Townsquare Media, Inc.

Previous wording

Our Broadcast Advertising segment includes our portfolio of 337 local terrestrial radio stations. Our primary source of Broadcast Advertising net revenue is the sale of advertising on our local radio stations primarily to local and regional spot advertisers and, to a lesser extent, national spot and national network advertisers. We believe we are the largest and best-capitalized owner and operator of radio stations focused solely on markets outside the top 50 markets in the United States. Given the stability of radio’s audience, its broad reach and its relatively low cost as compared to competing advertising media such as television, we believe radio continues to offer an attractive value proposition to advertisers. The price point for radio advertising on a cost per thousand basis is lower than most other local media that deliver similar scale. This makes radio more affordable and accessible for the type of small and mid-sized businesses typically found in our local markets outside the top 50 markets in the U.S.

Current wording

Our Broadcast Advertising segment includes our portfolio of 336 local terrestrial radio stations. Our primary source of Broadcast Advertising net revenue is the sale of advertising on our local radio stations primarily to local and regional spot advertisers and, to a lesser extent, national spot and national network advertisers. We believe we are the largest and best-capitalized owner and operator of radio stations focused solely on markets outside the top 50 markets in the United States. Given the stability of radio’s audience, its broad reach and its relatively low cost as compared to competing advertising media such as television, we believe radio continues to offer an attractive value proposition to advertisers. The price point for radio advertising on a cost per thousand basis is lower than most other local media that deliver similar scale. This makes radio more affordable and accessible for the type of small and mid-sized businesses typically found in our local markets outside the top 50 markets in the U.S.

Previous wording

•Net revenue decreased $1.9 million, or 1.9%, primarily driven by a $2.7 million decrease in our Broadcast Advertising net revenue and a $1.5 million decrease in Subscription Digital Marketing Solutions net revenue, partially offset by a $2.5 million increase in our Digital Advertising net revenue.

Current wording

•Net revenue decreased $0.1 million, or 0.1%, primarily driven by a $2.7 million decrease in our Broadcast Advertising net revenue and a $1.6 million decrease in Subscription Digital Marketing Solutions net revenue, largely offset by a $4.7 million increase in our Digital Advertising net revenue.

Previous wording

•Excluding political revenue of $0.6 million for each of the three months ended March 31, 2026 and 2025, respectively, net revenue decreased $2.0 million, or 2.0%, to $96.1 million, Broadcast Advertising net revenue decreased $2.8 million, or 6.9%, to $38.0 million, and Digital Advertising net revenue increased $2.5 million, or 6.9%, to $39.2 million.

Current wording

•Excluding political revenue of $1.3 million and $0.6 million for the three months ended June 30, 2026 and 2025, respectively, net revenue decreased $0.9 million, or 0.8%, to $114.0 million, Broadcast Advertising net revenue decreased $3.5 million, or 7.2%, to $45.3 million, and Digital Advertising net revenue increased $4.7 million, or 11.1%, to $47.1 million.

Previous wording

•Operating income decreased $8.4 million for the three months ended March 31, 2026. The decrease was primarily due to an $8.6 million non-cash impairment charge and the $1.9 million decrease in net revenue, partially offset by a $1.3 million decrease in transaction and business realignment costs.

Current wording

•Operating income decreased $33.3 million to an operating loss of $12.3 million for the three months ended June 30, 2026. The decrease was primarily due to a $25.1 million increase in non-cash impairment charges, a $6.0 million decrease in net gain on sales and retirements of assets and a $1.7 million increase in direct operating expenses.

Previous wording

•Broadcast Advertising reported an operating loss of $4.1 million for the three months ended March 31, 2026, which represents a decrease of $9.4 million, as compared to operating income of $5.3 million for the same period in 2025. The decrease is primarily due to an $8.6 million non-cash impairment charge and a $1.0 million decrease in segment profit, partially offset by a $0.5 million increase in net gain on sales and retirements of assets. Digital Advertising reported operating income of $6.8 million for the three months ended March 31, 2026, a decrease of $0.5 million, as compared to operating income of $7.2 million for the same period in 2025 due to a $0.4 million decrease in segment profit. Subscription Digital Marketing Solutions reported operating income of $5.0 million, a decrease of $0.5 million from the three months ended March 31, 2025, primarily due to a $0.3 million decrease in segment profit and higher depreciation and amortization.

