Newsmax Third Quarter 2026 Earnings Conference Call - NEWSMAX INC

Explicit Guidance:

• Full-Year 2026 Revenue: Maintaining guidance of $212 million to $216 million (midpoint $214 million, representing 13% year-over-year growth); inclusive of the one-time $14M item, the range is $226 million to $230 million.
• International Licensing (Annualized): Expecting approximately $25 million in annualized licensing revenues for the upcoming year (FY2027), based on signed agreements.
• International Licensing (Current Year): On track for approximately $16 million in international licensing fees for FY2026 under existing agreements.
• Profitability: Expects to sustain "second consecutive adjusted EBITDA positive quarter" status for the full year, driven by high-margin affiliate fee and licensing revenue streams.
• Margin Improvement: Anticipates further margin expansion in the near term as the revenue mix shifts toward higher-margin affiliate and licensing revenues while scaling the business.

Business-Segment Outlook:

• Affiliate Fees: Multi-year agreements are renewing at higher rates due to increased reach and ratings; these renewals are expected to set a higher revenue base for subsequent years, driving structural growth.
• Licensing: Projected to be the fastest-growing revenue stream, expanding globally via partnerships (e.g., Newsmax Ukraine launched Nov 1st, expansion in Europe) and AI platforms (Meta partnership).
• Broadcasting: Broadcasting revenues are expected to grow driven by rate increases taking effect in late 2025 and 2027; linear news retains a strong place despite viewing shifts.
• Digital/Streaming (Newsmax Plus): Focused on converting viewers to subscribers by expanding the content catalog (>700 titles) to include original programming, documentaries, and licensed scripted TV (e.g., "Bonanza," "Dragnet"); average engagement time per account rose 19% year-over-year.
• Newsmax 2: Plans to increase control over advertising monetization on the free streaming channel in coming quarters; currently reaches ~87% of U.S. TV households via 131 digital markets.
• Legacy Print/Newsletters: Intentionally reducing overhead and subscription base for print magazines and legacy paid newsletters to shift resources toward online revenue streams (partnerships, streaming, licensing).

Market and Competitive Outlook:

• 2028 Election Cycle: Expects the 2028 presidential race (primaries starting summer 2027) to amplify advertising spending and viewer engagement, with Newsmax benefiting as a trusted outlet for underserved, center-right audiences.
• Advertising Trends: While midterm races drive local station ad spend, Newsmax anticipates higher engagement and long-term viewer retention from these cycles, similar to the 2024 election impact; 2028 projected to see even greater federal and state election spending.
• Audience Growth: Audience engagement is structural and builds cycle-over-cycle; reached 49 million viewers in first nine months of 2026 (up 42% from 2023), with loyal viewers remaining even when news cycles slow.
• Platform Expansion: Positioning to capture market share across cable, OTT, social, and AI platforms; ranking #2 in engagement among adults 35-64; social followers up 13% to 26.8 million.

Macro / Industry Outlook:

• Election Cycle Dynamics: Management views the two years leading into a presidential election as a "Super Bowl of elections" characterized by high engagement, which historically drives revenue growth.
• Media Consumption: Acknowledges diversification of news consumption toward AI, social, and streaming; expects this trend to continue, with Newsmax expanding presence on AI platforms (Meta, Yahoo, Apple, Google).
• Political Ad Spending: Midterm political ad spending projected at $11.6 billion (higher than 2024 presidential cycle); expected to amplify further in 2028.
• Regulatory/Market Position: Anticipates continued demand for independent journalism; positions Newsmax to fill a gap left by competitors not focusing on the "family-friendly, center-right" niche.

Strategic Initiatives:

• M&A / Acquisitions: Acquired two radio stations in Miami (Radio Mambi and sister station) to establish a foothold in the Spanish-speaking market; strategy is opportunistic rather than a large-scale M&A program, focusing on building existing platforms.
• AI Partnerships: Signed multi-year AI content partnership with Meta (July) to distribute Newsmax content across Meta apps/devices; expects to see revenue and reach developments in the coming year.
• Content Investment: Increasing investment in original programming and documentaries for Newsmax Plus to drive subscription growth; added "World at War" channel and true crime content.
• Internal Efficiency: Deploying AI across all departments (marketing, accounting, legal, production, writing) to improve productivity and reduce costs, though not fully substituting human roles.

Risks and Headwinds to Outlook:

• Legacy Segment Declines: Continued contraction in print magazine and legacy newsletter subscription bases is expected as part of a strategic overhead reduction plan.
• Digital Revenue Volatility: Digital segment revenues may fluctuate year-over-year (e.g., Q3 saw a 4.1% decrease) as growth in licensing offsets declines in subscriptions and digital advertising.
• Execution Risk: Future growth depends on successful conversion of free streaming viewers to paid Newsmax Plus subscribers and effective monetization of expanded content libraries.
• Market Dependency: Reliance on election cycles and political sentiment; while engagement is expected to rise with the 2028 cycle, results remain tied to political activity levels.

Management Tone on the Future:

• Confidence Level: High; described the Q3 results as the "strongest in our history" and expressed confidence in "structural, not cyclical" growth.
• Strategic Outlook: Management is "excited about the journey ahead" and views the 2028 election cycle as a two-year window to capitalize on existing strength, record revenue, and a debt-free balance sheet.
• Investment Stance: Committed to continuing to invest behind growth in programming, talent, technology, and distribution despite recent legacy headwinds.
• Guidance Changes: Maintained previous guidance without adjustment, citing positive performance through the first nine months and the strength of the new revenue mix.

Miscellaneous:

• Financial Position: Ended quarter with $137.6 million in total cash and investments ($26.7M cash, $110.8M short-term investments) and zero debt on the balance sheet.
• One-Time Items: Q3 included a $14 million non-recurring termination fee from an ad agreement amendment; full-year guidance provided both with and without this item.
• Operational Efficiency: AI adoption in production and writing has reduced article creation time from 2-3 hours to under an hour, potentially impacting long-term employee needs as the company grows.