Q1 2021 New York Times Co Earnings Call
[music].
Hello, and welcome to the New New York Times Company's first quarter 2021 earnings Conference call.
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I would now of teleconference over the hard on the top of escape Vice President of Investor Relations. Mr. Joe Pesci. Please go ahead.
Thank you and welcome to the New York Times Company's first quarter 2021 earnings conference call on the call today, we have Meredith Kopit, Levien, President and Chief Executive Officer, and Roland Caputo, Executive Vice President and Chief Financial Officer.
Before we begin I would like to remind you that management will make forward looking statements. During the course of this call. These statements are based on our current expectations and assumptions, which may change over time, our actual results could differ materially due to a number of risks and uncertainties that are described in the company's 2020 10-K and subsequent S.
You see filings. In addition, our presentation will include non-GAAP financial measures and we've provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website at investors that N Y T. C O dot com with that I will turn the call over to Meredith co pay.
Yes.
Thanks Harlan.
Morning.
<unk> finished the first quarter.
8 million.
Scripts.
Yeah.
More than 100 million registered users.
Average weekly audience.
That foundation.
Could you remind the Brent market.
Hundreds of millions.
Right.
The language.
Rounds of optimization that we can.
Absolutely.
Yeah Pete.
Okay.
Our strong financial results in the first quarter demonstrates the success of our strategy.
Our large and growing digital subscription.
We reported adjusted operating profit of 60.
$8 million.
Net of imports.
Compared to the first quarter 2020.
Yeah.
Revenue increased 38%.
And we added 301.
Net new digital subscriptions new.
New cookie.
One of them.
Our first quarter of them all.
The flat.
And digital advertising.
That's driven by a free market.
Our mark last year on refining.
The offering and the margin profile.
E mail advertising breath after Q1.
2020, and 2019 demonstrates the advantage of our subscription first strategy to our average.
In our last earnings call I noted that fluctuations in the new cycle can lead to considerable variability net.
Each non subscription additions.
In February and March our audience declines from near historic highs last year.
Fewer net new.
In the latter part of the quarter.
We expect moderating right to continue through the second quarter traditionally.
The year with lower forecasted second quarter performance, we now expect and you turn on the net subscription additions to be in the range of our 2019 performance, which prior to the 2021 of our best year for net addition.
There is no doubt that the news.
Over the last five years.
My last year of tumultuous presidential election race reckoning.
19 of pandemic.
Unprecedented demand for times journalism, and therefore accelerating subscription growth.
At the same time with each passing quarter, we didn't.
Many aspects of our underlying.
Well, we don't know, which streamlined will drive the next big New cycle, we do know that the size of our newsrooms its range of expertise and our continued investment in meeting more than me.
The us to capture that demand whatever the source.
In the last few months, the breadth and reach of our journalism.
Right.
Well the group of damages.
One of the part of our news release.
Can you update the weizmann.
Since COVID-19 Keith strength.
Our current income.
Cash should be if that's what it feels like to be a lot of right now with their breakout of multimedia feature of prime moves free.
One.
One of the cap rate just the multiple scandals.
Albany, or a long time.
Covering primarily simple route.
For me that wasn't in our feature length documentary framing Britney Spears, which aired on the FX.
<unk> had a huge cultural impact the.
World is getting no less complex and the need for understanding the.
<unk>.
Outstanding journalism, the helps people understand the thoughts.
Two of our model and it will continue to be the primary driver, but the majority of our audiences and paying customers.
What would be the only drawn 10 million people a week now comes the time.
You mean beyond them.
Recipes hustle and shopping site.
The individually and Waikiki games and then why.
The amount of the largest journal on some of that subscription services in America.
We have as firms the endy arent subscription portfolio through the wire cutter and.
Reflect our deeply held beliefs that the times can play an even bigger role in the lives.
Millions of people.
Combined with the differentiated value and demands of advantages of our core news product. We believe operating should enable the times to become a larger and more profitable business apps.
I'll turn down of our underlying subscription drivers in the corner and some of them.
[laughter] about our work ahead.
Well total audience registered on the site and subscriber engagement.
Most of all of this year than the App.
These metrics are all higher than 2019.
We now have a significant the base of people.
Read the times every day of Bernstein.
Actually larger than the before the pandemic. This was the result of our continued strength.
The shift we made all of the two years ago, the tumor registration based model and the fact that we acquired so many new registered users in 2020 new.
Many of those registered users are now interacting with us new ways, which we each of our opportunities.
For example, we saw a meaningful uptick in the range of three line that drove user engagement in the first quarter positive development given the strong correlation we've described in the past between experiencing the breath of our reported and subscribers.
Our white cartridge with which we've been experimenting recipe since late 2019 now please the significant move ensuring the strength at the top.
Some of our funnels and the <unk>.
Well, it's repeat engagement channel.
