Q2 2022 New York Times Co Earnings Call
Good morning, and welcome to the <unk>, The New York Times Company's second quarter 2022 earnings Conference call.
All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.
I'd like to turn the conference over to Heartland took pesky Vice President of Investor Relations. Please go ahead.
Thank you and welcome to the New York Times Company's second quarter 2022 earnings conference call on the call today, we have Meredith Kopit, Levien, Debian, 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 2021 10-K and subsequent SEC filings.
In addition, our presentation will include non-GAAP financial measures and we have 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 and finally, please note that a copy of the prepared remarks from this morning's call will be posted to our.
Your web site. Shortly after we conclude with that I will turn the call over to Meredith Kopit Levien. Thanks, Harlan and good morning, everyone in the world that is getting ever more complex, we believe that quality journalism to play an even more valuable role in People's lives over the course of the year.
We introduced the next phase of our strategy to become the essential subscription for every English speaking person seeking to understand and engage with the world that strategy is grounded in three pillars.
First to build on our leadership and needs to be the best news destination in the world.
Second to be more valuable to our people by helping to make the most of their lives and passion and third to put those two things together in a more expansive and connected product experience or bundle that makes the time, even more indispensable to the daily lives of millions more.
People were making palpable progress in each of these areas for next strong conviction in our path forward and our ability to create shareholder value.
Turning to our second quarter result.
Overall revenue grew more than 11% with digital subscription revenue up nearly 26% and total advertising revenue up just over 4%. We had 180000 net digital subscriber additions in the quarter, which represents approximately.
70% improvement over the second quarter of 2021 driven by the bundle.
Yeah, what it it was also relatively strong period for subscriber engagement.
There were two big success stories in the corridor, our effectiveness and getting more people to buy our all access bundle and the performance of our recent acquisition <unk>.
Gather they show our strategy in action.
As I said on the last few earnings calls and at our June Investor Day, We believe that the bundle will allow us to better penetrate our addressable market and drive more volume and higher our Pip.
News remains core to our value proposition, but the bundle helps ensure that the time is indispensable to an ever widening group of people even as news engagement.
In the second quarter, we brought in our highest ever number of new starts to the bundle. Thanks to a deliberate effort to prompt more people to buy it versus news only subscriptions as a result, the bundled made up a majority of the quarter's total net subscriber additions.
That means we are seeing discernible momentum on a key element of our strategy to drive revenue profit and shareholder value.
Our experience so far is that bundle subscribers, including our newest Watson pay more engage more frequently and retain better. So our plan is to lean even more heavily into selling the bundle to new subscribers and getting existing subscribers to upgrade in the back half of the year.
We expect much of the revenue benefit from this to begin in 2023 as we follow our proven playbook of moving subscribers from introductory offers to higher prices over time.
Our acquisition also played a big role in the quarter. We had 50000 Standalone. Net addition of yeah, let it which is 50% higher than the athletic performance in the second quarter of last year before we acquired it.
Two quarters into owning the athletic we're even more excited about the opportunities we see and we are moving quickly to realize that we added the athletic to our all digital access bundle in G.
Extending access to existing bundle subscribers and at the end of the month print subscribers. We also began promoting the athletic stories on time surfaces, including our homepage the morning newsletter, and our social feeds and we plan to aggressively market the athletic as part of the times bundle.
To potential new subscribers globally in the second half of the year.
The quarter was also our best one yet for games net additions. Thanks to the continued success of portal and attracting an outsized number of new regular users while smaller than the bundle as a percent of total net addition games only starts were significantly higher than the second quarter last.
Yeah.
We reacted users aboard all have come down off the peak as expected, but they remain high and we have successfully capitalized on portal demand to drive engagement with our broader portfolio of game. For example, the number of people playing more than two games in any given week has nearly doubled quarter.
Every quarter.
Times now has $9 2 million subscribers with 10.6 million subscription and we believe we are well on our way to our next mile marker of 15 million subscribers by the end of 2027.
On advertising performance for the quarter was on track for total revenue digital grew less than expected and print grew more let.
Let me set this quarters results and the next quarter's guidance into a broader context, our advertising revenue, it's cyclical and it's subject to significant fluctuation as a result of exogenous conditions, having been in and around the AD business for a long time I would call the patterns. We're currently seeing.