Current wording

•Broadcast Advertising reported an operating loss of $15.9 million for the three months ended June 30, 2026, which represents a decrease of $32.4 million, as compared to operating income of $16.5 million for the same period in 2025. The decrease is primarily due to incremental non-cash impairment charges of $25.1 million, a $6.0 million decrease in net gain on sales and retirements of assets, and a $1.2 million decrease in segment profit. Digital Advertising reported operating income of $10.1 million for the three months ended June 30, 2026, a decrease of $0.1 million, as compared to the same period in 2025. Subscription Digital Marketing Solutions reported operating income of $5.4 million, a decrease of $0.2 million from the three months ended June 30, 2025.

Previous wording

Net revenue for the three months ended March 31, 2026 decreased $1.9 million, or 1.9%, as compared to the same period in 2025. Broadcast Advertising net revenue decreased $2.7 million, or 6.6%, due to decreases in the purchases of advertising by our clients and Subscription Digital Marketing Solutions net revenue decreased $1.5 million, or 7.9%, due to reduced sales velocity as a result of lower sales headcount. These decreases were partially offset by an increase in Digital Advertising net revenue of $2.5 million, or 6.8%, due to increases in the purchases of advertising by our clients.

Current wording

Net revenue for the three months ended June 30, 2026 decreased $0.1 million, or 0.1%, as compared to the same period in 2025. Broadcast Advertising net revenue decreased $2.7 million, or 5.5%, due to decreases in the purchases of advertising by our clients and Subscription Digital Marketing Solutions net revenue decreased $1.6 million, or 8.5%, due to reduced sales velocity as a result of lower sales headcount, and Other net revenue decreased $0.5 million, or 9.9%. These decreases were largely offset by an increase in Digital Advertising net revenue of $4.7 million, or 11.0%, due to increases in the purchases of advertising by our clients.

Previous wording

Direct operating expenses for the three months ended March 31, 2026 decreased by $0.2 million, or 0.3%, as compared to the same period in 2025. Broadcast Advertising direct operating expenses decreased by $1.8 million, or 5.4%, primarily due to lower compensation and bad debt expense as compared to the same period in 2025. Subscription Digital Marketing Solutions direct operating expenses decreased by $1.2 million, or 9.6%, due to lower compensation as compared to the same period a year ago. These decreases were partially offset by a $2.9 million, or 10.1%, increase in Digital Advertising direct operating expenses due to higher inventory and compensation costs as compared to the same period in 2025.

Current wording

Direct operating expenses for the three months ended June 30, 2026 increased by $1.7 million, or 2.0%, as compared to the same period in 2025. Digital Advertising direct operating expenses increased by $4.7 million, or 14.8%, primarily due to higher inventory costs as compared to the same period in 2025, as a result of higher costs associated with acquiring digital advertising inventory, partially driven by the increase in net revenue discussed above. This was partially offset by a decrease of $1.8 million, or 14.5% of Subscription Digital Marketing Solutions direct operating expenses due to lower compensation and a $1.4 million, or 4.2%, decrease in Broadcast Advertising direct operating expenses primarily due to lower compensation, each as compared to the same period a year ago.

Previous wording

Segment profit for the three months ended March 31, 2026 decreased by $1.7 million, or 7.2%, when compared with the same period in 2025. Broadcast Advertising segment profit decreased $1.0 million, or 11.4%, primarily due to the decrease in net revenue. Digital Advertising segment profit decreased $0.4 million, or 5.0%, as compared to the same period in 2025, primarily due to the increase in inventory and compensation costs. Subscription Digital Marketing Solutions segment profit decreased $0.3 million, or 4.5% as compared to the same period in 2025, primarily due to lower revenue.