Isn't really the reader it came to the times for coverage of Guerrant shipments of trial with our live experience driving much of that leadership.
More than the third of our registered users of subscribers.
Coverage on a weekly basis with that number expected to increase thanks to the steady rollout of new.
New innovation.
The times has always had a large number of regular newsletter of readers and our newsletter audience has grown significantly since we began the apple users to register.
15 million people, who read the times newsletter every day, including 5 million can start their day with our flagship in the morning.
More than 85% of our newsletter readers are not yet paying times subscribers the new.
Newsletters and represent a promising opportunity in our subscription sales, but you encourage registered users to subscribe and is the source of subscription value.
At the nearly $1 7 million subscriptions and the chocolate cookies are succeeding at the product.
Right with a lot of times.
What's particularly encouraging.
Joining me on the trial.
Of this value it needs, we're seeing we've locked.
In the last few months the Big League.
You got to experiment with how we sell our multi products under the new ways.
Really test the promising and we plan to introduce the more substantial overhaul of how we price and the Merchandised every time, we expect the bundle to benefit conversion retention and the long term monetization.
I'll turn now the advertising.
In the first quarter, we reported $59 million from digital advertising revenue of 16% increase over the first quarter of 2020 and encouraging the 7% increase over the same period in 2019.
This is the last quarter that we were comparing against revenue from the marketing services business.
<unk> exited and also from the removal of the open market programmatic advertising of our App to the actual improvement in digital advertising versus last year is even stronger.
The growth in registered users has propelled the rapid expansion of our first party data products, which are proving effective for marketers.
I'm a fee on the third.
Third party trackers.
Demand for these products is strong driving 20% of our digital advertising revenue in the first quarter compared with what sort of 10% in the same period last year and as of the first quarter, we fully eliminated all the lines on the.
Third party day, David targeting indirect protesting.
I know advertising sales also continued the strong channel audio Mr. As grew 30%.
Last year, driven by the addition of cereal.
I'd like to our portfolio.
Production of beyond the daily, including sway with Caris Swisher the art.
With Jim Thompson and the lines now.
I'll start performing well, but listeners and advertisers.
Print advertising was still relatively weak in the quarter of mall, we expect non category to recover in the latter half of the year, we do believe that some of.
The pandemic losses, the deep regarded instructions.
These kind of all of that was non comparable in the second quarter and the fact that our digital advertising business.
The larger than print, we expect the material acceleration in our AD business in the second quarter.
Before I turn things over the phone I want to mention our continued focus on our people and our culture.
Describe the next decade, and the times business as being about scaling of our strategy of journalism worth paying.
To do that we need a culture of that attract develop and routines top talent not just in our history.
All of our debt.
Okay.
Our culture has enabled the world's most admired the influential news report and it's also helped green in the beta rising digital business.
The access from here it will require that we nurture the best aspects of that culture and also involved but in both cases, we are making steady progress.
In the last quarter marched the multiyear plan to build the more diverse equitable and includes the New York times that reflects the global audience, we serve and supports our mission and business and.
We also continue to advance our underlying the tech strategy, which reflects the increasing importance of engineering excellence to our grid and finally, you've begun to define the future of our workplace.
Offer more flexibility, while preserving the kind of physical together Mrs enabled much of our team oriented screen of work I'm confident that all of this will propel our strategy and our growth for years to come and with that alternative at the moment.
Thank you Meredith and good morning, everyone.
Adjusted diluted earnings per share was 26 cents in the quarter nine cents higher than the prior year.
We reported adjusted operating profit of approximately $68 million higher than the same period of 2020 by $24 million.
We added 167000, net new subscriptions to our core digital news product and 134000 net new subscriptions to our Standalone digital products.
Total of 301000, net new digital only subscriptions.
As of the end of the quarter, we had nearly 900000 game subscriptions and slightly more than 800000 cooking subscriptions.
The international share of total new subscriptions remained at 18% as of the end of the quarter.
Total subscription revenues increased more than 15% in the quarter with digital only subscription revenue growing 38% to nearly $180 million.
The acceleration in the rate of year over year digital subscription revenue growth.
The 10% in the first quarter of 2020% to 37% by the fourth quarter and now 38% in the first quarter of 2021 was the result of three factors.
First the large number of new subscriptions, we have added in the past year.
Second ongoing strength in retention of the dollar per week promotional subscriptions growth graduated to higher prices and finally, the positive impact from our digital subscription price increase which began late in the first quarter of 2020.
As you'll note in the guidance, we gave we expect that rate of growth to slow beginning with the second quarter as we begin to comp against the strong 2020 results.
Digital news subscription <unk> for the quarter increased approximately one percentage point compared to the prior quarter and declined approximately six percentage points compared to the prior year.
Which represents a significant improvement in both trends.
This improvement was primarily a result of subscriptions, graduating from the introductory price to either full price or an intermediate step up in the quarter as well as the continued benefit from price increases on our more tenured full price subscriptions.
