Earnings Call Transcript - EVC Q3 2021

Operator, Operator

Greetings, and welcome to the Entravision Communications Corporation's third quarter 2021 earnings conference call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kimberly Esterkin of investor relations. Thank you. You may begin.

Kimberly Esterkin, Investor Relations

Thank you, operator. Good afternoon, everyone, and welcome to Entravision's 2021 third quarter earnings conference call. I hope everyone is staying healthy and safe. Joining me on the call today is Walter Ulloa, chairman and chief executive officer; and Chris Young, chief financial officer. Before we begin, I must inform you that this conference call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Entravision's SEC filings for a list of risks and uncertainties that could impact the actual results. This call is the property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Entravision Communications Corporation is strictly prohibited.

Walter Ulloa, CEO

Thank you, Kimberly, and good afternoon, everyone. We appreciate you joining us for Entravision's third quarter 2021 earnings call. Entravision's business continues to perform very strongly, and the third quarter was no exception. We are proud to see growth across all of our core businesses, with digital, in particular, being our shining star. Digital has comfortably become the vast majority of our revenue, representing 73% of total revenue in the third quarter as we evolve our business to become a global digital media powerhouse. Speaking of evolving our digital business, just today, we announced the acquisition of 365 Digital, a digital marketing solutions company headquartered in South Africa. We are very excited about this acquisition, which marks our third digital acquisition within the last 13 months. I'll speak more about our digital growth and strategy later on the call. But first, let's begin with the consolidated results for the third quarter. Net revenue for the third quarter totaled $199 million, up 216% year-over-year. On a pro forma basis, including Cisneros Interactive and MediaDonuts in our prior year results, revenue increased 60% over the third quarter of 2020. Growth during the quarter was largely driven by our digital business, as well as the continued sequential and year-over-year improvements of our core television and audio businesses. For the nine months ended September 30, revenue totaled $526.3 million, up 205% compared to the same period in 2020. Similar to the quarter, year-to-date revenues benefited from the continued sequential and year-over-year improvements of all three business segments, with digital leading the way. Adjusted EBITDA totaled $23.2 million for the third quarter, up 42% year-over-year. On a pro forma basis, accounting for Cisneros Interactive and MediaDonuts, adjusted EBITDA increased 17% year-over-year. We have been able to maintain many of the cost reductions placed at the beginning of the pandemic while, at the same time, improving top-line results to help drive our incredibly strong EBITDA growth. Now, let's take a look at our segment performance. Digital revenue totaled $146.1 million for the third quarter, more than 10 times higher than the $13.7 million generated in the prior year period. Digital revenue represented 73% of total revenue for the company in the third quarter. Along with strong organic growth, the primary drivers of this improvement were our acquisition of a majority interest in Cisneros Interactive in the fourth quarter of 2020, which became wholly owned during the third quarter of 2021, and our acquisition of MediaDonuts at the beginning of the third quarter. On a pro forma basis, our digital revenue increased 95% compared to the prior year period. As I just noted, at the end of August, we officially acquired the remaining 49% interest in Cisneros Interactive and now own 100% of the company. Cisneros Interactive maintained sales partnerships with major technology platforms like Facebook, Spotify, and LinkedIn in Latin America. The business has been performing extremely well. As a result, Entravision has become a dominant digital player in Latin America. Our digital business is now focused on a combination of top-tier global audience and media representations, programmatic technology and local digital solutions, such as El Boton, our digital audio app, which includes all of our radio broadcast shows, talents, and podcasts that streamed over 3.5 million downloads per month during the third quarter. Speaking of other digital solutions, additional growth drivers of digital revenue in the third quarter included Smadex, our global mobile programmatic user acquisition and performance business unit headquartered in Barcelona, which grew its revenue by 56% compared to the third quarter of 2020. Our US local market and solutions business was up 45% in Q3 2021 versus Q3 2020. The MediaDonuts addition means we now serve more than 1,400 clients each month in over 30 countries, with campaigns running in over 120 countries. We are now becoming a successful digital player in Southeast Asia, particularly with Twitter and TikTok. The integration of MediaDonuts is going well as most of the heavy lifting to integrate their back office has been completed. Now, let's turn to our television segment, which comprised