Current wording

Segment profit for the three months ended June 30, 2026 decreased by $1.8 million, or 5.4%, when compared with the same period in 2025. Broadcast Advertising segment profit decreased $1.2 million, or 8.2%, primarily due to the decrease in net revenue and Other segment profit decreased $0.7 million, primarily due to the performance of certain events in the current year period. These declines were partially offset by an increase in Subscription Digital Marketing Solutions segment profit of $0.2 million, or 3.4%, as compared to the same period in 2025, due to the decrease in direct operating expenses.

Previous wording

Unfavorable changes in key assumptions utilized in the impairment assessment of our FCC licenses may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the weighted average cost of capital as of the date of our last quantitative assessment would cause the estimated fair values of our FCC licenses to decrease by $19.9 million which would have resulted in an incremental impairment charge of $10.3 million as of March 31, 2026. Further, a 100-basis point decline in the long-term revenue growth rate would cause the estimated fair values of our FCC licenses to further decrease by $11.3 million which would have resulted in an incremental impairment charge of $8.9 million as of March 31, 2026. Finally, a 100-basis point decline in operating profit margins would result in a decrease in the estimated fair values of our FCC licenses of $8.9 million which would result in an incremental impairment charge of $7.2 million. Assumptions used to estimate the fair value of our FCC licenses are also dependent upon the expected performance and growth of our traditional broadcast radio operations. In the event broadcast radio revenue experiences actual or anticipated declines in excess of these assumptions, such declines will have a negative impact on the estimated fair value of our FCC licenses, and the Company could recognize additional impairment charges, which could be material.

Current wording

Unfavorable changes in key assumptions utilized in the impairment assessment of our FCC licenses may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the weighted average cost of capital as of the date of our last quantitative assessment would cause the estimated fair values of our FCC licenses to decrease by $16.5 million which would have resulted in an incremental impairment charge of $10.0 million as of June 30, 2026. Further, a 100-basis point decline in the long-term revenue growth rate would cause the estimated fair values of our FCC licenses to further decrease by $8.4 million which would have resulted in an incremental impairment charge of $5.6 million as of June 30, 2026. Finally, a 100-basis point decline in operating profit margins would result in a decrease in the estimated fair values of our FCC licenses of $8.0 million which would result in an incremental impairment charge of $6.8 million. Assumptions used to estimate the fair value of our FCC licenses are also dependent upon the expected performance and growth of our traditional broadcast radio operations. In the event broadcast radio revenue experiences actual or anticipated declines in excess of these assumptions, such declines will have a negative impact on the estimated fair value of our FCC licenses, and the Company could recognize additional impairment charges, which could be material.

Previous wording

Interest expense increased primarily due to the cost of borrowings under the February 2025 credit agreement, including the term loan and revolving credit facilities, partially offset by scheduled principal repayments. For further discussion related to the terms of the credit agreement and effective interest rates, see Note 6, Long-Term Debt, in the Notes to Unaudited Consolidated Financial Statements.

Current wording

Interest expense decreased primarily due to a lower effective interest rate on the term loan, driven by declines in SOFR, and a reduction in term loan principal resulting from scheduled quarterly and voluntary repayments. For further discussion related to the terms of the credit agreement and effective interest rates, see Note 6, Long-Term Debt, in the Notes to Unaudited Consolidated Financial Statements.

Previous wording

We recognized a benefit for income taxes of $15.7 million for the three months ended March 31, 2026, as compared to $3.0 million for the same period in 2025. Our effective tax rate for the three months ended March 31, 2026 and 2025 was approximately 123.3% and 66.8%, respectively. The increase in the effective tax rate and tax benefit for the three months ended March 31, 2026 is driven by the valuation allowance for interest expense carryforwards, non-deductible compensation and the effects of non-cash impairment charges recognized in the first quarter of 2026.

