Hey, great. We'll get started. We have from Outfront Media, Nick Brien, CEO, Matthew Siegel, CFO. Guys, thanks so much for being here.
Thanks, Dave. Thank you for having us.
Nick, you're coming up on a year since you laid out your strategic imperatives. I think that was last May. The results have clearly inflected. Can you give us a sense of where the company is today versus then, what you're most proud of over the past 12 months?
The company as reflected by the results is really operating very well. If I separate in a way the brand and the business, there's a greater clarity on exactly what business we're in and the opportunity we have to really be a strategic business partner with some of the most significant advertisers at the highest level, as well as being at the mid-market and the SMB level. The focus on what and how we're positioning our brand is resonating very well.
At a business level, if a core part of the business is people, process, and technology, a lot of the heavy lifting we did last year on the restructuring, the redesign of the business, the talent we hired at the leadership level, the business processes that we've been focusing on, and as importantly, a lot of the technology investments that we've been making. We're early in the journey, but the results, you know, are promising.
Got it. The broader ad market has seen some pockets of macro uncertainty, yet outdoor seems to be holding up well, if we look at the results of you and your peers. Maybe you can walk through why you think out-of-home has been resilient in this environment. You know, is there something structural about the medium that is providing a degree of insulation?
Yeah. Absolutely. The recognition, I think three things have happened. One, there's been a pendulum shift. It's a slow one, but it's really starting to happen for a lot of the more significant brand advertisers who have for the last 10 years been too far down the bottom of the funnel on short-term performance and at the expense of longer-term brand building. There's the other part of the marketplace that is recognizing that for all the power of the addressability and the personalization of digital media, there's a real strength in the one-to-many that out-of-home has, that we have. Thirdly, we're really leveraging, and I think the industry is really picking this up, that we're trying to reframe out-of-home media and talk about increasingly IRL. Because out-of-home is a fact. IRL is a benefit.
We don't wanna just be talking about fact. It's out-of-home. What? The TV's in-home. We're talking about in real life and in real life brand experiences as part of the value proposition, why brands need to be integrating this great media as part of their own omnichannel mix. It's starting to resonate. We need to do a more consistent role collectively, and I talked to my peers about this, at the marketing level, but we need to underpin to it with measurement.
Maybe turning out to Outfront specifically. Q1 outperformed, and you've got it for further acceleration in Q2. Why don't we start with Billboard? Maybe you can unpack what's driving the better trend, any color you can give around category, region.
Yeah. I think if I think about the regions, the West has done, you know, I think exceptionally well for us on the last one. I think certainly the benefit that we've had in L.A. and in San Francisco, and that's also been benefited from a tech trends. I mean, technology now, including AI, is representing one of the largest categories. And the AI spending of AI-native businesses as well as the more significant, you know, established players is definitely, you know, it's leaving San Francisco. It's very extensive in New York now. That's been a strong one for us. Finance, CPG, a number of these are the exciting categories that we're seeing.
Is there any way to frame the competitive dynamic on that AI side, right? You know, I was in San Francisco in March. I counted from SFO to the city, probably two-thirds of the boards had an AI message. You know, just how kind of unique is this moment in terms of that incremental buying coming in?
Well, I think it's probably even higher than that. I mean, it's remarkable the level of ambition that the AI companies are all from all sorts, from the B2B to the B2C, and they're willing to spend. We're pretty much sold out to the end of the year. They, again, start in San Francisco and then wanna come to other markets. We've got some have migrated to Chicago, some to Boston, most to New York. We're very excited about it. I mean, it's clearly here to stay. Also, the other opportunity and the other superpower opportunity that's emerging now, which is probably not what people would have considered with AI, is what it will do in changing agentic commerce and agentic advertising and marketing.
Now you've got a situation where in the open web as well as the walled gardens, you're going to look at so much in the digital ecosystem that AI is rendering fake, untrustworthy, unreliable, unknown, more and more bots clicking, more fake bots, more fake impressions, more confusion. A growing world where a lot of the biggest advertisers have a lot of frustration with the lack of transparency and fraudulence that goes on in the digital ecosystem. In antithesis of that, we are the only medium that is IRL, that we are the only one-to-many true physical medium that has a high degree of trust. We are leaning into that, and I think that is only going to continue at a very accelerated pace.
