TSQ 10-K & 10-Q changes, risk factors and insider trading

Macroeconomic factors such as inflation,high risingand sustained inflation and interest rates, enacted and proposed tariffs and changes in the economy have had, and may continue to have a material adverse effect on our business.

A substantial majority of our net revenue is generated from the sale of local, regional and national advertising on our digital properties and radio stations. In addition, our target clients for our digital marketing solutions business are SMBs. Periods of economic slowdown and uncertainty, recession or recessionary indicators, increases in unemployment rates, interest rates and inflation rates, prolonged supply chain disruptions or labor shortages, market volatility, political instability or a reduction in consumer confidence in the U.S. economy may have a material adverse impact on our business, financial condition and results of operations. Additionally, tariffs or other trade restrictions affecting imported broadcasting equipment, servers, computer hardware, or other technology infrastructure could significantly increase our capital expenditure requirements or limit our access to critical equipment, which could adversely affect our operations. Decisions by advertisers and subscribers to delay, reduce or cancel their advertising, campaign, or subscription spending on our platforms based on changes in economic conditions could also slow our revenue growth or reduce our revenues, and SMBs, who generally have less resources than larger companies, may limit their spending. Furthermore, because a substantial portion of our revenue is derived from local advertisers, our ability to generate advertising revenue in specific markets (including concentrations in and around the Northeast, Upper Midwest, Texas and the Mountain West) could be adversely affected by local or regional economic downturns. A downturn in the U.S. economy could also adversely affect our advertising revenue and our results of operations.

The success of our radio stations is significantly impacted by our on-air talent, and we compete for on-air talent with other radio stations and radio station groups, radio networks, and other providers of syndicated content and other media such as broadcast television, cable television, satellite television, the internet and satellite radio. Our employees and other on-air talent are subject to change and may be lost to competitors or for other reasons, and the contracts we have with certain talent generally are limited in duration. Any adverse changes in particular programs or on-air talent in a particular market could have a negative impact on our ratings and generally could have a material adverse effect on our ability to attract advertisers, which could negatively impact our business, financial condition or results of operations. In addition,addition in April 2024, the FTC has adopted rules that, wouldto ban most post-termination non-compete clauses and require employers to rescind existing ones. Those rules were appealed by several parties and ultimately never went into effect. As a result, there is no FTC rule banning non-compete clauses. However, the FTC has signaled such clauses are stayeddisfavored pendingand judicialis review,pursuing butthem ifvia upheld,other authority in some cases. To the extent these newclauses rulesare an enforcement priority for the FTC, it could have a material adverse impact on our ability to retain key personnel.

We pay royalties to song composers and publishers through four performing rights organizations (“PROs”). Royalties are currently paid to Broadcast Music, Inc. (“BMI”), the American Society of Composers, Authors and Publishers (“ASCAP”), SESAC, Inc. (“SESAC”) and Global Music Rights, Inc. (“GMR”), for the performance of musical compositions on our radio stations and websites. We also pay royalties to SoundExchange for digital public performance of sound recordings in connection with the streaming of music. Royalty rates are subject to periodic adjustment and proceedings are currently underway in which certain PROs and SoundExchange are seeking increased royalties. Through these and other proceedings, itIt is possible that our royalty rates associated with obtaining rights to use compositions and sound recordings in our programming content could increase as a result of private negotiations, regulatory rate-setting processes, or administrative and court decisions. In addition, should one or more new PROsPRO establish that we use compositions to which they have the rights, the royalties we pay could increase.

From time to time, Congress considers legislation that could require that radio broadcasters pay sound recording performance royalties to record labels, recording artists, and other copyright holders for over-the-air broadcasting. That proposed legislation has been the subject of considerable debate and activity by the radio broadcast industry and other parties that could be affected. We cannot predict whether any proposed legislation will become law. The proposed legislation would add additional royalties to be paid, likely to Sound Exchange,paid for the benefit of record labels (or other sound recording copyright holders) and artists. If adopted, these royalties would increase the cost of music and other sound recordings. It is currently unknown what proposed legislation, if any, will become law. However, if adopted, such additional royalties could have an adverse effect on our business, financial condition and results of operations.

The use of music other than in connection with our broadcast operations and the streaming of our broadcast programming is not covered by our broadcast licenses with ASCAP, BMI, SESAC, GMR and Sound Exchange. In most cases, rights to use music on digital platforms requires direct negotiations with the copyright holders. There is no guarantee that rights to such music uses can be obtained at reasonable costscosts, which could restrict our ability to monetize and grow our online operations.

