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Good morning, and welcome to Townsquare Media's Third Quarter 2025 Conference Call. As a reminder, today's call is being recorded, and your participation implies consent to the recording. [Operator Instructions] With that, I would like to introduce the first speaker for today's call, Claire Yenicay, Executive Vice President. Please go ahead.

Thank you, operator, and good morning to everyone. Thank you for joining us today for Townsquare's third quarter financial update. With me on the call today are Bill Wilson, our CEO, and Stuart 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 would 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 pleased to share with you this morning that Townsquare's third quarter results met the total net revenue and adjusted EBITDA guidance that we provided on our last call, reflecting our team's hard work in the current macroeconomic environment. Despite numerous headwinds that we have encountered, we are proud that the execution of our digital-first local media strategy has allowed us to deliver excellent results for our clients while also producing strong cash flow from operations due to the thoughtful and deliberate management of our expense base. In the third quarter, our guidance was that total net revenue would be $106.5 million to $108.5 million, and it finished right in line with $106.8 million. We also provided guidance that third quarter adjusted EBITDA would be between $22 million and $23 million, and it came in right at $22 million. Importantly, due to our strong expense management, adjusted EBITDA margins, excluding political, actually improved year-over-year despite ex political revenue declines. 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 9 months of 2025, our digital revenue grew plus 2% year-over-year. And as a result, our digital revenue expanded to 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 plus 4% year-over-year in the first 9 months of the year with a strong profit margin of 26%, up slightly year-over-year, and digital's year-to-date contribution grew to the 55% of our total segment profits. As we have consistently stated for many years, digital is and will continue to be Townsquare's growth engine and the area we focus the bulk of our investment capital going forward, consistent with our strategy of being a digital-first local media company, focusing on markets outside the top 50 in the United States and further differentiating us from others in local media. Let's first dive into the results of our 2 digital divisions, starting with Townsquare Ignite, our digital advertising business. In Q3, we're seeing 2 very different trends play out in our digital advertising business. Digital advertising related to our direct-to-client sales remains very healthy, including strong revenue growth. However, these gains are offset in the short-term by significant deterioration in online audience trends that have significantly impacted our indirect or also known as remnant revenue on both our local and national websites, which we discussed on our last call. In the third quarter, the negative indirect trends were enough to offset growth, leading to a slight overall digital advertising revenue decline of less than 2% year-over-year. Let's start with the positives before diving into and detailing the headwinds. First, our digital programmatic business, which makes up approximately 60% of our digital advertising segment revenue, continues to deliver strong results with high single-digit revenue growth in the third quarter. We believe that this part of our business has very strong organic growth opportunities, and we expect it will continue to be our primary growth driver going forward. 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 and insights, providing a level of service that is often not available in the markets we operate. In addition, we are simply able to offer a more cost-effective campaign to our clients than most of our competitors, given our scale across our 74 market footprint, our first-party data and our in-house proprietary demand-side trading desk that is integrated with more than 15 advertising buying platforms with access to all major digital advertising exchanges and therefore, more than 250 billion impressions per day. Second, our third-party media partnership model, which is a component of this programmatic business has been progressing quite well since its beta launch in early 2024. This strategy will be a meaningful component of our digital advertising growth in future years -- although in 2025, it's still small, adding approximately $6 million of revenue this year at approximately 20% profit margin. As a reminder, and as we've shared on previous calls, through 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 the inventory, optimizing the inventory and customer support of the digital campaigns, and importantly, effectively training our partner sales team to sell our solutions. Therefore, we can enter new markets to offer programmatic digital advertising solutions without having to acquire radio broadcast assets to do so, freeing up our capital for other purposes. I expect that in approximately 5 years, this division can grow to be at least $50 million in revenue for Townsquare and approximately 20% profit margin. Ultimately, our goal with this division is to become the chosen provider of digital programmatic advertising to broadcasters and digital agencies in local markets outside of major cities. We are proud and honored to currently have 6 strong partners in this division, and we expect that number to grow in 2026 and beyond. And third, direct sales of our local owned and operated digital properties, which includes locally sold advertising, aka traditional feet on the street selling our own inventory on our own 400 local websites and mobile apps was quite strong in both the third quarter and year-to-date periods, up approximately 10% year-over-year. Given the overall weak advertising environment, we're especially proud of the success of our local sales team and what they've been doing in driving direct sales growth, and we believe that they will continue to drive this growth going forward. Now to address the digital advertising headwinds that have been created from the emergence of AI and its subsequent impact on content creators and their corresponding