In line with what we'd expect given the macroeconomic uncertainty.
We're confident in our advertising approach, which is grounded in the market leading suite of first party data and premium AD products that are subscription first strategy enables so we fully expect digital advertising to be a growth driver over the midterm and overall advertising to continue to be.
A significant contributor to the company's profit.
Now, let me turn to costs.
Our adjusted Cross spreads and the New York Times group slowed in the first and second quarters consistent with our plan and as you'll see in our guidance you can expect more meaningful improvements to cost growth in the back half of the year.
Given the uncertain macroeconomic environment will continue to look closely at cost while prioritizing investments in areas that widen our moat like journalism and digital product development.
Our second quarter result interactions underscore the five part value creation thesis, we shared in Investor day in June our confidence in the business is grounded in the following beliefs first that our high quality portfolio of journalism lifestyle products is our competitive advantage.
And the basis of our company's value.
Second that our product portfolio positions us to pursue a large and still growing Tam a at least 135 million people.
Third that our model itself is advantaged with favorable unit economics, numerous levers for value creation and multiple revenue streams.
Fourth given the scale that we've begun to achieve we believe that our model will lead to sustained profit growth overtime.
Even as print continues to decline and even as we continue investing to widen our moat and finally these things together mean that our model is and we expect will continue to be increasingly cash generative.
As we've articulated this vision target, we're aiming for 15 million subscribers by the end of 2027, which we view as a biomarker and not an endpoint we're targeting compound annual growth in a L. P of between nine and 12% over the next three to five years with 2022.
As the base year. This is more profit growth that we achieved on a CAGR basis in the previous five years.
We expect to achieve margin expansion on a consolidated basis, beginning in 2023, and we expect to return free cash flow to our shareholders in a range of 25% to 50% annually over the midterm on that last point in the second quarter and into the third we can achieve.
To be active buyers of our stock.
As we articulated at Investor day, we factored headwinds into our midterm Arab P target given the outsized role that advertising plays in our profitability and its sensitivity to macroeconomic condition. These headwinds have begun to appear and are reflected in our second quarter results.
And in our forward looking guidance, we also see potential tailwind. We're encouraged by this quarter's progress, which strengthens our belief in the power of the bundle and our ability to translate our strategy into results were.
We're also executing well so far with the athletic and we have moved faster than initially anticipated.
Adding it to the bundle.
As a result, we expect the impact of the athletic and this year's consolidated profit will be less negative than we forecasted at the time of acquisition.
Let me close with our full year 2022 outlook, we are reaffirming the guidance that we shared in February and again in May that we continue to expect to grow adjusted operating profit in our core business before the impact from the athletic, but we do not expect that grows.
To entirely offset the dilutive impact of the athletic on a consolidated basis.
We'll see how macroeconomics trends play out and also what we can achieve on subscriber or <unk> as we lean more aggressively into selling the bundle and we'll continue to keep you apprised of our progress and trajectory as we go and I look forward to your questions in the meantime over to Roeland.
Thank you Meredith and good morning.
As Mary said, our second quarter results suggest real progress against our strategic goals in the face of macroeconomic uncertainties and we have real confidence in our path forward and ability to create shareholder value.
Turning to the quarter adjusted diluted earnings per share was 24 cents 12 cents lower than the prior year.
We reported adjusted operating profit of approximately $76 million lower than the same period in 2021 by approximately $17 million largely as a result of the expected losses from our acquisition of the athletic.
Adjusted operating profit in the New York Times Group was approximately $89 million in the quarter lower by approximately $4 million compared to the prior year, while the athletic lost approximately 12 and a half million dollars.
On a consolidated basis. The company added 180000, net new digital only subscribers and 230000 net new digital only subscriptions in the quarter with strong growth in adoption of our bundled product.
The number of multi product subscribers, which includes bundled subscribers grew by approximately 120000 in the quarter driven mainly by increases to the number of number of bundle subscribers.
As Mary mentioned, we began giving our bundle subscribers access to the athletic late in the second quarter and as a result, the disclosed number of subscribers with entitlements to the athletic grew by approximately 420000. In addition to the approximately 50000 Standalone athletic net subscriber additions.