I just wanna understand your last point on agentic. If we move to this world where sort of Consumer purchasing decisions, not everyone, but, you know, a sizable portion go to my agent, talks to, right, a publisher agent or, you know, a seller agent, right? This will translate in a way to more IRL, more outdoor.
Well, it will because we'll be the only medium-
Right.
-that if you're in a low-interest priority brand sector of a preference and you're not, and there's not a high degree, you're gonna keep the preferences that you're very interested in, whether it be, you know, Italian travel, fine wine, and fast cars. You're gonna wanna hear from as many brands and businesses in that sector. The things that you can delegate that don't interest you will be pushed to your agent, and agents will talk to agents, and humans will talk to humans. There will be as many agents as there are humans. Every one of us will have our own custom, smart, well-trained agent to do the work. We will be a medium that cannot be separated, it cannot be filtered.
Even if you are in a low-priority category, and there's many you can imagine that you're not going to be personally interested in, you still have an opportunity to engage with basically everybody using our media. What our media needs to do is get much smarter and almost, not leapfrog basic audience measurement, because we haven't even got that fixed yet. We've got to get that fixed, but we have got to move into the behavioral intent side because what these agentic planning and buying systems are doing, they're not looking to just buy audiences anymore. They're looking to buy audiences, people with a buying intent that they may be ready to book a holiday, buy a car. How do we make our media not just in real life and a physical media and a public media and a shared media experience?
How do we also bring the intelligence of smart data signals?
The transit business led in Q1, with the MTA up 26%. You know, investors often ask what's changed at the New York MTA. From what we can tell, inventory ridership trends are stable. Maybe you can comment on Outfront specific factors like your sales team, experiential offering. Maybe you could just talk about investor appreciation for the transit channel just in general at the moment.
Well, thank you for that. I mean, we're very bullish about transit and not just the new MTA. When I arrived, there was a sense of confusion between the nature of the contract and the nature of the medium. This is a line of business and a particular product that has so much of the cultural zeitgeist. Over 6 million people travel using the tubes, the buses, and the trains in New York City every day. Understanding how we could be more deliberate and more focused. I changed, yeah, we changed the sales team, found some brilliant leaders underneath what was the leadership team.
We promoted them, we changed the compensation structures, and we gave it a product marketing focus that started to arm those salespeople with very relevant, and, you know, specific orientation towards transit and specifically New York in general. Suddenly the flywheel has been turning. We've also made it. I also see it in L.A., we're seeing it in San Francisco. The New York MTA specifically has attracted a lot of, a really big assortment of brands who actually want to do more creative things. It's remarkable how much we can do in the MTA. That is becoming a platform for IRL media like nothing else.
I feel like I have to press on that last point, right, about more you could do creatively because we've seen that, right.
Yeah.
Whole wrapping around-
Yeah.
-the subway, right? Seems like there's just a lot more opportunity.
Oh, we did-
There. Yeah.
We did an air scent drop for Bath & Body Works. We did a, you know, we did a Barilla experience that people could get in on the tubes, and everything was structured in a different way around you know, the ticket was a Barilla pasta box. There's so many coming. ESPN, they wanted to wrap. They have their mascots. The MTA are a great business partner, and they appreciate that by being more creative, by allowing more opportunity for creativity and activation, those experiences get photographed, and they get shared. That's where the amplification of our medium has such superpower capabilities because if you do it right, people are excited by it, they're stimulated about it, and they wanna share it.
Got it. Separate from the MTA, you noted a couple, but there's implied momentum in your other transit markets. Any kind of regions you'd wanna highlight out of the portfolio?
San Francisco specifically has done. They haven't had the sort of, you know, ridership level coming back. As Matt always says, in L.A., you know, buses, it doesn't really matter how many people are in the buses because it's what's going around.
We advertise on the outside.
