Just a high-level strategy question. You said, at one level, your strategy is very clear, but there were a lot of things that happened on that last earnings call where you were talking about serving machines and stuff like that. I thought maybe just to start us off, just a high-level simple strategy question. What is your firm's strategy?
Yeah.
How has it evolved? Where are we now? What might change?
Yeah. In trying to keep it simple and short, I think the way that I would answer that is we have one of the biggest content creator forces in the country. We create content every day that's relevant to consumers. We're kind of in the news space, although we've branched out into entertainment, sports, games, and things like that. We have a national play and a local play, which makes us a bit unique compared to most media companies. We're a content creator, and what's really the underlying strategy is create content that's relevant and unique, valuable to consumers, and to build an audience on our digital platform at scale. That's really the underlying strategy.
What is changing really rapidly that impacts Q2 both positively and negatively is the search landscape's changing dramatically from the old search to new AI search. That's impacted where consumers, when they're doing search, what platform they stay on versus moving across or around the open web. That impacts us more in a negative way than a positive way. On the other hand, AI is creating opportunities for us to take the data we have on consumers, make it into intelligence that we can then use to create a more personalized and engaging experience for consumers, which we think in the long run will lead to better revenue opportunities for all consumers on our platform. For us, the strategy is still create content that's unique but yet relevant, bring audience to the platform, leverage that data.
Once they are on the platform, we get signals, turn that signal into intelligence, actionable intelligence, then have an opportunity to monetize that consumer on our platform. Our digital revenue strategy is across five really diversified revenue streams. We are not all in on any one. We are really focused on five. That is digital subscription revenue, digital advertising revenue, e-commerce revenue, digital marketing services, then licensing and syndication of our content. Across those five categories, we are looking to be able to grow ARPU per consumer on the platform as well as expand overall margins of the business as we especially enter licensing deals. Definitely, it is complicated, and we could go into a ton of detail.
Okay.
That is the underlying strategy. Grow audience at scale, leverage, take that data, make it into actionable intelligence through technology today that makes a more personalized experience for every consumer on our platform.
Okay. When you say that the search ecosystem is evolving rapidly,
Yes
That is something that transcends just the AI Overview or whatever, right? This is just constant changes that are being made by Google all the time, then punctuated by this recent AI Overview change or?
Yeah, correct.
Yes? Okay.
Yeah, correct.
Okay.
Deprioritizing search, removing things from search.
Right.
Google plays a lot of games.
They just want to keep you in their walled garden.
That is right.
Okay.
Yeah.
All right. Trisha, I have a-
Yeah.
This is a question more for you. I think the North Star for your stock is same-store revenues. That seems to be the thing that investors are most focused on. The declines were pretty sharp, almost 8% back in the first quarter of 2025, then almost every quarter uninterrupted, it just got better and better and better and better until we got to, I'll call it minus 1.8, call it minus two in the first quarter of 2026. Then we sort of retrenched back down to minus six in the second quarter, and the stock sort of reacted to that, I think. My question is pretty simple. What happened in Q2 that caused this uninterrupted improvement to sort of get interrupted for one quarter?
Do you think investors should take that as indicative of future growth, or is that just a blip on a multi-quarter, multi-year improvement trajectory?
Yeah, I think that's a great question. I think the strategy that Mike just outlined really leads us to what we said we would do this year, and that is meaningful improvement in our same-store sales. We've done that through the first half of the year. We came into the year saying that there would be quarterly variability in our business. I think it's really important to separate the quarterly variability that we alluded to when we came into the year signaling and the underlying fundamentals of the business, which we think are moving in the right direction and are what are going to give us that sustained improvement in same-store sales. I agree, I think that that's the metric that investors look at the most and certainly what we look at.
The AI content licensing business, which is growing, is still a very nascent business. There's a lot of quarterly variability in how that revenue is recognized, and we signaled that as we came into the year.
Yep.
It was particularly strong in Q1, not as strong in Q2, although it still had 20% year-over-year growth in the quarter. When you look at the second quarter, you look at our digital-only subscription business, that grew nicely. Second consecutive quarter of year-over-year growth. We drew new highs in ARPU. Our content licensing business continued to grow again at double digits. Even in a quarter where the same-store sales didn't show the same kind of improvement in the first quarter, we still grew free cash flow year over year. We posted a solid net income. I think it shows that we're able to control all of the variables, even as the top line has been very quarter to quarter. I also think that the second quarter is not indicative of where we think we'll be.
Certainly, the quarter where we started to see the most impact, from search on our traffic. We're doing quite a bit in the foundation to bring that traffic to us in different sources. We expect that to improve in the second half of the year. Overall, a really strong first half of the year, and we think we'll continue to improve those trends as you've seen over the past several quarters.
