NY Times (NYT) Q3 Earnings Top, Digital Subscriptions Rise Y/Y
The New York Times Company NYT delivered third-quarter 2022 adjusted earnings from continuing operations of 21 cents a share, which beat the Zacks Consensus Estimate of 15 cents but declined 8.7% from the prior-year reported figure. Total revenues of $547.7 million came marginally ahead of the Zacks Consensus Estimate of $547.1 million and improved 7.6% year over year.
Subscription revenues rose during the quarter due to continued progress in bundle offerings. While digital advertising revenues increased, print advertising revenues showcased a decline from the year-ago period. The New York Times Company is gradually heading toward its goal of 15 million subscribers by the end of 2027.
A Rise in Subscription Revenues
Subscription revenues of $382.7 million grew 11.7% year over year. The upside was primarily due to an increase in the number of subscribers to the company’s digital-only products, the benefits of subscriptions graduating to higher prices from introductory promotional pricing and the inclusion of subscription revenues from The Athletic.
Subscription revenues from digital-only products jumped 22.8% to $243.9 million. However, print subscription revenues fell 3.6% to $138.8 million due to lower domestic home delivery revenues that declined 3.3%.
The company ended the quarter with roughly 9.33 million paid subscribers, with about 10.75 million paid subscriptions across its print and digital products. Of the 9.33 million subscribers, approximately 8.59 million were paid digital-only subscribers, with roughly 10.02 million paid digital-only subscriptions. There was a net increase of 180,000 digital-only subscribers and 210,000 digital-only subscriptions compared with the preceding quarter.
Management envisions total fourth-quarter subscription revenues to increase about 17-20%, with digital-only subscription revenues anticipated to surge approximately 30-33%.
The New York Times Company Price, Consensus and EPS Surprise
The New York Times Company price-consensus-eps-surprise-chart | The New York Times Company Quote
A Look at Advertising Revenues
Total advertising revenues of $110.5 million witnessed a marginal decline of 0.4% from the prior-year period.
Print advertising revenues declined 8.5% to $40.2 million in the quarter under review. The metric decreased mainly in the advocacy and media categories and was hurt by macroeconomic factors.
Meanwhile, digital advertising revenues advanced 4.9% to $70.3 million. This year-over-year increase was due to higher direct-sold advertising at The New York Times Group and the addition of advertising revenues from The Athletic, which helped mitigate lower revenues from fewer programmatic advertising impressions and pressure from the macroeconomic environment.
For the fourth quarter, The New York Times Company expects both digital advertising revenues and total advertising revenues to decline in the mid-single digits.
Other Highlights
We note that other revenues fell 1.9% year over year to $54.5 million during the quarter under review as a result of lower licensing revenues, partly offset by higher Wirecutter affiliate and live event revenues. For the final quarter, The New York Times Company anticipates a low-single-digit increase in other revenues.
Adjusted operating costs rose 7.8% to $478.7 million during the quarter. Management anticipates adjusted operating costs to increase approximately 7-9% in the fourth quarter.
The total adjusted operating profit increased 6% to $69 million during the quarter under review as higher digital subscription revenues at The New York Times Group segment more than offset operating losses at The Athletic.
Meredith Kopit Levien, the president and CEO, said, “With three quarters of the year behind us, we are improving our outlook for full-year 2022 results and expect adjusted operating profit between $320 and $330 million, even with the dilution from our acquisition of The Athletic, which is on the high-end of the full year guidance range we provided in February.”
Segment Details
The New York Times Group revenues increased 2.8% year over year to $523.6 million. Subscription revenues rose 5.4% to $361 million due to growth in subscription revenues from digital-only products. Advertising revenues fell 2.5% to $108.1 million, stemming from soft print advertising revenues.
The adjusted operating profit jumped 20.7% to $78.6 million. This can be attributed to higher digital-only subscription revenues.
Revenues totaled $24.1 million in The Athletic segment, primarily from subscription revenues. The adjusted operating loss amounted to $9.6 million.
Management expects fourth-quarter total subscription revenues to increase 10-13% at The New York Times Group and foresees a 6-8 percentage point contribution from The Athletic to consolidated results. It expects digital-only subscription revenues to increase about 20% at The New York Times Group and envisions a 10-13 percentage point contribution from The Athletic to consolidated results.
The New York Times Company expects both digital advertising revenues and total advertising revenues to decline 10% at The New York Times Group.
Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $468.6 million, reflecting a decrease of $605.8 million from $1.07 billion as of Dec 26, 2021. Approximately $550 million was utilized to fund the buyout of The Athletic in February 2022.
The company incurred capital expenditures of about $9 million during the quarter. Management envisions capital expenditures of about $50 million in 2022.
The board of directors authorized a $150 million share repurchase program in February 2022. As of Oct 28, 2022, the company repurchased 2,778,380 shares for about $93.1 million and $56.9 remained under the authorization.
We note that this Zacks Rank #2 (Buy) stock has risen 1.4% in the past three months compared with the industry’s growth of 7.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 Solid Picks
Here we have highlighted three better-ranked stocks, namely Tapestry TPR, Home Depot HD and Kroger KR.
Tapestry, a provider of luxury accessories and branded lifestyle products, carries a Zacks Rank #2. TPR has an expected EPS growth rate of 12.5% for three to five years.
The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 3.5% and 11%, respectively, from the year-ago period. TPR has a trailing four-quarter earnings surprise of 14.5%, on average.
Home Depot, which operates as a home improvement retailer, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.2%.
The Zacks Consensus Estimate for Home Depot’s current financial-year revenues and EPS suggests growth of 3.6% and 7.2%, respectively, from the year-ago reported figure. HD has a trailing four-quarter earnings surprise of 7.2%, on average.
Kroger, one of the leading grocery retailers, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.7%.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 7.8% and 10.3%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 15.7%, on average.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The New York Times Company (NYT) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
The Kroger Co. (KR) : Free Stock Analysis Report
Tapestry, Inc. (TPR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
