iHeartMedia Inc (IHRT) 2024 Q2 法說會逐字稿

Good morning and welcome to the iHeartMedia Q2 2024 earnings call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to Mike McGuinness, Head of Investor Relations. Thank you. Please go ahead.

Good morning, everyone, and thank you for taking the time to join us for our second-quarter 2024 earnings call. And joining me for today's discussion are are Bob Pittman, our Chairman and CEO; and Rich Bressler, our President, COO and CFO.

At the conclusion of our prepared remarks, management will take your questions. In addition to our press release, we have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward-looking statements regarding our financial performance and operating results. These statements are based on management's current expectations and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings.

Additionally, during this call, we will refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release, earnings presentation, and our SEC filings, which are available in the Investor Relations section of our website. And now I'll turn the call over to Bob.

Thanks, Mike, and good morning, everyone. We are pleased to report that our second-quarter 2024 results. We're in line with our previously provided adjusted EBITDA and revenue guidance ranges for seeing sequential improvement in our revenue growth. While the marketplace continues to be dynamic with the changing outlook on interest rates, inflation trends, global uncertainty, and a rapidly evolving domestic political landscape, we continue to see strong momentum in our podcast business, our digital ex. podcast business, and the sequential improvement of our multi-platform group's year-over-year revenue performance. As we look at the back half of the year, our results will reflect the continuing positive impact on an ad market recovery year, material upside from political advertising as well as the benefit of our ongoing focus on cost efficiencies.

Now, let me take you through some of the key financial results of the quarter. In the second quarter, we generated adjusted EBITDA of $150 million, and the middle of the guidance range we provided of $140 to $160 million. Our consolidated revenues for the quarter were up 1% compared to the prior year quarter, a little above the guidance range of approximately flat year-over-year. And excluding the impact of political, our consolidated revenues were up one-tenth of 1% compared to the prior year quarter. This marks the first quarter that our consolidated revenues increased year over year since Q4 2022.

Turning now to our individual operating segments, the digital audio group generated second quarter revenues of $286 million, up 10% versus prior year, just above our previously provided guidance of up high single digits and represented 31% of the company's total revenue. For the quarter, the digital audio group generated adjusted EBITDA of $92 million, up 9% versus prior year.

The digital audio group's adjusted EBITDA margins were 32%, continuing the trend of sequential margin improvement from first to second quarter. Within the digital audio group, our podcast revenues, which grew 8% versus prior year. We expect our podcast revenues to return to double-digit year-over-year growth for the third quarter, the fourth quarter and the full year. Our non-podcast digital revenues grew 10% versus prior year, and we expect that strength to continue as well.

In June, iHeartMedia was once again ranked the number one podcast publisher in the US with more monthly downloads than the next two largest podcast publishers combined according to podcasts. And our financial discipline in podcasting continues to pay off as our podcasting EBITDA margins remain accretive to our total company adjusted EBITDA margins.

As a reminder, our leadership position in podcasting is in part the result of the power of our broadcast radio assets. We've used those assets to build not only the podcast business, but also the iHeart Radio app, which is the number one digital radio service and our Marquee live events business, which includes the recent, iHeart Radio Music Awards and the iHeart Country Festival.

In addition to our industry-leading podcast business and our digital radio streaming service, which has five times the digital listing of our closest competitor, we also have the largest social footprint of any audio service by a factor of seven, and we operate 3,000 national and local websites that reach more than 110 million people in the United States each month, all of which represent additional opportunities for our advertising partners to interact with a highly engaged consumer base and provide additional revenue growth for the company.

Turning now to the multi-platform group, which includes our broadcast radio, networks and events businesses. In the second quarter, revenues were $576 million, down 3% versus prior year, slightly better than our previously provided guidance of down mid-single digits and down 4% excluding the impact of political advertising. Adjusted EBITDA was $104 million compared to $162 million in the prior year quarter, due primarily to the timing of certain non-cash marketing expenses associated with our iHeart Radio Music Awards, which we discussed last quarter.