Our pool of related solely to domestic new subscriptions increased 1% versus the prior quarter and declined approximately 4% versus the prior year.
We expect the continued demonstrating pricing power throughout 2021 of the impacts from subscriptions, graduating from discounted promotions and the price increase on tenured digital subscriptions provides a tailwind to digital news of <unk> throughout the year.
On the print subscription side revenues were down nearly 4% largely due to a decline in single copy and international bulk sales.
Revenue from domestic home delivery print subscriptions grew of half percent in the quarter as home delivery price increases more than offset year over year subscription declines.
Total daily circulation declined 12% in the quarter compared with prior year while.
While Sunday circulation declined 2%.
As a reminder of the first quarter of 2020 was only partially impacted by the pandemic related business closures increased levels of remote working and reductions in travel that negatively affect newsstand sales.
Yeah.
Total advertising revenues declined approximately eight 5% in the quarter as print continues to be severely impact impacted by reduced spending by advertisers during the pandemic.
Digital advertising has returned to growth.
Digital advertising grew approximately 16% in the quarter compared with the prior year, primarily as a result of higher direct sold advertising, including traditional display and podcasts as compared to the week digital advertising revenue seen in March of last year at the outset of of the pandemic.
It's worth noting that this is the last quarter that we are comparing against revenue from the marketing services business. We've now exited and also the removal of open market programmatic advertising and our apps.
Excluding the nearly $3 million in revenues, we earn from those areas in the prior year period, our digital advertising growth rate versus last year would have been 23%.
Our first quarter digital advertising revenue is better than the guidance. We gave in early February of this was largely the result of better than expected revenue from technology and media advertisers and targeted AD products and audio.
Meanwhile, print advertising declined approximately 32% with entertainment travel and luxury categories hit hardest.
Other revenues declined 10% compared with the prior year to $47 million.
Primarily as a result of fewer TV episodes as well as lower revenues from live events commercial printing and building rental revenue.
These declines were partially offset by an increase in wire cutter of show yet referral revenue.
Adjusted operating costs were higher in the quarter by one 4%.
Cost of revenue increased approximately 3% as a result of growth in the number of newsroom games cooking and audio employees.
Costs in connection with audio content.
Higher incentive compensation accrual versus zero in Q1 of 2020, and higher subscriber servicing and digital content delivery costs.
This was partially offset by lower print production and distribution expenses lower content costs related to fewer television episodes and lower travel and entertainment costs.
Sales and marketing costs decreased approximately 18% driven by lower media expenses and advertising sales costs.
Product development.
<unk> costs increased by approximately 26% largely due to growth the number of engineers employed and a higher incentive compensation accrual that we had recorded in the first quarter of 2020.
It's also worth reiterating that we plan to continue adding to headcount in this area over the foreseeable future as we expect to continue leaning into our investments in product development as well as in our core news and Standalone journalism to drive growth.
General and administrative costs increased by 7% largely due to a higher incentive compensation accruals and increased head count.
Our effective tax rate for the first quarter was 18, 7%, which was lower than the statutory tax rate largely due to a benefit from stock price appreciation on stock based awards that settled in the quarter as we can.
<unk> said previously we expect our tax rate to be approximately 27% on every dollar of marginal income we record with significant variability around the quarterly effective rate.
Moving to the balance sheet, our cash and marketable securities balance ended the quarter $891 million.
An increase of $9 million compared with the fourth quarter of 2020.
The company remains debt free with $250 million revolving line of credit available.
Let me conclude with our outlook for the second quarter of 2021.
Total subscription revenues are expected to increase approximately 15% compared with the second quarter of 2020 with digital only subscription revenue expected to increase of approximately 30%.
Overall advertising revenues are expected to increase of approximately 55% to 60% compared with the second quarter of 2020 and digital advertising revenues are expected to increase of approximately 70% to 75% mainly as we compare against the quarter that was severely impacted by the pandemic.
Other revenues are expected to increase in the low single digits.
Gross operating costs and adjusted operating costs are expected to increase in the mid to high teens compared with the second quarter of 2020, as we continue investment into the drivers of digital subscription growth.
And comp against the low spending of the second quarter of last year that resulted from actions taken during the early weeks of the pandemic.
And with that we'd be happy to open it up for questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble the roster.
And this morning. The first question comes from John Day, Natus with Wolfe Research.
Hi, good morning.
Meredith given your slightly moderated tone for subscribers. This year can you talk about your confidence level around the longer term opportunity I know you've talked about $20 million of more subs of let's say longer term does that still seem doable and big picture, how tight is the growth to the new cycle.
Good morning, John Good question.
My short answer to your first question.
Absolutely no change in revenue.
The confidence in the long term.
The reason why we can't have the subscriber base since 234 times, what we have today.
