OUTFRONT Media Inc. Stock

Very pleased to have Matt Siegel, CFO of OUTFRONT Media, and thank you for everyone in the audience for joining us. Matt, thanks for coming.

Thanks for having me, and I apologize for those expecting Nick Brien, suffer through just with me. He's out sick today, had a tough weekend.

All right. No worries. No worries. We're just pleased to have you. So I want to start with a high-level industry question because I feel like following the outdoor industry for a number of years, it feels like something really good is happening right now and pretty different.

And what I mean by that is, even if I back out the tailwinds from onetime or episodic things like political or World Cup, like the underlying growth that's happening for you guys in [indiscernible], that's happening at some of your peers is phenomenal. Like it's the best growth maybe -- I mean, I'm going to strip out the post-COVID quarters because that was sort of crazy. But just like normal economy, like the growth is really good. And so my question is, what has changed? What is happening?

We think it's a number of things, and we've observed the same thing. We are maybe not as surprised as you are. We think we're impacting some. Some of it is what we saw in the first quarter, kind of the market is coming towards out-of-home. You saw all 3 public companies report good numbers kind of comparable to each other, comparable to expectations. In the second quarter, we think we kind of outperformed and distinguished ourselves. There was some help from World Cup, certainly.

But I think for us, I can't tell you what the other guys are doing. We're putting a lot more focus on how we sell, what we sell. We've talked about -- I think probably everyone in this room. We've changed over our management, so we have a lot more focus on the digital ecosystem. We're pushing price more both in transit and in billboard. We're spending more time focused on programmatic. I'm sure we'll talk about that in a little bit.

The industry is getting more vocal about itself, kind of look at us. We're not just accepting the historical trend. We're talking about competing not just with each other, but outside of out-of-home. It's -- for years, it's been the cheapest CPM, which is an imperfect metric, but still a fact, and that gives us, I think, runway, which we're taking advantage of now and probably into the next few years to catch up on a good value. So a lot of things are happening all at once. We think we're contributing. And frankly, Nick's loud voice, both within the industry and outside, I think, is getting a lot of people to take notice.

But people have tried this before, right? I mean the fact that you're the lowest CPM out there, that imperfect metric, I mean, people have tried to sort of close the CPM gap, but it does feel like, I don't know, something is different. Is there anything around this, I think you've touched on this on some of the calls, it's hard to quantify that people just want the safety of something that's real in this highly digitized economy?

This kind of move toward IRL, in real life, maybe a backlash to AI and other online media that they want to take something. They want to see something that they can't always touch it because it's pretty high up, but they can take their picture in front of it, they can point to it. They can see it as a copy of something that they've seen some place else. So it's real, and we're benefiting from that. We're pushing that.

In addition, we're spending more time on what we call experiential, some temporary things that we're bringing out. And again, you can touch them right now in Duffy Square, we have a kiosk that you can actually touch for Dancing with the Stars. We had something similar for Game of Thrones back in Times Square. So it's much more in real life than we've been in the past. And that's -- for us, that's not driving as much revenue or earnings as we'd like it, but it's driving a lot of discussion, a lot of marketing. People are taking notice again at our media and say, "Oh, we can do some interesting things." So I think people are coming back to that.

Is there a threat of this that is just a new category, meaning the AI companies like OpenAI and Anthropic that are out there trying to get people to download their app that's meaningful? Or is that more noise? I mean I'm sure it's...

It's certainly meaningful whether it's AI, retail media networks, anyone with audience, we've had calls from retailers and others, can you help us sell advertising and things like that. Everyone thinks they can take dollars out of the U.S. media market. Media inflation is about 5% a year every year for a while. So it can't feed everybody. But we think there's certainly opportunity for us to gain share, not just within out-of-home, out-of-home to gain share in media and us to gain share within that increased share.

Okay. Great. So one of the things that we do every year is we do this 10-year retrospective where we try and see where is the industry's growth coming from, not OUTFRONT specifically, just outdoor overall. And over the last decade, it always comes back about the same number where it's 1/3 of the growth comes from converting static to digital. 1/3 of it comes from tuck-in M&A and 1/3 of it comes from same-store static billboard growth.

But you guys, when I look at your mix, you haven't really participated that much in M&A, right? I mean, even a few years ago. Pockets, but smaller relative to your peers. But now you're talking about now that your leverage is in a better position, maybe leaning into M&A a bit more than you have in the past. Is that fair?

Yes. First on the M&A side, our investment in the MTA over the years, especially since we're not going to recoup all the spend could count as M&A new inventory. It's an investment, but I wouldn't put it on the same line. So we've been investing in our business. But now we have proactively improved our balance sheet. A few years ago, we had some leverage challenges. If you remember, we sold our Canadian business. As a REIT, it's sometimes difficult to pay down debt. So we thought we should do that in a big chunk.

We sold the Canadian business and paid off some debt. We've refinanced all of our near-term maturities. We have nothing maturing until 2029. And then everyone's favorite organic EBITDA growth over the last year plus has really helped bring our leverage down to pretty close to the low end of our range. So we feel very comfortable in getting back into more material M&A. I mean we've been doing tiny tuck-ins, 2s and 3s that don't really move the needle much, but they just add to inventory. So we're looking at a bunch of things. We think there are some things that aren't for sale yet, but that will be. So we expect to participate prudently, but a little more aggressively than we have in the past.

So I think I've got $200 million to $300 million in my model for M&A.

Maybe premature to say a number. I mean the other guys put a number out and they've been saying that number for a while, but we think we have very good financial capacity, financial flexibility and the ability to stretch and delever with the right acquisition.

Okay. Can I ask you one sort of related M&A question, which is, for the audience, can you explain what an UPREIT structure is and do you think that is something that you may do or should do to open up the envelope of potential...

So [indiscernible] down in the REIT workings. An UPREIT is as a REIT who don't pay corporate income tax is our ability to give someone shares in our REIT or in a REIT-like structure so they can defer their capital gain and be part of the REIT and they commit to hold it for x number of months. I think it's a 1-year minimum, but it's negotiated.

So as a REIT, you can set up an UPREIT. If we were looking at someone to acquire and they suggested a preference for the UPREIT, we would put it together within a month, paperwork, some legal fees. And frankly, the first counterparty, the first target that we used would probably benefit from being the counterparty and get their specific terms that they weren't included. We would put together an UPREIT as soon as something material came along.

Okay. That's great. Can I shift to programmatic. So you mentioned earlier that you guys are leaning a bit more into programmatic. What is it that -- when I look at sort of the share of all advertising that's done programmatically, it feels like outdoor still has a relatively small percentage that's sold programmatically. Why is that? Is it still a person-to-person sale that requires a salesman? Is it a function of the mix of national and local advertisers? What is it that has sort of held back programmatic?

I think the out-of-home industry has just been slow to adopt. For context, overall media is what, 80-20 in favor of programmatic and a lot of the -- obviously, online and stuff grew up in the programmatic world. Out-of-home is more 20-80. I'm not sure we'll ever get to 80-20, but we want to go directionally toward that. First, a lot of our inventory and a lot of our revenue is still static. So it can be sold programmatically, not nearly as easy and not nearly as beneficial. A lot of programmatic depends on better measurement and metrics. So our industry is behind where it should be. It's slow to adopt and improve that.

So as we continue to improve that, I think that will get better. So the percent of programmatic will go higher. For us, in particular, we've hired the middle of this year, a Head of Digital to kind of push programmatic. He's putting us on more platforms. He in turn is hiring 2 programmatic salespeople which once after in finance, I complained why do we need salespeople, programmatic sells itself. Explained it doesn't. You need people to drive demand. So they're specifically focusing on enterprise sales for programmatic. So we're investing resources, time, money, technology to sell more programmatically. And the attraction isn't so I can beat up my out-of-home peer and take more programmatic from him. We think we can take money from outside out-of-home that's in the non -- just the digital media budget that we're not attracting right now.

I remember early in this programmatic push, there was a little bit of anxiety around the sort of ad tech tax being larger than the sales commission that you would have with a direct sale. Is that still an issue? Like should investors think of more programmatic means a slight margin headwind? Or is it something that...

Not too much actually, and we're still paying commission to the salespeople. So if you're covering Coke and they want to buy something programmatically, we're encouraging you to help them drive demand and not talk against our programmatic offering. So you're helping your customer, however they want to meet them wherever they want to be. To avoid the ad tech tax, we just set a CPM minimum a little higher to cover that.

I see. Okay. That's great. So can I shift to the changes to your guidance? Okay. So I think your AFFO guidance was double digit in the fourth quarter. You went to mid-teens AFFO growth in the first quarter and then low 20s in the quarter you just wrapped up. Presumably, a lot of that had to do with just the strength of the business that we talked about earlier. But what are some of the other drivers that caused such a big shift in the guidance, if there are any other issues?

So the strength of the business is really the driver. The mentioned double-digit revenue growth first quarter, second quarter. We're guiding to high single-digit revenue growth in the third quarter. So revenue is a key driver. I confess. It's -- our revenue growth so far is above our 2026 budget, but ahead of our expectations. We've used that excess revenue partially to join it, driving higher EBITDA. We're investing some of that to help drive future continued growth into 2027 and 2028. As I mentioned, Head of Digital, Head of Data, some other people, some more training. We're accelerating some of our tech investment. So the added revenue ahead of budget, partially offset by slightly higher spend in our SG&A line.

And then we kind of modified our interpretation of our MTA expense. It's an incredibly complicated issue. This is -- we've had in the MTA world or MTA accounting world, maybe two 100-year storms in 3 years. I'm sure everyone remembers in 2023 in the spring, we impaired our investment, came out of the pandemic, all our businesses recovered. The MTA kind of flatlined. And looking at our models, we thought there's a very good chance, a high likelihood, we wouldn't recover the spend. We wouldn't get repaid by the MTA for the spend we're making to install the great digital network. So we wrote off that spend.

3 years later, obviously, a surprise, especially in the accounting world, updated model based on performance and focus and some other factors. We're not going to recoup it all, but we're going to recoup some. How do I account for that? What am I recouping against? I wrote off the balance. So with the support and help and input from our external advisers and their advisers, we came to this approach, we're still accounting for the MTA on a franchise cost basis on the minimum guarantee and everything above that breakeven is EBITDA. So our MTA EBITDA is a little higher than we expected. So we never accounted for it differently. We just -- we had to clarify that as we got later in the year and look at the impact in the fourth quarter. So back to your question, the benefit from the guide is mostly revenue growth, higher-than-expected revenue growth, slightly offset by higher SG&A spend and helped by the improvement in MTA EBITDA.

Okay. That's great. The SG&A investments that you talked about that are sort of an offset to the good revenue growth. How should investors frame that? Is that more just like catch-up investment because you felt like you were underinvesting in the past? Or is there really some new opportunity that you see now that the business is on better footing?

So I think a little bit of both, mostly better footing, better visibility. So we're hiring in training, in recruiting, other things to make our employees, both in sales and sales support better at what they do. So that could be a catch-up. We hadn't been spending a lot on training before.

We're hiring new skills and capabilities. We have people selling digital. We have a lot of digital inventory, a lot of digital revenue, but now we have a Chief Digital Officer. We have a Chief Data Officer. As I mentioned, the digital is going to hire more digital sellers. So I would say those are investments to continue our growth. We mentioned get programmatic not necessarily to 80%, but programmatic growing faster than our other digital -- our non-programmatic digital business and certainly faster than our static business.

And then in tech, I've been here 8-plus years. We're always trying to fix our technologies, whether that's new investment or catch-up. The tech we had last year wasn't working for us. We've signed up for a new CRM. We invested in AdQuick, which came with an operating agreement, and we're developing along with them capabilities from what they can do for inventory visibility and availability and responding to proposals, eventually moving into a self-serve model. So those are all things that we're doing to help us in the future. And I would say, sitting here with my 8 years of history, maybe things we've underinvested in the past.

Okay. That's great. On the last earnings call, you announced this New York Jets partnership. And I didn't know if that was something that was like a throwaway comment because I'm sure it's not big enough to be that needle moving or if it's emblematic of something that you could do with other teams and other markets that is sort of a new frontier. So can you just explain what's in that Jets partnership? And how much should investors think about?

It's a lot of what you just said. It's all things. So it's not huge, but it's great. It's great for visibility. Basically, we're going to sell some of their inventory on and near their stadium, and they're going to sell some of ours to their clients, their existing clients. They're going to introduce us to their clients, [indiscernible] as opposed to us cold calling and saying, "Hey, I got billboards and transit for you," they're going to make a warm introduction. So we'll work closely with them.

I think it raises our visibility in the advertising world. You wouldn't have asked me about a random deal for the Jets. We got calls from other teams in the NFL. We're working with 2 NBA teams, a hockey team and I think our World Cup performance raised visibility on sports. So no one team deal is going to move the needle. But if we can stamp those out all over the place, it helps drive more demand. And frankly, whether you're a Jet fan or a Giant fan or in between, it kind of gives you a positive vibe when you're listed as a name sponsor for the local teams.

Sure. Should people think about this like this Jets inventory as the inventory that is around and getting to the Jet stadium or it's broader than that?

Probably more of that and broader than they have the stores in Manhattan. We had the kickoff of this agreement in transit. So you'll see more, I think, more Jet advertising, whether it's earned media or purchased within our properties. But certainly, we're very big in New Jersey, especially Northern New Jersey. So I'm sure you'll see some benefits from -- for both of us in and around the Meadowlands. And I wouldn't be surprised if you see some similar stuff eventually with red and blue, not just green and white.

Okay. Shifting to digitization. You guys talked about converting maybe 100, 150 boards a year, something like that. I always do this calculation. Well, here's my question. How far can this digital conversion go? Because it feels like when did you first start converting boards to digital? 2009 or something? Is that?

Yes. We're 16 years in.

Okay. So how far can this go where that is 100, 150 boards a year? Is it -- are we in the second inning, eighth inning?

We're probably in the fourth or fifth inning. So the issue of the governor I look at is really percent of revenue. So we have 36,000 static signs. We're not going to convert them all. Some of our biggest advertisers prefer static sign. So we're always going to have some and static is going to barbell. You have the iconic locations on the West Side Drive and SoHo, the Flatiron building and turn left, turn right near [ Joe's Diner and Bob Sheby ]. So those are going to stay, and there's all kinds in between.

Our digital revenue is about 30%, 35% of our overall revenue, probably next big milestone might be 50%, which what we see in Europe and Australia and maybe more advanced digital. So I look at the governor as to how much digital revenue we can put on. I would see our inventory maybe going 10% digital. Right now, it's -- we have about 2,000 digital signs out of that 36,000. So of that -- and the 36,000 are going to be coming down. We trade when we do a new digital, we often trade more than one for one. The municipality might say, take down 3 statics, I'll give you permitting for one digital or we take down a bunch of smaller ones, smaller posters. So the denominator goes down, the numerator goes up. So I would think maybe something more like 10% overall, whether it's 12% or 9%, I'm not sure, but still plenty of room.

You mentioned on the digital, and we started pointing out in our AFFO guide, and I'm sure all the others do it since 2009, not all these digital screens are designed to last forever. As a matter of fact, none of them are. So we've started proactively replacing, taking some down. Not because they're old, I'm not a young man myself. But just over time, keeping them fresh, keeping them looking better technology, they shine better. So that's going to be an ongoing part of it. We're not going to grow that in our maintenance CapEx, an ongoing cost of our AFFO measure to basically keep our plant looking great.

So you're saying investors should not be increasing maintenance CapEx demonstrably even though you're swapping out older digital boards.

I think we've been spending now. We're going to keep spending that -- the other guys are saying they're not. I'm not sure they're truthful.

I can't remember the number we used to use for digital conversion, $200,000, I think, was the number.

I think we used about $250,000. It hasn't really materially changed. I mean, if anything, the cost of the steel costs went up with tariffs. We got tariff refunds. It's kind of the screens are similar price, better screens with technology, steel and employee contractor costs.

And still, was it 20% IRRs? Is that what you guys would target...

Really, we started with you getting revenue lift of 12x. The first digital very exciting in the second one and the third one, kind of a quality pyramid. Since I've been here, it's pretty much been 4x revenue lift. So I'm adding 7 flips. And instead of having 1 static, I'm going to 8. So it's a different -- slightly lower price point, but still very attractive. And what I like most about it, I mean in finance, it's the least risky thing we do. We're taking a location that we know, we know where there's demand, we know where there's interest, and we're just putting more inventory. And then with the push and the growth in programmatic, it should make it even more attractive. So we can package it more easily with other types of media.

Is the only risk with digital just that the contract lengths are shorter and so it could inject more cyclical volatility in the business? Is that the only sort of downside?

I'm not even sure that's a downside because the flip side of that argument is I don't have as much frictional emptiness. So in a static, I put something up for a month, January 1, and it ends January 31, and my next order is for February 15, I have 2 weeks I haven't sold. I have that same flight schedule. I can do 4 weeks of digital. I can squeeze in 2 weeks of digital and then start something else. So I think it's much more flexible.

We haven't really seen the volatility related to digital. What we did see in the pandemic in short notice, people were able to cancel. Technically, we could hold them to hey, you have a 60-day notice period. We thought long term, it didn't make sense to do that. But it's both beneficial they can call off Friday and say, I want to get this up on Monday, great or they can call up on Friday and say, I change my mind, my video game is ready for publication on Monday, I want to hold this off. So flexibility, I think, for us, net-net is good, but we have to monitor it.

Okay. Any questions in the audience? Happy to take them if you have one, just raise your hand, we'll get you a microphone.

Can I ask one question about transit contracts? This is I know your transit business is doing well right now, but I think if I polled everyone in this room, 95% of investors would say, yes, we don't really like transit, right? Like transit has these MAGs and it's a lot of CapEx investment.

You could add me in that pool.

And you'd be in that pool. Okay. So when we get to the -- like I remember when I think you guys ran into some trouble with this before you guys, I think, were public, but when you were part of CBS, some problem with the London underground, why? Because the great financial crisis happened. And then this time, it was because of COVID. And when I've asked in the past, it's sort of like, yes, but it's integral to our messaging to advertisers. It's where the young people are. It's where the advertisers want to be. Therefore, we're going to keep doing this. Is that still true? Or do you think there's been sort of a shift either for your company or for the industry overall that these transit contracts just aren't that attractive?

For us a bit of a shift in that we're embracing transit now. When the marketing people tell me, maybe it's a bad visual that the sex is in the subway. I'm not sure you want to picture that, but you can do more things creatively underground than you can up on a billboard.

I think what investors look at, they look at -- it's a finite tenor, whereas billboard, we have often renewable rights, not forever, but for a very long time. Transit is finite. It's competitive, so you're rebidding against others who want it. In addition, it's accepting of a lower margin. And as you're pointing out, it's more volatile. Recessions, with the pandemic and crisis behind, hopefully, that doesn't recur too often. But in a recession, transit gets hurt more than billboard. So that's to me, again, I'm critical of transit, but I see the -- right now where we're enjoying the positive side of that volatility.

The audience is great, the franchises are good. The ability to be creative is great, and you can tie it into your other inventory. The problem is the contracts. And what we ran into the MTA with the construction and the write-off, we're generally out of the construction business. We're happy to screw signs in. We're happy to purchase signs. We just don't want to be financially responsible for that. We think that should be a different part of the business. We sell advertising. We sell it very well. We sell creative opportunities. So for us, audience is great, franchise is great. The contracts need to be improved to reflect something mutually beneficial for us and the municipality.

Okay. So maybe in the future, if you do another MTA contract, the structure could be different than it is now.

It's something that everyone in this room can understand. It's incredibly complicated. It's something where we're happy to sell the advertising. We're happy to give them a return. And if they want more screens, we'll make it happen. We just don't want to be that levered boom or bust based on construction.

Okay. That's great. Those are all my questions. One last check for the audience. Any questions in the audience? All right. Matt, thank you so much.

Thank you.

You bet.

Hello, everyone. Thank you for joining us, and welcome to OUTFRONT Media's Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Stephan Bisson, SVP, Investor Relations. Stephan, please go ahead.

Good afternoon, and thank you for joining our 2026 second quarter earnings call. With me on the call today are CEO, Nick Brien; and CFO, Matthew Siegel. After a discussion of our financial results, we'll open the lines for a question-and-answer session. Our comments today will refer to the earnings release and slide presentation that you can find on the Investor Relations section of our website, outfront.com. After today's call has concluded, an audio archived replay will be available there as well.

This conference call may include forward-looking statements. Relevant factors that could cause actual results to differ materially from these forward-looking statements are listed in our earnings materials and in our SEC filings, including our 2025 Form 10-K as well as our Q2 2026 Form 10-Q, which we expect to file tomorrow. We will refer to certain non-GAAP financial measures on this call. Any references to OIBDA made today will be on an adjusted basis. Reconciliations of OIBDA and other non-GAAP financial measures are in the appendix of the slide presentation, the earnings release and on our website, which also includes presentations with prior period reconciliations.

With that, let me hand it over to Nick.

Thanks, Stephan, and thank you, everyone, for joining us today. We're excited to be here reporting our second quarter results, which came in better than we had anticipated when we last spoke in May, given continued strong demand, focused execution and a successful World Cup, which generated over $35 million of revenue during the quarter and over $50 million overall.

As you can see on Slide 3, which summarizes our headline numbers, consolidated revenues were up 14%, driven by 32% growth in transit and an 8% growth in billboard, while consolidated OIBDA was up 29% to $160 million and AFFO grew 45% to $121 million. As I just mentioned, these results include about $35 million of FIFA revenues, of which we believe approximately half were incremental to our typical business.

Slide 4 shows our more detailed revenue results. Billboard revenues were up 8%. Included in our comparative billboard results for the final time is our previously announced exit of a large and marginally profitable billboard contract in LA as the revenues and expenses of this contract are still included in our reported 2025 financial statements. Excluding the billboard revenue generated by this contract, billboard revenue growth would have been up 9.4%. The strongest billboard categories in quarter 2 were tech, including the rapidly growing AI, legal and medical. Transit grew a robust 32% and was again led by New York MTA, which was up an impressive 48% during the quarter. Our strongest transit categories were tech, entertainment and financial.

Slide 5 shows our detailed billboard revenue. On a reported basis, digital billboard revenues were up 17.6% and static and other billboard revenues were up 3.8% during the quarter. However, excluding the revenue generated by the exited contract, digital billboard revenues would have been up over 21% and static and other billboard revenues would have been up 4.3%. We estimate that FIFA contributed approximately $19 million of revenue to our billboard results this quarter.

Slide 6 shows our detailed transit revenue, which grew over 32% during the quarter, led by the MTA strength. Our digital transit revenues were up nearly 36% to about $68 million and static transit revenues were up over 29%. We estimate that FIFA contributed approximately $17 million to our transit revenues in the second quarter. Three of the FIFA-related campaigns, I would highlight from across our business are the New York, New Jersey Host Committee subway wraps of the tournament local participants flags within the -- with the New York subway system, Nike's complete takeover of the Bryant Square subway station and the massive soccer player Wallscape in Coke's own town of Atlanta, which you can see on the cover of our slide presentation.

Slide 7 shows our combined digital revenue performance, which grew over 23% in the quarter and represented about 37% of total revenues compared to 34% in the comparable period last year. Even more impressive, excluding the aforementioned LA contracts, digital revenues would have grown by 26%. Programmatic and digital direct automated sales increased nearly 50% during the quarter, representing 20% of total digital revenue, up from about 17% a year ago.

Moving on, the breakdown of commercial and enterprise revenues can be seen on Slide 8. Commercial revenues were up 15% during the quarter, driven by strength in technology, entertainment and legal. Enterprise was up about 12% during the second quarter, with much of the strength being driven by tech, CPG and health medical. Slide 9 shows our billboard yield growth, which was up 12% year-over-year to $3,344 per month, principally driven by a focused effort to establish higher rates across our assets and boosted by FIFA.

Summing up, we are very pleased with our quarter 2 performance and confident that we will maintain this positive momentum into the second half, which I will discuss in greater detail later. With that, let me now hand it over to Matt to review the rest of our financials.