Additionally, we expect the multi-platform group to have positive year-over-year revenue growth in the back half of the year, yet another indication of the continuing strengthening of the ad market and our performance within it. And this year iHeartMedia is serving as the exclusive audio home for the NBC coverage of the 2024 Summer Olympics in Paris with original new podcasts from the Olympic Village as well as station streaming, real-time play-by-play coverage of the games, all in partnership with NBCU.

With the unparalleled reach and audience of iHeart's platforms, our coverage of the games results in significant engagement on our broadcast, digital and podcast platforms and invaluable cross-promotion to our partner, NBCU, showing the strength of our relationship with our listeners and validating the ability of our audio assets to drive off-platform behavior, too.

Looking at the company as a whole, we remain focused on growth, from expanding businesses and developing new consumer and revenue opportunities through the development of programmatic platforms that enable the automated buying, selling and planning of our broadcast radio inventory, which allow us to participate in the growing and substantial digital and programmatic TAMs. And our continued focus on expense management, driving efficiencies and structuring our business using technology, including AI, drives both short and long-term profitability. And now I'll turn it over to Rich.

Thank you, Bob. As I take you through our results, you'll notice that our second quarter 2024 results were in line and in some cases, slightly above our revenue and adjusted EBITDA guidance ranges. Our Q2 2024 consolidated revenues were up 1% year over year, a little above the guidance we provided of approximately flat year over year.

Our consolidated direct operating expenses increased 7.6% for the quarter. This increase was primarily driven by higher variable content costs related to the increase in digital revenues as well as an increase to event costs related to the timing of the 2024, iHeart Radio Music Awards, which was in the second quarter of 2024 and the first quarter of 2023, as mentioned in our last earnings call.

Our consolidated SG&A expenses increased 9.6% for the quarter. The increase was driven primarily by higher non-cash marketing expense due to the timing of the iHeart Radio Music Awards as mentioned before as well as the costs incurred in connection with executing on our cost savings initiatives, partially offset by lower bad debt expense and lower bonus expense.

We generated second quarter GAAP operating loss of $909.7 million compared to a loss of $897.2 million in the prior year quarter. Included our GAAP operating loss was the impact of a $920 million non-cash intangible impairment related to our FCC licenses and goodwill. Our second quarter adjusted EBITDA was $150 million within the guidance range we provided of $140 million to 160 million and compared to $191 million in the prior year quarter.

Turning now to the performance of our operating segments. And as a reminder, there are slides in the earnings presentation on our segment performance. In the second quarter, the digital audio Group's revenues were $286 million, up 9.5% year over year, and they comprise 39% of our second quarter consolidated revenues. The digital audio group's adjusted EBITDA was $92 million, up 8.6% year over year, and our Q2 margins with 32.2%.

Within the digital audio group are our podcasting revenues of $105 million, which grew 8.1% year over year. We expect to resume double-digit revenue growth trajectory in the third quarter -- the fourth quarter and for the full year as well. And our non podcasting digital revenues of $181 million, which grew 10.3% year over year, reflecting the investments we have made in building out our more diversified digital capabilities.

The multi-platform whose revenues were $576 million, down 3.4% year over year, but down 4% excluding the impact of [pull-in]. Adjusted EBITDA was $104 million, down from $162 million in the prior year quarter. And the multi-platform group's adjusted EBITDA margins were 18.1%.

Turning to the audio and media services group, revenues were $70 million, up 6.5% year over year, and adjusted EBITDA was $24 million, up 28.9% from $18 million in the prior year. Excluding the impact of political, the audio and media services group revenues were up one-tenth of a percent.

As we've highlighted in our past calls, we remain focused on financing opportunities available to us, including with respect to our debt maturities, the earliest of which is May 2026. We are engaged in active dialogue with the group holding more than a majority of our debt. And we look forward to sharing an update regarding our ongoing refinancing activities when appropriate.

At quarter end we had approximately $4.85 billion of net debt outstanding, which was the lowest net debt position in the history of our company. Our total liquidity was $791 million at quarter end, which includes a cash balance of $365 million. Our quarter ending net debt to adjusted EBITDA ratio was 7.3 times. And in 2024, we expect to make progress towards our goal of a net debt to adjusted EBITDA ratio of approximately 4 times.

