Welcome to the Gannett Company Q2 2025 Earnings Call. Please note that this conference is being recorded. I would now like to turn 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 Gannett's second quarter 2025 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 Gannett Media. If you navigate to the Gannett 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 and our full year 2025 business outlook. Before we begin, please let me 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 Gannett's 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, adjusted EBITDA margin and adjusted net income attributable to Gannett. 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 a solicitation of offer to purchase any Gannett securities. The webcast and audio cast are copyrighted material of Gannett and may not be duplicated, reproduced or rebroadcasted without our prior written consent. With that, I would like to turn the call over to Mike Reed, Gannett's Chairman and CEO.

Thank you, Matt. Good morning, everyone. The second quarter reflects continued progress across most all facets of our strategy. During the call this morning, you'll hear a lot about the sequential improvements in our financial results from the first quarter to the second quarter. As we mentioned last quarter, 2025 will unfold as a year of two halves, and we are now beginning to see that shift take place. While the first half of the year didn't fully meet our expectations, momentum is building across key areas of the business, and you'll hear today about the operational and strategic initiatives that are improving our current trends and positioning us for stronger performance in the second half of the year. Stronger performance will also be driven by our recently announced $100 million cost reduction program and the strategic AI content licensing agreement we announced yesterday with Perplexity. Trisha will walk through details later in the call, but a few key highlights I want to address upfront this morning that we expect in the second half of the year. Those include same-store digital revenue growth between 3% and 5% year-over-year, meaningful total adjusted EBITDA growth compared to the prior year, and free cash flow growth of over 100% versus the prior year. We are seeing our key financial metrics move in the right direction. We saw that in Q2, and I'll run through a few of those in a second. We are also seeing that momentum and improvement carry into the third quarter, which we believe positions us well for the back half of the year. Looking at Q2, we drove sequential improvement across our key financial metrics. These include total adjusted EBITDA of $64.2 million, reflecting a sequential increase of 27%. We generated $17.6 million in free cash flow, representing sequential growth of 73%. We repaid $23.4 million of debt in the second quarter. And for the first 6 months, we have repaid close to $100 million of debt. Same-store revenue trends also improved sequentially, driven by momentum across our digital portfolio. Three of our four digital revenue categories posted sequential growth, and our overall digital revenue performance strengthened as the quarter progressed. Separately, digital advertising revenues grew 4% year-over-year as compared to being down slightly in the first quarter. Realizing these improvements in the second half of the year is critical to our ongoing transformation, and we believe our progress and current trends position us to accomplish this. Further, in the third quarter, we began implementing a cost reduction program targeting approximately $100 million in annualized expense reductions. And as a result, we expect total adjusted EBITDA to grow for the full year of 2025 over 2024 with meaningful growth in the back half of the year. And we believe this cost reduction program positions us to deliver solid total adjusted EBITDA growth again in 2026 and will lead to continued expansion of adjusted EBITDA margins. We expect the majority of these efficiencies will be implemented by the end of the third quarter with a small portion expected to carry into the fourth quarter. These actions are targeted, near-term and are already in motion, which, along with the green shoots across our digital portfolio that we are seeing, reinforce our confidence to drive much stronger performance in the second half of the year. Now let's turn to some key operational highlights from the second quarter. Our diversified digital revenue strategy is rooted in having an audience at scale with improving engagement in order to provide a foundation for sustainable growth. In the second quarter, which marked the first quarter the audience from the Austin American-Statesman was excluded, we maintained our position as one of the leading news and information providers among content creators with 181 million average monthly unique visitors coming to our platform. This underscores the continued strength of our overall reach. We also improved our engagement with that audience, evidenced by another quarter of page view growth compared to the prior year. We believe our heightened focus on monetizing the full spectrum of our audience through personalized experiences and diverse revenue streams positions us to drive meaningful improvement across our digital portfolio. A clear example of this progress is our digital advertising business, which returned to year-over-year growth in the second quarter. We've consistently seen how scaled audience growth and increased engagement directly drive programmatic yield and revenue. However, the more meaningful upside lies in our ability to convert that audience into premium, high CPM direct campaigns that align with advertiser objectives. We believe we will continue to benefit from the stability we are seeing across the broader advertising marketplace and that our growth will accelerate as we further leverage the strength of the USA TODAY brand and the reach of our national sales organization. We believe publishers in general, but the USA TODAY NETWORK in particular, provide an attractive brand-safe platform. And as a result, we see significant potential to unlock additional demand for large marketing budgets. Turning to our digital-only subscription business. The last 6 months have been a reset, hard but healthy. As we've evaluated the data on churn, we made the decision to stop acquisition that delivered volume without long-term subscriber value. We have calibrated our focus on high-value subscribers and are prioritizing ARPU and sustainable growth. That means some pain in the short term, but this is an intentional necessary shift that is already starting to show positive signs of improvement. Our local subscriptions continue to be our highest ARPU group, and we are doubling down on this core, where we have a differentiated product, strong brand trust and significant pricing power. Last year, we largely priced across the board. This year, we're localizing our approach, raising prices in markets with higher engagement and being flexible where needed. It's not a one size fits all, and we're getting more sophisticated in our approach. As we grow this business, we will continue to calibrate our focus on volume and profitability over the long term. We remain committed to growing digital-only subscriptions, but we are building our subscriber base with intention. This is important as we are seeing positive traction from this approach as digital-only ARPU increased both sequentially and year-over-year. We believe there is continued upside in ARPU, and we expect sequential improvement in digital-only subscription revenue for both the third quarter and the fourth quarter as we continue to build our base of loyal core subscribers. With that, I'll turn the call over to Kristin to outline some of the strategic initiatives in motion for Gannett Media during the second half of the year.

