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Good morning, and welcome to Townsquare Media's Second Quarter 2025 Conference Call. As a reminder, today's call is being recorded, and your participation implies consent to such recording. With that, I would like to introduce the first speaker for today's call, Claire Yenicay, Executive Vice President. You may begin.

Thank you, operator, and good morning to everyone. Thank you for joining us today for Townsquare's second quarter financial update. With me on the call today are Bill Wilson, our CEO; and Stu Rosenstein, our CFO and Executive Vice President. Please note that during this call, we may make statements that provide information other than historical information, including statements relating to the company's future expectations, plans and prospects. These statements are considered forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These statements reflect the company's beliefs based on current conditions but are subject to certain risks and uncertainties, including those that are detailed in the company's annual report on Form 10-K filed with the SEC. During this call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA. Such non-GAAP financial measures should be used in conjunction with all the information contained in the quarterly, year-end and current reports available on our website. I also encourage all participants to go to our corporate website and download our investor presentation, as Bill will reference some of those slides during our discussion this morning. At this time, I would like to turn the call over to Bill Wilson.

Thank you, Claire, and thank you all for joining us today. It's great to reconnect with everyone. We are very pleased to share with you this morning that our second quarter results met or exceeded the total net revenue and adjusted EBITDA guidance that we provided on our last call. We are proud that the execution of our digital-first local media strategy has allowed us to deliver solid and consistent results, while also producing strong cash flow even during these uncertain and challenging macroeconomic times. Due to our robust local presence and holistic set of local and digital marketing solutions available to our local clients, we were able to successfully navigate the revenue pressures caused by April's Liberation Day and achieve our total net revenue guidance, while continuing to carefully manage our expense base and deliver adjusted EBITDA above our second quarter guidance. In the second quarter, our guidance was that total net revenue would be negative 2% to negative 4% year-over-year, and it finished right in line with our expectations, down approximately negative 2% with and without political. We also provided guidance that second quarter adjusted EBITDA would be negative 1% to negative 5% year-over-year, and our actual EBITDA result was better at plus 1% year-over-year, above the high end of our guidance and achieving year-over-year growth, and excluding political, our EBITDA was plus 4% over Q2 2024. Additionally, our net leverage ticked down to 4.58x. By now, it should be very clear that Townsquare has transformed from a legacy broadcast company into a digital-first local media company and that our digital platform and digital execution sets us apart from others in local media. In 2024, approximately 52% of our company's total net revenue and 50% of our total segment profit was generated from our digital solutions. In the first 6 months of 2025, our total digital revenue grew plus 4% year-over-year, and as a result, our digital revenue in the first half of 2025 expanded to be a very significant 55% of our total net revenue, which as highlighted on Slide 11, is industry- leading at more than 2x the industry average. Total digital segment profit increased a very strong plus 9% year-over-year in the first 6 months of the year, with a strong profit margin of 27%. Digital's year-to-date contribution grew to 56% of our total segment profit. As we have consistently stated for many years, digital is and will continue to be Townsquare's growth engine and the area where we focus the bulk of our investment capital going forward, consistent with our strategy of being a digital-first local media company and further differentiating us from others in local media. Let's dive into the results of our 2 digital divisions, starting with the fastest-growing business for Townsquare, Ignite, our digital advertising business. Q2 was a challenging quarter across the board due to pauses and concerns in advertising following April's Liberation Day announcement as well as DOGE cuts impacting government-related advertising, even impacting our consistent digital advertising growth engine. Despite the challenging advertising marketplace. However, we still delivered growth in the second quarter, with digital advertising revenue increasing plus 2% year-over-year. From January through April, our digital advertising segment delivered strong mid-to high single-digit revenue growth rates. The impact of Liberation Day was felt in May onward as digital advertising campaigns are of longer duration, and therefore, most of April was already booked by Liberation Day. Although, we didn't quite achieve the mid-single-digit growth rate that we had anticipated when we last reported in early May, we're pleased that we were still able to deliver growth in this division. Our programmatic business was the strongest component of digital advertising in the quarter, making up approximately 60% of the segment's revenue with strong organic growth opportunities, and we expect it will continue to be our primary growth driver. As a reminder, our programmatic platform provides our customers with precise targeted solutions, giving them the ability to reach a high percentage of their potential customers across desktop, mobile, connected TV, e-mail, paid search and social media platforms utilizing display, video and native executions. We essentially act as a full-service digital agency for our clients from providing campaign strategies, creative services to buying inventory, optimizing campaigns and providing real-time reporting and analytics as well as insights, providing a level of service that is often not available in the markets we operate. In addition, we are simply able to afford a more cost-effective campaign to our clients than most of our competitors, given our scale across our 74 market footprint and our in-house proprietary demand-side trading desk is integrated with more than 15 digital advertising buying platforms with access to all major advertising exchanges and therefore, more than 250 billion impressions per day. Our local owned and operated digital business includes locally sold advertising, aka, traditional feet on the street selling of our own 400 local websites and mobile apps, and that was strong in both the second quarter and year-to-date periods. However, our overall digital inventory has been negatively impacted by declining search engine traffic, which I'm sure you're aware of has been the case for all web publishers at scale. Therefore, any remnant unsold inventory that we sell via exchanges was negatively impacted, thereby muting our strong directly sold local digital growth. We continue to see these search referral trends in Q3. Therefore, we expect Q3's digital advertising revenue growth to be in line and consistent with Q2's performance. The digital revenue that we sell directly to advertisers by our in-house sales teams both programmatic digital solutions at our differentiated owned and operated digital solutions continue to grow and improve from Q2 to Q3, but remnant revenue tied directly to search traffic will continue to decline, leading to an overall Q3 growth rate roughly in line with Q2's growth rate. As we've shared previously on calls, we are confident that our third-party media partnership model launched in early 2024 will be a meaningful growth driver for our digital advertising business in future years. I am very pleased to share with you that we added