Thanks, Nick, and good afternoon, everyone. Please turn to Slide 10 for a more detailed look at our billboard expenses. In total, billboard expenses were up nearly $15 million or approximately 7% year-over-year. Zooming in on lease costs, these expenses were up $6 million or about 5% year-over-year. This increase was driven by higher variable lease costs and contractual escalators on fixed leases, partially offset by $4 million of savings related to the exited large billboard contract in Los Angeles. Excluding the impact of the L.A. portfolio exit, billboard property lease expense would have been up about 9%.

Posting, maintenance and other or PMO expenses were up about $3 million or almost 8% due to higher production expenses and higher compensation-related expenses, partially offset by lower site-related costs. SG&A expenses grew over $5 million or about 8% due to higher professional fees, including software and technology expenses and an increase in the allowance for bad debt from higher sales activity, partially offset by lower credit card usage by customers and lower compensation-related expenses. The $15 million increase in total billboard expenses were more than covered by the strong growth in billboard revenues Nick described earlier, leading to billboard adjusted OIBDA increasing by over $13 million or 10%.

Now turning to transit on Slide 11. In total, transit expenses were up $8 million or just over 8% year-over-year. Transit franchise expense was up 6% to $66 million due primarily to higher variable transit franchise expenses driven by higher transit revenues outside New York and the annual inflation adjustment in the minimum annual guarantee for the MTA contract. Let me take a minute before discussing the rest of Transit segment to clarify the accounting treatment regarding the New York MTA. We will continue to book annual transit franchise expenses at the minimum annual guarantee, which in 2026 is $161 million, including the final year of the 2020 amendment. We will record this expense on a straight-line basis evenly each quarter.

This approach will continue until we expect to recoup the entire cost of the digital investments we have made since the commencement of deployment in 2018 and reflects the financial statement impact of our 2023 transit impairment. Please refer to our earnings press release and 10-Q for additional details on the MTA. Returning to our discussion of transit operating expenses. PMO costs were up just over $2 million or about 12% due to higher display production costs driven by higher profile creative initiatives during the FIFA World Cup and higher posting and rotation costs.

SG&A expenses were up $2.5 million or about 14% due to higher professional fees, including software and technology expenses, higher compensation-related expenses, including commissions and higher allowance for bad debt, partially offset by lower credit card usage by customers. The $8 million increase in total transit expenses was far eclipsed by our exceptional 32% transit revenue growth described earlier, leading to transit adjusted OIBDA improving by about $26 million during the quarter to $33 million.

Slide 12 shows the company's adjusted OIBDA in the second quarter. Corporate by about $3 million due to higher compensation-related expenses, including severance and the impact of market fluctuations on an unfunded equity-linked retirement plan offered by the company to certain employees. Combined with the billboard and transit OIBDA, total consolidated adjusted OIBDA totaled about $160 million, up 29% compared to last year. Before moving on, given our robust revenue performance and strong outlook for this year, I'd like to mention some important growth investments we have accelerated into 2026 to support our ambitious revenue targets for this year and beyond. First, we are investing even more in digital growth. We are reinforcing our programmatic sales team, adding experienced sales leaders to ensure that we capture as much of this growing revenue stream as possible.

We have also expanded our data analytics function, hiring a Chief Data Officer late in the second quarter to partner with our research and insights team to advance our audience intelligence and measurement solutions in order to meet industry expectations. Second, we are investing in our people. We have expanded the platform tools and training available to our workforce to improve both efficiency and effectiveness. Tools such as Salesforce, our proprietary IRL NAV and an integrated marketing cloud will minimize time spent on repetitive administrative tasks and maximize time spent engaging with clients. And we will continue investing in our HR function to ensure we attract, retain and develop the best possible talent to be a world-class media organization. As a result of these strategic investments, we expect our SG&A expense growth rate to outpace our revenue growth rate for the remainder of 2026 to help drive exceptional revenue performance in 2027 and beyond.

Turning now to capital expenditures on Slide 13. Q2 CapEx spend was about $17 million, including about $6 million of maintenance spend. We added 51 new digital boards in the quarter and expect to add a total of about 125 in the full year. For 2026, we still expect to spend approximately $90 million of CapEx, in line with our historical level of about 5% of revenue. About $30 million to $35 million of this total is expected to be for maintenance.

Looking at AFFO on Slide 14, you can see the bridge to our Q2 AFFO of $121 million. The improvement is principally driven by higher adjusted OIBDA. Based on our results thus far, our expected revenue growth for the remainder of the year and the ongoing investments in our business, we now expect that our reported 2026 AFFO will grow in the low 20s percent range relative to our reported 2025 AFFO of $338 million. Included in this guidance is the previously noted maintenance CapEx, interest expense of approximately $145 million and a small amount of cash taxes. Also, our outlook reflects both the strength of the underlying business and the NTA accounting treatment discussed earlier.

Please turn to Slide 15 for an update on our balance sheet. Committed liquidity is nearly $600 million, including about $30 million of cash, around $500 million available by our revolver and $50 million available by our accounts receivable securitization facility. As of June 20, our net total leverage was around 4x at the bottom end of our 4 to 5x target range. During June, we refinanced our $650 million of 5% notes due in 2027 with a new issuance of $500 million of senior unsecured notes due in 2034 priced at 6% flat with the balance funded through a draw on our accounts receivable facility and cash on hand.

Turning to our dividend. We are pleased to announce today that our Board of Directors raised our quarterly cash dividend by 10% to $0.33 per share payable on September 30 to shareholders of record to close of business on September 4. We spent just over $11 million in acquisitions during the quarter. And looking at our current acquisition pipeline, we continue to expect our 2026 full year deal activity to be similar to levels reached in recent years. With our leverage trending to low end of our range and increasing cash flows, we expect to be more opportunistic in our deal activity going forward.

With that, let me turn the call back to Nick.

Thank you, Matt. I'm pleased to report that we are seeing strong top line growth in the third quarter. And from where we sit today, we expect quarter 3 revenue growth to be up in the high single digits year-on-year, driven by about 20% growth in transit and mid-single-digit growth in billboard. These figures include a $16 million benefit related to the World Cup with approximately $9 million booked in billboard and $7 million in transit. 2026 is a transformative year for OUTFRONT from operating as a legacy out-of-home media vendor into the premier platform company of IOL Media. We are immensely proud of the results we've delivered so far, although our work is far from complete.

We continue to be laser-focused on executing our strategic imperatives while investing smartly to strengthen our business and further accelerate our future revenues and profits. We are creating a formidable growth engine with our revamped marketing team feeding our reorganized sales force with the highest quality leads. We have supercharged our sales engine by investing in industry-leading sales tools such as AI-enabled integrated CRM and the Marketing Cloud as well as advanced sales training. Our strategic investment in AdQuick is changing how we plan and sell, reducing the number of handoffs from audience discovery to proposal creation. To further accelerate our growing revenue, we're also expanding our research and measurement team to consistently prove the immense value of our IOL solutions. To that end, we've hired an industry-leading Chief Data Officer, Hugh Griffiths, who has been tasked to leverage his decades of media agency experience to raise all standards of our medium measurement and attribution capabilities.

I want to close with why we believe IOL Media becomes more valuable, not less in an AI-generated world. We commissioned Kantar to study consumer trust across media types, and the finding was unambiguous. Trust in digital content is eroding fast. When any image, post or video can be machine generated in seconds, audiences default to suspicion. And because online inventory is infinitely expandable, another feed, another ad unit, another AI-generated impression, that abundance is a very thing driving the trust erosion. Infinite supply collapses credibility and advertising is caught in the crossfire. Physical media works the opposite way. It's scarce by law and by geography. You can't simply build more of it. We believe that fixed supply paired with the rising demand for real-world engagement means the media value of physical inventory can only go up.

This dynamic is playing out in real time. Drive through San Francisco today and nearly every other billboard belongs to an AI company. The same companies eroding trust online are turning to the one channel that cannot be faced because a billboard is public and real and putting your name on one signals that your company is credible and trustworthy. To be clear, this isn't an argument against online media. It's an argument of smarter media planning. Out-of-home is a load bearing wall. The credibility layer that makes every downstream digital impression more believable, while AI increasingly powers the targeting, planning and measurement on top of it. That's the thesis behind our recent minority investment in AdQuick, bringing AI native workflows into physical campaign planning.

Our Kantar research backs this up directly. Consumers rated the identical ad is dramatically more trustworthy on a billboard than on social media. This matters commercially as trust isn't a soft brand metric. 87% of consumers say they'll pay more for brands that they trust. Trust has become a scarce commercial asset and increasingly, the real world is where it's built. That's our conviction heading into the second half of the year. As AI floods digital channels with infinite low-cost content, the brands that also claim a stake in the physical world will be the ones that stand out, and we are ideally positioned to help them do exactly that.

And with that, operator, let's now open up the line for questions.

[Operator Instructions] Your first question comes from the line of Cameron McVeigh with Morgan Stanley.

I was hoping you could comment on the strength in programmatic that we're seeing. Curious how conversations with advertisers are trending, what's been working? And how much runway you might expect we have on programmatic going forward? And then secondly, on the higher SG&A costs and the hiring of a Chief Data Officer, I would love to hear just any more on what drove this, why now and where you expect to see the largest benefit going forward?

All right. Thank you. Thank you, Cameron, and I appreciate the questions. Let me start with the first one. Programmatic, we see tremendous runway. When we look at digital media, nearly 80% now in the U.S., and I think 75% globally is traded programmatically. We are 20%. I think the out-of-home industry overall is less than 20%. There are significant pools of advertiser dollars that sit with trading desks, either within the advertiser or within big agency groups as well as the independent agencies, and they choose to trade, plan and buy their digital media, their online media programmatically.

It's the reason we invest -- we have been investing, as Matt talked about, we hired a Chief Data Digital and Strategy Officer in terms of sales and strategy from the Trade Desk, and he's been looking at both strategy for pipes, inventory, technology, making sure ad tech stack is as seamless as possible as well as the sales relationships, both with the DSPs and the leading SSPs. We have strong relationships with the industry SSPs. We see an opportunity to further extend those relationships. And Jeff Hackett is leading that effort along with a further strength. So, we see significantly more upside on the way we can engage digital revenues through programmatic.

The reason why we hired our Chief Data Officer now, why we hired Hugh with this is we're at a watershed moment in the industry where the industry has decided to -- after a pilot test to choose Ipsos to go to the next standard of what our industry measurement is. But it's not just audience measurement and reach curves, it's understanding how data, especially when it comes to digital, is going to apply different first-party data capabilities better -- as well as omnichannel strategy planning, so our media could be more constructively and credibly integrated into overall campaign planning. Hugh is a master of that. He's come from the agency world. He's got over 30 years of working with the biggest agencies and the biggest brands doing just that.

So, he, as a consequence of what has gone on at IPG and Omnicom, Hugh is someone I worked with 25 years ago at Universal McCann. I've watched his career development and I've watched his expertise. And I realize that we would benefit significantly by having someone lead that way as we're seeking to engage with the enterprise marketers. The most sophisticated marketers who are focused on audiences and reach curves that focused on business outcomes. So, we need to engage at that level to have the credibility to ensure our media is integrated not as an optional consideration within omnichannel campaign planning, but a fundamental platform, as I described earlier, I consider the low bearing wall. So those are the 2 reasons, and we see great upside on both.

Your next question comes from the line of Alexey Philippov with JPMorgan.

You talked about FIFA as a good opportunity to bring new advertisers into the segment. Now that the tournament is over, how is the progress there? Do you see clients remaining with you? That's my first question. And another, can you comment on macro? Your commercial revenue was up nicely, and that's likely a reflection of World Cup, but local was a bit softer than in first quarter. Any signs of macro weakness on the local front or not really?

Thanks, Alexey. Let me -- the first question you asked about the new advertisers. And it's something that we all know across this industry that the out-of-home medium has failed to demonstrate its level of efficacy with the most sophisticated marketers. With those -- if we think about those advertisers who are spending over $250 million a year in the advertising, we have the lowest share relative to the 2.5% that the medium takes is less than 1%. We see what we are calling the enterprise side of the business, the enterprise and the strategic accounts as being very important opportunities to engage and grow our share, whether it be on automotive, whether it be on pharma, whether it be on CPG, we have a number of those logos. We have a number of those relationships, but they're not as consistent across all their brands as we would like.

That's why we developed our heads of industry practice within the enterprise sales division. So to focus on not just winning those accounts, but growing them is also very important. We also are really focused laser on retaining clients, really tracking the data to understand which clients and which category are either spending less or leaving the medium altogether with us. So those are drives that we are very confident will strengthen our revenue going forward, both in terms of new logo and increases.

At the macro level, you asked about if there were weaknesses -- and the commercial side of the business. Obviously, there was -- there has been a real benefit there from World Cup. There's also been a continued benefit there from AI and the AI companies who are now extending after their VC raises and whatever they're doing in San Francisco coming into other markets. Whether it be into Boston, whether it be in Chicago and certainly New York City. So I would say that any slight lessening versus quarter -- the first quarter on the commercial side has no impact on the drive momentum that we're experiencing. And I'm very confident you'll see a balance for the second half of the year.

And just if I may, to confirm on MTA accounting, you still expect revenue shift in the fourth quarter so that the MTA cost will shift to revenue share in the fourth quarter?

No. It's Matt. We're going to account for the transit franchise expense on a straight-line basis for the whole year and really for the foreseeable future in the years to come. It's cleaner basically, we're looking at our internal models on the MTA. We don't expect to recoup in the life of the contract, the money we've spent. And as you know, in 2023, we took an impairment. And so most of the recoupment was already expensed back then. So we are going to straight line the MAG this year, which, as I mentioned in the script, is $161 million, so about $40 million a quarter. And you'll see -- likely see a big margin gain in the fourth quarter.

Your next question comes from the line of Jonnathan Navarrete with TD Cowen.

Can you discuss the economics of the Jets partnership and whether the opportunity is primarily direct revenue from the team or access to a broader pool of sponsors and advertising budgets?

Thanks, Jonnathan. Thank you for the question. Yes, we're very excited that the Jets announcement was the official launch with today that we are the official media partner and we're the only out-of-home media partner within their practice as to the way they sell their sponsorships. And the way the Jets are looking to engage their sponsorships is not just in stadium or online. This is -- we're very excited because this is a 5-year deal, and they have the wisdom to see the opportunity to ensure that the very best of our inventory within the footprint that they have identified completes their omnichannel media package. So they're selling as well as any of the significant brands that are looking to engage, they're the first NFL team and as far as we understand, the first U.S. toy sports team to include out-of-home in their packages.

So we -- this is important. I talked about this, I think, on the last earnings call, the one before, that we see this kind of brand expansion, the opportunity in sports, in experiential, with retail media. These different areas where our in real-life inventory can really complement whatever they're selling, whether it's in-store, whether it's online, how do they bundle it together. So we'll have more announcements to come, but certainly, to represent this very significant NFL team in New Jersey is something we're very excited about. But that's the reason we're doing it.

Your next question comes from the line of Patrick Sholl with Barrington.

I was curious if you could follow up on your commentary on your M&A pipeline and how you -- where you would look to target within making investments, whether that would be additional technology investments or expanding within your own markets or outside your markets or into different types of out-of-home inventory.

Pat, it's Matt. Thanks for the question. First, I'll give another shout out to our balance sheet. We really feel we're in a good place with a lot of flexibility with hopefully, everyone recognizes without money burning a hole in our pocket. So we feel good. For the last few years, we've been really focusing on tiny tuck-ins, as we've improved our balance sheet and got our leverage down. We've consistently looked at high-quality premium inventory, billboard inventory mostly in our existing markets, so we can tuck in and find hopefully both revenue synergies and some cost synergies. So we're going to continue to do that. We'll probably widen our aperture and look at more things, we don't think we've missed anything over the last few years. We just think we'll go shopping a little more aggressively.

And in addition, if there are attractive DMAs that we don't have that are available as a market, we would certainly look at those and consider a few that are maybe not in our portfolio, but we'd like them to be. As far as tech or other type of enablement, we made the investment in AdQuick a few months ago, and we would continue to do things like that, that help our sales force or help our -- the package of portfolio of things that we sell, but our focus is really going to be on the billboards and expanding our existing great inventory.

And apologies if I missed this earlier, but on the incremental benefit you talked about on the World Cup, how much of that was existing advertisers expanding their share of spending on out-of-home beyond where you would expect them to going forward versus newer advertisers that you don't think would return in that level in the future?

Pat, so for our World Cup money, as Nick mentioned, we identified a little over $50 million, about half of that we believe is incremental by incremental, either higher prices than we would have expected without the World Cup or some of our interim experiential inventory or some higher occupancy. A lot of the investments were from existing customers or ours or foundation. We haven't kind of pieced together how much is new. We haven't disclosed that, but there are a few new customers. And as Nick pointed out earlier, we hope to keep them as ongoing customers. We haven't disclosed how many dollars are from new customers yet.

Patrick, I'll jump on and add to that because I think this is also a significant opportunity to whether the existing brands who have been with us that wanted to double down because they were FIFA sponsored either at the enterprise level or a team sponsor or they were new brands, and we know who they are. We're tracking them. It's the opportunity to say welcome to the medium. And if the medium was important to you to develop those live physical experience that could be shared what this is something that should be continuing to build your brand equity with trust and credibility. So, we are not going to miss the opportunity and imagine, oh, that's gone for 4 years and now we just move on to Super Bowl and then we have the Olympics. No, every one of these episodic significant growth opportunities are an opportunity for us to maintain and build on that momentum.

We have reached the end of the Q&A session. I will now turn the call back to Nick Brien, CEO, for closing remarks.

Thanks for joining us today. We hope to see and meet many of you at the various conferences and events that Matt, Stephan and I as the 3 musketeers that will be attending over the next coming months. But for those of you who we don't meet along the road, we certainly really look forward to presenting our quarter 3 results to you in November. So genuinely, thank you for your engagement, and we'll talk to you soon.

This concludes today's call. Thank you for attending. You may now disconnect.

Okay. Great. We'll get started. We have from OUTFRONT Media, Nick Brien, CEO; Matt Siegel, CFO. Guys, thanks so much for being here. Thank you for having us.

Thank you for having us.

Thank you for having us.

So Nick, you're coming up on a year since you laid out your strategic imperatives. I think that was last May. The results have clearly inflected. Can you give us a sense of where the company is today versus then, what you're most proud of over the past 12 months?

Well, the company, as reflected by the results is really operating very well. If I start at the -- if I separate in a way, the brand and the business, there's a greater clarity on exactly what business we're in and the opportunity we have to really be a strategic business partner with some of the most significant advertisers at the highest level as well as being at the mid-market and the low -- at the SMB level. So the focus on what and how we're positioning our brand is resonating very well.

And at a business level, if a core part of the business is people, process and technology, a lot of the heavy lifting we did last year on the restructuring, the redesign of the business, the talent we hired at the leadership level, the business processes that we've been focusing on and as importantly, a lot of the technology investments that we've been making. So we're early in the journey, but the results are promising.

Got it. So the broader ad market has seen some pockets of macro uncertainty, yet outdoor seems to be holding up well if we look at the results of you and your peers. Maybe you can walk through why you think out-of-home has been resilient in this environment. Is there something structural about the medium that is providing a degree of insulation?

Yes, absolutely. We're the recognition, I think, three things have happened. One, there's been a pendulum shift, and it's a slow one, but it's really starting to happen from a lot of more significant brand advertisers who have for the last 10 years been too far down the bottom of the funnel on short-term performance and at the expense of longer-term brand building. There's the other part of the marketplace that is recognizing that for all the power of the addressability and the personalization of digital media, there's a real strength in the one-to-many that out-of-home has that we have.

And thirdly, we're really leveraging, and I think the industry is really picking this up that we're trying to reframe out-of-home media and talk about increasing the IRL because out-of-home is a fact, IRL is a benefit. And we don't want to just be talking about a fact. It's out-of-home. So what, the TV is in home. We're talking about in real life and in real-life brand experiences as part of the value proposition why brands need to be integrating this great media as part of their omnichannel mix. So it's starting to resonate. Now we need to do a more consistent role collectively, and I talked to my peers about this at the marketing level, but we need to underpin it with measurement.

Maybe turning to OUTFRONT specifically. So Q1 outperformed and you've guided for further acceleration in Q2. Why don't we start with billboard? Maybe you can unpack what's driving the better trend. Any color you can give around category, region?

Yes. I think if I think about the regions, the West has done, I think, exceptionally well for us on the last one. I think certainly, the benefit that we've had in L.A. and in San Francisco, and that's also been benefited from tech trends. I mean technology now, including AI, is representing one of the largest categories. And the AI spending of AI native businesses as well as the more significant established players is definitely leaving San Francisco. It's very extensive in New York now. So that's been a strong one for us. Finance, CPG, a number of the exciting categories that we're seeing.

Is there any way to frame the competitive dynamic on that AI side, right? I was in San Francisco in March, I counted from SFO to the city, probably 2/3 of the boards had an AI message. Just how kind of unique is this moment in terms of that incremental buying coming in?

Well, I think it's probably even higher than that. I mean it's remarkable the level of ambition that the AI companies are all -- from all sorts from the B2B to the B2C and they wanted to spend. So we're pretty much sold out to the end of the year. And they, again, start in San Francisco and then want to come to other markets. We've got some have migrated to Chicago, some to Boston, most to New York. But we're very excited about it. I mean it's clearly here to stay.

Also, the other opportunity and the other super power opportunity that's emerging now, which is probably not what people would have considered with AI is what it will do in changing agentic commerce and agentic advertising and marketing. So now you've got a situation where in the open web as well as the walled gardens, you're going to look at so much in the digital ecosystem that AI is rendering fake, untrustworthy, unreliable, unknown, more and more bots, more bots clicking, more fake bots, more fake impressions, more confusion, a growing world where a lot of the biggest advertisers have a lot of frustration with the lack of transparency and fraudulence that goes on in the digital ecosystem.

So in antithesis of that, we are the only medium that is IRL that we are the only one-to-many true physical medium that has a high degree of trust. So we are leaning into that, and I think that is only going to continue at a very accelerated pace.

I just want to understand your last point on agentic. So if we move to this world where sort of consumer purchasing decisions, not everyone, but a sizable portion go to [indiscernible] agent talks to, right, a publisher agent or a seller agent, right? This will translate in a way to more IRL, more outdoor.

Well, it will because we'll be the only medium that if you're in a low interest priority brand sector of a preference and you're not -- and there's a high degree, you're going to keep the preferences that you're very interested in, whether it be Italian travel, fine wine and fast cars. You're going to want to hear from as many brands and businesses in that sector. The things that you can delegate that don't interest you will be pushed to your agent. And agents will talk to agents and humans will talk to humans. There will be as many agents as there are humans. Every one of us will have our own custom, smart, well-trained agent to do the work. We will be a medium that cannot be separated. It cannot be filtered. So even if you are in a low priority category, and there's many you can imagine that you're not going to be personally interested in, you still have an opportunity to engage with basically everybody using our media.

What our media needs to do is get much smarter and almost not leapfrog basic audience measurement because we haven't even got that fixed yet. We've got to get that fixed, but we've got to move into the behavioral intent side because what these agentic planning and buying systems are doing, they're not looking to just buy audiences anymore. They're looking to buy audiences, people with a buying intent that they may be ready to book a holiday, buy a car. And so how do we make our media not just in real life, and a physical media and a public media and a shared media experience, how do we also bring the intelligence of smart data signals.

The transit business led in Q1, the MTA with the MTA up 26%. Investors often ask what's changed at the New York MTA from what we can tell, inventory ridership trends are stable. So maybe you can comment on OUTFRONT-specific factors like your sales team, experiential offering. Maybe you could just talk about investor appreciation for the transit channel just in general.

Well, well, thank you for that. I mean we're very bullish about transit and not just the new MTA with -- when I arrived, there was a sense of confusion between the nature of the contract and the nature of the medium. This is a line of business and a particular product that has so much of the cultural zeitgeist. So over 6 million people travel using the tubes, the buses and the trains in New York City every day. So understanding how we could be more deliberate and more focused. So I changed -- yes, we changed the sales team, found some brilliant leaders underneath what was the leadership team. We promoted them. We changed the compensation structures, and we gave it a product marketing focus that started to arm those salespeople with very relevant and specific orientation towards transit and specifically New York in general.

