Q4 2022 News Corp Earnings Call
Please stand and Barry.
Good day and welcome to the news Corp fiscal 2022 fourth quarter and full year.
Earnings Conference call. Today's conference is being recorded media will be on a listen only basis.
I would now like to turn the conference over to Mike Florin Senior.
Senior Vice President and head of Investor Relations. Please go ahead.
Thank you very much Sarah Hello, everyone and welcome to news Corp's fiscal fourth quarter of 2002 earnings call. We issued our earnings press release about 30 minutes ago, and it's now posted on our website at Newscorp Dot com on the call today are Robert Thomson, Chief Executive and Susan Penuche out Chief Financial Officer will open with some prepared remarks that we'll be happy to take questions.
From the investment community.
Call May include certain forward looking information with respect to news corp's business and strategy actual results could differ materially from what is said news corp's Form 10-K, and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward looking information.
Additionally, this call will include certain non-GAAP financial measurements, such as total segment EBITDA adjusted segment EBITDA and adjusted EPS, the definitions and GAAP to non-GAAP reconciliations of such measures can be found in our earnings release for the applicable periods posted at our website.
With that I'll pass it over to Robert Thomson for some opening comments.
Yeah.
Thank you Mike.
To use a superlative as really is unbecoming, but the past quarter and the full year have created so many unprecedented records that reflect well on all that new school and we believe have created a platform for future performance and enduring returns for our investors. These.
These accomplishments, which necessarily demand the use of <unk>, while our intense digital transformation by the businesses and focused acquisitions that we expect will provide increased revenue and healthy profits into the future.
Profitability for the full year rose, 31% to a record $1 $67 billion and that followed a 26% surge in the previous year, which itself was a record.
Revenues rose a robust 11%, despite incipient economic uncertainty and unfavorable forex fluctuations that outweighs the benefit of an extra week in Toto. The favorable results were reflected now reported EPS of $1.05 compared to 56 cents in the prior year.
It is worth noting that we saw enhanced success in each and every business segment last year and we are confident about our prospects in fiscal 2023.
Our core pillars, Dow Jones digital real outside services and book publishing all notched record results that exceeded the Sterling performance of the previous fiscal year. When you benchmark, we said across most of the company.
And it's worth noting that our net cash from operating activities was a record $1.35 billion topping the previous year's record of one point to $4 billion.
That extra cash has enabled us to return capital to shareholders and to be pointed doing poised for opportunistic investments of the kind that have already transformed the Dow Jones business, making it more digital more premium and more profitable.
The successful journey of our media properties is unlike any in the world as has been the principal pursuit of change terms of trade with the big digital players.
We believe the profoundly positive commercial and social impact of those changes will be felt for many years to come.
None of that would have been possible without a strong corporate culture created by and curated by Rupert and Lachlan Murdoch the support of an engaged enlightened board and passionate committed and creative employees around the world.
So we have a sturdy balance sheet total cash generation profitable and growing businesses and the resources to take advantage of emerging opportunities that muscular alrighty was also reflected in the past year, but the termination of <unk> shareholder rights plan, whereas it is referred to collect really the poison pill.
Over the past eight years, our reported revenue has grown by $1.8 billion, even though our advertising revenue.
Paper dependent as it was declined by $2.2 billion that is a $4 billion swing.
Over the same period, our total segment EBITDA has more than doubled and our free cash flow available has increased by over 80%.
Dow Jones has prospered more than doubling its segment EBITDA to $433 million in just the past three years, our faith and its prospects has been shown by the acquisitions of investor's business daily Opus and base chemicals, all of which we expect will contribute to revenue and profitability in the years ahead.
Me.
Meanwhile, digital real estate services has expanded rapidly from 5% of our revenues in 2014% to 17% in fiscal 'twenty two to be precise.
We have seen growth in every quarter of this past year. Despite the recent increases in interest rates and the home supply challenges. We are confident the digital runway for real estate is long and lucrative.
It is certainly worth recognizing that used cores profits have expanded prodigious Lee compared to eight years ago rising from a reported $770 million in total segment EBITDA to nearly $1 $7 billion. This year.