Thank you, Mike. Gannett Media continues to lead as an organization that prioritizes its audience, experiments with purpose and intent and moves at the speed of news. The results speak for themselves as we continue to have one of the largest digital audiences among content creators in the country. As I outlined earlier this year, our focus in 2025 is engagement. We will continue to lean in on highly engaging verticals such as sports, where OneTEAM Sports continues to demonstrate its dominance. In the mold of the Paris Olympics, we have successfully created an effective and repeatable playbook to dominate the biggest tentpole events. The power of our success was evident during major sporting events such as the Kentucky Derby, Indy 500 the College World Series, where we generated notable increases in audience, page views and readership per story. Our goal when we launched OneTEAM Sports was to drive repeatable audience growth as we strive to become the nation's most read sports network. And our results in the first half of the year show that we are on our way. Importantly, this passionate and highly engaged audience drives meaningful scale and delivers tremendous value to our advertising partners. Now with the football season quickly approaching, this gives us another chance to engage some of our most loyal readers and viewers with unmatched expertise and authority. Our mission for this season remains the same, delivering content that matters to them in the moment every time while opening new windows for readers to see the endless inventory of exceptional content and programming opportunities that we have throughout the network. This includes expanding our high school football content portfolio, which is a key driver of local digital-only subscriptions, also refining and expanding the NFL picks experience and leveraging newsletters to capitalize on our success with college football. We also have ambitious plans to become the leading force in entertainment. We have recently made a strategic hire, Wendy Naugle as our USA TODAY NETWORK Executive Editor of Entertainment. Wendy most recently served as the Editor and Chief for People, and she brings over 25 years of editorial growth and strategy development to our organization. Entertainment presents an exciting opportunity to expand our audience to deliver more personalized and relevant experiences and to drive higher digital revenue per user and per visit. We are moving quickly to execute our strategy that creates standout experiences around the topics our readers love, such as celebrities, fashion and style and doing so in the formats and platforms they prefer. This deepens their connection with our products and entices them to take another step in their journey. Similar to sports, entertainment is a powerful draw for our advertisers and also offers a compelling opportunity to grow our e-commerce business. On that note, our digital-only subscription volumes in Q2 reinforces that we still have work ahead to fully unlock the company's potential. I'm encouraged that our refined acquisition strategy drove both sequential and year-over-year growth in digital-only ARPU. Smart pricing plays a key role in our strategy, and we expect the back half of the year to benefit from a shift away from low-priced introductory offers, which based on our experience, generates minimal revenue and results in higher churn to a series of annual subscription offers that are expected to drive near-term revenue, reduce churn and strengthen our base of loyal readers. That said, we recognize that a portion of our audience will always remain relatively light consumers of our content rather than bringing them into the funnel through these high churn, lower introductory offers, we plan to introduce pay-per-article options that better align with their consumption habits. We also are taking a more dynamic approach to pricing by implementing models that better reflect the unique characteristics of our local markets. In parallel, we also see multiple opportunities to accelerate overall consumer monetization. We recently launched stacked products, which enables multi-product subscriptions. It's in beta across a few markets, and that is a foundational step with long-term potential. And as we look to more fully monetize our enormous audience, we also expect to lean more heavily into games to broaden our consumer revenue portfolio. To put it concisely, we are moving with speed and executing with precision, and we will continue to try new things, some that will have an immediate impact and some that will take time to scale as we work to reenergize our local consumer base and accelerate total consumer monetization. Back to you, Mike.