Renda Media as our newest media partner. In total, we now have 6 local media partners under this new division, reaching 19 incremental markets that do not overlap with our own footprint, and we have only scratched the surface of this opportunity. Because of our media partnership strategy, we're able to enter new markets to offer programmatic digital advertising solutions without having to acquire radio broadcast assets in order to do so. In this capital-light model, we partner with others in local media and handle all the major components of the digital advertising solution, including managing the creative, buying, optimization, and customer support of the digital campaigns and very importantly affectively training our partner sales team to sell our solutions. In 2025, as I shared on our last call, I expect this initiative will add approximately $6 million of revenue at approximately a 20% margin for the full-year. As I shared on our last 2 earnings calls, I expect that in 5 years or less, this division can grow to be at least $50 million of revenue for Townsquare at approximately a 20% profit margin. Ultimately, our goal with this initiative is to become the chosen provider of digital programmatic advertising to broadcasters and digital agencies and local media outside of the major cities. We are proud and honored to now have 6 strong partners in this division, and we expect that number to grow in 2026 and beyond. Let's now turn to our second digital business, which is our subscription-based digital marketing solutions SaaS business, Townsquare Interactive. We are very pleased to share that we are having a fantastic profit year at Townsquare Interactive, which we expect will continue for the remainder of the year. In the first 6 months of 2025, segment profit has increased plus 19% year-over-year, an increase of nearly $2 million. This is an excellent result as year-to-date profit margins expanded to 33% as opposed to the customary 28% profit margin we're used to seeing. This increase in Townsquare Interactive's profit margin is largely due to 3 causes. Number one, the restructuring of our customer service model in 2023 that allowed us to grow more efficiently. Number two, changes to our sales structure late last year and early this year have led to both a smaller sales team, which is temporary, but importantly, a more productive sales team. Let me elaborate a bit on that. After careful evaluation, we determined that we needed to restructure our sales team to align culture and incentives with our goals, which is consistent and strong profit growth. The restructure include changes to the compensation structure as well as the intentional reduction of sales personnel correlated to raising the bar of baseline level of sales expectations. Since the start of the year, we have not been able to fill vacancies quickly enough on our sales team to offset this attrition, which has led to much smaller sales team and thus lower sales velocity overall. However, sales productivity has improved dramatically as the number of sales units and revenue per sales rep has increased as anticipated, generating higher profit with improved profit margins. The third cause of improved profit margin is due to the business deploying AI solutions to improve efficiency. Thus, we remain very confident that the changes we have made both to our customer service and sales models, along with continued deployment of AI solutions are setting Townsquare Interactive up for the next decade of efficient and profitable growth and success. However, as I just mentioned and also highlighted on our last call in May, with the smaller sales teams come smaller sales velocity and therefore, muted revenue performance in the short term. In the second quarter, Townsquare Interactive revenue increased plus 1% year-over-year, marking the third consecutive quarter of year-over-year revenue growth. We expect Q3 revenue at Townsquare Interactive to be roughly inline with Q2’s $18.8 million and as we continue to backfill our sales team with more productive members, we currently expect Q4 revenue to increase over Q3 revenue. Strong profit growth will continue in the second half of the year as we expect profit margins to remain above 30%. Thus, as I mentioned on our May call, I expect our profit performance at TSI in 2025 to be one of the best in the division's 12-year history and setting us up for a strong 2026 and beyond. As you have heard me consistently state, I am very confident that Townsquare Interactive is on track and set up for long-term profitable growth and success, and I believe that our 2025 expected profit performance is a great proof point of that. Turning to our third and final business segment, broadcast local radio. As you're all aware, we view local radio as an extremely valuable asset with significant cash flow properties, unparalleled consumer reach and an important local connection to our audience and clients. However, radio is not a growth driver for Townsquare. In the second quarter, broadcast advertising net revenue, excluding political, performed exactly as we telegraphed on our last call and declined negative 8% ex-political year-over-year and in line with Q1's performance. As we have stated for several years, but I feel it is important to reinforce, we take the view that broadcast is a mature cash cow business that will continue to decline going forward as businesses will continue to share shift from traditional advertising to digital advertising. Thankfully, we are often the beneficiary when share shifting occurs as we often have the most comprehensive set of digital advertising solutions available in our markets. Townsquare is differentiated and different. As a result of our talented team and organically building our own technology platforms and solutions over the past 15 years in-house, Townsquare's digital profit margins are in line with our traditional broadcast profit margins and thus, our overall profit margin profile is stable as a result of the advertising share shift from broadcast to digital. Despite broadcast revenue declines and Liberation Day and macro headwinds, we outperformed the industry in both first and second quarter, gaining local and national broadcast market share according to Miller Kaplan estimate. In fact, in June our local market spot share as measured by Miller Kaplan increased to an all-time high of 39%. With our differentiated local content on our local radio broadcast, we believe that we will continue to gain broadcast and total market share across our market footprint, while also generating a solid profit as we carefully manage expenses to maintain a strong broadcast profit margin. In fact, in Q2, our broadcast profit margin ex-political was approximately 30%, which is stronger than Q2 2024 profit margin. As we look out to the back half of 2025, we expect to see digital advertising trends consistent with our Q2 performance with continued strength in programmatic and direct sales of our owned and operated 400-plus websites and mobile apps, partially offset by ongoing headwinds tied to audience size as a result of declines in search referral traffic. As I already noted, I expect Q3 revenue at Townsquare Interactive to be in line with Q2's revenue, and I expect Q4 to grow over Q3. We anticipate similar ex-political performance in our Broadcast segment in Q3 and Q4 with declines in line with the first half of negative 8%, although Q4 is currently pacing slightly better than the first 3 quarters of the year. As a result, and as Stu will share, we are narrowing our full-year revenue and adjusted EBITDA guidance range and both yet will remain within the original parameters we set at the start of the year. Importantly, our business model continues to generate strong cash flow, which we have been applying towards organic investment in our business and debt paydown, which we will continue to do for the remainder of the year. Now I'll hand the call over to Stu to discuss our financial results and guidance in more details. All yours, Stu, take it away.