roughly 18% of revenue for the third quarter. Television revenue was $36.5 million for Q3, down 4% compared to the prior year period, primarily due to a decrease in political revenue, partially offset by increases in local and national advertising revenue. Excluding $4.9 million of political spend in Q3 2020 related to the presidential election and $400,000 of political spend in Q3 2021 related to the California recall election, core television advertising increased 15%, with national advertising revenue increasing 5%, and local advertising revenue up 25% year-over-year. When comparing Q3 2021 total television revenue with pre-COVID Q3 2019 results, TV revenue finished flat in Q3 2021 versus Q3 2019. The auto category, particularly new car sales, continues to face supply chain pressures related to the international supply of electronic chips. While consumer demand for cars remains strong, the availability of new cars is being impacted by delays in production. Thus, television auto ad sales were down 9% in the third quarter compared to the prior year period. Offsetting these declines, services were up 9%, and healthcare was up 1% in Q3 compared to the last year's same period. Retail, restaurants, travel, and leisure all also grew in the quarter, assisted by overall improving macro conditions and the rollout of the vaccine. Turning to our rating performance, our Univision television affiliates built upon their market leadership in September 2021. For adults 18 to 49 in early local news, our Univision television stations finished ahead of the Telemundo competition in 11 of the 17 markets where we have head-to-head competition, plus three ties. In late local news, we finished ahead of Telemundo competitors among adults 18 to 49 in nine markets, along with the 17 markets where we have head-to-head competition, plus two ties. The CONCACAF Gold Cup tournament rounded up the summary of soccer on our Univision and UniMas television stations, the final match between the United States and Mexico national teams delivered impressive ratings. The game ranked number one or number two for the time period among all local broadcast stations in 13 of our markets among adults 18 to 49 and adults 25 to 54, outperforming the NBC Summer Olympics. Finally, let's turn to our audio segment, which comprised the remaining 9% of our third quarter revenue. Audio revenue totaled $16.4 million for the third quarter, a sizable increase of 42% year-over-year. Local audio revenue increased 39% year-over-year, while national audio revenue was up 47% year-over-year. Excluding political spend of $1.2 million in Q3 2020 related to the presidential election and $600,000 of political spend in Q3 2021 related to the California recall election, core radio revenue increased by 54% versus the third quarter of 2020. When comparing Q3 2021 total audio revenue with pre-COVID Q3 2019 results, audio revenue grew 11% in Q3 2021 versus Q3 2019. The execution across our radio business could not be stronger. With the addition of our executive vice president of national sales, Chris Munoz in June of 2020, we reorganized our operations, streamlined our client base, and positioned the radio segment for improved top and bottom line performance. This business was breakeven just two years ago, and we are now seeing record gross margins of 41%. Now, let's look at more specifics of the radio segment's performance for the third quarter. In our number one market for Los Angeles, radio cluster revenue increased 64% compared to last year, also updating our 2019 ad revenue performance by 23%. For the first nine months of 2021, the Entravision Los Angeles radio cluster outperformed the total market by 24%, a remarkable achievement. In the 11 markets where we subscribe to Miller Kaplan data for total spot revenue, we outperformed the market by 10% in total revenue combined. We outperformed the total market in seven of the 11 markets to which we subscribe to Miller Kaplan. In terms of advertising categories, we saw growth in nine of our top 10 categories. Services remained our largest category, representing 36% of total audio revenue, improving by 37% year-over-year. Healthcare, our fifth largest category, was up 52% compared to the prior year period. Other ad categories showing growth included restaurants, which improved 44%; retail, which improved 32%, and travel and leisure, which improved 712%, all on a year-over-year basis. The other category saw an increase of 19% compared to the third quarter of 2020 based on increased audio ad spending by local car dealerships, despite the supply chain issues I discussed earlier. Looking at our radio division ratings performance for summer 2021 among Spanish language radio stations, the Erazno y La Chokolata show is ranked number one in eight of our nine markets released for summer among Hispanic adults 18 to 49 and Hispanic adults 25 to 54, including ties. Across our nine owned and operated stations, the Erazno y La Chokolata show reached more than 522,000 Hispanic adults 18 to 49. In summary, Entravision had another fantastic quarter, positioning us well for the final three months of the year. Before speaking further, I will turn the call over to Chris Young, our CFO, to discuss our third quarter 2021 financial performance and our fourth quarter 2021 pacings. Chris?

