Entravision Communication 2026 Q2 Earnings Call

Good afternoon, everyone. I am Roy Nir, Vice President of Financial Reporting and Investor Relations. Joining me today to discuss our results are Michael Christenson, our Chief Executive Officer and Chair of the Board, and Mark Boelke, our Chief Financial Officer and Chief Operating Officer. Before we begin, I would like to inform you that this 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 actual results. The press release is available on the company's investor relations page and was filed with the SEC on Form 8-K. Additional information may also be found on our quarterly report on Form 10-Q, which was also filed today.

If you would like to ask a question, please use the Q&A function on your screen, indicate your name and company, and submit your question. We will try to answer any questions that relate to the topics contained in today's call. I will now turn the call over to Michael Christenson.

Thank you, Roy, and thank you for joining this call today. We appreciate your interest in Entravision and your support. As you saw in our press release, on a consolidated basis, Entravision revenue increased 126% to $228 million in 2Q26 compared to 2Q25. We produced operating income of $37 million in 2Q26 compared to operating income of $6 million in 2Q25. We report our results for two segments: Media and Advertising Technology and Services. For those of you new to Entravision, this is our third year with this segment reporting. We started with the third quarter of 2024. Now for our Media segment. Our revenue decreased 1% to $45 million in 2Q26 compared to 2Q25. Our Media segment incurred an operating loss of $3 million in 2Q26 compared to a break-even result in 2Q25.

Our 2Q26 results included a 1% increase in local advertising revenue and a 19% decrease in national advertising revenue. These numbers exclude political revenue. Local advertising revenue is from our sellers working with local advertisers selling broadcast and digital marketing solutions. National advertising revenue is produced by our partners, primarily TelevisaUnivision, selling our broadcast to national advertisers and agencies. Our local advertising operations had 3% higher monthly active advertisers in 2Q26 compared to 2Q25, but a 1% decrease in revenue per monthly active advertiser. Our operational priorities for our Media segment are to grow monthly active advertisers and revenue per monthly active advertiser. Let me provide some additional context for these Media results. We've been executing several important revenue-focused operational initiatives during 2025, and that have continued through the first half of 2026, and will continue through the second half of 2026.

First, we increased the size of our local sales team. Our analysis convinced us that we could increase revenue with a larger team on the field. Second, we developed the capability of our local sales team to sell digital marketing solutions to local advertisers: search, social, streaming video, streaming audio, and our own digital properties. This required extensive training and the addition of digital product specialists. Third, we expanded the amount of local news programming that we produce. This is the most important way we can serve our local audience. Finally, fourth, we developed a direct sales capability for political campaign advertising. In addition, as we discussed on prior calls, we had two additional new business projects underway in 2Q26: our LATV multicast television network and our partnership with Hemisphere Media Group for our WAPA Orlando station. All of these initiatives require investments.

Our team has worked hard to fund these investments by reducing expenses in areas other than direct selling and content production, including corporate expenses. Although we produced an operating loss in our media segment in 2Q26, our media operating expenses in 2Q26 were less than $2 million higher than our media operating expenses in 2Q25, and they were lower than our media operating expenses in 4Q24. Nevertheless, as we have discussed on prior calls, we are committed to growing our media business and earning a profit. We acknowledge that we have more work to do to improve our operating performance and profitability in our media business. Let me answer two questions that come up in all of our discussions with shareholders and analysts. First, our political revenue outlook.

There are 85 days until election day, and we are working hard to directly engage with campaigns to convince them that they must win the Latino vote to win their race, and that Entravision is the best way to communicate with the Latino voter. We have many important races underway across all of our markets, but there are nine critical races where the Latino vote will clearly determine the outcome, and where we, Entravision, are very well-positioned. These are the Texas U.S. Senate race, the governor's races in California, Nevada, and Texas, and the House races in Texas 15, Texas 23, Texas 28, Texas 34, and Florida 9. The total spend on these nine races and the allocation of that spend to Spanish language media will determine how well we do compared to prior election years. The second question is on the status of our TelevisaUnivision affiliation renewal.