Right.
Yeah.
They're both doing well. In general, the sentiment towards transit as a superpower line of business in our portfolio is there now. Before, it didn't have the attention, it didn't have the enthusiasm, and it didn't have the marketing to support the salespeople to be able to really showcase the excellence that it provides.
Got it, Matt. Major milestone for this year. You now expect MTA revenue to surpass the MAG level in 2026. Can you just walk through the accounting dynamics here? How does the shift to revenue share technically work in Q4?
Sure. The major milestone, it's the first time really since 2019, we're gonna be above the MAG level and have some recoupment. It's great to tell people, great to hear, and we're excited about it, and hopefully it continues in the future. We started the year straight lining our MAG because we did not expect to be above the MAG level, and that was the preferred accounting. At the end of the first quarter, we looked at our forecast and said we're gonna be above the minimum guarantee, we shifted into revenue share. The MTA is a 55% revenue share up until the MAG, where the MAG is the minimum, and then the revenue above that gets accounted for at 70% revenue share.
I say accounted for, it's non-cash. The delta between that MAG line and the 70% line, we retain for recoupment against the hundreds of millions of dollars of money we spent on the deployment. For us, we're getting the first quarter had too large an expense because it's a seasonally smaller quarter, and the straight line over-expensed that quarter. By the third and second or third quarter, we'll be all caught up in our true-up. The fourth quarter will be a pure revenue share quarter, expense is 70%, so the expense will be much higher than it was last year. The EBITDA is likely to be lower. The cash flow will be very strong.
Right. To confirm, no impact to cash flow, no impact to AFFO?
There will be an impact to AFFO-
Okay.
-because it's part of, you know, EBITDA, but the cash flow and working capital-
Got it.
-will benefit.
Got it. The World Cup's coming up next month. You disclosed about 70 active customers, I think over 40% of FIFA sponsors engaged with agreements across six host cities. Nick, can you just give us a sense of kind of what you're doing specifically around the World Cup? You know, is it primarily leveraging your existing billboards, or is it more about, like, those areas, close to the arenas and stadiums?
Yeah, there's a couple of things. I mean, certainly we've had a high level of expectation that the FIFA sponsors, as well as the team sponsors, are gonna wanna be activating. The inventory, we separated it, and we made sure that we were very careful to ensure that in those particular markets, that inventory was locked and set aside. We've had very specific marketing, very specific outreach, very specific packaging and pricing for those advertisers. The second thing we've been doing is our real estate and our supply team, who have got great relationships with obviously all local municipalities and the planning department, is to say, "How can we create, you know, unique inventory?
What special capabilities are we gonna be able to have for this next three or four-week period to really use these walls and start to get smarter about the way that we're integrating, let's call it, custom inventory with what our standard fare is. We've even got some conversations going on now. We've got a couple of FIFA sponsors who have bought drone shows from us in conjunction. There's the whole notion that there's an IRL media activation opportunity here, and that's our challenge and the biggest opportunity we're excited about where we're doing on our targets. We set aggressive targets.
We set a dedicated team to lead it, is to have the highest level of retention of those brands who have come into the medium because of FIFA, stay with the medium because they can see that we're proving that it works, and then we can maintain those direct dialogues, you know, going forward.
I guess to that last point, it sounds like you do expect some sort of long-term impact, meaning everyone's been so focused on, you know, World Cup this year. This is obviously an opportunity to bring in new marketers and to realize.
That's our industry's greatest opportunity. I was just having this conversation in Dallas last week at the OAAA, the industry's trade association. Between myself, Sean, and obviously the new owners of Clear Channel, we're all gonna really significantly, as well as a lot of the independent players, benefit from this influx of these are potentially non out-of-home advertisers or they're small out-of-home advertisers who are gonna be stepping up. Our opportunity is to engage them, discuss how well it's worked, and make sure that we get into the proper measurement and attribution conversations.
Got it. Programmatic and digital direct automated sales grew nearly 40% in Q1. I think they now represent 20% of your digital revenue. Can you talk about how the buyer base here has evolved? Are you seeing new types of clients come in through programmatic who wouldn't have bought outdoor previously, or is this primarily existing advertisers shifting how they transact with you?
