IHRT - NASDAQ

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. Joining me for today's discussion 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 were in line with our previously provided adjusted EBITDA and revenue guidance ranges and we're 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 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 in the middle of the guidance range we provided of $140 million 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 0.1% 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, iHeart was once again ranked the #1 podcast publisher in the U.S. with more monthly downloads than the next 2 largest podcast publishers combined according to Podtrac, 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 iHeartRadio app, which is the #1 digital radio service and our Marquee Live immense business, which includes the recent iHeartRadio Music Awards and the iHeart Country Festival. In addition to our industry-leading podcast business and our digital radio streaming service, which has 5x the digital listing of our closest competitor, we also have the largest social footprint of any audio service by a factor of 7, 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 our highly engaged consumer base and provide additional revenue growth for the company. Turning now to the Multiplatform 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 noncash marketing expenses associated with our iHeartRadio Music Awards we discussed last quarter. Additionally, we expect the Multiplatform 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, iHeart is serving as the exclusive audio home for the NBC coverage of the 2024 Summer Olympics in Paris with the original new podcast 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 to 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 cost related to the increase in digital revenues as well as an increase to event costs related to the timing of the 2024 iHeartRadio 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 noncash marketing expense due to the timing of the iHeartRadio Music Awards as mentioned before, as well as the cost 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 in our GAAP operating loss was the impact of a $920 million noncash 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 performances. In the second quarter, the Digital Audio Group's revenues were $286 million, up 9.5% year-over-year, and they comprise 31% 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 were 32.2%. Within the Digital Audio Group, 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 Multiplatform Group's revenues were $576 million, down 3.4% year-over-year or down 4%, excluding the impact of political. Adjusted EBITDA was $104 million, down from $162 million in the prior year quarter, and the Multiplatform Group's adjusted EBITDA margins were 18.1%. Turning to the Audio & 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 & Media Services Group revenues were up 0.1%. 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 a 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 7.3x. And in 2024, we expect to make progress towards our goal of a net debt-to-adjusted EBITDA ratio of approximately 4x. 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 in 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 the Multiplatform Group revenues to be down low single digits. We expect the Audio & Media Services Group's 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 digits. Our full year 2024 political revenues are currently pacing approximately 20% higher than the last presidential election cycle and have 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.

[Operator Instructions] Our first question comes from Jim Goss from Barrington Research.

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?

Jim, it's Rich, thank you. By the way, when we say depressed, we still have 8% revenue growth in podcasting. And I think as 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 said back to double-digit revenue growth of podcasting for both Q3 and Q4 and for the full year growth overall, and you'll see in this quarter, we gave not just quarterly guidance, but also just in terms of the way you think about the business, not just quarter-to-quarter, but also we gave you full year with guidance. We gave guidance for the second half of the year for the total company of 8% to 11% revenue growth in 25% EBITDA growth. And sometimes, it's just some timing aspects. But the business continues to be extremely healthy and we're as optimistic as we've open.

Let me just talk a little specificity too, that when we talk about unusual comps, we have one that was prior year related to COVID vaccine. As you can imagine, there was 0 chance that was coming back for this year. So there's a few things like that, that we were up against in terms of comps, which we think are an absolute anomaly and don't reoccur in the year.

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

Well, it's a great question. I think in terms of audience usage, if you follow the statistics not only are more people using podcasting, coming to podcasting, but they are spending more time with it. So you have 2 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're still in the early days of understanding how to monetize it, although I think 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 when we walk in the door to talk to advertisers, podcasting is 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. I mean there was a time at 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, they're sort of an exuberance and people think the normal loss of economics don't apply, they do. When they realize that, you see them beginning to normalize. I think we're sort of in the normalizing phase of that. We've had extraordinary discipline which is why we've been able to generate a nice healthy profit on podcasting almost since the beginning and continues to be an important profit driver for us, not just revenue driver.

And Jim, maybe just to add one thing, and build upon what Bob said, if you look at -- there's lots of projections out there by different people that do that for a living. And most of them say, hve the U.S. advertising podcasting market, I don't know, in and around $2 billion, $1.8 billion, $2 billion again depending on the estimate. When you go out 3 years, 4 years, 5 years and again, there are only projections and there's a wide range out there. But under any scenario, it shows U.S. podcasting industry whether it's $4 billion, $5 billion, $6 billion. It's very healthy significant growth. And just one last thing, we talked about being in what inning, and I'm not the best sports guy in terms of analogies. But the 1 thing that is clear is big advertisers, to Bob's point, in terms of audience and level of engage because the level of engagement have just recently, over the last couple of years started to come to podcasting. And so that's important because big advertisers bring big dollars.

