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Greetings. Welcome to the USA TODAY Company Q2 2026 Earnings Call. Please note, this conference is being recorded. I would now like to hand the conference over to your host, Matt Esposito, Head of Investor Relations. You may begin.
Thank you. Good morning, everyone, and thank you for joining our call today to discuss USA TODAY Co.'s second quarter 2026 financial results. Presenting on today's call will be Mike Reed, Chairman and Chief Executive Officer; Trisha Gosser, Chief Financial Officer; and Kristin Roberts, President of USA TODAY Media. If you navigate to our website, you will find that we have posted an earnings supplement in addition to our earlier press release. We will be referencing it today on the call as it provides you with additional detail on this quarter's performance. Before we begin, I would like to remind you that this call is being recorded. In addition, certain statements made during this call are or may be deemed to be forward-looking statements as defined under the U.S. Federal Securities Laws, including those with respect to future results and events and are based upon current expectations. These statements involve risks and uncertainties that may cause actual results and events to differ materially from those discussed today. We encourage you to read the cautionary statement regarding forward-looking statements in the earnings supplement as well as the risk factors described in our filings made with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call. Please keep in mind all comparisons are on a year-over-year basis unless otherwise noted. In addition, we will be discussing non-GAAP financial information during the call, including same-store revenues, free cash flow, total adjusted EBITDA, total adjusted EBITDA margin, segment adjusted EBITDA, segment adjusted EBITDA margin and adjusted net income attributable to USA TODAY Co. You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the earnings supplement. Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any USA TODAY Co. securities. The webcast and audio cast are copyrighted material of USA TODAY Co. and may not be duplicated, reproduced or rebroadcast without our prior written consent. With that, I would like to turn the call over to Mike Reed, Chairman and CEO of USA TODAY Co.
Thank you, Matt. Good morning, and thanks to all of you for joining our second quarter earnings call. The second quarter reflects continued progress against our long-term strategy and strengthens my confidence in reaffirming our full-year outlook. Today, we'll highlight the operational progress driving that confidence, the momentum we continue to see across our key growth areas, such as digital-only subscription revenues and digital other revenues, as well as the strategic initiatives underway to further accelerate that progress. One example I'd like to highlight is our work with Palantir, which we expect to strengthen how we collect, connect, and activate audience data to drive more effective and faster monetization across our platform. As we mentioned back in the spring, 2026 would be a year with real momentum, but also real variability, particularly in our content licensing business, where the delivery of revenue from those agreements can differ meaningfully from one quarter to the next. We saw some of that lumpiness in the second quarter, alongside the continued shift in consumer behavior away from traditional search. It's important to note, this is a shift we have been preparing for and one that has guided our investments for some time now. We have been focused on building more direct relationships with audiences through newsletters, social platforms, and producing more video content. And those investments are driving strong growth across each of those channels and position us to better offset the changes in audience behavior. At the same time, audiences are increasingly discovering content through AI systems that answer questions directly for consumers. What that means is we are now effectively serving two audiences, human readers and the AI platforms that surface our work to them. And it isn't only the consumer platforms that surface our work; a far broader universe of crawlers and scrapers seek to ingest our content. However, as you know, we continue to leverage technology to block those crawlers and scrapers who don't have licensing agreements with us. We are also building our products and our strategy to provide essential content for our users and machine-readable formats that let us expand current licensing structures. We recognize that we have to create and format content for humans and for machines. And while we see a change in search-driven behavior, we also see entirely new ways to license, distribute, and monetize the trusted content we produce every day. Now with that framing, I'll walk through some of the key financial highlights for the second quarter. First, we generated approximately $20 million of free cash flow, an increase of 11% year-over-year. We also delivered our second consecutive quarter of positive net income. We continue to pay down debt and maintain a solid cash position. And our digital-only subscription business and digital other business, which we believe are two important engines for sustainable growth, continued to post strong performance in the quarter. For example, in our digital-only subscription business, volumes are stabilizing and digital-only ARPU reached another record high, driving digital-only subscription revenue to growth year-over-year for the second consecutive quarter. Digital other also grew year-over-year in the quarter, driven by continued strength in our syndication and licensing agreements as well as our commerce business. We expect this revenue stream to expand throughout the year as we broaden our portfolio of content licensing partners and further grow our