Thank you, Bill, and good morning, everyone. It's great to speak with you today. We're very pleased to report that once again, our second quarter results met our revenue guidance and exceeded our adjusted EBITDA guidance. Second quarter net revenue, excluding political, declined 1.6% year-over-year and 2.3% in total to net revenue of $115.4 million on the higher side of our guidance range of $114 million to $116 million. Second quarter adjusted EBITDA increased with and without political to $26.4 million, which was above our guidance range of $25 million to $26 million. This represented year-over-year adjusted EBITDA growth of 0.7% and 3.8%, excluding political, and we experienced margin expansion as adjusted EBITDA margins increased from 22.2% in Q2 of 2024 to 22.9% in Q2 of this year. Townsquare Interactive, our subscription Digital Marketing Solutions segment continued to demonstrate growth in the second quarter. As expected and we previously telegraphed, Townsquare Interactive's Q2 net revenue increased 1.4% year-over-year. We are thrilled to share that as expected, Townsquare Interactive delivered another quarter of very strong profit growth in the second quarter with Q2 segment profit increasing 15% year-over-year or segment profit growth of approximately $800,000. Segment profit margins were very strong at 33% in Q2 of 2025, and for the full-year, we expect Townsquare Interactive's profit margin to remain above 30%. In 2025, we are very confident in our expectation that we will deliver strong profit growth for our Townsquare Interactive business, which is very beneficial after the profit losses in 2023 and 2024. As Bill noted, we're very pleased with this Townsquare Interactive's strong performance -- profit performance. Q2 broadcast advertising net revenue decreased in line with our expectations, which was similar to first quarter broadcast revenue decline. In the second quarter, broadcast revenue declined 7.8%, excluding political and 9.2% in total, each as compared to the prior year. Importantly, broadcast segment profit margins increased year-over-year to approximately 30% with and without political as we continue to work hard to manage our broadcast expense base in the face of revenue decline. Our second quarter net income was $2 million or $0.09 per diluted share as compared to net loss of $3.26 per diluted share in the prior year period. We'd like to remind you that any benefit or provision for income taxes included on the face of the income statement is for GAAP financial statement purposes only. We maintained significant tax attributes, including approximately $96 million of federal NOL carryforwards and other substantial tax shields related to the tax amortization of our intangible assets. We continue to believe that we will not be a material cash taxpayer until approximately 2028. As Bill highlighted, and I would again like to emphasize, we consistently generate strong cash flow. We generated $10 million of cash flow from operations in the first half of 2025, roughly equal to the prior year. In the second quarter, we repaid another $10 million of debt, including the $7 million balance on the revolver, our first amortization payment of $2.9 million. Since the February refinancing, we have repaid $13 million of our debt. In addition, our cash this year has been used to fund $29 million of interest payments, $7 million of dividend payments and $28 million of fees associated with our February refinancing. With $467 million of total debt outstanding and $3 million of cash at June 30, our net leverage ticked down to 4.58x. As always, our #1 priority is to invest in our local businesses through organic internal investments that support our revenue and profit growth, particularly our digital growth engines. We plan to continue to invest in our digital product technology, sales, content, support teams, specifically our Townsquare Interactive and Digital Ignite businesses to maintain our strong competitive advantage in markets outside the top 50 cities. In addition, we plan to use our excess cash flow to reduce our debt through both mandatory and voluntary debt repayments and, of course, support our high-yielding dividend. Our Board has approved our next quarterly dividend payable on November 3 to shareholders of record as of October 27. The dividend of $0.20 per share equates to $0.80 per share on an annualized basis and implies an annual payment of approximately $13 million based on our current share count and a dividend yield of approximately 12% based on current share prices. We believe our strong cash flow characteristics will allow us to continue to invest in our business, support our dividend and allow us to delever going forward. Turning now to our third quarter outlook. We expect third quarter net revenue to be between $106.5 million and $108.5 million. As previously detailed on this call, we expect Townsquare Ignite, our digital advertising business, to grow in line with Q2's growth rate. Townsquare Interactive to have approximately the same revenue in Q3 as it generated in Q2 with continued strong profit performance and broadcast revenue ex-political to decline in line with Q1 and Q2's performance. We expect third quarter adjusted EBITDA to be between $22 million and $23 million. For the full year, as Bill highlighted, given the impact Liberation Day had on advertising growth in 2025, we are now narrowing our revenue range so that revenue will be between $435 million and $440 million, which is still within our original revenue guide. As a result, we are also narrowing our adjusted EBITDA range to be between $90 million and $94 million, also within our original EBITDA guide. As a reminder, embedded in this guidance is the loss of political revenue of $10 million to $11 million as we typically get between $2 million and $3 million of political revenue in non-election years. With that, I will now turn the call back over to Bill.

