USA TODAY Co., Inc. (TDAY)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on February 26, 2026. Management's Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements that reflect our plans, estimates, and beliefs, all of which are based on our current expectations and could be affected by certain uncertainties, risks, and other factors described under "Cautionary Note Regarding Forward-Looking Statements," "Risk Factors," and elsewhere throughout this Quarterly Report on Form 10-Q, as well as the factors described in our Annual Report on Form 10-K for the year ended December 31, 2025, and subsequent periodic reports filed with the Securities and Exchange Commission, particularly under "Risk Factors." Our actual results could differ materially from those discussed in the forward-looking statements.

OVERVIEW

We are a diversified media company with expansive reach at the national and local level dedicated to empowering and enriching communities. Our mission is to inspire, inform, and connect audiences. As a media and digital marketing solutions company we are focused on sustainable growth. Through our trusted brands, including the USA TODAY NETWORK, comprised of the national publication, USA TODAY, and our network of local properties, in the United States (the "U.S."), and Newsquest, a wholly-owned subsidiary operating in the United Kingdom (the "U.K."), we provide essential journalism, local content, and digital experiences to audiences and businesses. We deliver trusted unbiased journalism when and where consumers want it. LocaliQ, our digital marketing solutions brand, supports small and medium-sized businesses ("SMBs") with innovative digital marketing products and solutions.

We report in three segments: USA TODAY Media, Newsquest and LocaliQ. We also have a Corporate category that includes activities not directly attributable to a specific reportable segment and includes expenses associated with broad corporate functions. A full description of our reportable segments is included in Note 12 — Segment reporting in the notes to the condensed consolidated financial statements.

Industry trends

We have considered several industry trends when assessing our strategy:

•Print advertising and Print circulation revenues have and are expected to continue to decline as our audience increasingly moves to digital platforms. We seek to optimize our print operations to efficiently manage for the declining print audience. We are focused on growing a digitally-oriented audience across multiple platforms and revenue streams.

•Shortages of newsprint have resulted in price volatility, and we have experienced and expect continued price increases in 2026.

•Our revenues and results of operations continue to be influenced by general macroeconomic conditions, including, but not limited to, trade policy, inflation, interest rates, housing demand, employment levels, and consumer confidence, as well as economic and political instability, global conflicts, and other geopolitical events. We believe that these factors are contributing to uncertainty, which is resulting in lower levels of advertising performance and reduced spending.

•We rely on third-party platforms from large technology companies, particularly search engines, social media platforms, and emerging technologies. These platforms exert significant control over the visibility and ranking of our content, and their actions can adversely impact traffic, engagement, and revenues. Additionally, these companies can influence both the type of media we acquire and the associated costs. We continue to adapt by diversifying our digital strategies and optimizing content distribution to mitigate these impacts.

•The application of artificial intelligence ("AI") and the rapid rate of change within the AI ecosystem is increasing the pace of change in the media sector.

Macroeconomic environment

We are exposed to certain risks and uncertainties caused by factors beyond our control, including, among other things, trade policy, inflation, interest rates, housing demand, employment levels, and consumer confidence, as well as economic and political instability, global conflicts, and other geopolitical events. We believe that these uncertain economic conditions have

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adversely impacted and may continue to have an adverse impact on our revenues, and the occurrence of these factors has resulted in a reduction in demand for our print and digital advertising, reduced the rates for our advertising, and caused marketers to shift, reduce or stop spend.

We are exposed to potential increases in interest rates associated with our 2029 Term Loan Facility, which as of June 30, 2026, accounted for approximately 74% of our outstanding debt, as well as fluctuations in foreign currency exchange rates, primarily related to our operations in the U.K. We expect continued uncertainty and volatility in the U.S. and global economies which will continue to impact our business.

Seasonality

We experience seasonality in our revenues. The USA TODAY Media segment typically witnesses the greatest impact from seasonality in the third quarter, primarily attributed to reduced population in seasonal markets and decreased holiday related spending. The LocaliQ segment generally experiences the greatest impact from seasonality in the first half of the fiscal year, which can be attributed to the advertising needs of specific verticals, which are generally lower in the first half of the year.

Foreign currency

Our U.K. media operations are conducted through our Newsquest subsidiary. In addition, we have foreign operations in regions such as Canada, Australia and New Zealand. Earnings from operations in foreign regions are translated into U.S. dollars at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Currency translation fluctuations have and are expected to continue to impact revenues, costs and Segment Adjusted EBITDA for our international operations. For example, our international revenues are favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. During the three and six months ended June 30, 2026, foreign currency exchange rate fluctuations had a positive impact on our revenues and Segment Adjusted EBITDA and a negative impact on costs.

Reclassifications

Certain reclassifications have been made to the prior periods unaudited condensed consolidated financial statements to conform to classifications used in the current periods. These reclassifications had no impact on net income (loss), equity or cash flows as previously reported.