Current wording

We recognized a provision for income taxes of $18.0 million for the three months ended June 30, 2026, as compared to $6.3 million for the same period in 2025. Our effective tax rate for the three months ended June 30, 2026 and 2025 was approximately 75.9% and 75.8%, respectively. The effective tax rate and tax provision for the three months ended June 30, 2026 are driven by the valuation allowance for interest expense carryforwards resulting from higher non-cash impairment charges and non-deductible compensation.

Previous wording

The Company incurred $8.6 million of non-cash impairment charges related to FCC licenses during the three months ended March 31, 2026, as compared to no impairment for the same period in 2025. The impairment charges were primarily driven by increases in the discount rate applied in the valuation of our FCC licenses due to an increase in the weighted average cost of capital, caused by an increase in industry bond yields. For further discussion, see Note 5, Goodwill and Other Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements.

Current wording

The Company incurred a total of $35.2 million in non-cash impairment charges related to FCC licenses in 20 of our 74 local markets during the six months ended June 30, 2026, as compared to impairment charges of $1.5 million related to FCC licenses in 4 of our 74 local markets during the six months ended June 30, 2025. The impairment charges during the six months ended June 30, 2026 were primarily driven by decreases in third-party forecasts of broadcast revenue and increases in the discount rate applied in the valuation of our FCC licenses due to an increase in the weighted average cost of capital, caused by an increase in industry bond yields. For further discussion, see Note 5, Goodwill and Other Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements.

Previous wording

Net cash provided by operating activities was approximately $4.2 million for the three months ended March 31, 2026, as compared to net cash used in operating activities of $0.1 million for the same period in 2025. The increase was primarily related to lower cash interest payments in 2026 and net changes in working capital balances, particularly accrued expenses and accounts receivable.

Current wording

Net cash provided by operating activities was approximately $7.8 million for the six months ended June 30, 2026, as compared to $10.1 million for the same period in 2025. The decrease was primarily related to net changes in working capital balances, particularly accounts receivable, accounts payable and accrued expenses, partially offset by lower cash interest payments in 2026.

Previous wording

Net cash used in investing activities was $2.9 million for the three months ended March 31, 2026, as compared to $4.3 million for the same period in 2025. The decrease in net cash used in investing activities was primarily due to a $0.8 million decrease in purchases of property and equipment and a $0.6 million increase in net proceeds from sales of assets.

Current wording

Net cash used in investing activities was $6.1 million for the six months ended June 30, 2026, as compared to $1.9 million for the same period in 2025. The increase in net cash used in investing activities was primarily due to a $5.5 million decrease in net proceeds from sales of assets in 2026, partially offset by $1.2 million decrease in purchases of property and equipment.

Previous wording

Net cash used in financing activities was $3.6 million for the three months ended March 31, 2026, as compared to $22.7 million for the same period in 2025. The primary differences in net cash used in financing activities include:

Current wording

Net cash used in financing activities was $5.0 million for the six months ended June 30, 2026, as compared to $37.7 million for the same period in 2025. The primary differences in net cash used in financing activities include:

Previous wording

•$3.0 million in net borrowings under the Revolver during the three months ended March 31, 2026, as compared to $7.0 million during the same period in 2025;

Current wording

•$10.0 million in net borrowings under the Revolver during the six months ended June 30, 2026, as compared to no net borrowings during the same period in 2025;

Previous wording

•Fixed term loan repayments of $2.9 million in 2026;

Current wording

•Fixed term loan repayments of $5.9 million in 2026, as compared to $2.9 million in 2025;

Previous wording

•$1.4 million of shares repurchased to cover employee tax withholdings on restricted stock that vested during the three months ended March 31, 2025, which did not recur in 2026; and

Current wording

•$1.5 million of shares repurchased to cover employee tax withholdings on restricted stock that vested during the six months ended June 30, 2025, which did not recur in 2026; and

Previous wording

•$3.7 million of dividend payments in 2026, as compared to $3.1 million of dividend payments in 2025.

Current wording

•$7.2 million of dividend payments in 2026, as compared to $6.6 million of dividend payments in 2025.

Previous wording

As of March 31, 2026, we had $434.2 million of outstanding indebtedness, net of unamortized discount and deferred financing costs of $23.3 million.