Thank you, Stu. Well done, as always. Thanks to everyone for taking the time to be updated on Townsquare's Q2 results this morning. We greatly appreciate it. I'd like to close today's call by reiterating our confidence in our digital-first local media strategy, our focus on markets outside of the top 50 in the United States, the strength of our digital solutions and the long-term profitable growth potential of our digital platforms. It is also worth noting and highlighting just a few of our successes in Q2 as well as year-to-date. Our differentiated digital advertising platform continues to deliver growth in the face of uncertainty and macro volatility. Our mature cash cow broadcast advertising platform continues to generate a solid profit and Q2 broadcast profit margins are actually up year-over-year due to solid expense management. Townsquare Interactive is driving incredible profit growth in 2025 with margins north of 30%. We continue to strong cash flow and after refinancing our January-February, which extended our maturity profile to 2030, we have already repaid $13 million of our debt through June, while maintaining our high-yielding dividend, delivering attractive current returns to our shareholders. Most importantly, we are confident in our ability to build shareholder value for our investors through long-term net revenue, profit and cash flow growth, net leverage reduction and future dividend payments. As always, we wouldn't have the confidence in our long-term success without the Townsquare team's effort, passion and commitment that is directly driving our growth and innovation each and every day. I could not be more appreciative of our team and their tremendous work. With that, operator, at this time, please open the line for any and all questions.