In the second quarter. Our free cash flow was $6 million compared to $34 million in the prior year quarter. As a reminder, our free cash flow typically builds throughout the year, and we expect to see significant sequential quarterly growth in our free cash flow at each of the remaining quarters in 2024. We also expect to generate robust political advertising this year and as a reminder, that political revenue is paid upfront, which will help further fuel our free cash flow generation in Q3 and Q4.

Turning now to our outlook for Q3 and the full year. We expect our Q3 2024 revenues to be up mid-single digits. We are still closing the books for the month of July but expect revenues to be up low single digits.

Turning to the individual segments, for Q3, we expect the digital audio group's revenue and our podcasting revenue to both be up low double digits. We expect multi-platform gross revenues to be down low single digits. We expect the audio media services group revenues to be up approximately 40%.

We expect to generate third quarter adjusted EBITDA in the range of $200 million to $220 million compared to $204 million in the prior year quarter. We expect our full year 2024 revenues to be up mid-single digit. Our full year 2024 political revenues are currently pacing approximately 20% higher than the last presidential election cycle, and that's sequentially improved from the up 16% we discussed in our Q1 call, which gives us confidence that this will be a record political year for us and that we will outperform the $167 million of political revenue we generated in 2020.

We expect to generate full year adjusted EBITDA in the range of $760 million to $800 million compared to $697 million in the prior year. Within that guidance range, our second half revenues will be up 8% to 11% year over year, and our adjusted EBITDA will be up 25% to 30% year over year.

Turning to some of the items affecting our full year free cash flow. We expect our cash taxes to be approximately 10% of adjusted EBITDA in 2024. Our estimate of full year 2024 capital expenditures is now expected to be approximately $90 million. Cash restructuring expenses will be approximately $70 million this year as we continue to execute on new opportunities to optimize our organization for efficiency and growth.

On behalf of our entire management team, Bob and I want to thank our team members who work to deliver for their communities, our advertising partners, and for iHeart every day now we will turn it over to the operator to take your questions. Thank you.

Jim Goss, Barrington Research.

Great, thank you. What was the reason for the podcast gains to be so depressed in the latest quarter relative to the rest of digital? And why are you pretty confident that you can return to double-digit growth?

Hey Jim, it's Rich. By the way, when we say depressed, we are still at 8% revenue growth in podcasting. And I think is Bob's comment, what he highlighted, two things. One is we did have a tough comparison to last year, but I think more importantly, we set back to double digit revenue growth for podcasting for both Q3 and Q4 and for the full year growth overall.

So -- and you'll see this quarter, we gave not just a quarterly guidance, but also in terms of the way you think about the business, not just quarter to quarter, but also we gave you full-year guidance. We gave guidance for the second half of the year for the total company of 8% to 11% revenue growth and 25% to 30% EBITDA growth. And sometimes it's just some timing aspects. But the business continues to be extremely healthy and what as optimistic as we've ever been.

I let me just add a little specificity to that. When we talk about unusual comps, we have one that was prior year related to COVID vaccine. As you can imagine, there is zero chance that was coming back for this year. So it was a few things like that that we were up against in terms of comps, which we think are an absolute anomaly and don't recur in the year.

Okay. So it's more of a comp issue, so that's good. In fact, just a little bit more on the evolution of the podcasting business, in terms of content costs and ad demand, a lot more attention is being paid to it. I'm just wondering where you think -- how you think these developed and where you think we are in the maturity cycle for that business? Is it still very early? Are we getting a little more second or third inning? Where would you say we are in terms of the development of podcasting?

I think in terms of audience usage, if you follow the statistics, not only are more people using podcasting -- coming to podcasting, but they're spending more time with it. So you have two growth vectors, an increasing audience and increasing usage by the existing audience. And I don't see that abating anytime soon. As you know, that has surpassed the reach now of the streaming music services. And I think obviously a very positive sign.

I think in terms of monetization, we are still in the early days of understanding how to monetize it, although we're making great progress on it. And I think the industry is as well. Advertisers have a great interest, a great desire in podcasting. We walk in the door to talk to advertisers, podcasting usually top of their list of things they want to talk about.

I think in terms of the economics of it, I think that's still working through the system, although I think it's getting better. There was a time in which people were, in our opinion, paying uneconomic prices for the content of the podcasting. I think they've all pretty much acknowledged that that didn't make money. And you're seeing company after company come out with statements saying they're pulling back and being more rational there.