Use of website to distribute material company information

Our website is www.usastodayco.com. Information contained on our website is not part of this Quarterly Report on Form 10-Q. We use our website as a distribution channel for material company information. Financial and other important information regarding the Company is routinely posted on and accessible on the Investor Relations and News and Events subpages of our website, which are accessible by clicking on the tab labeled "Investor Relations" and "News and Events", respectively, on the website home page. Therefore, investors should look to the Investor Relations, and News and Events subpages of the Company's website for important and time-critical information.

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RESULTS OF OPERATIONS

Consolidated summary

A summary of our consolidated results is presented below. Refer to Segment results below for a discussion of results by segment.

*** Indicates an absolute value percentage change greater than 100.

(a)    Amounts are net of intersegment eliminations of $28.4 million and $34.8 million for the three months ended June 30, 2026 and 2025, respectively, and $56.8 million and $69.3 million for the six months ended June 30, 2026 and 2025, respectively. Intersegm

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

OVERVIEW

We are a diversified media company with expansive reach at the national and local level dedicated to empowering and

enriching communities. Our mission is to inspire, inform, and connect audiences. As a media and digital marketing solutions

company we are focused on sustainable growth. Through our trusted brands, including the USA TODAY NETWORK,

comprised of the national publication, USA TODAY, and our network of local properties, in the United States (the "U.S."), and

Newsquest, a wholly-owned subsidiary operating in the United Kingdom (the "U.K."), we provide essential journalism, local

content, and digital experiences to audiences and businesses. We deliver trusted unbiased journalism when and where

consumers want it. LocaliQ, our digital marketing solutions brand, supports small and medium-sized businesses ("SMBs") with

innovative digital marketing products and solutions.

In November 2025, we changed our corporate name from Gannett Co., Inc. to USA TODAY Co., Inc. and we revised the

names of two of our reportable segments: Domestic Gannett Media is now referred to as USA TODAY Media and Digital

Marketing Solutions is now referred to as LocaliQ. We do not distinguish between our prior and current corporate and

reportable segment names and refer to our current corporate and reportable segment names throughout this Annual Report on

Form 10-K. As such, unless expressly indicated or the context requires otherwise, the terms "USA TODAY Co.," "Company,"

"we," "us," and "our" in this document refer to USA TODAY Co., Inc., a Delaware corporation, and, where appropriate, its

subsidiaries.

We report in three segments: USA TODAY Media, Newsquest and LocaliQ. We also have a Corporate category that

includes activities not directly attributable to a specific reportable segment and includes expenses associated with broad

corporate functions. A full description of our reportable segments is included in Note 15 — Segment reporting in the notes to

the Consolidated financial statements.

Strategy and executive summary

We are focused on becoming a sustainable, growth‑driven media and digital marketing solutions company. Our strategy is

rooted in three operating pillars: (i) expanding our reach and engagement, (ii) diversifying our digital revenues, and (iii)

strengthening our capital structure, all supported by an increasingly integrated operating foundation, including modernized

technology systems, automated workflows, enhanced data capabilities, and continued investment in our people and talent

development. Our strategy unifies trusted journalism and digital innovation under one brand: USA TODAY Co. and is

represented by our motto, "National voice. Local strength." Our consolidated results for the year ended December 31, 2025,

reflect the execution of our operating priorities, including the changes in our mix of revenues, cost structure, and capital

allocation.

Expand reach and engagement with our customer segments

We aim to grow and strengthen our large national and local audiences across our USA TODAY Media, Newsquest, and

LocaliQ segments by delivering relevant content and expanded offerings, and as of December 31, 2025, we have built one of

the largest digital audiences in the U.S. media sector, both locally and nationally.

Diversify digital revenues

We seek to accelerate digital revenue growth by developing a broad portfolio of monetization channels on our platforms,

maximizing yield, and tailoring opportunities to individual consumer behavior. We aim to accomplish this by offering a wide

range of solutions across advertising, subscriptions, and commerce, while increasingly leveraging our existing content to power

syndication, affiliate, content and AI partnerships, as well as licensing arrangements. As a result of these efforts, as of

December 31, 2025, total Digital revenues as a percentage of total revenues increased by two percentage points to 46%

compared to 44% at December 31, 2024.

Strengthen our capital structure

We remain focused on reducing debt, generating consistent cash flow, and creating flexibility to reinvest in growth

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initiatives with the goal to support long‑term financial resilience and innovation. During the year ended December 31, 2025, we

repaid $135.5 million of long-term debt and as of December 31, 2025 had cash provided by operating activities of $114.4

million.

Industry trends

We have considered several industry trends when assessing our strategy:

•Print advertising and Print circulation revenues have and are expected to continue to decline as our audience

increasingly moves to digital platforms. We seek to optimize our print operations to efficiently manage for the

declining print audience. We are focused on growing a digitally-oriented audience across multiple platforms and

revenue streams.