Your first question comes from Michael Kupinski from Noble Capital.

I was wondering, Bill, can you provide a little more color on the search engine referral traffic trends that you were talking about? Do you think that this is going to change the trajectory of the digital advertising outlook that you have in your presentation regarding the outlook for -- over the course of the next several years?

Michael, as always, thank you for the question. Yes, so the great news for us is that our direct sales in digital advertising is very strong. Our programmatic is -- was close to double digits, high single digits. As I noted earlier, our direct sales of our owned and operated 400-plus local websites and mobile apps is strong as well in the high single digits and pacing quite well for the back half of the year is both programmatic and direct sales of our owned and operated websites. As we noted, the referral traffic, and I'm sure you've been seeing this across the board at any publisher at scale, the search engine traffic referral has come down, and it's come down more meaningfully in Q2 and Q3 and what we expect in Q4 than the beginning of the year. I'm sure you've seen when you go into Google or other search engines, there's the AI results and in essence, the organic blue links are pushed down and therefore, all publishers across the web are facing this challenge. For us, our indirect revenue, so any revenue that is not sold directly by our sales team, and again, our sales team is doing a great job in monetizing it directly has come down meaningfully in Q2, and we expect that to continue for some period of time. That's where we are. In terms of our total growth trajectory, in terms of the next 3 to 4 years, I think this will be a temporary setback. Obviously, programmatic, as you may recall, is 60% of our total digital advertising. In Q2, we did $42.5 million in digital advertising. Just under $27 million of that was in the programmatic space, which had no impact here. Then the other 40% is comprised of our owned and operated and the direct sales there are strong. The remnant or indirect has come down, but as it relates to the next 2 to 3 years, we're still very confident in our growth trajectory of digital advertising. It will still be the fastest-growing part of our company with a really strong profit margin. I'll pause there, Michael, and turn it back to you for any follow-ups on that or other questions you may have.

