Q1 2022 News Corp Earnings Call
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Good day and welcome to the New score first quarter of fiscal 2022 Conference call. Today's conference is being recorded.
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And the only basis at this time I would like to turn the conference over to Mike flooring, Senior Vice President and head of Investor Relations you may begin Sir.
Thank you very much body, Hello, everyone and welcome to new sports physical first quarter of 2022 earnings call. We should our earnings press release about 30 minutes ago, and now posted on our website at Newscorp Dot com on the call today, Robert Thompson, Chief Executive and Susan Penuche O Chief Financial Officer will open with some prepared remarks and they'll be happy.
Questions from the investment community. This call will include certain forward looking information with respect to news course business and strategy actual results could differ materially from what he said he was gonna Form 10-K, inform turnkey filings identify risks and uncertainties that could cause accidents else to Denver and contained cautionary statements regarding forward looking informed.
Nation. Additionally, this call will include certain non-GAAP financial measurements, such as total segment EBITDA adjusted segment EBITDA and adjusted EPS, the definitions and gap to non-GAAP reconciliation of such measures can be found in our earnings release with that I'll pass over to Robert Thompson for some opening comments.
Thank you Mike.
We are joining through the contours of a complex commercial landscape. There has been a sterling test of the mental of companies and countries for us the first cool and it was the most profitable of its kind since the relaunch of use corn 2013, continuing the trains that were evident in the last financial year and building on.
Rockford rights of drugs.
And we continue to have much confidence you narrow immediate and long term prospects.
One noteworthy sign of that Optionality is our ability to capitalize on the patent success of the Fox tail streaming strategy, which was highlighted during the foxtail strategy day, we have been working through the potential permutations and will continue to provide updates as appropriate in the meantime, it is worth noting that.
<unk> video services segment, EBITDA rose, a rather healthy 46% in the first quarter.
As for our campaign to hold Big digital accountable clearly there have been pronounced in profound developments in recent times. We are pleased with the agreements we have reached and the work that has progressed on revaluing content, but we have always regarded the digital AD market as a separate issue and the release of an Unredacted <unk>.
By the Texas Attorney General last month has highlighted the extent of the problem Lee manipulative language was deeply concerning we are obviously, considering our position on this important matter and want to ensure that in the future. The edmar properly recognize the value of our audience and of our inventory.
Now turning to the first quarter Dow Jones recorded a 15% increase in revenues compared to the same quarter last year with segment EBITDA surging, 32% that profitability was a record for the first quarter.
Revenue at risk and compliance grew 26%, meaning that we have had 25 consecutive quarters of double digit growth.
Flip flop by Zillow, we have always been focused on the digital market not on bricks and mortar and certainly not on sorting out the septic tank or papering overworld cracks, we concentrated on our core competency and never took on excessive balance sheet risks or chased what appear to us to be very low margin returns.
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It appears you are now finally understands what we always news too new to be true that said.
As an open platform, we do see opportunities to be a marketplace for the industry, including I buyers such as open door, providing them with the same kind of dependable and trusted information that agents and consumers alike have values.
In Australia.
<unk> had a remarkable first quarter with revenues burgeoning 62% that is correct 62%.
Australia has slowly been emancipated from severe lockdowns and access to homes for sale has been limited. So we believe that positive market conditions will likely continue as the country returns to a semblance of normalcy. When harbinger is that site traffic was strong in Q1 was $129 million average vis.
That's up 13% year over year that is essentially an average of five visits for every person in the country.
In total and it's furnishing and engaging off season programming for the football trajectory ahead of the new season early next year.
Bulk sales appeal was further broadened with the launch of the flash streaming new service featuring a non Pi collection of 'twenty local and global news sources with content for all political persuasions that breadth combined with a cutting edge world class user interface adds to the last three or four.
So and is indicative of its Renaissance. We are now obviously in a position to be even more ambitious for fox tail and always seeking to maximize its undoubted potential.
News media was a strong contributor to news Corps profitability this quarter with segment EBITDA of $34 million in the quarter. After a loss in the same period last year. Thus is attribute to Rebekah Brooks, Michael Miller, and Sean <unk> and their talented committed teams there.
Transformation was in part due to the benefits of our deals with the major tech platforms, notably Google and Facebook together. These deals will contribute annual revenues in the nine figures to news Corps, clearly putting out news businesses on a more profitable car.
<unk> is now contributing to segment profitability and is an increasingly important voice in the national political debate.