We remain incredibly excited about that long term opportunity.
On your second question.
I think I think you're asking me the degree to which the new cycle.
The wrong.
The second question again, one of the meter right.
Great.
Yeah, I mean, just based on the comments around call. It late <unk> and Tokyo of knowing and see if Melbourne. The obviously, there's been a lot of talk about the slowing new cycles have it impacts subs and so I guess the one narrative would be you know of the new cycle slows is there more of a longer term discussion here that we should have around say subscriber acquisition.
Yeah.
Let me say a couple of things about that.
The first one is of course, the new cycle.
Great.
In many ways.
The various stories in the last nine years with new beds.
The story.
Of the last year had been an accelerant.
The model, but then I would say two other things.
On behalf of things.
Non.
Yeah.
The quarter over quarter of year every year, we are getting better under the Marines.
Getting better at the underlying <unk>.
Driving the subscription in buildings and as I said in my prepared remarks.
Really.
Where we are today from an engagement standpoint, maybe deemed happened standpoint versus 2019 zone.
So I'm very confident that there is new.
Wind instruments.
Yes.
Hum along since day one.
The thing.
The only thing tomorrow is getting the message.
The thing I don't think its getting any less complex and.
We expect the.
Hi al.
On the seven screens.
We've come back in another sense.
Free.
Hi.
Hi.
Mhm.
T infusion.
In my prepared remarks about the enormous investments you've made.
Yes.
Yeah.
Per day kind of that income.
Per day net demand wherever the strength of.
We've also.
I'm a bit of investment.
You didn't mean.
Wayne.
I've mentioned.
We don't have the coverage lives.
The range thing.
At the time.
First before now.
For 2019, and the really big way of something was happening.
The weighted toward <unk>.
Twitter of you're getting much better the lots of room to deal with the getting much better meaning that the gain.
We're getting much better at the meeting.
Need for the.
The daily habit now of showing up in your inbox.
New bladder and letters of the on that.
So I'm really confident that we're going to keep.
Neither of them the need for understanding.
And.
Adam.
<unk>.
We do that.
And that new this will continue to be net.
The real creator of demand.
That helps us on the whole.
One of them.
Got it thanks.
Maybe can you talk about media expenses going forward the.
Do they start to tick up.
Significantly the drive or a re accelerate subscriber growth in and can you give any more color on churn.
Sure.
I'll answer the first question and the second one enrollment may have come on to the asset.
Yeah, I'll, just remind you that.
The majority of our.
<unk> co.
Come in through organic means and actually that's one of them.
I mean before that.
No.
The new product.
In itself.
Hum.
The demand so.
Yeah.
We are still getting the tumors.
<unk>.
Yeah.
Here again.
Exploring new cycle.
The last high new demand, we also end up buying.
Right.
Read the return.
But the overarching.
<unk> is much much more.
Panic.
I'd say on churn.
Broadly very happy with churn.
Yeah.
When we compare ourselves to other.
The content the.
Digital media company, we think Archer.
Our overall retention the message.
The class of my move.
Versus last year, I think that the new risk cohort.
New surgeon in.
Last year the.
New <unk> and last year are repeating.
And last well.
In the past the 19 in the probably way in the Rocky.
Very happy.
I'm, sorry, but the linac.
Do you want to add to the Tiger.
No actually really think you hit all of the major points.
Nothing to add thanks, a lot of them.
Thank you.
Yes.
Thank you and the next question comes from Alexia <unk> from JP Morgan.
Hi, Thank you very much just a couple of questions first if you could maybe elaborate a little bit on what the demos book like in the new subscribers in Q1 I'm if its any different in the past you know sort of mix of U S International that that's what the color and then secondly, I'm Meredith you have.
The I think the outlook, particularly advertising has changed on and off throughout the years as the as the world has evolved and the model has changed a bit.
Curious I know you mentioned it you know it's been very very very healthy outlook for digital advertising for the remainder of the year.
I'm curious if your long term view of digital advertising has changed at all or maybe you can update us on how you see that.
You know how of the outlook there is.
Sure I'm happy to talk about I, sometimes.
Thanks Alexia.
On.
Yeah Mark.
In general I'm thinking of a version of the standpoint of every quarter in general and very high new period, we're bringing a lot of people in the <unk>.
<unk> tend to be getting a little bit younger and a little bit.
The one very geographically.
Domestic domestically and internationally so.
We've been through the GAAP.
The re tasking of toward more and more of the new subscribers.
Good morning.
And more from <unk>.
Parts of the country at the wrong.
And the Houston penetrated.
In the.
The quarters were.
Les it's high <unk>.
Timing of demand.
And of the other way, but I'd say very broad in times of continuing to Hum.
Bringing the younger subscribers new subscribers from some form of batteries.
Nothing that happened in the first quarter.
The net change that trajectory.
Since then in the past.