I really appreciate all the color there. Just overall, it just seems like your Q3 guide is a little softer than what you had hoped, I think. Is that just advertisers seem to be a little bit hesitant? Or are they cutting back due to economic uncertainty? I was just trying to give us -- since you have a little read on the local economies, I was just wondering if you can give us your color on what you're hearing from advertisers in general?

Yes, you're correct. I'd say, they're cautious, but still spending, placing more short term or in month versus out months. We've definitely been seeing that since April, and that continues. I'd say, probably the biggest change from the beginning of the year when we provided our guidance on the year-end 2024 call is the search engine traffic and the impact to our indirect remnant revenue, and that's muted our overall digital advertising growth. I would have expected in Q3 on a normal standpoint, mid-to high single-digit digital advertising growth. As I just said, in Q2, we grew 2% because of the search engine referral headwind, and we expect the same in Q3, but we have so many other tailwinds when you're thinking longer term. Obviously, our programmatic business from just straight up organic growth is doing extremely well, as I just noted, close to double-digit growth in Q2 and pacing onward. Then obviously, with the Media Partnership division, I noted on our last call as well as just reiterated now, we expect about $6 million of total revenue there this year. Very modest as it relates to our overall digital advertising, but we obviously just noted, we signed up another partner, Renda Broadcasting, adding another 6 markets, so we're in 19 markets. We've got great partners. The majority of these partners are not yet generating revenue. We're, in essence, we've got Summit, who we've talked about in prior calls and Steel City. Those are the 2 primary ones who are generating 2025 revenue. These other ones will come on board in 2026. As I noted, thinking over the next 5 years, we're very confident that this media partnership division could be at a minimum of $50 million of top line revenue at a 20% profit margin, so adding $10 million of profit over that time. Our overall perspective on digital advertising long term, which was your original question, is incredibly bullish. As always, there's going to be challenges that come up. Right now, that challenges the indirect remnant sales. I think based on us being a significant local publisher at scale, some of this will work itself over time, but in terms of 2025, I'd say, you are correct. It's muted the overall health and growth of our direct sales and digital advertising until you peel back the onion and see why that is. I'll turn it back to you.

Bill, you just answered 4, 5 and 6 of my questions. I appreciate that very much.

Your next question comes from Patrick Sholl from Barrington Research.

Maybe if I could just ask another question about the referral traffic headwind. Just a couple of years ago, I think you had a -- well, is the magnitude of this kind of similar in size to, I think, the change in like social media referral traffic algorithm? Is it a similar impact?

Pat, great to hear from you as always. Yes, you are correct. I think it was 18 months ago, a couple of years ago, the algorithm, particularly on the social media platforms was updated. It's always being updated, as you're aware. That definitely muted traffic directly from places like Facebook to publishers, including ourselves, so this is very similar in that. The good news for us is based on different strategies and the talented team we have, our search engine traffic after declining quite a bit significantly, plateaued and then started to grow again. I expect that same type of behavior with the search engine referral traffic over time, but I do expect it to continue to decline through the remainder of this year and potentially into the beginning of next year with this change in terms of AI and search engines. I think we'll find other ways as we always have, because when you think about it, just taking a macro step back, we're one of the largest publishers of local content in the United States. As we've talked about consistently on these calls for many years now, these are really news deserts, these 74 markets that we're in. I'd say, they're significantly underserved from a journalistic and news and information and entertainment standpoint. As we've talked about previously, many of our markets don't have a local television station. A large percentage have had newspapers completely go away, not only stop printing, but actually don't even have an online presence. I share all of that because we are -- and I've shared this before, we have the largest local audience in our markets, we believe, from an online perspective. That is incredibly differentiated. It's one of the reasons that we continually talk about what a difference it is operating outside the top 50 markets and what a major point of differentiation and major competitive advantage for Townsquare that is. I still believe, given that we are -- we've talked about this before, we reached 70% of the adult population through mobile apps and websites. That's still consistent even with this drop in search engine and referral traffic. We've talked about the fact that we reached 50%, 5-0 of people just through our AM and FM broadcast on average in our 74 markets. The emotional connection, the scale and reach is unparalleled. I do think, going back to your original question that although the search engine referral traffic is definitely down, which is impacting our indirect revenue, which is muting our overall digital advertising performance of our direct sales team, I do believe that at some point, I don't think it will be this year, but I do think it will plateau and then we'll be able to grow it again simply because not only we have a talented team, but we are literally in many of our markets, the primary source of news and information for that community. They will find us because we are there to serve them, and that's a core part of Townsquare's mission. I'll turn it back to you, Pat.