It is primarily new buyers, and especially in the programmatic side of it. There is a whole world of inventory management and ad media spending that goes with audiences specifically, not linked to individual media. The more we can have our data and our inventory into those centralized, whether it be the DSPs or the SSPs or anywhere within the programmatic ecosystem, we benefit. We do have some individual advertisers who are previously using direct, you know, IO, they wanna move to programmatic, but we're excited about it. I said that on the call.
We made the investment to hire a new head of digital sales and strategy, Jeff from The Trade Desk, a heavyweight leader who can not only make sure on pipes, plumbing, data sets, our ad tech systems were frictionless, but had the relationships with Amazon, with DV360 at Google, with The Trade Desk, to ensure that we could get our inventory fully integrated into. That is gonna be one of the biggest unlocks, and we know 80% of all digital media, if all media spend is 75% is digital, 80% is traded programmatically. The more we can accelerate digital, the more we can accelerate programmatic, the more we engage in an entirely new revenue source.
Just staying on some of these points, the AdQuick partnership is a few months in now. Can you give us an early read on how it's being received by your commercial clients? What are you seeing in terms of simplifying the buying process for the SMBs?
Well, two parts to that question. Let's the first part, certainly very enthusiastic. Has it been responded? Has it been felt in the marketplace by our clients? Less so, because this is more internal at the moment about the way we're taking the pain and the inflexibility out of the way we're organizing our inventory for it to be s tructured and therefore planned, therefore bought.
A lot of that is in the early stages, as well as data and measurement side of it, so we're very excited about the way that's going. The longer term aim is, yes, just like the other tech giants who dominate the advertising ecosystem, SMB is not a manual affair. You're on a self-serve platform. We have already looked at the way we categorize our clients between SMB 1, 2, and 3, mid-market. We want to move the lowest level of our SMB onto a self-serve platform. There's no reason for us to have to have an AE directly interact with a gym owner in Boston who's interested in that board three streets away who wants it. No. That can all be, and all should be, on SMB.
That's certainly gonna be, we're hoping for next year, but that's next in the roadmap with AdQuick.
Okay. I wanted to ask on the AWS partnership, I think this is designed to connect your inventory and data directly into the major agency groups planning and buying systems. I think you've mentioned one signed up, another potentially on the way. Just maybe you could speak to the efforts there, how quickly you think this can scale.
I can't name names yet.
Right.
We've got a couple that we're gonna be announcing, hopefully one in Cannes very soon. This is not just about having our inventory in through another source of planning, buying, decision-making. This is also recognizing that the nature of the agentic advertising and marketing ecosystem changes fundamentally because the agentic, the agents are basically gonna be making their decision-making on behavioral signals. They're not interested in buying audiences. They're looking to find where are those people who are most likely to buy the FIFA ticket, or to be prepared to go into the Kia dealer. The level of data sophistication from these agency holdcos, evidenced by the way this week with Publicis buying LiveRamp, and that's another example. They've bought Lotame, they've had Epsilon. Yet again, it's another highly sophisticated data capability that they're integrating into their planning and buying system.
By the way, they're gonna be looking to leverage that for their principal-based buying, which means they're coming to media owners to basically take on our business and arbitrage it to the clients with a higher level of intelligence. We need to be in those stacks. We're talking to all the holding companies and all the big buying groups to make sure that not only our inventory, but our data signals are fully integrated and the partnership with AWS enables us to kind of have these conversations.
Matt, I remember Nick, I remember a year ago, you know, you talking a lot about the holding companies and a need to kind of connect with them, get more buy-in from them. You know, outside of, you know, what we've talked about today, the AWS partnership, anything else? You know, I don't want you to front run maybe what you'll be saying at Cannes, but anything you else you would say in terms of building more traction with the holdcos? Which I know has been a big initiative.
It has been. With the holdcos, elevating the nature of our discourse and our representation beyond their out-of-home specialists into their central planning teams.