So suddenly, the flywheel has been turning. And we've also made it very much -- it's not just -- I also see it in L.A. We're seeing it in San Francisco, but the New York MTA specifically has attracted a lot of a really big assortment of brands who actually want to do more creative things -- it's remarkable how much we can do in the MTA. So that's becoming a platform for IRL media like nothing else.

I feel like I have to press on that last point, right, about more you could do creatively because we've seen that, right, hole wrapping around the subway, right? It seems like there's just a lot more opportunity.

We did an air scent drop for Bath & Body Works. We did a [indiscernible] expedited people who could get in on the tubes and everything was structured in a different way around the ticket was a [indiscernible] pasta box. There's so many coming, ESPN. They wanted to ramp. They have their mascots. The MTA are a great business partner, and they appreciate that by being more creative, by allowing more opportunity for creativity and activation, those experiences get photographed and they get shared. That's where the amplification of our medium has such super power capabilities because if you do it right, people are excited by it, they're stimulated about it and they want to share it.

Got it. And then separate from the MTA, you noted a couple, but there's implied momentum in your other transit markets. Any kind of regions you'd want to highlight out of the portfolio?

San Francisco specifically has done is really -- they haven't had the sort of wider level coming back. And as Matt always says in L.A., buses, it doesn't really matter how many people are in the buses because it's what's going around.

We advertise on the outside.

So -- but they're both doing well. In general, the transit -- the sentiment towards transit as a superpower line of business in our portfolio is there now. Before, it didn't have the attention. It didn't have the enthusiasm, and it didn't have the marketing to support the salespeople to be able to really showcase the excellence that it provides.

Matt, major milestone for this year. You now expect MTA revenue to surpass the MAG level in '26. Can you just walk through the accounting dynamics here? How does the shift to revenue share technically work in Q4?

Sure. So the major milestone is the first time really since 2019, we're going to be above the MAG level and have some recoupment. So it's great to tell people, great to hear, and we're excited about it, and hopefully, it continues in the future. We started the year straight-lining our MAG because we did not expect to be above the MAG level, and that was the preferred accounting. At the end of the first quarter, we looked at our forecast and said we're going to be above the minimum guarantee. So we shifted into revenue share. The MTA is a 55% revenue share up until the MAG where the MAG is the minimum. And then the revenue above that gets accounted for 70% revenue share. And I say accounted for, it's noncash. The delta between that MAG line and the 70% line we retain for recruitment against the hundreds of millions of dollars of money we spent on the deployment.

So for us, we'll get the first quarter had too large an expense because it's a seasonally smaller quarter and the straight line over expensed that quarter. By the third -- second and third quarter will be caught up in a true-up. The fourth quarter will be a pure revenue share quarter, expense is 70%. So the expense will be much higher than it was last year. The EBITDA is likely to be lower, but the cash flow will be very strong.

Right. So to confirm, no impact to cash flow, no impact to AFFO.

There will be an impact to AFFO because it's part of EBITDA, but the cash flow and working capital will benefit.

Got it. So the World Cup is coming up next month. You disclosed about 70 active customers. I think over 40% of FIFA sponsors engaged with agreements across 6 host cities. Nick, can you just give us a sense of kind of what you're doing specifically around the World Cup? Is it primarily leveraging your existing billboards? Or is it more about like those areas like close to the arenas and stadiums?

Yes. There's a couple of things. I mean, certainly, we have had a high level of expectation that the FIFA sponsors as well as the team sponsors are going to want to be activating. And the inventory, we separated it and we made sure that we were very careful to ensure that in those particular markets, that inventory was locked and set aside. And we've had very specific marketing, very specific outreach, very specific packaging and pricing for those advertisers.

The second thing we've been doing is our real estate and our supply team who have got great relationships with, obviously, all local municipalities and the planning is to say, how can we create unique inventory? What special capabilities are we going to be able to have for this next 3- or 4-week period to really use these walls and start to get smarter about the way that we're integrating, let's call it, custom inventory with what our standard fare is. We've even got some conversations going on now. We've got a couple of FIFA sponsors who have bought drone shows from us in conjunction.

So there's the whole notion that there's an IRL media activation opportunity here. And that's our challenge and the biggest opportunity, we're excited about where we're doing on our targets. We set aggressive targets. We set a dedicated team to lead it, is to have the highest level of retention of those brands who have come into the medium because of FIFA, stay with the medium because they can see that we're proving that it works and then we can maintain those direct dialogues going forward.

I guess to that last point, it sounds like you do expect some sort of long-term impact, meaning everyone has been so focused on World Cup this year, but this is obviously an opportunity to bring new marketers and to realize a long-term.

That's our industry's greatest opportunity. I was just having this conversation in Dallas last week at the OAAA, the industry trade association. So between myself, Sean and obviously, the new owners of Clear Channel, we're all going to really significantly as well as a lot of the independent players benefit from this influx of these are potentially non out-of-home advertisers or they're small out-of-home advertisers who are going to be stepping up. So our opportunity is to engage them discuss how well it's worked and make sure that we get into the proper measurement and attribution conversations.

So programmatic and digital direct automated sales grew nearly 40% in Q1. I think they now represent 20% of your digital revenue. Can you talk about how the buyer base here has evolved? Are you seeing new types of clients come in through programmatic who wouldn't have bought outdoor previously? Or is this primarily existing advertisers shifting how they transact with you?

It is primarily new buyers and especially in the programmatic side of it, there is a whole world of inventory management and media spending that goes with audiences specifically, not linked to individual media. So the more we can have our data and our inventory into those centralized, whether it be the DSPs or the SSPs or anywhere within the programmatic ecosystem, we benefit. We will -- we do have some individual advertisers who are previously using direct IO. They want to move to programmatic, but we're excited about it.

We -- I said that on the call, we made the investment to hire a new Head of Digital Sales and Strategy, Jeff from The Trade Desk, a heavyweight leader who can not only make sure on pipes, plumbing data sets, we -- our ad tech systems were frictionless, but had the relationships with Amazon, with DV360 at Google, with The Trade Desk to ensure that we could get our inventory fully integrated into. That is going to be one of the biggest unlocks. And we know 80% of all digital media -- if all media spend is 75% is digital, 80% is traded programmatically. So the more we can accelerate digital, the more we can accelerate programmatic, the more we engage in an entirely new revenue source.

So just staying on some of these points. The AdQuick partnership is a few months in now. Can you give us an early read on how it's being received by your commercial clients? What are you seeing in terms of simplifying the buying process for the SMBs?

Well, two parts to that question. The first part, certainly, very enthusiastic. How has it been responded? How has it been felt in the marketplace by our clients, less so because this is more internal at the moment about the way we're taking the pain and the inflexibility out of the way we're organizing our inventory for it to be structured and therefore, planned, therefore, bought. So a lot of that is in the early stages as well as data and measurement side of it. So we're very excited about the way that's going.

The longer-term aim is, yes, just like the other tech giants who dominate the advertising ecosystem, SMB is not a manual [ affair ]. You're on a self-serve platform. So we have already looked at the way we categorize our clients between SMB 1, 2 and 3, mid-market, we want to move the lowest level of our SMB onto a self-serve platform. There's no reason for us to have a directly interact with the gym owner in Boston who's interested in that board 3 streets away, he wants -- no, that can all be and all should be on SMB. So that's going to be -- there's certainly going to be -- we're hoping for next year, but that's next in the road map with AdQuick.

Okay. And then I wanted to ask on the AWS partnership. I think this is designed to connect your inventory and data directly into the major agency groups planning and buying systems. I think you've mentioned one signed up, another potentially on the way. Just maybe you could speak to the efforts there, how quickly you think this can scale?

I can't name names yet because we've got a couple we're going to be announcing, hopefully, one in Cannes very soon. But this is not just about having our inventory in through another source of planning, buying decision-making. This is also recognizing that the nature of the agentic advertising and marketing ecosystem changes fundamentally because the agentic -- the agents are basically going to be making their decision-making on behavioral signals. They're not interested in buying audiences. They're looking to find where are those people who are most likely to buy the FIFA ticket or to be going -- or prepared to go into the [ Kia ] dealer.

So the level of data sophistication from these agency holdcos, evidenced, by the way, this week with Publicis buying LiveRamp. And that's another example. They bought Lotame, they've had Epsilon. Yet again, it's another highly sophisticated data capability that they're integrating into their planning and buying system. By the way, they're going to be looking to leverage that for their principal-based buying, which means they're coming to media owners to basically take on our business and arbitrage it to the clients with a higher level of intelligence.

So we need to be in those stacks. We need -- we're talking to all the holding companies and all the big buying groups to make sure that not only our inventory, but our data signals are fully integrated. And the partnership with AWS enables us to kind of have these conversations.

I remember -- Nick, I remember a year ago, you talking a lot about the holding companies and a need to kind of connect with them, get more buy-in from them outside of what we've talked about today, the AWS partnership, anything else? I don't want you to front run maybe what you'll be saying at Cannes, but anything else you would say in terms of building more traction with the holdcos, which I know has been a big initiative.

It has been. It's been -- but with the holdcos, elevating the nature of our discourse and our representation beyond their out-of-home specialists into their central planning teams, the ones who are looking after the planning for Mars or the planning for Microsoft or the planning for General Motors, who is looking at the omnichannel planning and then the central trading desks. And these central trade, so we've got dedicated by separating the sales organizations we did last year between commercial and enterprise. That because I really don't like the definition of national local. I think it keeps a lid on everything to really unlock the growth in the enterprise side means that we have to have stronger relationships with the holdco agencies. It just does.

But it also means having a greater discourse with the clients themselves. The ultimate buyers to really -- and this is more of a marketing point of view rather than a negotiating point of view. With the agencies, we're going to be negotiating. With the clients, we need to be selling. And this is when I talk about IRL media, why is that something that a client should be thinking about as part of their campaign planning.

Got it. So the OAAA recently announced a new measurement pilot program. I think you spoke about investing your own dollars, improving the efficacy of the medium. Can you just walk through where the industry measurement landscape stands right now? How are the proprietary tools you're building fitting into that story?

Well, our priority is the industry measurement standard. It's not about what I have individually. I'll augment that. Same thing with Clear Channel, Lamar. No one, no one individually is going to resolve the inherent weakness of this medium's lack of growth because it has not got credible industry measurement. Audience measurement that is both robust, consistent and credible for the buyers. It hasn't had it and it hasn't had it for decades. So I'm really excited now that after we went through this whole process to upgrade this and finally fix it, we ran the pilot program, and this is before I arrived. So this was obviously Scott and Sean are driving hard with the OAAA. Ipsos won that pilot. They won the RFP. Ipsos look after out-of-home advertising in 26 markets around the world. They're a big brand. Clients want big brand security, Nielsen, Kantar, Ipsos.

So I'm very excited about this. I want it to go faster. I believe that we need to get this all ramped up and capable to really capture the September planning -- September, October planning cycle for next year. But it's promising. It's very, very promising. On top of that, each individual player can decide what level of data capture, data signal integration we can overlay. But if you haven't even got credible and universal audience measurement, you've got a real problem.

Got it. Matt, you've guided to, I think, 125 digital conversions this year, up from about 100 last year. I know in the past, you've talked through a 4x revenue uplift, 2x cost uplift. I think that's still holding. A question we often get, just given those returns, what's the constraint to go kind of meaningfully faster?

So we're still getting those same kind of returns, 4x revenue, 2x cost. we began that for a number of years. Obviously, it started much higher, and now we're in the really good area of conversions. The biggest constraint is really regulatory and kind of the gestation period of how long it takes to get approval, whether it's a local community board or engineering review or some other thing in between landlord who's a little slower. We probably have about 300 projects in our pipeline that take multiple years and somewhere between 100 to 150 come out of the pipeline in a year. We'd like to speed it up a little bit, maybe get some more boots on the ground. But we think we're doing the right number. If we can bump it up a little bit, we'll do more. But right now, we think it's appropriate.

Okay. We touched on some factors impacting the transit margins earlier, but billboard EBITDA margin has been expanding. I think you flagged continued improvement in '26. Maybe just help investors understand how much further you can improve profitability in that segment? What are sort of the levers going forward?

We think, especially on the billboard side, a lot of fixed costs in the business and the lease cost and some overhead. So over time, as revenue grows, we think the margins can continue to grind higher, not necessarily linear in a quarterly sequential because there's a lot of things that go into it, whether it's a mix between markets, mix within markets. But over time, we think it goes a little higher. This year, we're spending a little more on SG&A, which you're seeing a little bit higher in -- especially in the billboard side. As we've said on our earnings call, we're investing in our business and some of the sales tech, we signed up Salesforce. We just discussed, we brought in AdQuick, which has an operating agreement. But I think over time, you'll see those investments pay off in improved margin and improved revenue growth 2027 and beyond.

And then related to corporate earnings, you had discussed bringing back some of the consultants you'd worked with prior. Maybe just discuss what the focus would be there and then how investors should think about the fee structure associated with that.

We've brought them back, and this is a third go around. It's easier to bring someone back who knows the business and knows the people. So the tuition is very low to 0. A little bit of help with revenue, but mostly on process improvement. They're looking at how what we call shipping, how our cross market, salesperson in New York sells something in Chicago, how that works and can it go faster, simpler. They're looking at how our marketing structure works, how our RFP response goes really, can we do things faster, which will be better for the client, require fewer account exec and sales support time so they can do other things and focus on more clients as opposed to more time on the same client. So we're measuring them on savings ideas, KPIs for these special projects, revenue growth and then a fixed component.

Okay. I have a few more, but just I'll call the room. If anyone has a question, you can raise your hand. If not, I can continue. Okay. Nick, maybe just a few more on some verticals. So pharma and health care, I think you've talked about that as a growth opportunity. Just where are you in terms of building out that practice? Are you seeing some of the same headwind -- sorry, same tailwinds associated with some changes at the FDA that reference?

I know that in the ANA, Sean and also Clear Channel were talking about that as a particular category that's really demonstrated some real momentum here. And we're seeing that as well. We're cultivating that, whether it be in terms of Rx, whether it be on -- it could be on the GLPs, we've done very well there. Also working with dedicated data and measurement companies who specialize in pharma to make sure that they're part of that organization. So it's one of the industry categories. We've got 5 industry verticals that we're really focusing on.

But we do believe in line with my peers in the industry that this is a sector -- I mean, it spends less than 0.5% of its total spend, and it's one of the biggest spending categories in the out-of-home medium. So as far as I'm concerned, a huge opportunity. And now we're starting to see Pfizer, J&J. We've seen a number of the big brands, both on billboard and in transit. So we're excited about that.

You mentioned 5 verticals you're focused on. Should give you an opportunity to just highlight anything else?

Well, the CPG is another sector, CPG and retail, we're getting real traction in some of the significant conversations that are going on there. Financial services, I think it's more dependent on the individual players who are spending at the time, but we're seeing, again, at the regional level, a lot of deregulation. So therefore, it's more consolidation in the banking and the finance and the credit area. So we're excited about that. Automotive, I've been personally involved in a couple of the big conversations there. That is, again, a massive category that barely uses our medium. So again, a lot more activity there. And then when you think about the entertainment sector, we're pleased to see now this year some real momentum happening because, obviously, after the writers' strike and then the production, everything was delayed and slowed down. So we're now actually seeing quite a good amount of money that's now coming in, not just from the studios, but also from the streamers.

Okay. Wrapping it up, Nick, you've articulated a vision in the past kind of getting out-of-home from where it is now around 2.5% of U.S. ad spend back to where historically, it's been around 5% and repositioning the medium in an AI-driven world. I guess what are the kind of proof points over the next 12 to 18 months that would tell you this thesis is playing out?

Number one would be that some of those most significant brand advertisers who joined us for FIFA really got a taste for it and started to appreciate and wanted to investigate how our medium, not as outdoor and out-of-home, but as IRL media and experiences that they can create should be part of their campaign brand building. The fact that we've got and we're tracking industry penetration, so we can actually track through [ Vivvix ] exactly how much they spent on our medium collectively versus other media.

And thirdly, that we are getting the traction coming from our position in the marketplace that advertising to real people to humans who have high level of trust in our media is something that is now playing out for the brand marketers who want to build brand in a very fast-moving agentic advertising and marketing world. We have a unique opportunity to really represent the fact that we are a one-of-a-kind superpower ingredient media as part of campaign brand building, and they need to be trying it.

So for me, it's about the new non out-of-home advertisers who are trying our medium, not massive campaigns yet, but those who are saying, yes, I'm going to test you in individual cities or states. So those are going to be the metrics we're looking for because the absolute share of our medium, it's not where it needs to be. It doesn't need to be this low.

Got it. All right. That's a great note to end on. Nick, Matt, thank you for being here. Thank you very much.

Thank you very much.

Thank you very much. Thank you everybody for listening.

Thank you.

Hello, everyone. Thank you for joining us, and welcome to the OUTFRONT Media First Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the call over to Stephan Bisson with OUTFRONT. Please go ahead.

Good afternoon, and thank you for joining our 2026 first quarter earnings call. With me on the call today are CEO, Nick Bryan; and CFO, Matthew Siegel. After a discussion of our financial results, we'll open the lines for a question-and-answer session.

Our comments today will refer to the earnings release and slide presentation that you can find on the Investor Relations section of our website, outfront.com. After today's call has concluded, an audio archived replay will be available there as well.

This conference call may include forward-looking statements. Relevant factors that could cause actual results to differ materially from these forward-looking statements are listed in our earnings materials and in our SEC filings, including our 2025 Form 10-K as well as our Q1 2026 Form 10-Q, which we expect to file tomorrow. We will refer to certain non-GAAP financial measures on this call.

Any references to OIBDA made today will be on an adjusted basis. Reconciliations of OIBDA and other non-GAAP financial measures are in the appendix of the slide presentation, the earnings release and on our website, which also includes presentations with prior period reconciliation period.

With that, let me hand the call over to Nick.

Thanks, Stephan, and thank you, everyone, for joining us today. We're pleased to be here reporting our first quarter results, which came in better than we had anticipated when we spoke 2 months ago, given the strong demand and excellent execution from our entire organization.

As you can see on Slide 3, which summarizes our headline numbers, consolidated revenues were up 10%, driven by 22% growth in transit and 7% growth in billboard, while consolidated OIBDA was up 56% to about $100 million and AFFO more than doubled to $61 million. Notably, these results include $13.5 million of combination billboard revenues and OIBDA that we highlighted when we provided our guidance in February.

Slide 4 shows our more detailed revenue results. Billboard revenues were up 7.1%. Included in our comparative billboard results are 2 notable items this quarter. First, approximately $13.5 million of revenue in quarter 1, 2026 related to billboard combinations I just mentioned; and second, our previously announced exit of a large marginally profitable billboard contract in L.A. as the revenues and expenses of this contract are still included in our reported 2025 financial statements.

Excluding the billboard revenue generated by both of these items, billboard revenue growth would have been up over 4%. The strongest billboard categories in the quarter were legal and tech. Transit grew by 22%, again, led by the New York MTA, which was up over 26% in quarter 1. Our strongest transit categories in the quarter were tech and financial.

Slide 5 shows our detailed billboard revenue, which, as I mentioned earlier, was impacted by the outsized condemnation revenue and the large L.A. billboard contract that we exited. On a reported basis, static and other billboard revenues were up 7.6% during the quarter, and digital billboard revenues were up 6.1%. However, excluding the revenue generated by both of these items, static and billboard revenues and other billboard revenues would have been up nearly 2% and digital billboard revenues would have been up over 10%.

Slide 6 shows our detailed transit revenue, which grew over 22% during the quarter. Our digital transit revenues were up over 26% to about $45 million and static transit revenues were up almost 20%. The strength in our transit business was led by our commercial team this quarter, which grew their revenues at a clip of 35%. We remain immensely proud of the performance turnaround in this important line of business, continuing to be driven through smarter product marketing and innovative focused sales approaches.

While technically occurring in the second quarter, I'd like to highlight a recent activation with British Airways and the new MTA that you can see on the cover of our slide presentation. As part of this innovative campaign, we wrapped the shuttle to resemble an airliner and be able their flight attendants to Grand Central and Times Square that hand our English biscuits to hungry commuters.

Slide 7 shows our combined digital revenue performance, which grew over 11% in the quarter and represented about 1/3 of our total revenues. Even more impressive, excluding the aforementioned L.A. contract, digital revenues would have grown by nearly 15%. Programmatic and digital direct automated sales increased nearly 40% during the period, now representing 20% of total digital revenue, up from 16% a year ago.

On the topic of programmatic growth, I'd like to also highlight the recent addition of a very senior digital sales leader from the -- with deep expertise across programmatic advertising, data analytics, measurement and omnichannel media activation. This strategic hire further advances our evolution into a modern media company built around digital expertise, audience intelligence and measurable outcomes.

Jeff Hackett's leadership will help us maximize the value of our unified ad tech stack, our data management platform and trading partnerships while strengthening our position with programmatic buyers who are increasingly extending audience-driven strategies into premium IRL media environments. In turn, we believe we are better positioned to capture this growing demand and demonstrate how IRL media enhances platform-based omnichannel campaigns through greater targeting precision, breakthrough creative and measurable performance in the real world.

Moving on, on the breakdown of commercial and enterprise revenues can be seen on Slide 8. Commercial revenues were up 19% during the quarter or 13%, excluding the $13.5 million condemnation revenues that we realized during quarter 1. Enterprise was down about 2% during the first quarter, predominantly related to the exit of the large L.A. contract.

Slide 9 shows our billboard yield growth, which was up 11% year-on-year to over $2,900 per month, driven by higher rates as well as billboard condemnations. Excluding combination revenue from both periods, billboard yield would have been up about 6.5%, given our strong revenue performance and continued practice to prudently optimize our billboard portfolio.

Summing up, we are pleased with our quarter 1 performance, and I'm happy to report we're seeing these strong top line trends continue into the spring and summer, which I will discuss in greater detail later.

With that, let me now hand it over to Matt, who's going to review the rest of our financials.

Thanks, Nick, and good afternoon, everyone. Please turn to Slide 10 for a more detailed look at our billboard expenses. In total, billboard expenses were up about $5 million or approximately 2% year-over-year. Zooming in on lease costs, these expenses were up about $2 million or about 2% year-over-year. This increase was driven by higher variable lease costs and contractual escalators on fixed leases, offset partially by $4 million of savings related to the large billboard contract in L.A. that we exited.

Excluding the impact of the L.A. portfolio exit, billboard property lease expense would have been up about 5%. Posting maintenance and other expenses were up over $1 million or about 4% due to higher maintenance and utilities, higher site-related costs and higher compensation-related expenses.

SG&A expenses grew just over $1 million or about 2% due primarily to higher professional fees, including software and technology expenses and a higher allowance for bad debt, partially offset by lower credit card usage by customers and lower compensation-related expenses. This $5 million increase in total billboard expenses, combined with the growth in billboard revenues Nick described earlier, led to billboard adjusted OIBDA increasing by about $17 million or 18%. Excluding the impact of the billboard condemnations in the quarter, billboard OIBDA would be up around 4%.

Now turning to transit on Slide 11. In total, transit expenses were up $4.5 million or just under 5% year-over-year. Transit franchise expense was up 3% due primarily to the annual inflation adjustment to the MAG for the MTA contract. Posting, maintenance and other expenses were up just over $1 million or about 8% due primarily to higher display production costs and higher posting and rotation costs.

SG&A expenses were up $1.5 million or about 9% due primarily to higher compensation-related expenses, higher professional fees, including software and technology expenses, partially offset by lower credit card usage by customers. The 5% increase in total transit expenses, combined with the 22% transit revenue growth described earlier, led to transit adjusted OIBDA improving by about $13 million during the quarter to an adjusted OIBDA loss of a little over $1 million.

While on the topic of transit, I would like to quickly discuss some important developments regarding the New York MTA. Given our strong Q1 results and an improved outlook for the remainder of the year, we now believe that our 2026 New York MTA revenues will surpass the defined baseline revenue level, which we often describe as the MAG level.

As a reminder, based on our prior expectations at the beginning of the year, we continue to record the MAG on a straight-line basis rather than account for the contract on a revenue share basis. Due to the seasonally lower revenues in Q1, this resulted in approximately $7 million of additional expense than if we had recorded the contract on a revenue share basis.

