Davenport-based newspaper publisher Lee Enterprises has faced big challenges in recent months, but still has “strong revenue growth.”
That’s the word from Lee company leaders as the media company on Thursday, May 8, released its preliminary second quarter financial results, for the period ended March 30.
In the Quad Cities region, Lee is the publisher of the Quad-City Times, Rock Island Argus and Dispatch, and Muscatine Journal newspapers. It publishes more than 350 weekly and specialty publications serving 73 markets in 26 states.
During the quarter, the company faced a February cybersecurity incident, incurring $2 million in restoration costs and impacting advertising revenue, the earnings report said.
“On the subscription side, our normal process for activating new digital subscribers was hampered (by the cyber attack), significantly impacting units in the quarter. I’m proud of how our team navigated the challenges as we are now recovered from the cyber incident and focused on executing our strategy,” Lee President and CEO Kevin Mowbray said in a news release.
Despite that challenge, the company did well in the second quarter, he added. “Our second quarter results demonstrate the continued progression of our digital transformation. Digital subscription revenue continues to grow rapidly, up 20% on a same-store basis in the quarter, as we yield higher average digital subscription rates for our 728,000 digital-only subscribers. Amplified Digital Agency, our full-service digital marketing agency, continues to have strong revenue growth, up an industry-leading 9% on a same-store basis over the prior year,” Mr. Mowbray said.
The Lee CEO said “also took significant action” to address near-term challenges. “We executed $40 million in annualized cost reductions in the second quarter, and trimmed capital and other spending to drive significant back-half free cash flow.”
As a result, he added “we now expect our third and fourth fiscal quarters of FY25 to demonstrate improving year-over-year trends in total digital revenue.”
Also in the first quarter, Lee launched an AI solution for its advertising customers.
Some of the quarter’s highlights include:
- Total operating revenue was $137 million – a new loss of $12 million.
- Total digital revenue was $73 million, a 3% increase over the prior year, or 4% on a same-store basis. This represents 53% of the company’s total operating revenue.
- Revenue from digital-only subscribers totaled $24 million, up 17% over the prior year, or up 20% on a same-store basis.
- Digital advertising and marketing services revenue represented 73% of its advertising revenue and totaled $44 million.
- Digital services revenue, which is predominantly from BLOX Digital, totaled $5 million.
The print side of the business showed a drop in revenues. Print advertising revenues went from $18.7 million in March 2024 to about $16.5 million at the end of first quarter 2025. Subscription revenues decreased from almost $49 million the prior first quarter to just more than $41 million at the end of March. Total print revenues went from $75.7 million a year ago to about $64.8 million in March 2025, which was about a 14% decrease.