commerce opportunities. And finally, some of the key metrics in our LOCALiQ segment continued to move in the right direction. We delivered sequential growth in our core platform revenue. Our core platform average customer count and core platform ARPU reached another record high, supporting more meaningful revenue opportunities in the back half of the year. We have consistently said that this transformation would not be linear, and Q2 reflects that. While quarterly results will fluctuate as we execute on our strategy, we believe our long-term direction remains unchanged. As we look across the business, we see continued strategic progress, a strong operating foundation, and growing confidence that the actions we're taking are positioning us for sustainable long-term value creation. Our industry-leading scale at both the national and local levels, our highly diversified digital portfolio and vast collection of trusted real-time content that audiences value and AI platforms need, serve as strong drivers for the growth we expect to capture over time. As mentioned, we are reaffirming our full-year outlook. We expect revenue trends to improve as the year goes on and believe the inflection point remains firmly in sight. We also expect to grow adjusted EBITDA, expand margins, improve net income and deliver a fourth consecutive year of free cash flow growth. And in the background, we remain optimistic about the outcomes of the pending litigation against Google, as well as the opportunity to enter into more AI licensing agreements in the future. Now with that, I'd like to discuss some of the key operational highlights from the second quarter in a little bit more detail. And I'll start with our diversified digital revenue strategy, which is rooted in having an audience at scale with improving engagement to provide a foundation for sustainable growth. In the second quarter, we continued to serve one of the largest digital audiences in the media industry. And the opportunity moving forward is to better understand that audience and put the data behind it to work. Every visit, every session, and every moment of attention creates a signal. And when we connect those signals, they become actionable intelligence that allows us to engage users more effectively and monetize those relationships faster and at much greater value. The work our team is doing with Palantir is a direct extension of this strategy. We are applying Palantir's AI-powered platform to one of the largest opportunities in front of us, converting the sheer scale of our audience into known orchestrated first-party relationships because that is what turns our reach into sustainable higher-value revenue. We believe the work to build a common intelligence layer that connects our audience, content, and first-party data to better understand our users and translate those insights into stronger engagement and monetization across our platform can be a meaningful driver of ARPU across subscriptions, advertising, and e-commerce. We view the evolving search dynamics as an opportunity to build a healthier and more resilient business, and a business that is less dependent on any single platform. We experienced the risks of that dependence firsthand in early 2025, when Google's manual actions delayed the growth we expected from several content partnerships. As a result, reducing that reliance has been a key focus of ours for several quarters, and it's something we have consistently discussed with you. It is how we gain greater control over the growth drivers in our business. It also reflects the same approach we successfully applied in 2025 to our digital-only subscription business, where we moved away from volume that didn't create long-term value. That transition required patience and discipline, but it has produced a healthier, more durable business with consistent growth across key metrics, some of which include our digital-only subscription revenue growing year-over-year for the second consecutive quarter, giving us increased confidence that revenue will grow over the next several quarters and beyond. Our digital-only ARPU reached another record high in the quarter, increasing 34% year-over-year, and our start-to-stop ratio grew sequentially, reflecting further volume stabilization and bringing us closer to sequential volume growth. We are applying that same discipline to our broader audience strategy by prioritizing the quality of engagement over the sheer volume of traffic. To support that strategy, our focus is shifting away from one-and-done traffic because even though it contributes to our unique visitor count, it is ultimately our least valuable and least monetizable audience. Instead, we are investing in new channels that allow us to build direct ongoing relationships with consumers. That includes expanding how audiences discover our content off platform through channels like social media, where we continue to see meaningful growth and where we see significant potential to unlock greater value from those audiences. We also see social media, along with vehicles like personalized newsletters, as important pathways to bring audiences back to our platform where we can deepen that engagement through immersive video experiences. And as those relationships deepen, so does our understanding of our audience, allowing us to deliver greater value to advertisers and drive higher CPMs while also connecting consumers with the right commerce opportunities at the right time. We believe this is the right long-term trade-off because replacing lower-value traffic with deeper audience relationships creates a stronger foundation for predictable and repeatable revenue growth and, in turn, long-term value creation. Now with that, I'd like to hand the call over to Kristin to discuss these initiatives in more detail as well as the continued momentum we're seeing in our digital-only subscription business. Kristin?