We have a significant amount of indebtedness. As of December 31, 2024,2025, we had $465.8$433.0 million of outstanding indebtedness, net of unamortized discount and deferred financing costs of $1.7$24.4 million, with aannual 20252026 cash interest expense requirement of approximately $16.1$40 million. On February 19, 2025 we entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent and collateral agent and the lenders and financial institutions party thereto, that contemplatedprovides for a five-year $470 million senior secured term loan facility (the “Term Loan Facility”) and a five-year $20 million senior secured revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facility”). We the Senior Secured Credit Facility requires fixed quarterly repayments of the initial principal amount, which commenced on June 30, 2025, with the remaining balance payable upon maturity. We used the approximately $453 million of net proceeds from the Senior Secured Credit Facility (after giving effect to original issue discount, fees, expenses and the $10 million of the Revolving Credit Facility drawn at closing), together with cash on hand, to redeem the $467.4 million aggregate principal amount outstanding of the 6.875% senior secured notes due 2026. Our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. We may incur substantial additional amounts of indebtedness, as well as incur significant non-debt obligations, which could further exacerbate the risks associated with such indebtedness. Our substantial indebtedness could have other significant effects on our business.

Ratings for broadcast radio stations and traffic or visitors to a particular website are also factors that are weighed when advertisers determine which outlets to use and in determining the advertising rates that the outlet receives. Poor ratings or traffic levels can lead to a reduction in pricing and advertising revenue. For example, if there is an event causing a change of programming at one of our radio stations, there could be no assurance that any replacement programming would generate the same level of ratings, revenue or profitability as the previous programming. In addition, changes in ratings methodology and technology could adversely impact our ratings and negatively affect our advertising revenue. Because of the competitive factors we face, we cannot assure investors that we will be able to maintain or increase our current audience ratings and advertising revenue, which could have an adverse impact on our business, financial condition and results of operations.

Our business depends on the availability, reliability, and security of our information systems, networks, data, and intellectual property. Any disruption, compromise, or breach of our systems could interrupt or damage our operations, harm our reputation, and adversely affect our competitive position. A security breach could occur both from external sources, including malicious attacks and third-party service provider vulnerabilities, as well as internal sources, such as employee error, failures in our security measures or vulnerabilities in our networks or code base. Any security breaches of our computer systems, including repeated or sustained attacks or disruptions, could interrupt delivery of services to customers, potentially increasing costs and reducing revenue. If third parties or our employees are able to penetrate our network security or otherwise misappropriate personal information or contact information of our customers, audience, business partners or advertisers, or if we give third parties or our employees improper access to such data, we could be subject to liability. This liability could include identity theft or other similar fraud-related claims,claims as well as claims that we failed to uphold our contractual obligations or legal duties to protect the privacy and confidentiality of our business partners and other stakeholders. This liability could also include claims for other misuses or losses of personal information, including for unauthorized marketing purposes. Even in the absence of bad actors, unidentified vulnerabilities or glitches in our systems could result in the loss of business-critical data or otherwise compromise the confidentiality, integrity or availability of such data. Other liabilities could include claims alleging misrepresentation of our privacy and data security practices. We could also be subject to regulatory enforcement actions or private rights of action in certain jurisdictions.

There have been recent developments in U.S. federal and state data protection laws that we may be required to comply with and which may impact our business. For example, the California Consumer Privacy Act (the “CCPA”), among other things, allows California consumers the right to opt out of the “sale” or “sharing” of their personal information, which includes any data transferred for the purpose of cross-contextual behavioral advertising. This opt-out right, and similar opt-out rights in other effective and proposed state privacy laws, may have an adverse effect on our business by decreasing the availability of and increasing the cost of data. The CCPA and other state privacy laws also impose broader obligations on covered businesses such as transparency and information security requirements, and additional privacy rights such as rights to access and delete personal information. Enforcement of these laws may carry a variety of consequences, including civil penalties, litigation, private rights of action or damage to our reputation. In addition, if any of our third-party service providers fail to comply with applicable privacy laws, we may face additional exposure and liability on behalf of such providers. While we attempt to control against such outcomes through our vetting of third-party service providers and with appropriate contractual obligations, we cannot ensure our third-party service providers will fully comply with all such obligations. Moreover, the regulatory landscape is constantly evolving and subject to ongoing interpretations and guidance from regulatory authorities. The costs of compliance,compliance and other burdens imposed by CCPA and other privacy laws could have an adverse impact on our business, results of operations and financial condition.

We rely on third parties to provide the technologies necessary to deliver content, advertising and servicesservices, and adverse changes to our audience, and any change in the licensing terms, costs, availability, or acceptance of these formats and technologiesarrangements could adversely affectharm our business.

