Gannett faced “strong economic headwinds” in Q2, with larger-than-expected losses of print and digital ad revenues, CEO Mike Reed said during a conference call on Thursday morning.
However, the firm is succeeding with its SaaS-like B2B solutions business, which brought in $116 million in the second quarter, over 60% of which is in recurring evergreen contracts.
Total company revenues fell by 6.9% to $748.7 million. The net loss attributable to Gannett totaled $53.7 million, a 7.2% margin loss, adjusted to $26.9 million.
Print took a particular hit due to distribution problems resulting from a tighter labor market. This included a 67% increase in unstaffed delivery routes YOY, and 267% over 2020. Print was also affected by higher energy costs and increased consumer sensitivity to price.
The net loss was also affected by costs related to headcount reductions.
Given that it does not expect these pressures to abate, Gannett is pursuing a significant cost-cutting program, primarily on the print side, but also including “transformative cost reductions,” Reed said. This entails an increased reliance on automation and third-party resources.
An 8.9% decrease in digital media ads was largely due to a softer programmatic ad market and policy challenges in monetizing third-party affiliates.
However, digital-only circulation revenues grew by 35.3% to $32.5 million. Gannett now has 1.87 million paid digital subscriptions, and added 155,000 in the quarter.
Looking forward, the company is forecasting annual revenue of $2.95 billion to $3 billion for fiscal 2002, with a net income loss in the $60 million-$70 million range. But it expects to have from 2 million to 2.2 million in digital-only subscribers.