Media company The New York Times (NYT -2.54%) reported mixed results on Wednesday, Feb. 5, in its fourth-quarter earnings report. Adjusted earnings per share (EPS) of $0.80 surpassed the analysts' consensus forecast of $0.75. However, total revenue of $726.6 million, came in slightly below the estimate of $726.8 million.
The quarter highlighted continued digital growth and robust subscription expansion, despite facing challenges in print advertising and rising operating costs.
| Metric | Q4 2024 | Q4 Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $0.80 | $0.75 | $0.70 | 14.3% |
| Revenue | $726.6 million | $726.8 million | $676.2 million | 7.5% |
| Digital-only subscription revenue | $334.9 million | N/A | $288.7 million | 16% |
| Adjusted operating profit | $170.5 million | N/A | $154 million | 10.7% |
| Digital advertising revenue | $117.9 million | N/A | $107.7 million | 9.5% |
Source: The New York Times Co. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
Business Overview and Recent Focus
The New York Times Co. is a distinguished media company known for its commitment to high-quality journalism and comprehensive news coverage. Recent years have seen a strong emphasis on digital transformation, focusing on increasing digital subscriptions and diversifying content offerings beyond traditional news, including areas like sports and lifestyle. This strategic shift is crucial as the company continues to grow its digital subscriber base, a key factor in its financial stability and expansion.
Critical metrics for the company revolve around subscriber growth and retention, quality journalism, and an optimal balance between subscription and advertising revenues. Investments in technology, particularly data management, also play an instrumental role in enhancing user engagement and operational efficiency.
Notable Achievements During the Quarter
In Q4, The New York Times Co. reported significant progress in its digital subscriber base, adding roughly 350,000 net new digital-only subscribers. This brings its total digital subscribers to 11.43 million, marking an annual increase of 1.10 million. Digital-only average revenue per user (ARPU) increased by 4.4% to $9.65, attributed to pricing adjustments and subscribers moving from promotional pricing.
Financially, digital-only subscription revenue rose 16% year over year to $334.9 million. The Athletic continued its upward trajectory, contributing to a 29% increase in digital advertising revenue. However, the company faced a 7.1% decline in print subscription revenue, consistent with industry trends toward digital preferences.
Operating costs increased by 6%, with marketing and sales expenses notably rising by 21.3%. This reflects higher promotional activity aimed at bolstering subscription memberships. Moreover, adjusted operating profit reached $170.5 million, a 10.7% increase year over year.
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Key Data Points
One-time items impacting the quarter included costs related to litigation over AI usage of its content. While these expenses affected short-term financials, the implications underscore The New York Times' proactive measures to protect its intellectual property, suggesting a strong stand in safeguarding its content.
Despite rising costs, the company's dividend got a 38% increase (from $0.13 per share up to $0.18), aligning with the company's ongoing strategy to reward shareholders while investing in growth opportunities. The Board of Directors approved a $350 million Class A share repurchase program in addition to the amount remaining under the 2023 authorization.
Looking Forward
Looking ahead, The New York Times Co. forecasts digital-only subscription revenue growth of 14% to 17% for Q1 2025, with a mid-single-digit increase anticipated in other revenue streams. Meanwhile, adjusted operating costs are expected to grow by 5% to 6%, reflecting planned investments in technology and content enhancements.
Investors should observe digital advertising developments and the ongoing expansion in subscription models, particularly bundled offers. The company's legal stance on its intellectual property and technological investments will also be key areas of focus as it looks to maintain its competitive edge and sustain subscriber engagement.