We expect to account for this benefit from the straight-line MAG in Q2 and Q3 when the revenue share expense would have exceeded the MAG. By the end of Q3, we will be caught up on a year-to-date basis. And then for the fourth quarter, we will book the full calculated revenue share amount, which will show a substantial increase in transit franchise expense from the prior period when we're just recording the MAG.

A benefit of being above the MAG level also means that we will return to recouping the digital investments we have made in the MTA since the inception of this contract in 2018. Let me remind you how this works as it has been a number of years since we last recouped. Any incremental transit franchise expenses due to the MTA above the MAG will not be paid in cash, but rather utilized to reduce our significant recoupable investment balance with the MTA, meaning each incremental dollar of revenue will remain extremely accretive on a cash basis.

Recoupment will positively impact our net working capital and cash balances but will not impact adjusted OIBDA, AFFO or net income. Given the recoupment will not flow through net income, the monies recouped will not be subject to the REIT distribution requirements.

Slide 12 shows the company's adjusted OIBDA in the first quarter. Corporate expense declined by about $6 million due primarily to lower compensation-related expenses, including last year's severance and lower professional fees. Combined with the billboard and transit OIBDA, which includes the benefit of the condemnation discussed earlier, adjusted OIBDA totaled about $100 million, up 56% compared to last year.

Before moving on, I'd like to quickly discuss some important growth investments we are making in OUTFRONT during 2026 to support our ambitious revenue targets for this year and beyond. First, we are investing in our technology. We have modernized many of our systems in 2025 and early 2026, including a new CRM, training modules and our partnership with AdQuick. While each of these improvements are more costly than the systems they are replacing, we expect that each will assist us in accelerating our top line revenue growth.

Second, we are investing to continue improving our workflow and processes. So far, we have started to improve how we approach inter-region revenue opportunities and our RFP response process. We have brought back the same consultant who assisted us last year, but importantly, much of their potential fee is success-based and as such, will only be paid should we realize benefits from their efforts.

Turning now to capital expenditures on Slide 13. Q1 CapEx spend was about $24 million, including about $7 million of maintenance spend. We converted 14 new billboards to digital in Q1 and expect to add a total of about 125 in the full year. For 2026, we still expect to spend approximately $90 million of CapEx with $30 million to $35 million of this total expected for maintenance.

Looking at AFFO on Slide 14, you can see the bridge to our Q1 AFFO of $61 million. The improvement is principally driven by higher adjusted OIBDA. Based on the first quarter results, our expected revenue growth for the remainder of the year and our investment in our business, we now expect that our reported 2026 consolidated AFFO will grow in the mid-teens relative to our reported 2025 AFFO of $338 million. Included in this guidance is the previously noted maintenance CapEx, interest expense of approximately $145 million and a small amount of cash taxes.

Please turn to Slide 15 for an update on our balance sheet. Committed liquidity is over $700 million, including $70 million of cash, around $500 million available by our revolver and $150 million available by our accounts receivable securitization facility. As of March 31, our total net leverage dropped to 4.3x, well within our 4 to 5x target range.

Turning to our dividend. We announced today that our Board of Directors maintained the $0.30 cash dividend payable on June 30 to shareholders of record at the close of business on June 5. We spent just over $8 million on acquisitions during the quarter. And looking at our current acquisition pipeline, we continue to expect our 2026 full year deal activity to be similar to levels reached in recent years.

With that, let me turn the call back to Nick.

Let me jump in. Nick is having some audio problems. So [ Matt ], I'll keep going. As Nick mentioned earlier, the top line strength we saw in the first quarter has continued into the spring and summer. And from where we all sit today, we expect second quarter revenue growth to accelerate to over 10% year-on-year, driven by about 30% growth in transit and mid-single-digit growth in billboard. These figures include a benefit related to the U.S. role as a World Cup host in June and July as well as a headwind created by our strategic decision to exit a large marginally profitable billboard contract in Los Angeles, which generated about $4.4 million of billboard revenue in Q2 2025.

OUTFRONT has gone through significant change over the past year based on executing the strategic imperatives I shared with you at that time. At the same time, we have reimagined out-of-home and our company's leading role within it. An important part of this process has been refining how we communicate our value proposition to the world. And just last week, we launched our new brand platform as a declaration.

OUTFRONT is a leader in IRL media. In a world of endless scrolling, muted ads and algorithmic noise, we exist in the one place no one can opt out of, the real world. Our media doesn't just reach people, it moves them. IRL media is where culture lives. It's where brands stop interrupting and start belonging in the cities and communities that shape daily life.

For far too long, our industry has defaulted talking about inventory and impressions. That's not our story. Our story is influence and impact the breakthrough experiences we create, the cultural moments we amplify and the real outcomes we drive for partners looking to build trusted brands in the real world. Our clients know this and are increasingly choosing IRL media to drive the results they seek.

To close, we are redefining what out-of-home means in the rapidly changing Agentic advertising world. The physical world is the last uncluttered brand-safe, fully viewable canvas in media, offering brands the ability to show up and interact with people where their attention is the highest. Our premium inventory is immersive and experiential with national scale. And in our view, the sky is the limit.

And with that, operator, let's now open the lines for questions, and we'll see if we can get Nick back on the line.

[Operator Instructions] Your first question comes from the line of Daniel Osley with Wells Fargo.

Maybe a bigger picture question. I wanted to get your industry outlook on measurement modernization. We saw the OAAA recently announced a new pilot program. So what's your view on the timing of all this and the potential benefits the industry could see on the other side? And then as a follow-up, how does the measurement partnerships that OUTFRONT has recently announced tie in here?

Sorry, Nick is still having some audio problems. Obviously, measurement is a key factor for the industry overall. It's been something the industry has been shying behind on. Nick and the other leaders of the industry are working with OAAA and Geopath, bringing consultants and really trying to move the measurement dialogue and capabilities forward.

Some of the partnerships we've signed up like AWS and AdQuick in particular, we think will help us. AdQuick has some great measurement capabilities, demonstrate really a viable currency and hopefully, over time, maybe a proof of concept for greater industry adoption. So let's see how it works for us first.

Your next question comes from the line of Cameron McVeigh with Morgan Stanley.

First, I was curious, your view on one of your peers potentially being taken private and maybe implications on asset sales in your acquisition pipeline as you think through the remainder of the year? And is this a potential opportunity for you going forward?

And then secondly, you had mentioned this in the prepared remarks, but I was curious if you could help size the potential impact of the World Cup over the next couple of quarters in the midterm elections in the back half of the year just as we think through the cadence of growth?

Sure. So first, peers, obviously, we love all our peers they're fine people. With one of the large peers or competitors going private, interesting, I think a capital infusion will likely make them healthier, which I think is great for the industry. They can be more nimble and invest in the business and invest in the industry overall.

We have not heard that there is any asset sales coming out of that. But to the extent there are asset sales from them or really from anyone else material kind of in our footprint or something that would make strategic sense, we think our balance sheet is in a much better place than it's been in the last few years. Our capabilities are strong, and we would expect to participate in something that's interesting.

As far as size impact for the World Cup, we're not prepared to share numbers there. As far as names, we have about 70 customers overall. And I think the numbers that we've heard in media seem to be in the right neighborhood, but we're still calculating. We still think we still have business to book in the second quarter and certainly in the third quarter, and we will give you a much greater in-depth explanation in August.

Matt, is this working now? Can you hear me?

Yes, you're back on, Nick.

Yes. No, I just wanted to add on the World Cup thing. I mean, I think as Matt said, we've got over 40% of the FIFA sponsors. We've got road there ahead, as Matt said. What's exciting is that a lot of those significant brands and the big sponsors, they actively use our medium, but they don't use it as much as we'd like. So we see FIFA and the World Cup as a way of really attracting some of the biggest brands to really demonstrate how they're building their brands in real life. So it's an exciting time for us.

Your next question comes from the line of Alexey Philippov with JPMorgan.

Transit grew 22% in the quarter, well above your high teens guide that you gave in February. Can you help us understand what drove that upside relative to your preliminary expectations in February? And you mentioned 26% for New York MTA specifically. It looks like other transit contracts are also doing rather well. Is there an unexpected turnaround there too?

And if I may, a follow-up related to transit. Thinking about FIFA benefit, is it primarily around billboards? Or do you expect this to be a meaningful thing for New York MTA. I wonder how your clients think about that. Transit officials in New York already seem not to work from home because of the traffic inflow. So just for you to basically how to think about benefits for New York MTA.

So Alexey, thanks for the question. I'll start, and Nick, you can jump in. So transit is going well. It's because of the MTA and frankly, for the last few years when transit wasn't, it's the MTA. MTA is more than half of our transit revenue. It's about 7 or 8x the next largest transit franchise. So we have a great focus there. So the 26% growth in the MTA is obviously what's leading to transit.

Other transit franchises like BART in San Francisco doing pretty well is also. San Francisco is one of our best-performing markets in the first quarter. I think one of our peers probably also had a very strong San Francisco growth led by certainly tech and the repopulation of the city.

As far as FIFA, we're taking business in both billboard and transit. Frankly, the influx in all the big cities of tourists, not just near the stadiums, but the influx of those tourists, attractive demographic tourists, and the ability for them to move around cities and move underground, above ground, are hitting our inventory, again, above and below ground, and we're very happy to have it.

Nick, do you want to add something on FIFA or transit?

No, I think on the -- Alexey, thank you for your question. I think as I mentioned earlier, on the New York MTA, this has been significantly strengthened by a dedicated focus on the product marketing and the unique attributes of our -- the transit within the context of the cities that they serve as well as the innovation and the opportunity for creating the brand experiences.

So as opposed, we've got -- and we are demonstrating that, as I said, you see on the front cover, the VA wrap. So this is becoming more exciting because they're now starting to understand transit is a really exciting platform for IRL media activation. So the experiences can be created, and we're celebrating those and pricing them accordingly. So that's made a big contribution.

Your next question comes from the line of Patrick Sholl with Barrington Research.

Congratulations on the milestone on the MTA. Could you remind us how the revenue share on the MTA works when revenue generation is above the MAG?

Sure. No, it's been a while, so it's good to refresh everybody. So the MTA is a 70% revenue share contract. The gap between 70% and 55% was intended not to be a cash payment, but to allow OUTFRONT to recoup the investment that we made in the screens upfront. We would qualify for that recoupment if we got above that baseline revenue line, which is commonly referred to as the MAG line.

So while we will be expensing 70% revenue share cost to the MTA, we won't be sending the MTA a check for the gap between the MAG and the revenue share. We'll be using that to pay down some of our debt and offset some working capital. Obviously, there's a big number there. It's not going to pay it all down this year, but it's good to get back to that recoupment plan and start to get paid back for some of the screens we invested in.

Okay. You had mentioned San Francisco doing a little bit better than one of your peers. I was just curious like post events, if that has been sustained. And to the extent that if there's a benefit from the World Cup on some of the -- I think you said depopulated cities that could benefit those markets as well.

Yes, Patrick, I'll go at that. I think we're definitely seeing that early start success as well as having a very strong team. And also, obviously, the strength in San Francisco, the AI developments. When I look at the kind of the size of the -- not just the big OpenAI and the Anthropic, but also the pure-play native AI companies. We've got Genspark, CodeRabbit, Nebius, Arize AI, Dot.ai, and they really are shifting towards a physical reality. These are pure-play technology companies that have a huge interest in the trust and the physical nature of our medium. And those campaigns are extending now outside of San Francisco, but that is providing a very solid revenue stream for us in that important market.

There are no further questions at this time. I will now turn the call over to Nick Bryan. Nick?

Well, thank you. I don't think I could have actually articulated my closing -- my summary for the earnings better than Matt did. So thank you for jumping in on that. I apologize again for the technology mishap here.

I think the one thing that I want to close with is the fact that we've got various conferences and events across the spring and the summer. And I'm going to continue to be with the team articulating just how I see and feel this remarkable shift that we're experiencing now that in the Agentic advertising world, the power of this medium that I've always believed has been undervalued through when we think about its tremendous scale, it's tremendous value and really proven trust and therefore, the influence it has for consumers and people.

As I said at the close that Matt shared sky is the limit. And I'm just excited that the organization has really stepped up to follow all those initiatives. We set out for transformation velocity in March of 2025. And here we are not far a year after that and seeing the fruits start to appear. And it's really a testament to the remarkable focus and hard work of the entire organization.

So I look forward to sharing more of that on the road and look forward to presenting our quarter 2 results to you in August. Thank you so much for your time.

This concludes today's call. Thank you for attending. You may now disconnect.

[ Let's ] get started. Before we do, I'll read this. For important disclosures, please see the Morgan Stanley research disclosure website. If you have any questions, please reach out to your Morgan Stanley sales representative. Okay. My name is Cameron McVeigh. I cover advertising stocks here at Morgan Stanley. Pleased to welcome Nick Brien, OUTFRONT's CEO, to the conference.

Thank you. Thank you, Cameron. Nice to be here. I appreciate it.

Great to have you here.

Yes.

Now Nick, to get started, results have been pretty solid past 2 quarters. And you described having some good visibility into 2026. Your recent guidance is for double-digit AFFO growth and mid-single to high single-digit first quarter revenue growth. Could you walk us through maybe the key building blocks of the guide and what gives you confidence in the trajectory?

Well, we gave -- well, thank you for that question. We gave very detailed background to our results on the earnings call. Matt went through that in detail. And I think ultimately, if we talk about our guidance on AFFO, a lot of that stems from what we're going to be able to do on our OIBDA and managing our cost base, but ultimately, the revenue. And when we look -- when I look at the run rate and I look at the forecast, and we have very rigorous pipeline meetings on a very frequent basis. And I can look at the individual categories. I'm just -- I'm feeling very confident with what we gave as our guidance.

That's great. And maybe just to talk broadly about the out-of-home industry. Yes. We've seen out-of-home take some share from the more traditional mediums and digital start to grow and take share as well. In your mind, what do you think is the unique value prop of out-of-home? And what do you think will help see it continued strength over the next few years?

Well, it needs to demonstrate its continued strength because, obviously, over the last 10 years, it's suffered as any of the analog media because it hasn't demonstrated its relevance and dynamism in terms of the brand building compared to the big tech giants who have sucked so much of the ad dollars out. Now I think we're facing a very exciting time in its own way with AI. Not only is the AI becoming an industry vertical that is a significant spending opportunity for us. You can see it on the way from the airport here, every single one of our boards is an AI board. There's nothing else. And it's not only just the new incumbents and the new players, whether it be in health care or finance or whichever, whether B2B or B2C, we've got the legacy companies looking to communicate that they have AI capabilities fully integrated. So we see that really -- and we're seeing the strength of that in New York on the transit.

But there's another dimension here that people aren't talking about, which is how AI is going to fundamentally change the nature of marketing and advertising. The agentic advertising world promises a bright future for the out-of-home industry because we are real. We are trusted. We are a public media. We can't be divided by algorithms. When you and I are driving down the highway, we will see the same board. And what you're going to see with AI and modern-day marketing, it's going to change your ability to prioritize your preferences and delegate what you're not interested in. So if you're interested in cooking a scheme, wine collecting, you're going to listen to the brands and the businesses that want to inform, educate and inspire you. Everything else, you will delegate to your agent. And that will be -- we already see now on open web, 60% of all traffic is bot-driven. Let's watch that go. And then let's also combine AI slot that's turning the open web into a very strange space. And that will go to the walled gardens.

So it's our time, and I'm trying to really lead from the front here as the industry leader that this is our time to not be just talking about classic old-fashioned legacy out-of-home, but to talk about building trusted brands in real life. We're commissioning more research about the trust of the medium on the basis that if you trust the medium, you're going to trust the message. So out-of-home is real, whether it's on the bus, the transit, that billboard, even if it's a digital billboard, it's in real life, and it's almost -- everyone already know is very, very high scale, it's high reach. But being a public media is going to be stronger. And we are already seeing evidence of a number of the biggest advertisers who care about brand. I'm not talking about the performance marketers. I'm not talking about the lead gen, credit cards, auto insurance. I'm talking about brand marketers who care about brand. And they have spent so much with the tech giants, and they've been so focused on bottom of the funnel.

They're looking to now focus more on building long-standing equity and brand building. And we need to be back there with a more modern dynamic, relevant and contemporary message in the context of their omnichannel activity, why the out-of-home medium is powerful, vital and needs to be part of their sustainable brand building. Our industry association needs to have a louder voice. It needs to be more educated. And that is another reason why OUTFRONT, we're hiring a lot of ex agency and a lot of our leaders are coming, the new leaders are joining from other media. They're not coming from the out-of-home industry. We don't need mono thinkers. We need macro thinkers. We need those people who can understand the power and potency of our medium in the context of all the other channels that a marketer is going to use. So we see the AI developments, and we're in the early stage. We're only in the first couple of innings. But we -- I personally see this as a huge opportunity for our medium.

That's great. And I guess just to follow up on that point, the AI-driven agentic sort of marketing budgets that you would expect to see out-of-home medium capture. Is that -- you mentioned research. Is that the tip of the spear to help aggregate the new view and the increasing marketing budgets? What would you say is the main point?

It's a good question. It's both. It is both research and measurement, which has always been an underbelly of weakness for our medium. It's also marketing. We need to do our own marketing, which is our own storytelling in the context of the agentic advertising world. Are we a fact or a benefit? What role do we play? Let's start with a narrative that is strategic and on the cutting edge of insight and knowledge and understanding of our total media planning and buying and all channels. And then we need the measurement to reinforce it. You're exactly right. Our measurement, if you talk to so many of the biggest advertisers, I'm talking to you about the enterprise marketers who have largely abandoned our media. I'm talking automotive. I'm talking CPG, I'm talking finance, health care, wellness. When I look at the size of their advertising spend in the U.S., we take but a sliver. And the reason is we have not been loud and active and deliberate about our communication to them on an industry vertical basis.

And then our industry measurement has been too weak. So a lot of the big brands you talk to, they say, too complex to buy, too hard to measure. I just can't be bothered with it, right? And actually, one of the biggest challenges we face, the complexity on planning and buying is as much on the local side that we now call the commercial side of the business, the local SMB, SMB and mid-market, but it's the agencies as well. People don't understand. And I can say this with the experience of being on the agency side for over 35 years. I run the biggest agencies. And we have always got a head count deficit. We're always trying to find a way to balance the economics of our own business with doing the right thing for the brands and the marketers, which is about building brands and fueling growth. I mean any agency and any media company, if you're in the advertising business, your obligation is to help build brands and fuel growth.

And if that's odds and you have a medium that shows up, and I've got to call Lamar there and I've called Clear Channel over there, and I've got some [indiscernible] Mississippi. I mean, you got -- if we don't make it, that's why we made our strategic acquisition, a minority, but a significant acquisition in AdQuick. They are a leading independent platform capability, all media, all out of home, not just OUTFRONT. And we, especially for the SMB side of our business, we want self-serve platform. I mean if I think about our numbers and you think we're 55% commercial. Of the commercial revenue, the bulk of it is coming from SMB. Why wouldn't that be self-serve? Why any AE having any conversation with one gym owner in Boston about the Board at the end of the road? I mean, I doesn't have the Facebook or Google. So we are looking for opportunities to automate, simplify and create this kind of certainly that close that gap between the action you take and the results you get.

So measurement, I'm pleased to ask about that because the OAAA as the industry association has been taking, and they started it before I arrived, a year ago on the scene, great steps to really recognize, embrace and fix fundamentally once and for all, an industry measurement issue. But let me be clear, that industry measurement issue is more about audience measurement. It doesn't deal with the issues of attribution, incrementality, media mix modeling. That tends to be more custom. If you're Mercedes-Benz or you're [ GLÄSER ] or you're new GLP, you're Weight Watchers and you've come out of bankruptcy and you want to now demonstrate your businesses and just communities, but it's about the GLPs and about medical advice, you need the evidence, not of the brand association. People have a very high brand awareness of Weight Watchers. They need to know this business is in a new business. What are the measurements to do with that. So measurement is a big part of our business. It's a huge opportunity for us, but let's not the marketing behind.

That's great. And I guess just you brought up trying to capture the -- some of this programmatic SMB, almost algorithmic ad spend and getting it more automated. Is the biggest roadblock currently just a lack of a platform for the local SMBs to -- for you to capture that spend? And is that what AdQuick is providing?

Yes. at the SMB level, more in the SMB market. But to answer your question, we, as a medium, have failed to keep pace with the way most media dollars are spent and traded in the U.S. today. In fact, globally. In the U.S. today, if let's say, just these rough numbers, right, we're talking about $400 billion media spend. In the U.S., U.S. is the biggest market. It's 1/3 of global ad spend. We're the biggest individual market in the world. 70% of that money is spent on digital. Of that 70%, over 80% is traded programmatically. And in our industry, we're less than 20% with direct. So when we're trading programmatically, we're -- and when we're accessing and selling through not just industry SSPs, not just selling through Vistar and Place Exchange, but probably selling through Magnite, PubMatic, Index Exchange. In fact, when we're better connected directly into the big DSPs like The Trade Desk, like Google DV360, like Amazon Ads, when our digital out-of-home button, our banner is up there with all the other CTV streaming retail media, we're just another -- but we're not just more -- that's where our marketing is so important.

We're just not more digital inventory. We're not just more digital impressions. Our digital impressions are real. They are real. They are almost, let's not say, digital out-of-home, they're digital IRL. They're digital in real-life media opportunities. So we still -- even though we're going to be on the platforms and we're going to be better connected, and we've just made a big -- I'm happy to share it today. We have hired Jeff Hackett, who's one of the most senior leaders at The Trade Desk. And he is coming in to run all digital sales and strategy everywhere, SMB, mid-market, enterprise and the biggest strategic accounts. And clearly, there's an economic advantage when our inventory and our data sets are fully integrated in the biggest of the platforms because then you're unlocking the spend because they're the ones buying it.

And these programmatic trading desks, they're not just at the holdcos, they're inside the big clients as well. A lot of the biggest advertisers that we all know the brands, they've taken that in-house and they have their own deals direct with The Trade Desk or directly with Amazon. And that's another reason why we also announced on the earnings call, our strategic partnership with AWS because Amazon Web Services is the cloud system of choice, and they are doing everything they can about plumbing and wiring for the biggest holdcos to ensure the usage and capacity is as high as it can be. So we're working with them. They gave us an infrastructure agency. We jointly are investing in MadConnect, and they're helping us to make sure that our inventory is perfectly connected with the right data set into the holdco trading desks. And we've already signed up one of the biggest holdcos. We've got another one on the books because they're interested.

They're agents, smart agencies and their clients are alive to the fact that the traditional pure-play digital media environment is changing so fast because of AI. Where do they go? What do they do? That's why we need to show up loud and proud with a very clear point of view about the value and the measurement impact, to your point, of why they should be integrating digital out-of-home into what they do. Because for us, it's strategically important. It's 4% of our inventory is digital. It's over 40% of our revenue. I mean it's profitable revenue. The economics. So if I'm putting the pressure on our real estate team, we have a great supply because our business is straightforward. It's supply and demand. I mean we don't even have the complex element of being of a media company in the middle to do with the creative and the content and all the challenges that come with that. Our supply team has to really marry up with what they're doing to align with our demand. And the demand is digital.

We just haven't been satisfying that as much as we can as an industry. I'm not talking about OUTFRONT. I'm talking as an industry, we haven't really lent into that for. You ask Sean that because he was the one that bought that stake in Vistar, what 7 years ago? 8 years ago? Right. So what has that done to change the trajectory? I know his numbers. We all know his numbers. We don't make the rules, the market makes the rules. Digital spending, I was at the IAB, their big leadership event out in Palm Springs at the end of January, to show up at the Internet Advertising Bureau, no out-of-home company has ever been there. No out of -- maybe I was shocked. I talked to a number of the past CEOs of the IAB, and we're here because they are predicting 100% of all media will be digital within the next 5 years and 90% will be traded programmatically. So we're either in that current or not. And by the way, they're having some amazing keynotes, and they're talking about the next phase of where we go with the agentic advertising and the agentic marketing environment and how does that look for us.