I also want to reiterate that we expect there to be variability in net additions from quarter to quarter as a result of seasonality and other factors that may affect audience. However, we remain confident in our ability to achieve our goal of 15 million subscribers by year end 2027.
Total subscription revenues increased approximately 13% in the quarter with digital only subscription revenue growing approximately 25% to approximately $239 million.
Digital only subscription revenue grew as a result of the large number of new subscriptions, we have added in the past year.
Renewed strength in retention of the dollar per week promotional subscriptions, who have graduated to higher prices.
Our subscription revenue from the athletic.
Moving to subscriber ARPA.
As a reminder, the art pool, you're reporting represents the average revenue per digital subscriber and therefore it includes all of our digital products.
<unk> commentary made prior to Q1 referred solely to the digital news product subscriptions.
For the quarter digital only subscriber arps, who decreased seven 5% compared to the prior year and three 3% compared to the prior quarter, both largely driven by the athletic.
Excluding the impact of the athletic the declines were significantly less pronounced although the effect of new subscribers had introductory promotional prices, including a large number of new games subscribers more than offset the gains from subscribers converting to the bundle or otherwise transitioning to higher prices.
Print subscription revenues declined approximately 3% as the benefit from the first quarter home delivery price increase did not fully offset lower volumes in both home delivery and single copy.
Total advertising revenues increased approximately 4% in the quarter with digital advertising declining two 4%.
Which was driven by a number of factors, including the impact of the challenging macroeconomic environment.
A reduction in marketer spend on advertising adjacent to news coverage and supply constraints and programmatic advertising related to choices, we made to drive more audience to our apps.
Meanwhile, print advertising was higher by approximately 15% compared with 2021, primarily driven by growth in the live entertainment and luxury categories.
Other revenues increased approximately 18% compared with the prior year to approximately $55 million, primarily as a result of revenue from higher commercial printing live events television and film projects wire cutter affiliate referral revenues and licensing.
Other revenues came in higher than guidance as a result of higher wire cutter affiliate referral and TV and film revenues.
Adjusted operating costs were higher in the quarter by nearly 18% as compared with 2021, mainly due to the additional costs associated with the athletic.
Adjusted operating costs were in line with the low end of our guidance.
Adjusted operating costs at the New York Times Group grew approximately 10% slightly better than our guidance.
I'll now discuss the cost drivers for the New York Times Group.
Cost of revenue increased approximately 11% as a result of growth in the number of employees, who work in the New York Times' newsroom, as well as higher subscriber servicing costs and print production and distribution costs.
The increase in production and distribution costs was due to higher raw material and fuel costs and increased commercial printing activity.
Sales and marketing costs increased approximately eight 5% largely due to higher advertising sales costs, which were lower than the prior year due largely to the pandemic.
Media expenses were $28 million approximately 3% below last year.
Product development costs increased approximately 18% as a result of growth in the number of digital product development employees in connection with strategic digital subscription initiatives.
General and administrative costs grew approximately 2%.
We had one special item in the quarter of $34 million gain related to an agreement to lease and then sell a four acre parcel of land adjacent to our college point printing facility.
Our effective tax rate for the second quarter was approximately 28%.
As we said previously we expect our rate to be approximately 27% on every dollar of marginal income we record with the possibility of some variability around the quarterly effective rate.
Moving to the balance sheet, our cash and marketable securities balance ended the quarter at approximately $453 million a decrease of approximately $21 million compared with the first quarter of 2022, largely as a result of share repurchases and higher cash taxes.
After repurchasing sufficient shares in the first quarter to offset the dilution expected from the issuance of stock based compensation Awards.
But sinister share repurchases during the second quarter totaled $25 million and the company repurchased an additional $13 million worth of shares subsequent to the end of the quarter.
Approximately $82 million remained under the company's repurchase authorization.
Last week the company entered into an agreement on a five year $350 million revolving credit facility, which replaces the $250 million facility that was scheduled to expire in two years.
The company remains debt free.