Jason, I'll just add to that. As Trisha is saying, I think with a transformation like we're going through from a legacy print business to a digital business, there are two steps forward, one step back, and there are fits and stops, and there are things changing in the technology world and in the search world, and they impact our business. One of the things we really talk to investors about a lot, and we manage the business this way internally is, on an annualized basis, are we continuing to make progress? Because there are going to be some fluctuations quarter to quarter, and sometimes the stock market quarter to quarter is more like a casino.
Sure.
It's not really the right way to look at our business. If you looked at the LTM, for example, at the end of the second quarter, while we had a step back from Q1 to Q2, our LTM at the end of Q2 was still improved from the year before. I think the year before in Q2, our same store was down 7%. Our LTM now with a down 6%, and it's a little bit better. We really do encourage that long-term view of, on an annual basis, are we continuing to make progress? If you look back over the last three or four years, we continue to make progress on same-store sales towards that inflection point, and at the same time, expanding margins and growing free cash flow.
That inflection point meaning flatter growth?
Yes. That's correct.
Okay. All right.
Yeah.
LTM. Trisha, can you go back to one thing you said? What was it that grew 20% in the first quarter? Was that all digital, or that was digital other? What was it?
Yeah. Digital other grew 20%
Okay.
-year-over-year in the second quarter.
Okay.
In the second quarter, yeah.
Now, maybe it is very hard for me to unpack sort of digital other, but I sort of assumed that the weakness that we saw in the second quarter was really just a function of smaller AI licensing revenue, but maybe that is not right. Maybe it is more around some of the search things that you were bringing up. Is it sort of an AI issue, or it is more digital advertising dollars related to the search changes or both?
Yeah. Well, I think if you are just simply comparing Q1 to Q2, down 2% versus down 6%.
Yep.
It is both.
Okay.
We had more licensing revenue in the first quarter that was tied to a specific set of content that somebody bought from us that did not repeat in Q2. So there was a difference there. Then we saw some changes in Google Search that impacted us more in Q2 than it had in previous quarters.
Okay.
There is a combination of those two things.
Okay. That's great.
Yeah.
On the AI side, can you just remind us, Mike, what AI deals you've done so far and which, just in terms of names.
Yep.
Are there any left, or should investors think of, it's just about getting more juice out of the lemons that we already have contracts?
Yeah. No, there's more or less. So we've done deals so far with Meta, with Microsoft, with Amazon. So we do think we'll get more juice out of those lemons, those three. But there are a lot more deals to do. Just some of the names you could think of are Apple and Anthropic, OpenAI, Grok, whatever Elon is. There are the social media platforms that, as each day goes by and you have so many hallucinations and fake content out there, our content being a trusted source of content, it's being sought after more by the social media platforms who want trusted content on their platform. So them licensing or paying us, essentially think about it like a licensing fee to produce more of our content onto those platforms in addition to our own, which is part of our growth strategy anyways.
But that opens up more paths for deals as well. We do think there is one or two more deals to come this year. We did say that on the second quarter earnings call, so I think you will see that in the next couple of months. But then there are more deals to do out there as well.
Okay. I think investors always struggle with these AI deals because it is like, I think we have sort of learned some of this is, you have always said it is lumpy.
Yeah.
But it is very hard for us. Is it like fixed or variable or some combination of the two?
Yeah.
Without getting into the specifics, can you just
Yeah.
qualitatively describe how these deals are typically struck?
Yeah. I say lumpy, partially because there's a lot of reasons why it's lumpy, but partially because this ecosystem is so new and it's just evolving.
Right.
Our partners on the other side who have the AI business are really still trying to figure out their business model. Compensating us for the content as they figure out their business model, I think gets easier. I still think there's a big disconnect between what we perceive our content's worth and what they perceive it's worth. I think that dynamic continues to work in our favor each day because there's so much fake news out there and so much hallucination out there that trusted content is becoming more and more valuable. As their business models evolve and as the desire to have trusted content evolves, I think that these deals will become less lumpy. It'll be easier to understand how they work and to lay out how they work. Right now, every deal we've done has been really different.
Some have been more pay on performance. Some have been, we want to buy archived content. Some are, we want to buy real-time content for the next 2 years. So each deal's been structured a little bit differently.
Okay.
That is why I think this ecosystem still has to evolve for the deals to become more consistent.