So we have -- forget about the operational challenges our industry is facing, we have some bigger strategic opportunities or dangers coming towards us at high speed. And we -- I and the leadership team at OUTFRONT, we see them. We see the AI development. I mean, San Francisco is almost full. I mean when we look at now what's going on in New York Transit and New York, we've got AI campaigns. Tomorrow, Stephan and I, we have a lunch and a dinner with 3 different AI CEOs, one major legacy SaaS company that's integrating AI into what it's doing as well as 2 incredible challengers who have got significant money to spend. And these are virtual businesses that want to be real. They're quite -- they're really getting quite excited about their scale, their phone when they're testing the ability to build their brand in real life, we're going to lean into that Cameron.

That's great. It's quite the opportunity coming up.

We believe.

Yes. I wanted to just follow up on the digital point. It's about 40% of the book. With these digital tailwinds coming online and more digital conversions every year, where is -- what's the long-term target for you on the digital percentage?

Okay. Well, long term is the sort of subjective. If I say our target, and I've been very clear with the leadership team, is 50-50. We want to book a 50-50. We want to book 50% enterprise, 50% commercial. We want to book that is 50% static and 50% digital. Then I'm really getting to a happy place. And everything I'm putting in place with separating the sales or and developing the sophistication and the sophistication of dealing in the commercial market is a different kind of value proposition than dealing with the enterprise side of the clients.

You want to engage with General Motors, with Coca-Cola, with Nestle, L'Oreal, these are different with the big -- the biggest industry verticals that we have identified, you're going to have the people who understand that world. When we do that right and that starts turning, so I think in my mind -- and again, I'm going to be simplistic about it, that there's a 50-50 play here. And then clearly, we should see some significant economic benefit of that because when you're buying, yes, there's costs and everyone is going to say there's greater cost of the programmatic take rates and the DSPs and the SSP. Take rates are coming down. But it's -- there's no one selling that. We just need to have our inventory available to be bought.

Are there certain verticals -- industry verticals in which there's more of an opportunity to capture demand using either digital or programmatic buying and selling that you would...

Well, I think they are -- that's -- in a way, that's the beauty of programmatic because we try -- we did that analysis when we developed our 6 industry verticals that we were going to commit to this year. which isn't a particularly innovative approach. I mean all the tech companies do it. They have their HOIs. They have the heads of industry for retail, for CPG, for automotive. We have our sixth. We're now going to have a subset. We have created our seventh now with AI. We're going to have an industry vertical and a HOI who's going to lead our AI practice. And when we look at programmatic, it is such a wide range of spenders. It is remarkable. There's not one particular category. We look in that because I can look at that on a daily basis, and I do. And I'd like to see -- not every day, every 2 days, which probably bothers my head of programmatic too much because I caught about why if I've got a spend, I've got a small amount of spend that's coming on McDonald's, why can't that be 5x as much. He's not able to really control it in the same way because it's whatever is coming in.

And a lot of that is based on did you have the availability as a brand or an agency to buy digital out-of-home. -- and what's the opportunity around that. So I think that I see as an opportunity because a lot of the biggest brands in the advertising is not so much how they're spending, it's where they're spending. So are they spending static or digital isn't the conversation. It's an omnichannel world and that you're using both. It's where you're spending. And no, you don't have to -- we don't have to be in a situation to listen to Unilever and the new CEO of Unilever come in, and he came in -- Fernando Fernández, he was the CFO. He ran Latin America. He was Unilever's CFO. He has come in. And now as a new CEO, said, we're going to get back to brand building. We're going to shift 50% of our ad spend. We're going to get back to -- and as we're going to move from the bottom of the performance funnel, we're going to shift 50% to the creators, to the creative economy. They're the ones with the influence. They're the ones with the scale. They're the ones with the reach.

Well, we have massive reach, we have influence because the core of influence is trust. We have real trust. He didn't mention he was going to spend anything on out-of-home. He didn't say CTV, he didn't say retail media. He didn't say social, he didn't say search. He talked on his earnings call and has consistently talked about the creator economy and the influence of the creators. Well, we have now 3 partnerships with creative agencies because they and their creators love the out-of-home medium. So we're making the proposition of say, URL and IRL. Come on, bundle it together. Let's work together. We've got so much opportunity that when the creators are involved, whether it be on the launch of a movie or a product or the products and the brands that they're launching themselves that they can be more proactive and we say, don't just try and build your brand online in the virtual world. build your brand also in the real world, and it's resonating. But to be clear with you, they're not really having a conversation about is it a static board or a digital board. They just want the right board in the right place.

Nice addition to an omnichannel approach for a lot of these marketers.

Yes, absolutely.

Nick, I wanted to pivot to transit and talk about that a bit. We saw a seeming inflection recently. And I want to get your take on what's changed in the past 6 months or so and your outlook as we progress into '26.

Well, the single thing that changed with our transit was our ambition around it and our belief that the transit medium is not just a moving billboard. It is part of the fabric and culture of some of the most exciting dynamic cities in the world. And when I arrived and I've seen it having been on the Board for a long period of time, and I know that everyone is going to have their point of view about the MTA contract, which was struck pre-COVID, but the MTA, forget about the contract, the medium is amazing. The medium is what moves between 5.5 million and 6 million people around New York every single day. So I realized very swiftly that the management team who are responsible didn't have the belief, didn't have the hunger and didn't have the skills.

So they left that day. And the new team that I found inside the organization run by Victoria Mottesheard and [ Ginger Leabre ], those 2 women leaders are amazing. They created the transit velocity team, [ Ginger ] comes from the marketing side -- [ Ginger ] is on the sales side. Victoria is on the marketing side, and they together have created a powerhouse team. They meet with me, they meet on a biweekly basis, and they are responsible for the product marketing, the negotiation. We've changed the sales compensation structure. Transit is now no longer an opt-in, it's an opt out. And if you have to opt out on a significant brand campaign, they usually direct that to me. So we are seeing significant campaign. We've also -- on the supply side, we've made sure that our inventory wherever it is in San Francisco, in Boston, in New York City that we are maintaining the best visibility of our screens.

And genuinely, we put the commitment behind it. So suddenly, in quarter, we made all these changes as of quarter 2 last year. We had a significant reorganization. As you know, that was at the end of June last year. July 1, the new world started in the sales org. And transit suddenly had the elevation. As said on digital. Digital is taking a little bit longer because digital is a much more -- in a way, a much more complex beast with the way you can sell DDA programmatic. But the transit is a significant opportunity, and we weren't proactively, passionately, enthusiastically selling it. Now we are. So we were pleased to report on our results. We're even more pleased to report on our next results. I'm not giving guidance on my stuff. I'm looking at you. Okay. There's no guidance involved other than it's now a well-run part of our business, and it wasn't before.

That's great. And on that point, I wanted to ask just how advertiser conversations are trending around transit. And what are they most focused on? Is ridership levels? Is that still a data point for them?

They've gone up. I mean, certainly in New York City, I mean, we're back -- we're at 80% of pre-COVID. When I arrived, I think we were 72%, 73%. Certainly, the congestion system has been put in place has helped a lot. But I just think it's safer, it's cleaner, less rhetoric about it. And we are -- but that hasn't been what's resulting in the uplift that we're looking at on a relative basis. That doesn't happen between 75% and 80% on a ridership situation. That happens to the fact you are really actively selling the medium. And the advertisers -- and the other thing is they're excited because when we start talking -- we're talking less about classic out-of-home, because you talk to a lot of the biggest brands, you say out of home, they're like, okay, granddaddy is out of home. Do I need it, top of the funnel awareness, I've got enough exposure. No, you have the opportunity to create experiences, memorable, shareable experiences in real life. The transit media allows us to do more of that than the classic book.

But you see some of the experiences we've created with the new MTA. They're remarkable. I mean when I think about the big Duolingo event we had, we had the ESPN, we wrapped the train. We had Bath & Body Works. They did the scent. We pushed the scent through the system. Some people didn't like it. I liked it. But you had Apple, I wish we had done it. I wish I could claim it. They won the Grand Prix at Cannes last year for their experience for severance in Grand Central Station, if anyone saw that. I mean, for 4 days, they had the cast and the crew there, but it was the amplification. That's what is fortunate about our medium when we're creating these highly creative experiences, and we're doing them in Washington. We're doing them in San Francisco. We're doing them in L.A. We're able to -- the transit media owners are much more open to us doing the most remarkable things in real life. And guess what, those get amplified. And there's no cost for that. We don't pay for the social amplification.

And our clients are realizing that this combination, it's not just the experience on the ground. Everyone knows that when you've been in New York and you try and go 57, you see the Louis Vuitton. I mean what they have created that is effectively a building site, but they didn't because for 7 years, they're over the road while they do that. They just didn't put up scaffolding. They created something remarkable and everyone is clicking that every single day. So transit, we are really seen as our tip of the spear when it comes to powerful in real-life brand experiences. And that excites a lot of our brands because they don't mind in isolation, they still carry on with doing their video. They might be doing their CTV, they might be doing their search and they might be doing their social. But suddenly, it's something special, and it's about culture building.

It's why Apple, who's our biggest advertiser, has loved this medium and has been so selective and choiceful and you all know it as consumers, when you travel on any city in the world, not just in the U.S., they will choose and be very deliberate and they will pay to lock up the very best sites because they want to be present, and they want to be visible and they're using the canvases in a very different way. That's a scale billboards, and we're able to offer that as well. That's why I really -- I'm really proud and I like our portfolio because we are a premium brand in the key DMAs in the U.S. And in those environments, we haven't shied away from transit. Now what we negotiated the contract for, I'm not going to go back in time. We can't turn back time. What we can do is say that this contract is with us until 2030, and it's in the family, and we're going to make the most of it as opposed to ignore it.

Great. Nick, I wanted to get your take on the Clear Channel news of the take private. And maybe just what you think of implications for the broader industry and for OUTFRONT specifically.

Well, for the broader industry, I think it's very good. I think anyone who's demonstrating that they see a long-term investment in our media is a very healthy thing. I think it sends a very good message. And I'm looking forward to meeting the new leadership and aligning on some of the biggest industry challenges that we all need to fix and benefit from. For us specifically, No, there's no change. We were very clear at the outset. We asked that on the earnings call. I mean, who knows how this will evolve down the road. But my focus and my agreement with the Board when I came in this time last year was to set the strategic imperatives to fix and really turn the taps on for this great business that we have and not be distracted by M&A. And with the circumstances around Clear Channel, and obviously, every significant bank has been called in. But we're not -- at this stage, no, I can't see anything other than opportunity and positivity for our industry.

Got it. That's great. I want to also ask about World Cup. It's coming to the U.S. this summer. How should we think about timing of spend, maybe any key verticals that are more excited about the events? And maybe if you can, any sort of yield uplift that you would potentially expect from the World Cup?

Well, I was just -- I was only smiling when I'm thinking about the clients and the client categories. I think there's many more client categories who would love to get involved in the World Cup, the FIFA sponsorship regulations and rules are pretty -- they have to be abided by in the host cities. It doesn't mean that we're not working with other brands who might not be FIFA sponsors in other parts. But the other exciting part is we are tracking. We have a FIFA task force. We're very clear. We're tracking because this obviously, it goes to the end of July and then we're done. So we need to capitalize on it. We have our FIFA sponsors. We have our team sponsors. And we've already -- we can see the kind of commitments coming in from the Coca-Cola, Frito-Lay.

We can see -- we can also see the host cities. We have struck agreements with 6 of the host cities that we will help represent and discover alternative or, let's say, episodic inventory opportunities like we did at the Super Bowl. We did it this year. We did it -- it was more significant than new ones. We're able to do it last year, but where we can find, let's say, the inventory that's going to supplement what we have to sell. When it comes to our inventory, we have got a very clear focus and our pricing and packaging team have pulled all inventory out in those key host cities that we believe are the premium for the sponsor brands. That's what we're selling. No one can be buying that. It starts first and foremost with us talking with the FIFA sponsors. So we're getting good traction. We set ambitious targets. We're tracking well.

Great. I want to see if you would give you the opportunity for any closing remarks as we're almost at time.

Well, thank you, and thanks again for the opportunity to speak with you. My closing remarks are that I love this medium. I think it's really pure. I love the fact it's a public media. I love the fact that in a world of the highly personalized algorithms and the world of division that has been spread and occurred, not just in this country and the circumstances around that, that our medium can also do good when it comes to purpose when I think about some of the pro bono and the charitable and the experiences we did like Dear New York, in New York City, where we removed in the MTA, where every single ad was removed for the period of our exhibition. I love brands. I love marketing. I'm a big believer in brand building. I believe that certainly in the West, it's too much of everything, too many goods, too many services. You're either -- as Philip Kotler said, you're either a brand or a commodity. So if you want to be a brand and you believe in the value of having the brand as a as a place of trust, as a premium pricing as evidence of your story, then you need to find the medium that are trusted.

I believe the future because of AI is going to be less about analog media versus digital media. It will be about trusted environments versus mistrusted ones. We are going to be investing significantly to demonstrate the remarkable trust, connectivity and scale of this great medium. In which case, it should not have fallen as it has done in the U.S. in the last decade from 4% of media spend to 2.5% of media spend. I have an ambition to lead the industry to get this back up to 5% of media spend. In China, it's between 6% and 7%. The advertising industry has only existed in China for the last 30 years. Their medium is fragmented. They have a massive market. They have huge regions. Why is Germany 9%? Why is the U.K. increasing? Australia has gone from 4% to 6% -- and yet we, as an industry in this market -- and I know we're fragmented, and I know we have measurement issues, and I know all this. We're out of time, so I'll shut up now. But I believe this medium has failed. It's been undervalued and poorly sold, and it has the greatest potential of any media out there. Thank you for your time.

Perfect. Brien, thank you so much.

All right. Welcome to Citi's 26th Global Property CEO Conference. I'm Jason Bazinet with Citi Research. We're very pleased to have OUTFRONT CEO, Nick Brien here. If media or any other individuals are on the line, please disconnect. Disclosures are available on the webcast and at the AV desk. [Operator Instructions] And I guess, Nick, I'll turn it over to you. Maybe you can just introduce yourself, the team, give us a brief overview of your company.

All right. Hello, everybody. Thank you. Well, first of all, thank you for hosting me. It's always a pleasure to talk about our medium and OUTFRONT specifically is the industry leader and what we see and what we plan to do about it. And certainly, it continues to be after 1 year of being the CEO.

As you know, I've been on the Board for a while, for quite a considerable period of time earlier. So it was a privilege to be asked by my colleagues on the Board and the Chairman to become the full-time CEO in September. And it's been a journey of transformation from a people side of the business to a technology side of the business to a process side of the business.

And I shared a lot of those details on the recent earnings call. And I hope I also conveyed our continued enthusiasm for the business growth and the brand expansion that we see as a significant opportunity ahead.

That's great. Can I share with you one piece of color like in terms of our inbound. We get -- over time, more and more of our inbound calls are REIT investors. I'd say it's about 80% now. And most of them are just looking for pro-cyclical exposure. That's the #1 thing I hear is they sort of manage their REIT portfolio. I'd be curious, other than the cyclical nature of your business, what are some of the other key attributes that you think investors should be aware of as they're thinking about your firm vis-a-vis some of the other REIT investments that they could make?

Well, I think the ones that I'd like to highlight is that then it's a REIT investment, but it's going to be a high-growth REIT investment in the sense that we believe that the biggest trend affecting not just the water marketing and advertising, but business in general is AI and how does that manifest itself and how do we operate in an Agentic advertising environment.

And we see tremendous opportunity for our medium to be real, authentic in real life connected with all communities and part of the culture and the fabric of being a public media that cannot be controlled and influenced by the algorithms. And we are going to see AI start to influence how people prioritize their pursuits, prioritize their choices, the categories they're interested in. And a lot of what they won't be interested in will be delegated or relegated to their agent or their buying agent.

And the advertisers and the manufacturers and the marketers are going to be looking for those medium that are high -- have high trust, high reach, tremendous value and the opportunity not to be managed by the gatekeepers online. So we see the further digitization of our medium in combination with being in real life and with stronger measurement as a tremendous tailwind.

And so I would say that's a major development that we're capitalizing on both from an industry vertical, we've now created our sixth industry vertical around AI and AI spending, and we're seeing tremendous growth, and that's going to be sustainable because, again, we're seeing the AI players that are advertising with us of both B2C and B2B. And they're also increasingly now on wearables. So we're excited about that.

But I think that's one of the biggest -- when you are saying you have investors looking at other REIT investments, what sets us apart, I believe it's the fact that the AI revolution and everything that represents strengthens our hand and doesn't weaken it.

So that's helpful. When you say a sixth -- standing up a sixth vertical on AI, should investors think of ChatGPT and -- that's it as opposed to, I don't know, GM is going to do something in the AI space that would be under.

No. It's both, but more the former. This is Anthropic, it's cloud, it's profit. It's [ ARISE ] AI in the B2B space. It's the players we're going to go and see in Boston next week in the health care space, AI businesses that have now been created as a consequence of the AI technology that's allowing them to either create new industry categories or disrupt the existing ones.

And they are spending both to engage directly with potential customers, whether it be B2B or B2C or for fundraising or for their own general name and brand visibility. We've got every stage of AI spender with us from the brands you wouldn't have heard of that are yet to become brands as well as some of the most powerful ones that you expect to hear and see.

That's great. And so you wouldn't say that there's any risk from AI then based on your answer? Because I can tell you, I mean, I've spoken with some investors and they're a little bit nervous about either AI causing consumer disruption via layoffs, therefore, less ad spend or they're nervous about AI just being able to put the right ad in front of the right person more effectively that may not be as applicable to outdoor and sort of shift dollars away from outdoor into other mediums.

It's interesting. The comment about the changing nature of the workforce and the implication if you talk about AI efficiency in terms of job losses. That's more of a societal and a general business issue that doesn't -- that I think impacts all business.

When I'm talking about the AI, we're talking about the implications for AI to do all of our business processes better, faster, cheaper. And of course, we're looking at that as much as anyone else's.

So all the leverage around AI tools and automation. I'm talking here about them as a spending category and the implications of AI collapsing the bottom of the funnel performance. A lot of those advertisers who are there are now looking to where else they go.

If you're a content creator, I mean, I would be concerned if I were running one of the open web platforms, I'd be concerned if I was running a streaming TV service. I'd be concerned in a number of different media platforms. But we don't have the content that is now questioning the variability about what's real and what's not.

We don't have AI swap. There is no opportunity. More importantly, not only is our medium real and it's in the culture and in the environment, it is universal. As I said, it's a public medium, and it's not restricted.

Now there are nuances around like with FIFA, which is obviously going to be a great tailwind for us. We're going to have -- we're partnering with 6 of our host cities, and we will have episodic advertising environment that won't be on a permanent nature that's going to be surrounding those host cities and what we can do with that.

But still, at the same time, these are universal canvasses for universal audience engagement, and it has high reach and high trust. The other thing we're going to be doing is spending some more of our own money on measurement to prove not just the efficacy of our medium in the context of market mix modeling and attribution incrementality, but also for the very trusted nature of our medium relative to online.

I'm not talking digital because, obviously, we have digital out-of-home. And we want to be able to actively sell and represent our digital inventory either direct or through the programmatic channels. I'm talking here more about the medium itself, whether it be static or digital, it's real.

Can I just build off of one of the things you said when you said you're looking to spend more of your money to prove the efficacy of the ads that are placed on outdoor. Are you talking about sort of a replacement for Geopath? Or are you talking about some other sort of investment?

Two aspects to that. One is at an industry standard level where, yes, a replacement for Geopath is industry measurement. And there's an executive work party that's been working as part -- it started before I arrived as the CEO with the AAA. And now that's down to 2 key partners. One is Ipsos and the other is StreetMetrics, and we're working through -- and again, a big brand name, in my opinion, like a Nielsen, like a Kantar, like an Ipsos is exactly what the big brand sophisticated marketers want to believe in, right?

So we're going through that process. So that's an industry standard measurement. So for frequency, for accuracy, for the ability to integrate. And then there's our own bespoke research that we're going to be wanting to commission about our medium, about our inventory and our medium that you could say is probably more qualitative than quantitative. We also have new measurement capabilities that come with our AdQuick partnership.

We announced on our last earnings call, our strategic investment with AdQuick, one of the leading independent planning and buying platform capabilities. We're taking a significant stake in them, a significant minority stake, and they're going to be developing that as an internal capability for our inventory and our planning and buying needs.

They also have sophisticated measurement. So the way to be thinking about measurement this medium needs is both qual and quant. It needs to be subjective and objective. And it needs to do its job right now that the changing face of marketing in an AI world is significant and profound and what role and opportunity [Audio Gap]

Anyone has a question in the room, feel free to hit the microphone. You're more than welcome to ask a question if there are any.

Is there -- do you see -- I'm not aware of your global ambitions. Do you see a fit in terms of global expansion in the future for you?

It's -- thank you for the question. It's a logical one because you can imagine with the strength in the medium and some things we're talking about, that has a universal opportunity. We are -- we were in Latin America and Canada. We came out of those markets. Canada, Matt, we sold last year that year, 1.5 years ago.

So we're very excited about our footprint. We're a pure-play U.S. We're the third biggest ad market in the world. We've got key representation. We're the premium brand. We're in the key DMAs where we're the people, the business, the culture is shaped. We are very happy with what we have. We want to strengthen the hand we have. The international expansion, not on our radar at this stage.

Anyone else have a question?

Second question. Are malls a big venue in terms of your footprint?

The best malls are, and we're very selective about that because the mall environment is tightly controlled by those mall operators. And usually, like anything, and this -- a lot of it is match, the way we have sort of a center of gravity is a lot of the operational supply side really rolls up to Matt, and I focus a lot on demand on the demand side of the business.

And I think on the supply side, I mean, when I talk to Matt, we've recently -- we haven't announced it yet, but we've just agreed some really exciting inventory in a previous -- in a Southern California mall operator. But in general, it's not a particular area of focus. We look at all the inventory sources that come our way. And as long as they're premium and the price is right, then we're going to engage.

Did you want to add? All right. So I'm going to ask you to take -- this is sort of an odd question, but I was telling Matt and Stephan after your last earnings that I think these are probably the best 2 quarters that you've put up since you've been a stand-alone public company.

And my question is, it's a little hard for me -- I mean, I think the first time we met was last September, and I was struck by your energy and your enthusiasm for this ad medium. And all of a sudden, a few quarters in, all of a sudden, the results sort of take off. And it's hard for me to separate is this the enthusiasm that you're bringing to the organization to sort of sell in a different way, which you talked about last year?

Or is this just sort of more coincidence and that the MTA is sort of finally in sort of the self-healing mode and the bull case that investors had back in '22 or '23 post-COVID is now just manifesting itself, and it would have done it whether you were the new CEO or not.

That's a little bit of an unfair question, but I'd love your take on that. It's just you.

I don't -- no, it's never me because it teams win, not individuals, right? Every team needs a leader. Every team needs a leader, but the team. The team is an amazing team. It's a team that I put together with real thought and care to keep the very best of the legacy leaders and those with heritage and knowledge of our business as well as attracting in remarkably talented non-out-of-home leaders who really understand marketing, measurement, technology and sales. And they're coming together and they're buying into, yes, the vision and the enthusiasm I have. But more than that, it's about focus and it's about belief.

I've set very tough expectations because I refuse to be the only medium that is going to accept low single-digit growth rates. Why? What? And all the tech companies can keep taking double digit every year and streaming TV can walk up and retail media and all these others keep showing up and they keep wanting to take the money from analog media, the dumb analog media.

Okay, time to wake up, right, and start to go on offense. And if anyone doesn't sign up for that, they can find another job. But it's about the focus. The focus, transit just didn't happen, the ridership levels are relatively the same. We changed the entire leadership, found a brilliant leader in Victoria Mottesheard to become basically the internal CEO, changed commission structures.

She's responsible for sales, marketing and product marketing. And that TVT, that transformation, that transit velocity team meet with me and Matt on a biweekly basis. And the goals and the targets are significant. And guess what, they're meeting them. Why? Because they're focused, they're not distracted by other things.

All the salespeople in all of the regions, all those regional leaders, they had all the other functions. They had HR, they had marketing. They had real estate, all of those were stripped away. They are now dedicated focusing on growth, right?

So there's no ambiguity. It's not a complicated business. There's supply and there's demand. We don't even have the bit in the middle, that's the content and all the craziness that goes with a high creative. We have a great creative team. We have great measurement. We have new skill sets and new capabilities, but more importantly, we have alignment.

