Podcast revenue continued to rocket forward at iHeartMedia during the second quarter. The company’s podcast revenue totaled $86 million, which was a 60% increase from a year earlier and a quarter higher than what it booked during the first quarter of this year. That brings iHeart’s total podcast revenue during the first half of the year to $154 million, which is a 68% increase when compared to a year ago. During Q2, podcasting represented almost 10% of revenue at iHeart.
“The increased relative size of our digital and podcasting businesses has fundamentally changed the makeup of the company and it puts us in a stronger and more resilient position than we've ever been in to weather any advertising downturn,” CEO Bob Pittman said. He also reminded investors of iHeart’s position atop Podtrac’s monthly ranking of the top publishers, and the benefits it brings. “Downloads are the best approximation of ad inventory, which correlates to revenue potential,” Pittman said.
With concerns about a potential recession top of mind for advertisers and investors, Pittman told analysts on the iHeart’s quarterly conference call that not only does the company’s management team have experience in operating in times like these but its business composition is “meaningfully different” than it was during the 2020 slump. And that advertisers who have lived through difficult economic times have learned that cutting back on marketing leads to lost sales in the long term.
Despite the up and down nature of monthly numbers, Pitman said the company has also spotted a trend. “We see more softness in the first month of the quarter than we do the other two months of the quarter. And our thesis is that in times of uncertainty, in the first month of the quarter, everybody takes a beat and waits and looks – and then continues to spend,” he said.
During the second quarter, iHeartMedia’s revenue jumped 11% to $954 million and earnings clocked in at $237 million, which President/COO/CFO Rich Bressler said was in line with the revenue guidance range the company gave earlier.
The red-hot Digital Audio Group was the quarter’s showstopper with revenue up 28% to $253 million, thanks to scorching 60% revenue growth in podcasting and profits that rose 45%. But it wasn’t just podcasting that spurred the increase. Digital revenues were up 16 % when podcasting is subtracted from the comparison.
The Multiplatform Group, home to 850 radio stations and assorted radio networks, “continues to demonstrate that even in uncertain times, it’s also a growth engine for the company in both revenue and earnings, as well as powering the creation of our new platforms,” Pittman said. Multiplatform Group billings rose 4.5% year-over-year to $633.3 million.
Based on current pacing, iHeart said the strong performance is on track to continue. Bressler said they expect third quarter revenue to increase approximately 3% to 7% year over year. That suggests an acceleration since Bressler said July billings rose four percent versus last year. And despite the uncertainty, Bressler said they expect to finish 2022 with around $1 billion in earnings.