Our teams have made the successful journey despite the upheaval in the advertising market. Despite the significant challenges to print media and despite the pandemic we.
We have more digital more mobile more global acutely cost conscious and astutely tracking trends in the quest for more revenues increased profitability and enhanced returns for our investors.
To be specific about the segments that are giants is already seeing the tangible benefits of opus and base chemicals, which we have rebranded chemical market analytics or CMA to the cognoscenti.
These two businesses complement each other and they certainly complement Dow Jones, we were fortunate to acquire them at a favorable price as their CIO was required by regulators for approval of the S&P Global I hate chess market merger, we think those companies and the regulators for the opportunity big waste to us.
Not only our opus and CMA is starting to benefit us financially, but that contributed to the depth and breadth of Dow Jones overall expertise in commodities in traditional fuel sources in essential chemical products and in renewables and more the <unk>.
Analysis and analytics fit perfectly into our professional information business, where we have seen sustained growth, particularly from risk and compliance, which reported an 18% surge in full year annual revenues with the fourth quarter, saying another double digit increase that means we have reported 28 that is correct 28 <unk>.
<unk> quarters of double digit growth.
Advertising at Dow Jones remained strong in the fourth quarter and was a significant contributor to the segment throughout the year total advertising at Dow Jones achieved year over year growth of 20% for the full year the highest on record.
Dow Jones also made progress in expanding its high yielding subscriber base, which rose 9% to almost $4 9 million, including over 4 million digital only subscribers as a point of comparison digital advertising at Dow Jones Rose, 16% in the most recent quarter, while it shrunk it contracted it diminished.
At the New York Times.
And what was the resounding performance with New School Dow Jones really is worthy of note.
As profitability, so at 54% in the quarter to $106 million.
And as noted earlier for the year segment, EBITDA was $433 million up 30%, while revenues rose to over $2 billion, an 18% increase.
The imperative at Dow Jones is to provide a premium service and premium value through a premium audience and is remembering that this is a premium audience at scale with more than 100 million visitors each month to Dow Jones sites and thousands of the world's largest companies as enterprise clouds.
So our opportunity is to offer more of the information the intelligence demanded by discerning professionals. These are fertile fields for the future.
At digital real estate services revenues for the full year surged, 25% to more than 1.7 billion. While segment EBITDA grew 12% to $574 million as we continued to build brands and products for future success.
In Australia, our EIA continued its expansion into intelligent adjacencies, most notably with the mortgage choice acquisition and residential listing volume improved by 11% in fiscal 'twenty two to the highest levels since 2016.
We also now have the number one digital property company in India in terms of audience share with housing dotcom expanding its lead in an expanding market.
Leave visitors rose in June by 52% to $15 7 billion.
In the U S move operator of realtor Dot Com reported revenue growth for the year of 11%, while we invested in expanding our expertise in rentals and acquired uplift and the agent marketplace that focuses on monetizing seller leads the broader thing is that we are see a confluence of trends in the U S and Australian market places.
The U S market is traditionally derive revenue from bio leads but the future will bring opportunity to harvest seller revenue, which is the basis for ARIA is emphatic success in Australia.
As for the U S housing market, obviously, the hiking interest rates has influenced market trends for example, mortgage refinancing has imploded, which plays to our strength as a source of mortgage origination leads which mortgage companies. We're ignoring somewhat because it was easier to refinance an existing a known customer.
The rates of price increases the put homes out of Rage is generally expected to continue to decline and inventories have at last started to improve with active inventory in June up 19% year over year, According to real to dotcom.
News media, which in recent years has faced severe challenges did particularly well both in Q4 and throughout the fiscal year to be precise news media was the single largest contributor to profit improvement across the company. This fiscal year, let's be candid. The spectacular result came as many other newspaper companies around the world straw.
And it's a true tribute to the efforts of our executives and teams in Australia, the U K and the U S.
In fiscal 2022 revenues were up 10% and the segment delivered $217 million of segment EBITDA expanded 317% year over year I should repeat that stunning number for clarity 317%.
At news UK, the Sun reported and historic shifts with digital advertising outpacing print in fiscal 'twenty two as its online audience surged, 33% in Q4 to 165 million monthly average uniques globally, including 173% growth for the sudden dot com driven by the successful launch of the <unk>.