Let me conclude with our outlook for the third quarter of 2022 on the New York Times Group, which does not include the athletic comparisons are to the company's consolidated results for the third quarter of 2021 prior to the acquisition of the athletic.
The effect of the athletic on our consolidated guidance has been included in the outlook section of the earnings release that we published this morning.
But the New York Times Group total subscription revenues are expected to increase 5% to 7% compared with the third quarter of 2021 with digital only subscription revenue expected to increase 10% to 14%.
Overall advertising revenues are expected to decrease in the low to mid single digits compared with the third quarter of 2021 with digital advertising revenues are expected to decrease 4% to 8%.
As a reminder, the month of September typically played an outsized role in our third quarter advertising results.
Other revenues are expected to decrease approximately 5%.
Adjusted operating costs are expected to increase in the mid single digits compared with the third quarter of 2021 with with cost growth for the New York Times group expected to slow considerably in the second half of 2022.
As Mary noted given the uncertain macroeconomic environment, we continue to look closely at cost while strategically investing in areas that widen normal like journalism and digital product development.
As <unk> also said we are reaffirming our full year profit guidance.
We continue to expect to grow adjusted operating profit in the New York Times group that we do not expect that growth to entirely offset the near term dilutive impact of the athletic segment on a consolidated basis.
With that I'll turn it back to merit for some final thoughts.
Thanks, Roland before we open the line for Q&A, Let me just reiterate a few key takeaways the macro headwinds we factored into our ERP targets are playing out largely as we anticipated we slowed cost growth in Q1, and two and expect that trend to continue through the remainder of the year.
We're doing better with the athletic than we expected and we're encouraged by the potential tailwind in the business, particularly around the power of the bundle and with that we'd be happy to open it up for your 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.
We're 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 our roster.
Our first question comes from Douglas Arthur from Huber Research Partners. Please go ahead.
Yes, good morning.
Roland I'm wondering on the.
A breakdown of the subscription ads as opposed to subscribers can you give us a sense of are the news only adds in the second quarter is a little hard to fair. It out from the data you gave six yeah I think the I think the best way to get to that we're not breaking.
Alpha subscriptions by product, but I think the best way to get to what you're interested in is to look at the number of subscribers with entitlements to the news product and.
And you can see that the delta there.
That does include both the new Standalone ends up bundles news.
Subscriptions.
So just can you can you make any kind of.
Gradation on on second quarter momentum versus first quarter of momentum for news only.
Yeah, Hi.
Hi, Dad, I'll I'll take that.
I would say, what you're seeing in the quarter as our strategy and action where.
Really pushing the bundle. We're you know we're intervening in the the news flow to.
To get people to buy the bundle instead, and having real success with that and the the so and obviously news is part of the bundle, but we're incredibly focused on that at this point I'll I'll say two more things just not 100% sure what you're getting at but I'll I'll say two more things that that performance in it.
Overall was meaningfully better from a subscriber standpoint than the second quarter of last year news starts in and of themselves.
Were also better than it was I think you you may be asking about that and it was a relatively strong period kind of across the board across the portfolio for subscriber engagement and you know we look closely at what's the percent of subscribers on site and that was broadly in line with the same period last year, but.
See we have a on a percentage basis, we have a larger number of subscribers and I'll mention one more thing which is.
We are feeling very confident about the levers we have in our hands to drive that engagement. Both within news. So you know if you look at our homepage programming or our use of email newsletters. We we we are really focused on bringing people back to site.
Were more regularly.
And and and you know have a lot of confidence that there there are plenty of levers there.
In addition, as we continue to market and merchandise and push the bundle. We believe we have a lot of levers to get people to engage with with the bundle and the point here is that no news cycles going to ebb and flow news engagement is going to ebb and flow and the bundle we believe.
It makes us that much more indispensable indeed.
Independent of the news cycle and whatever is going on in the new cycle.
Okay. A final question I think when you close in the athletic you were talking about an adjusted operating loss in the mid to low fifties can you sort of give us a sense of.
Where you are now.
Yeah. So so that statement referred to what we believe that the loss looked like last year I believe our statement was we thought we would do a little bit better than that and actually what we're seeing now is we think we're going to do we're going to definitely do a bit better than we expected.
So said differently I would not take.