It's digital network reached 151 million unique users in September almost half of the U S population according to Google analytics.
Digital advertising revenue was 28% higher compared to the same quarter last year and print advertising increased 62% recovering from the COVID-19 related lows of last year.
The company built on its momentum from last fiscal in the first quarter and we remain optimistic about growth prospects going forward clearly there are macroeconomic pressures affecting certain companies, but our increasingly digital orientation has bolstered our ability to weather the pandemic.
And deal with the economic uncertainty in some of our markets. We are confident in our employees confident in our businesses and very confident in our prospects and now for further detail.
For further details and invaluable insight I'll cede the floor to Susan Felicia.
Robert this.
As Robert mentioned strong operating momentum that made last year. So successful has continued into our first fiscal quarter results fiscal 2022 first quarter total revenues were over $2 5 billion up 18% marked by higher revenue growth across all our key segments, notably at digital real estate services.
Accounted for approximately 32% of revenues driven by record home values and increased transaction volume.
Revenue growth was partially offset by the divestiture a top producer in March negatively impacting revenues by $5 million or four percentage points.
With home prices at record highs and supply limited lead volumes fell approximately 18% compared to over 40% gross lost cheat, albeit we'd lead still around 15% higher than prepandemic levels in.
Encouragingly, new listings are up from the recent lows and we have seen moderation of lethal you've declines in September and October.
Reising remains robust given strong agent demand.
Rei had an exceptional quarter with revenues rising 62% year over year to $246 million, including a $7 million or 3% positive impact from currency fluctuations.
Results benefited from $43 million a contribution from the mortgage choice acquisition and $8 million from the consolidation of Alara, which is being rebranded to Rei India.
The underlying performance was very encouraging with Australia, and residential revenue growth driven by an increasing penetration price increase and favorable product mix.
The revenue growth was also driven by an 11% increase the new by listings, despite lockdowns across multiple states, including restrictions on physical inspections in Melbourne.
Melvin listings rose, 79% will Sydney fell 7% financial services also benefited from highest settlements in submissions.
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Turning to the subscription video services segment revenues for the quarter was $510 million up 3% versus the prior year benefiting from highest strict streaming revenues and a modest benefit from positive currency fluctuations, partially offset by lower broadcast in commercial subscription revenues on and adjusted basis revenue.
Use with flat.
Total closing paid subscribers across Brocatel reached nearly 3.9 million as at quarter end up 17% year over year with total subscribe as including Triallist approximately $4 million. The increase was driven by continued growth in pipe streaming subscribe is partially offset by a decline in broadcast subscribers and commercial subscriptions.
Of negative impact seen in the first quarter of fiscal 2021 related to deferred sports costs from the fourth quarter of fiscal 2020.
Adjusted segment EBITDA increased 42%.
Moving onto Dow Jones, Dow Jones delivered revenue of $444 million up 15% compared to the prior year with digital revenues accounting for 75% of total revenues this quarter up two percentage points from the prior year.
Adjusted revenues, which notably excludes the impact of IPD rose, 9% as Robert mentioned, both revenues and profitability with our highest first quarter results since its acquisition.
Circulation and subscription revenues increased 12%, including 13% circulation revenue growth, primarily reflecting the acquisition of IBD and the continued strong volume gains in digital only subscriptions.
<unk> subscriptions to its consumer products increased to an average of approximately $4 6 million in the quarter up 18% from the prior year off that over $3 6 million with digital only subscriptions up 24% year over year <unk> accounted for 100000 digital only subscriptions at 128000 <unk>.
Total subscriptions.
Despite the difficult prior year comparison book consumption levels remain elevated overall consumption across the industry remains higher than prepandemic levels and materially above the historical low single digit type revenue growth.
This quarter benefited from a rebounding Christian publishing, which was more exposed to the closure of retail stores in the prior year and highest sales in the UK General books, so healthy growth benefiting from new releases, coupled with high up back with sales from the Bridgeton series by Julia Quinn.
Digital sales rise, 5% this quarter and accounted for 21% of consumer sales. The backless represented 62% of revenues up two percentage points from last year underscoring the importance of this steady high margin revenue stream and a key factor behind the acquisition of height Shanghai <unk>.
Hi, Jim H integration continue to progress well and is in the process of being integrated into a full in print structure within Harper Collins, we remain on track with our savings target of $20 million to be delivered within the first two years overall hitron H contributed $50 million in revenue and $6 million in segment EBITDA This quarter.