Again, that's usually the way industries go when they start. There's sort of an exuberance and people think the normal laws of economics don't apply. They do. And when they realize that you see them beginning to normalize. I think we're in the normalizing phase of that. We've had extraordinary discipline, which is why we've been able to generate a nice healthy profit from podcasting almost since the beginning and continues to be an important profit driver force, not just revenue driver.

And Jim, maybe just to add one thing and build upon what Bob said, If you look at that, there's lots of projections out there about different people that do that for a living. And most of them say, you'll have the US advertising podcasting market and around $2 billion, $1 billion, $2 billion deal to get depending on the estimate. When you go out three years, four years, five years and to get early projections and there's a wide range out there. But under any scenario, it shows US podcasting industry, whether you're $4 billion, $5 billion, $6 billion, it's very healthy, significant growth.

And just one last thing that we talk about being in what inning and I'm not the best sports guy in terms of analogies, but the one thing that is clear is, big advertisers -- to Bob's point, in terms of audience and level of the -- because the level of engagement have just recently over the last couple of years starting to come to podcasting. And so that's important. Big advertisers bring big dollars.

So I would also just add one final point, which we make often, but just probably worth repeating here is that we have chosen, since the beginning, to play in the publisher segment of the podcasting industry, which is where we think profit lies. We have shied away from sales rep deals, although we have pieces of our company to do some sales reps for podcasting as part of other businesses. But as the focus of the company, we've been in the publishing sector and think that is really the right place to be.

Okay. And one other question if I might, broader category, you alluded to the some of the discussions that might be involved in the debt maturities that are -- I think the earliest ones are in May of 2026 that you mentioned aside from extending maturities or refinancing, are there any other options on the table including debt equity swaps or ATMs or other things? I assume you want to get certain things done well ahead of that deadline. I'm just wondering if you might frame that some of the broader implications since I know you can't describe the specifics.

Yeah, Jim. So thank you for the question. No surprise, we're not going to talk about any of the details. Just to say, we continue to be in active discussions with a group of debt holders across the company, obviously bound by confidentiality agreements. We remain incredibly focused on improving our capital structure, working with the market to improve our product, our capital structure. And obviously, we'll be back to you all. We have more to say in that.

Great appreciate your taking my questions.

Jessica Reif, Bank of America Securities.

Thank you. Obviously the two most important topics have already been covered. So maybe moving on to other drivers. Can you maybe talk about where else you can find cost savings? You've been going through efficiencies for the last couple of years. So just where else could you find something? And then secondly, in terms of revenue, you guys just talked about programmatic. Can you talk about what the opportunity is and one we should start seeing a benefit?

Sure. Let me hit the first one, just in terms of where we can find cost savings. Look, we think technology has unlocked a lot of cost savings. Technology provides efficiency. It always has over the past 40 or 50 years. And we think we're in probably one of the greatest technological jobs we've seen since probably the mid-90s when the Internet entered the picture in terms of a productivity tool.

Rich and I spend an enormous amount of our time looking at the company and saying, we started this company today. How would we restructure, how would we use technology, given the fact that we are -- we do have some technology systems already, where you have a structure already? And then we look and compare it to where we are today.

And those areas where there's a big delta between where we do it if we started today and where we are, areas that we look at. And we're fortunate to have a very robust and talented management team and one committed to increasing the efficiencies. And the efficiencies not only helped the cost, but they also help -- everybody who works here feel better because they can get their work done better, faster and give us, I think, a competitive advantage.

As you know, we've invested in technology systems substantially upgrading what we had in building out things like the programmatic platform. And I will say the programmatic platform has several benefits for us. One, it unifies all of our old existing technology systems that had to do with serving advertising, tracking, inventory, billing, et cetera. So we're putting together one system.

So even if you want to use it the old way, I might make a phone call and manually interact. You'll be interacting with exactly the same system of inventory, and then having that system like that. And as you know, we had investments like Jelli, which allowed us to take our radios that broadcast radio stations and grab their inventory so we can deal with it the same way we can our digital products.

