News Corporation (NWSA) Q2 Earnings & Revenues Beat, Up Y/Y
News Corporation NWSA reported second-quarter fiscal 2024 earnings of 26 cents per share, which beat the Zacks Consensus Estimate by 30% and surged 85.7% year over year.
Revenues of $2.59 billion increased 3% year over year and beat the consensus mark by 0.29%. Top-line growth was driven by solid momentum in Digital Real Estate Services owing to higher Australian residential revenues at REA Group.
Also, strength across Dow Jones and Book Publishing segments, driven by solid growth in the professional information business and increased digital sales, respectively, contributed well.
Quarterly Details
Adjusted revenues (which exclude the impact of foreign currency, acquisitions and divestitures) were up 2% compared with the prior year.
Total EBITDA increased 16% to $473 million, primarily due to higher revenues and gross cost savings related to the announced 5% headcount reduction initiative. Also, reduced costs in the Book Publishing segment were a plus. The increase was partly offset by higher costs for sports programming rights in the Subscription Video Services segment.
News Corporation Price, Consensus and EPS Surprise
News Corporation price-consensus-eps-surprise-chart | News Corporation Quote
Segment Details
Digital Real Estate Services
Revenues in the Digital Real Estate Services segment increased 9% to $419 million, owing to solid momentum in REA Group, which was partly offset by softness in Move. Adjusted segment revenues increased 8%. However, the segment witnessed a negative impact of 1% due to unfavorable foreign currency fluctuations.
Revenues in Move fell 13% to $127 million, mainly due to lower real estate revenues. Representing 82% of total Move revenues, real estate revenues decreased 14% year over year, owing to the continued impact of the macroeconomic environment on the housing market, including higher mortgage rates, which has led to lower lead and transaction volumes.
Based on Move’s internal data, average monthly unique users of Realtor.com’s web and mobile sites remained flat year over year at 66 million. Lead volume declined 7%.
Revenues at REA Group rose 22% to $292 million, driven by higher Australian residential revenues due to price increases, improved depth penetration, a surge in national listings, strength in financial services and a favorable geographic mix.
The increase was partly offset by a 1% negative impact from foreign currency fluctuations.
Australian national residential buy listing volumes in the quarter increased 8% compared with the prior year, with listings in Sydney and Melbourne up 22% and 24%, respectively.
Subscription Video Services
The Subscription Video Services segment’s revenues were $470 million, up 2% year over year, primarily attributed to higher revenues from Kayo and BINGE, driven by a rise in both volume and pricing. This was partially offset by the impact of fewer residential broadcast subscribers. Also, foreign currency fluctuations adversely impacted the segment’s revenues by 1%. Adjusted revenues were up 3% year over year.
Foxtel Group streaming subscription revenues represented approximately 29% of total circulation and subscription revenues in the quarter compared with 26% in the prior year. As of Dec 31, 2023, Foxtel’s total closing paid subscribers were above 4.3 million, which remained flat year over year, primarily due to the growth in streaming subscribers driven by Kayo and BINGE. This was partially offset by fewer residential broadcast subscribers.
Broadcast subscriber churn in the quarter remained flat at 12.9% compared with the prior-year quarter. Broadcast ARPU for the quarter increased 3% year over year to A$86 (US$56).
Dow Jones
Revenues at the Dow Jones segment increased 4% year over year to $584 million, driven by growth in circulation and subscription revenues led by a rise in professional information business products. Digital revenues at Dow Jones in the quarter represented 78% of total revenues compared with 76% in the prior year. Adjusted Revenues increased 3%.
Circulation and subscription revenues increased 6%, including a 1% positive impact from foreign currency fluctuations. Professional information business revenues grew 13%, primarily due to 16% growth in Risk & Compliance revenues to $72 million and a 15% rise in Dow Jones Energy revenues to $62 million.
Circulation revenues were flat year over year. Continuous growth in digital-only subscriptions, owing to an increase in bundle offers, was offset by lower print volume. Digital circulation revenues accounted for 70% of circulation revenues for the quarter compared with 69% in the prior year.
Advertising revenues decreased 4%, primarily due to an 11% decline in print advertising revenues. Digital advertising, which grew 1%, accounted for 62% of total advertising revenues in the quarter compared with 59% in the prior year.
During the second quarter, total average subscriptions to Dow Jones’ consumer products were above 5.4 million, representing a 10% increase compared with the prior year. Digital-only subscriptions to Dow Jones’ consumer products grew 15%.
Total subscriptions to The Wall Street Journal grew 7% compared with the prior year to more than 4 million average subscriptions in the quarter. Digital-only subscriptions to The Wall Street Journal grew 11% to more than 3.5 million average subscriptions in the quarter and represented 87% of its total subscriptions.
Book Publishing
The Book Publishing segment reported revenues of $550 million, which increased 4% year over year from the prior-year fiscal quarter’s level, primarily driven by a rise in digital book sales and improved returns owing to better sell-through inventory. Adjusted revenues increased 2%.
Key titles in the quarter included The Pioneer Woman Cooks – Dinner’s Ready! by Ree Drummond, The Little Liar by Mitch Albom, Tom Lake by Ann Patchett and My Effin’ Life by Geddy Lee.
Digital sales increased 15% year over year, owing to strength in the downloadable audiobook category and positive contributions from the new Spotify partnership. Digital sales represented 21% of Consumer revenues for the quarter compared with 19% in the prior year. Backlist sales represented approximately 60% of Consumer revenues in the quarter compared with 57% in the prior year.
News Media
Revenues in the News Media segment dipped 3% to $563 million, primarily due to lower advertising revenues, partially offset by a 2% positive impact from foreign currency fluctuations and higher circulation and subscription revenues. Adjusted revenues for the segment decreased 5% compared with the prior year.
Within the segment, revenues at News Corp Australia decreased 6% due to lower advertising revenues. News UK remained flat as higher circulation and subscription revenues and a 5% positive impact from foreign currency fluctuations offset the declining advertising revenues.
Circulation and subscription revenues increased 5% compared with the prior year, primarily due to a 3% positive impact from foreign currency fluctuations, price increases and digital subscriber growth, partially offset by lower print volumes.
Advertising revenues decreased 9% compared with the prior year, primarily due to lower print advertising at News Corp Australia and lower digital advertising due to a decline in traffic at some mastheads due to platform-related changes. The decline was partially offset by a 2% positive impact from foreign currency fluctuations.
Digital revenues represented 38% of News Media segment revenues in the quarter compared with 37% in the prior year and represented 36% of the combined revenues of the newspaper mastheads.
As of Dec 31, 2023, The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, were 575K compared with 550K in the prior year. New York Post’s digital network reached 124 million unique users in December 2023 compared with 141 million in the prior year. The Sun’s digital offering reached 143 million global monthly unique users in December 2023 compared with 194 million in the prior year.
Other Financial Aspects
News Corporation ended the quarter with cash and cash equivalents of $1.724 billion, borrowings of $2.984 billion and stockholder equity of $8.182 billion, excluding non-controlling interest of $920 million.
Zacks Rank & Stocks to Consider
NWSA currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader sector are BlakLine BL, Arista Networks ANET, and Badger Meter BMI. While BlackLine and Arista Networks each sports a Zacks Rank #1 (Strong Buy), Badger Meter carries a Zacks Rank #2 (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank stocks here.
BlackLine shares have lost 3.5% in the year-to-date period. The long-term earnings growth rate for BL is currently projected at 50.56%.
Arista Networks shares have increased 13.7% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 20.15%.
Badger Meter shares have lost 7.3% in the year-to-date period. The long-term earnings growth rate for BMI is currently projected at 12.27%.
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