I would also just add one final point, which we make awesome, but is 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 I think that is really the right place to be.

Okay. And one other question, if I may. A broader category. You alluded to the -- some of the discussions, you might be involved in the debt maturities that are, I think, the earliest ones are in May of 2026, I think you mentioned. Aside from extending maturities or refinancings, 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 the deadline. I just wondering if you might frame out some of the broader implications since I know you can't describe the specifics.

Yes, Jim. So thanks for the question. Look, no some products, 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 down by confidentiality agreements. We remain incredibly focused on improving our capital structure, working with the market to improve our capital structure. And obviously, we’ll be back to you all, we have more to say on that.

Our next question comes from Jessica Reif Ehrlich from Bank of America Securities.

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 kind of 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 have talked about Programmatic. Can you talk about what the opportunity is and when we should start seeing a benefit.

Sure. Let me hit the first one, Jessica, 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. It has over the past 40 or 50 years. And we think we're in probably one of the greatest technological jumps we've seen since probably the mid-90s when the Internet entered the picture in terms of a productivity tool. I spend an enormous amount of our time sort of looking at the company and saying, if we started this company today, how would we structure it, how will we use technology given the fact that we are -- we do have some technology systems already. We do have a structure already. And then we look and compare to where we are today, and the areas where there's a big delta between where we do it, if we started today and where we are, are areas that we look at. And we're fortunate to have, I think, a very robust and talented management team and one committed to increasing the efficiencies, efficiencies not only help 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 and building out things like the Programmatic platform. And I will say on 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 1 system. So even if you want to use it the old way, I mean, 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 radio -- 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. Our digital inventory podcasting inventory, I've already 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 advertising community because they clearly want to buy on these 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 network is less than 20%. Spotify, Pandora, the other audio players and digital-only are at 20% and 16% 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 to a benefit to us of joining that parade.

Just on just two quick things. Just one thing just back on the cost. Bob said, I think if you just go back over our history during not just taking advantage of technologies, but just in terms of just finding ways to be just more efficient in general, combining different operations, just we've got a pretty good track record of taking costs out, whether there has been specifically announced cost programs or just the way we do this is as Bob said just really just want to emphasize that in terms of the amount of cost we've taken out. And then the only thing I'm not in Programmatic is, to Bob's point is, look, we know the market is there already. You just look at the amount of dollars that are going through Programmatic and subsets of that on things like retail media networks, which is just over a subset of that. And we are actually allowed one DSP platform that called Magnite, again testing some proof of concepts out there. So we're actually live in the marketplace in a test. Yes, I think you have talked about this before in a test concept out there.

And I would add one more thing on to Rich’s point, because I think he’s right on it just in terms of our own culture of cost. Since 2019, we’ve taken 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 cost.

Our next question comes from Stephen Laszczyk from Goldman Sachs.

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 in the back half outlook for improvement in Multiplatform. And then to the extent you see opportunity to 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 and to the extent you have exposure, the sizing and magnitude of that?

Sure. Look, I think in the ad market, you're probably hearing the same things. We're gearing the major holding companies are reporting their numbers. I think other companies are talking about how they're spending advertising. I think if anything, there's probably the benefit we've heard people say they 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 the bottom of the funnel to try to get the performance. What they're -- I think all saying is sort of the buzz around the industry is, unfortunately, that's running out of steam because the top of the funnel wasn't full. And so I think they're looking back to full funnel advertisers, advertising partners like us, they're looking to -- they've just got to get reached. 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 it indeed boost the response rate 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 try and 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 call this a recovery year in the ad market. Ad market tends to lead as you know, I think it was slowed 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 creates 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 have particular focus on verticals. I think there are opportunities within almost every vertical. So we mentioned probably not COVID vaccines. But other than that, on a narrow one, they're pretty much all looking for what they do, either now or planning for '25. On the political front, I think our footprint helps us enormously. If you've got 9 and 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.

By the way, if you just look at – just given some of the data. I mean, obviously, we also with the Fed last week and speculation of 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. And just as a reminder, 2020 was the best presidential cycle, political year we had as a company, which was $157 million. And again, pacing is just an indication at a 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, there’s not going to be anything new in terms of the fundraising that’s happening on both sides, not just from a presidential election that on the Senate and the House and the down do amount of money in. So it just seems to be an enormous amount of money that’s coming to the marketplace, coupled with what we said about the economy is our confidence in the second half of the year.

