.
Great. Well, if there are no other questions, Bob, myself, Mike, and the rest of the iHeart team want to thank everybody for listening to the iHeart story today. As always, we are available for any follow-ups or questions. Thank you all.
This concludes today's conference call. Thank you for your participation. You may now disconnect.