A quick note from Communications analyst Andrew Freedman:
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iHeartMedia (IHRT) reported 2Q21 results last evening that came in above the Factset consensus across all key metrics. Broadcast radio revenue of $451.1M increased ~85% YoY, recovering to approximately 80% of 2Q19 levels (Broadcast radio ~52% of total revenue / ~75% multiplatform). The Digital Audio segment generated revenue of $197.9M, ahead of the consensus estimate of $174M. Growth in digital was driven by podcast revenue growth that accelerated to 152% in 2Q21 (from 142% YoY in Q1), and contributions from the Triton Digital acquisition that closed on March 31st, 2021. Adjusted EBITDA of $184.5M came in slightly ahead of the consensus estimate of $177.3M. Adjusted EBITDA margins on a consolidated basis increased 2,740bps in 2Q21 to 21%, albeit still below the 28.8% margin in 2Q19. Management guided July revenue +26% YoY, but 3Q21 revenue to +20% (in-line with consensus) as growth comparisons get increasingly difficult in the 2H21 as we lap the initial recovery post-COVID and contributions from political advertising. Management reiterated that they will be back to 2019 levels of profitability by year-end. However, in our view, the postponement of office reopenings and other potential COVID-related restrictions due to delta could slow the rate of recovery (in addition to already more difficult comparisons NTM). We first went long IHRT in November 2020 as a recovery play (estimates too low/growth accelerating) with an underappreciated digital growth story in podcasting. We believe that thesis is now well understood and has largely played out. Further, as we flagged during our morning research call yesterday, IHRT doesn't meet the preferred style factors for #Quad3. Overall, we got the river card with Q2 results, but we are not sticking around for the next hand. |