One U S. Overall news U K, thanks to Rebekah Brooks and her team increased its profit contribution by $54 million.
News Corp, Australia under Michael Miller, and his team increased its profit contribution by $109 million its highest since separation as digital subscribers to news Corp, Australia properties rose by 12% to 964000 and advertising revenues remain robust.
The New York Post post it and historic result, it formally reported a profit possibly the first since Alexander Hamilton founded the paper and we are now on a pathway to increasing profit contribution.
The post has distinguished itself with brave journalism that has seen it so far above the media mediocrity that is a tribute to the intrepid editor keep pool, he's journalist and to show on June call or the chief executive and all on the tea.
We also transitioned from the Bronx, sprinting size and are working towards completion of that facility sale.
At subscription video services. The foxhole groups were a nice holes continued with adjusted revenues, which excludes currency impact was <unk>, 4% in the fourth quarter, while adjusted segment EBITDA rose, 32% in the fourth quarter and importantly, excluding currency full year revenues for the segment rose for the first time in five years.
Again, the Foxhole group is a company transformed and while generating record metrics total streaming subscribers at the end of the fiscal year saw a 31% from a year ago to 2.8 million, while broadcast churn fell to 13.8% in the fourth quarter sharply lower than the prior year, our sports streaming service Kao.
It's particularly successful with AVO rising partially attributable to the recent price increase and given the quality of our teams productions and the quantity of quality sports hub.
Harper Collins grew full year revenue and segment EBITDA, despite higher freight and manufacturing costs and a challenging prior year comparison, given that the pandemic created a captive audience and record revenues in many countries. We can clearly see the virtue of acquiring Houghton Mifflin Harcourt books and media as the value of that priceless back list.
Being realized.
That efficacy should be obvious in coming months as HMH includes the U S rights to the Lord of the Rings collection and we have seen increased orders ahead of the rings of power series on Amazon Prime scheduled to be launched next month.
Speaking of superlative, we have the best selling book in the U S with a new Daniel Silva novel Portrait of an unknown woman and we are pleased by the lingering melody of where the crude that seeing the first movie that was just released in partnership with our friends at Sony Pictures.
The news Corporation of nine years ago is not the news Corporation of now the provenance and the principal in July but the business is fundamentally transformed it is vastly more profitable and with the potential for even greater growth. Our teams are rightly proud of the way have they have influenced the digital landscape changing the terms of trade for media businesses.
[noise], bringing clarity to an opaque advertising market and increasing transparency to hitherto uncountable algorithms.
The commercial changes are integral to our ongoing success, but the social consequences are also profound and in Germany.
Almost a decade after Irene coronation, thanks to the efforts of our employees and the fate of our investors Newschool is set fair for the future.
Our CFO Susan Panocha will now provide a concise account of what has transpired and a glimpse of the shining light that is the future.
Thank you Robert fiscal 2022 with another record year for news Corp. We have taken significant steps over to Heath to reshape and strengthen the portfolio reduce fixed cost transition to become more digital and generate incremental high margin revenues I will come back to some thoughts about our fiscal 2023 outlook, but suffice to say that news Corp is well positioned as we move into <unk>.
Fiscal 2023, given the strength of our asset mix and balance sheet and the continued diversification of our revenue base.
Fiscal 2022 fourth quarter total revenues were almost $2 $7 billion up 7%. The fourth quarter includes an extra week, which positively impacted revenues by $110 million that impact was more than offset by foreign exchange headwinds of $139 million.
Excluding the impact of foreign currency fluctuations acquisitions, and divestitures fourth quarter adjusted revenues grew 9% compared to the prior year.
Cleaning the extra week.
Title segment, EBITDA was $315 million up 50% versus the prior year, primarily due to higher overall revenues and lower costs in the other segment, partially offset by higher costs from recent acquisitions and the negative impact from foreign currency fluctuations.
The current quarter results include a one time 20 million legal settlement charge for insignia adjust.