Chris Young, CFO

Thanks, Walter, and good afternoon, everyone. As Walter discussed, revenue for the third quarter 2021 totaled $199 million, an increase of 216% from the third quarter of 2020. When comparing on a pro forma basis and including Cisneros Interactive and MediaDonuts revenue in our 2020 results, revenue increased 60% over the prior year period. For our digital division, revenue totaled $146.1 million, up over tenfold over last year. When compared on a pro forma basis, including Cisneros Interactive and MediaDonuts revenue in our 2020 results, digital revenue increased 95% over the prior year period. For our TV division, total revenue was $36.5 million, down 4% year-over-year. Excluding political, core ad and spectrum-related revenue was up 15% year-over-year. Retransmission revenue for the quarter totaled $9.1 million, which was flat year-over-year. Lastly, for our audio division, revenue totaled $16.4 million, up 42% over the prior year period. Excluding political, core audio revenue was up 54% over Q3 of last year. Now, let's turn to expenses. Direct operating expenses totaled $28.6 million for Q3 of 2021, up 18% from $24.2 million in Q3 of 2020. Excluding the Cisneros and MediaDonuts acquisitions, direct expenses were up 6% over the prior year period. SG&A expenses were $14.5 million for the quarter, an increase of 47%, compared to $9.9 million in the year-ago period. Excluding the Cisneros and MediaDonuts acquisitions-related SG&A, SG&A expenses were up 12% compared to the prior year quarter. Finally, corporate expenses increased by 15% to total $7.3 million for the quarter compared to $6.3 million in the same quarter of last year. The primary drivers of corporate expense increases were salaries and noncash compensation expenses. During the third quarter, our share buyback remained on hold. We also maintained our dividend at $0.025 per share and continue to eliminate expenses at the operating and corporate levels deemed secondary to serving our core businesses. We will continue to evaluate our buyback at the end of each quarter, which will be at the discretion of our board of directors. Consolidated adjusted EBITDA totaled $23.2 million for the third quarter, compared to $16.4 million in the third quarter of last year. On a pro forma basis, accounting for the Cisneros Interactive and MediaDonuts acquisitions, adjusted EBITDA was up 17% year-over-year. Entravision's portion of Cisneros Interactive adjusted EBITDA represented a $4.8 million contribution to our total EBITDA in the third quarter, which represented 51% ownership through the end of August and 100% ownership starting September 1. Going forward, 100% of Cisneros Interactive's adjusted EBITDA will be attributed to Entravision as defined in our earnings release, was up approximately 112% to $22.4 million in the quarter, compared to $10.6 million in the prior year period. Strong free cash flow remains a cornerstone of our business, and we expect this high free cash flow conversion rate to continue for the foreseeable future. Earnings per share for the third quarter of 2021 were $0.14, compared to $0.11 per share in the same period last year. Cash free for income taxes was $0.5 million for the third quarter, compared to $5.1 million in the same quarter of last year. Net cash interest expense was $1.5 million for the third quarter, compared to $1.3 million in the same quarter of last year. Cash capital expenditures for the third quarter totaled $1.4 million, compared to $2.1 million in the prior year period. With year-to-date capital expenditures of $4.3 million, capital expenditures for the year are expected to be approximately $6.5 million. Turning to our balance sheet, which remains very strong. Cash and marketable securities as of September 30, 2021, totaled $182.9 million. Total debt was $213 million. Net of $75 million in cash and marketable securities on the books, our total leverage, as defined in our credit agreement, was 1.6 times as of the end of the third quarter. Net of total accessible cash and marketable securities on the books, our total net leverage was 0.3 times. Turning now to our pacings for the fourth quarter of 2021. As of today, revenue from our digital business is pacing at a plus 64% over the prior year period. Factoring in Cisneros and MediaDonuts revenue generated in the fourth quarter of last year, our digital business on a pro forma basis is pacing at a plus 36%. Our TV business is pacing at a minus 24% over the prior year period, with core TV advertising, excluding $11.1 million in political in the prior year, pacing at a minus 2%. Lastly, our audio business is pacing at a minus 6%, with core audio, excluding $3 million in political generated in the prior year period, pacing at a plus 15%. All in, our total revenue, compared to last year is pacing at a plus 32%. Excluding $14.1 million in political generated in last year, our total revenue is pacing at a plus 43% versus the prior year period. Pro forma our Cisneros and MediaDonuts acquisitions in the prior year's results, our total revenue is currently pacing at a plus 17% over last year, while excluding political revenue last year, our core pro forma revenue is pacing at a plus 26% over last year. With that, I'll turn the call back over to Walter.