The question.
Question Demographically of premium subscribers.
We do more of that every time and the beginnings of our data isn't great here generally younger and generally.
Batteries.
Great.
On advertising.
A few things.
The the.
Our team did very very good work last year in the U.
And it will be difficult and mark.
The margin profile of business.
And.
Of the specifics about that.
Exiting.
Our less profitable market.
And the kind of.
And gosh five six years ago.
That that can be really additive.
In our asset mix and in fact, what we learn is that the demand is really the highest for our media products into the fund.
The higher margins in the effort demand is getting stronger and stronger for our first party data products, which confirmed registration based model, we're now making faster than expected progress per month.
And the creative work that we still do a bunch of creative.
We did that previously through fairly.
The only comverse.
Lower margin the marketing services.
Now, we're able to do that work in a way that is nearly always intended to media and therefore in deal level.
We like the margin of that person, that's all of the long winded way of saying.
We like the profile of the AD business and new to the land business better than we would have some times.
No.
Good day.
No question, the secondary endeavor and the main 19 net.
Hearings are directed.
Each of those.
Inscription.
I do think now we've gotten as to the business in the real thing we pulled off last year as many of them.
The business is running like entirely on the same high octane gas region.
Registered.
Good day.
And privacy born weighted and we like that of what I think of wrong. It doesn't mean of bedroom business.
It is not the main the main IBM for making the right.
And if I could just squeeze in one more just circling back on your comments earlier about about churn just tweaking up just slightly Oh my God. That's understandable given the huge number of subscribers that came on last year I'm. Just curious if it changes at all or have you revisit the algorithm in terms of the the the price hikes.
So coming off of the promotional rates given that tweak in churn or not necessarily.
Let's see do you think Roland can add more color here.
Very comfortable with kind of chime in and I'll, just say again.
And one of the biggest accomplishments of last.
Net dramatically improved free cash.
Sure.
We're very comfortable.
Everything we do to the model of Marriott exact.
Exactly right you, bringing Cheyenne third Gen of new people in an inquiry or.
Slightly less volume.
And then the new income co ordinates slightly less.
The only slightly.
Churn Rodney.
A very very good story.
Our algorithms of getting a lot better.
That's the point.
The models of Nash.
Yes, Mark and so we all sort of like what we're seeing enrolling touched on the third.
Remarks.
The prices for LNG in our ability to use algorithms and determined.
The simple prices to the Johnson is working very very well.
I don't know if you want to add anything.
Sure.
Hi, Alexia.
We're still really comfortable with with our pricing strategy and the.
The way, we're going about it with with the with the modeling.
As a matter of fact, we actually are testing a second intermediate price, which sits somewhere between the the intermediate step up price, we've been using and full price to try to take a little bit even more advantage of the demand curve.
But we haven't we haven't increased or decreased the number of folks. The model has an increase or decrease the number of folks that it is the ascending to full price. So I'm still comfortable with the model no problems there.
Yeah.
Thank you very much.
Thanks Lindsay.
Your next question comes from kind of like a touch bar with Barclays.
Thank you.
Just a follow up on the <unk>.
Previous comment you made on the intermediate price.
Is there any difference in the kind of subscription that people get so the intermediate price or is it just some kind of a bridge the step people up.
The full price.
And then broadly when you think about price increases over the course of the theater I guess there is a cohort that already has <unk>.
Which came in in 2018 during the promotional phase.
Which has the EBIT seen a price increase already.
Or will see a price increase over the course of theater, which is the second time that price would be the because I guess in the last two years. So could you talk about the churn of that particular cohort and how that's behaving.
And retaining.
And lastly on the advertising side of it.
Sorry, I'll follow up with advertising off of it.
So.
The good questions and actually there is not a differentiated experience for subs across the pricing range.
Really trying to do is.
Yes.
Not pushed price on someone who's not apt to accept the the price increase as much as someone else would sort of what we're trying to divide the population of that way, but there is there is no difference.
In the subscription experienced that someone going all the way the full price versus someone going.
Two of midpoint price received.
Your second question was sort of about the second moment that second price increase so.
Our experience to date with that is we're very comfortable with that.
It is a.
Another test of that persons.
Elasticity of demand. So we do see we do see a bit of a drop off there.
But we're perfectly comfortable with with the level of that that we're seeing there and of course, we will.
It take action to.
The two lean a little bit into trying to save the person and keep them with the brand and then pushing the price because we are still more interested in scaling the monetization at this point.
Hey, Rob the only thing.
And the only thing I would add to that is that we also.
The conversion of that but we get sort of steadily better one of them, but you have the salary batteries maintaining the spring.
Each of them, well and that the product proposition keeps.
Keeps getting better one of the best.
Neither of them were investing in the digital product its degree of snapper time, that's not at the Providence.
Got it.
And then on the advertising trend of.
Meredith of lot of this.
