Townsquare Q3 Revenue Rises 4% on Digital Ad Growth

Townsquare Media (NYSE: TSQ) reported higher third-quarter 2026 revenue and adjusted EBITDA as growth in digital advertising outweighed a continued decline in its subscription digital marketing business. The company also suspended its dividend, directing excess cash toward corporate liquidity and potentially higher-return opportunities as net leverage stood at 5.43 times.

Third-quarter net revenue increased 4% year over year to $110.9 million, exceeding the company’s guidance range of $108 million to $110 million. Adjusted EBITDA, a non-GAAP measure, rose 3% to $22.6 million and was within the projected range of $22.5 million to $23.5 million.

Digital advertising drives growth

Total digital revenue advanced 6% from a year earlier in the quarter. Digital advertising revenue rose 12.7%, offsetting an 8.5% decline at Townsquare Interactive, which provides subscription-based digital marketing services to small and midsized businesses.

Digital segment profit decreased 1% in the quarter, with a segment margin of 24%. Townsquare Interactive maintained a 36% segment margin despite its revenue decline.

For the nine months ended Sept. 30, digital operations generated $183.6 million in revenue, up 4.3%, and accounted for 57% of Townsquare’s total revenue. Digital segment profit declined 1.4% to $45.4 million but represented 56% of companywide segment profit.

Within digital, advertising revenue increased 10.3% to $131.8 million for the nine-month period, while segment profit fell 2% to $26.9 million. Subscription digital marketing revenue declined 8.3% to $51.7 million, although segment profit was nearly unchanged at $18.6 million.

The company highlighted its Media Partnerships operation as a growth area. The business, which provides white-labeled programmatic advertising services to third parties, had 18 partners covering 48 additional markets. Townsquare expects Media Partnerships to generate at least $13 million of revenue in 2026, compared with $6 million in 2025.

Broadcast revenue declines

Broadcast advertising revenue fell 3.8% to $132.3 million during the first nine months of 2026, while segment profit decreased 2.7% to $36 million. The segment produced a 27% profit margin, or 25% excluding political revenue.

Overall revenue for the nine-month period increased 0.7% to $323.1 million. Total segment profit declined 3.3% to $80.7 million, representing a 25% margin. Live-events revenue decreased 2.6% to $7.2 million and generated a segment loss of $0.7 million.

For the 12 months ended Sept. 30, Townsquare recorded $430 million of revenue and $85 million of adjusted EBITDA. Unlevered free cash flow, defined by the company as adjusted EBITDA less capital expenditures, was $72 million, equivalent to an 84% conversion rate. Cash flow from operations totaled $13 million for the first nine months of 2026.

Full-year revenue expected at $430 million to $432 million

Townsquare expects fourth-quarter revenue of $107 million to $109 million, compared with $106.5 million in the prior-year period. Excluding political revenue, that range represents a projected decline of 2% to 4%. Fourth-quarter adjusted EBITDA is expected to be between $23 million and $25 million, compared with $21.5 million a year earlier.

For full-year 2026, management expects revenue of $430 million to $432 million, approximately 1% above 2025. Revenue excluding political advertising is expected to decline by about 1%. Full-year adjusted EBITDA is projected at $87 million to $89 million, ranging from a 1% decline to a 1% increase from 2025.

At Sept. 30, Townsquare had $468 million of total debt and $5 million of cash, leaving total net debt of $463 million. Net leverage was 5.43 times trailing-12-month adjusted EBITDA of $85.3 million. The company’s term loan and revolving credit facility mature in February 2030.

The presentation cautioned that forward-looking expectations remain subject to assumptions and uncertainties, including factors outside the company’s control. Management’s projected financial information is unaudited and could change as closing procedures and final adjustments are completed.