Walter Ulloa, CEO

Thank you, Chris. Those who have been following us know that Entravision has been building this digital growth strategy for some time. We are particularly proud to welcome MediaDonuts in early July and to acquire the remaining 49% of Cisneros Interactive this past August. Today, we announced the acquisition of 365 Digital, bringing Entravision into Africa. This is our third digital acquisition within a 13-month period, and our digital operations now have a presence on five continents. This acquisition further positions Entravision as a global digital marketing powerhouse, serving platforms, brands, and local businesses with sophisticated advertising solutions. 365 Digital, which is headquartered in Cape Town, South Africa, maintains exclusive sales representations with TikTok, one of the world's top mobile video user-generated and advertising platforms; Trident, a global digital audio streaming and podcast marketplace; and Anzu, a sophisticated and advanced in-game advertising platform. 365 Digital also offers end-to-end digital publisher solutions for premier South African publishers, including a proprietary digital ad network. We plan to leverage 365 Digital's local and regional access to brands and agencies, and its operating expertise in existing unique commercial representations to scale Entravision's digital business model and suite of services across Africa. The essence of these businesses, Cisneros Interactive, MediaDonuts, and 365 Digital, is that we are able to apply their models across geographies while efficiently leveraging our resources, platforms, talent, and governance protocols. Moreover, we can rapidly deploy our sales and operational service standards where little or no prior sales presence exists to expand Entravision's digital footprint with local digital advertisers worldwide. Part of our vision is to become a critical partner to global technology platforms, such as Facebook, Twitter, Spotify, TikTok, LinkedIn, and others. Cisneros Interactive, for example, has grown its prominence in digital and sales for Facebook in Latin America, while MediaDonuts is a leading advertising partner for Twitter and TikTok throughout the Southeast Asia region. While Facebook, Twitter, and TikTok are well-established within the United States from a digital advertising perspective, they are just getting started in many international locations. Entravision has a first-mover advantage in these emerging economies. Sub-Saharan Africa, our newest geographical addition, is an extremely attractive target market with nearly $500 million digitally connected to consumers and one of the fastest-growing digital marketplaces globally. Our 365 Digital business model aligns seamlessly with Entravision's culture, vision, and passion, and we are all excited to see the success we can achieve together. In summary, it's easy to see that the Entravision of today has evolved significantly. Each of our business segments, digital, television, and audio, combine together to create a company that is more than the sum of its individual parts. Our digital business alone positions us against a new set of competition that should strengthen our multiple from a shareholder perspective, expand our client base from a customer perspective, and advance our in-house capabilities and talent from an associate perspective. The future is bright, and we look forward to seeing Entravision continue its growth journey to become a well-oiled global marketing solutions machine powered by technology, benefiting from the continued expanding connected consumer base around the world. As always, I would like to thank our entire team for their efforts and contributions to our strong performance to date. This concludes our prepared remarks. So I would like to thank you again for your continued support of Entravision. Chris and I will now open the call up to your questions.

Operator, Operator

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. Our first question comes from the line of Michael Kupinski with NOBLE Capital Markets. Please proceed with your question.

Michael Kupinski, Analyst

Thank you, and good morning. A couple of questions. Regarding the pacings in Q4 for your TV and radio divisions, is there any way to quantify what the impact might be from the auto category itself, I mean, in terms of the drag in terms of your pacing data?

Chris Young, CFO

Hey, Michael. So the big issue with auto, as you know, is the chip issue, and it's really impacting our TV business more so than our radio business. For TV, auto is pacing at a minus 28%, and that's our number two category. So that's a significant deal. For radio, on the automotive side, the pace is at minus 19%, so not quite as severe, but still negative. The good news, however, is, because we provided the overall pacing information, TV is at minus 2%, but on a core basis, radio is at a plus 15%, which indicates that we have our categories stepping up and filling in the gaps. But that provides you context on the automotive impact.

Michael Kupinski, Analyst

And is the filling in of the gap coming from sports betting and so forth, or just other services? Can you give us a flavor of what the robust categories are?

Chris Young, CFO

Sure. It's coming from services, insurance, and legal, along with government messaging, the COVID-related pandemic type of messaging that is government-funded, and healthcare. Those are the significant movers for both TV and radio that are offsetting it.

Michael Kupinski, Analyst

Got you. And then, regarding 365 Digital, is that included in your pacing data for digital in the fourth quarter?

Chris Young, CFO

It is not. But Michael, this is an early-stage acquisition. We are not going to disclose numbers for that acquisition, but they won't be material this year in terms of the overall digital platform, so there's really nothing to model at this point.

Michael Kupinski, Analyst

And the balance sheet doesn't change meaningfully because of the acquisition either, right?