Thanks, Kristin. It's exciting to hear you share more about the key initiatives underway to deepen engagement and enhance the overall monetization across our digital advertising and digital-only subscription categories. Now shifting gears to AI. We are leveraging every opportunity to lead through innovation and strengthen our competitive position in today's dynamic digital landscape. You might have seen yesterday that we announced an exciting new deal with Perplexity, the AI-powered answer engine to license content from USA TODAY and the USA TODAY NETWORK of over 200 local publications. Gannett's premium content and trusted journalism will be integrated into Perplexity's AI-powered search experiences, including its newly released agentic web browser, Comet. The deal is comprised of both licensing fees and advertising revenue share and importantly, represents what we believe is fair value for our content. This strategic alliance with Perplexity exemplifies our continued leadership in embracing transformative technology and reflects our belief that innovation and responsible stewardship must go hand-in-hand, setting a standard for the way quality content and trusted journalism should be valued. Additionally, in the second quarter, we became the first publisher in the U.S. to launch Taboola's generative AI answer engine, Deeper Dive within USA TODAY. While still in beta, we are expanding this technology to a broader audience to connect readers with clear answers to their questions and surface real-time content exclusively from our trusted USA TODAY NETWORK. We are proud to bring this innovative experience to our audience, which we expect to increase time on site and deepen reader loyalty. Importantly, Deeper Dive also creates a new monetization channel by inserting contextually relevant high-intent ads directly into the AI-powered results page and in turn, allows us to capture search-like advertising revenue on our platform. Early performance has exceeded our expectations, and we are continuously expanding the beta launch to additional users. Furthermore, the growing volume of our user queries is expected to provide real-time insights that can actively inform our content strategy. As we gain a deeper understanding of the topics users are searching for, we can deliver timely, relevant content, which in turn is expected to drive stronger advertising CPMs and increased engagement from readers who are more likely to become subscribers. To protect and monetize the value of our journalism and content in the AI era, we are taking a two-pronged approach. First, by onboarding to the Snowflake Marketplace, we provide enterprise developers a straightforward, fully licensed way to train and deploy AI models on our content under transparent usage-based terms. Second, we have implemented new measures to prevent unauthorized data collection and scraping and direct such activities to a specific page for licensing information. This technology, which is now being adopted more broadly across the industry, is already reducing unauthorized use and highlights the premium attached to our trusted real-time news content. Over time, we expect the industry-wide shift to tip the scales toward paid access. And as changes to industry dynamics have tempered the growth we initially expected from partnerships, we have redirected those efforts toward building high-value advertising verticals on our platform. An example of that is our recently announced multi-year agreement with AddressUSA to power an online real estate portal across the USA TODAY NETWORK. As one of our largest multi-year agreements, AddressUSA's listings have been integrated throughout our network alongside editorial content, including topics such as home buying, selling, decorating and improvement. We are excited to partner on this innovative new real estate marketplace hub, giving our readers the information they need while generating immediate revenue opportunities at a very high margin. Now turning to our DMS business. We had a solid quarter with noticeable improvement across key areas of the business. We saw sequential growth in core platform revenue, segment adjusted EBITDA and client count. We also achieved a record high in quarterly core platform ARPU, which grew both year-over-year and sequentially. These positive signals, along with the strategic initiatives underway to enhance the product suite, reinforce our optimism for the second half of the year. These strategic initiatives include. First, strengthening our search optimization capabilities. Search remains an important component of advertising budgets, and we are leveraging tools such as Google AI Smart Bidding to better position our clients in search results. This initiative is expected to deliver measurable improvements in campaign performance and customer retention across our broader portfolio. Second, we established a CRM integration in the second quarter to deliver more targeted personalized campaigns and generate stronger insights for our customers, which we believe will lead to higher ARPU and better retention. Early results are encouraging as campaigns with this new integration have seen immediate measurable improvements to their marketing ROI. And then lastly, we launched our conversational AI voice agent within Dash to create a seamless and innovative omnichannel customer engagement experience. We view this as a significant opportunity for our DMS business and a key enhancement to our core product offering. These initiatives are all early stage, but we are already seeing a positive impact on ARPU, retention and customer growth. As we continue to scale them across our customer base, we expect these efforts to contribute meaningfully to the expected revenue growth during the second half of the year as well as 2026. I'd now like to turn the call over to Trisha to provide additional details and color around our 2025 second quarter financials, as well as the details on our updated full year 2025 guidance. Trisha?