Right.
The ones who are looking after the planning for Mars or the planning for Microsoft or the planning for General Motors. Who is looking at the omnichannel planning? The central trading desks. We've got dedicated By separating the sales organizations we did last year between commercial and enterprise. I really don't like the definition of national and local. I think it keeps a lid on everything. To really unlock the growth in the enterprise side means that we have to have stronger relationships with the holdco agencies. It just does. It also means having a greater discourse with the clients themselves, the ultimate buyers. This is more of a marketing point of view rather than a negotiating point of view. With the agencies, we're gonna be negotiating.
With the clients, we need to be selling. This is when I talk about IRL media, why is that something that a client should be thinking about as part of their campaign planning?
Got it. The OAAA recently announced a new measurement pilot program. I think you've spoke about investing your own dollars, improving the efficacy of the medium. Can you just walk through where the industry measurement landscape stands right now? How are the proprietary tools you're building fitting into that story?
Our priority is the industry measurement standard. It's not about what I have individually. I'll augment that. Same thing with Clear Channel, Lamar. No one individually is gonna resolve the inherent weakness of this medium's lack of growth because it has not got credible industry measurement. Audience measurement that is both robust, consistent, and credible for the buyers. It hasn't had it, and it hasn't had it for decades. I'm really excited now that after we went through this whole process to upgrade this and finally fix it, we ran the pilot program, and this is before I arrived, so this was obviously Scott and Sean are driving hard with the OAAA. Ipsos won that pilot. They won the RFP. Ipsos look after out-of-home advertising in 26 markets around the world. They're a big brand. Clients want big brand security, Nielsen, Kantar, Ipsos.
I'm very excited about this. I want it to go faster. I believe that we need to get this all ramped up and capable to really capture the September planning, September/October planning cycle for next year. It's promising. It's very promising. On top of that, each individual player can decide what level of data capture, data signal integration we can overlay. If you haven't even got credible and universal audience measurement, you've got a real problem.
Got it. Matt, you've guided to, I think, 125 digital conversions this year, up from about 100 last year. I know in the past you've talked through a 4x revenue uplift, 2x cost uplift. I think that's still holding. You know, a question we often get, just given those returns, you know, what's the constraint to go kind of meaningfully faster?
We're still getting those same kind of returns, you know, 4x revenue, 2x cost. And we've been getting that for a number of years. Obviously, it started much higher, and now we're in the really good area of conversions. The biggest constraint is really regulatory and kind of the gestation period of how long it takes to get approval, whether it's a local community board or engineering review or some other, you know, thing in between, you know, a landlord who's a little slower. We probably have about 300 projects in our pipeline that take multiple years and somewhere between 150 come out of the pipeline in a year. We'd like to speed it up a little bit, maybe get some more boots on the ground.
You know, we think we're doing the right number. If we can, you know, bump it up a little bit, we'll do more. For right now, we think it's appropriate.
Okay. We touched on some factors impacting the transit margins earlier, but billboard EBITDA margin has been expanding. I think you flagged continued improvement in 2026. Maybe just help investors understand how much further you can improve profitability in that segment. What are sort of the levers going forward?
Sure. We think, especially on the billboard side, there's a lot of fixed cost in the business and lease cost and some overhead. Over time, as revenue grows, we think the margins can continue to grind higher. Not necessarily linear in a quarterly sequential basis. There's a lot of things that go into it, whether it's media, a mix between markets, mix within markets. You know, over time, we think it goes a little higher. This year we're spending a little more on SG&A, which you're seeing a little bit higher especially in the billboard side. As we've said on our earnings call, we're investing in our business in some of the sales tech. We signed up Salesforce.
We just discussed, we brought on AdQuick, which has an operating agreement. I think over time, you'll see those investments pay off in improved margin and improved revenue growth, 2027 and beyond.
Related to corporate at earnings, you had discussed bringing back some of the consultants you'd worked with prior. Maybe just discuss, you know, what the focus would be there and then how investors should think about the fee structure associated with that.
