Yahoo Finance News Corp (NWS) Q3 2024 Earnings Call Transcript Highlights: A Mixed Financial Performance with ...
Total Revenue: $2.4 billion, down 1% year-over-year.
Adjusted Revenue: Flat compared to the prior year.
Total Segment EBITDA: $322 million, up 1% year-over-year.
Earnings Per Share: Reported at $0.05, down from $0.09 year-over-year.
Adjusted Earnings Per Share: $0.11, up from $0.09 year-over-year.
Free Cash Flow: $491 million in the first 3 quarters, up 53% from $320 million year-over-year.
Digital Revenue: Accounts for over half of total revenues.
Digital Subscriptions Growth: Increased 17% year-over-year at Dow Jones.
Advertising Revenue: Digital advertising rose 4% compared to the prior year.
Print Advertising: Continues to show weakness with a decline of 11%.
Dow Jones Revenue: $544 million, up 3% year-over-year.
Dow Jones Segment EBITDA: $118 million, up 8% year-over-year.
Book Publishing Revenue: $506 million, down 2% year-over-year.
Book Publishing Segment EBITDA: $62 million, up 2% year-over-year.
News Media Revenue: $530 million, down 6% year-over-year.
News Media Segment EBITDA: $26 million, down significantly year-over-year.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
News Corp (NASDAQ:NWS) reported a 53% increase in free cash flow in the first three quarters compared to the same period last year.
Digital revenue now accounts for over half of total revenues, highlighting a successful digital transformation.
Dow Jones' professional information business saw double-digit revenue growth and an increase in profit margin from 20.6% to 21.7%.
Digital subscriptions at Dow Jones increased by 17% year-over-year, with significant growth in average daily digital subscriptions.
REA Group's robust performance in Australia contributed to a 15% year-over-year revenue increase, reinforcing its position as the leading digital real estate platform in the country.
Negative Points
Total revenues for Q3 were down 1% compared to the prior year, indicating some challenges in revenue growth.
The U.S. housing market faced difficulties due to high mortgage rates, impacting News Corp (NASDAQ:NWS)'s operations in the sector.
Print advertising remains weak, with a continued decline despite a 4% rise in digital advertising.
The Subscription Video Services segment saw a 5% decline in revenues compared to the previous year, with challenges in streaming revenue growth.
News Media segment faced a 6% decline in revenues, with advertising revenue particularly weak across all markets.
Q & A Highlights
Q: Can you provide details on the investment in Move, specifically how much is going into marketing versus product development, and are you targeting sell-side agents with this spend? A: (Robert J. Thomson, CEO & Director) - The focus is on ensuring a solid backend and great user interface, providing value for money, and focusing on buy-sell dynamics. The partnership with Zillow on rentals is aimed at benefiting both companies. (Susan Lee Panuccio, CFO) - The investment is roughly evenly split between marketing and product development. Compared to last year, there's a significant increase in marketing spend due to reduced expenditure in the previous year.
Q: What are the current demand trends in Book Publishing, particularly with big box retailers, and how is the Spotify partnership influencing the market for audio books? A: (Robert J. Thomson, CEO & Director) - There was a slight pause in book purchases last quarter, but a strong performance is returning. The partnership with Spotify has significantly boosted audio book streaming revenue. (Susan Lee Panuccio, CFO) - The market was a bit softer in Q3, but stronger performance is expected in Q4 compared to last year.
Q: Could you elaborate on the renewal of the Google transaction and its financial implications? A: (Robert J. Thomson, CEO & Director) - The deal is a renewal of the existing agreement and does not cover payments for AI use of content. Financial negotiations regarding AI will occur later. (Susan Lee Panuccio, CFO) - Financially, the deal is consistent with the previous agreement.
Q: What progress has been made in simplifying the company structure, and what timeline can investors expect for these changes? A: (Robert J. Thomson, CEO & Director) - The company is advancing in planning and regulatory steps to ensure flexibility and optionality. The aim is to generate momentum and maximize shareholder value, with significant developments expected soon.
Q: What are the drivers behind the sequential decline in BINGE subscribers at Foxtel, and what are your responses? A: (Susan Lee Panuccio, CFO) - The decline is largely due to the impact of the writer's strike on content availability, which affected subscriber numbers.
Q: Given the uncertain macro outlook, particularly for advertising and the U.S. housing market, are there plans for further cost reductions? A: (Susan Lee Panuccio, CFO) - The company continues to focus on cost efficiencies across all businesses, building on previous initiatives like the 5% headcount reduction and joint ventures for cost savings. These efforts are expected to help offset any potential revenue shortfalls.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