Thank you, Mike. Good morning, everyone. Please keep in mind, all comparisons are on a year-over-year basis unless otherwise noted. In the second quarter, total revenues were $584.9 million, a decrease of 8.6% or 6.4% on a same-store basis. This represents a 130 basis point improvement from Q1 same-store revenue trends. While we are pleased to see the improvement, we are not yet improving our revenue trends at the pace needed. As a result, we expect to continue to align our expense structure with our revenue trends. In Q2, operating costs, combined with SG&A expenses decreased approximately 8%, reflecting our commitment to prudent cost management. Building on that momentum, in Q3, we began a cost program targeting $100 million in annualized cost savings, which is expected to lead to improved total adjusted EBITDA in the second half of the year. These initiatives give us near-term flexibility while supporting our digital transformation. We are focused on transformative cost reductions that continue to variabilize our cost structure, including an increased reliance on automation and third-party resource providers to reshape the organization into a leaner, more efficient company. Crucially, this is a moment to tap into AI-driven automation across our workflows and back-office processes, which is expected to unlock an additional layer of operating efficiency. We have also announced the closure of two of our largest production facilities, both slated to shutter later this year. The consolidation of these plants into other facilities, along with ongoing mail delivery conversions is expected to have a positive impact on our expense run rate going forward. Total adjusted EBITDA was $64.2 million in the second quarter, representing a margin of 11%. On a sequential basis, total adjusted EBITDA increased $13.7 million. While total adjusted EBITDA remains lower than the prior year, we expect to see year-over-year growth in Q3, Q4 and for the full year as a result of the expected improvement in revenue trends and the impact of the cost management program. On the bottom line, we reported a net income of $78.4 million in the second quarter, representing an improvement of $64.6 million. Our results also improved on an adjusted basis with adjusted net income attributable to Gannett of $84.5 million, increasing by $55.3 million. The net income of $78.4 million is heavily impacted by a tax benefit of $87.5 million, which reflects large quarterly variability expected across the year tied to the pre-tax results of each quarter. We expect to have a tax provision for the year and given the tax benefit of approximately $94 million year-to-date, we expect an exceptionally large provision in the back half of the year, largely in the fourth quarter. Total digital revenues in Q2 were $265.4 million, down 4.6% or 2.8% on a same-store basis and represented over 45% of total revenues. We saw a 100 basis point improvement in same-store digital trends from Q1 to Q2, while the digital share of our revenue expanded 160 basis points over Q1. Within digital revenues, digital advertising returned to growth due to solid performance in our page views, programmatic revenue and improvement in direct sales from our national teams. In Q2, our digital-only subscription revenues totaled $42.7 million. We continue to feel the impact of rebuilding our subscriber base, tightening offers and implementing a shorter grace period. While we believe the largest sequential impacts from grace changes are behind us, it will take a few quarters to return the digital-only subscription business to year-over-year growth. That said, we are seeing early signs of progress from our more intentional acquisition strategy, evidenced by our digital-only subscription ARPU of $7.79 in Q2, returning to growth both sequentially and year-over-year. And our strategic efforts to enhance the quality and the value proposition of our print product continue to demonstrate results. While we all know that print and commercial revenues continue to be a declining category for us, we are managing the long tail as effectively as possible. And the actions we've implemented to improve the subscriber experience have tempered declines over the last few quarters. We are committed to managing the print products and related secular declines as efficiently and profitably as possible, and we expect to carry this momentum into the back half of the year. Turning our attention to the Domestic Gannett Media segment. Revenue trends in Q2 on a reported basis were influenced by the performance in digital-only subscriptions and digital marketing services as well as the first full quarter without revenue from the Austin American-Statesman. In Q2, segment adjusted EBITDA was $43.2 million, up 30.3% compared to Q1. Segment adjusted EBITDA margins of 9.8% also saw sequential growth, increasing by 230 basis points. Turning to Newsquest. Revenue trends returned to slight growth in Q2, a result of favorable currency rates. Segment adjusted EBITDA was $14.9 million, up 5.3% to the prior year, while segment adjusted EBITDA margins totaled 24.3%. In our Digital Marketing Solutions segment, revenue remained lower year-over-year, but Q2 showed sequential improvement in both revenue and segment adjusted EBITDA margin through growth in both client count and ARPU. We are pleased with the sequential momentum from Q1 to Q2, which is reflected in the following key areas. Total core platform revenue was $116.9 million, up 8.1%. Segment adjusted EBITDA totaled $11.5 million, reflecting growth of 35.8% and our margin of approximately 10% also expanded over Q1. Average customer count increased nearly 400, an increase of 2.8% and core platform ARPU reached a new quarterly high in Q2 of $2,830, up 5.1%. Now let's shift to the balance sheet. At the end of the first quarter, our cash balance stood at $88.5 million, and our outstanding net debt was approximately $926 million. In Q2, free cash flow totaled $17.6 million, up 73% compared to Q1. There continues to be variability in our free cash flow each quarter, so while we expect Q3 free cash flow to decrease both sequentially and year-over-year, we expect free cash flow growth in Q4 and for the full year. We ended Q2 with approximately $1 billion of total debt, reflecting $23.4 million of total debt paydown for the quarter. We currently have approximately $20 million in real estate assets in various stages of the sales pipeline, and we are increasing our expectation on debt paydown to $135 million for the year. And in light of slower-than-expected pace of revenue improvement, we are updating our full year outlook. We now anticipate digital revenue to be roughly flat on a same-store basis with growth of 3% to 5% year-over-year in the last 6 months of the year, driven by ongoing digital advertising growth, accelerating DMS trends and the impacts of incremental AI licensing. Even with our full year revision, digital should still represent nearly 50% of total company revenue by year-end. And as a result, we now project total same-store revenues to decrease in the low to mid single-digit range for 2025 and low single digits over the last half of the year, which we believe positions revenue to be flat in early 2026. In part due to the $100 million cost reduction program already underway, we continue to expect year-over-year improvement in net income or a narrower net loss and growth in adjusted EBITDA. We also still forecast free cash flow to increase roughly 30% versus 2024, though we have trimmed the expectations slightly to reflect the near-term cash required to implement those cost initiatives. As we look ahead, our priorities are clear: to ensure stability on executing on the basics, grow and engage our audience and maximize the sizable revenue streams this audience generates across multiple channels. The sequential gains that we have already posted give us confidence that momentum will compound into year-over-year growth. We are optimistic and encouraged by our continued transformation into a digital-first business, which we believe will drive enhanced shareholder returns and ensure a long future for journalism. I will now hand it back to the operator for questions, and then we will go back to Mike for some closing thoughts.