The 12, and a half million dollar loss in Q2, and extrapolate that to get the full year loss, we'll do we'll do a bit better than that.
Spectrum.
Okay. Thank you.
The next question comes from Thomas <unk> from Morgan Stanley . Please go ahead.
Thanks, so much I'm going off of what Doug was asking on the subscribers with news net add which I think increased 40, K this quarter compared to 80 K in the year ago quarter sequentially. Despite what I figure it would've been a relatively strong news cycle I know, there's quarterly volatility in typical <unk> seasonality.
Could you maybe just further characterize what youre seeing from how hot or cool the news cycle isn't it.
In the current quarter or into Q and from a churn or gross starts perspective, how that shaped out relative to prior quarters.
Yeah, I'm happy to do that hi, gentlemen.
So a couple of things I would say the second quarter. Generally has you know if you go back and look at history. Most of the time. There is some seasonal factors at work I'll say two things at least one of which I may have said in answer to Doug's question, We actually had more news starts in the second quarter.
This year than we had last year.
And you're you're asking about churn I'm going to make a brief comment on churn, which is you know the base is larger so even at what we believe is a very manageable churn number you just lose more people every year.
The the raw number is higher because of the size of the base, but we are feeling confident that our churn number is manageable.
And and there's nothing in the quarter that we're seeing that that makes us I'm overly concerned about churn and I think what you're also seeing is you know the focus on on a very deliberate strategy of becoming the essential subscription.
With a widening value proposition that you're seeing you're seeing us push that you're seeing us push the bundle push the athletic push given given all of the momentum that that word all brought your you're seeing a shift a lot of time and attention and energy to two games.
Let me, let me step back, though Thomas and just add a couple of points on news that may be useful here I said in my prepared remarks that remains core to the value value proposition and I expect it will we'll always be that.
We're always going to see or we certainly our history has been that the news cycle is going to ebb and flow and we have yet to see one without the other and I think we have plenty of levers still to come.
To drive news engagement.
And just one one more kind of step back point on news, we do always think we'll sort of see variability we've seen it before from quarter to quarter. You know people asked us after the 2016 and political cycle. You know it you know our people less interested in news and and again after Covid and I would say.
Hey, the patterns are going to you know the tide goes in and out but over a long time horizon. I think we remain very confident that news is going to be central to the value proposition and just plays a huge role here.
Okay. Yeah, that's very helpful. Meredith and then second can you give us some color on the comments that you made about the spending philosophy adapting to the macro which areas doesn't make sense to adjust in the near term versus the other areas, where it might make sense to invest through a cycle.
Yeah, Great really good question, let me, let me sort of make make two points on broad broad point them to make sure I'm, giving you the whole picture rolling and I've been talking for a while now about the idea that cost growth was going to begin to really.
It really come down in a considerable way in the back half of this year. So I wanted to say setting aside the macro environment, you're seeing that a lot of that is about the product itself, becoming a you know an.
And increasingly strong engine of engagement and conversion and and you're seeing us be able to to have an effect on marketing spend as a result of that so let me. Let me say that first and then if you add to that that the headwinds we're seeing from adverse.
Rising are playing out kind of broadly as as we would expect them to and so we're very focused on making sure were kind of resilient if and as those those headwinds from macro economic uncertainty continue and we believe that the two most important areas of continued investment.
For the time might be different from what you've heard from me before or in our journalism and in our digital product development and we intend to continue to invest into that that's our moat. That's that's how we kind of build our build our structural advantages and at the same time, we're looking at cost.
To make sure we are strategically prioritize those things into the the highest impact work to to drive our medium and long term strategy.
Thank you.
The next question comes from Ken on Venkatesh, where from Barclays. Please go ahead.
Yeah.
Thank you.
So I just wanted to check something on the harpoon and I'm not sure.
The math is correct because of some of these statements.
When we look at the ARPA sequentially. It looked like it looks like I put the plane, even though news.
The next news numbers split a lot lower.
That would be expected.
Excluding the athletic.
So if you take out the athletic looks like got sequentially Arpels were down maybe low single digits.
This implies that John the news was potentially unlock higher.
