Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

5. SEGMENT INFORMATION

The Company’s management has determined that the Company operates in three reportable segments as of September 30, 2022, based upon the type of advertising medium, which segments are digital, television and audio. The Company’s segments results reflect information presented on the same basis that is used for internal management reporting and it is also how the chief operating decision maker evaluates the business.

Digital

The Company's digital segment, whose operations are located in Latin America, Europe, the United States, Asia and Africa, reaches a global market, with a focus on advertisers in emerging economies that wish to advertise on digital platforms owned and operated primarily by global media companies.

The Company provides digital end-to-end advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of four separate business units:

•the Company's digital commercial partnerships business;

•Smadex, the Company's programmatic ad purchasing platform;

•the Company's branding and mobile performance solutions business; and

•the Company's digital audio business.
 

Through the Company's digital commercial partnerships business – the largest of its digital business units – the Company acts as an intermediary between primarily global media companies and advertising customers or their ad agencies. The global media companies represented by the Company include Meta (formerly known as Facebook Inc.), Spotify, TikTok, and Twitter, as well as other media companies, in more than 30 countries throughout the world. The Company's dedicated local sales teams sell advertising space on these and other media companies' digital platforms to its advertising customers or their ad agencies for the placement of ads directed to online users of a wide range of Internet-connected devices. The Company also provides some of its advertising customers billing, technological and other support, including strategic marketing and training, which it refers to as managed services.

Smadex is the Company's proprietary automated purchasing platform, on which advertisers can purchase ad inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in the Company's industry as programmatic advertising. Smadex is also a “demand-side" platform, which allows advertisers to purchase space from online marketplaces on which media companies list their advertising inventory. Most advertisements acquired through Smadex are placed on mobile devices, but they may also be placed on computers and other Internet-connected devices. The Company also provides managed services to some of its advertising customers in connection with their use of its Smadex platform.

The Company also offers a branding and mobile performance solutions business, which provides managed services to advertisers looking to connect with consumers, primarily on mobile devices. The Company's digital audio business provides digital audio advertising solutions for advertisers in the Americas.

Television

The Company's television operations reach and engage U.S. Hispanics in the United States. The Company owns and/or operates 49 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. The Company generates revenue from advertising, retransmission consent agreements and the monetization of spectrum usage rights in these markets.

Audio

The Company's audio operations reach and engage U.S. Hispanics in the United States. The Company owns and operates 45 radio stations (37 FM and 8 AM) located primarily in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas.

Separate financial data for each of the Company’s operating segments are provided below. Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses, change in fair value of contingent consideration, impairment charge, foreign currency (gain) loss and other operating (gain) loss. The Company generated 74% and 70% of its revenue outside the United States during the three-month periods ended September 30, 2022 and 2021, respectively. The Company generated 74% and 68% of its

revenue outside the United States during the nine-month periods ended September 30, 2022 and 2021, respectively. The Company evaluates the performance of its operating segments based on the following (in thousands):

	Three-Month Period									Nine-Month Period
	Ended September 30,						%			Ended September 30,						%
	2022			2021			Change			2022			2021			Change
Net revenue
Digital	$	188,877		$	146,121			29	%	$	516,966		$	377,826			37	%
Television		35,678			36,450			(2	)%		98,918			106,598			(7	)%
Audio		16,459			16,437			0	%		43,997			41,874			5	%
Consolidated		241,014			199,008			21	%		659,881			526,298			25	%
Cost of revenue - digital		157,095			124,332			26	%		431,951			318,118			36	%
Direct operating expenses
Digital		8,041			6,234			29	%		23,017			17,373			32	%
Television		14,941			15,565			(4	)%		43,712			45,737			(4	)%
Audio		7,104			6,784			5	%		20,776			20,370			2	%
Consolidated		30,086			28,583			5	%		87,505			83,480			5	%
Selling, general and administrative expenses
Digital		11,039			6,953			59	%		28,560			18,691			53	%
Television		5,062			4,583			10	%		15,257			13,811			10	%
Audio		3,107			2,994			4	%		9,205			8,987			2	%
Consolidated		19,208			14,530			32	%		53,022			41,489			28	%
Depreciation and amortization
Digital		3,230			2,479			30	%		8,551			5,673			51	%
Television		2,723			3,087			(12	)%		8,424			9,410			(10	)%
Audio		601			335			79	%		2,237			1,076			108	%
Consolidated		6,554			5,901			11	%		19,212			16,159			19	%
Segment operating profit (loss)
Digital		9,472			6,123			55	%		24,887			17,971			38	%
Television		12,952			13,215			(2	)%		31,525			37,640			(16	)%
Audio		5,647			6,324			(11	)%		11,779			11,441			3	%
Consolidated		28,071			25,662			9	%		68,191			67,052			2	%
Corporate expenses		9,525			7,253			31	%		26,769			21,756			23	%
Change in fair value of contingent consideration		734			-		*				6,810			-		*
Impairment charge		-			166			(100	)%		-			1,604			(100	)%
Foreign currency (gain) loss		1,966			177		*				2,112			454			365	%
Other operating (gain) loss		(58	)		(2,431	)		(98	)%		(1,011	)		(4,867	)		(79	)%
Operating income (loss)		15,904			20,497			(22	)%		33,511			48,105			(30	)%
Interest expense	$	(3,055	)	$	(1,714	)		78	%	$	(7,225	)	$	(5,287	)		37	%
Interest income		788			12		*				1,916			235			715	%
Dividend income		6			207			(97	)%		20			211			(91	)%
Realized gain (loss) on marketable securities		(473	)		-		*				(473	)		-		*
Income (loss) before income taxes		13,170			19,002			(31	)%		27,749			43,264			(36	)%
Capital expenditures
Digital	$	977		$	493					$	2,838		$	1,367
Television		3,121			685						4,257			2,146
Audio		123			143						534			436
Consolidated	$	4,221		$	1,321					$	7,629		$	3,949
	September 30,			December 31,
Total assets	2022			2021
Digital		394,379			309,347
Television		377,405			433,303
Audio		104,673			108,692
Consolidated	$	876,457		$	851,342

* Percentage not meaningful.