So it also allows us now to have a programmatic platform, which allows us to be on all the important DSPs with our broadcast inventory. You know our digital inventory, podcasting inventory is already on most of that -- most of those DSPs. But the real win for us is taking broadcast inventory and putting data to it and putting it on a system that is usable inside those DSPs which is our programmatic platform.

We also think we provide a fantastic benefit to the advertising community because they clearly want to buy on the digital -- digitally driven, digitally developed systems. And now they're trying to add everything to those platforms. And what we provide for them is the actual reach and audience they need.

If you think about it in audio unlike video, the reach is in broadcast radio, reach 90% of America with our AM/FM radio stations. And when you think about the biggest TV network, that's about 38%. The biggest cable networks less than 20%. Spotify, Pandora, the other audio players and digital-only are at 20% and 16%, so it will of the ad enabled products.

So if you're an advertiser, how do you reach the audience? And broadcast radio has that? So there's a desire to get it in there to add the reach to these buys that you can't get without broadcast radio. So we think there's both a need in the marketplace for what we deliver, and two, a benefit to us of joining that parade.

Just one thing back on the costs. Bob said -- I think if you just go back over, our history is good, not just taking advantage of technologies, but in terms of just finding ways to be more efficient in general, combining different operations. We've got a pretty good track record of taking costs out, whether there's been specifically announced cost programs or just the way we do business. To Bob's adjusted, well, I just want to emphasize that in terms of the amount of costs we've taken out.

And then the only other thing I might add on programmatic is, to Bob's point, is we know the market is now ready. You just look at the amount of dollars that are going through programmatic and subset to that on things like retail media networks and which is just over a subset of that. And we are actually on a one DSP platform now called Magnite, getting testing some proof of concepts out there. So we're actually live in the marketplace. Again in a test, I think, you and I've talked about this before in a test concept out there.

And I would add one more thing on -- to Rich's point, right on it just in terms of our own culture of cost. Since 2019, we take a substantial amount of cost out of the multiplatform group. I think it's about 7%. And we have used those savings to fund our higher growth and new initiatives. So we constantly are looking at reallocation of resources. We don't keep adding costs on top of costs.

Thank you.

Stephen Laszczyk, Goldman Sachs.

Great. Thank you. I'll maybe two, if I could. Bob, on the ad market, could you maybe just talk a little bit more about what you're hearing from your advertising partners that gives you confidence on the back half outlook for improvement in multi-platform? And then to the extent you see opportunity, see upside in that outlook, I'd be curious what verticals you think they could come from?

And then just quickly on political. I think you called out your degree of confidence is increasing on the political side. What's driving that? And then I guess, specifically in some of these battleground states, could you remind us what your footprint looks like to the extent you have exposure the sizing and magnitude of that? Thank you.

Sure. Look, I think in the ad market, you're probably hearing the same things. We're hearing a major holding companies reporting their numbers. I think other companies are talking about how they're spending advertising. And I think if anything, probably the benefit we've heard, people say, look, first part of the year as they were nervous about spending and in last year, they had taken a lot of money out of mass market advertising and put it way down bottom of the funnel to trying to get the performance.

What they're -- I think all saying is buzz around the industry is unfortunately, that's running out of steam because the top of funnel wasn't full. And so I think they're looking back to a full funnel advertiser -- advertising partners like us. They're looking to -- just got to get reach. They got to find some new people to talk to, to get them to do whatever.

They're also finding that if they put advertising like ours on top of their performance advertising, that will indeed boost the response rate. So, if you're an advertiser and you say, look, I'm really heavy into digital and I need some more customers, I can either go to new people, new list, if you will, or I can trying get more out of the existing people I'm already talking to. We help them in both.

And so that I think has been a big advantage for us. But I think, we've called this recovery year in the ad market. Ad market tends to lead as you know. I think it was a slow down last year, and we see it coming back this year and see no signs of that abating.

I think in terms of verticals, remember, we have a really diverse group of advertisers, which witnessed one of the strengths of this company. There's no category that's over 5% of our advertising revenue, no advertiser over 2%. I think that continues. And we have not really seen -- has particular focus on verticals. I think there are opportunities within almost every vertical, to mention probably not COVID vaccines. But other than that on a narrow one there, they're pretty much of all looking for what they do either now or are planning for '25.