Comments that you've made I mean, it sounds like some of these improvements are structural and therefore, there could be a bit more correlation between subscriber growth and advertising going forward. Then we should see the less volatility is that the right way to read your comments on advertising and should that be more going forward.
[laughter] strategically.
Correct.
Couple of caveats now.
Say, having a very large now you know, we often think of assignment.
You have 100 million registered users so mark.
Orange registry use of me.
We have direct relationships.
<unk> is extremely important.
The subscriber base I'm, saying the audience engagement of the fact of these people are fully addressed.
And the update on that and it's all very confident that's what I mean, when you say the AD business.
On the same sort of asking yeah.
And that as of yet.
To the question, you're asking yes, I do think that net.
Well for advertising.
Having come into the run up in the AST business and run our business I will also say we are we have highly competitive product versus the kind of publishers.
Any of any traditional media companies.
But we are still in the world where you've got.
Book end.
On the new increasingly you've gotten and platforms.
With the particular offering.
Al.
And at the price that is unmatched so I'd say, we're very confident about our ability to win share.
We are very confident now that in the brisk Mark.
There's a lot of business.
On the screen very well, we think we've got the right proposition I would just say of the AD market in that.
It's the same way.
The thing.
Yeah.
That kind of dominate the dynamics of <unk>.
The.
We kept our excitement about it with that.
[laughter] demand here in the market.
Sure.
We are awesome supply of properties.
Than anybody else's.
And the market.
Got it thank you so much growth.
Thank you and the next question comes from Craig Huber with Huber Research partners.
Great. Thank you for the first few questions if I could.
Maybe we could start I want to ask you if I could the marketing costs, they were down 21% year over year to $36 million.
What should we expect for the dollar amount going forward for share marking spend and how much of that decrease by design in your marketing costs. You think ended up hurting the number of new ads for the digital subscriptions in the first quarter I mean, how much of a correlation do you think there is there.
Net interest.
Short answer rolling.
The short answer is that by design and went back to what I said I think in answering John's question, which is the habit is.
It's organic and when that engine.
When the new cycle was a little bit Mark.
Actually the economy.
Much much less efficient and you can see it.
I mean because of Watson.
Watson patients.
As things pick up any of them.
Yeah.
You can get them even more.
Kind of plans I think yeah, no I think that's the general you're right I mean, we don't we don't see that the.
The cutback and marketing spend hurt our sort of our net adds at all but.
But if you go back and look.
At the comps I mean did really pulled back dramatically. If you. If you go through the last year in the in the early half. So I think youll, probably see us reintroducing some marketing spend.
As we get into into the second quarter.
But again, we gauge it based on how well we think it's going to perform in market.
So my next question guys.
The potential price increases on the digital front for the remainder of the year can you give us just a sense of how you think about the phasing that in over the course of the of how many.
<unk>.
People are you expecting that the pit with the higher price equation, just kind of guess sensors for modeling purposes.
Yeah, Yeah for modeling purposes, you can think about about 100000 folks per quarter.
All right in that range.
Would be seeing.
Im assuming youre talking about the tenured.
Nice increase yes, yes, but that's obviously it's out of the side of a very big number 400000 roughly for the year.
The foreign foreign change of the year.
So I mean.
That's telling me you, obviously kind of volume hitting it off of a scare anybody away.
So the first of model.
When you look at us a whole set of of.
Attributes that determine when we when we.
Paul the trigger on on the 10 year price increase and and.
Our current outlook is that the little bit of little bit over 100000 in the quarter as what we think we'll see the rest of the year.
Robert Let me just add that as for tenured. Some we also have an enormous number of people.
The price.
Just describe that right the number of people stepping up off of the big year. We had last year in terms of new subscribers. As you can imagine is going to be very large we're estimating for the full year.
The one and a half of $1 6 million.
Folks will see.
An increase from their promotional price.
But also on the cost of front, you've obviously said you thought.
Costs for this upcoming quarter will be up I think you said mid to high teens. So I wanted to get to the bottom of this in the first quarter. You said it would be up mid single digits, that's up about 1.5% whats the delta of the athletes what did you not spend as much on that you originally thought when you talk though so it really came down to media.
Media spend and a bit of the hiring ramp.
Okay. I guess my last question Meredith you mentioned registered users now of about $100 million.
What is the.
Daily visitors on average do you guys have now to the main website of main app or monthly with a number of that right now on your data.
The question, we don't answer that one of the thought what I'm, saying.
More people, who need some weird times every day.
And we have at any point in our history.
We know.
Of that.
Okay. Thank you.
Higher is the answer.
<unk>.
Okay. Thank you and the next question comes from Thomas <unk> with Morgan Stanley.
Hi, good morning, Thanks for taking my questions. Yeah. Following up on the 100 million plus registered user base can you talk a bit about any of the strategies that you're undertaking around encouraging sign ups through that funnel I mean beyond article limits that were implemented some years ago and engage and users of our content. What are some of the mechanisms you're building to convert does for you.