online audience. As I'm sure you're aware, this is an industry-wide issue among web publishers of scale. For example, publishers including well-known names like Forbes, Daily Mail, Washington Post and CNN are seeing major drops in traffic to their websites. In fact, in August, 45 of the top 50 U.S. news websites experienced year-over-year declines in search traffic with the 4 publishers I just mentioned averaging declines in search traffic of over 40% year-over-year in July. As we detail on Slide 13, both our local and national websites are also experiencing meaningful declines in our search engine traffic, leading to declines in our overall digital inventory. This impacts our ability to monetize any remnant inventory unsold by our direct sales team, digital inventory that we have historically sold via programmatic bidding engines. Although a much smaller part of our digital advertising segment, the declines have been significant. For context, revenue from remnant inventory on our websites was approximately $20 million in 2024 and accounted for 13% of our digital advertising revenue. In the third quarter of this year, this revenue stream declined 50% year-over-year, going from $5 million in Q3 2024 to only $2.5 million in Q3 2025 and thus a decline of $2.5 million, which is very high-margin revenue and an acceleration from Q2's decline of approximately 25% thus creating a drag on our performance and causing our digital advertising revenue to decline negative 2% year-over-year in the third quarter as opposed to the slight growth we originally expected when we last spoke. Important to highlight that excluding revenue from remnant inventory sold programmatically, Q3 digital advertising revenue would have increased plus 5% year-over-year. Unfortunately, we continue to see these search referral trends in Q4 and believe this headwind will exist through at least the first half of 2026 before remnant revenue stabilizes at a lower run rate. As a result, we expect Q4's digital advertising revenue to be again be muted. And again, I'd like to emphasize that while it's a meaningful drag in the short-term, it represents only a small portion of our business and the majority of our segment, including our programmatic business, which represents 60% of our digital advertising revenue, continues to deliver very healthy revenue growth. Let's now turn to our second digital business, which is our subscription-based digital marketing solutions SaaS business, Townsquare Interactive. We are pleased to share that our fantastic profit performance has continued in the third quarter, and we again expect strong profit growth in the fourth quarter. In the first 9 months of 2025, segment profit has increased plus 19% year-over-year, an increase of $3 million. This is an excellent result as year-to-date profit margins expanded to 33% as opposed to the customary 28% profit margin we've delivered over the past few years. As we detailed on our last call, the 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 allows 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 very importantly, a more productive sales team. And finally, number 3, the deployment of AI solutions to improve efficiency. Thus, we remain very confident that the changes we have made to both our customer service and sales models, along with the 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, with a smaller sales team comes slower sales velocity and therefore, muted revenue performance in the short-term. In the third quarter, Townsquare Interactive's revenue decreased approximately negative 2% year-over-year and was just in line with Q2's total revenue as expected and shared on our last call. We expect Q4 revenue at Townsquare Interactive to be roughly in line with Q3's $18.6 million, and we are confident that we will return to revenue growth during calendar year 2026 once we have reached previous sales staffing levels. In the meantime, we expect that strong profit growth will continue in Q4 and 2026 as we expect profit margins to remain above 30% in Q4 and above our historical levels next year. We look forward to sharing our strong full year profit results next quarter as we expect our profit performance at TSI in 2025 to be one of the best in the division's 12-year history. 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 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 our clients. However, radio is not a growth driver for Townsquare. And in the third 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, in line with our performance through the first half of the year. Despite broadcast revenue declines and macro headwinds, we have consistently outperformed the industry in 2025, gaining local and national broadcast market share according to Miller Kaplan estimates. With our differentiated local content on our local radio broadcast, combined with being able to offer clients marketing solutions powered by the combination of digital and radio, 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 Q3, our broadcast profit margin expanded significantly year-over-year when excluding political from 25% in Q3 2024 to 28% in Q3 2025. As we close out 2025, we expect to see digital advertising trends consistent with our Q3 performance with continued strength in programmatic and direct sales of our owned and operated 400-plus websites and mobile apps, offset by ongoing headwinds tied to the decline in search referral traffic. As I already noted, I expect Q4 revenue at Townsquare Interactive to be in line with Q3's revenue. We anticipate a slight improvement in ex-political performance in our Broadcast segment in Q4. Although on a total basis, we will see a large decline due to the significant political comp we had in Q4 of last year, coupled with lighter than forecasted fourth quarter political revenue this year. As a result of that, and as Stuart will share shortly, our full year revenue and adjusted EBITDA guidance will be revised. Importantly, our business model continues to generate strong cash flow from operations, which we have been applying towards organic investment in our business and debt paydown as well as rewarding our shareholders with current returns in the form of a dividend, which we will continue to do. And now I'll hand it over to Stuart to discuss our financial results and guidance in more detail. Stuart, please take it away.

