News and information provider The New York Times Co. (NYT 0.78%) reported third-quarter earnings on Monday, Nov. 4, that fell just short of estimates on the top line but topped bottom-line estimates. The quarter's adjusted earnings per share (EPS) stood at $0.45, surpassing expectations of $0.41, showcasing solid performance. Despite a slight miss on revenue estimates at $640.2 million, the company indicated a robust 7% growth, affirming positive momentum in digital subscriptions and profitability.
The overall quarterly performance was solid, marked by growing digital engagement but shadowed by continued challenges in traditional print advertising.
| Metric | Q3 2024 | Analysts Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $0.45 | $0.41 | $0.37 | 22% |
| Revenue | $640.2 million | $641.0 million | $598.3 million | 7% |
| Digital advertising revenue | $81.6 million | - | $75.0 million | 8.8% |
| Digital-only subscribers | 10.47 million | - | 9.41 million | 11.3% |
| Digital-only ARPU | $9.45 | - | $9.28 | 1.8% |
Source: The New York Times. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. ARPU = Average revenue per user.
Overview of The New York Times Co.
The New York Times Co. is a premier media company, known for its high-quality journalism and diverse content offerings. It has been focusing on expanding its digital subscription model, as evidenced by its acquisition strategy, which includes The Athletic and interactive products like Cooking and Games. The company's primary revenue driver is digital subscriptions, and it aims to reach 15 million digital subscribers by 2027. Maintaining robust journalism standards is crucial to its business model, cementing its brand reputation and appeal.
Beyond subscriptions, advertising remains a significant income stream, particularly digital advertising, which constitutes a growing share. Technological advancements are also pivotal, aiding in the innovation of subscriber experiences. The diversification of The New York Times' offerings widens its appeal, ensuring it meets the varied interests of its audience.
Quarterly Highlights
During the quarter, The New York Times experienced a significant boost in digital subscription numbers, adding 260,000 new digital-only subscribers, achieving a total of 10.47 million. This growth fortifies its strategic goal of increasing digital revenue streams. The company's 7% year-over-year rise in total revenue came in management's target of a flat to low single-digit increase. Especially notable was the 8.8% boost in digital advertising revenue, propelled by improved offerings and new advertising supply sources.
Despite strong digital strides, challenges in print advertising persist, with revenue in that segment declining by 12.6% year over year. This decline reflects a broader industry trend toward digital consumption. Additionally, the company reported $4.6 million in litigation-related costs associated with efforts to get compensation and/or halt generative artificial intelligence's (AI) use of NYT content, marking a significant one-time expense impacting its financials.
In terms of margins, The New York Times achieved a 20.7% increase in operating profit, with the adjusted operating margin expanding by 130 basis points to 16.3%. These improvements indicate effective cost control and operational efficiency. The company declared a dividend of $0.13 per share, up from $0.11, signaling continued shareholder returns.
Looking Ahead
The New York Times management forecasts continued robust digital subscription revenue growth, projecting increases between 14% and 17% for the fourth quarter. It also anticipates digital advertising revenue growth in the high-single to low-double-digit range. These projections underscore confidence in its ongoing digital transformation strategy, leveraging its comprehensive digital products portfolio.
Investors should watch for the company's progress in mitigating print advertising declines and managing litigation costs. Forward guidance indicates a rise in adjusted operating costs by 5% to 6%, as the company invests in its technology infrastructure and content development. These strategies will be essential in shaping its competitive edge and sustaining its growth trajectory in an evolving media landscape.