There's.
And then any update on your prior guidance for modest operating profit growth given the strength of <unk> guidance on the financials, how should we think about the cadence of some of the investments you're making and should we expect some of those investments to accelerate in the back half. Thank you.
Sure Let me let me take the.
The second question.
The first which is just to say as I said in my prepared remarks.
Hum.
And the strategy mentioned propel you know mark.
The more profitable business every time, regardless of what we said in the last.
Call it the guidance that much of a direction of travel.
And nothing has changed in terms of our.
The assumption in the direction of travel.
And that's in the couple of places.
In the prepared remarks.
The on your first question.
And making sure you got it.
I just kind of ex 19, you can't hear me give me one second I'm going to answer the other question I was just kind of keep moving.
My thought on that.
Yeah.
The trial.
So hopefully the kind of now.
And your first question I'll say, a few things in and you can tell me. If this isn't an incentive of what you're asking about 100 million registered users now we still do bring in a good number of of new registered users every week. So there is still more of activity happening.
On driving registration I'd say the thing that's going to change now is that.
That's less of the focus last.
The last year is enormous audience and a new cycle presented the opportunity for us to really scale that we are incredibly focused now on getting those registered users to return and I mentioned in my prepared remarks, the number of the air and the sort of zones of the opportunity we've got a huge that of.
Entity in the email.
50 million people using of a opening reading of times now.
Every week 5 million people.
Who use the daily.
On the very I'm, sorry, not the daily the the morning of on a very regular basis and and so there's a really big opportunity and email to have it be of more intentional driver in the funnel from registration to subscription and youre going to see us get.
Just much more more intentional and focused on that.
Another another place where you'll see activity with registered users is.
We have very very high engagement in our App and once we get our registration we're much more able to direct people to download the app and begin to use the app. So you'll you'll see more activity. There and then something I've mentioned in the prepared remarks, and I think I've probably said in every one of these calls for some time, we know that.
People experiencing the breath of our reported that more topics more different storylines drives them you know it at its of behavior that correlates with paying and staying and say you can imagine that we're working to stimulate that now that we've got registered users.
They're they're addressable to us and so I'd say generally you'll see of shifting from driving more ritchie's, although I don't want to suggest we're anywhere near the top or not.
Q I'm getting registry getting registered users to return and just the last bit there is and maybe this is implied but registered users convert.
Obviously, the significantly higher rates of an anonymous users said that that's why the focus there.
Yeah that makes sense and maybe if I can squeeze one last in merit of can you pine on the evolution of regulatory events in Australia around news and Big Tech platforms and any read through it as you might have in a kind of broader opportunity there. Thank you.
Sure.
Try not to approve of.
Yeah, I'll give you the the day the thing that I should say one more thing on the last question Roland touched on this before but one of the other things that the the really big registration registered user base gives us the opportunity to keep.
Keep training of our algorithms and I think I said of version of this in the prepared remarks, you know we.
Or where it said it in prior calls we've got a dynamic meter now so we are able to customize when we actually ask a registered user to subscribe and we got it.
Machine learning, that's getting better and better at how we do that so I should have said that before as well on the the platforms. All day. We are we continue to watch with interest everything that's happening.
The the legislative and regulatory environment I would say there has broadly for the last couple of years now, but the shift.
In the direction of platforms seeking and being willing to make.
The agreements in the form of licensing.
<unk> with publishers, we obviously.
We have one of those arrangements now with Facebook for their news tab, and we certainly don't rule out they're being they're being more there. So we're watching that with the interest we have a really clear strategy that we are in the business of of you know.
Scaling out of direct to consumer digital subscriptions and that that can do that we need direct relationships. The users that we want people to experience our journalism on our destination, where we think they get the best the best of it the best experience of it our work in context, and we also believe that platforms get a lot of Val.
From from publishers get a lot of value from the original work of news that of course, it is through their systems and so.
We think the compensation has to be right. So we think about all of those things when we consider whether and how the work with the platform and I'd say I don't what the out more to come there, but have you don't have nothing to report.
Great. Thank you so much very helpful.
Thank you Youre welcome.
Thank you and the next question comes from Doug Arthur with Huber Research partners.
Yeah. Thanks, two questions.
On the you have of common in the press release about of sizable of sustained investment and journalist in the journalistic engine.
Meredith as the newsroom now over 1800, I mean are you adding.
More resources, there or can you can you comment on that.
Sure and good morning.
<unk> said this a few times in the past I would the newsroom now is it's well over 1700 might say that number doesn't include you know.
Of the people we have many of the people, we have making recipes and puzzles and and <unk>.
The wire cutters.
The product reviews, so depending on you know.
We even think about you know what what do we call it the new threats.