Yep. Okay. That is super helpful. Outside of AI, I am going to turn it back over to you, Trisha. Beyond AI and within other revenues, you have got a handful of these. Digital subscriptions, they grew year-over-year, but when I sort of look at the long-term numbers, like digital subscriptions, it is sort of flattish with a lot of volatility. The subs go up, and then the subs go down, and the ARPU is down, and then the ARPU is up a lot. It is very hard to get a ton of modeling conviction as you are sitting there trying to go out and prognosticate the future. You guys sound very optimistic about where digital subscriptions are going.
Maybe just talk a little bit about both the past in terms of the quantity and the price, moving up and down, and then what we should expect going forward and why you are so optimistic about digital subscriptions.
Yeah, absolutely. Our digital subscription business has been growing this year-over-year. You pointed that out. In the second quarter, we saw good growth year-over-year. That has been driven off of our ARPU. Our ARPU continues to hit record highs up over 30% year-over-year in Q2, consistently double-digit growth year-over-year. We think we have continued headroom on our pricing. We think we can continue to improve ARPU. What you have seen is that our volumes have been pretty stable to declining. What we saw in the second quarter that has us really optimistic is the fact that we are starting to see the underlying metrics of our volumes give us the indication that we are at the point where volumes will start to return to growth.
We've been incredibly disciplined in our pricing strategy over the past year, and that means we've let go of high churn, low lifetime value customers that brought in a lot of volume but didn't bring in a lot of revenue. We've taken that off of our platform. That's helped us increase our ARPU, but it's also given us a much more sustainable and predictable base of subscriptions and subscribers. From that, we can model the future more predictably than we've been able to in the past. As you look at Q2 and you see things like our churn metrics are improving, our start-to-stop ratio is improving, our retention, our engagement is improving. Long term, growth really does need to come from both levers. It needs to come from ARPU, and it needs to come from volume. You're seeing that ARPU growth now.
I think you'll see that continue, but I think you'll only see digital subscription revenue growth be more substantial as we bring back volume growth and ARPU growth.
More stable going forward?
Yeah. We did a lot of work over the past year. It was painful to take those high churning, like I said, low lifetime value consumers off of our platform. They were difficult to model, but we've done the work so that we have quality subscriptions left in our portfolio.
When you guys say start to stop, that is just gross add as a start and someone that churns as a stop?
Correct.
Okay. You are looking at that ratio, and it is getting better and better as you model.
Correct.
Okay, that is great. Digital ads down, I think it was 9% in the second quarter. Does this just all circle back to the search changes, or is there something else going on in the digital ad market beyond the search changes you alluded to?
Yeah, I think there were three things that happened in the second quarter that each had about equal weight. The second quarter was the first quarter where we really saw the change in consumer behavior, search behavior impacting our digital advertising revenue. We also saw one of our programmatic partners being removed from one of the platforms that we use. Then we did see a change in one of our vendors, a Google algorithm change, which impacted one of our vendors, which then flowed through sponsored links onto our platform. I would say all of those had about equal weight in the quarter. The thing that we are most excited about is that we have the ability to bring consumers onto our platforms in different ways. We have been intentionally stepping away from search for many quarters now.
I think you've heard us talking for well over a year about lessening our reliance on Google Search as a funnel for traffic onto our platform. The work that we've been doing, whether it's around social or newsletters, are still a very valuable channel for us in acquiring customers. As those start to scale and stack up, we have the ability to change that digital revenue trend in the back half of the year. I think you also have heard us talk a lot about the work we're doing around technology. The signals on our platform are known users, and as that grows across our platform, our advertising CPMs start to grow as well. I don't think that the trend that we saw in the second quarter is indicative of where we'll be in the back half of the year.
Great, Trisha. Thank you. Mike, I'm going to shift it over to you. During the second quarter, you brought up Palantir for the first time, or at least I've missed this if you mentioned it in prior calls. What are you doing with Palantir? If you can sort of dumb it down to
Yeah
explain for a layman, what does that mean? How is it going to help you?
They have a software that they've written called Foundry over the last 20 years, and we're essentially renting that. What we do, and the simplest way to think about it is, we take the data or the signals we get from consumers on our platform, and we have so much history of that. Not only do we create new signals every day, new data every day, but we got history. So we have tons of data, and what we do is rent Palantir's software to turn those signals into actionable intelligence. That's really what we're doing. So with every single consumer on our platform, we can serve them a more personalized experience. This is the content we need to serve that consumer. Here's the e-commerce link we need to embed into that content. Here's the subscription offer we should deliver at this time, at this price to that consumer.