Just a question on like the -- I guess, overall macro environment in your markets. You talked about the local advertisers being more cautious. I'm just curious with your advertising partners who are also interactive subscribers, you had mentioned in your guidance that you expect revenues from that to be flat sequentially. I think just looking longer -- a little further out, I guess, can you just talk about like the confidence of like inflecting back into growth? Or is there a risk of these macro challenges creating a little bit more of a headwind on the top line for that segment again?

Yes. No, a great question, Pat. I'm very confident that we will be returning to growth on the revenue side. We're very proud of the team. As I said, this will be the -- from a Townsquare Interactive perspective, this will be, if not the highest, one of the largest year- over-year increases in profit in the division's 12-plus year history. Even with this muted revenue performance, the profit performance is incredibly strong. I expect in 2026, for that revenue to return back to normal standards. We were, on average, doing $7 million to $10 million in revenue. Based on some of the AI technology and tools we've deployed, as I noted in our prepared remarks, we're operating at a very healthy profit margin in the low 30s, where we historically have been at like on an annual basis, 27% to 28% profit margin. Looking in the out years, I think we have a good potential possibility of still being at 30-plus profit margin with this -- with increased revenue growth. All of that feels quite good and bullish for Interactive. I noted on this call as well as last call, some of this was very purposeful. We made a conscious decision to raise the sales criteria and quota for our sales rep at Townsquare Interactive. Therefore, we flushed out the bottom performers by -- and we actually, I'd say, at least 1/3 of our sales force was decreased starting in January through the time period we're operating in now. We're adding people back and the people we're adding back are much more productive with higher ROI and the people who remain the 2/3 are incredibly more productive with higher ROI, and that's driving that profit performance. Going to your overall question, like where does Interactive sit in? Are we concerned that if this macro situation we're navigating now. We're already seeing green shoots, and it's really about just building up our sales team, which will take time, but 2026 will be a revenue growth. Obviously, we're coming off great momentum of profit growth in 2025 at Townsquare Interactive. I'll just take -- you asked specifically about Interactive. Obviously, Michael's last question was about the environment. I will also share that in addition to the cautiousness, the good news is they're still placing dollars, obviously, advertisers. Obviously, digital advertising, the direct sales, as I said, was high single digits, muted down because of the remnant piece. We're still seeing that. We also -- we didn't talk about this in the prepared remarks. I didn't mention this with Michael's question, but with DOGE, there was significant advertising cuts. Things like the New Jersey Department of Motor Vehicles, things like many of our markets we were placing like health and community service ads. All of those got cut when the DOGE cuts came. We're talking about millions and millions of dollars of broadcast and digital advertising that was actually either already placed or we knew was coming based on what happens each year that didn't come back. Again, that has a 2025 impact when you're looking at vis-a- vis 2024 and the broadcast decline that we had of negative 8x political. I think that again works itself out in 2026 by just replacing that with other dollars, be it broadcast or digital. That also has muted the 2025 revenue performance. But long term, we continue to be very bullish on the transformation of the company. We're glad, obviously, for the last decade, our growth has been driven by Townsquare Interactive and Townsquare Ignite, and we love our broadcast business. We talk about the connection, the reach. Obviously, broadcast now is the #1 reach medium, cord cutting continues to accelerate. There's so many tailwinds for us from just the connectivity that the broadcast side, but we treat that as a traditional cash cow and the cash flow generation is incredible as it is for the overall company. That's why we're able to reward our shareholders, while they're being incredibly patient to unlock the long-term value with high-yielding dividend. Hopefully, that gives you a sense of your question on Townsquare Interactive and our continued bullish outlook for the out years, including 2026. Then just a little bit more color on the macro environment, including those DOGE cuts and why we see where we are going into the back half of the year, we feel well situated while we're navigating these challenges. Pat, I'll turn it back to you to see if you have any other follow-ups or additional questions.