Acquisitions have been and may continue to be,be an important component of our overall strategy. The acquisition of a radio station requires the prior approval of the FCC and may require approvals by other governmental agencies, such as the DOJ or the FTC. To obtain that approval, a proposed acquirer is required to file a transfer of control or assignment of license application with the FCC. The Communications Act and FCC rules allow members of the public and other interested parties to file petitions to deny or other objections to the FCC with respect to the grant of any transfer or assignment application. The FCC could rely on those objections or its own initiative to deny a transfer or assignment application or to require changes in the transaction, including the divestiture of radio stations and other assets, as a condition to having the application granted. Although we do not currently expect such divestitures to be material to our financial position or results of operations, no assurances can be provided that we would not be required to divest additional radio stations in connection with obtaining such approval, or that any such required divestitures would not be material to our financial position or results of operations. The FCC could also change its existing rules and policies to reduce the number of radio stations that we would be permitted to acquire in some markets. For these and other reasons, there can be no assurance that the FCC will approve potential future acquisitions that we deem material to our business. See “-There are risks associated with our acquisition strategy” for additional information regarding FCC and other regulatory approvals required for acquisitions.

We began paying quarterly cash dividends in 2023, althoughhowever any future cash dividends will be at the discretion of our board of directors and other factors. You may not receive any return on investment unless you are able to sell your Class A common stock for a price greater than your purchase price.

On March 6, 2023, the board of directors approved a quarterly dividend of $0.1875 per share for holders of record as of March 27, 2023. On February 28, 2024, the board of directors increased the quarterly dividend to $0.1975 per share. On March 13, 2025, the board of directors increased the quarterly dividend to $0.20 per share. We previously paid a quarterly dividend of $0.075 per share starting in 2018, which was ceased in 2020 as a result of uncertainty created by the COVID-19 pandemic. Any determination to continue to pay dividends in the future will be at the discretion of our board of directors and will depend upon results of operations, financial condition, contractual restrictions, including agreements governing our indebtedness, any potential indebtedness we may incur, restrictions imposed by applicable law and other factors our board of directors deems relevant. Accordingly, if you purchase shares, realization of a gain on your investment may depend on the appreciation of the price of our Class A common stock, which may never occur.

Townsquare is a community-focused digital and broadcast media and marketing solutions company principally focused outside the top 50 markets in the U.S. Townsquare Ignite, our robust digital advertising division,division specializes in helping businesses of all sizes connect with their target audience through data-driven, results based strategies, by utilizing a) our proprietary digital programmatic advertising technology stack with an in-house demand and data management platform and b) our owned and operated portfolio of more than 400 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data. Townsquare Interactive, our subscription digital marketing services business, partners with small and medium-sized businesses (“SMBs”) to help manage their digital presence by providing a SAAS business management platform, website design, creation and hosting, search engine optimization and other digital services. And through our portfolio of local radio stations strategically situated outside the Top 50 markets in the United States,States we provide effective advertising solutions for our clients and relevant local content for our audiences.

Our most significant expenses are sales personnel, programming, digital, marketing and promotional, engineering, and general and administrative expenses. We strive to control these expenses by closely monitoring and managing each of our local markets and through efficiencies gained from the centralization of finance, accounting, legal andlegal, human resources functions and management information systems.systems, and the implementation of AI. We also use our scale and diversified geographic portfolio to negotiate favorable rates with vendors where feasible.

Current economic challenges, including high and sustained inflation and interest ratesrates, and proposed and enacted tariffs have caused and could continue to cause economic uncertainty and volatility. These factors could result in advertising and subscription digital marketing solutions cancellations, declines in the purchase of new advertising by our clients, declines in the addition of new digital marketing solutions subscribers, and increases to our operating expenses. We monitor economic conditions closely, and in response to observed or anticipated reductions in revenue, we may institute precautionary measures to address the potential impact to our consolidated financial position, consolidated results of operations, and liquidity, including wage reduction efforts and controlling non-essential capital expenditures.

•Net revenue for the year ended December 31, 2024,2025, decreased $3.2$23.6 million, or 0.7%,5.2%, as compared to the year ended December 31, 2023.2024. Our Broadcast Advertising net revenue decreased $26.5 million, or 12.6% and our Subscription Digital Marketing Solutions net revenue decreased $6.9$0.5 million, or 8.4%, and our Broadcast Advertising net revenue decreased $2.8 million, or 1.3%,0.7% as compared to the year ended December 31, 2023. Our Other net revenue decreased $2.0 million, or 19.5% as compared to 2023.2024. These decreases were largelypartially offset by ana $8.3$2.6 million, or 5.5%,1.6%, increase in our Digital Advertising net revenue and a $0.8 million, or 11.8%, increase in our Other net revenue.

•Excluding revenue related to political advertising of $13.4$2.2 million and $2.9$13.4 million for the years ended December 31, 20242025 and 2023,2024, respectively, net revenue decreased $13.8$12.3 million, or 3.0%2.8% to $437.6$425.2 million,million. Broadcast Advertising net revenue decreased $12.6$15.8 million, or 6.1%,8.0%, to $196.4$181.5 million,million and Digital Advertising net revenue increased $7.7$3.1 million, or 5.1%,2.0%, to $157.8$160.9 million.