And this also goes back to the previous question around new subs, but if what originations were higher than last year, but in subsequent are much lower than last year and arpels are basically having this trend then it would imply children's a lot higher.
Could you just give us some kind of a sim Saddam sequential Sean to the other news I mean that that's gone up substantially.
Yeah. So let me start with before I before I talk to churn, which I well, let me talk to kind of the other side of the equation, which is the starts there's a large large number of games starts in the in the quarter.
Driven by our acquisition of word on what that's done to drive folks to the funnel and bring them to our other games products and subscribe to games, so that might be a piece.
That you want to consider.
The the.
The increase in in I'm, sorry, the decrease in Orca once you take out the athletic though is very slight.
So I think I think maybe the games is the missing piece there.
On the churn side, we did not see any difference in churn in the quarter from from previous quarters. So it's not it's not being driven by churn.
And I'll just add to that you know to us. The most important driver of churn is or of retention not churning is subscriber engagement and we're making a point to say subscriber engagement.
In the second quarter was relatively strong and you know that is broadly across the portfolio and for news.
Alright, thank you.
The next question comes from what's really care a sign off from clinical research. Please go ahead.
Thank you good morning Meredith.
Meredith I think my question is for you.
So in the press release, you said that and I think in your prepared remarks, you mentioned that the <unk>.
<unk> been quoted best Sladek, starting this quarter so in terms of engagement.
Can I ask you what you're seeing with subscribers do you see a net addition of time spent and an increase in engagement. After you do that because you would think that if someone was various support interested in sports there with already have that sweating. So would be curious if you could talk about what you see.
In terms of engagement within the bundle different products when you introduce them to people.
Yeah.
That's a that's a great question, let me, let me say a couple of things that we put the athletic into the bundle for all digital access subscribers and then ultimately print subscribers to who are who count at the.
In June and for for many of them at the very end of June . So I don't I don't have good data to share yet, but you can regard you know the direction of travel here as you know we were very encouraged by them by what we're seeing I'd say in terms of everything.
The bundle and our general thesis about the bundle, which is that people pay more little bit more to start and more every time, they engage more and they retain better is kind of playing out. So that's that's why you hear us.
I'm talking optimistically and isn't encouraging ways about the bundle and we'll see you know that political is going to play a big role in that bundled in the back half of the year until likely.
Likely have more color to add.
Once it's doing that but let me say I think you're asking kind of a more important broad question about can we get people to engage across the portfolio of products when they buy the bundle and what I'll say is it's a huge area of focus talked about this a lot at Investor day, we have a lot of levers to do it it's quite important that we.
Do it and we're very encouraged by what we've seen in kind of the the first half of this year with our ability.
To do that and there are two things I'll point to them.
We're doing I think much better work with still more to come on getting people, who buy the bundle to onboard them and sort of experience multiple products I think that that's at the root of your question and then youre going to see you're going to see more of games in particular, playing a role in the overall.
Experience, you're going to see us start to connect the products in a better way and I think so I think there's there's real running room, there to do that even further.
I'm getting at what you're asking about but please feel free to ask again if not.
No. This is Ed thank you.
The next question comes from Craig Huber from Huber Research Partners. Please go ahead.
Yes, good morning, a question on cost structure.
It's a little more detail if you would.
Cool.
Sure.
We are investing heavily.
For the year.
When we talk about <unk>.
[noise] take out this way how should we sort of immediate cost too.
Yes.
Okay.
Yes, I can.
I can start on the merits you can jump in yeah.
The big difference is going to be in and are in our marketing spent in our media spend and I think you'll see the.
The decrease in that year over year spend show up.
The vast majority of it showing up there.
We don't expect to slow.
Cost growth in in journalism.
Or or in our engineering so.
Again, I think where you where that's going to show up when you look at our lines of expenses most of that is going to manifest itself in the sales and marketing line.
I don't think it's time to pull back on an investment in areas that we believe makes sense for the long term that are going to expand our moat versus the competition and so we don't plan to do that in this cycle given the even given the economic uncertainty that's right and I'm just going to add a beat them because I think it's important to say.
Say that set aside the market uncertainty it is long, but aren't planning you've heard Roland and I talk about this to get the product itself to do more of that work to engage and convert and we talked about that a lot at investor day, all of the levers we have within each individual product in the portfolio.