Thank you, Mike. Audience growth has been central to our transformation. And over the past three years, that strategy has helped us build one of the largest digital audiences among content creators in America. As Mike noted, consumers are changing how they find and consume content, and we're meeting them where they are. We're doing that from a position of real strength through the scale, trusted brands, and loyal audiences that we have already built, which we believe will provide a foundation that very few others in the industry can match. As consumer behavior shifts, we're putting focus on platforms such as YouTube, TikTok and Instagram, as well as leveraging creators, personalities, podcasts, and video-first experiences. Social video and newsletters are becoming primary engines of discovery, and the early results speak for themselves. In the first half of this year, we generated 3 billion off-platform video views, putting us on pace to more than double last year's total. Within that, TikTok alone surpassed 1 billion views. These channels are still small relative to our overall traffic, but that's exactly what makes the opportunity so compelling. We see significant runway ahead, and these numbers tell a bigger story than audience growth alone. They reinforce that our content continues to find audiences as consumer discovery evolves. Importantly, we continue to see strong search performance in the categories where we have a clear right to win, including breaking news, sports, and entertainment. The World Cup is an excellent example. Coverage across the USA TODAY NETWORK generated 97 million page views with search driving nearly 65% of that traffic. That reinforces an important point. When content meets a real and urgent need, search still delivers. But we're not building our future on search. Even in our strongest categories, great content still finds an audience, and our opportunity moving forward is to ensure that our distribution tactics keep pace with the way readers and viewers want to consume content in digital spaces. As we continue to strengthen how audiences discover and engage with our content, we are also expanding the ways we generate revenue from those relationships. Commerce is one of the clearest examples, and we believe our work with Palantir has the potential to accelerate that opportunity. Historically, much of our commerce business has relied on manual processes to connect affiliate opportunities with our content. Our work with Palantir changes that by matching affiliate products and offers to relevant content at scale, which will allow us to monetize significantly more of our sports, entertainment, dining, and other relevant content categories in real time. And the opportunity extends well beyond commerce. By connecting audience signals across our platform, we can create a unified understanding of our users that simply didn't exist before. That enables more personalized experiences, increases our base of known users and strengthens our first-party intelligence, which is expected to significantly increase the value of our audience over time. In other words, we are not working to simply monetize more of our content, but to better understand, engage, and unlock greater value from every audience relationship we create. Together, expanding our discovery and growing our base of known users fuels growth in digital advertising, and we believe this positions us to generate materially higher revenue from our audience than we have in the past. Known users simply monetize at higher rates. And as they become a larger share of our audience, the value of every impression we sell rises with them. This shift in audience mix doesn't happen overnight, but the investments we have made are already improving that mix, and we're encouraged by the progress we're seeing. We've done this before with our digital-only subscription business, where we absorbed short-term pressure in exchange for a healthier, more durable model. And today, we're capturing the benefits of that discipline. We believe digital advertising can follow the same path. The playbook is proven, and we are ready to run it again. On that note, we're encouraged by the strong performance of digital-only subscription revenue. Our approach has not changed. We are deliberately trading a measure of raw page views for stronger engagement metrics as well as higher-value subscription revenue. We're continuing to build out our stacked products model, and this quarter, we added Marvel Comics to the PLAY platform, which is an important step in extending the experience beyond puzzles and games. Since launch, the audience engaging with Marvel content has been overwhelmingly new to us. That's a signal we take seriously. We believe it reinforces both the demand for premium entertainment experiences and our ability to bring entirely new audiences into our portfolio. It also supports PLAY's broader role in differentiating our product offering to drive long-term subscription growth. On the subscription front, we continue to build momentum in the second quarter. Our progress reflects solid improvement across key drivers of the business, including churn, our start-to-stop ratio, and paywall encounters. Those improvements reinforce our confidence that we are building sustainable momentum and position us well for sequential growth over the coming quarters. To recap, the work is far from complete, but we are confident in the direction we are heading. We have anticipated these changes for some time and the strategy we are executing is designed to build a broader, more engaged audience that delivers predictable and repeatable revenue. Back to you, Mike.