•Operating income increased $40.8$22.5 million to $44.2 million for the year ended December 31, 2025, as compared to operating income of $21.7 million for the year ended December 31, 2024, as compared to an operating loss of $19.1 million for the year ended December 31, 2023.2024. Operating income increased due to a decrease in total non-cash impairment charges of $52.9$28.8 million andmillion, a $3.6 million decrease in direct operating expenses of $8.5 million, and corporatea expenses.$8.1 million increase in net gains on the sales and retirement of assets. These decreasesvariances were partially offset by an increase in stock-based compensation of $9.1 million, a $3.7 million increase in transaction and business realignment costs and the $3.2$23.6 million decrease in net revenue discussed above.revenue.

•Our Broadcast Advertising segment reported operating income of $19.0$39.3 million, an increase of $20.0 million compared to an operating lossincome of $33.8$19.3 million for the year ended December 31, 2023,2024, due to a decrease in total non-cash impairment charges of $43.1$27.7 millionmillion, and an $8.9 milliona decrease in direct operating expenses,expenses of $11.9 million and an increase in net gains on the sales and retirement of assets of $6.5 million. These increases were partially offset by the $2.8$26.5 million decrease in net revenue. Our Digital Advertising segment reported operating income of $37.3$27.7 million, a decrease of $7.6$8.5 million from 2023,2024, primarily due to a $13.5$7.3 million increase in direct operating expenses,expenses and a $3.5 million increase in non-cash impairment charges, partially offset by anthe $8.3$2.6 million increase in net revenues.revenue. Our Subscription Digital Marketing Solutions segment reported operating income of $18.4$22.6 million, aan decreaseincrease of $2.9$4.6 million from 2023,2024, primarily due to the $6.9 million decrease in net revenue, partially offset by a $5.0$4.2 million decrease in direct operating expenses.

Net revenue for the year ended December 31, 20242025 decreased by $3.2$23.6 million, or 0.7%,5.2%, as compared to the same period in 2023.2024. Our Broadcast Advertising net revenue decreased $2.8$26.5 million, or 1.3%,12.6%, due to decreases in the purchases of advertising by our clients.clients and political revenue. Our Subscription Digital Marketing Solutions net revenue decreased $6.9$0.5 million, or 8.4%0.7% as compared to the year ended December 31, 2023,2024, due to reduced sales velocity as a reduction in net subscribers. Other net revenue decreased $2.0 million, or 19.5%, due to the eliminationresult of lowlower profit events in 2024.headcount. These decreases were partially offset by a $8.3$2.6 million, or 5.5%,1.6%, increase in our Digital Advertising net revenue due to purchases of new advertising.advertising and a $0.8 million, or 11.8%, increase in our Other net revenue.

Direct operating expenses for the year ended December 31, 20242025 decreased by $2.4$8.5 million, or 0.7%,2.6%, when compared with the same period in 2023.2024. Our Broadcast Advertising direct operating expenses for the year ended December 31, 20242025 decreased $8.9$11.9 million, or 5.7%,8.1%, asdriven compared to 2023, primarily due toby lower compensation costs.and sales expenses, partially offset by a higher provision for credit losses. Our Subscription Digital Marketing Solutions direct operating expenses decreased $5.0$4.2 million, or 8.6%,7.8%, as compared to the same period in 2023. The decrease was primarily driven by lower compensation costs and lower bad debt expense. Other direct operating expense decreased $2.0 million, or 20.3%,2024 due to thelower eliminationcompensation. ofThese lowdecreases profitwere events.partially Ouroffset by $7.3 million or 6.2%, increase in our Digital Advertising direct operating expenses increased $13.5 million, or 13.0%, primarily driven by higher inventory and compensation costs,costs. asOther welldirect asoperating anexpenses increaseincreased in$0.3 badmillion, debt,or each as compared to 2023.3.6%.

Stock-based compensation expense for the year ended December 31, 20242025 increaseddecreased $9.1$3.4 million, or 113.8%,19.8%, as compared to 2024, due to $4.6 million in expense recognized related to the cash settlement of options, $3.8 million of expense recognized for the stockcash bonussettlement programof andoptions duein to2024 that did not reoccur in 2025. This was partially offset by a $0.3 million increase in expense recognized for grants during the fourth quarter of 20232025 and a $0.9 million increase in expense related to the firststock quarterbonus of 2024.program. For further discussion, see Note 10, Stockholders' Deficit, in the Notes to the Consolidated Financial Statements.