Adjusted EBITDA grew a healthy 34% versus the prior period for the quarter, We reported earnings per share of 19 cents compared to a loss of two cents in the prior year adjusted earnings per share was 37 cents in the quarter compared to 16% in the prior year.
Free cash flow generation remains strong and remains a key area of cycle.
Moving onto the results for the individual reporting segments for the fourth quarter, starting with digital real estate services.
Segment revenues were $443 million, an increase of 7% compared to 74% revenue growth in the prior year.
The results include a negative impact of $22 million from a valuation adjustment of future trial commissions that are a financial services business and a negative impact of $20 million or 5% from foreign currency fluctuations, partially offset by the $21 million contribution from mortgage choice and the benefit from the extra week, which added 14.
To lose revenue.
On an adjusted basis segment revenues increased 7%, which does not exclude the benefit from the extra week.
Segment, EBITDA declined 11% to $121 million driven by the $14 million negative impacted rei related to the revaluation of trail commissions, and an $8 million or 6% negative impact related to currency headwinds as well as higher employee cost that they are a nice adjusted segment EBITDA declined 1%.
News revenues were $193 million up 4% following 68% growth in the prior year for the course are real estate revenues grew 3% and accounted for 84% of total revenues.
Price optimization within the core lead Gen business higher penetration of our hybrid offering market. The I T and continued high price appreciation, coupled with higher advertising revenues helped to offset the impact from lower lead volumes and transaction volumes.
News revenues also benefited by $14 million from the extra week.
Referral offerings accounted for approximately 31% of total revenues up from 30% last year.
Based on our internal metrics relative to average monthly unique users with $93 million in the fourth quarter.
[noise] lethal games in the quarter fell 39% compared to the prior year impacted by continued lack of supply and home price appreciation as well as the recent rise in mortgage rates home prices remain high going in mid painting G. Underscoring the continued supply and demand imbalance. During the course of these acquired uplift advancing real to seller.
Mr Agent strategy and continue to make investments in rentals and new homes as they build out those adjacencies.
In the last two years relative cycles with not only to take advantage of the strong market dynamics during the pandemic.
But also to position itself for long term growth, while focusing on core competencies and improving the product to deliver deeper and richer information for consumers and customers.
This is evidenced by the shift to the data rich referral based model with the integration of our policy, which enabled the launch and expansion of market. The I T. The hybrid product and Telemark a place to allow customers to explore celebrate without risking allied capital to enter I buying these.
These investments together with the utmost acquisition have allowed us to expand our scale compared to two years ago and catch all the elements of the transaction last cycle.
Ari I had another strong quarter with revenues rising 10% year on year on a reported basis to $250 million as growth in residential <unk> revenues and the contribution from the mortgage choice acquisition more than offset the negative impacts from currency fluctuation and the revaluation of child Commission.
I continue to benefit from the favorable market backdrop, which saw Australia residential knee by listings rise, 2%, despite comparing against 54% growth in listing volumes in the pie here unexpected uncertainty around the federal election in May.
Refer to our earnings release and their conference call. Following this call for more detail.
Turning to the subscription video services segment revenues for the quarter was $524 million sequentially higher than the third quarter and down approximately 3% compared to the prior year on a reported basis due to foreign currency headwinds importantly on an adjusted basis revenues rose, 4% accelerating from the prior quarter rate of 1%.
Streaming revenues accounted for 23% of circulation and subscription revenues, 16% in the prior year and more than offset broadcast revenue declined this quarter we.
We believe this is a key inflection point for the business and has helped underpin the recent stability in Fox Health group's revenue.
Total clothing paid subscribers across the group reached over $4 4 million at quarter end up 13% year over year.
Total subscribers, including trial has reached over $4 5 million.
Total paid streaming subscribers reached 2.7 million, increasing 34% versus the prior year, and adding 114000 sequentially with streaming subscribers now representing 61% of Fox helped total paid subscriber base.
<unk> benefited from strong winter sports content very high retention from the initial repricing at the legacy lighthouse customers and the successful implementation of the Prost rising by Kayo paying subscribers reached almost $1.3 million up nearly 23% year over year.