•Shortages of newsprint have resulted in price volatility and in 2026, we expect to see price increases.

•Our revenues and results of operations continue to be influenced by general macroeconomic conditions, including, but

not limited to, trade policy, inflation, interest rates, housing demand, employment levels, and consumer confidence.

We believe that these factors are contributing to uncertainty, which is resulting in lower levels of advertising

performance and reduced spending.

•We rely on third-party platforms from large technology companies, particularly search engines, social media

platforms, and emerging technologies. These platforms exert significant control over the visibility and ranking of our

content, and their actions can adversely impact traffic, engagement, and revenues. Additionally, these companies can

influence both the type of media we acquire and the associated costs. We continue to adapt by diversifying our digital

strategies and optimizing content distribution to mitigate these impacts.

•The application of AI and the rapid rate of change within the AI ecosystem is increasing the pace of change in the

media sector.

Recent developments

On January 31, 2026, we completed the transfer of The Detroit News from MediaNews Group (the "Detroit News

Transaction"). Financing for the Detroit News Transaction was funded partially with cash on the balance sheet, and in part with

incremental debt financing under our 2029 Term Loan Facility in an aggregate principal amount equal to $15.0 million from

funds managed by affiliates of Apollo Global Management Inc.  As part of the financing, certain terms of our 2029 Term Loan

Facility, as described in Note 9 — Debt and Note 16 — Subsequent events in the notes to the Consolidated financial statements,

were amended. Subsequent to the Detroit News Transaction the 2029 Term Loan Facility will bear interest at an annual rate

equal to Adjusted Term SOFR plus a margin of 4.5% with a floor of 150 basis points.

Recently enacted U.S. tax legislation

On July 4, 2025, the President signed into law H.R. 1, titled the "One Big Beautiful Bill Act" (the "Act"), which introduced

significant tax law changes with varying effective dates for businesses. We have evaluated the provisions of the Act on the

Consolidated financial statements, and its impact was included in our income tax provision for the year ended December 31,

2025. Key provisions of the Act applicable to us include the reinstatement of EBITDA, rather than EBIT, in determining

adjusted taxable income under Section 163(j), the immediate expensing of domestic research and experimental expenditures,

and the extension of 100% bonus depreciation for qualified property placed in service after January 19, 2025. Beginning with

2026, the legislation also makes changes to the Global Intangible Low-Taxed Income regime, including an increase in the

effective tax rate and modifications to the calculation of tested income. As a result of the changes in determining adjusted

taxable income under Section 163(j), the Company's limitation on the deductibility of business interest expense and our

corresponding valuation allowance on non-deductible U.S. interest expense carryforwards was reduced.

Macroeconomic environment

We are exposed to certain risks and uncertainties caused by factors beyond our control, including, among other things,

trade policy, inflation, interest rates, housing demand, employment levels, and consumer confidence, as well as economic and

political instability and other geopolitical events. We believe that these uncertain economic conditions have adversely impacted

and may continue to have an adverse impact on our revenues, and the occurrence of these factors has resulted in a reduction in

demand for our print and digital advertising, reduced the rates for our advertising, and caused marketers to shift, reduce or stop

spend.

We are exposed to potential increases in interest rates associated with our $900.0 million five-year first lien term loan

facility (the "2029 Term Loan Facility"), which as of December 31, 2025, accounted for approximately 75% of our outstanding

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debt, as well as fluctuations in foreign currency exchange rates, primarily related to our operations in the U.K. We expect

continued uncertainty and volatility in the U.S. and global economies which will continue to impact our business. See "Item 1A

— Risk Factors" in this Annual Report on Form 10-K.

Seasonality

We experience seasonality in our revenues. The USA TODAY Media segment typically witnesses the greatest impact from

seasonality in the third quarter, primarily attributed to reduced population in seasonal markets and decreased holiday related

spending. The LocaliQ segment generally experiences the greatest impact from seasonality in the first half of the fiscal year,

which can be attributed to the advertising needs of specific verticals, which are generally lower in the first half of the year.

Foreign currency

Our U.K. media operations are conducted through our Newsquest subsidiary. In addition, we have foreign operations in

regions such as Canada, Australia and New Zealand. Earnings from operations in foreign regions are translated into U.S. dollars

at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the

balance sheet date. Currency translation fluctuations may impact revenue, expense, and operating income results for our

international operations. For example, our international revenues are favorably impacted as the U.S. dollar weakens relative to

other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. During

the year ended December 31, 2025, foreign currency exchange rate fluctuations had a positive impact on our revenues and

profitability.

Reclassifications

Certain reclassifications have been made to the prior years' Consolidated financial statements to conform to classifications

used in the current year. These reclassifications had no impact on net income (loss), equity or cash flows as previously reported.

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RESULTS OF OPERATIONS

Consolidated summary

A summary of our consolidated results is presented below. Refer to Segment results below for a discussion of results by

segment.

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