AREN 2026 Q2 Earnings Call

Thank you. Hosting the call today are Paul Edmondson, Chief Executive Officer, and Geoffrey Wait, Principal Financial Officer. Before we begin, I'd like to note that some of the comments made during this call may include forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements.

Forward-looking statements relate to future events or future performance and include, without limitation, statements concerning the company's business strategy, future revenues, and income from continuing operations, anticipated yield growth, and monetization improvements, cost reductions, debt refinancing efforts, market growth, capital requirements, product introductions, and technological capabilities, expansion plans, our stock price relative to our peers, and our share repurchase program, as disclosed in our annual report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 16, 2026, the 2025 Form 10-K, and in our other SEC filings and publicly available documents. The company cautions investors that any forward-looking statements made in this call, or that the company may make orally or in writing from time to time, are based on the beliefs of assumptions made by and information currently available to the company.

Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, and uncertainties and factors that are beyond the company's control or ability to predict. Accordingly, investors should use caution in relying on forward-looking statements, which are based only on known results and trends at the time they are made to anticipate future results or trends. Certain risks are discussed in the company's filings with the SEC. The company disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. In addition, reference will be made to the non-GAAP financial measure, adjusted EBITDA.

Information regarding reconciliation of this non-GAAP measure to the closest GAAP measure can be found in the press release that was issued this afternoon and can also be found on the investor relations page of our website at investors.thearenagroup.net. With that, I'll turn the call over to CEO Paul Edmondson. Paul, the call is yours.

Thank you for joining us today to discuss our Q2 2026 results. We have several major announcements this quarter, so I'll get right to them. First, we refinanced our corporate debt. Geoffrey Wait will provide more details in a moment. Second, we've closed our acquisition of InfoSentience, a generative AI company. Third, we have officially launched Cutter Studios, which I'll share more about shortly. These moves align with and support our new corporate identity. As announced in our press release this afternoon, we are rebranding to Paradium.AI. The second quarter was a period of bold transformation for our company. Amid a rapidly evolving digital media landscape, we channeled our energy into the strategic initiatives we've been discussing over the past several quarters. Initiatives designed to diversify our business, expand our technology capabilities, and open new avenues for growth.

We've been witnessing an unprecedented structural shift in digital media, which is reflected in our results from Q2. For years, publishers relied heavily on traditional search traffic until LLM stepped in almost overnight to capture and consume those audiences directly. We saw this shift as an opening, a chance to rethink our relationship with creators and audiences, and to lead with bold, creative strategies. Our new name, Paradium.AI, reflects that spirit of innovation and creativity. This is much more than a rebrand. It marks our expansion into an AI technology company designed to power the future of media entrepreneurs, built to empower creators, publishers, and brands to perform at the speed and scale of AI. By replacing legacy structures with a centralized AI-optimized infrastructure, we're putting the tools, data, and reach they could not build alone directly into their hands, enabling them to scale their business like never before.

As I mentioned earlier, we've closed the acquisition of InfoSentience, an industry leader in automated data-driven natural language generation that creates AI content at scale for multiple major publishers. InfoSentience specializes in structured, data-driven content generation using a deterministic template-based engine that provides zero-error reliability. Rather than replacing editorial judgment, the hallucination-free platform automates highly repetitive content around structured data, statistics, financial information, sporting events, freeing content creators to spend more time on differentiated journalism and expand coverage into areas that were once out of reach. We've also officially launched Cutter Studios, our proprietary AI-driven video and article production and distribution platform. Cutter Studios turns video-first content into viral assets and accompanying articles at scale. We aim to service content creators with on-brand, AI-generated derivative content that expands their reach and earning power.

With the Paradium.AI rebrand underway, the InfoSentience tech stack operating profitably, Cutter Studios live, and our balance sheet strengthened, we are building the next generation of brands, data, and commerce. With that, I'll hand it over to Geoff to share our financial results.

Thanks, Paul. in Q2 2026, revenue was $22.2 million, compared to $45 million in Q2 2025. Loss from continuing operations was $200,000 in Q2 2026, compared to income from continuing operations of $12.4 million in Q2 2025. We reported a net loss of $200,000 in Q2 2026, compared to net income of $108.6 million in the same period a year ago, which included gain from discontinued operations of $96.2 million. Adjusted EBITDA was $4.4 million in Q2 2026 versus $18.6 million in Q2 2025. As noted earlier, adjusted EBITDA is a non-GAAP measure. A reconciliation of this non-GAAP measure to the closest GAAP measure can be found in the press release that was issued this afternoon and can also be found on our investor relations website at investors.thearenagroup.net.

Despite these challenges, we sustained a cash balance of $11.2 million and generated over $2 million in cash flow from operating activities in the first half of 2026. This reflects the underlying durability of our variable cost structure, a structural advantage made possible by our entrepreneurial publishing model, which continues to provide resilience as we navigate the evolving media landscape. Our financial performance reflects a challenging traffic environment as we have faced continued headwinds, underscoring our need to evolve the business through technology to better serve market needs. As we enter the historically stronger second half of the year, we remain focused on leveraging AI and automation to improve monetization and accelerate the growth of non-traffic dependent revenue streams. In parallel, we have successfully finalized the refinance of our debt facility.

Following a rigorous evaluation of refinancing alternatives, including deep engagement with multiple banking institutions, we made the clear strategic decision to reject proposals that would have triggered unnecessary dilution and eroded shareholder value. We've successfully extended the maturity of our debt facility by three years with our existing lending partner at the same interest rate. The new facility was purpose-built around our operating model, with terms calibrated to our current business profile and the continued evolution toward Paradium.AI. This removes a significant near-term refinancing risk, avoids shareholder dilution, and gives us additional financial flexibility to execute our strategic priorities. As we continue through the year, paying down debt remains a top priority for our long-term success. Our performance in the first half of the year demonstrates that our baseline operations comfortably support our current debt service.

Looking ahead, we aim to unlock additional cash flow with these new technological initiatives that can be used to continue reducing our leverage. Moving forward, our shift to Paradium.AI strengthens our operational commitment to an asset-light business model. By using automated workflows and AI production, we can quickly expand into new markets and grow B2B sales without adding heavy overhead. This allows us to control content production costs and drive stronger profitability as we scale. This ongoing corporate evolution is directly accelerated by our acquisition of InfoSentience. Funded entirely with cash on hand at an attractive multiple, the transaction strengthens our internal workflows and unlocks a new high-margin line of business through platform partnerships. Now, I will turn the call back over to Paul to outline our strategy for the remainder of 2026.

Thank you, Paul. We are energized by our execution this past quarter and the runway ahead of us for the rest of the year. I want to emphasize a critical point as we enter this new era. While we are supercharging with AI, our people remain at the absolute core of our business. This technology is designed to elevate our partners and teams, not replace them. Our mission is to empower creators and entrepreneurs by blending the massive authority of our brands with the technology we have built. This corporate evolution was underway long before the name change. We have firmly transitioned past traditional publishing. Another clear example of our asset-light IP monetization strategy in action, we continue to expand our commerce and licensing footprint.