Your next question comes from Michael Kupinski from Noble Capital.

I just had a couple of quick follow-ups here, Bill. In regards to the promise of this -- of your Phoenix office was to open up your West Coast and since it was in a different time zone that you felt like it could really propel your business in the West Coast in some of the mountain states and so forth. I was just wondering, if maybe give us an update on how the Phoenix office is working, maybe the staffing levels of the Phoenix office at this point and what your -- maybe your outlook and growth trajectory of that might be at this point?

Great question, Michael. I'm glad you circled back around as always. Quite pleased with the Phoenix office. It was really two-fold. You mentioned the time zone aspect and super serving our West Coast clients, which is accurate. I'd say, the larger reason and rationale for the Phoenix office was also recruiting and talent pool. Obviously, Charlotte is where the headquarters of Townsquare Interactive is. It's our largest office by far in all of Townsquare with hundreds and hundreds of employees. Then Phoenix, we're approaching 50. We're around 40 employees, plus or minus. Now we not only have salespeople there, but we have our service people there as well, which has been accelerating over the last 6 months. Quite pleased with the talent pool and the people we're recruiting into that office and also the benefits of having the West Coast side as well from a talent pool, but also, as you noted, from a time change. Quite pleased with Phoenix, quite pleased with Townsquare Interactive overall, as I just noted, we went through a really challenging period in '23 and '24. We rebuilt a complete service model. We redid the sales compensation and quotas at the beginning of this year. Now we -- as we look in the out years, we feel quite well positioned for growth. As I just said to Pat, expecting that $7 million to $10 million top line to come back next year with roughly $3 million-plus in profit. I'll pause there, Michael.

You mentioned the government advertising a couple of times. Can you -- is there a number that you had in terms of what did the government advertising contribute, for instance, in 2024?

Several million dollars. In the first half of this year, I didn't look at all of '24, but I was looking at year -- or at least first half of '25 and that's come down several million dollars. That's impacted not only broadcast, it has impacted digital advertising as well because these like health and community and as I mentioned, the Department of Health and traffic and human services and all of these that, in essence, throughout the counties and the states add up, and that's definitely been something that we had to overcome, and we knew those wouldn't be coming back because of the overall DOGE cuts across the board. It's definitely impacted our broadcast ex-political, negative 8, and it's definitely impacted digital advertising. We mentioned the search engine referral, but the DOGE cuts cut muted our growth there as well because as I noted, our direct sales of our programmatic business and our direct sales of our owned and operated were high single digits. I'd say, the health of that business is incredibly strong and the underpinning of our direct sales demonstrates that. It's these DOGE cuts and the search engine piece that's muting the growth, but quite honestly, as I said earlier, like we're quite proud of the team at Townsquare and their tenacity and passion. Even in this environment of uncertainty and cautiousness and these DOGE cuts and everything else, we still grew digital advertising and the direct sales team did that at a high single-digit rate. Quite pleased with them. I'll turn it back to you, Michael, for any other comments or questions.

There are no further questions at this time. I will now turn the call over to Mr. Bill Wilson. Please continue.

Thank you, operator. Again, thank you all for joining us this morning to be updated not only on Q2's results, but also our outlook for the rest of the year. We look forward to updating you again in 3 months. If you have any questions in the meantime, as always, do not hesitate to reach out. Have a great day.