Really, we've brought them back and this is a 3rd go around. You know, it's easier to bring someone back who already knows the business and knows the people, so the tuition is very low to, you know, zero. A little bit of help with revenue, but mostly on process improvement. They're looking at how, what we call ship in, how our cross-market, you know, a salesperson in New York sells something in Chicago, how that works and can it go faster, simpler. They're looking at how our marketing structure works, how our RFP response, goes really. Can we do things faster? Which would be better for the client.
Require fewer account exec and sales support time so they can do other things and focus on more clients as opposed to more time on the same client. We're measuring them on savings ideas, KPIs for these special projects, revenue growth, and then a fixed component.
I have a few more, but just to uphold the room, if anyone has a question, you can raise your hand. If not, I can continue. Nick, maybe just a few more on some verticals. Pharma and healthcare, I think you've talked about that as a growth opportunity. Just where are you in terms of building out that practice? Are you seeing some of the same tailwinds associated with, you know, some changes at the FDA that your peers have referenced?
Yeah. That, I know that, in the ANA, Sean and also Clear Channel were talking about, that as a particular category that's really demonstrated, some real momentum here, and we're seeing that as well. We're cultivating that, whether it be in terms of Rx, whether it be on pharma. On the GLP-1s, we've done very well there. Also working with dedicated data and measurement companies who specialize in pharma, to make sure that they're part of that organization. It's one of the industry categories. We've got five industry verticals that we're really focusing on. We do believe in line with my, with my peers in the industry that this is a sector.
I mean, it spends less than half a percent of its total spend, and it's one of the biggest spending categories in the out-of-home medium. As far as I'm concerned, a huge opportunity. Now we're starting to see Pfizer, J&J. We're seeing a number of the big brands both on billboard and in transit, so we're excited about that.
You mentioned five verticals you're focused on. Should I give you an opportunity to just highlight anything else?
The CPG is another sector. CPG and retail. We're getting real traction in some of the significant conversations that are going on there. Financial services is, I think is more dependent on the individual players who are spending at the time. We're seeing, again, at the regional level, a lot of deregulation, so therefore there's more consolidation in the banking and the finance and the credit area. We're excited about that. Automotive, I've been personally involved in a couple of the big conversations there. That is, again, a massive category that barely uses our medium. Again, a lot more activity there. When you think about the entertainment sector, we're pleased to see now this year some real momentum happening because obviously after the writers' strike and then the production, everything was delayed and slowed down.
We're now actually seeing quite a good amount of money that's now coming in, not just from the, from the studios, but also from the streamers.
Got it. Okay, wrapping it up, Nick, you've articulated a vision in the past kind of getting out-of-home, you know, from where it is now, around 2.5% of U.S. ad spend back to where historically it's been around 5% and repositioning the medium in an AI-driven world. I guess what are the kind of proof points over the next 12 to 18 months that would tell you this thesis is playing out?
Number one would be that some of those most significant brand advertisers who joined us for FIFA really got a taste for it and started to appreciate and wanted to investigate how our medium, not as outdoor and out-of-home, but as IRL media and the experiences that they can create should be part of their campaign brand building. The fact that we've got and we're tracking industry penetration, so we can actually track through Vivvix exactly how much is spent on our medium collectively versus other media. Thirdly, that we are getting the traction coming from our position in the marketplace that advertising to real people, to humans who have high level of trust in our media, is something that is now playing out for the brand marketers who wanna build brand in a very fast-moving agentic advertising and marketing world.
We have a unique opportunity to really represent the fact that we are an one-of-a-kind superpower ingredient media as part of campaign brand building, and they need to be trying it. For me, it's about the new non out-of-home advertisers who are trying our medium. Not massive campaigns yet, but those who are saying, "Yeah, I'm gonna test you in individual cities or states." Those are gonna be the metrics we're looking for because the absolute share of our medium, it's not where it needs to be. It doesn't need to be this low.
Got it. All right. That's a great note to end on. Nick, Matt, thank you for being here.
Thank you very much.
Thanks very much.
Thank you. Thank you, everybody, for listening. Thank you.