Gannett, owner of USA TODAY, reported its first quarterly profit since its merger in 2019 as the company's digital subscription strategy gained momentum and the economy improved, bolstering its advertising clients.
The media company, which also owns more than 250 other daily publications as well as several hundred weeklies, reported net income of $15 million for the second quarter. S&P Global Market Intelligence analysts had expected a net loss of $102 million.
A year earlier, when the American economy was reeling from widespread business shutdowns aimed at curbing the spread of COVID-19, Gannett reported a second-quarter net loss of $437 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $116 million, up 48% from a year earlier.
Revenue in the second quarter of 2021 rose 5% to $804 million from a year earlier.
On a comparable basis, circulation revenue fell 9%, while advertising and marketing services revenue rose 20%. Digital sources now represent about one-third of Gannett’s revenue.
“The solid results of the second quarter of 2021 underscore the strength of our strategy and the execution of our team,” Gannett Chairman and CEO Michael Reed said in a statement.
Gannett has been grappling with the industry-wide challenge of declining print revenue for years but has been increasing its paid digital subscriptions, which are viewed as crucial to creating a path for growth.
The company, which started selling online subscriptions for USA TODAY during the second quarter, reported that total digital subscriptions for Gannett rose to 1.4 million at the end of the second quarter, up 41% from the same point last year.
Reed said in January that the company had set a goal of securing 10 million digital subscriptions within five years.
Investors have grown increasingly optimistic about Gannett’s prospects, more than tripling the company’s stock price over the last 12 months.
Gannett's stock price rose 14% to $6.34 as of 4:30 p.m. ET on Friday. It closed at $5.55 the previous day.
Some of the optimism stems from the company’s improving balance sheet. Gannett has taken several steps to improve its cash flow since the pandemic began in 2020. Those moves included refinancing a loan from private equity firm Apollo Global Management that enabled the late-2019 merger of New Media Investment Group and the company previously known as Gannett. The new, combined entity took on the Gannett name.
The company has also taken steps to shed overlapping costs following its merger, including closing certain printing facilities and eliminating redundant executive positions.
Gannett said in May that it had met its goal of saving more than $300 million in annualized "synergies" by the end of 2021 and now expected to save $325 million.
In addition to pursuing its digital subscription plan, Gannett announced a 5-year, $90 million partnership with sports gambling company Tipico in July.
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This article originally appeared on USA TODAY: Gannett earnings: Revenue, digital subscriptions increase in 2Q