The COVID-19 savings initiatives in the Pri across head count and marketing, we expect more moderate year over year cost increases for the balance of the year.
[noise] and subscription video services, we remained pleased with the ongoing performance of chaos and binge and the efforts to improve broadcast up who would Chen we do expect seasonality and chaos given the end of <unk> winter coats, but look forward to a summer schedule with the ashes and the cricket World Cup in the second quarter cough are expected to be hiring a second <unk>.
Most notably for entertainment and sports rights as well as some higher marketing to support the launch flush the new streaming offering overall, we continue to expect cost for the <unk> to be relatively stable in local currency.
At Dow Jones overall trends across the business remain strong with advertising and subscriptions growth continuing to perform well input.
You can pull publishing overall trends remained favorable despite lapping the benefits from COVID-19, we have a strong release lineup in the second quarter, including titles from Richmond, which album and David Williams at.
That news media, we continue to expect a segment to show profit improvement partially benefit from the recent content licensee revenues, we do expect some additional costs in the U K as we expand more into video content and leverage a key brands and masters.
[noise] Capex was modestly higher in the first quarter and we continue to expect phooey capex to be up $100 million. This is the prior year.
Given this was necessary.
We've used our media platforms to complement and promote the quality of Foxtel.
Team made some tough decisions to rationalize made some smart decisions on streaming and systems.
And here we are today, so whatever we do we will not be naive naivety is not now 19.
And as for Zilla.
Obviously, we had discussed ourselves getting into bricks and mortar, but we had a very clear sense of the digital priorities don't forget that we had revived renovated the distinctly unfashionable realtor dot com and we bought it on the cheap net net about $700 million. What's it worth now 6 billion 7 billion what will it be worth it.
Five years is the inevitable digital match continues $15 billion 20 billion more.
So we've been very focused.
Diligent Lisa all to service for vendors buyers and Realtors.
As for Zilla.
The idea that it was simple to fond of great plumber, plus or a plan or a plan to the idea of the prices were not variable subject to vicissitudes. The idea that holding inventory was not itself constantly.
Tomatoes were rather strange ideas I'm I'm not sure.
What impact.
Eventually when.
Makes up in mind, what type of business that is they will have on on the market back and talk from a macro perspective festival very confident and realtors prospects.
But also very confident in the us real estate market generally.
Thank you uhm in in the news media business I was wondering if you could sort of Pontificater give us an idea of what you think the the.
The overall opportunity is even longer term from licensing fees from from tech platform sort of overtime and then just a quick follow up on on Fox tail, you know with with some of the streaming platforms, yes spot players sort of launching their own platforms in Australia do you see that is incremental competition or how how should.
We do that.
Well first of all of all news media, what you're seeing is really a transformation led but that'll change.
Isn't mentioned will there be AD revenue, which shouldn't into UK was up 36%, Australia, 5% newel posts, 32% check revenues.
Overall up 16% in the UK, 30% of Fry and 1%.
You're seeing a lot of hard work done bought by our teams and being very diligent about cost, but also being focused on on growth certainly the big digital deals will make a difference to all of our publications.
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Frankly, all we can say given the constraints of confidentiality is at the deals made that comfortably I have a non figures are flowing into the news companies in return for the highest quality new services and three separate continents.
Fox tell from a strategic standpoint, I am just wondering the rest of the companies or any of the reviews going on and be obviously, a lot of investors view rightly or wrongly that the company is overly complicated and stuff I'm wondering if there's any other ongoing review is going on with the with the company and my other just Nit pick question, you usually tell us what.
What the change is year over year EBITDA at realtor Dot Com can you provide that for the quarter. Please thank you.
Craig.
The simplification.
Candidly with constantly we're getting a structure as you know was sold quite a few companies along the way.
Cash generation potential our ability to both invest to grow and to return capital. So as I mentioned now that the quiet period is almost over you will soon hear the sound of buyback.
And Brian just in relation to your question on the content licensing, we havent given out that number apart from saying.
It was going to be into nine figures and just in relation to how that's going to be pacing over the course of the year, we would expect to grow as more products within a nice particular contracts launched like for instance, Shanghai site here in the U S. So we would expect to see that build as we go throughout the year.
Talked previously in relation to that about a high level allocations of it sitting between the news media segment and Dow Jones.
Thank you.
Brian.
Bobby will take our next question please.
And then no further questions at this time I will turn the call back over to you for any closing remarks great.
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