Thanks, Kristin. I'd like to reinforce a few of the points you just made because they get to the heart of the confidence we have in our path forward. We have significant scale, and we have made deliberate investments over the past few years to engage directly with that audience. Most importantly, as Kristin put it, great content still finds an audience. Our job now is to meet that audience wherever they choose to be and from there, keep them engaged. That heightened focus on engagement is central to how we are using AI on our platforms. DeeperDive, our generative AI answer engine, is a great example of this. Since launching in September of last year, readers have asked more than 50 million questions with average daily activity now exceeding 390,000 interactions. But the real story is not the volume, it's the value of that engagement. When we tested pages with DeeperDive against pages without it, the difference was clear. DeeperDive generated longer time on site, higher advertising revenue per session and stronger subscription intent. These results reinforce what we already know: the engagement of our audience matters more than the raw traffic alone. And DeeperDive is another way we are deepening that engagement and translating it into greater monetization. As DeeperDive usage grows beyond just USA TODAY, we see a significant opportunity to replicate this engagement across the entire network. We are also one of the first publishers in the U.S. to adopt this kind of AI answer engine. And as advertiser demand moves quickly towards this type of experience, we believe our position as an early innovator, combined with our scale, creates additional opportunities to unlock value across our advertising business. Overall, we navigated the quarter well, and we feel good about the momentum we are carrying into the second half of the year. Now I'd like to turn the call over to Trisha, to provide additional details and color around our 2026 second quarter financials. Trisha?
Thank you, Mike. Good morning, everyone. Please keep in mind, all comparisons are on a year-over-year basis unless otherwise noted. As Mike mentioned, we expected variability in our quarterly results this year, and the second quarter was consistent with that expectation. While performance varied across the portfolio, we managed the business well through it. We held the line on costs. We delivered solid profitability, and we grew free cash flow. We continue to see encouraging trends in several key areas of the business, reinforcing our confidence in our strategy and the opportunities ahead. Let me walk you through the numbers. In the second quarter, total revenues were $536.3 million, a decrease of 8.3% or 6.1% on a same-store basis. Let me bridge this performance to the first quarter because the drivers are specific and in large part expected. First, we are lapping an outsized content licensing contribution in Q1, while still driving strong year-over-year digital other growth in Q2. Second, digital advertising softened a bit as we adapt to the shift in audience behavior. We expected variability across quarters given the shift in revenue mix. But overall, we feel positive about the collective direction of the business over the first half of the year. Total adjusted EBITDA was $56.9 million in the second quarter, representing a margin of 10.6%. While total adjusted EBITDA decreased compared to the prior-year period, we continue to expect year-over-year growth for the full year. Expense management remains a top priority. And in Q2, operating expenses decreased 7.8% compared to the prior year. In the back half of the year, we will continue to align our expense base with our revenue trends while projecting the investments that drive our growth. Continued operational discipline made our net income more consistent, and we reported net income of $9.1 million in the second quarter, marking our second consecutive quarter of positive net income. On an adjusted basis, adjusted net income attributable to USA TODAY Co. was $11 million. Total digital revenues in the second quarter