Your first question for today is from Giuliano Bologna with Compass Bank.

Congratulations on your continued execution. To begin, your financial guidance for trends in the latter half of 2025 is strong, and revenue trends are moving positively. When do you anticipate your revenues will stabilize?

Thanks, Giuliano. Nice to talk to you again. Yes, we have some pretty exciting opportunities ahead of us here in the third and fourth quarter and as we move into 2026. There's a variety of factors, as you heard on the call, that are really driving our optimism. One, we didn't spend a lot of time on, but we're actually seeing improvement in our print trends. We've seen that three consecutive quarters. So the efforts we're making there to harvest that business and that cash flow are showing continued signs of improvement. So we're optimistic about those being contributors to our overall improving trends. But more importantly, the digital advertising marketplace is very strong right now. And as you heard, we saw a 5 point improvement in the second quarter alone from the first quarter. And so we expect a robust back half of the year with regard to digital advertising, really on the back of our large audiences and large page views. And then very exciting, the underlying initiatives that we mentioned on the call that are really showing promising signs already, both in the DMS business and the digital circulation business. We expect both of those to drive improvement in trends in the back half of the year. And then finally, on revenue, just the AI licensing deal we announced yesterday, the AddressUSA deal we announced a few weeks ago, those will start to contribute as the back half of the year goes on to revenue. So all of those things give us the confidence that our Q3 revenue trend will improve versus Q2 and Q4 will improve versus Q3. And then to answer the end of your question there, we expect to get revenues flat in the early stages of 2026. And then finally, on the strength in the back half of the year and for 2026, combined with the improving revenue trends, we also mentioned or announced this morning a $100 million cost reduction program, and that's going to help lead to much more meaningful EBITDA growth back half of this year and next year as well as really significant free cash flow growth. As we mentioned this morning in our guidance, we expect it to grow about 100% in the back half of this year and expect really strong growth again next year. So positioned on both the revenue and the expense side to deliver a strong back half of the year and have that carry into 2026.