Assume that particularly in the Standalone products area that we are continuing to invest in the content and we've said that before as far as investing in the newsroom itself. So the the.
The the.
Work of our core news report, we have continued to invest I'd say thoughtfully and we will continue to invest thoughtfully in the investment tends to go to.
Ensuring we can cover the biggest stories of our time.
Leading the way and then also meeting more of these needs I described.
Our budding engine for real time coverage of live coverage, that's been an area of investment all of that there I'd say, that's as much about digital product and engineering investment as it is about.
Adding the journalists we've made a big investment in audio journalism of named some of the podcast are starting to do.
Really well from the listener standpoint, and also from an advertising standpoint said that that's how I'd regard index.
Moving to the newsroom to the extent, you're asking me about it does that scale with our expectations of subs scaling I'd say no not at the same pace.
We really like where we are in terms of the breadth.
The expertise in our newsroom.
We're certainly going to keep adding to it but not at the same level that we're scaling the subscriber base.
Okay, Great and then just one quick follow up.
My recollection is you you shut down a couple of in house.
Advertising.
Operations last year, what what's the impact on the year over year comp in revenues for 2021 and digital advertising from the sort of the time, yeah and the.
The impact.
Rollin Rollin well it might give us a slightly more precise answer here, but I think what I said in my prepared remarks is the the.
The way, we would've been up somewhere in the neighborhood of like 23 per cent and digital advertising.
We've not been comping against.
The closure of the last of our marketing services business and also the fact that we chip open market programmatic out of our out of our apps that that was the big comp as well some of the first quarter.
Okay, great. Thank you.
Youre welcome.
Thank you and the next question comes from Iusacell, the car sales from kind of of all research.
I have a silly.
Good morning. Thank you I have a question about the Iot.
Look for subscriber additions this year. So can you tell me please what changed.
What was wrong with your model of where did you have to adjust your model from February when you were talking about adding between 19 and 20.
The number of subs he is and I can guarantee now yes.
Yes, what that factor is and is it possible that the effect of will change in the quarter of two like how fluid that is.
So let me answer the second part of the question first which is it is of course possible that that it changes you know.
We've said the and the passing of I'll say again, we are there.
There is sort of more underlying stability and the whole thing because of the registration model, but you know we said there could be considerable variability from quarter to quarter and what we saw in the first quarter was really strong January alone.
The sort of.
The change in the new cycle.
Combined rule.
The the.
The opening up of of.
Activities that people can do the following a year of quarantine combined with better weather combined with the prevalence of vaccines that that all sort of happen at once and I would say it came a little faster than we were expecting probably because of the compounding.
The effects of all of the things that one.
And the reason we've suggested that it could continue into the second quarter in the second quarter traditionally pump to be just a flow period where for audience.
The engagement.
All I'll say as I said I think of them onto the kit to an earlier question. We have seen periods one of the tightest got out of a little bit on one particular storyline or new storylines and the it always comes back and we were very good underlying drivers of strong very strong compares.
The 2018, and I'd say, we've got plenty of room ahead.
To optimize the the model.
Optimizing the funnel.
On a road map now.
I'll just I think I've said this before but I don't think of it.
It's hard to say, we haven't been sort of no.
Obviously, the new cycle.
And the model and so to just sort of work on the underlying mechanics of the bed, it's hard to keep the thing.
The part.
No I don't think the.
Hum.
It's hard not to work every day.
Hum.
Hum.
Right now.
Thank you and the quick follow up not follow up of quick question. Why did you feel like you want you needed to disclose the number of registration of the 100 million I don't think of talked about it before.
And this level with this level of precision I think he was saying that you had a very large.
Yeah of the base so can you.
Give us the.
An idea.
Yeah. That's of Great question listen, we really believe that the registration model has just improved all of her ability to them too.
The get at those users and get them to more of a habit and the ultimately pay day.
Honestly, we were waiting for it to be a big enough number that.
That it it felt more of the of sharing we think it's the fact that the number of we don't think we're done just to be clear.
As I said earlier, we're still getting more registration, but at 100 million Mark gives us.
Really sizeable population around the 10.
Can intervene to stimulate returned and draw people in new.
So we disclosed it because we want to make the point that it's a really important part of the model, it's really working and that's the basis on which we're building lots about the the optimization. So I mentioned, our algorithm getting smarter about windows.
Hey, I mentioned our newsletters.
Having more today than at any of the point I mentioned.
Net is to get people to download the app of the legislation model helps us do all of those things that we really exposed it.
One because it's now the size that we're very excited about and two we think it's a really important factor at the end of life and it gives us a lot of confidence of how he grabbed some of them.
Thank you very much.
Youre welcome.
Thank you and this concludes our question and answer session I will now turn the conference back over the hold on top of scale for any closing remarks.
Thank you for joining us. This morning, we look forward to talking to you again next quarter.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.