Transaction and business realignment costs for the year ended December 31, 20242025 increased $3.7$6.7 million, or 319.6%,137.5%, as compared to 2023,2024, primarily due to localcosts marketassociated operationalwith costa reductionchange efforts.in the provider for listing management tools supporting the Subscription Digital Marketing Solutions segment and the August 2025 settlement between the Radio Music License Committee and performing rights organizations related to music license royalty payments from 2022 through June of 2025.

Impairment of Intangible Assets, Goodwill, Investments, Goodwill and Long-Lived Assets

The Company recorded total impairment charges of $37.7$8.9 million related to intangible assets, investments, goodwill, and long-lived assets during the year ended December 31, 2024,2025. asWe compared to $90.6 million inrecorded total impairment charges of $3.5 million related to FCC licenses in 5 of our 74 local markets during the year ended December 31, 2023.2025, Weas recordedcompared totalto $30.9 million of impairment charges of $30.9 million related to FCC licenses in 27 of our 74 local markets during the year ended December 31, 2024, as compared to $70.9 million of impairment charges related to FCC licenses in 36 of our 74 local markets during the year ended December 31, 2023.2024. The impairment charges were primarily driven by increases in the discount rate applied in the valuation of our FCC licenses due to an increase in the weighted average cost of capital and decreases in third-party forecasts of broadcast revenues.revenues and an increase in the estimate of initial capital costs due to rising prices.

The Company recorded total non-cash goodwill impairment charges of $4.2$4.4 million during the year ended December 31, 2023,2024, of which $2.8 million related to the Local Advertising reporting unit and $1.4$2.6 million related to the Live Events reporting unit and $1.8 million related to the National Digital reporting unit.

Unfavorable changes in certain of these key assumptions utilized in determining the fair values of each of our reporting units may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the weighted average cost of capital assumption for each of our reporting units would cause the estimated fair values of our National Digital, Townsquare Ignite, Analytical ServiceIgnite and Townsquare Interactive reporting units to decline, resulting in a decrease in the fair value in excess of their respective carrying values by approximately 3%, 4%, 6%, 8%, and 8%,4%, respectively. Further, keeping all other assumptions constant, a 10% decline in the estimated fair value of each reporting unit, due to other changes in assumptions, including forecasted future cash flows, would not have resulted in incremental goodwill impairment charges forto theour yearreporting ended December 31, 2024.units.

During the year ended December 31, 2024, the Company recorded totalan impairment chargescharge of $2.0 million related to certain of its equity securities, which are measured at cost minus impairment. The Company recorded total impairment charges of $14.5 million related to certain of its investment securities during 2023. For further discussion, see Note 6, Investments, in the Notes to Consolidated Financial Statements.

Loss (Gain) on Repurchaseextinguishment, repayments and repurchases of Debtdebt

During the year ended December 31, 2024, the Company voluntarily repurchased an aggregate $36.2 million principal amount of its 2026 Notes, plus accrued interest. The Company wrote-off approximately $0.2 million of unamortized deferred financing costs, recognizing an immaterial total net loss in connection with the voluntary repurchases of its 2026 Notes. The repurchased notes were canceled by the Company.

Other Expense (Income) Expense,, Net

In February of 2024, one of the Company’s investees announced the completion of its acquisition in a private transaction. The Company recognized a $4.0 million gain on the transaction. During the twelve months ended December 31, 2023, one of the Company's investees was acquired as a result of a private transaction. The Company recognized a $5.2 million gain on the transaction. See Note 6, Investments, in the Notes to the Consolidated Financial Statements for further discussion related to thesethis investments.investment.

Other expense (income) expense,, net includes unrealized losses related to measuring the fair value of one of the Company's former investees that was sold during 2024. Prior to its sale, the Company recognized a total unrealized net gain of $0.2 million as a result of changes in the fair value of the investee's common stock during 2024. The Company recorded a total unrealized net loss of $0.4 million based on changes in the market price of the investee's common stock during 2023. See Note 6, Investments, in our Notes to Consolidated Financial Statements for further discussion related to this investment.

Income tax provision (benefit)

We recognized an income tax provision of $1.3$4.7 million for the year ended December 31, 20242025 as compared to a benefit from income taxes of $6.1$1.3 million for 2023.the same period in 2024. Our effective tax rate was approximately 94.1% for the year ended December 31, 2025 as compared to 13.6% for the year ended December 31, 2024 as compared to 12.5% for the year ended December 31, 2023.2024. The increase in the effective tax rate is primarily driven by an increase in the valuation allowance for interest expense carryforwards and certain non-deductible items.compensation costs for the year ended December 31, 2025.

Net cash provided by operating activities was $48.7$30.6 million for the year ended December 31, 2024,2025, as compared to $67.8$48.7 million for the same period in 2023.2024. This decrease was primarily related to higher cash interest payments in 2025, partially offset by changes in working capital balances, particularly prepaidaccounts receivable, accrued expenses and accruedaccounts expenses.payable.