This is the type of advertising that will work with this consumer. It's essentially taking the data or all those signals we have and all the history, but also the new stuff we're creating and really turning it into actionable intelligence. For us to do that ourselves, it would take years to build the software, and they've done it. The data's ours, the output's ours. The last mile of delivery of that intelligence is on our platforms. It's really all of our stuff. We're renting their software and their future deployed engineers to help us. I'm really excited about the opportunity and what might take us years to do, I think we can do in months with them.
Let's say that this succeeds. What ends up happening? We just see digital revenues get better as the advertising gets better?
Exactly. Across all categories, commerce, subscription, and advertising, I think across all three. I think you would look at, instead of looking at just a number per subscriber,
Yeah
You look at a number per consumer on the platform.
Right.
Because there's a lot of people that will never subscribe.
Right.
Our overall revenue per consumer on the platform should grow meaningfully from $2, where it is today, to a much larger number in the future.
That's $2 per DAU? Is that what you're measuring? Or $2 per now? Or when you say a consumer on your platform.
Yeah. Per year in revenue. If you say we have 150 million consumers on the platform every single month.
Okay
we do $2-$3 per year in revenue.
Okay.
Because I'm taking DMS revenue out, so you can't look at our total
Yeah. Okay.
revenue, just revenue generated on the platform.
From the consumers.
If we do $2 or $3 and we can get that to $6, it is a double of-
Right
digital revenue.
Right.
We are really excited. We just started, so we do not have enough information to really say, "This is the pace we think this should grow at." But we are hopeful in the next couple of quarters, we have enough real information to be able to say, "Here is how you model it, here is how you should think about it.
Have you turned on all of these at the same time, or are you piloting one where it is like you are just focused on ads or just focused on sponsorship or something?
Yeah. We are actually just turning them on, but doing it in a couple of markets.
Oh, interesting. All of them are on in a few markets.
In a couple of markets.
As sort of a beta test.
Yeah.
Okay. When will you share with the street how well that's going or not going?
Our hope is that we're actually going to see revenue improvement in the fourth quarter from this test. Hopefully by the time we get to the fourth quarter, we're talking about what we saw from an improvement standpoint from Palantir.
That's great.
Not that far off.
Have you shared how many markets you have turned on?
I do not know if we have, but it is two.
Two? Two markets. All right.
I don't know if we're breaking that into
The idea in these two test markets is just sort of get some learnings, lessons learned, and then
Yeah
take those learnings and then expand.
Right.
Okay. That's great. Trisha, I'm going to go back to something that Mike sort of caught me off guard during the 2Q earnings when he started talking about we serve both machines and humans. I haven't heard any other publisher say this, so can you just talk a little bit about that? Because, not that I disagree with you, I've just never heard it expressed that way.
Yeah. The reality is that half of the traffic on the internet now is machines. It is bots. We are aware that we have to serve both humans and machines with our content. The good news is you do not have to change the type of content that you are producing, and you do not have to approach your business from a content perspective differently for humans or for machines. What you do have to make sure you are doing is that your content is in a format that is beneficial for both machines and for humans. We are leaning into things like, subject matter expertise is going to be important. The speed that your site loads at is going to be important. Content that is actionable.
All of those are things that are important for our human readers, but that is also things that are important for our machine readers.
Machines may get there first, but our ultimate goal is always going to be to reach that human reader. What you have to do is you have to take the work that we have done to optimize your content for search engine optimization, right? That becomes a lot less important. You have to pivot now to make sure that your content and your format is optimized for answer engines or generative engines. You also have to make sure that your experience, whether it is for humans or for machines, is in a format that is recognizable and repeatable. That is the work that we are doing to make sure that we are providing that type of simple, easy-to-digest, recognizable content to machines. But interestingly enough, that is also what our human readers want, right?
As we are working to lessen our reliance on search, creating that recognizable destination for human readers is also going to be important in our audience growth going forward. It is interesting. We know that our content is serving two different audiences. But it is really about the format that we have to be focused on and not changing the content that we are producing.
I think everyone in the audience would agree that machine, I did not know if people know it is half. I did not know it was half of all traffic, but everyone agrees machines are out there to a greater extent.
But how is that different than the AI licensing? I thought we all thought that you were taking your corpus of information and then licensing this to AI, and then AI would do something with it, which would be machine traffic, and then the human would come in and do something and get the answer from the AI. What you're describing here is a totally separate initiative from the AI licensing revenue, right? Where you're just taking your corpus of information and making it more accessible to a machine. That's where I get a little con-
Yeah, I think there's an overlap there, right?
Okay.
So you need to create your content in a way that ultimately, AI licensing platforms, that it's most effective for AI licensing platforms.
Okay.