Chris Young, CFO

That's correct. If you look in the press release, the acquisition was slightly less than $2 million, not a significant item, so that puts it into context for the P&L impact.

Michael Kupinski, Analyst

Yeah, thanks for that. I didn't get a chance to read through all that yet. In terms of your opportunities outside, this is, obviously, a great win for you all in terms of this acquisition frenzy you've been on in building a great business here. The relationship with TikTok. Obviously, you said it's a developmental business, but how strong is that relationship? It seems like your Latin American businesses don't represent TikTok. They represent more Facebook and so forth. What are the opportunities for you to introduce Facebook in some of your Asian markets and now TikTok in some of your Latin American markets? How do you think that you will be able to integrate those? And is there an opportunity there?

Walter Ulloa, CEO

Michael, it's Walter. We represent TikTok in Southeast Asia in three important countries, and now with this acquisition, it will be four countries with South Africa. We think this further strengthens our relationship with TikTok. We believe that that's an important platform now and in the future. We expect it to grow significantly, just as it has this year and into next year. As for Facebook, I can't really comment on that. We don't represent them in Southeast Asia, and essentially, that's all I'll say. Their plans and strategies are very private and certainly, they do not share them with us. But we have a great relationship with Facebook and expect that to continue.

Michael Kupinski, Analyst

Walter, is there another provider that has TikTok in your Latin American markets? I'm just wondering if there is an opportunity for you to pick up TikTok with Cisneros in Latin America.

Walter Ulloa, CEO

There's a new company emerging; they've been around for several years but are now emerging as a key player, so you'll probably be hearing more about them in the future. We understand they are representing TikTok in a number of Latin American countries.

Michael Kupinski, Analyst

Got you. And then, in terms of acquisition prospects, obviously, you've been on an acquisition spree. Are there other developed companies in this segment in the industry, particularly in Europe? I know that you might have an angle in terms of maybe acquiring one in that marketplace. But where are you seeing the most opportunities for further M&A in the space?

Walter Ulloa, CEO

Well, Michael, we continue to search the globe for opportunities. Right now, we are in discussions regarding some potential opportunities related to expanding our digital footprint. We are looking at every continent and every country in the world to identify future opportunities.

Michael Kupinski, Analyst

And Walter, you are generating a lot of cash and have significant cash reserves. What are your thoughts on capital allocation at this point? It seems like you could possibly increase the dividend. You have the prospect of reinstating your share repurchase authorization. What are your general thoughts on capital allocation here?

Walter Ulloa, CEO

Well, Michael, we are certainly pleased with the fact that we have about $183 million in cash equivalents and marketable securities on the balance sheet. We continue to hold that level of cash with confidence due to our ongoing work related to acquisitions. When the pandemic was upon us, having that cash helped us significantly. I would say that our emergence from the pandemic in such a strong fashion is due to several factors, but our ability to get through it with our existing cash reserves was crucial. Regarding the dividend, as you know, the initial reduction was primarily in response to the prevailing economic and pandemic crisis. We recognize that dividends are important to our shareholders. We remain in a cash-conservation mode due to the uncertainty of the current economic environment, and we believe that reducing the dividend at this time is a prudent move. That said, the board reviews the dividend each quarter, and we could certainly consider raising it in the future.

Michael Kupinski, Analyst

Got you. That’s all I have. Thank you.

Chris Young, CFO

Thank you, Michael.

Walter Ulloa, CEO

Thank you, Michael.

Operator, Operator

Our next question comes from the line of James Dix with Industry Capital Research. Please proceed with your question.

James Dix, Analyst

Hey, guys. Just a couple from me. First, just on the free cash flow conversion. It's certainly been impressive. This quarter, it really seemed to be almost the positive outlier. Chris, you indicated you expect that free cash flow conversion of EBITDA to continue. But should we expect some moderation as we model for next year, more in the range of 70% or something as opposed to the nearly 90% plus we're seeing in this quarter? Just how should we be thinking about that conversion?

Chris Young, CFO

Yeah. I think it's safe to say it will moderate a little bit. The tax bill came in a little lighter in the third quarter than we were anticipating. So I expect that to tick up slightly. We had mentioned this earlier in the year. Expect that to pick up slightly. Capital expenditures have also decreased a bit. Again, it's a chip-related problem; much of the equipment we intended to purchase isn't simply available. So, we're looking at a CapEx line of about $6.5 million, compared to $9 million two quarters ago. We will finish up at around $6.5 million, and for next year, it's early to discuss, but I anticipate a more normalized year as the chip issue gets resolved.