Net cash used in investing activities was $9.9$4.5 million for the year ended December 31, 2024,2025, as compared to $3.6$9.9 million for the same period in 2023.2024. The increasedecrease in net cash used in investing activities was primarily due to casha $3.5 million increase in proceeds of $3.0 million related tofrom the sales of digital assets inand 2023investment thatrelated didtransactions not reoccur in 2024,and a $2.5$2.2 million increasedecrease in purchases of property and equipment, and a $0.6 million decrease in proceeds from the sale of assets and investment related transactions.equipment.

Net cash used in financing activities was $67.4$54.3 million for the year ended December 31, 2024,2025, as compared to $46.6$67.4 million for the same period in 2023.2024. The increaseprimary differences in net cash used in financing activities was primarily due to $10.4 million of incremental repurchases of 2026 Notes in 20242025 as compared to 2023,2024 a $6.9 million increase in stock repurchases, and a $3.0 million increase in dividend payments, partially offset by an increase in proceeds from stock options exercised.include:

We fund our working capital requirements through a combination of cash flows from our operating, investing, and financing activities. Based on current and anticipated levels of operations and conditions in our markets and industry, we believe that our cash on hand and cash flows from our operating, investing, and financing activities will enable us to meet our working capital, capital expenditures, debt service, dividend payments,payments and other funding requirements for at least one year from the date of this report. Future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, some of which are beyond our control. We arehave focused on and will continue to monitor our liquidity.liquidity in response to current and future economic challenges and uncertainty.

During the year ended December 31, 2024,2025, the Company voluntarily repurchasedrepaid an aggregate $36.2$5.8 million principal amount of its 2026Term Notes,Loan, below par plus accrued interest.

Townsquare is a community-focused digital and broadcast media and marketing solutions company principally focused outside the top 50 markets in the U.S. Townsquare Ignite, our robust digital advertising division, specializes in helping businesses of all sizes connect with their target audience through data-driven, results basedresults-based strategies, by utilizing a) our proprietary digital programmatic advertising technology stack with an in-house demand and data management platform and b) our owned and operated portfolio of more than 400 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data. Townsquare Interactive, our subscription digital marketing services business, partners with small and medium-sized businesses (“SMBs”) to help manage their digital presence by providing a SAAS business management platform, website design, creation and hosting, search engine optimization and other digital services. And through our portfolio of local radio stations strategically situated outside the Top 50 markets in the United States, we provide effective advertising solutions for our clients and relevant local content for our audiences.

Certain key financial developments in our business for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025 are summarized below:

•Net revenue decreased $1.9$0.1 million, or 1.9%,0.1%, primarily driven by a $2.7 million decrease in our Broadcast Advertising net revenue and a $1.5$1.6 million decrease in Subscription Digital Marketing Solutions net revenue, partiallylargely offset by a $2.5$4.7 million increase in our Digital Advertising net revenue.

•Excluding political revenue of $1.3 million and $0.6 million for each of the three months ended MarchJune 31,30, 2026 and 2025, respectively, net revenue decreased $2.0$0.9 million, or 2.0%,0.8%, to $96.1$114.0 million, Broadcast Advertising net revenue decreased $2.8$3.5 million, or 6.9%,7.2%, to $38.0$45.3 million, and Digital Advertising net revenue increased $2.5$4.7 million, or 6.9%,11.1%, to $39.2$47.1 million.

•Operating income decreased $8.4$33.3 million to an operating loss of $12.3 million for the three months ended MarchJune 31,30, 2026. The decrease was primarily due to ana $8.6$25.1 million increase in non-cash impairment chargecharges, anda the $1.9$6.0 million decrease in net revenue,gain partiallyon offsetsales byand retirements of assets and a $1.3$1.7 million decreaseincrease in transactiondirect andoperating business realignment costs.expenses.

•Broadcast Advertising reported an operating loss of $4.1$15.9 million for the three months ended MarchJune 31,30, 2026, which represents a decrease of $9.4$32.4 million, as compared to operating income of $5.3$16.5 million for the same period in 2025. The decrease is primarily due to an $8.6 millionincremental non-cash impairment chargecharges andof $25.1 million, a $1.0$6.0 million decrease in segment profit, partially offset by a $0.5 million increase in net gain on sales and retirements of assets.assets, and a $1.2 million decrease in segment profit. Digital Advertising reported operating income of $6.8$10.1 million for the three months ended MarchJune 31,30, 2026, a decrease of $0.5$0.1 million, as compared to operating income of $7.2 million for the same period in 2025 due to a $0.4 million decrease in segment profit.2025. Subscription Digital Marketing Solutions reported operating income of $5.0$5.4 million, a decrease of $0.5$0.2 million from the three months ended MarchJune 31,30, 2025, primarily due to a $0.3 million decrease in segment profit and higher depreciation and amortization.2025.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025