That's very helpful. Maybe continuing on that point. Can you provide any more details around the cost reduction program in terms of what kind of things you might be reducing or cutting back on?

Yes, absolutely. This is Trisha. I'll walk you through that. So the cost program is really focused on the areas that we can automate, areas that we can outsource and then areas where we may still have some duplication in our organization. And the focus is on places where we can add variability to our cost structure. That's especially true as it relates to our print and our commercial businesses, where we think we have a lot of opportunity to capture that long tail that Mike was talking about that exists for our revenue and for our profitability. And you heard me mention that we're shuttering two of our largest print facilities later this year, and we'll also continue to move some of our products to mail delivery where it makes economic sense. And then payroll is going to be a component of this. but we're really focused on the areas that are ripe for automation and in the areas that we can leverage AI to improve the processes and the workflows that we have in the organization. So we believe that these changes are really intentional, they're really methodical. And what they allow us to do is stay really committed to our product. We get to stay really committed to our content, and that leads to a commitment to our overall growth still.

That's very helpful. We've recently seen news regarding publisher audiences and traffic funding because AI search and Google AI search aren't directing traffic back to content sites. I'm interested in hearing about your experiences on this front.

Sure. It's Kristin. I'll take this one, Mike, if you don't mind. I think despite this backdrop, I think what you can see in our numbers is that we're continuing to grow. We continue to have one of the largest digital audiences and we are consistently generating at least 1 billion page views per month every month, and we're growing year-over-year. So our audience and page view growth show that we are not seeing declining trends. And I think that's the result of planning. It's the result of a proactive strategy. And we're leaning into automation and diversification as we lessen our reliance on Google. So we've focused on growing referrals from Facebook and Instagram and Reddit and Threads. But we also see that our service journalism, our connect teams are really deepening engagement, and that has a direct positive impact on the number of people who come to us directly. I would also say here, Giuliano, that we have not buried our head in the sand. We are using technology to block unauthorized scraping from AI bots. And as the industry adopts it over time, we can create a new marketplace for publishers, as Mike mentioned earlier. And I think our partnership with Perplexity is an absolutely fantastic example of this. We are compensated for our content. We receive attribution, and we share in the advertising dollars. So AI has, I think, the potential to be disruptive, but we're being proactive. We're being strategic in our approach. And we think it actually has the potential to be highly beneficial in the long-term as well. So I hope that helps, Giuliano.

That is very helpful, and I appreciate it. Next one, I'm curious if there are any updates on the ad tech antitrust case with Google.

Yes. Thanks for that. The various ad tech cases that are out there are continuing to move forward positively in our view. And just as a reminder for backdrop, in April, the judge ruled in favor of the DOJ on all publisher-facing conduct claims that the DOJ brought to trial. So that was a positive development for us. And since that decision, both the DOJ and Google have submitted proposed remedies and that remedies hearing is now scheduled for September with a ruling expected actually later this year. So that's also a very positive development. And there's another big case is Texas, which has, I think, 17 states attached to it. And that trial scheduled for Q3 has actually been pushed to Q4 simply because they want to see the DOJ remedies trial or hearing happen first. So we do expect that trial to start in the fourth quarter. And then with regard to our case, we do expect that our case will be scheduled. The trial date will be set, and it will be in 2026. We're not exactly sure when yet, but we think it is getting closer now and it will happen next year. So really, we remain very confident in our case and with how things are progressing and actually believe that the broader developments are all moving in the right direction as well. So overall, seeing positive movement, and we remain very confident in our position.