On the political front, I think our footprint helps us enormously. If you've got 9 in 10 Americans listening, we've got almost every voter within our listening population. So for political advertisers, the question is how do you access those people regardless of state, city, or nationally. And it's not only candidates, but it's also a lot of these initiatives that are on the balance which are additional opportunities for us as well. And obviously, the packs are spending heavily this year.

But if you just look at, just even some of the data, obviously, we also with the defense sector -- last week and speculation rate cuts probably saw the unemployment data today, which was pretty encouraging. And also, I think we referred to in our remarks that we're actually pacing about 20% ahead this year. Just as reminder, 2020 was the best of presidential cycle, political year we had as a company, which was $157 million. And again, pacing is just an indication at some point in time, but we're pacing 20% ahead this year.

And the bulk of that is obviously the second half of the year. And look, I think we all read the same press out because there's not anything new in terms of the fundraising that's happening on both sides, not just from a presidential election, but on the sentiment in the House and the down power the amount of money. So there just seems to be an enormous amount of money that's coming to the marketplace, coupled with what we said that the economy is our confidence, the second half of the year.

That's great. Thank you, guys.

David hamburger, Morgan Stanley.

Thank you for the question. So could you unpack for us a little bit the trends and what's driving the growth in digital ex podcast? And then maybe you can help us understand better the complexion of the margin differential between the podcast business and the digital business broadly?

You did mention how tied the broadcast business is back to your broadcast radio business. So maybe you can help us understand better the complexion of the margins in the podcast business and how you see those evolving?

Well, let me let me start with the margin issue. I think in podcast, as we said, we're in the publisher side of the business, which has a much better margin. Happy being a publisher. Obviously, it's a better margin business. In the rest of digital, we have some things like our own streaming service in which we have a very high margin because that's all of our products. But we also resell some other products. And even including OTT, those are lower margins.

So it's a mix of products there. And we tried to manage that mix very carefully to maximize the margin for us. If a seller can get $1,000 where you're going to put it, well, first thing you have to do is put it somewhere that's going to be really great for the clients. But within that, we also want to manage the mix. So it's also good for our business, and we're also very cognizant of margin.

And by the way, just building upon that, David. So if you look at our podcasting business -- a digital business, ex podcasting, which we had a very strong quarter, I think that really should just continue to demonstrate. And we've been talking about this growth. And we -- I think we've actually said, historically, we expect that growth to demonstrate to everyone the diversity of our digital business. So offering that.

Yes, we talked a lot about podcasting. But to Bob's point, whether streaming websites, social extensions out there; and there are, by the way, a range of, I think what we've said publicly, is 40% to 70% EBITDA margins for those businesses. Obviously, we don't have a lot of details, but just pretty clearly, a higher margin business and Bob talked about publishing and broadcasting and things. When you hold substantially all of the IP that you have the monetization of that, and then the other extreme, when you engage with third party to provide a total solution to clients out there, there won't be higher end of that margin business.

And then the only thing I'd say about podcasting, if you talk about just again to reiterate the example, the strength of our podcasting business. But just as a reminder, things like -- we made a strategic decision years ago that every seller has the ability to sell anything, all the products anytime anywhere.

And so if you're one of our 1,000 plus sellers in this company, you're out there not just selling -- broadcast, not just selling streaming, but you've got the ability to sell podcast every single day in terms of taking advantage of the ability.

I think there's something like $3 million or so, $4 million podcasts in the United States right now. You've got the greatest podcast in the world, but you don't have awareness about podcasting, not just podcast to podcast, but using our broadcast airwaves to promote podcasting out there. So, you know, I think getting a little bit. Your question how we think about podcasting and incorporating to our business. They really are tied to the benefits of of other businesses also.

Also, I Would add one more thing and you didn't specifically ask this, but I think it's an important part in inherent in your question, is you're also seeing, I think in the performance of the digital group as a whole and certainly in the digital even ex. podcasting is you're beginning to see our platforms. We talked about the platforms we're building out to try and get the broadcast radio on to the digital buying systems. Well, we've already got a lot of our digital onto the digital buying systems, and I think you're beginning to see the impact of that in terms of the growth.