Next question comes from David Hamburger from Morgan Stanley.

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 tight the bodcast 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 do you see those evolving?

Well, let me start with the margin issue that I think in podcast as we said we're in the publisher side of the business, which has the much better margin. And being the publisher obviously, is 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 of the products. And even including OTT, those are lower margins. So it's a mix of products there, and we try and manage that mix very carefully to maximize the margin for us. If a seller can get $1,000, where are you going to put it? Well, first thing you have to do is put it somewhere that's going to be really great for the client. 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.

Yes. And by the way, just building upon that, David. So if you look at our podcasting business -- I'm sorry, our digital business ex podcasting, which we had a very short quarter. I think that really should just continue to demonstrate, and we've been talking about this, the growth, and I think we've actually said historically, we expect that growth to -- or to demonstrate to everyone the diversity of our digital business offering. Yes, we talk a lot about podcasting, but to Bob's point, whether it's 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 talk about a lot of the details, but just pretty clearly, the higher end margin business, and Bob talked about publishing our podcasting things where you own a substantially on all of the IP that you have in the monetization of that. And then the other extreme, when you engage with third party to provide a total solution to clients out there. It won't be as hard on the higher end of that margin business. And then the only thing I'd say about podcast as you've talked about just again to reiterate the example he has 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 our products anytime, anywhere. And so if you're on about 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 it. The ability, I think there's something on like 3 million or so, 4 million podcasts in the United States right now. You've got the greatest podcasting in the world that you don't have awareness of that podcasting, not just podcast to podcast, but using our broadcast onlays to be both podcasting out there. So I think getting a little bit at your question, how we think about podcasting, and incorporate into our business, they really are tied to the benefits of our other businesses also.

I would add one more thing, and you didn’t specifically ask this, but I think it’s an important part, 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 onto 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 sort of say, can you 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.

Our last question will come from Marlane Pereiro from Bank of America Securities.

I just wanted to touch on the full year adjusted EBITDA guide of $760 million to -- excuse me, $760 million to $800 million. Can you just I know you touched on this a bit, but walk through any onetime items that are impacting that guide for this year?

There are no onetime items that are impacting that guide for the year. We just -- we gave full year guidance. We obviously also gave Q3 guidance within that number. So if you just kind of do some math, when you got kind of ranges, you look at Q3 in the [205] range or something, just 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], 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. By the way, 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 comments, we just continued to see improvement in the business from Q1 to Q2 we expect to see the rest of the year. And I think just all of us watching the environment we're in, again, with the Fed, we're talking about the rate cuts out there and the unemployment information today does not do that reinforce our confidence in the back half of the year.

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

Yes. I mean you really can't, and I appreciate your question. Remember, this is inventory. So we didn't sell it to political worlds of that, we'd be selling the inventory out there. We'd be 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. Bob talks about all the categories. Political -- if you go about it as simple as churn the category, the great thing about that category is we have had our cash upfront, which is the only category we have that does that. But you really can't do separate out in that way.

I think you -- 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 is extra demand. There's a category that comes every other year. That's helpful because of not only what industrial political, but what it does for everyone else.

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

No, no real difference. I'm going to go back to, I think it was Jessica's question. I think it was Jessica's question, a couple of questions go. I just think not even just looking at all words, and Bob talked about technology and taking advantage, I would just look at our track history over the last years. And Bob, I think highlighted, we've taken out 7% as a multi-platform group, and both reinvested in our Fed high-growth businesses in the digital areas, started with podcasting, but also I'd 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 growth free cash flow down to the bottom line. But taking out expenses as a way of life out here, as I think all of our management team, which has done a great job working with us.

The way on the cost cuts, I want to add 1 other thing. It's not only are we always looking for more efficiency. But when you try new things, you add additional expenses, they don't 100% 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 ex. Did we get ex, if we didn't get ex, let's weave the garden, let's get rid of that. And I think 1 of the problems in many companies, and it's something I think every company fights 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 keep your costs from getting below that as well.

Just wanted to make sure there are no other questions. And if not, Bob and I and the entire management team, thank you all for taking the time to listen and focus on iHeart. And we are all available for questions following up Mike McGuinness and the rest of the guys. So thank you all.