were $254.3 million, a decrease of 4.2% or 3.6% on a same-store basis, and represented 47.4% of total revenues. Digital advertising revenues decreased 9.2%, reflecting lower page views and the loss of a programmatic partner, creating pressure on programmatic advertising. Given the focus on audience engagement, we are expecting improved advertising trends in the back half of the year. Within digital, the underlying growth engines continue to perform. Digital-only subscription revenues totaled $45.6 million, increasing 6.8% year-over-year. Digital-only ARPU also reached a record high of $10.47 in the second quarter, increasing 34.4% year-over-year. Volume decreases moderated further during the quarter, while our start-to-stop ratio improved sequentially, reinforcing our confidence in the path toward renewed subscriber growth. In the second quarter, our digital other revenues, which include revenues from our AI partnerships, content licensing agreements and syndication, grew 20.2% year-over-year to $20.4 million, and we expect ongoing growth in this category this year as we further expand this revenue stream and our suite of licensing agreements. Turning to the USA TODAY Media segment. Segment adjusted EBITDA totaled $42 million, representing a margin of 10.6%. Second quarter revenue trends were primarily affected by the performance in digital advertising. Turning to the Newsquest segment. Segment adjusted EBITDA totaled $14.3 million, reflecting a margin of 24.2%. Revenue trends were impacted by the expected timing shift of a revenue-generating conference but reflect strong ongoing digital growth. In our LOCALiQ segment, revenue remained lower year-over-year, but Q2 reflected sequential growth in both core platform revenue and segment adjusted EBITDA. We are pleased with the sequential momentum from Q1 to Q2, which is reflected in the following key areas. Total core platform revenue was $106.3 million, up 7%. Segment adjusted EBITDA totaled $13.2 million, while margins expanded 560 basis points to 12.4%. Core platform average customer count increased by 300 or 2.8% and core platform ARPU increased 4.1% to a record quarterly high of $2,908. Let's now turn to the balance sheet. At the end of the second quarter, our cash balance was $86.7 million and net debt decreased to $883.8 million. In Q2, free cash flow totaled $19.6 million, an increase of 11.2%, while cash provided by operating activities grew 8.6% to $35.4 million. We ended Q2 with $970.5 million of total debt, reflecting $17.7 million of total debt paydown in the quarter. Now let me turn to our outlook. We are reaffirming our full year 2026 business outlook. We continue to expect meaningful improvement in same-store revenue trends as compared to 2025, driven by the strength of our digital-only subscription and digital other businesses and improving digital advertising trends. We expect adjusted EBITDA to grow over the prior year and solid net income growth, along with double-digit free cash flow growth. Our second half reflects a shift away from search and the mitigating actions underway across content distribution, licensing and known user monetization. In short, we view the second quarter as a period of expected variability within a year that we still expect to be a strong one for the company. As we look ahead, we remain encouraged by the direction of the business. This is a dynamic environment, and results may continue to vary quarter-to-quarter, but we believe the strategic foundation, following our audience, growing our data and known audience capabilities, expanding our license capabilities and footprint, and staying disciplined on costs will lead to long-term growth and shareholder value creation. I will now hand it back to the operator for questions, and then we will go back to Mike for some closing thoughts.
分析師問答
Your first question for today is from Giuliano Anderes-Bologna with Compass Point.
Great results. As a first question, you referenced your work with Palantir several times during the call. Can you elaborate on that and what the opportunity looks like?
