USA Today Co. (TDAY) Q3 2026 earnings review
USA Today cuts its profit outlook as search traffic falls
USA Today Co., the publisher of USA Today and over 200 local newspapers, cut its full-year targets as changes in internet search reduced digital advertising. Underlying sales from businesses owned a year ago fell 6%, while operating profit before depreciation and one-offs (Adjusted EBITDA) dropped 36% to $37 million. Chief executive Michael Reed rolled out a new $100 million cost-cutting plan and got permission to borrow up to $50 million for share buybacks.
| Sales from businesses owned a year ago | -5.8% -6.1% last quarter |
|---|---|
| Total Adjusted EBITDA | $36.6M -36% from a year ago |
| Digital-only monthly revenue per subscriber | $10.82 +23% from a year ago |
| Full-year 2026 outlook | Cut EBITDA and cash flow now expected to fall |
⚖️ Verdict: 🔴 Bearish
The story got worse because falling search traffic forced management to abandon its promises of full-year operating profit and cash flow growth, and to push its 50% digital revenue goal into 2027. Both digital subscriber counts and small-business marketing clients shrank from last quarter, while borrowing to buy back stock adds debt as leverage rises. The good news: higher prices lifted monthly revenue per digital subscriber 23%, and a judge set an April 2027 trial date for the company's $901 million antitrust claim against Google.
The question now is whether the new $100 million cost reduction can shrink expenses faster than search changes erode advertising revenue. Either fourth-quarter cost savings restore cash generation and bring leverage back down, or ongoing ad and print declines absorb the cuts as they did after last year's cost program. Fourth-quarter Adjusted EBITDA and the size of the debt-funded buyback will tell.
🐂 Bull Case
Higher Subscription Prices Lift Revenue Per Reader
USA Today Co. has spent two years weeding out low-paying introductory readers and raising renewal prices for its online newspapers. That pricing push drove average monthly revenue per digital-only subscriber (ARPU) to a record $10.82 in the third quarter, up 23% from a year ago and up from $10.47 in the second quarter.
Higher prices outweighed a 12% drop in total paid subscribers, so digital-only subscription sales grew 5.3% from a year ago to $46.0 million. That marks a third straight quarter of annual growth for the subscription line, led by the US media network where monthly revenue per reader rose 27% to $11.45.
What to watch: fourth-quarter revenue per subscriber against the $9.81 level from late last year. Because last year's fourth quarter already included big price increases, the annual pricing gain will slow by our math unless subscriber counts stop falling.
Google Antitrust Trial Set With $901M Claim
The publisher is suing Google over how the search giant runs the online advertising market. Chief executive Michael Reed said the court denied Google's request to throw out the case and set a trial date for April 5, 2027.
The court's ruling also "made public our damages calculation, which totaled $901 million through 2024," Reed said, before any potential triple damages under antitrust law or extra losses since 2024. That claim approaches the publisher's entire $952.9 million debt load, though trial outcomes remain uncertain and the company does not include any payout in its financial plan.
What to watch: the updated damages figure management plans to file ahead of the April 2027 trial, or any settlement talks before then. A pre-trial settlement would bring in cash to pay down first-lien term loans.
🐻 Bear Case
Management Cut Nearly Every Full-Year Target
"Audience trends showed signs of stabilization, engagement strengthened across our platforms, and we continued to grow the digital revenue categories that are central to our strategy," chief executive Michael Reed said. Despite that upbeat assessment, the newspaper group abandoned most of the full-year financial targets it had reaffirmed three months ago.
- Sales from businesses owned a year ago: now expected to fall in the mid-single digits, cut from flat to down low single digits
- Total Adjusted EBITDA (operating profit before depreciation, interest, taxes and one-offs): now expected to fall for the year, reversed from growth
- Operating cash flow and free cash flow: now expected to fall for the year, reversed from double-digit growth
- Digital share of total revenue: 50% target pushed from 2026 into 2027, after reaching 48.0% in the third quarter
The cuts matter because third-quarter underlying sales fell 5.8% even against an easy comparison from last year. By our math, the new full-year outlook leaves fourth-quarter underlying sales falling about 6%, pushing the long-promised revenue turnaround further out.