Thank you, Bill, and good morning, everyone. It's great to speak to you today. We're very pleased to report that our third quarter results met our revenue and EBITDA guidance. Third quarter net revenue, excluding political, declined 4.5% year-over-year and 7.4% in total to net revenue of $106.8 million, within our guidance range of $106.5 million to $108.5 million. Third quarter adjusted EBITDA, excluding political, declined 2.1% year-over-year and 13.6% in total to $22 million, which was also within our guidance range of $22 million to $23. I would like to highlight that when excluding the political impact in 2024 and 2025, adjusted EBITDA margins expanded slightly from 20% in the third quarter of 2024 to 20.5% in the third quarter of 2025 as we thoughtfully managed our expense base. Townsquare Ignite, our digital advertising segment, experienced slight revenue declines in the third quarter as accelerated weakness in remnant indirect digital advertising revenue offset continued growth in the direct sales of our programmatic offering and our owned and operated digital portfolio. In total, third quarter digital advertising revenue declined 1.6% year-over-year. Third quarter digital advertising segment profit margins were impacted by the same forces and as a result, margins contracted year-over-year to 21.5%. As expected and we previously projected, Townsquare Interactive, our subscription Digital Marketing Solutions segment's third quarter net revenue decreased 2.3% year-over-year. We are thrilled to share that as expected and consistent with performance all year, Townsquare Interactive delivered another quarter of very strong profit growth with Q3 segment profit increasing 21% year-over-year with segment profit growth of approximately $1.1 million. Segment profit margins were very strong at 33% in Q3 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. Q3 broadcast advertising net revenue decreased in line with our expectations, which was similar to declines in the first half of the year on an ex-political basis. In the third quarter, broadcast revenue declined 8.1%, excluding political and 13.8% in total, each as compared to the prior year. Importantly, broadcast segment profit margins meaningfully increased year-over-year when excluding political from 25% in the third quarter of 2024 to 28% in the third quarter of this year. We're very proud of how our team is working diligently to manage our broadcast expense base in the face of revenue declines. Our third quarter net loss was $5.5 million or $0.36 per diluted share. In the first 9 months of the year, net loss improved $31 million year-over-year, primarily due to the reduction in noncash impairment charges in 2025. 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 maintain 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 the year 2028. As Bill highlighted, and I would again like to emphasize, we consistently have strong cash flow generation. We generated $18 million of cash flow from operations in the first 9 months of 2025. Cash flow from operations before cash interest payments was $59 million and was 5% or $3 million higher than the previous year. In the third quarter, we repaid $9 million of our term loan, including $6 million, which we purchased at a discount in the open market and our second amortization payment of $2.9 million. Since the February refinancing, we have reduced our outstanding debt by $17 million as of the end of the third quarter. In addition, our cash this year has been used to fund $41 million of interest payments, $10 million of dividend payments and $28 million of fees associated with our February refinancing. With $463 million of total debt outstanding and $3 million of cash on hand at September 30, our net leverage is 4.71x. And I'd like to highlight that since our term loan is a floating rate instrument, the 2 recent interest rate cuts totaling 50 basis points translates to roughly $2.3 million of annualized interest reduction based on the current debt balances. As always, our #1 priority is to invest in our local business through organic internal investments that support our revenue and profit growth, particularly our digital growth engine. We plan to continue to invest in our digital product technology, sales, content and support teams, specifically in our Townsquare Interactive and Townsquare Ignite businesses to main our strong competitive advantage in these 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 February 2 to shareholders of record as of January 26. 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 13% based on our current share price. For our full year outlook, due to much steeper-than-expected declines in our search engine traffic and its related indirect revenue, coupled with much lower-than-forecasted political revenue, we expect that our net revenue will come in lighter than previously expected. As these are both very high-margin revenue streams, this also impacts our adjusted EBITDA guidance, but due to our strong expense management to a much lesser degree. Specifically, for the fourth quarter, we expect net revenue to be between $105 million and $109 million. We expect fourth quarter adjusted EBITDA to be between $21.5 million and $23.5 million. As a reminder, in the fourth quarter of 2024, we generated $7.2 million of political revenue versus our current forecast of less than $1 million of political revenue in the fourth quarter of 2025. This guidance implies that Townsquare's 2025 full year revenue will be between $426 million and $430 million, with political revenue of less than $2 million as compared to $3 million we generated in 2023, the last nonpolitical year. We expect full year adjusted EBITDA will be between $88 million and $90 million. And with that, I will now turn the call back over to Bill.