So we have a much bigger ambition. We've raised our altitude in the industry. Not that wasn't difficult for me to do because I've operated at that level. But more importantly, we have alignment now between our organization, between enterprise and commercial, between the supply side and the sales side, between the tech.

That's all we've done is just get everyone aligned, focus in the same direction, but they all have to sign up for very significant growth and brand expansion, not just growth through exactly what we have, more occupancy, high yield, but through the brand expansion as well.

So I don't know, it's not the Nick Brien effect because it's Nick Brien and the team, are part of the team.

Of course. I'll take that as a yes, it's you. All right. I'm going to shift over here to the question from the web here.

And bear with me, I'm going to read this as -- I'm going to...

Are these coming -- are these live questions?

This is a live question. Unlike my questions I might love it up here. Transit and digital are clearly growth engines. How should we think about the sustainability of the current transit growth and the runway for further digitization over the next 3 to 5 years?

I think that is a very profound question, and I think about it with tremendous enthusiasm and belief that are what we've already shared on double digit, we're not giving any projections for the year, but we gave out in the last -- we gave the first quarter right? And we gave high teens, and we continue to be very enthusiastic that transit, all things -- not just the New York MTA, but all things transit will continue to be a very attractive part of our portfolio.

And with this dedicated focus and dedicated sales and now integrated product marketing, I have no reason why that should slow down. Now when it comes to digital, the digitization is only going to strengthen. We're introducing a new programmatic capability across our rolling stock.

We haven't announced when that's happened. It's a complicated one, but we're looking to add digital and programmatic capabilities in more of our transit. And digital overall, listen, 75% of all ad spend, 72%, 73% of all ad spend is digital. It is -- 80% of that is traded programmatically. So we aren't even 20% programmatically traded.

And our digital is less than 40% of our overall revenue. We have nothing but upside here when we do a better job converting and developing our digital capabilities and then generating the demand by making sure we're selling it to the buyers and directly integrated.

That's another reason why on the enterprise side, we did our partnership with AWS. And that partnership because they are the ones connecting the pipes and the data sets of all the big holding companies. They're the ones working to develop the Agentic Optimium in planning and buying systems. Those are digitally native centralized trading desk.

And if our inventory isn't in it, if we're not trading with the big SSPs, if we're not even trading directly with the big DSPs like Amazon or the Trade Desk or Google, DV360 and our option button there when a particular programmatic buyer wants to reach, I don't know, single moms who drive a mini and love football, they're going to -- we need to be but -- digital out-of-home needs to be there to be clicked and see what it can offer.

If we're not even there, we're not even represented how we're going to access that massive pool of spending power. And by the way, our digital is better than their digital because our digital is digital and it's IOL. It's real. It's not just more millions of digital impressions that are flying around the web, 60% is generated by bots and watch AI, watch what AI does to the open web even more.

Now our digital is real digital because it's there, it's on that billboard, it's on that transit, you can go and touch it. So we believe that we have huge strengths. We just got to show up at the party.

Super helpful. So can I confess -- one of the things that I've always struggled with and maybe you can bring some clarity to this. Most of the outdoor companies when they talk about the returns on their digital conversions would say, hey, our IRRs are 20% plus. And that hasn't changed for many, many years.

The returns are still great. Maybe the CapEx has come down a little bit. It's all selling in really well. Somewhat naive, but I say, well, then let's convert more faster, right? And the answer I get back from the industry is, well, there's -- it's slow from a regulatory standpoint. We can't just get through the regulatory machine to which I say, we'll then put more stuff in the beginning of the machine, and it will all come out the back end of the machine at some point, but that's not -- that's a near-term answer why you can't accelerate, why not a long term.

So I've come to this tentative conclusion, which may be wrong, which is the reason that digital conversions don't happen more quickly is there is always the risk of flooding the zone with too much supply. And so that's the real -- that's my hypothesis for the real constraint that you can't add 8x more inventory on a board and do a bunch of boards without crashing prices in a local market.

Is that wrong? And if it's not the answer, can we do more digital faster?

Well, the question you've just asked me is a question I ask Matt on a very frequent basis. So I'd like Matt to go first, and then I'll jump on this with a point of view on crashing prices because I have a strong point of view. But with regard to the complexity of digital conversions and therefore, the slowness, Matt.

That's a great question. It's a great observation. So I've been here almost 8 years, the IRR and the payback periods have been about the same. We're still getting roughly 4x lift on revenue and 2x lift on cost. So it's still great to do. Part of it is we don't want to flood the zone.

However, we're not at risk of flooding the zone. It takes more boots on the ground. So it will take more upfront CapEx to put more people, get more development, more training. And then the pipeline, just to build that pipeline takes a couple of years. So it would have to be probably a longer-term view with some short-term cost to it.

But since we're still -- we're not filling all our digital, both above ground and below ground. We don't feel there's a real urgency to do it. As Nick has said, we are stepping on the accelerator a little bit and getting more and pushing our markets for more, but your observations are correct. And still the gestation period is long. Not everybody wants a digital billboard outside their window.

Right. I'll add to that and just say, okay, so we are stepping on the accelerator a little bit more, pedal to the metal. Matt and I, we will get into this tug of war. It's got to be accelerated because we can sell it. It's not going to crush and depreciate prices. And I look at the market for that. I don't make the rules. The market makes the rules. 75% of all media spend is traded digitally, right?

So that $320 billion, $430 billion is spent in the U.S. paid media market this year, over $325 billion will be spent and 70% of that will be gobbled up by 4 tech giants. Go bigger. Where are we? So is it -- we just need to be in the places where they're buying it.

I mean you're saying to me, no, well, don't grow more apple trees because we can only sell 10 apples a day. No, well, let's go to the marketplaces where they're buying lots of apples. They're out there. It will not depress prices. We just need to be active. That's why we've just hired and announcing here, Jeff Hackett, one of the most senior leaders from the Trade Desk to lead our programmatic sales and strategy effort.

And it's not just sales and getting our inventory and our data sets into the holdcos and the programmatic trading desk. You got to have the right pipes and the right connectivity. That's why I'm also very pleased on our Board, we've strengthened our Board, Nicolle Pangis, who's one of the industry's leading lights on strategy, programmatic tech to 24/7, Xaxis, Group M, and we've got Michael Barrett, the CEO of Magnite, one of the most -- I mean, between them and PubMatic, they're the leader in SSP.

We're going to get this right. The industry hasn't prioritized that, simple as that. So they've been left behind. So as far as I'm concerned, Matt, convert as fast as you can. I'll generate the demand.

That's great. Any questions? So can I talk a little bit about industry verticals?

Yes.

So there's 2 questions that I have. One is, it's still a bit of a head scratcher to me why legal has shown up sort of out of -- I don't want to say out of nowhere. It's always been there, but it feels more prominent than it's been in the past, and I can't trace that down to a reason why. That's my first question on industry verticals.

And my second is on pharma. It seems like pharma is sort of percolating and potentially becoming a -- maybe a new source of strength for you all given some of the changes on the TV side and the regulations. So I'd love for you to comment on both of those.

Okay. Well, the first -- the first one is an industry vertical, but it was not one that was necessarily targeted by us or the industry. As you said, it emerged and evolved. But the answer to why it's become the most significant spending category, I asked myself when I met the Chief Marketing Officer for Morgan & Morgan, our largest spending client after Apple, right?

They're so significant. They love the medium, and they're not the only ones, all the lawyers do. And they measure traffic. They measure. They know -- they track everything. I was amazed, and she shared with me confidentially that not just the calls, but the quality of the calls, where they come, when they come. 90% of so many -- 80% to 90% of the calls are to do with sort of traffic and crash related. So the proximity, that name memorability, which is why so much of it is just the volume, name recognition, name -- I'm there, I'm there. I'm there.

And the amount that they spend in our medium because the medium works, it has proximity to where people are likely to remember when did that happen and [ now ] they're on the side of the road. So they are -- they have encouraged and Morgan & Morgan for us is great. They're now taking on -- they're coming to California. They're taking on. They're spending big. And a lot of the existing players, they love it.

So it's emerged that way because the medium works for them. It's very cheap. It's probably too cheap on a relative basis to broadcast or to search in social, you're not doing that in the moment. No. So that's evolved in its way. Pharma is one of our industry verticals we've targeted.

When we look at finance, CPG, we're looking at entertainment, we're looking at technology, pharma. We're seeing more of the bigger pharma brands, both on -- and so certainly Rx as well as general health and wellness. When we put into pharma, it's not just pharmaceutical, it's also the trends around GLPs, the trends around life. It's growing so fast.

So we are -- we decided that it was important to develop a dedicated head of industry and an industry vertical team to go and pursue them and have those conversations with Johnson & Johnson, with Novo Nordisk, with Pfizer and try and get more upstream and understanding what they're doing. So we're bullish.

They continue to be and whether you look at an aging population of wellness, you can look at whatever the statistics, health care spending is very interested in digital, but a lot of the health care players believe they have not modernized their advertising and their marketing stack enough. So we are looking to put ourselves front and center and talk about the trust level of advertising and building their brands in real life.

A lot of that around pharma has to do with trust and familiarity. So we are dialing that up and it seems to be working.

That's great. Any other questions? Okay. So I'm going to -- so we got sort of AI, you're a winner, not a lot of risk. Big focus on digital conversions and programmatic. Is there any sort of potential fly in the win as it relates to programmatic, given the sort of tax that you have to pay to get through the ad tech machine vis-a-vis a direct sale where you might pay a salesperson a commission.

Like do people need -- as investors are doing their EBITDA bridge of good guys and bad guys, do they need to be worried that if you are successful in digital and programmatic as a subset of digital that there's an EBITDA headwind?

That's a very good question. Two reasons we don't concern ourselves about that is because we have the opportunity with our digital inventory to obviously develop more custom audiences around it if it's more sophisticated. And a lot of those taxes, the high excessive tax that was always there with ad tech is on the way down.

We know that if you look at the SSPs and the big DSPs, they announced their earnings, they're making more money on data overlays than they are on, let's say, the traditional tax that was applied.

But as far as we're concerned, if you're selling it programmatically, you're basically from a manpower and a labor point of view, you're not selling it, they're buying it. We're there. We're showing up. So a lot of the cost of sales, packaging, marketing on our side comes way down.

We see the programmatic side of our digital, not only unlocking new dollars, but it needs to be a less expensive way to trade, to plan and buy. That's why we did the AdQuick deal on the commercial -- essentially for the commercial side of the business. So it can be a much more automated, simple tech streamlined kind of planning, buying and measurement process.

And then when it comes to partnering with AWS and agency to get connected into the big agency holdcos and we've already started with one major account, and now we've got another one we're signing up right now. Our theory, our hypothesis is that we're going to be able to push a lot more digital volume through those pipes with very little handholding involvement.

So we should see the profitability. What you're saying is the -- Yes, there are higher going direct, but there's a lot of labor. There's a lot of involvement, a lot of manual overlay that we have to provide when it's a direct buy.

When I asked Lamar this question, they also brought up, and I don't know if you would concur with this, that it's possible that the CPM, the pricing could actually be better on a programmatic buy than their average. Would you say that's also a factor that could -- yes?

Yes. We see it on how we trade it today. We see it on how -- and we're only selling [indiscernible] to the major industry SSPs. When you think about Vistar & Place Exchange, okay, now you start to connect. We get connected to the big industry SSPs and direct with the big DSPs.

As far as I'm concerned, they all pay. I look at the prices for Snapchat. I look at the prices for retail media. I look at all the prices for CTV. I have my people run the number. They don't want to bring me those numbers. It's too shameful. As far as I'm concerned, the only way is up.

That's great. I have time maybe for one more question, if anyone wants to squeeze one in. Okay. Well, that was great.

Well, thank you for the opportunity to talk to you guys. Thank you all for being here to listen as well. Appreciate it. Thank you very much.

Good afternoon. Thank you for attending today's OUTFRONT Media Fourth Quarter 2025 Earnings Call. My name is [indiscernible], and I will be the moderator in today's call. [Operator Instructions] At this time, I would like to pass the call over to our host, Stephan Bisson with OUTFRONT. You may begin today's call.

Good afternoon, and thank you for joining our 20,254th quarter earnings call. With me on the call today are CEO, Nick Brien; and CFO, Matthew Segal. After a discussion of our financial results, we'll open the lines for a question-and-answer session. Our comments today will refer to the earnings release and slide presentation that you can find on the Investor Relations section of our website, outfront.com. After today's call has concluded, an audio archive replay will be there as well.

This conference call may include forward-looking statements. Relevant factors that could cause actual results to differ materially from these forward-looking statements are listed in our red materials and in our SEC filings, including our 2024 Form 10 as well as our 2025 Form 10-K, which we expect to file tomorrow. We will refer to certain non-GAAP financial measures on this call. Any references made today will be made on an adjusted basis. Reconciliations of OIBDA and any other non-GAAP financial measures are in the appendix of the slide presentation, the earnings release and on our website, which also includes presentations with prior period reconciliations.

With that, let me hand the call over to Nick.

Thanks, Stephan, and good afternoon to all of those listening. We're pleased to be here sharing our fourth quarter results as well as our 2026 outlook. As has become the customer, I would like to quickly highlight some of our accomplishments in 2025. It was a busy year that was full of change but I'm happy to report we have made significant progress on the 4 strategic imperatives I laid out last May.

First, we've made great strides on optimizing our sales strategy. primarily through a broad reorganization of our sales force. We've created distinct enterprise and commercial go-to-market teams and ensure there's experienced leadership throughout your entire organization. To that end, we work diligently to make sure that the key roles will fill by the best possible leader whether they were found internally or externally.

Second, we have made important progress in modernizing our workflow and processes. We have centralized many of our back-office functions as well as invested in better sales tools, such as Salesforce and AWS. We will continue to invest in our technology and tools to further accelerate our growth and ROI as appropriate. The latest of these efforts was our investment in exclusive commercial arrangement in Ad Quick a leading independent out-of-home planning platform, which we announced earlier today. We believe this is the first step towards creating an environment in which our clients can harness the full potential and value of our products to simplify planning, buying and measurement of their advertising campaigns.

Third, we generated new demand from both existing clients and new logos. Importantly, much of this new demand was created within our transit business, accelerating revenues in the segment throughout the year. Most notable of all was our growth in the New York MTA which was up nearly 20% for the year. And lastly, our teams have responded to our demand for operational excellence by rising to the occasion as illustrated by the fourth quarter and full year results we are reporting today as well as the strong trends we are seeing thus far in 2026.

Turning to those results. We're pleased to report that we had a solid fourth quarter. You can see the headline numbers on Slide 3. Consolidated revenues were up 4.1%, an acceleration from quarter 3, 3.5%. And driven by 16% growth in transit and 1% growth in billboard while consolidated OIBDA was up 12% and to $174 million and AFFO was up 8% to $130 million. Slide 4 shows our more detailed revenue results. Billboard news were up 0.5% due to higher demand partially offset by our previously announced exits of 2 large marginally profitable billboard contracts, 1 in our New York and the other [indiscernible].

As the revenues and expenses of these contracts are still included in our reported 2024 financial statements. Excluding the revenue generated by these contracts in 2024, billboard revenues would have grown 3.7%. Transit grew an impressive 16%, led by the new MCA, which was up over 20% during the quarter, driven by strong performances within the finance, tech and legal verticals.

Slide 5 shows our detailed billboard revenue, which, as I mentioned earlier, was impacted by the 2 large billboard contracts we have exited. On a reported basis, static and other billboard revenues were up 1.1% during the quarter, and digital billboard revenues were down 0.6%. However, I believe it's important to note that excluding the results of the 2 large billboard contracts, we exited from the comparable fire year period, digital revenues would have been up 6.7%.

Slide 6 shows our detailed transit revenue, which grew nearly 16% during the quarter. Our digital transit revenues were up 37% to $73 million while static transit revenues were down a little over 2%. The overall strength in our transit business was driven equally by our commercial and enterprise teams, which both continue to operate at extremely high level. We are proud of the momentum we have driven within our transit business in the latter half of 2025, and I'm pleased to report that this strength continues into 2026, which I will discuss later.

On a consolidated revenue basis, our stronger category during the quarter were financial, legal and debt. The weaker category during the quarter were government political, retail and auto consistent with the broader advertising industry trends.

Slide 7 shows our combined digital revenue performance which grew about 11% in the quarter and represented about 39% of total revenues. Even more impressive, excluding the aforementioned New York and L.A. contracts, digital revenues would have grown by over 16%. Programmatic digital direct automotive sales were up 11.3% during the period and represented 16.9% of our total digital revenues, up slightly from the same period last year.

Moving on, the breakdown of enterprise and commercial revenues can be seen on Slide 8. Commercial grew by almost 7% during the fourth quarter with transit growing mid-teens and billboard up mid-single digits. Enterprise was up 1% year-on-year during the quarter, with mid-teens growth in transit been offset by a mid-single-digit decline in billboard revenues due to the impact of the L.A. contract exit.

Slide 9 shows our billboard yield growth which was up about 4% year-on-year to nearly 3,300 per month, driven primarily by our inventory management efforts. Summing up, we were pleased that we ended 2025 with strong and accelerating revenues. This positive momentum continues into 2026.

With that, let me now hand it over to Matt to review the rest of our financials.

Thanks, Nick, and good afternoon, everyone. Please turn to Slide 10 for a more detailed look at our billboard expenses. In total, billboard expenses were down about $3 million or 1.4% year-over-year. Zooming in on lease costs, these expenses were down $4.5 million or about 3.8% year-over-year. This decline includes approximately $9 million related to the large billboard contracts in New York and Los Angeles that we exited, which was partially offset by contractual escalators on fixed leases.

Excluding the impact of the portfolio exits, billboard property lease expense would have been up about 4%. Posting, maintenance and other expenses were down about $1 million or 2.6% due primarily to lower production expenses. G&A expenses increased by about $2.3 million or 3.5% due to a higher provision for doubtful accounts, higher professional fees and higher travel and entertainment expenses.

This nearly $3 million improvement in total billboard expenses, combined with the low single-digit revenue growth Nick described earlier, led to billboard adjusted OIBDA increasing by over $5 million or 3.4%. We are pleased to see billboard adjusted OIBDA margin increase again this time by 120 basis points year-over-year to 41.5%, helped by improved revenue performance and recent portfolio management decisions. We expect billboard margins will continue to improve in 2026 relative to 2025.

Now turning to Transit on Slide 11. In total, transit expenses are up about $6 million or a little over 6% year-over-year. Transit franchise expenses were up 4.7% due primarily to the annual inflation adjustment to the MAG for the MTA contract. Posting, maintenance and other expenses were up about $0.5 million or 2.8% due primarily to higher production expenses. SG&A expenses were up about $2.6 million or 15% primarily due to higher professional fees.

The 6% increase in total transit expenses, combined with the nearly 16% transit revenue growth described earlier, led to transit adjusted OIBDA improving by more than 56% during the quarter to over $34 million. While on transit, I'd like to take a moment to update some of our expectations for the New York MTA in 2026. Our minimum annual payments to the MTA will step up by about 3% this year to approximately $161 million given the New York City CPI escalator contained within the contract. Included in this $161 million is the final $11.7 million deferred minimum annual payment we will make to the MCA related to the 2020 NTA amendment during the pandemic and the associated MAG shortfall.

Lastly, we will continue to account for our New York MTA franchise expense on a straight-line basis throughout the year. Slide 12, a is the company's combined billboard transit and corporate adjusted OI in the fourth quarter. Corporate expense declined by about $1 million due primarily to lower compensation-related expenses partially offset by the impact of market fluctuations on an unfunded equity-linked retirement plan offered by the company to certain employees.

Combined with the billboard and transit OIBDA I covered earlier, adjusted OIBDA totaled about $173 million, up 12% compared to last year. As in the third quarter, much of this increase is attributable to our improved performance in the New York MTA as incremental revenue growth within this important franchise has extremely high margin.

Turning to capital expenditures on Slide 13. Q4 CapEx spend was about $25 million, including about $11 million of maintenance spend. We converted 26 new boards to digital in Q4 2025, bringing our total for the year to 103. In 2026, we expect to spend approximately $90 million of CapEx in line with our growing revenues and with much of the spend earmarked for digital developments. We still expect $30 million to $35 million of this total to be for maintenance. One quick note before turning to AFFO.

Starting at the end of 2025, we modified our calculation of AFFO to include amortization of direct lease acquisition costs instead of cash paid for direct lease acquisition costs as we believe that this calculation of AFFO is a more appropriate measure of performance period-over-period and consistent with how we calculate funds from operations. This change has resulted in small adjustments less than $3 million on an annual basis or reported AFFO in prior periods, which have been recast to conform to this definition and can be found on Slide 20 in the appendix of our earnings presentation.

Now turning to Slide 14. You can see the bridge to our Q4 AFFO of $130 million. The 8.3% improvement is principally driven by higher billboard and transit EBITDA which was partially offset by higher maintenance CapEx. For 2026, we currently expect reported consolidated AFFO growth comfortably in the double-digit range, driven principally by improvement in OIBDA Included in this guidance is $145 million of cash interest.

The aforementioned $30 million to $35 million of maintenance CapEx and $5 million of cash taxes. Please turn to Slide 15, and for an update on our balance sheet. The middle liquidity is nearly $750 million, including almost $100 million of cash, about $500 million available via revolver and $150 million available by our accounts receivable securitization facility.

As of December 31, our total net leverage was 4.7x, within a 4 to 5x target range. We remain comfortable with our debt stack with our next maturity not until late 2022. Turning to our dividend. We announced today that our Board of Directors maintained a $0.30 cash dividend payable on March 31 to shareholders of record at the close of business on March 6. We spent approximately $3 million on acquisitions during the quarter, bringing our total for 2025 to just over $13 million. We remain interested in pursuing attractive tuck-in acquisitions within our footprint. And based on our current acquisition pipeline, we expect our 2026 billboard acquisition activity to remain at a similar level to those seen in the last couple of years.

With that, let me turn the call back to Nick.

Thank you, Matt. As I mentioned earlier, the strong top line trends we saw in the fourth quarter continued into the start of 2026. And from where we sit today, we expect first quarter revenue growth to accelerate from quarter 4's results. The consolidated reported revenues up in the high single digits driven by high teens growth in transit and mid-single-digit growth in billboard. This guidance is impacted by 2 nonrecurring items.

First, a billboard condemnation that will contribute approximately $10 million to billboard revenues, which we expect to close at the end of March. And second, the headwind created by our strategic decision to exit a marginally profitable billboard contract in L.A, which contributed approximately $4.5 million in revenue in the first quarter of 2025. We -- taking into account these 2 items, we believe quarter 1 consolidated revenue growth would be in the mid- to high single-digit range based on our existing operations.

Before closing, I'd like to take a moment to reflect on 3 statements I made on our earnings call at this time last year. First, I describe Outfront as a differentiated organization that is distinct from the pack and has significant potential to unlock. Second, I said I was focused on amplifying the power of out-of-home and expanding our share of U.S. ad spend -- and third, that we will be accelerating our digital capabilities.

Looking back on these statements today, I'm pleased with the progress we have made on all counts. First, as I mentioned on the top of the call, we've begun unlocking the potential we identified a year ago by making significant headway on our strategic imperatives of optimizing our sales strategy, modernizing our workflow processes generating new demand and demanding excellence from our teams.

Second, we are redefining the value of out-of-home, which has been historically undervalued by increasing involvement with a variety of different advertising groups industry associations and conferences to inspire today's market peers on the power and unique value of IRL advertising and how it can drive superior business outcomes, especially during this time of AI-driven mistrust of the online advertising world. We are increasing the visibility of Outfront and the whole industry so that we will be at the forefront of marketers mines as they design their future advertising campaigns, finding to take a larger share of their omnichannel spend.

And third, we've accelerated our digital capabilities by signing 2 new commercial agreements, 1 with Amazon Web Services, which will primarily serve the enterprise marketplace by connecting our inventory more efficiently into the holdco's media buying centers. And second, with Ad Quik, an all-in-one AI-powered technology platform that makes out-of-home advertising easier to plan, purchase and measure. -- enabling a significantly more efficient buying process for all of our customers.