The following table presents the Company's reportable segment net revenue, direct operating expenses and segment profit for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Net revenue for the three months ended MarchJune 31,30, 2026 decreased $1.9$0.1 million, or 1.9%,0.1%, as compared to the same period in 2025. Broadcast Advertising net revenue decreased $2.7 million, or 6.6%,5.5%, due to decreases in the purchases of advertising by our clients and Subscription Digital Marketing Solutions net revenue decreased $1.5$1.6 million, or 7.9%,8.5%, due to reduced sales velocity as a result of lower sales headcount.headcount, and Other net revenue decreased $0.5 million, or 9.9%. These decreases were partiallylargely offset by an increase in Digital Advertising net revenue of $2.5$4.7 million, or 6.8%,11.0%, due to increases in the purchases of advertising by our clients.

Direct operating expenses for the three months ended MarchJune 31,30, 2026 decreasedincreased by $0.2$1.7 million, or 0.3%,2.0%, as compared to the same period in 2025. BroadcastDigital Advertising direct operating expenses decreasedincreased by $1.8$4.7 million, or 5.4%,14.8%, primarily due to lowerhigher compensationinventory and bad debt expensecosts as compared to the same period in 2025.2025, as a result of higher costs associated with acquiring digital advertising inventory, partially driven by the increase in net revenue discussed above. This was partially offset by a decrease of $1.8 million, or 14.5% of Subscription Digital Marketing Solutions direct operating expenses decreaseddue byto $1.2lower compensation and a $1.4 million, or 9.6%,4.2%, decrease in Broadcast Advertising direct operating expenses primarily due to lower compensationcompensation, each as compared to the same period a year ago. These decreases were partially offset by a $2.9 million, or 10.1%, increase in Digital Advertising direct operating expenses due to higher inventory and compensation costs as compared to the same period in 2025.

Segment profit for the three months ended MarchJune 31,30, 2026 decreased by $1.7$1.8 million, or 7.2%,5.4%, when compared with the same period in 2025. Broadcast Advertising segment profit decreased $1.0$1.2 million, or 11.4%,8.2%, primarily due to the decrease in net revenue.revenue Digitaland AdvertisingOther segment profit decreased $0.4$0.7 million, primarily due to the performance of certain events in the current year period. These declines were partially offset by an increase in Subscription Digital Marketing Solutions segment profit of $0.2 million, or 5.0%,3.4%, as compared to the same period in 2025, primarily due to the increasedecrease in inventorydirect andoperating compensation costs. Subscription Digital Marketing Solutions segment profit decreased $0.3 million, or 4.5% as compared to the same period in 2025, primarily due to lower revenue.expenses.

Transaction and business realignment costs for the three months ended MarchJune 31,30, 2026 decreasedincreased $1.3$0.8 million, or 53.2%,56.4%, as compared to the same period in 2025, primarily due to local marketcontinued operational cost reduction effortsefforts, andwhich costswas relatedled toby the Februaryacceleration 2025 debt refinancing incurred in 2025, which did not recur in 2026, partially offset by higher severance related expenses inof the firstamortization of certain leased assets during the second quarter of 2026.2026 due to a reduction in space.

The Company incurred $8.6$26.6 million of non-cash impairment charges related to FCC licenses during the three months ended MarchJune 31,30, 2026, as compared to no$1.5 million of non-cash impairment charges for the same period in 2025. The impairment chargescharge werewas primarily driven by increasesdecreases in thethird-party discount rate applied in the valuationforecasts of ourbroadcast FCC licenses due to an increase in the weighted average cost of capital, caused by an increase in industry bond yields.revenues. For further discussion, see Note 5, Goodwill and Other Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements.

Unfavorable changes in key assumptions utilized in the impairment assessment of our FCC licenses may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the weighted average cost of capital as of the date of our last quantitative assessment would cause the estimated fair values of our FCC licenses to decrease by $19.9$16.5 million which would have resulted in an incremental impairment charge of $10.3$10.0 million as of MarchJune 31,30, 2026. Further, a 100-basis point decline in the long-term revenue growth rate would cause the estimated fair values of our FCC licenses to further decrease by $11.3$8.4 million which would have resulted in an incremental impairment charge of $8.9$5.6 million as of MarchJune 31,30, 2026. Finally, a 100-basis point decline in operating profit margins would result in a decrease in the estimated fair values of our FCC licenses of $8.9$8.0 million which would result in an incremental impairment charge of $7.2$6.8 million. Assumptions used to estimate the fair value of our FCC licenses are also dependent upon the expected performance and growth of our traditional broadcast radio operations. In the event broadcast radio revenue experiences actual or anticipated declines in excess of these assumptions, such declines will have a negative impact on the estimated fair value of our FCC licenses, and the Company could recognize additional impairment charges, which could be material.