Thank you, Stuart, and thanks to everyone for taking the time to be updated on Townsquare's Q3 results this morning. We greatly appreciate it. I'd like to close today's call by emphasizing our confidence in our digital-first local media strategy and the long-term profitable growth potential of our digital platform. Direct digital advertising sales remain strong, and Townsquare Interactive is driving incredible profit growth in 2025 with margins north of 30%. Our mature cash cow broadcast advertising platform continues to generate a solid profit, and Q3 ex-political broadcast profit margins are actually up year-over-year due to solid expense management. We continue to generate strong cash flow. And after refinancing our debt in February, which extended our maturity profile to 2030, we have already reduced our outstanding term loan by $17 million through September, all 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 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.

[Operator Instructions] Our first question comes from the line of Michael Kupinski with NOBLE Capital Markets.

Just a couple of questions here. First, I want to start on the broadcasting side. I see that, obviously, we see core advertising kind of decline. And typically, in an off-election year, we would kind of get the core advertising up because of the displacement from political. And we should just see continued deterioration there, of course, secular headwinds. I get that. I was just wondering if and when do you think we'll see some stabilization on core advertising there? And I know it's not a main focus for you, but I was just wondering what do you think will take to see at least some stabilization on the core advertising front?

Thank you, Michael. Always good to hear from you. Yes, obviously, as you just noted, there's a secular decline currently in broadcast radio similar to broadcast television. From what we've heard and what we've seen from publicly reported companies, but what we've also heard about year-to-date is down low double digits for the industry. As we just reported this morning, just exactly what we telegraphed on our last call that Q3 would be down negative 8% ex-political, which is exactly where we were for Q1 and Q2. So, it came in directly where we thought. We also just noted in the prepared remarks that Q4 is pacing slightly better ex-political by 1 point, 1.5 points. So, it's not dramatic, but it is slightly improving. And it's also important to note that our broadcast profit margin is up year-over-year. So, in Q3 this year, our broadcast profit margin is 28%, which is actually up from Q3 2024, which was 25%, so a 3-basis point improvement. So clearly, we've always taken the view that, obviously, digital is our growth engine and that our broadcast business, which we love, and we don't think we'd have the success in our 2 digital divisions without the power of broadcast radio and the connection it has with our communities, it is a traditional cash cow, and it is, in our view, not our growth driver. I would also highlight, and we're quite proud of this, is that our local sales team is increasing share. So, we -- if you look at Miller Kaplan, we're taking local spot share from our competitors in the 74 markets where we operate radio stations, and we're taking total spot share. So, in a declining market, we're in essence, doing better than the rest of the industry, which is evident in our negative 8% versus the industry's negative 11%. Going to the heart of your question, which was when do we expect "stabilization"? So again, we're seeing slight improvement in Q4. Obviously, the macro environment throughout 2025 has been incredibly challenging given the uncertainty. The uncertainty coming into the year, obviously, Liberation Day on April 2, we detailed quite specifically on our last call that the dramatic and instant impact that had on our advertising business in total and muted our digital advertising in Q2 and Q3 and obviously hurt our broadcast advertising. And then going into the longest government shutdown, uncertainty around interest rates, so forth and so on. So hopefully, with the developments last night in the government, hopefully reopening in short order, my expectation in 2026 is the current negative 8% moves to, call it, low to mid-single digits. I would probably guide to just be conservative mid-single digits in '26 in terms of broadcast. And then looking at '27 and beyond, and I'm talking about ex political because obviously, next year will be a great political year. We expect to be in low single digits. So that's what our expectation, Michael, is in terms of core radio -- so I'd call it, in '26, negative mid-single digits and then '27, '28 negative low single digits. And I'll turn it back to you for your other questions or any follow-ups on that.