By layering proprietary data and automation Aqui allows marketers to launch targeted measurable out-of-home campaigns in minutes, not weeks, thereby unlocking potential new ad spend from those who found the medium too complex to purchase in the past. While it will take some time for each of these initiatives to full year ramp, we've already signed up clients to both. Most importantly, these partnerships represent the first real steps to modernizing the out-of-home planning on buying process for brands and agencies alike.

To close, I want to stress that we are far from finished. OUTFRONT's journey of growth and innovation from a legacy out-of-home company to a cut-in edge in real life marketing powerhouse has just begun. While we are encouraged by our results thus far, we're even more excited by the future ahead of us. And with that, operator, let's open up the lines for questions.

[Operator Instructions]

today's question-and-answer session. SP1 Keeps briefly when questions are registered. The first question comes from the line of Daniel Osley with Wells Fargo.

Just looking at the growth that you've continued to put up at the enterprise or national segment, are you starting to see a structural shift in the way large advertisers are engaging and how do the measurement announcements with a quick and AWS Tian here?

Daniel, I think -- well, first of all, thank you for the question. I mean these of both significant strategic agreements that we've set into the entirely designed to unlock in the new revenue streams that we see both on the enterprise and the commercial side. The orientation of our partnership with AWS is to what we are calling agency Connect to ensure that for all the holdcos who are increasingly having consolidated AI-enabled digital planning and buying systems that our inventory and our data sets are completely integrated into that.

We see as quite as being much more for the SMB and mid-market because as we talked about a year ago when we talked about steadying out the strategy, to be much more focused on how we would look at SMB, mid-market, and we would look at enterprise accounts being strategic and those enterprise players. So we're very excited about these initiatives that we've taken. These are established both AWS, of course, and ADI have been established in this space and working in a very diligent format. So we're very excited about what they represent.

The next question comes from the line of Cameron McVeigh with Morgan Stanley.

I wanted to ask about your pacings on transit so far, maybe your visibility into the rest of the year. Curious of this might be the year we see MTA results above the MAG. And then secondly, I noticed an AI-related billboard slide in your earnings deck, just curious how much of an impact on growth, the AI vertical is driving?

Ken, it's Matt. Thanks for the question. I'll take the patient question on transit. Transit books relatively later than billboard. So while we we feel great about the year, Nikos about the outlook for the first quarter, might be premature to give you any color on the second and third and fourth quarter, but we still feel it's in great shape, really led by the MCA and your comment of maybe the MTA gets back above the [indiscernible] you see, when we talk about our accounting, we're still accounting for it on a straight-line basis, so we don't anticipate that, but we don't think it's so far out of the realm that it's only possible and we're hoping that we tripped that line.

Cameron, if I take the second part of your question about the AI campaigns. Yes, they're significant. If I look at the especially within the transit world when I think about AI and SaaS, let's say, the B2B sector -- we've got some exciting brand names there. We've got a big campaign we've come an audit. It's just come through, but we've got Anthopic, codabit, profound, crowded IBM clicker.

We've got a lot of the independent AI brands that are striving to ensure that they get that level of visibility, both to customers and clients as well as their funding. So we're very bullish on it. We've got a dedicated team led by our leadership grew in San Francisco, who are having direct engagement with some of the biggest conversations there. And it seems that our medium is something that really understanding that as virtual and digital brands, they can be building their businesses and their recognition in real life.

So we continue to see 2026 this has been a strong category for us.

Next question comes from the line of Jonnathan Navarrete with TD Cowen.

Nice to have on the quarter. My question is with 2 months already into the year, can you maybe talk about how National is trending perhaps in the first quarter and then what you guys are seeing in the second half? And lastly, can you help us quantify the benefit that the World Cup that you guys will have in the work of this year?

Okay. I think -- well, thank you, Jonnathan. Thank you for the question. I think national, when we're talking about national, as I said, we tend to now focus on our categorization between intertwine and commercial. So these entails a national advertisers, they continue to be a very important part of our business, and we've really looked at some very strong brand names that are continuing to support us I think as we just talked about earlier on the AI and the SaaS side, I mean, some of the big players on the price side entertainment.

When we think about all the big entertainment brands have been active in beauty, we've had Loral, that's a significant advertiser. CAP1 Finance or dash eBay even Duolingo, who did a very significant campaign with us that we've got to surround the Super Bowl and bad value performance. So again, the enterprise team is combined of those who focus on the enterprise clients buying through agencies as well as business direct and brand direct conversations with our brand solutions team. And those are going extremely well.

And then when we think about FIFA, yes, we think in the World Cup, we're excited. It has been identified before. It's we're not yet giving out detailed numbers, but we have direct agreements we've made with 6 of our host committee partnerships at 6 cities: L.A., San Francisco, Atlanta, Dallas, Kansas City, Miami, and our level of entire revenue is kind of across from some of the significant brands is something we're tracking on a weekly basis. I mean, we've identified every 1 of the FIFA Pitea sponsors, they're the obvious ones we think about Coca-Cola, AB InBev, Unilever, Verizon, Telemundo, Lenovo, Lowe's.

I mean, McDonald's, some of the biggest brands we know and we're having conversations with every single 1 on a very frequent basis. And whether that's specials, whether that's going to be more standard inventory that we have as well as some of the specific agreements that we have to create a unique advertising opportunity during the course of the festival. So we are probably giving more detail on that on our second or on our next earnings call. But at this stage, we're feeling very excited about what FIFA and the World Cup represents.

The next question comes from the line of Patrick Sholl with Barrington Research.

I just had maybe a follow-up on CapEx beyond the maintenance guidance, the digital elements. Is there any like -- is that primarily little boards? Or is there -- are there other digital investments that would be included in that?

Thanks, Patty. It's Matt. So the CapEx, we try to keep it around 5% of our revenue, a little lower with revenue growing we felt we can take us some $85 million to $90 million this year. Maintenance CapEx will be about the same as last year. so the increase will be all in growth. And primarily for digital conversions and new digital boards as an occasional replacement of a Board that drives revenue growth -- and then we have some spend in some transit areas, we have residual contractual obligations. But most of the growth is really driving digital billboards.

Okay. And then maybe just a follow-up on the AI and other tech ad spending commentary on advertisers like Entropic and other prediction markets. Is that group within tech? Or do you -- or is that kind of viewed similar like, I think, gambling a few years ago when that was ramping up in certain states. And I guess, you kind of see that as -- is that not really meaningful? Or do you see that as like kind of different and potentially more sustainable?

Pat, I think we group all those within tech, but you point out a good point, a lot of interesting categories within Tech. UBER, for example, it's obviously a tech company, but it's also travel and transportation and AI right now is, I think we cover it in tech.

Okay. And then lastly, just the MTA, is there any sort of like a comp issue from the transition from Metro cartilage government advertising around that? Or is that initial like informational board stuff?

I don't think you have any comp issues at all [indiscernible] doing great as a strong second half of the year, it grew all through 2025, as Nick pointed out, rolling into the first quarter with tennis transit has growth for us. It's mostly coming from the MTA. And I'm not sure if I answered the question entirely.

Yes. No, just the transition from like the metro card to the One Metro New York..

No issues for us. Ridership continues to slowly melt higher. However, people are getting on the subway. Firstly, I use credit cards, something we use their phone, metro cards are dead, but I think ridership is around 80%, below 80% of where it was in 2019, slightly higher, and I don't think the metro card changes impacting everyone.

It is some of the important significant 1 as something they use in medium for that. But if we look at the wider set up 30% in 2022. I mean the range is, as Matt said, between 80% and 85%. But we increased substantially in '25. We had over $1.3 billion billion trips in total. So we continue to be excited. And as importantly, that dedicated trend transit velocity team has been excellent on focusing not just on the advertising, but on the relationship with the MTA about the opportunities that they see to encourage more creativity and more innovation on their platform and on their learning stock, it gives us the opportunity to continue to push the envelope with the advertisers who really want to stand out beyond doing the classic ad. So we continue to be very excited about.

The next question comes from the line of [indiscernible] with JPMorgan.

Can you talk about your MTA contract again? What revenue do you expect for 2026? So your 20% full year growth that you disclosed I think implies around 2 for fourth quarter. Can you talk what is driving this strong momentum again? And the second question will be on AFFO outlook for this year. obviously World Cup and strong momentum in your MTAR big tailwinds. Perhaps you could help understand between these 2 factors, what is more important for you to execute in order to achieve the double-digit growth in AFFO?

I'll take the FFO question. First, Obviously, we feel very comfortable with, I think, the phrase we used with that there's a few onetime things in 2026. As Ton mentioned earlier, World Cup is going to benefit us -- there is an election year, which we're not a big political player, but it's going to be helpful. As Nick mentioned, we have a sizable condemnation that's going to hit the end of the first quarter and then just continued strong growth in our regular way business transit continues to rally and highlight and billboard lot of what are new initiatives, a lot of things are panning out.

We really feel very bullish about our year. So at this the way we give guidance for AFFO, we think that's helpful. We give the details between AFFO and then EBITDA, and I think that's -- you can back into the EBITDA number, then make some assumptions around margin to fund a revenue number. We typically don't give full year revenue guidance at this time, something we want to put out there in public. I think we're happy to help you with your assumptions at a different time.

Yes. And then,you had the -- there's a question about the New York, the MTA contract. I think as Matt shared in our comments that we will see the MTA step up 3% to approximate 61 million this year. I'm not sure I understood what the rest of the question was.

Just more broadly about what is driving revenue growth?

Again, we haven't given that guidance, but we feel very content. You can see the acceleration from the first quarter of '25 through as Nick described into 2026 as Tam pointed out before, there is a chance -- not in our guidance, but there is a chance that we cleared the MAG breakeven, which is around $285 million. it would imply very strong double-digit revenue growth for the MTA. But that's, again, not what we're guiding is saying there's a chance of that.

Thank you. At this time, there are no questions. [Operator Instructions] There are no questions waiting at this time. I will now pass the call back over to Nicolas for any further closing remarks.

Well, thank you. We appreciate everyone dialing in today and to listen to our prepared remarks is also to our questions. We were very excited, and we know that we're going to see and meet many of you at various conferences and events over the coming weeks and months, but for those that we don't, we wish you well, and we look forward to presenting our quarter 1 results to you in May. So thank you so much for joining us. And yes, best wishes.

Thank you all. At this time, this will now conclude today's conference call. We will be an amazing rest of your day, and you may now disconnect your lines.

Everyone, and thank you for joining us. My name is Marlane Pereiro. I'm the High Yield cable and media analyst at Bank of America. I'm happy to have with us this afternoon from OUTFRONT Media, Matt Siegel. Thank you for joining us.

Thanks for having me.

That's a pleasure.

I wanted to start with the advertising environment. What gives you confidence that ad strength will carry into '26?

So first, I can say we had a pretty good third quarter led by our transit business. And we gave guidance that the fourth quarter growth rate is going to be a little higher than the third quarter. So we feel pretty good going into next year. And sitting here December 2, I can say my visibility into 2026 looks stronger than my visibility a year ago, December 2, 2024, looking into 2025.

So I feel more confident. We can see it. It's early days yet. Our perm business, which is the resetting of our 12-month contracts in advance of the year. Price growth is up from where it was last year. So a lot of our sales metrics are improved. And this is, again, with maybe 10 -- a little more than 10% of our revenue on books, but directionally really good.

Great. National ads have been strong. How has that momentum translated to local markets or at least local markets next year?

Switching for us, even though we're considered the leader in national out-of-home, we have a very big local business, which has much less volatility. So it's really just the last couple of quarters where national focus in transit has kind of overwhelmed local. So we have less volatility, but it's been chugging along. So we feel it's in good shape.

Also, that does most of our perms come out of local, the old-fashioned turn left for this, turn right for that -- yes miss those. Again, doing well. So we feel good about local, both in billboard and transit. Most of our recent management changes have been focused on putting more talent, more digital talent focused on enterprise. And I think local will benefit from some of the extra marketing we're spending on right now.

Great. In terms of -- just one last question on local. In terms of categories that are driving that or that you expect to drive the momentum, what would you highlight?

So one of, if not our biggest categories is the legal profession, that's large and fast growing. So I think everyone has seen or heard the Morgan and Morgan and others, imitators, followers, competitors, that's been big, and we can expect to continue to see that growing across the country in almost all of our markets, plus the resurgence of retail and most fashion is in national, but there is some that's local. It was a pretty diverse portfolio.

Auto, which has been down on the national side, is very steady when you look at it through a local lens. So the auto dealers, not necessarily Ford's new vehicle launches, but Bob Chevy and Joe's GM dealer, they don't give up their perms for anything, and that's been a good driver for us.

Great. And I think it was discussed on the call, the World Cup, Olympics, those type of revenue streams. How do you expect those types of events to impact outdoor and kind of drive revenue and innovation?

So without question, the big events are tailwinds for the industry. World Cup, in particular this year, we have all except one market. We're not in Seattle, but we're in Kansas City and obviously, New York, New Jersey, L.A. and the large markets. So we feel it's a pretty good tailwind for us. It gives us an opportunity to do more short-term permitting of experiences and things. We've been stepping out trying to do more than just sell rectangles -- nothing against sell rectangles. We have a lot of rectangles.

But doing drone shows and experiences, the shorter duration nature of these high-profile events give an opportunity for that. So we're excited. We don't necessarily think it's going to be one-for-one ad, 1 plus 1 equals 2 type thing. But -- so when we add -- take in ads or increase pricing for FIFA in a certain market, something else might get squeezed out. So we're excited and enthused. It's a good tailwind for us and for others. We haven't quantified it yet.

Other related -- Super Bowl, every year, we have the Super Bowl in one of our markets. We're all in the big markets in the rotation. Some years are better than others. Last year, this past year, New Orleans was a big market for us, again, as we did a lot of that short-term permitting. So that's something we're doing more and more of, whether it's in sports or unique experiences.

Great. And then turning to digital. It's about 35% of revenue. What is the long-term target for digital share?

Not necessarily a target, maybe it's a mile marker along the way. As 35% goes to 50% and beyond, we look at how quickly we get to 50% penetration of digital revenue. A lot of countries in Europe and Australia are north of 50%. So we know that's attainable. And that will likely drive our development and spend on more digital billboards. Most of our transit properties are digitized and a lot of spending still to do there.

But we're basically growing our digital penetration about 1% per quarter on a sequential basis. So that 35% by the end of next year should be around 40%, and we think we can just grow it from there. I don't see any slowdown. In digital, our programmatic or automated revenue is growing even faster than our regular digital. So we think that helps lift that penetration.

Great. And which markets offer the most upside for digital? And what kind of factors should we think about in terms of limiting conversion to digital in certain markets?

So limiting conversion, we're not there yet. So we think all of our markets, even the smaller ones have opportunity for more digital. So we have a 100-plus person real estate team that's always out there looking for opportunities. The digital opportunities across our portfolio, the bigger markets, New York or Los Angeles, obviously, you create digital, you create new inventory. There's more revenue opportunity.

So therefore, generally more EBITDA opportunity. I would have more value in a new digital billboard in lower Manhattan than it would in Louisville. That being said, those in Louisville have higher margin. And to the extent we believe the market can handle new inventory, we're looking everywhere to do so.

Great. And the AWS partnership, how will that reshape planning, buying, measurement in the outdoor space in your view? And when will that integration start driving revenue growth?

It's interesting. It's the new arrangement for us, partnering with smart people who want to find solutions is one of the things our new management has really brought in that idea. No revenue this year and probably very little next year associated with this AWS contract. But we think our inventory with them can help us, our salespeople and our clients better see our inventory, what's available, what's not available, kind of 3-dimensional over time, space and location.

So we're hopeful for that, but I don't have anything specific to say we're developing this. We think in addition, that can help us with post-transaction measurement. But again, a lot of it rides on continued development between us and AWS. Smart people, we use their cloud services, and we think there could potentially be something here.

And when we think about programmatic, that grew roughly 30%. How do you accelerate from here? And how do we think about outdoor closing the measurement gap versus other digital channels?

First, programmatic accelerating focus. So more inventory tied to programmatic. Right now, almost all of our inventory is connected to the programmatic and automated platforms that we use. The one that's not is rolling stock train cars, which we've been working on for most of this year, haven't kind of perfected that yet. And people ask me how can it take so long? I flippantly say we have -- the trains are moving. But it's hard. So we're working on that, and that will be helpful.

But getting all of our inventory, all of our billboards connected and all the players connected was a challenge, and that's happened. So everything is there. Our salespeople are still receiving commission for their clients that generate programmatic sales. So they're not obstructing. They're pushing demand, which we think is helpful. We're covering now, we weren't a year ago, specifically covering the digital agencies, which are kind of spread throughout the country with both enterprise salespeople and commercial salespeople, they are a little smaller.

So we're spending more time, more focus to generate programmatic. Over time, we think there's a number of channels, whether it's something automated for really small customers who want to take a digital billboard and they can send in their copy and get it up quickly, programmatic and automated. And still there's going to be a channel for direct selling and those who have big complex plans and proposals and want to reach varied audiences. We still expect to service that.

Great. And then turning to MTA and transit. Transit was up about 24% in 3Q. New York MTA up 37%. How sustainable is this into '26 and beyond?

For a few years, I hated taking questions on the MTA. So I thank you for asking it now. It's really doing well. And I don't want to say it just started. MTA itself grew 12% last year, still under the minimum guarantee. So it's got some ways to go and the incremental -- the rise is good incremental EBITDA. So MTA performance as a result of focus, execution and portfolio management. We used to have a large billboard portfolio in New York that we exited and wasn't part of our strategy, but we thought it would kind of help focus the sales team.

So now they're selling more transit that has same commission structure for them, which is great. And for the company has a higher incremental EBITDA. So it's realigned the sales force. That's helped. We've put one of our top marketing people on top of nothing but transit. And obviously, if you're in transit for us, you're doing the MTA and they're focused on that. And our enterprise group is really focused on bringing their clients to this audience.

I think the fears of the subways and safety and cleanliness and other things are mostly behind people. Customers, advertisers recognize that this is the biggest audience in the country, and this is how you reach them. So it's -- again, 37% don't come back in 3 months and tell us we're decelerating. The math might say so. But we think MTA is going to grow in the high teens in the fourth quarter as well.

So we feel, again, great going into 2026 and no reason for the momentum to -- I'm not sure there's a 37% growth quarter in our future, but we feel really good about the MTA now, and that's been great for our EBITDA mix and frankly, great for internal morale. It's good to see stepchild come back and perform.

Can you remind us how that contract works, right? Because obviously, there's like a CapEx component.

It will need more time.

Okay.

But no, there's other...

Let's say, we had a breakeven point just...

Breakeven might be a stretch. The contract runs through 2030. If you recall, we are responsible for funding and construction and putting all those screens in, 30,000-plus screens that the initial deployment is completed. If you didn't see a couple of years ago, we took a $0.5 billion impairment for our Transit segment, but most of it was in the MTA. So if we hit a certain revenue benchmark, which is above the minimum guarantee, the MTA would start to reimburse us for that spend.

We didn't reach it, post pandemic, it was really very depressed. And our internal modeling said we wouldn't reach it, so we took that impairment, and that was painful. That led us to some other steps to improve our balance sheet. But now once you're still below the minimum guarantee, as you grow your revenue higher than our model, you're getting closer to the minimum guarantee. The EBITDA impact is very high.

So I know I'm paying a fixed amount for the franchisee and the revenue is all mine, except for the commission and bonuses I'm paying for the sales force. So the falling below is painful, but rising back toward and hopefully at some point above is very enjoyable. So again, at 2030, we have a 5-year option from there to extend. Obviously, it will be facts and circumstances at the time, but we think we can make a good case for renegotiating something mutually beneficial. We like the franchise. We like the audience. We just don't like the contract.

Thanks for that overview. And obviously, ridership is a factor, but what other metrics matter the most now in addition to ridership?

Ridership is a factor, but no longer critical. Back in the pandemic when ridership was down -- 90% down. I think it's now in the high 70% from 2019 comparison. And for those of you who don't go to the office on a Friday in New York, the natural limit is probably around 80%. So we're probably back to where it's going to be. Key metrics are CPMs, even though we don't sell transit on a screen-by-screen basis like we sell billboards, getting customers to pay us more for that same audience, even a slightly growing audience is important.

And to do that, we need to create more tension, drive more demand on those assets. So bringing people underground or on the street level [indiscernible] we have is important. And again, going back to not just selling the rectangles there, but selling experiences, doing a big ESPN show on the E-Train, doing a match train with things outside the shuttle.

Recently, I think Bath & Body Works, they had a scent in the shuttle, the [indiscernible] train. And so if you walked off the train or through that area, you could smell Christmas trees. Again, that's -- I'm not sure that's going to change the world, but it's something we can do and others can't just from our contract. So we're taking greater steps, more focus, trying to be more creative with the MTA and not just kicking ourselves for owning it, but trying to maximize it.

Great. And as we think about margins, cost savings, starting with the billboard margins, those improved to 39.5%. What's next for margin optimization?

I think margins grind higher and a couple of factors. First, on billboard, continue to manage our portfolio. For years, we would focus really on getting, winning, building more billboards, adding opportunities for revenue. We've inflected and we're focusing a lot more on EBITDA from the portfolio. We gave up 2 large contracts, one in New York, one in L.A. in the last 15 months. Both those, we give a pro forma update on revenue, but no pro forma update on EBITDA. EBITDA was pretty small. So we think we can do without them.

And so far, that theory was proving correct. Smaller scale, we're empowering our real estate team to negotiate tougher and give up some static leases if they don't think it makes sense to keep them. Right now, we have 37,000 static billboards. I don't think anyone in this room would think less of us if we have 35,000 or 32,000 or whatever the number is, we have a lot that we think we can manage or the cost of our lease portfolio by being proactive. So I think that continues to grind higher.

Transit, as the MTA comes up to its minimum, the total EBITDA margin on transit improves. So we think directionally, that's good. And I hope everyone painfully took a reduction in force in June. We lost about 6% of our headcount. And we think there's benefits from that going forward, and we continue to look, whether it's through AI or improved efficiency or just better operations, various ways to manage our overhead costs.

Got it. And how do you balance lease cost cuts with keeping premium locations?

Great question. We're not giving up things on Houston Street or the West Side Highway. We have given up some things in Times Square, but there's a lot of stuff, and we have a lot of inventory in Times Square. It's a combination of art and science. So it's not just a metric, this doesn't make enough to get rid of it. Some of these high-profile ones, whether it's the iconic statics or the digital, we're not giving up any digital. We think the more digital is better, which they make sense to have the client wants them even if you're not making money off that.

Our largest advertiser, probably every one's largest advertiser choose a static instead of digital. They're not flipping from an electronic device to a wizard. They're not sharing it. So we need to focus really on some of the expensive low-return static and we think even if you're not taking down the tool -- our real estate team has to negotiate tougher, we think it's a valuable tool for them to have.

Great. And turning to your capital structure, leverage is 4.7x. How are you thinking about and/or prioritizing some of your near-term debt?

Our next maturity is summer of 2027, still basking the refinance of our '26. So we probably wouldn't address that until the near going current, the '27s and probably the '28s seem to be historically low bonds. And if I can't put them in a museum, at least I can provide them as long as we can. Leverage-wise, we'd still like to reduce our leverage, maybe closer to 4, not necessarily to live there forever, but to regain or continue to build some financial flexibility. The high-yield market is very supportive of out-of-home in general and OUTFRONT specifically. So we want to be respectful and kind of keep a regular cadence. And just we think having a little less leverage is beneficial to all of our stakeholders.

Great. And what is your current secured capacity?

We're about 1.5x. It's 3 turns, so about $1.5 billion. We do have one unnatural secured bond, which we issued a little over a year ago when the secured, unsecured gap was unusually wide. At some point, when the rates line up within the call window, we'd probably take that out and replace that with unsecured, not that I dislike secured debt.

I'd rather save it for necessary usage in M&A or distress or rainy day or something, but again, plenty of secured capacity even if we don't replace that. So we feel pretty good about that. I do want to have a balance. I mean term loan market, the bond market, secured, unsecured, so no one gets sent home hungry.

Great. And obviously, you have strong liquidity. We just talked about the balance sheet. Would you consider larger M&A and bringing kind of leverage a bit higher for the right opportunity?

