Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- New York Times Co (NYT, Financial) added 300,000 net new digital subscribers in Q2, showing strong subscriber growth.
- Digital-only ARPU grew by 2.1% year over year to $9.34, indicating successful pricing strategies.
- Revenue from digital advertising increased by approximately 8% to $80 million, reflecting strong demand.
- Wirecutter and licensing revenues exceeded guidance, contributing to overall revenue growth.
- The Athletic showed substantial growth in both audience and revenue, keeping it on track for profitability by next year.
Negative Points
- Print subscription revenues continue to decline, impacting overall revenue growth.
- Some marketers are still avoiding advertising on certain hard news topics, affecting ad revenue.
- There is natural variability in Wirecutter revenue from quarter to quarter, making it less predictable.
- Adjusted operating costs increased by approximately 4.4%, reflecting higher investments.
- Despite strong performance, the market continues to experience significant audience headwinds driven by shifts in the platform landscape.
Q & A Highlights
Q: Just on the digital subscription guide for Q3, it looks healthy acceleration over Q2 at the midpoint. How much of the lift or growth you're seeing there is a product of the promotional bundle subs graduate in the higher tiers? And what are you seeing for the cohort so far?
A: (Meredith Kopit Levien, CEO) The model is playing out as designed, with net adds coming from multiple places, including bundle and single product. The trajectory of transitioning bundle subscribers to higher prices is going well. (Will Bardeen, CFO) For other income, Wirecutter affiliate revenue can be seasonally stronger in certain periods, and we've been investing there to create more value, seeing good returns. The timing of our licensing revenue can be somewhat lumpy, but we expect both affiliate and license to deliver growth in 2024.
Q: Can you give us an update on how the phasing of graduating promotional bundle subscribers has gone? Is that still the case? And regarding marketing efforts, is there any change in dynamic in terms of the ROI that you see from marketing spend?
A: (Will Bardeen, CFO) The sequential growth in bundle and multiproduct ARPU is primarily driven by bundle step-ups. We're focused on year-over-year growth in total digital-only ARPU. The ARPU increases reflect our strategy as we improve our journalism products, leading to higher engagement and value. Regarding marketing ROI, we are ROI-focused and consider leaning in when we see strong returns. This may be one of those quarters. Our focus remains on year-over-year AOP growth and margin expansion.
Q: What do you think will end up happening with your growing cash balance since the acquisition of The Athletic?
A: (Will Bardeen, CFO) Our capital allocation strategy remains unchanged. Our top priority is organic investment to grow our essential subscription strategy. We aim to return at least 50% of our free cash flow to shareholders through stock buybacks and dividends. We also value maintaining a strong balance sheet for strategic optionality, which is important during a period of market dynamism.
Q: Can you provide more color on the variability of Wirecutter revenue from quarter-to-quarter and what drives that? And regarding advertising, have you figured out a way to work around marketers avoiding certain news topics?
A: (Meredith Kopit Levien, CEO) Wirecutter's variability reflects broader shopping trends, such as back-to-school and holiday gift buying. We've been investing to harness strong demand for high-quality product reviews. On advertising, we saw a modest pickup in demand in Q2. Our ad products, including BrandMatch, are performing well, and we are extending them across our portfolio. We remain confident in our ad product portfolio despite some marketer news avoidance.
Q: Can you comment on The Athletic's bottom line moving to breakeven quicker than expected and the take rate of the bundle product?
A: (Meredith Kopit Levien, CEO) We are very happy with The Athletic's progress. We are playing a long game to build awareness and audience. We are on track for profitability as initially projected and are focused on becoming a leading global destination for sports fans.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