You've been able to maintain some pretty impressive margins. Is there much to cut there? I mean, given that you have these pretty high margins, I mean, it's surprising that given the type of revenue declines that you had in core advertising, you still maintain some pretty healthy margins.

We appreciate you noting that, and we agree. And Stuart and his team as well as many others have done a great job. Quite honestly, the short answer is yes, we have a lot of opportunity. We talked about this on a couple of calls, but we're currently continuing to deploy AI solutions throughout our company that are providing efficiency as well as increased productivity. So, we're very proud of the fact that if you look at our broadcast profit margins ex-political, they're up and quite healthy, as you noted. And we are quite confident we'll be able to maintain that. We're profit margins up, as I just noted, to 28%, 3 basis points up from 25% in Q3 '25 on a decline of negative 8% ex-political is quite great work that our team has done, and I'm quite proud of. We will be able to continue to do that and take out expenses in line with wherever the revenue comes in. And I think we've proven that over the last several years, and we'll do the same moving forward. I'll turn it back to you, Michael.

Indicated that they have had some government-related advertising in Q4, like Medicare enrollment, things like that. Did you have any type of government-related shutdown advertising impact?

Are you saying you've heard from others that they've gotten incremental buys? Yes, we have not seen that. We have not seen incremental buys related to the government shutdown. We've seen softness as it relates to that talking to our local customers. National continues to be a significant headwind for us. It's a small part of our business, less than -- as we've talked about before, less than 10% of our broadcast business. But no, the short answer is we have not seen a positive impact or incremental buys based around the government shutdown or Medicare or anything around that.

Yes. No, I was actually -- it was the reverse that they were saying they had impact from advertisers.

Yes. We have seen that. We've seen canceled orders and things like that. And we've seen that throughout the year with the Dodge cutbacks in health services. So yes, the short -- if you're asking if we've seen a negative impact, the answer. Sorry, I misunderstood the question. The answer is yes.

And then final question, I don't want to take up too much time. A part of the attraction of the new office in Phoenix was in your Interactive segment was to focus on the West Coast expansion. I was just wondering if you could talk a little bit about your Interactive business on the west of the Mississippi. What were your goals on milestones? Could you just talk a little bit about your thoughts on how that office is kind of progressing?

Yes. So quite pleased with the progression of the Phoenix office as well as Townsquare Interactive SaaS-based subscription division of our company. I'll first speak about Phoenix and address that, and I'll just give a little color on Townsquare Interactive overall. So, the primary driver of opening the office was to be able to increase our talent pool, and that's why we picked Phoenix. It's been a great place to hire sales talent. And then after we hired sales talent, we started to add customer support focus as well as what we call subject matter expert, people who are great in design, people who are great in CRM and digital marketing for our Townsquare Interactive customers. So that office is doing exactly what we expected it to and are quite pleased with it. I'll just take a step back and just talk about Townsquare Interactive. So, we're quite pleased with the performance and really, really proud of the division. In Q3, we delivered 21% growth and profit. And year-to-date through September, we grew our profit 19%. So over $3 million in incremental profit in the first 9 months of the year. As I shared on our last call, I expect this to be our best profit growth year-over-year in the division's history. So, they've done a great job. The profit margin has increased, which customarily, you may remember, Michael, that our TSI Townsquare Interactive profit margin of about 28%. Given our new service model, which we've outlined in detail on our earnings calls in the past, given the new sales paradigm where we put a higher level of revenue per salesperson in place as well as deployment of AI solutions, the customary 28% profit margin has improved to 33% year-to-date, and we expect that to hold in Q4. So, they're doing a tremendous job. The revenue in is essence stagnant, and we detailed why on the last call, but we really reduced our sales force quite substantially. I think on the last call, we talked about over 40%. But the profitability of each sales rep that remains as well as we add to the team moving forward is much, much higher. And therefore, that you've got this tremendous profit growth even though the revenue is stagnant. As we go into '26, the revenue growth will come back as we add more and more sellers and get back closer to our sales level in terms of number of sellers. And we believe we'll still be able to operate at a 30-plus percent profit margin even as we aggressively hire our sales team. So just want to provide that color, after losing -- I think it was about $5 million in profit between 2023 and 2024 to now add back, call it, over $3 million, probably $3.5 million in '25 in incremental profit year-over-year. I think just speaks to the underlying strength of the division and how confident we are moving forward in Townsquare Interactive. And going back to your original question, that includes our operations in Phoenix. So, I'll turn it back to you, Michael, unless you don't have any other questions, we'll open it up to others, but I want to give you the opportunity for any follow-ups.