James Dix, Analyst

Okay. So next year is more and more normalized as opposed to a $2.5 million shift from this year to next?

Chris Young, CFO

I think so. I don't model out 90% free cash flow conversion for next year. But that's correct.

James Dix, Analyst

Okay, fair enough. And then just while on the topic of next year, roughly how much advertising should we be thinking about pulling out of TV just for the affiliation changes, which you are going to be having at the end of this year?

Chris Young, CFO

Sure. So you're talking about Tampa, Washington, and Orlando. Those are affiliates that are going over to Univision starting January 1. That represents about $20 million in revenue and $10 million in cash flow. That is the outlook for what's coming down. We haven't yet announced what we will do with the stations regarding affiliations for programming. But whatever we choose to do will offset that number, so that's just the starting point for the growth number.

James Dix, Analyst

Okay, great. And then in terms of the acquisitions, I gather, Walter, you don't want to discuss the multiple on that deal. The press release simply stated that there was a certain multiple based on three years of cash flow. Could you comment more generally on where you think the multiples have been going over the past year? I think you've said previously that they've been increasing. Cisneros, you got for six times EBITDA. Any sense of where those multiples are at now in the market?

Walter Ulloa, CEO

Sure, James. And by the way, it's good to hear your voice. My sense is that the multiples for digital businesses, the ones that we are targeting, are somewhere between eight and ten times. They have indeed increased.

James Dix, Analyst

Yeah, okay. And then just you have a couple of other opportunities on your plate. Any sense of the timing regarding when you could pull the trigger on those? Should we be looking for these over the next six months or could it be something more imminent?

Walter Ulloa, CEO

No, I can't give you a timeline. We're working on various opportunities globally to search for digital acquisitions that support and complement our existing businesses. As you know, we have three lines of digital business. One is our local solutions, digital marketing for mid and small businesses in our broadcast markets, sometimes even outside of our broadcast markets. Second is our proprietary DSP platform, Smadex, which is a transparent mobile media buying platform connecting to international mobile ad exchanges and offering real-time bidding for ad space. That has been a very important business for us showing immense growth in Q3, of about 56%. All of the staff that support that business are based in Barcelona. Lastly, we have our international representative business where we represent most major global digital platforms.

James Dix, Analyst

Okay, and you're looking at all three of them?

Walter Ulloa, CEO

Absolutely.

James Dix, Analyst

Yeah, okay. And then just concerning the fundamentals of the digital business at the moment, especially internationally. Facebook has talked about the impact of the changes that Apple is making and how it’s causing a headwind on their platform. Do you have a general sense that you are seeing less of that impact at Cisneros, in particular, due to the lower penetration of iOS in those markets? What are you hearing about this dynamic and any potential headwind that could arise?

Walter Ulloa, CEO

Well, certainly, the launch of iOS 15.2 has stirred quite a bit of controversy within the digital advertising industry. We experience less exposure to that because of Apple's low market share in our target territories and countries in Latin America. I believe Apple penetration is about 10% compared to other territories and countries where we now operate. But it’s something we need to address. We haven't seen any immediate impacts, but we are monitoring it closely and will continue to make adjustments as necessary.

James Dix, Analyst

Okay. And then, one last question from me. I've heard from some that traditional agencies and international markets might have made some cutbacks, which is actually, to some extent, increasing demand from clients looking for specific assistance that a representative firm could provide, such as Cisneros in Latin America or MediaDonuts in Asia. Have you encountered this situation? Is there an increase in demand as traditional agencies are scaling back and thus providing an opportunity for you?

Walter Ulloa, CEO

It's quite possible, and it undoubtedly serves our business well. While we haven't heard that specific feedback, we know that the digital advertising sector is growing rapidly, remaining the fastest-growing segment in advertising. Thus, it comes as no surprise that major advertising agencies might be reducing their headcount and looking to provide clients with more support from representative firms like ours.

James Dix, Analyst

Okay. Alright, great. That’s it for me.

Chris Young, CFO

Thank you, James.

Walter Ulloa, CEO

Thanks, James.

Operator, Operator

Ladies and gentlemen, there are no further questions at this time. I would now like to turn the floor back to Mr. Walter Ulloa. Thank you.

Walter Ulloa, CEO

Thank you, operator. Certainly, it's a pleasure to speak to everyone, and thank you for joining all of us today and for your support. We remain optimistic about the future of Entravision, and we look forward to sharing our progress with you on our fourth quarter earnings call in March of 2022. Thank you.

Operator, Operator

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.