Interest expense increaseddecreased primarily due to thea costlower ofeffective borrowingsinterest underrate the February 2025 credit agreement, includingon the term loanloan, driven by declines in SOFR, and revolvinga creditreduction facilities,in partiallyterm offsetloan byprincipal resulting from scheduled principalquarterly and voluntary repayments. For further discussion related to the terms of the credit agreement and effective interest rates, see Note 6, Long-Term Debt, in the Notes to Unaudited Consolidated Financial Statements.

BenefitProvision for income taxes

We recognized a benefitprovision for income taxes of $15.7$18.0 million for the three months ended MarchJune 31,30, 2026, as compared to $3.0$6.3 million for the same period in 2025. Our effective tax rate for the three months ended MarchJune 31,30, 2026 and 2025 was approximately 123.3%75.9% and 66.8%,75.8%, respectively. The increase in the effective tax rate and tax benefitprovision for the three months ended MarchJune 31,30, 2026 isare driven by the valuation allowance for interest expense carryforwards,carryforwards non-deductibleresulting compensationfrom and the effects ofhigher non-cash impairment charges recognizedand innon-deductible the first quarter of 2026.compensation.

Net cash provided by operating activities was approximately $4.2$7.8 million for the threesix months ended MarchJune 31,30, 2026, as compared to net cash used in operating activities of $0.1$10.1 million for the same period in 2025. The increasedecrease was primarily related to lower cash interest payments in 2026 and net changes in working capital balances, particularly accruedaccounts expensesreceivable, accounts payable and accountsaccrued receivable.expenses, partially offset by lower cash interest payments in 2026.

Net cash used in investing activities was $2.9$6.1 million for the threesix months ended MarchJune 31,30, 2026, as compared to $4.3$1.9 million for the same period in 2025. The decreaseincrease in net cash used in investing activities was primarily due to a $0.8$5.5 million decrease in net proceeds from sales of assets in 2026, partially offset by $1.2 million decrease in purchases of property and equipment and a $0.6 million increase in net proceeds from sales of assets.equipment.

Net cash used in financing activities was $3.6$5.0 million for the threesix months ended MarchJune 31,30, 2026, as compared to $22.7$37.7 million for the same period in 2025. The primary differences in net cash used in financing activities include:

•$3.0$10.0 million in net borrowings under the Revolver during the threesix months ended MarchJune 31,30, 2026, as compared to $7.0no millionnet borrowings during the same period in 2025;

•Fixed term loan repayments of $5.9 million in 2026, as compared to $2.9 million in 20262025;

•$1.4$1.5 million of shares repurchased to cover employee tax withholdings on restricted stock that vested during the threesix months ended MarchJune 31,30, 2025, which did not recur in 2026; and

As of MarchJune 31,30, 2026, we had $434.2$440.0 million of outstanding indebtedness, net of unamortized discount and deferred financing costs of $23.3$22.2 million.

Based on the terms of our Senior Secured Credit Facility, as of MarchJune 31,30, 2026, we expect our mandatory debt service requirements to be approximately $50.7$51.6 million over the next twelve months. See Note 6, Long-Term Debt, in our Notes to Consolidated Financial Statements for additional information related to our Senior Secured Credit Facility.

As of MarchJune 31,30, 2026 we had $2.2$1.2 million of cash and cash equivalents, and $49.1$60.3 million of receivables from customers, which historically have had an average collection cycle of approximately 50 days. As of MarchJune 31,30, 2026, the Company had $15.0$8.0 million available under its revolving credit facility. Amounts borrowed under the revolving credit facility above an aggregate $6.0 million as of the end of each fiscal quarter requires compliance with a net leverage ratio covenant, which could limit the Company’s ability to access the full amount of the facility.

On May 1, 2026, the board of directors approved a quarterly cash dividend of $0.20 per share. The dividend willof be$3.6 payablemillion was paid to holders on record as of July 27, 2026, on August 3, 2026 to shareholders of record as of the close of business on July 27, 2026.

Our anticipated uses of cash in the near term include working capital needs, interest payments, debt amortization payments, dividend payments, excess cashflow payments that may be required under the terms of the Credit Agreement, other obligations, and capital expenditures. The Company believes that the cash generated by its operations should be sufficient to meet its liquidity needs for at least the next 12 months. However, our ability to fund our working capital needs, interest payments, debt payments, dividend payments, other obligations, capital expenditures, and to comply with financial covenants under our debt agreements, depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions, increases or decreases in advertising spending, changes in the highly competitive industry in which we operate, which may be rapid, and other factors, many of which are beyond our control. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of debt financing would result in additional debt service obligations. Such debt instruments could introduce covenants that might restrict our operations. We cannot assure you that we could obtain additional financing on favorable terms or at all.