There is nothing new to report at this time. This agreement runs through December 31, 2026, so we still have time. We have been partners for three decades, and our goal is to renew this agreement. Turning to our Advertising Technology & Services segment. ATS revenue was $183 million in 2Q26 compared to $55 million in 2Q25. We had more monthly active customers and more revenue per monthly active customer. We continued to invest in our ATS segment in 2Q26 to grow revenue and operating profits. Our number one priority for our ATS segment, a strategic and operational priority which has been the number one priority really for 2024, 2025, and now 2026, has been to invest to build more powerful AI capabilities into our platform. We continue to invest in our product team and our engineering team to continue to improve the technology.

In addition, we continue to invest in our infrastructure capabilities. Our infrastructure costs will grow as our revenue grows, but we're very focused on generating operating leverage so that infrastructure costs will grow at a lower pace than revenue. We've also invested to increase the capacity of our sales and customer service organizations. The combination of these investments in ATS increased operating expenses by $14 million in 2Q 2026 compared to 2Q 2025. That is $56 million on an annualized basis. Operating profit for ATS was $40 million in 2Q 2026 compared to $5 million in 2Q 2025. To summarize, in media, we're investing in revenue-focused initiatives. We increased our local sales capacity, and we expanded our digital sales and digital sales operations capabilities. More sellers, more digital. In ATS, we are investing to add more engineers to advance our technology and to increase our sales and customer service capacity.

More technology, better technology, and more selling. We believe these investments will help us build a stronger company. Now I'd like to ask Mark Boelke to share more details with you about our financial results in 2Q 2026.

Thank you, Mike. I'll start by reviewing the performance of each of our two reporting segments, media and Advertising Technology & Services. In our media segment, second quarter revenue was $45.1 million, which was down 1% compared to the second quarter of 2025. This decrease was primarily due to decreases in broadcast advertising revenue and spectrum usage rights revenue, partially offset by increases in digital advertising revenue and retransmission consent revenue. We have undertaken initiatives focused on increasing our media advertising revenue, and we are seeing progress in these initiatives, particularly in local digital ad sales and national television ad sales, and an increase in the number of monthly active advertisers. Let's look at total operating expenses for the media business, which is the sum of direct operating expenses plus selling general and administrative expenses, as those two line items are reported in our segment results.

Media segment total operating expense in the second quarter increased $1.6 million compared to second quarter 2025, an increase of 4% primarily due to increased compensation expense versus the prior year period. The media segment had an operating loss of $3.3 million in Q2 2026. This was compared to an operating profit of $0.4 million in Q2 2025 and an operating loss of $5.2 million in the previous quarter, Q1 2026. One of our goals in the media segment is to optimize our organizational structure and expenses to be aligned with revenue and to generate profit, as Mike noted. We continue to work on achieving this goal, and we remain focused on providing compelling content, growing revenue, and increasing operational efficiency to reduce operating expenses during 2026 and beyond. Now I'll turn to our Ad Tech and Services segment, or ATS.

Second quarter revenue for the ATS business was $182.8 million. This was an increase of 230% compared to second quarter 2025, and a sequential increase of 18% from the prior quarter, first quarter 2026. We had a higher number of monthly active accounts and higher revenue per monthly active account. We have had success executing our strategies in the ATS business, including strengthening the AI capabilities that are a core part of our technology platform and expanding the ATS sales team and geographic sales coverage. ATS total operating expenses increased 85% in the second quarter 2026 compared to second quarter 2025. As Mike indicated, an increase of $13.9 million. The ATS expense increase was primarily related to the increase in revenue.

For example, the expense of cloud computing expenses has increased as a result of processing more transactions on additional revenue, as well as our investment in stronger AI capabilities in our Ad Tech platform. There was an increase in sales commission and performance compensation as a result of the revenue increase and achievement of other performance metrics. The ATS business has also hired additional sales, engineering, and ad operations staff in recent quarters in order to drive future growth and expand into new geographic territories. One of our goals for the ATS business is to continue to grow revenue and generate positive operating leverage, and the ATS revenue increase exceeded the expense increase in terms of percentage and absolute dollars. Operating profit for the ATS segment was $40.0 million in Q2 2026.