I think for something smart, prudent and we would take leverage up with a path to delever. Just to go -- turn higher and live there without the ability to delever, I think, is not going to be rewarded by any of our stakeholders, but we do think we have some flexibility, some creativity. We've used other people's money and some off-balance sheet financing, I think, smartly. So I do think the industry probably has some strategic changes in the future, although people have been saying that for years. And as one of the 3 large public companies in the industry, we would expect to participate in some fashion.

Are acquisitions about footprint, digital capabilities or maybe a combination of both?

Great question. Probably more about footprint. I think I can deliver digital capabilities within a footprint if I added the footprint as opposed to if we've bought some digital capabilities or bought some digital operations, and I didn't have -- like went out in Charlotte, North Carolina. I'd rather spend money to get into Charlotte and then build from there.

It's a good young market that's growing as opposed to just ignoring it and buying some cool stuff. It doesn't mean they're mutually exclusive. But I think the focus in our shop is more on tuck-ins to the locations we have and any new markets that we should have, top 25 that top 25 DNAs that were really not a big presence.

Great. And for a larger scale M&A, what are some of the tax implications that might be a hindrance or even a benefit that would be part of that thought process?

So we're a REIT. So some sellers would like REIT shares. I think everyone's heard about an UPREIT structure, something that we don't have, that we could put together in a month. We haven't spent the time or resources on the paperwork pending a need. But the tax implications, I'm guessing most of the industry is very low basis.

So sales would create capital gain even for a REIT -- we had a capital gain distribution when we sold our Canadian business. That's something to consider. And frankly, if you took your leverage too high, it becomes even more challenging remaining a REIT, very difficult to pay down debt when you're paying a big dividend.

Great. And then just thinking of longer-term targets, you raised AFFO guide for '25. When we think about '26, how do you see that drifting?

So we can answer, we'll be in the high single-digit growth rate in '25. And without giving too much forward guidance, I would expect to be at least there, if not continue to improve. We do think there's some tailwinds in costs, and we talked about some revenue opportunities in '26. So we feel pretty good about it. Again, we feel pretty good with the changes we've made, portfolio we have, performance. I think that will be reflected in the AFFO.

Great. And how will the mix of billboards and transit continue to evolve in terms of share?

Great question. So we recently in the last few years have been focusing on growing or adding billboard. And frankly, none of our big transit contracts come up until 2030. So we've shed a couple of the smaller ones. So our -- back in 2019, we were 2/3 billboard, 1/3 transit. We don't necessarily like the risk reward or the financial profile of transit. So we're not looking to add until these renewals come up and we can reprice them. So we've given up some transit, and I would expect the emphasis on the billboard, emphasis on large market billboard to remain and grow.

That being said, the [indiscernible], Columbus, Georgia and others have high margin, lower volatility and perform very nice function as balanced or ballast to our overall portfolio. So we like what we have. I would expect to increase our performance and our investment in large billboard markets. And if we can reprice and frankly, as the industry leader in transit, maybe it's up to us to reprice and demonstrate what we intend or comfortable paying. We like the transit properties, again, but we just want to improve the contracts.

Great. And then if we think about free cash flow items, first of all, you've mentioned kind of getting closer to the 4x leverage over time. So is that being part of it, how do we think about your capital allocation priorities evolving, right, as we think about leverage, potential M&A, what are the priorities? And how could we see them evolve as your leverage comes?

First priority, as a REIT, we have a big dividend obligation, and happy to say that our dividend yield has gone down. I remind all equity investors and everyone who asks that we don't control the yield, we control the payout. They control the yield. So that comes out from our EBITDA. We do think we'll pick up modestly our M&A activity on the tuck-ins. We haven't seen a lot of things in the last couple of years that have been interesting.

I don't think we've missed things, but if the industry -- as I mentioned, if the industry is going to have some strategic moves or have some more consolidation, we would look at that. Then otherwise, we would continue to delever organically. We're getting closer to post-dividend free cash flow neutral, which is for a REIT nice to have with funding the MTA and other things, I don't think we're going to be free cash flow positive post dividend, but pre-dividend, which is, I guess, a metric we would be, but the dividend is about $200 million. That shows up a lot of free cash.

Great. And from a CapEx perspective, should we expect it to be similar to this year or...

I think similar. We try to spend about 5% of our revenue. So this year, $85 million -- $85 million to $90 million range. Next year, probably in that same $90 million range. Of that, about $30 million, $35 million is maintenance CapEx, and we increased that because we start proactively replacing digital screens. So apparently, nothing lasts forever. And we have many screens that are older than 10 years. And rather than have the local salespeople and general managers complain, we want to take control of our digital operations group and identify those that should be replaced, not just the squeaky wheels.

So we'll continue to do that, and that's -- probably lasts forever. And I assume the others, not just in out of home, but anyone who has digital screens out there, they don't last forever. We're seeing a similar thing that's in our CapEx in the MTA. If you've been down to the bottom of the 7 train in the summer, it's pretty inhospitable. We've started installing these screens in 2018. So we're discovering how long they last in the elements.

Great. And as we think about '26, whether it's digitization, programmatic, experimental campaigns, what do you think will be a little -- more of the focus? And what are you most excited about when we think about those areas of the business?

Our focus on digital. So anything digital, more digital inventory, selling digital better. We're now directly covering the digital agencies, which we hadn't done before, increasing our focus on programmatic within the digital space. Historically, we've sold digital like it's [Audio Gap] there were a bunch of new hires, we can sell them more integrated with some others, the retail media networks that are within stores.

We have digital screens outside those stores. Why can't we link those? Same thing with stadiums for the sports teams. They now have on-premise or in-premise advertisements. So we can partner better with more people with digital. We're never going to exit static. There's all kinds of iconic statics, but greater focus on selling digital better will help our margin. You don't have to roll trucks and other things. And I think it will help grow our revenue higher than historical rates.

Great. Well, that's all the time we have. Matt, thank you so much for joining us today.

Thanks, everyone, for coming.

Hello, and welcome to the OUTFRONT Media Third Quarter 2025 Earnings Call. My name is Carla, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Stephan Bisson, to begin. Please go ahead when you're ready.

Good afternoon and thank you for joining our 2025 third quarter earnings call. With me on the call today are OUTFRONT's CEO, Nick Brien; and CFO, Matthew Siegel. After a discussion of our financial results, we'll open the lines for a question-and-answer session.

Our comments today will refer to the earnings release and slide presentation that you can find on the Investor Relations section of our website, outfront.com. After today's call has concluded, an audio archived replay will be available there as well. This conference call may include forward-looking statements. Relevant factors that could cause actual results to differ materially from these forward-looking statements are listed in our earnings materials and in our SEC filings, including our 2024 Form 10-K as well as our Q3 2025 Form 10-Q, which we expect to file tomorrow.

We will refer to certain non-GAAP financial measures on this call. Any references to OIBDA made today will be on an adjusted basis. Reconciliations of OIBDA and other non-GAAP financial measures are available in the appendix of the slide presentation, the earnings release and our website, which also includes presentations with prior period reconciliations.

With that, let me hand the call over to Nick.

Thanks, Stephan, and thank you, everyone, for joining us today. We're pleased to be here today reporting our third quarter results, which came in ahead of where we had anticipated when we spoke 3 months ago, given a sizable increase in demand, particularly within our transit business.

As you can see on Slide 3, which summarizes our headline numbers, consolidated revenues were up 3.5%, driven by 24% growth in transit, while consolidated OIBDA was up 17% to $137 million, and AFFO was up 24% to $100 million.

Slide 4 shows our more detailed revenue results. Billboard revenues were down 2.2%, primarily due to our previously announced exit of 2 large marginally profitable billboard contracts in New York and L.A. as the revenues and expenses of these contracts are still included in our reported 2024 financial statements.

Excluding the results of these contracts, billboard revenues would have been up a little over 1%. Transit grew an impressive 24%, led by the New York MTA, which was up a massive 37% during the quarter, given the launch of several large campaigns, particularly within the tech, finance, CPG, pharma and health categories.

Slide 5 shows our detailed billboard revenue, which, as I mentioned earlier, was impacted by the 2 large billboard contracts we've exited. On a reported basis, static and other billboard revenues were down 2.5% during the quarter and digital billboard revenues were down 1.4%.

However, I believe it is important to note that excluding the results of the 2 large billboard contracts we exited from the comparable prior year period, digital revenues would have been up over 5%.

Slide 6 shows our detailed transit revenue, which grew nearly 24% during the quarter. Our digital transit revenues were up over 50% to $56 million and static revenues were almost up 4%. Much of the strength of this quarter was driven by larger brands with enterprise transit revenues up over 30%.

Commercial was also a significant contributor to transit growth, up high single digits during the quarter. We are immensely proud of these results, which have been driven by the strengthening of our transit growth team and a focus on distinct go-to-market sales solutions. On a consolidated revenue basis, our stronger categories during the quarter were legal, financial, tech and travel. The weaker categories during the quarter were retail, alcohol, and government political.

Slide 7 shows our combined digital revenue performance, which grew over 12% in the quarter and represented 35.4% of our total revenues. Even more impressive, excluding the aforementioned New York and L.A. contracts, digital revenues would have grown by nearly 18%. Programmatic and digital direct automated sales were up nearly 30% during the period and represented 19.4% of our total digital revenues, up from 16.8% in the same period last year.

While on the topic of programmatic and digital, I'd like to highlight the strategic partnership that we announced with AWS last month, which we believe will usher in a new era for the out-of-home medium.

In a first for the industry, this initiative will enable the planning, buying and measurement of our inventory from end to end, creating new sales opportunities and advancing a way agencies and brands can access, interact, transact and measure their media in smarter, more efficient ways.

While we are in the early days of these partnerships, we're very encouraged by the opportunities and are extremely excited about its future potential.

Moving on, the breakdown of commercial and enterprise revenues can be seen on Slide 8. Enterprise grew by 7% during the third quarter with a huge 30-plus percentage point increase in transit, I previously mentioned, being offset by a mid-single-digit decline in billboard.

Commercial was essentially flat year-on-year during the quarter with high single-digit transit growth, offset by slightly weaker billboard revenues.

Slide 9 shows our billboard yield growth, which was up about 1.4% year-over-year to over $3,000 per month, driven primarily by our new digital inventory. Summing up, we were pleased with our quarter 3 performance. And encouragingly, we are seeing these strong top line trends continue into the fourth quarter.

With that, let me now hand it over to Matt to review the rest of our financials.

Thanks, Nick, and good afternoon, everyone. Please turn to Slide 10 for a more detailed look at our billboard expenses. In total, billboard expenses were down nearly $11 million or almost 5% year-over-year. Zooming in on lease costs, these expenses were down almost $9 million or about 7.5% year-over-year. This decline includes approximately $10 million related to the large billboard contracts in New York and Los Angeles that we exited, which was partially offset by the contractual escalators on fixed leases.

Excluding the impact of the portfolio exits, billboard property lease expense would have been up less than 1%, which reflects our continued portfolio management efforts. Posting, maintenance and other expenses were up just under $2 million or 4.5% due to higher production costs and compensation-related expenses from regular annual merit increases.

SG&A expenses declined by about $3.6 million or 5.3% due primarily to lower credit card usage by customers, lower compensation-related expenses following our June RIF and a lower provision for doubtful accounts. This nearly $11 million improvement in total billboard expenses was partially offset by the modest decline in billboard revenues Nick described earlier and led to billboard adjusted OIBDA increasing by about $3 million or 2.1%.

We are pleased to see billboard adjusted OIBDA margin increase again this time by 170 basis points year-over-year to 39.5%, helped by recent portfolio management decisions as well as the geographic mix of revenue generated in the third quarter. We continue to expect billboard margins will improve on a year-on-year basis for the remainder of 2025.

Now turning to transit on Slide 11. In total, transit expenses were up about $2.9 million or a little over 3% year-over-year. Transit franchise expense was up 2% due primarily to the annual inflation adjustment to the MAG for the MTA contract. Posting, maintenance and other expenses were up about $2 million or about 13% due primarily to higher maintenance and utilities costs.

SG&A expenses were down $300,000 or about 2%, primarily due to lower credit card usage by customers. The 3% increase in total transit expenses, combined with the nearly 24% transit revenue growth described earlier, led to a transit adjusted OIBDA improving by more than $18 million during the quarter to a profit of nearly $16 million.

Slide 12 shows the company's combined billboard transit and corporate adjusted OIBDA in the third quarter. Corporate expense rose by about $2 million due primarily to higher professional fees, including a management consulting project that ended on August 31 and costs related to the refinancing of our senior credit facilities.

Combined with the billboard and transit OIBDA I covered earlier, adjusted OIBDA totaled about $137 million, up nearly 17% compared to last year. Much of this increase is attributable to our improved performance within the New York MTA as incremental revenue growth within this important franchise is extremely high margin.

Turning to capital expenditures on Slide 13. Q3 CapEx spend was about $21 million, including about $6 million of maintenance spend. We converted 29 new boards to digital in Q3 2025. For the full year, we still expect to spend approximately $85 million of CapEx with $30 million to $35 million of this total expected for maintenance.

Looking at AFFO on Slide 14, you can see the bridge to our Q3 AFFO of $100 million. The improvement is principally driven by higher billboard and transit OIBDA, which was partially offset by higher corporate expense. Also, I'm pleased to tell you we are raising our AFFO guidance for the full year and now expect that our reported 2025 consolidated AFFO will grow in the high single-digit range versus our prior mid-single-digit expectation.

Included in this guidance is the previously noted maintenance CapEx, interest expense of approximately $140 million to $145 million and a small amount of cash taxes.

Please turn to Slide 15 for an update on our balance sheet. During the quarter, we refinanced our senior secured credit facilities, which pushed the maturity of our term loan from November 2026 to September 2032 and increased the size by $100 million to $500 million. We also extended the maturity of our revolving credit facility to 2030. Committed liquidity is over $700 million, including about $60 million of cash, around $500 million available by our revolver and $150 million available by our accounts receivable securitization facility. As of September 30, our total net leverage dropped to 4.7x within our 4 to 5x target range.

Turning to our dividend. We announced today that our Board of Directors maintained a $0.30 cash dividend payable on December 31 to shareholders of record at the close of business on December 5. We spent just $2 million on acquisitions during the quarter. And looking at our current acquisition pipeline, we continue to expect our 2025 deal activity to be similar to levels reached in recent years.

With that, let me turn the call back over to Nick.

Thank you, Matt. As I mentioned earlier, the top line strength we saw in the third quarter has continued into the fourth. And from where we sit today, we expect fourth quarter revenue growth to improve slightly from quarter 3's results with consolidated revenues up in the low, mid-single digits, driven by mid-teens growth in transit and low single-digit growth in billboard.

These figures include the headwind created by our strategic decision to exit the 2 large marginally profitable billboard contracts in New York and Los Angeles. Excluding the $11 million of billboard revenue generated by these 2 exited contracts in the fourth quarter of 2024, we believe quarter 4 billboard revenues would be up mid-single digits and consolidated revenue would be in the mid- to high single-digit range.

Just as important as the numbers themselves is what lies behind them. The media and marketing landscape continues to undergo a massive sea change, born of GenAI content capabilities and the rise of the media planning LLMs.

We are witnessing major brand advertisers retrench from the bottom of the funnel digital performance advertising seeking to strengthen their brand equity while improving overall business performance. They know that creating emotional brand experiences that are remembered and shared are the most trusted forms of marketing activities. There is no better way to deliver these engaging and unskippable brand experiences than in real life.

OUTFRONT is the premium out-of-home leader in the U.S. with excellent assets and IRL brand-building capabilities in the most important markets for the -- our advertisers to participate in culture and create communities of loyal fans and advocates. Our scale, coverage and breadth of services enables us to do full funnel marketing campaigns across the U.S., whether you're a Fortune 500 brand, a regional bank or a local family-owned auto dealer.

We're starting to break through with many of the largest brand marketeers as they would reconsider the power and value of out-of-home and IRL in today's AI-fueled digital advertising ecosystem.

And with that, operator, let's now open the lines for some questions.

[Operator Instructions] And our first question comes from Daniel Osley with Wells Fargo.

A question for Nick. You previously described 2025 as a year of transformation. As we exit this year and look towards '26, how do you think the company is positioned compared to your strategic objectives?

Well, thank you, Daniel. I appreciate that question. I appreciate you remembering that we were very clear in my first earnings call with the 4 strategic imperatives that we saw as absolutely critical to deliver the transformation velocity. I've been very, very impressed with the team, both some of the existing leaders in the organization as well as some of the new talented leaders we have attracted to really focus on the most important things that matter.

And the results we are hoping to demonstrate they're showing themselves to you in quarter 3. We've given you an increase in our guidance for quarter 4, and the momentum continues. So everything we put in place around our culture, our sales enablement, our technology underpinning, our basic operational excellence across the board sets us up to continue the momentum that the transformation velocity agenda, the strategy we set with the Board is being executed. And executed with real focus and with impressive results starting to show.

That's helpful. And a quick follow-up, if I may. On quarter 3, transit growth in the quarter was clearly very strong. Can you help to further unpack the drivers of the momentum you've seen there? And maybe touch on expectations for how you think growth shapes up into next year?

Well, we're extremely pleased with the transit focus, and it was a combination of the 3 things we set, we mentioned earlier. One was the creation of the transit velocity team, led by a dedicated growth leader across both sales and marketing, a real focus on the product marketing details to do with all aspects of transit, especially with the New York MTA. And then dedicated campaign focus with some of the most exciting brands to be able to say that the MTA is a platform for creating these brand experiences in real life as opposed to only running ads.

Now we have been focused on both, but we're starting to see that kind of momentum when I look at the work that sees an existing right now today within the New York MTA between the Bath & Body Works, where they have the experience that they've created around smell.

I mean the full takeover, the combination of advertising and experiences, what we did with ESPN, with E Train, we turned it into the ESPN Train. We took the leadership all the way down to Wall Street. They rang the bell. It had their mascots, it had their fans. The MTA and not just the MTA, but all of our transit assets allow us to really talk to some of the biggest brands that have very high brand awareness. They may not want more brand awareness, but they certainly want the brand experiences that can be shared, they can be amplified and they're certainly highly memorable with existing customers and with prospects. So I think the team are enjoying the success. They've worked extremely hard to deliver it.

So again, that combination of focus, the combination of further research and capability setting for the sales teams and as importantly, demonstrating the results of these campaigns in terms of whatever the success metrics the clients have put in place at the beginning. So we have nothing but confidence that the momentum will continue.

The next question comes from Cameron McVeigh with Morgan Stanley.

Nick, I was hoping you could talk a little bit more about your decision to restructure the sales function and particularly in transit, maybe what you've learned? And then secondly, is someway ridership still a factor in the advertiser's decision to utilize these MTA boards? If not, curious what the most important metric there is.

Okay. Well, thank you, Cameron. Thank you for the question. Let's start with the first one. The restructuring of the sales organization was to recognize that between enterprise and commercial that we knew we had a different level of sophistication in terms of the kind of conversations we were having with the different kind of clients. And we needed to have a more specific, custom and qualified sales conversations with the strategic accounts, with the enterprise accounts. And then we recognize in the commercial side, and don't forget, this was an industry that's always been called national to local, which I always felt coming in again from the outside, not a seller, somebody who's been a strategic buyer and agency leader with some of the biggest brand marketers in the world, it was too unsophisticated.

And in commercial, we have regional, and we have the small and medium businesses. And we recognize that we needed to create that focus and the unique capability set because the way you engage with a Coca-Cola or McDonald's, Procter & Gamble is very different to dealing with a Tier 4 auto dealer or a regional bank that wants to extend through acquisition. So that was the rationale between the restructuring of the sales organization despite the fact that we were going to underpin from a cultural point of view, a technology point of view, a data point of view, the capabilities would be there to support both.

Now when it came to transit, that's not a dedicated sales change. That's more recognizing that the product marketing and the dedicated focus of that sale required a more -- a different approach to just saying it's a mobile billboard. This was -- this is the fabric of major cities, whether it be San Francisco, whether it be L.A., whether it be Boston, certainly in New York City.

And we basically gave more dedicated organization around the growth team that was a combination of sales, marketing, product marketing and customer success. And that's why we've seen that kind of continued momentum. When I look at those clients, Capital One, Chase, the work we've done with Unilever. What's on the front cover you see there with Swiffer and what we did with them. I mean these are major brands coming to the medium, and they're recognizing that the transit medium is something that's exciting and more specific for them.

So it's really about focus and about capabilities, but it falls within the same structure between enterprise sales and commercial sales. And both have as relevant an opportunity to imagine how their respective brands and marketeers would want to use the -- our transit medium.

So the next question comes from David Karnovsky with JPMorgan.

Nick, maybe as you look ahead to '26, I just wanted to get your view on an outlier event like the World Cup, given your footprint and how you're kind of viewing also just the entertainment vertical and the prospect for more recovery there.

Okay. Well, thank you, David. Thank you for the question. Let me start with the second one first. I think the entertainment category is clearly one that has been discussed a lot and very publicly discussed in terms of the implications.

And there's certainly the highlights, there's highs and lows. I mean the lows that we've recognized in 2024 have really more to do with the network. When we think about entertainment, we think about ABC, NBC, Fox, these kind of network full launches, they're not disappearing, but they're certainly not extensive as they were.

When we look at quarter 4 entertainment in summary, there is less content. There are shorter media spend windows and the budgets are smaller. However, even though we recognize that TV has been suffering in entertainment, we've got highs for 2026 that we're pretty excited about in the sense that the strike, when we think about '22, '23, a lot of that production got moved to '24. I've personally had a number of conversations with some of the most significant studios here with our -- in L.A. with our Head of our Entertainment practice. And the general feeling is really that it's going to be a healthy 2026 for both film and streaming. There's a good slate on the docket. So we're feeling positive about that.

And I think when we talk about entertainment, we're talking about those are the brands that we really want to be focusing on making sure that our strength of relationship means we're extending share, obviously, from our competitors as well. So hopefully, that provides you the perspective on the entertainment sector.

And on the first part of the question, about World Cup?

Well, we're very excited about the World Cup. I mean we've got a number of significant conversations going on with some very significant enterprise brands who have committed significantly to World Cup, to Olympics to generally a lot more sports sponsorship that they want to activate. We are one of our most progressive real estate leaders who had advanced some very good conversations during the Super Bowl in New Orleans to extend the opportunity with temporary permitting to allow some of the biggest NFL sponsors to really get behind extending what they could do beyond in stadium. And that was a huge success for us. I think we generated between $7 million to $8 million incremental revenue.

So we're extending that practice. We've now turned that into a line of business. So when we're talking about brand experiences, and this is the thing that is one of the biggest opportunities this medium has and certainly we're seizing on, which is there will always be those advertisers who want to run ads and they want to build their brand exposure. There are many of the more sophisticated, well-known global brands that have all the awareness in the world. They're not interested in more exposure. They're interested in these brand experiences that enhance their brand equity in a really dramatic way. This team, we put together a dedicated team to really focus on those brand experiences from a real estate point of view, from a strategic point of view, from a creative point of view and from a measurement point of view.

And we're having conversations with a number of the experiential agencies, the biggest ones that are out there independent and owned by the holdcos about how they can look at our medium and imagine that we can help co-create these IRL experiences. So we feel bullish about it. Too early to talk about the conversations we're having, but they're extensive. So we're feeling good about World Cup specifically.

[Operator Instructions] And our next question comes from Patrick Sholl with Barrington Research.

I was just wondering if like the government shutdown has had any impact on ad trends, whether across billboard or static and just the general, if that's affected any of those planning decisions on the part of your advertisers?

Pat, it's Matt. I'll take that one. We really haven't seen any material impact from the government shutdown. Obviously, the population in D.C. isn't fully in the office at this point, but we're not seeing the impact on our transit properties there.

[Operator Instructions] And as we have no further questions in the queue, I will hand back over to Nick for any final comments.

Well, thank you, everybody. And we really always appreciate you joining us today. And certainly, we hope to see and meet many of you at the various conferences and events this winter. But for those that we don't, we look forward to presenting our quarter 4 results to you in February. Thank you all very much.

Thank you, everyone. This does conclude today's call. Thank you for joining. You may now disconnect. Have a great rest of your day.