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In Q4 Call With Investors, iHeart Emphasizes Consistency, Stability and Momentum.

Fourth quarter marked a milestone for iHeartMedia as total revenues exceeded their pre-pandemic level, up 3.5% compared to Q4 2019. Part of the company’s message to investors Wednesday was the consistency and stability of its financial performance and that it has the assets to maintain predictable growth in the year ahead.

“There's a consistency to the numbers and to the growth rates. I'm not sure if people have fully appreciated this is not just one, two, or three or four quarters – there is a consistent story here,” President and COO Rich Bressler said during the company’s fourth quarter 2021 earnings call. “And we feel very comfortable with this story going forward,” Bressler said.

It was another quarter of soaring podcast ad revenue as iHeart closed out 2021 with a quarter billion dollars of ad revenue tied to its podcast business. Making the case for the company’s “digital transformation,” Chairman and CEO Bob Pittman said digital revenues represented 26% of total company revenues in fourth quarter 2021 compared to less than 10% in Q1 2019. Podcasting alone made-up nine percent of its fourth quarter total revenue, compared to a one percent contribution at the start of 2019.

Fourth quarter revenue from its Digital Audio Group, which includes podcasting, streaming, websites, and other digital assets, jumped 58.7% year over year to $273.2 million. Podcast revenue jumped 130% to $96.6 million. Even when fast-growing podcast revenue is removed, digital revenues were up 36%.

And for all of last year, the company says podcast revenue totaled $252.6 million. That was a 148% increase over the $101 million podcast revenue it booked in 2020.

Radio Growth Engine

Thanks to the ongoing ad market recovery, the company’s Multiplatform Group, which houses its 850 radio stations, was also a growth engine in fourth quarter, with revenues up 9.2% year-over-year to $726.3 million revenue, or +17% minus political.

All of that revenue helped generate $52 million in free cash flow. The company also improved its profit margins year-over-year, to 34% for the Multiplatform Group and 36% for the Digital Audio Group.

Revenues from the company’s Smart Audio sales solution, which uses data to sell broadcast inventory, is growing at a faster clip that the Multiplatform Group as a whole. “We're finding increasingly that the data and analytics associated with Smart Audio are finding their way into a lot more buys and a lot more discussions with advertisers,” Pittman explained. “So it remains an important focal point for us for future growth, not only in digital, but probably as significantly in the Multiplatform Group, as we make that inventory much more digital-like.”

Pittman said the company is “confident” it’s Multiplatform Group will reach and exceed its 2019 revenue levels but didn’t say when that would occur.

“We believe certain key advertising categories will continue the recovery to pre-pandemic levels like auto, entertainment and retail, and others, like pharma continue their strong growth,” said Pittman. “And there are also new ad categories and customers that are continually added to the mix, like cryptocurrency players and sports betting.”

‘Stitching It All Together’

The company traditionally doesn’t break out revenue trends for individual ad categories, saying only that no category accounts for more than 5% of revenue and no single advertiser makes up more than 2% of revenue. When asked by an analyst what sales variances he was seeing based on market size, Pittman said that with a broadcast radio platform reaching 90% of the country in a month, iHeart is able to talk to advertisers about “a national footprint with local execution.” The addition of Triton Digital, which it bought in February for $230 million, means the audio giant can “seamlessly” find audience for advertisers wherever they are. “We've got this huge reach, we've got these big audiences across all of our product lines, and all of our platforms,” Pittman said. Triton’s tech stack “allows us to stitch it all together.”

With broadcast and cable TV reach continuing to decline, Pittman said Heart is poised to tap into the larger TV pool of ad dollars, while its investment in data-infused ad solutions for broadcast radio inventory will allow it to play in the $160 billion digital ad marketplace.

As live events began to return during the fourth quarter, billings from sponsorship and events nearly doubled to $66.7 million. Thanks to pent-up consumer demand, iHeart management says its events business will not only recover to pre-pandemic levels but grow from there, with new live and virtual events part of its future plans.

Pittman said iHeart’s fourth quarter serves as “a reflection of the continued successful execution of our strategy and the momentum of both our Multiplatform and Digital Audio groups.”

Total fourth quarter revenue grew 13.5% year-over-year to $1.1 billion, four percentage points better than management had been predicting for the quarter. Looking ahead to the remainder of first quarter 2022, iHeartMedia says it expects revenues to grow 17%-19% year-over-year with January up 18.3%.

“We believe we're poised for continued success in 2022 and beyond, and that our Q4 and full year 2021 performance is strong evidence of that momentum,” said Pittman.

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