That's very helpful. And I guess maybe on the digital side with the changes you've made to digital subscriber customer acquisition strategy, when do you think you'll return to year-over-year growth for digital subscriber revenue?

Kristin here. We are being more deliberate in our acquisition strategy to ensure that our subscriber base is sustainable, predictable, and most importantly, profitable. Our experience indicates that low introductory offers and network-wide pricing actions lead to higher churn rates. Therefore, we have stepped back from these practices and are focusing on the value of our local news subscription, which will serve as the foundation for our stacked products. We are also employing more stable strategies like annual offers and more strategic pricing. We believe we can capture revenue from high churn subscribers, such as those who onboarded with promotional offers, by providing them with pay-per-article options. There are positive signs indicating that this strategy is taking effect. We saw sequential growth in digital-only ARPU and year-over-year growth as well, marking the first sequential increase since Q3 of '24. We anticipate this will lead to further sequential growth in the third and fourth quarters, and overall growth next year.

That's very helpful. One last question. It's great to see the announcement of the Perplexity content partnership. I'm curious, as there are many articles discussing deals being made in the industry, it seems like there's an increasing focus on AI platforms securing content deals. Are you noticing any trends or changes in discussions or the willingness of AI platforms to negotiate potential content partnerships?

Yes, that's a great question, Giuliano. We believe there is currently a shift in momentum towards publishers. This isn't just talk; we are noticing that various technology companies share the perspective that unauthorized use of copyrighted content is unacceptable. These companies are investing in technologies that effectively block AI scrapers. Additionally, some are developing marketplaces for fair content licensing for large language models and similar applications. For instance, our collaboration with Snowflake enables their customers working on AI models to access our content through fair licensing agreements. We've also established a partnership with Perplexity and are in discussions with Cloudflare. Furthermore, we have a partnership with Fastly, which helps us effectively block unauthorized scrapers. All of this is contributing to a shift towards more discussions with AI companies that require our content, particularly as AI evolves into a service for real-time search and information. While I wouldn't expect an immediate surge of deals in the next 30 days, there is definitely a significant shift occurring, with content creators and AI platforms working together to form equitable agreements. We are optimistic about this and anticipate that there will be many more deals in the coming 12 months as we wrap up this year and move into the next.

Your next question for today is from Matt Condon with Citizens.

My first one is just on digital advertising revenue. Understood it was page view growth, programmatic revenue and direct sales that really drove the upside in the quarter. But can we maybe just dig in on each one of those? Were there certain formats that outperformed or different product releases that you guys did in the quarter that really drove that improvement?

Yes. This is Trisha. Yes, a few things. I think you've heard Kristin talk about the consistent page view growth that we've had and the way that we're focused in and in tune with the engagement and the propensity of our customers and our readers. And so that's really driving our programmatic revenue as we continue to increase our page views year-over-year. One of the things that we're really starting to see take hold is the strength of our national brand and that we have a very brand-safe platform. We have an incredibly wide and diverse portfolio and audience reaching 180 million uniques. And so we're really starting to see, and I think we're at early stages, the benefit of our national brand and some of the larger deals that we're seeing come into our pipeline and take hold. So I think you're going to see more of that as folks really start to see the benefit of the USA TODAY NETWORK brand. And so that's having an impact in our digital advertising as well.

Matt, this is Mike. I would like to add one more point. Similar to trends in the AI landscape, we're witnessing increased momentum from advertising agencies in the country considering a return to journalism as an advertising platform due to its healthy ROI. Over the past 20 years, there has been a shift away from this, as is widely recognized, due to the explosion of technology and the Internet. However, Stagwell, a well-known company, has invested significantly in research that indicates the ROI from journalism is among the best compared to current advertising placements for national advertisers. As a result, other players within the industry are now voicing the advantages of advertising on our platform, and those with budget control are investing in research that highlights the strong ROI on publisher platforms. This trend is likely to create more substantial national advertising opportunities in 2026. We anticipate being able to tap into a broader range of advertisers' budgets as we continue to share our narrative and develop our brands. We are optimistic about the robust advertising marketplace in the country, along with our reach, audience, and scale, combined with the valuable data we have on our audience, along with the growing momentum in the advertising ecosystem favoring a return to journalism and publishers.