What to watch: fourth-quarter underlying digital revenue growth when full-year results arrive. Another decline would make the delayed goal of getting half of all revenue from digital in 2027 depend on faster print shrinkage rather than digital growth.
Search Changes Cut Ad Sales and Operating Profit
"In the third quarter, we felt the impacts of the changes in consumer search along with some inflationary pressures," chief executive Michael Reed said. As artificial-intelligence answer tools keep more readers on search pages, monthly unique visitors across the publisher's sites stood at 161 million — up from 158 million in the second quarter, but down 14% from 187 million a year ago.
Fewer search referrals hit advertising and profit margins hard. Digital advertising revenue fell 14.0% from a year ago to $75.0 million, pulling total digital sales down 4.2% on an underlying basis. Because revenue fell faster than expenses, operating costs (the direct cost of producing news and marketing services) rose 2.1 percentage points of revenue to 64.9%, and selling and administrative overhead rose 1.2 points to 28.6%.
Those cost pressures cut Total Adjusted EBITDA by 36.0% from a year ago to $36.6 million, and compressed the Adjusted EBITDA margin by 3.2 percentage points to 7.0%. On a standard accounting basis, the company posted a pre-tax loss of $5.8 million only because it booked a $10.3 million gain on asset sales and $20.2 million of other non-operating income, including a gain from revaluing its stake in an Arizona newspaper partnership. Excluding those two non-operating gains, the pre-tax loss was $36.4 million by our math.
What to watch: fourth-quarter operating costs as a share of revenue. That ratio will show how much of the new $100 million cost-cutting plan actually reaches the income statement versus getting eaten up by ongoing revenue declines.
Borrowing From Apollo for Buybacks as Leverage Rises
"We believe our current market valuation does not fully reflect the underlying value of our business or its long-term potential," chief executive Michael Reed said, announcing plans to buy back shares in the fourth quarter. Because cash on hand fell to $68.2 million and third-quarter free cash flow was just $4.3 million, the publisher amended its 2029 term loan after quarter-end to borrow up to $50.0 million in new debt from funds managed by Apollo Global Management to pay for the buybacks.
Adding debt to retire equity reverses the company's debt-paydown priority at a time when falling earnings are already pushing leverage up. Even though total debt principal fell to $952.9 million from $970.5 million in the second quarter, first-lien net debt rose from 2.3 times trailing Adjusted EBITDA to 2.5 times because third-quarter Adjusted EBITDA dropped by $20.6 million. The company also carries $240.5 million of convertible debt that can dilute existing shareholders.
What to watch: how much of the $50.0 million Apollo loan the company draws before the December 31, 2026 deadline, and where first-lien net leverage lands at year-end. Borrowing to buy shares while operating cash flow shrinks reduces the cash cushion for required debt payments.
Small-Business Customers and Digital Subscribers Dropped Again
Both of the publisher's customer volume gauges lost ground in the third quarter. In LocaliQ, the unit that sells online marketing software and ad campaigns to small and medium-sized businesses, average core platform customers fell to 11,700 from 12,200 in the second quarter and 13,400 a year ago (down 13%). That drop reversed the second quarter's brief customer gain and pulled LocaliQ core platform revenue down 8% from a year ago to $105.4 million, even as monthly revenue per business client hit a record $2,996.
On the reader side, digital-only paid subscriptions fell by 46,000 from the second quarter to 1.396 million, a steeper quarterly loss than the 19,000 drop in the spring. Price hikes can only carry subscription and marketing revenue so far while the customer base keeps shrinking.
What to watch: whether digital-only paid subscribers hold above 1.35 million and LocaliQ customer counts stabilize in the fourth quarter. Continued customer losses would force the company to rely even more on price increases in 2027.
