MCLEAN, Va. - Gannett Co., Inc. (NYSE: GCI), a diversified media company, reported a miss on earnings per share (EPS) for the fourth quarter ended December 31, 2023. The company posted an adjusted EPS of ($0.16), which was significantly below the analyst consensus estimate of $0.06. Despite this shortfall, the company's revenue for the quarter was $669.4 million, only slightly missing the consensus estimate of $676.22 million.
The stock experienced a modest decline of 0.90% following the earnings release, indicating a somewhat negative market response to the EPS miss. Gannett's digital transformation strategy has shown progress, with digital revenues comprising 41.4% of total revenues, a 2.9% increase compared to the previous year. Digital-only subscription revenues grew by 18.1% year-over-year (YoY), reaching $41.9 million, while digital-only average revenue per user (ARPU) rose by 19.5% YoY to $7.05.
Michael Reed, Gannett Chairman and Chief Executive Officer, commented on the company's performance, stating, "In 2023, we made excellent progress executing on our strategy to drive our digital transformation, resulting in total digital revenues exceeding 41% of total revenues in the fourth quarter." Reed also highlighted the company's focus on improving its capital structure, with over $140 million in debt repayments made during the year.
For the full year 2024, Gannett expects total digital revenues to grow approximately 10%, with total revenues projected to be down in the low to mid-single digits on a reported and same-store basis. The company anticipates an improvement in net income attributable to Gannett, excluding an impairment charge related to the exit of their McLean, Virginia office. Adjusted EBITDA is expected to grow versus the prior year, with cash provided by operating activities and free cash flow also projected to increase.
Looking at the full year 2025 and 2026, Gannett expects to continue its revenue growth, with total digital revenues making up an increasingly larger portion of total revenues. Adjusted EBITDA is expected to exhibit ongoing growth, with cash provided by operating activities and free cash flow expected to grow at an accelerated rate.
In summary, Gannett's fourth quarter results were mixed, with a notable miss on EPS but a continued strategic focus on digital growth and financial stability. The company's outlook for the coming years reflects confidence in the ongoing digital transformation and revenue growth.
InvestingPro Insights
As Gannett Co., Inc. (NYSE: GCI) navigates its digital transformation, the latest financial metrics from InvestingPro paint a nuanced picture of the company's performance and market position. Gannett's market capitalization stands at $317.57 million, with a Price/Earnings (P/E) ratio of 10.97, suggesting a potentially attractive valuation for investors considering the company's earnings capacity. Moreover, the stock's P/E ratio adjusted for the last twelve months as of Q3 2023 is even lower at 7.78, indicating a possible undervaluation relative to its recent profitability.
One of the InvestingPro Tips highlights Gannett's commendable track record of raising its dividend for 6 consecutive years, showcasing a commitment to returning value to shareholders. Additionally, the company is trading at a low revenue valuation multiple, which might appeal to value-oriented investors. However, it's important to note that analysts anticipate a sales decline in the current year, which could be a factor for those considering the stock's future revenue prospects.
For investors seeking more comprehensive analysis and additional InvestingPro Tips, there are 5 more tips available on the company's page at Investing.com/pro/GCI. To gain deeper insights and make more informed investment decisions, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Overall, Gannett's focus on digital revenue growth is a key aspect of its strategy, and with InvestingPro's real-time data and insights, investors can keep a close eye on how well the company is adapting to the evolving media landscape.
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