Great. That's very helpful. And then I wanted to ask just on the DMS business. Obviously, there is signs of improving trends, which are great there. And I know the strategy is shifting there. But maybe we can just dig in on what is actually taking place in the strategy, both from a sales perspective and bringing new clients into the DMS portfolio, but also just what you're doing from a product perspective, maybe just digging in on each one of those things.

I'll start with your second question about the product perspective. Search remains a crucial element of advertisers' budgets, and we have been actively working to enhance that product. We have introduced AI smart bidding for some search customers, resulting in lower acquisition costs and an increase in leads. In Q2, we completed a CRM integration that has significantly improved the targeting capabilities for our customers, resulting in better outcomes and a more engaging experience as their CRM is integrated with our platform. Additionally, we launched the voice agent feature on our Dash product in Q2, which has received excellent early feedback from users, allowing them to connect with leads they might otherwise be unable to reach. We have numerous initiatives on the product side, both for the core platform and ongoing updates to Dash. There is a lot of positive momentum as we move into the second half of the year. We are also expanding the verticals where we have expertise, which has been a focus for over a year. Furthermore, we are aligning our media sales teams with our DMS sales teams to enhance our reach and scale among customers accessing our DMS portfolio. These efforts are already generating momentum in Q2 and will continue into the latter half of the year.

One of the simplest ways to consider this is that we are developing new products designed to deliver higher returns on investment for our customers. This means generating more leads, increasing conversions, and driving more business for them. We're not only creating products that enhance search results but also fostering a deeper integration with our customers, making us more indispensable. This ties into what Trisha mentioned about CRM integration, where we not only boost ROI for our customers, leading to better retention, but our connection to them becomes stronger due to the integration of our offerings. Additionally, we are focused on helping our customers follow up on every lead. Currently, only 3 out of every 10 leads from search are followed up on. With our AI voice agent and AI product Dash, we're empowering our customers to engage with all their leads. By facilitating lead follow-ups and setting appointments, we enhance our stickiness and improve their ROI by enabling them to act on every lead. In summary, we are creating products that not only elevate ROI but also strengthen our relationship with clients through both CRM integration and effective lead follow-up.

Great. And maybe just one last question for me about affiliate revenue. I know there were changes last quarter from Google that affected the business. Are we past that now? Is that in the past, and can we move forward? What context can you provide regarding what happened in Q2?

Yes, I would say that it's largely behind us now. We continue to have affiliate partnerships, but we are producing more of the content ourselves, and we're still earning revenue from that segment. However, it is not the same as it was a year ago before the Google manual actions. As mentioned on the call, we are now focusing on different verticals and bringing in new partnerships like AddressUSA, which presents a bigger opportunity than any previous affiliate deal we had signed. Thus, we are shifting our focus toward those types of deals and moving away from affiliate agreements.

We have reached the end of the question-and-answer session, and I will now turn the call back over to Mike for closing remarks.

Thanks. So as you heard today, we have a lot to be excited about as we enter the second half of the year. We're very optimistic about how things are going really across the board. And I just want to recap a few of those things and leave those as takeaways for you. First, we're seeing positive results from all of the actions that are improving our trends for both the DMS business and the digital-only subscription business. Also, our digital advertising results were solid. We saw a nice improvement in the quarter, and we see that improvement continuing into the back half of the year. Overall, we're projecting 3% to 5% digital revenue growth in the second half of a down 2.8% in the second quarter, and we'll end the year with about 50% of total revenue coming from digital. Our new cost reduction program positions us for adjusted EBITDA growth in the back half of 2025 and for full year 2026. We see strong free cash flow growth, both for 2025 and 2026. Debt repayment has been strong. We noted we paid back $100 million in the first half of the year. Our leverage is declining. We will continue to work on delevering and debt repayment. And a couple of our new deals that we announced recently with AddressUSA and Perplexity, they add high-margin revenues to our portfolio. We'll start to see all revenues during the back half of the year from those deals. And we're actively embracing technology to block the AI scrapers that don't have licensing deals with us. And we're joining AI marketplaces such as Snowflake to offer our content at fair value. So we have a lot to be optimistic about, a lot of exciting developments, and we're really looking forward to the back half of this year. And thanks all. Thanks, everybody, for joining the call this morning, and we look forward to updating you on all of our progress when we get together again in October. Thanks.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.