And the next question comes from the line of Patrick Sholl with Barrington Research.

Yes, you actually kind of answered, I think, most of the question I was going to ask about maybe longer-term expectations on profitability on Interactive. But is that sort of like in the low to mid-30s range kind of something you would expect to keep at going forward? Or do you think there'd be room for expansion from there? I guess, maybe like a time frame for getting to more -- yes, time frame for potential margin expansion at Interactive?

Yes. Great to hear from you, Patrick. Thank you for the questions, as always. I expect us to continue to be in the low 30% margins over the next couple of years, particularly with the aggressive investment. We want to build back the sales team. As I noted on our last call, we lost over 40%. And it was definitely the right thing, clearly by the profit growth. And so, in the short-term, I expect us to still live in that 32%, 33% profit margin area. But I believe there is room for margin expansion as we look out in '27 -- back half of '27, '28, '29. That's clearly an opportunity as we really rebuilt our service model and now our sales team with scale and efficiency in mind as well as obviously great customer service. So yes, I believe we'll be in this profit margin, call it, for the next 18 to 24 months, which is a huge improvement from the last several years, but that there is opportunity for margin expansion after that. And I'll turn it back to you, Patrick.

And then on Ignite, I think I heard you say that excluding the programmatic headwinds that it was up, I think, mid-single digits in Q3. If I have that wrong, please correct me. But just could you maybe talk about like the maybe different trends in that between the -- your own markets and the third-party selling or the third-party markets? And just maybe some of like the different macro trends in there versus any specific category issues.

No, great question. I'm glad you asked because if nobody did ask on the call, I was going to provide some color in the closing remarks. So, a very timely question, and I'm glad you asked it. So, you're exactly right. Without the remnant drag, so that's indirect sales. So, any unsold inventory that we've been customarily doing, if you remove that, and I'll talk about that specifically as well. Our Q3 digital advertising increased plus 5% versus the reported negative 1.7%. That 5% also includes online radio, streaming radio, which for us is not a high-growth area. It's a modest growth area. So then if you break it down, I know you know this, but for the benefit of everybody else on the call, our Ignite division, which is our digital advertising business is made up of programmatic, which is 60% of our digital advertising revenue. And then the remaining 40% is what we call owned and operated platforms. So digital advertising on our own properties that we own, like our mobile apps, our websites, our social platforms and so forth. So specifically on our owned and operated, I couldn't be more proud of the Townsquare team. I mean they are just killing it. So, in Q3, it was up 10%. So digital advertising on our own properties which makes up 40% of our total digital advertising was up 10% in Q3 as well as up 10% year-to-date, which we're quite proud of. So, the remaining programmatic of 60%, which is really -- we're a full digital agency, which we talked about on the call, everything from creative, media buying, optimization, insights, leveraging our first-party data from our owned and operated, all the things we're doing there was up high-single digits in Q3. So again, great performance in programmatic at high-single digits and then up 10% on our owned and operated. So then obviously, the question is what's happening in the indirect. So indirect, so this is unsold inventory that we would then make available to real-time bidding exchanges was quite healthy for us because we had such a large digital audience. As we noted on the call, this is not a phenomenon unique to Townsquare. This is happening to any web publisher at scale. So, in the prepared remarks, we said that audience trends based on AI, so if that's AI results at the top of Google, if that's people switching from Google to Perplexity or Cloud or whatever their -- ChatGPT, whatever their favorite or their -- whatever AI they're using. So, audience trends were down 40% on average to web publishers at scale based on search traffic. So that is quite, quite substantial. So, for Townsquare, our remnant revenue in 2024 was $20 million, and that was very, very high margin, over 90%. Could be over 95% profit margin. So that's a substantial number. That $20 million in 2025, we believe it will decrease $7.5 million. So go to about $12.5 million in 2025. So that's obviously down $7.5 million. In the first half of the year, 2025, it was only down -- a little over $2 million. So, in the second half, we just said on the call, Q3 was down $2.5 million, which was a decline of 50% year-over-year. In Q4, we expect that to get slightly worse. So, the second half, we expect a decline in remnant of $5.5 million. So again, for a full year basis, that's down $7.5 million. So, this is the #1 reason by far that we had to adjust our revenue guide and our profit guide because our profit guide really declined 2% on the low end, 4% altogether. So, a range of 2% to 4%. We were not expecting a $5.5 million decline in remnant revenue, which again is over 95% profit margin. So, you're talking about over $5 million profit decline. We expected it to continue along the lines of the first half, and that accelerated from being down a little over $2 million in the first half to being down -- we expect $5.5 million in the second half. So that was the main driver of our change in guidance on the revenue line and the profit line. To a small effect, as Stuart said in the prepared remarks, our political, we expected over $3 million and coming in under $2 million. Although it was a competitive race. New Jersey just didn't see the money that we expected. The good news is our partners at Cats, who drive a lot of our political along with our own team said overall in 2025, political was very healthy for broadcast radio. It just didn't line up with our market. So, we're quite bullish on 2026 political, but it just didn't come in. So, I digress to your original question, but I wanted to give a lot of color. So digital advertising Ignite, we couldn't be more proud of this division. It is the fastest-growing part of our company for the last several years. It will continue to be. Our media partnerships now have over 6 signed with many more in the pipeline. As I said in the prepared remarks, we expect $6 million of top line revenue from our media partnerships at a 20% margin. We're quite bullish on this division. As I noted, I think that could be $50 million over the next 5 years, top line at a 20% margin. So going back to recap, without remnant, Q3 digital advertising would have been up plus 5% -- our owned and operated was up 10% direct sold in Q3 as well as year-to-date. And our programmatic division, which is 60% of our digital advertising was up high single digits and doing quite well. So, I gave a lot of detail. I thought it was important given the dynamics in indirect. We think that indirect remnant will stabilize in the back half of '26. So, we'll have a little bit of a comp issue in the first 6 months of '26, but stabilize in the back half of '26 and sets us up quite nicely for great growth in Interactive in '26 and great growth in Ignite in '26. Obviously, as I shared with Michael's questions about our broadcast and what we expect from a core perspective, we expect our broadcast business ex-political to improve in '26. And then obviously, we have the benefit of going from this year under $2 million in political revenue. We expect over $10 million next year. So, I think it sets us up quite nicely for a rebound into 2026. So long answer to your question, but I hope -- thank you for indulging me. I wanted to provide that color for everybody on the call, and I'll turn it back to you for any follow-ups or additional questions, Patrick.