👓 Other Themes
A $100 Million Cost Plan and Newspaper Swap
"At the end of the third quarter, we implemented our new $100 million annualized cost reduction program," chief executive Michael Reed said. The company booked $18.0 million of reorganization charges in the quarter "to right-size the Company's employee base, consolidate facilities and improve operations." Separately, the publisher traded its Montana and South Dakota newspapers to Lee Enterprises in exchange for the remaining 50% stake in the Arizona Daily Star, adding no new debt and booking a $16.8 million accounting gain on its prior stake.
💲 Other KPIs
Deferred revenue — cash readers and advertisers have paid upfront for subscriptions and services not yet delivered — fell 4.5% from a year ago and 1.6% from the second quarter. The upfront cash balance is shrinking more slowly than total revenue (-7.4%), but the annual drop widened from 2.3% in the second quarter.
Free cash flow fell 11.1% from $4.9 million a year ago and dropped sharply from $19.6 million in the second quarter. Operating cash flow rose by $1.5 million to $16.7 million on lower cash interest and severance payments, but capital spending rose 22.0% to $12.6 million (2.4% of revenue).
The British local-newspaper unit held up much better than the US media business (-8.7%) and LocaliQ (-7.6%), with revenue down 2.6% from a year ago. Newsquest grew its digital-only paid subscribers 15% from a year ago to 160,000 and kept its Segment Adjusted EBITDA margin steady at 23.3%, compared with 6.3% in US media.
🔮 Guidance
Cut. The publisher lowered its full-year target for sales from businesses owned a year ago after third-quarter underlying revenue fell 5.8%. By our math, a 5% full-year decline leaves fourth-quarter underlying sales falling about 6.3%, against a tougher comparison from late 2025 when $7 million of digital revenue shifted into the fourth quarter.
Cut. Management pushed its goal of getting more than half of all revenue from digital products out of 2026 and into 2027. Digital revenue made up 48.0% of total sales in the third quarter, up from 47.4% in the second quarter only because print revenue shrank faster (-9.4%) than digital revenue (-5.1%).
Cut. After reaffirming full-year operating profit growth in the first two quarters, the group now expects Total Adjusted EBITDA to fall in 2026. With $166.6 million earned through nine months against $263.0 million in all of 2025, the new plan caps fourth-quarter Adjusted EBITDA below $96.5 million by our math, though cost cuts should lift it well above the third quarter's $36.6 million.
Cut. Both cash flow targets moved from double-digit growth to an annual decline. Through nine months, the company generated $30.3 million of free cash flow against $64.2 million in full-year 2025. By our math, the cut means fourth-quarter free cash flow will come in below $33.9 million.
Unchanged. The company still expects full-year net income to beat 2025's roughly $1.7 million total. Through nine months, net income is $24.4 million, aided by $17.9 million of asset-sale gains and a $16.8 million accounting gain from the Arizona newspaper transaction.
❓ Key Questions
How much did AI licensing and Digital Other bring in?
The earnings release did not break out the Digital Other revenue line, which grew 20% in the second quarter on artificial-intelligence content licensing deals. Without the quarterly filing's revenue table, investors cannot see whether licensing sales grew or stalled in the third quarter.
Why borrow from Apollo to buy shares as EBITDA falls?
Amending the 2029 term loan to borrow up to $50 million for fourth-quarter share buybacks adds senior debt right after first-lien net leverage ticked up to 2.5x. What interest rate does the new Apollo loan carry, and why prioritize buybacks over debt reduction?
How much of the $100M cost cut is net savings?
The company completed a $100 million cost-reduction program in late 2025, yet third-quarter operating and overhead expenses fell by only $20.2 million from a year ago while revenue dropped by $41.6 million. How much of the new $100 million plan will reach fourth-quarter Adjusted EBITDA?
What was the $28.5 million payment to a former partner?
The nine-month cash flow statement still shows a $28.5 million financing outflow labeled as a payment to a former partner — nearly equal to all nine-month free cash flow ($30.3 million) — with no explanation in the release of who received it or whether more is owed.