Segment Information

9 Months Ended

Sep. 30, 2023

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, 2023, 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 principally 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 business units:

•the Company's digital commercial partnerships business;

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

•the Company's mobile growth 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, ByteDance and X (formerly known as Twitter), as well as other media companies 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 programmatic ad purchasing platform, on which advertisers can purchase ad inventory. This business – 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 mobile growth solutions business, which provides managed services to advertisers looking to connect with consumers, primarily on mobile devices. This business allows the Company to manage programmatic media buys for its advertising customers or their ad agencies through multiple ad purchasing platforms in real time across multiple channels.

The Company's digital audio business provides digital audio advertising solutions for advertisers in the Americas. The Company's advertising customers and their ad agencies use these solutions to promote their brands on online audio streams, and provides them with tools to target specific users by demographic and geographic categories.

Television

The Company's television operations reach and engage primarily 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 primarily 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. The Company also sells advertisements and syndicates radio programming to more than 100 markets across the United States.

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 79% and 74% of its revenue outside the United States during the three-month periods ended September 30, 2023 and 2022, respectively. The Company generated 80% and 74% of its

revenue outside the United States during the nine-month periods ended September 30, 2023 and 2022, 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,						%
	2023			2022			Change			2023			2022			Change
Net revenue
Digital	$	231,487		$	188,877			23	%	$	657,865		$	516,966			27	%
Television		29,552			35,678			(17	)%		89,807			98,918			(9	)%
Audio		13,378			16,459			(19	)%		39,132			43,997			(11	)%
Consolidated		274,417			241,014			14	%		786,804			659,881			19	%
Cost of revenue - digital		199,289			157,095			27	%		562,881			431,951			30	%
Direct operating expenses
Digital		9,307			8,041			16	%		27,600			23,017			20	%
Television		14,967			14,941			0	%		44,750			43,712			2	%
Audio		7,581			7,104			7	%		22,432			20,776			8	%
Consolidated		31,855			30,086			6	%		94,782			87,505			8	%
Selling, general and administrative expenses
Digital		13,866			11,039			26	%		42,155			28,560			48	%
Television		4,925			5,062			(3	)%		15,109			15,257			(1	)%
Audio		3,163			3,107			2	%		11,023			9,205			20	%
Consolidated		21,954			19,208			14	%		68,287			53,022			29	%
Depreciation and amortization
Digital		4,068			3,230			26	%		11,428			8,551			34	%
Television		2,722			2,723			(0	)%		7,931			8,424			(6	)%
Audio		566			601			(6	)%		977			2,237			(56	)%
Consolidated		7,356			6,554			12	%		20,336			19,212			6	%
Segment operating profit (loss)
Digital		4,957			9,472			(48	)%		13,801			24,887			(45	)%
Television		6,938			12,952			(46	)%		22,017			31,525			(30	)%
Audio		2,068			5,647			(63	)%		4,700			11,779			(60	)%
Consolidated		13,963			28,071			(50	)%		40,518			68,191			(41	)%
Corporate expenses		13,292			9,525			40	%		35,836			26,769			34	%
Change in fair value of contingent consideration		(5,997	)		734		*				(8,939	)		6,810		*
Impairment charge		989			-		*				989			-		*
Foreign currency (gain) loss		548			1,966			(72	)%		289			2,112			(86	)%
Other operating (gain) loss		-			(58	)		(100	)%		-			(1,011	)		(100	)%
Operating income (loss)		5,131			15,904			(68	)%		12,343			33,511			(63	)%
Interest expense	$	(4,454	)	$	(3,055	)		46	%	$	(12,788	)	$	(7,225	)		77	%
Interest income		1,558			788			98	%		3,455			1,916			80	%
Dividend income		-			6			(100	)%		32			20			60	%
Realized gain (loss) on marketable securities		(33	)		(473	)		(93	)%		(94	)		(473	)		(80	)%
Gain (loss) on debt extinguishment		-			-		*				(1,556	)		-		*
Income (loss) before income taxes		2,202			13,170			(83	)%		1,392			27,749			(95	)%
Capital expenditures
Digital	$	1,304		$	977					$	3,785		$	2,838
Television		1,108			3,121						7,983			4,257
Audio		1,579			123						7,069			534
Consolidated	$	3,991		$	4,221					$	18,837		$	7,629
	September 30,			December 31,
Total assets	2023			2022
Digital		397,144			408,027
Television		367,681			363,904
Audio		111,310			108,910
Consolidated	$	876,135		$	880,841

* Percentage not meaningful.