Ross the bundle and so that that's sort of been part of the plan and that's why we've said, we expect marketing costs to begin to come down this year.
But also Meredith maybe could you talk a little bit further about engagement. What you maybe saw in the second quarter, putting aside the athletic engagement in terms of maybe.
Number of minutes spent use them to see the news only product versus a year ago, how does that sort of trending for you right now.
Yeah good.
Good good question, we we don't.
I don't we don't share anything about number of minutes spent on what what I will say is that you know broadly.
You know we put it in our prepared remarks that it was a relatively strong period for subscriber engagement and broadly the percent of subscribers on site in the second quarter.
This year was consistent year on year with.
With the same period last year and you know obviously, we have more subscribers now. So that's we think that's a very good thing we're very very very focused on that number and I'll add to it not not to repeat too much of what I said before we've talked for a long time about kind of which levers we have in our hands to drive.
Engagement and I'll, just say you know our our work there are experiments are testing and learning there is really working and I'll point to two things.
We are getting better taken a long time, but we are getting better at a more customized personalized homepage experience that we're getting better at sort of knowing what what to put in front of you. Obviously a lot of it is still dictated by judgment, but.
We're getting better at reflecting an important story you might've missed or where you are in the world and therefore, what what you should see and that that plays a real role in engagement and then the other thing I'll mention which we did not talk a lot. We didn't talk at all about in the prepared remarks, but its really a successful product intervention.
We have a lot of newsletters now we have a big portfolio of newsletters, some of which are subscribers only by the way that is going very well as a mechanism to help people engage and retain them, but but we also have newsletters that we can spin up based on something going on in the news that we have something called the updates.
The newsroom, which we'll we'll send them when when something happens.
In the moment and we're seeing real progress on being able to bring people back to site or bring them back into a times experience them with the content.
Great great. Thank you.
The next question comes from David Karnofsky from J P. Morgan. Please go ahead.
Alright. Thank you Meredith just on advertising wanted to see if you could provide some additional color on what youre seeing right now, which I think you said is you know kind of in line with what you would expect for this type of environment.
Or was there an observed kind of do sell through the quarter at all they do for certain verticals and then what products or data can you offer marketers to help keep them engaged with gap for them, even with the economic risk.
All good questions I would say you know the headwinds are broadly playing out and advertising as we expected they would and so nothing is surprising us here and and we've kind of factored that into much of what we've been saying to the market.
Your you asked you about kind of are we seeing it in particular categories. You know that the nice thing about the times as we work across a lot of categories and we have a very varied product set but we are in fact seeing more pressure in some categories. So in digital advertising, we saw real pressure on tech.
And streaming and finance, which I think you know you would expect given the macroeconomic uncertainty and on the flip side. You know we have categories that kind of over present in print luxury is a very big one and entertainment is another one's in those those continue to be brisk. So this is the moment, where we really are.
Appreciate having not just a variety of digital products that kind of a whole whole portfolio.
<unk> of products and and I think Roland mentioned in his prepared remarks, you see a little bit of a pullback sometimes depending on the news cycle.
Been around the business a long time, there are occasions, where advertisers say I'm less.
I'm less interested in being adjacent to news and we saw a bit of that that feels very cyclical to me and this is another place where we're very happy to have a wide product set with with advertising opportunities across them, you know really across a breadth of kinds of content. The last thing I'll say is that.
You know our I think you're asking me about what's what's working our first party data products and our premium add campuses that perform really well with those first party data products.
Our you know continue to be strong performers in a market where advertisers want to be and in privacy forward environments and then in premium environments and then the last thing I'll say it is early days, but we are very excited about the the you know the opera.
<unk> with the athletic it's even though the conversations we're able to have around it just put us in in different categories different kinds of advertisers or even like some of the same advertisers, but we're going after different kinds of people and we're really optimistic that over over the.
You know medium long term, that's going to be a real growth driver.
Alright, Thanks, a lot.
This concludes our question and answer session I would like to turn the conference back over to Heartland took klitzke for any closing remarks.
Thank you for joining us. This morning, we look forward to talking to you again next quarter.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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