That is important, and we want to make sure that only, we are blocking AI licensing platforms who don't have current licensing agreements with us. But once they do have licensing agreements with us, they process large amounts of data. It's important that your content and your data be in a structure that is helpful and efficient for them. But it's not just AI licensing platforms, and we have millions of bots that every day, every month, trying to scrape content from our platform. Sometimes we want those bots to scrape content from your platform. We have advertisers who want to have bots scraping against our platform because it gives exposure to that advertiser and to their ads on our platform.
Making sure that, when in simplistic terms, good bots have access to content, or those that we have agreements with, that it is in a format that is efficient for them.
Okay, that is super helpful.
Jason, I think what is really interesting about that is that it creates a bigger AI licensing opportunity too, in terms of the pay-to-play models. Because we have learned a lot in our partnership with Microsoft, and part of that partnership is they have created a marketplace for all their other business companies to come and leverage AI in the marketplace. Our content is in that marketplace, and we have learned what performs and what does not perform. The human storytelling nature of our content we produce for humans does not work in the marketplace, where it is mostly other businesses or other machines coming in to scrape that, to utilize that content. For us to create even more revenue on the AI licensing side-
I see.
We need to have the human storytelling content reformatted into something that's all data and fact, not storytelling, that then is consumed in a larger fashion in AI marketplaces. It's an interesting way to think about how we grow our AI licensing opportunity just by serving a different machine versus a human.
Super interesting. I'm going to shift to the Google litigation, if that's okay with you, Mike.
Sure.
There's two cases, right? We've got the DOJ that has sued Google, then you have a separate parallel lawsuit. I just want to focus on the first one, the Google one. You've told us that the next step now that Google has been found to have a monopoly in the supply side and in the exchange, that we're just waiting for the judge to hand down the remedies, right? My question is that when those remedies come out, if I was an investor and I knew that Google said they're already going to appeal this DOJ ruling, what do I do as a USA TODAY investor? It seemed to me if I know there's an appeal, there's not a major read across, but maybe I'm wrong.
Well, the remedies are. Google's been found guilty of antitrust violations.
Yes
in the DOJ case.
Yeah.
That's a fact.
Yeah.
That's done. They're found guilty. We filed summary judgment saying they've already been found guilty. For our claims that are the same as what the DOJ won, we shouldn't have to prove those.
Absolutely.
We should talk damages.
Of course.
We won that summary judgment.
Of course.
That is done.
Yeah.
In the DOJ case, the remedies are what does Google have to do because they were found guilty?
Yes.
And those remedies are about to come out. There is a memo, it is under lock and key for 14 days while there are redactions done. But we should know, we did hear from our lawyers, it is 106 pages.
Okay, wow.
We should know in the next couple of weeks what those are.
That's a lot of remedies.
The remedies are behavioral, not break the company up.
Right.
We should know in the next couple of weeks what those are. Google may want to appeal what the actual remedies are, but that doesn't have anything to do with the guilt of the case. They were found guilty of these infractions, so that applies to our case as well. The remedies are just what does Google have to do as a result of being found guilty?
Sure.
Just like in our case, they've now been found guilty of these things. In our case, it's okay, what's that mean damages wise?
Of course.
So.
My question is, if they're found guilty and Google's already said that they're going to appeal that finding, then aren't the remedies sort of at some level moot or I'm misunderstanding?
No, the remedy-
This is not-
The remedies go into effect.
Yeah
regardless of whether they appeal or not. Google would then have to apply to have the remedies stayed.
Right.
I am not an attorney, but they would have to argue that it would be so detrimental to their business to have these in place while they are appealing. The assumption would be that the remedies are in place unless they get those remedies stayed, which would be a separate action from the appeal.
Okay. Investors, whenever these remedies come out, investors can sort of take those to the bank. I guess the most bearish interpretation is those remedies might be temporary if Google is challenging the guilty appeal in the first place. They are going to go into effect.
Right.
That's the point.
That's my understanding.
Okay.
Unless they can get a stay, which we think is highly unlikely.
Understood. You guys have a preference for behavioral or structural? I guess it was bad. I don't know. You tell me. Since we're not doing structural changes, since they've already said that.
Yeah. The structural changes, in our view, would have taken a long time to put in place.
Okay.
To break that business up and sell it, you could be looking at two or three years.
I see.
The behavioral stuff to us can be done essentially in a matter of a week or two.
Yeah
or overnight. To us, the behavioral is a better path because it is more instantaneous to our business.
Okay. That is great. Anyone have any questions for the team at USA TODAY?
All right.
Well, this was great.
Yeah.
Thank you so much for the time.
Thank you, Jason.
Yeah, absolutely.
Thanks, everyone.