So, I guess just the digital media partnerships, I think you said $6 million from that in the -- for the year is the expectation. I guess I was just kind of curious like how much of that came in Q3? And what that kind of implies for just your own market digital selling efforts?

Yes. And again, so our own market digital selling efforts, again, our owned and operated is up 10%. So that has nothing to do with media partners, up 10% Q3. So programmatic was up high-single digits. So, if you remove media partnerships, it would still be high-single digits, but down about 1.5 points less than if you removed it. And again, we have a strong pipeline. We're quite pleased with the 6 partners we have now. They're quite pleased with us. And as we detailed on our last few calls, we're taking this slowly because we're treating it like -- we treat as if we were acquiring a market and part of our own team. So, we want to make sure we put in all of the training, all of the sales training we detailed on our last calls. We're actually going in with our sales team and training the sales team of our partners there. And it's going quite well for them. We know that because we see the lift of where they were prior to being with us, and they were with other companies in the programmatic space, and they switched to us because of our robust capabilities and they're quite pleased with their own revenue and profit growth, and we're quite pleased in what we've done for them. And probably more importantly, what I just detailed is the future for this division growing from this year being $6 million in total to what we believe can be $50 million over 5 years, and we'll see nice, nice growth in '26 in that division as well. So, a little bit of -- the high single digits would we maintain in programmatic, but be about 1.5 points less without -- maybe even less than 1.5 points, maybe just over 1 point less with the media partnerships.

And we have no further questions at this time. I would like to turn it back to Bill Wilson for closing remarks.

Thank you, operator, and thank you all for joining us this morning to hear about not only our Q3 results, but probably more importantly, what we expect for the rest of year and even more telling is what we expect in 2026 to be a great year for Townsquare. So, we look forward to updating you again. It's going to be a little bit of time for our year-end report. But if anybody has any questions, as always, please reach out at any time we're available to you, and I hope you have a great day.