Yes. Giuliano, good to talk to you. We referenced it a couple of times. We're really excited about this opportunity and what it could do for the trajectory of our business transformation. We have a tremendous amount of data on consumers on our platform today. This work with Palantir is going to allow us to connect that audience behavior, content engagement and first-party data in a way that allows us to monetize each consumer on the platform at a much higher rate. The easiest way to think about it is taking this first-party data — everything is a signal — and turning it into actionable intelligence in a real-time and fast way where we can deliver the right content to consumers while they're on our platform, the right advertisement to consumers while they're on our platform, the right commerce opportunity embedded into that content at the right time and the right price for a subscription offer. So it really allows us to take the wealth of data we have and turn it into actionable intelligence in real time. That gives us a lot of optimism on how fast we can move and how big the opportunity can be. This partnership with Palantir is exciting to us because what may take us a considerable amount of time to build internally, we can do in a matter of weeks or months with Palantir. You're talking about taking a best-in-class AI and software platform and applying it to actions on our platform. It's important to note, all of our data remains our data. It's our data. The actions and the intelligence that we utilize take place on our platform. It's our IP, it's our outcomes. So we're not replacing any technology; it's really just leveraging that software to allow us to move faster and be smarter with the data we have today. Another important capability is taking a lot of the anonymous interactions we have today and turning those into known relationships. That will increase the amount of data we have. The more known relationships we have, the more data we create, the more signals we create, the more actionable intelligence we have. We'll evaluate this work by looking at conversion, retention, engagement, and revenue per user. Over the next two quarters, we hope to be able to start talking more specifically about the financial upside. When we talk to Palantir, they're very bold about their predictions of financial upside. It's too early for us to quantify that yet. But we do believe the scale of our data, coupled with this technology, has the potential to create a powerful uplift in the trajectory of our business. We're excited to be working with them and think it's going to have a near-term and meaningful uplift to our business.
That's helpful. And next question, you mentioned the large audience you're building on social media platforms. Is that a potential new revenue stream?
Mike, I'll take this one. Giuliano, yes, absolutely. Social and video are increasingly becoming primary discovery channels, and that's where consumers are choosing to engage with content. As we said earlier, we generated more than 3 billion off-platform video views just in the first half of the year. That reinforces that our journalism continues to reach significant scale even as audiences change how they discover content. Some of that audience we'll monetize directly through platform revenue sharing, sponsorships, and branded content. Another opportunity is using those platforms to build direct relationships with consumers. We can bring a portion of these users back to our platform, and then coupled with our data, deepen that engagement and create higher-value opportunities across advertising, commerce, and subscriptions. In this way, off-platform moments become new on-ramps that drive frequency and habits and ultimately lead to paid relationships. We don't view social as separate from our business. We view it as an increasingly important part of how we build, engage, and monetize the audience over the long term.
And the next one, do you see any more licensing deals coming this year? Just kind of thinking about the AI front and other deals around that.
Yes, Giuliano, the short answer is yes. We do see more AI licensing deals coming this year. We continue to believe that demand for trusted and real-time content will grow as AI platforms expand their products and services. It's still an evolving landscape, but we are actively engaged in discussions. A key part of preparing for these deals is reformatting our content to be machine readable. Historically, we have created content for humans. Reformatting to machine-readable formats is important not only for future deals but also to unlock more value in current deals. We're working steadily to reformat content to make it machine readable. As the ecosystem evolves, as an industry leader in scale and great content, we expect to be at the table for new deals as well as expanding current deals. This opportunity remains largely in front of us even though we've had revenue and growth from it already, so we're pretty excited about it.
And then a couple of your second quarter revenue trends were softer than the first quarter. Is that a setback? Or do you expect some of that variability? And do things still remain on track at this point?
Giuliano, I don't view Q2 as a setback. We remain on track with the strategy we've outlined. It's important to separate the quarterly variability we saw from the underlying trajectory of the business. We expected 2026 to include both meaningful progress and quarterly variability, particularly around content licensing. That's still an important growth engine for us. Coupled with changes in consumer behavior, we're creating more direct engagement with our audience. We did experience pressure in digital advertising from the loss of a programmatic partner in the quarter, but the businesses most important for long-term growth continue to perform well. Digital-only subscription revenue grew for a second consecutive quarter, digital other revenue grew by more than 20% year-over-year, and we delivered good free cash flow growth and solid net income. We're also seeing underlying fundamentals in LOCALiQ stabilize and improve. So while some revenue categories were softer in Q2 than Q1, we see encouraging progress in the areas most important to long-term success. We're seeing our audience and data work scale more meaningfully, which led us to reaffirm our full-year outlook. We have a lot of confidence in where we are and where we're going.
And then last one from me. Is there anything to update on the Google litigation?