Current wording

As of June 30, 2026, we had $440.0 million of outstanding indebtedness, net of unamortized discount and deferred financing costs of $22.2 million.

Previous wording

Based on the terms of our Senior Secured Credit Facility, as of March 31, 2026, we expect our mandatory debt service requirements to be approximately $50.7 million over the next twelve months. See Note 6, Long-Term Debt, in our Notes to Consolidated Financial Statements for additional information related to our Senior Secured Credit Facility.

Current wording

Based on the terms of our Senior Secured Credit Facility, as of June 30, 2026, we expect our mandatory debt service requirements to be approximately $51.6 million over the next twelve months. See Note 6, Long-Term Debt, in our Notes to Consolidated Financial Statements for additional information related to our Senior Secured Credit Facility.

Previous wording

As of March 31, 2026 we had $2.2 million of cash and cash equivalents, and $49.1 million of receivables from customers, which historically have had an average collection cycle of approximately 50 days. As of March 31, 2026, the Company had $15.0 million available under its revolving credit facility. Amounts borrowed under the revolving credit facility above an aggregate $6.0 million as of the end of each fiscal quarter requires compliance with a net leverage ratio covenant, which could limit the Company’s ability to access the full amount of the facility.

Current wording

As of June 30, 2026 we had $1.2 million of cash and cash equivalents, and $60.3 million of receivables from customers, which historically have had an average collection cycle of approximately 50 days. As of June 30, 2026, the Company had $8.0 million available under its revolving credit facility. Amounts borrowed under the revolving credit facility above an aggregate $6.0 million as of the end of each fiscal quarter requires compliance with a net leverage ratio covenant, which could limit the Company’s ability to access the full amount of the facility.

Previous wording

Our anticipated uses of cash in the near term include working capital needs, interest payments, debt amortization payments, dividend payments, excess cashflow payments that may be required under the terms of the Credit Agreement, other obligations, and capital expenditures. The Company believes that the cash generated by its operations should be sufficient to meet its liquidity needs for at least the next 12 months. However, our ability to fund our working capital needs, interest payments, debt payments, dividend payments, other obligations, capital expenditures, and to comply with financial covenants under our debt agreements, depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions, increases or decreases in advertising spending, changes in the highly competitive industry in which we operate, which may be rapid, and other factors, many of which are beyond our control. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of debt financing would result in debt service obligations. Such debt instruments could introduce covenants that might restrict our operations. We cannot assure you that we could obtain additional financing on favorable terms or at all.

Current wording

Our anticipated uses of cash in the near term include working capital needs, interest payments, debt amortization payments, dividend payments, excess cashflow payments that may be required under the terms of the Credit Agreement, other obligations, and capital expenditures. The Company believes that the cash generated by its operations should be sufficient to meet its liquidity needs for at least the next 12 months. However, our ability to fund our working capital needs, interest payments, debt payments, dividend payments, other obligations, capital expenditures, and to comply with financial covenants under our debt agreements, depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions, increases or decreases in advertising spending, changes in the highly competitive industry in which we operate, which may be rapid, and other factors, many of which are beyond our control. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of debt financing would result in additional debt service obligations. Such debt instruments could introduce covenants that might restrict our operations. We cannot assure you that we could obtain additional financing on favorable terms or at all.

Previous wording

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our significant estimates, including those related to determining the fair value of assets and liabilities acquired in a business combination, impairment testing of intangible assets, valuation and impairment testing of long-lived tangible assets, the present value of leasing arrangements, share-based payment expense and the calculation of allowance for doubtful accounts and income taxes. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the result of which forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the Consolidated Financial Statements. Actual results could differ from such estimates, and any such differences may be material to our financial statements.

Current wording

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our significant estimates, including those related to determining the fair value of assets and liabilities acquired in a business combination, impairment testing of intangible assets, stock-based compensation expense and income taxes. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the result of which forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the Consolidated Financial Statements. Actual results could differ from such estimates, and any such differences may be material to our financial statements.