And so if you can show me some early value of this investment you've made in Triton and Jelli and places like that, yes, look at the digital numbers and we expect that to continue to grow in terms of importance, not only for our broadcast radio, but also for our digital as well.

Thank you.

Marlene Pereira, Bank of America Securities.

Great. Thank you for taking my questions. I just want to touch on the full year adjusted EBITDA guide of $760 million to $800 million. Can you just -- I know you touched on this a bit, but walk through any one time items that are impacting that guide for this year?

There are no one-time items that that that are impacting that guide for the year. We gave full year guidance. We obviously also gave Q3 guidance within that number. So if you just do some math, look at kind of the ranges, you'd look at Q3 and the $205 million range or something. Even though we gave a range out there or pick any number you want, then you look at Q4, which would kind of be around $320 million, I think if you just use the midpoint of the overall consensus. And I'm going to go back in terms of giving all of you hopefully the confidence that we have in those numbers.

Again, the bulk of our political revenue is in Q3 and Q4. And I think we've talked about where we are pacing. But like the last time, we all spoke to you at the end of Q1 earnings, I think we were pacing up about 16% year over year political, and now we're pacing up about 20% year over year in political.

And I think as Bob talked about also in his comment, we just continued to see improvement in the business from Q1 to Q2. We'll expect to see it the rest of the year. And I think just all of us watching the environment we're in, again with Fed, we're talking about the rate cuts out there, getting the employment information today, it does nothing but reinforce our confidence in the back half of the year.

Helpful. And then if we if we do think about the full year number, including political. So if we take the high end, let's say, $800 million, we assume political is $170 million, although I realize you commented it was pacing 20%. But just back of the envelope, those number roughly $630 million. So how should we think about? How much do you attribute that to crowd-out? So for example, like how much of that political actually crowding out core advertising?

Yeah. I mean, you really can, and I appreciate your question. This is inventory. So if we didn't sell it to political events, we'd be selling the inventory out there -- out there selling the inventory. I think one of the biggest benefits of political, quite frankly, we expect to have a very strong free cash flow year. And think about -- by the way, political is another category, talks about all categories. Political, if you think about it, the simplest term in the category. The great thing about that category is we have paid our cash up front, which is the only category we have that does that. But you really can't do separate out in that way.

I think what I will say about political because you do see a better performance in political years is that it does put extra pressure on the inventory. There's extra demand. There's a category that comes every other year. That's helpful because of not only what it does for political, but what it does for everyone else?

And are there any other expenses or cost cut guidance perhaps that you could provide or are something potentially that we could think about?

No. Now, we'll just have to go back to -- I think it was Justin's this question a couple of questions ago. I just think not even just looking at all, words and Bob talked about technology and take advantage, I would just look at our track history over the last years. And Bob, I think highlighted. We've taken that 7% as a multi-platform group, and both reinvested in our set, our high growth businesses in the digital area, podcasting.

But also a highlight, we've also brought a lot of that down to the bottom line for the benefit of all of our stakeholders. We generate a significant amount of free cash flow too. So we both invested our free cash flow down through bottom line, but taking out expenses as a way of life out here as I thank all of our management team, which has done a great job working with us.

On the cost cuts, I want to add one other thing. It’s not only, are we always looking for more efficiency, but when you're trying new things, you add additional expenses. They don't 100% of all work out. And I think what's critical is to have the discipline as managers to constantly be saying, okay, we said we're going to spend this money to get X, did we get X? If we didn't get X, weed the garden, let's get rid of that.

And I think one of the problems in many companies and it's something I think every company finds is you tend to keep stuff because you go well, it did something for me. Well, it didn't do what we said it was going to do. And therefore, it's not worth that expenditure. And having the discipline to continue to take out what didn't work, frees up a lot of cost and keeps your costs from getting below that as well.

Great. I appreciate the time and the commentary. That's all I have.

Thank you. I just want to make sure there's no other questions. And if not, you know, Bob and I and the entire management team thank you all for taking the time to listen and focus on iHeartMedia. And we are all available for questions following up, Mike McGuinness and the rest of the guys. So thank you all.

This concludes today's call. Thank you for your participation. You may now disconnect.