Nothing specific since our last earnings call, but we remain very optimistic about our position. The next big milestones include the remedies ruling in the DOJ Google case, which we expect may be released in the near future, and a ruling on Google's summary judgment motion in our case, which we expect around September. We'll disclose any material developments as they occur. One important point: in our outlook for 2026 and 2027, we have not built in any specific upside from a more open and transparent advertising ecosystem that might evolve from DOJ remedies. So the guidance we reaffirmed today is without any benefit from potential upside related to DOJ remedies or our litigation against Google. That remains upside for us in the future, whether this year or next year.
Your next question is from Matt Condon with Citizens Bank.
My first question here is just Google accelerated its push into AI search this quarter. A lot of other open web companies have been calling that out. Is there any way that you can size that impact on the business in the second quarter? And then have you seen search trends stabilize at all more recently?
Mike, I'll jump in on search trends and then circle back to Trisha. The way we look at this is the direct, engaged, and identifiable audience will produce better economics and a more reliable business than maximizing low-value anonymous traffic from any one platform. Our strategy for many quarters has been to diversify how audiences find us, convert interactions into direct known relationships, and expand discovery via social and video. Newsletters create habit, and registration and subscriptions allow us to better understand and monetize users. That creates value across multiple revenue lines, not just the revenue most impacted by search changes, which is programmatic. There's a lag between audience growth in these channels and the full revenue benefit of multipoint monetization. Trisha, do you want to add anything?
Sure. Our digital advertising performance in the quarter was driven by three main things. One, the impact of search. Two, the loss of a programmatic partner in the quarter. And three, a platform policy change that impacted one of our sponsored link partners. Each of those was fairly equal in size on the year-over-year impact. One encouraging point is that our premium sales on our platform did grow year-over-year, and our RPMs continued to improve throughout the quarter. So the things we can control are moving in the right direction.
Great. Another question: some other people have talked about potentially shutting Google off as far as their crawlers. Obviously, that would impact search for you, but then that could give you more negotiating leverage for AI licensing deals. Can you talk philosophically about whether this would be something you'd be interested in? At what point could you easily do that, meaning would search become such a low part of your business that this would make sense?
Yes, Matt, the short answer is yes, we could consider that. We're not there yet. There are still areas where we have great content and search still performs, such as breaking news and big sports events like the World Cup. Search revenue on our platform today is relatively small, and much of the search-driven traffic is one-and-done and less monetizable. So I can see a day where we turn off scraping or make our content unavailable to crawlers; that day is getting closer. I can't put an exact timeline on it, but it could be within months to a year or a bit more. Our preferred path is to negotiate a fair licensing deal with Google so that our content can appear in both traditional search and AI summaries. But if we need to block them to reach a fair deal, we will do that. We're getting closer to that decision point.
And then on the subscription business, as we look forward what are the key areas that continue to drive growth? How much of a lever is pricing from here?
I love this question. Coming out of Q2, the most important point is that our digital-only subscription revenue is continuing to grow and has now grown year-over-year for two consecutive quarters. The ARPU increase is an important factor, but it's not solely the result of broad price increases. It reflects a better mix of subscribers, more consistent offers, less reliance on deep discounting, and the removal of lower-value subscribers that did not generate attractive lifetime economics. The actions we took to improve subscriber quality and economics are working. We would not extrapolate a 34% ARPU growth rate indefinitely, but we continue to see opportunity through pricing, packaging, and stacked products. Volume trends are stabilizing as well — the sequential decline moderated and the start-to-stop ratio improved during the quarter. We are committed to ongoing growth in subscription revenue. As we return to volume growth, we will have more levers to make growth more meaningful. Our objective remains to grow subscription revenue and lifetime value, not to pursue subscriber volume at uneconomic price points.
What I would add to Kristin's remarks is we're not at the end of the runway for ARPU growth. We expect to lift subscription revenue for many quarters to come through ARPU. Importantly, as Kristin mentioned, volumes are stabilizing. When we look out several quarters and years, we see meaningful subscription revenue growth driven by the return of volume growth. The work we're starting with Palantir will help us deliver better content experiences and offer subscriptions at the right price and time. So we see runway ahead driven by ARPU in the near term and the return of volume growth over a longer horizon. We're very excited about the digital subscription category and its performance over the next few years.
Your next question is from Barton Crockett with Rosenblatt.
I was wondering about numbers. You guys report monthly unique visitors, and I think it was down to a number substantially lower than it was in the first quarter and the year-ago. Can you talk about what's driving that?
I'll take that. Barton, we still maintain one of the largest digital audiences among content creators, and there's value in that scale. But consumers are changing how they discover content, so the quality of our audience is increasingly more important than simply maximizing anonymous uniques. The decline in uniques does not reflect lower demand for our content; it reflects lower referrals from traditional search because of the discovery changes we're seeing. Our reach is extending beyond owned and operated properties into social and video channels. Those audiences might not be reflected in traditional unique visitor metrics, but they do show our content is reaching consumers at scale. Our strategy is to meet audiences where they are, use registration and subscriptions and first-party data — including capabilities coming from Palantir — to build direct relationships and increase lifetime value. We'd rather have a larger share of known, highly engaged users than maximize one-time anonymous visits because known users generate greater value across advertising, subscriptions, commerce, and licensing due to deeper engagement and return frequency.
Barton, to add to that, a good example is what we did with the subscription business about a year to 18 months ago. We have fewer subscribers today than in early 2025, but we're growing revenue because we've improved the quality and value of those subscribers. It's about attracting the right subscriber and unique visitor base so we can increase ARPU per user. Whether it's 180 million uniques or 140 million uniques, what matters is ARPU per unique. If we can achieve a higher ARPU per unique at a slightly smaller audience and then grow from there, that's a strong position. That's what we're hyper-focused on as search dynamics change.
Extending that, you had a goal to be majority digital at some point this year. This quarter ticked slightly down to 47.4% from 47.8%. What gets you to majority digital? Is it ad revenue turnaround or something else?
I do think our advertising revenue trends improve, which will help. We expect advertising trends to improve in the back half of the year as our audience and data work are more meaningfully reflected in revenue. There are other growth drivers as well: AI licensing should continue to grow as we sign new deals and reformat content for machines, unlocking more value; our digital-only subscription business is moving in the right direction; and LOCALiQ showed positive indicators with ARPU growth and customer count increases and improved EBITDA in the quarter. So while there will be quarter-to-quarter variability, the combination of subscription momentum, licensing growth, audience/data monetization, and LOCALiQ improvement gives us confidence in reaching majority digital in the back half of the year and ultimately returning to revenue growth.
We have reached the end of the question-and-answer session, and I will now turn the call over to Mike for closing remarks.
Yes. Thank you, and thanks to everybody for joining today. A couple of important points to recap. First, while we will have variability from quarter-to-quarter, the first half of 2026 was very good. We've improved overall revenue trends and are moving toward our inflection point. We grew EBITDA in the first half of the year. In the second quarter, we grew free cash flow double digits over the prior year, and we posted another quarter of positive net income. We feel really good about the second half of 2026, which led us to reiterate our full-year guidance calling for significantly improved same-store revenue trends versus recent years, EBITDA growth over the prior year, double-digit free cash flow growth and the fourth consecutive year of free cash flow growth, and positive net income for the full year. We're excited about the Palantir relationship and believe it will help us turn up large amounts of first-party data into more actionable intelligence. None of that is in our forecast for the year, so we think there's upside from Palantir's work both this year and in years to come. We're also excited about the digital other category; that is a major driver of what will get us to more than 50% digital revenue later this year. We're seeing double-digit growth in our commerce and affiliate revenue categories as well. Off-platform revenue from social channels, newsletters and video are all potential digital revenue upsides in the back half of the year. All the work we're doing is leading to a more engaged and recurring audience, which creates signals and intelligence we can use to grow repeatable revenue across our digital streams. We're really excited about the work and the second half of the year and look forward to updating you on our Q3 progress. Enjoy the rest of the summer, and we look forward to talking to you again to update you on our Q3 progress. Thanks, everyone.
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.