Finish paying subscribers grew 63% year over year to 1.2 million subscribers, which is relatively stable with the third quarter as the net adds were impacted by the timing of content availability and the record adds in the third quarter in July we announced the two Australian dollar price rise, hoping just standard offering.
<unk> ended the quarter with approximately 1.5 million residential broadcast subscribers down 10% year over year with the rate of decline modestly improving from the third quarter right.
So continues to focus on managing broadcast churn, which reduced by over three percentage points here I E in the quarter to 13.8%, even though cable customers are being actively migrations to the I T. Five. This reflects 11 consecutive months of year I think he chain reduction the focus on retaining high value subscribers, So podcast op who steadily.
Rise by 2% to 83 Australian dollar.
Segment EBITDA in the quarter of $81 million rose, 23% versus the prior year and 32% on an adjusted basis.
Continues to exhibit healthy cash generation and use existing facilities to pay 306 million Australian dollars July U S. P T maturities.
For the full year the business showed stability in revenue and segment EBITDA and as Robert mentioned full year adjusted revenues improved for the fifth time in five years, which is a great result for the business given the challenges of recent years.
As expected total costs were relatively stable in local currency.
Moving on to Dow Jones, Dow Jones continued its strong performance in the fourth quarter with revenues of $565 million up 26% compared to the prior year with digital revenues accounting for 76% of total revenues this quarter up four percentage points from last year.
Results include a full quarter from the Opus acquisition and one month from the chemical market analytics acquisition, which closed in early June on an adjusted basis revenues rose an impressive 16% with the extra weight contributing $40 million.
Circulation revenues grew 17%, reflecting an additional $17 million for the extra week as well as strong volume gains in digital only subscriptions total Dow Jones digital only subscription as well as a 4 million up 14%, including 88000 net adds in the fourth quarter.
Sessional information business revenues rose, 47% and accounted for 32% of segment revenues driven by recent acquisitions and growth across all product lines, partly due to $14 million of additional revenues from the extra week.
We are focused on further expansion of P IV, which will significantly enhance with the acquisitions of ipads and CNI. These acquisitions continue to move to agile to a more recurring and digital revenue base with very high retention rates strong margins premium product and optionality into new market verticals, well, we don't break out margins specifically for <unk>.
Is it safe to assume that the products and the business has attractive margins, which we expect to be enhanced by our recent acquisition.
Revenue from risk and compliance increased 19% driven by higher sales activity, including strong growth across all regions, most notably in Europe , and we have a very strong pipeline of new business activity.
<unk> generated $37 million of revenues in the quarter with the business benefiting from price rises high customer retention and strong demand in existing vertical CMA contributed approximately $6 million of revenues in the quarter.
Advertising revenues grew 13% to $116 million, despite lapping 45% growth in the prior year.
The extra week contributed $9 million to revenue and digital advertising revenues rose, 16% in the quarter, despite facing a record 53% growth comparable from the prior year.
Digital accounted for 58% of total advertising revenues, which improved two percentage points from last year. We continue to see very strong yield improvement in full strength in the database patency and finance categories. This quarter.
It is also noteworthy that the vast majority of that digital advertising comes from direct sales rather than via third party programmatic exchanges, which has been helpful to our yield improvement print advertising rose 9%.
Dow Jones segment EBITDA for the quarter rose, 54% to $106 million, excluding the contribution from the acquisition currency fluctuations and other items disclosed in our release adjusted segment EBITDA for the quarter Rose an impressive 30%, despite higher employee costs and higher sales and marketing costs.
At book publishing Harpercollins posted 4% revenue growth to $513 million and segment EBITDA declined 2% to $47 million as we continue to navigate supply chain and inflationary pressures as communicated during the fiscal year to that effect margins were down slightly from the prior year, we saw revenue growth driven by.
Strong frontlist performance in general books, and a $20 million benefit from the extra week, our backlist contributed 56% of revenues down slightly from last year impacted by lower sales of the pritchett inquiries compared to last year digital sales rose, 9% this quarter and accounted for 24% of consumer sales on an adjusted basis revenue.
It's 4% and segment EBITDA declined 6%.
Turning to news media with our momentum continued in the fourth quarter revenues were $629 million up 6% versus the prior year and included $53 million or 9% of negative impact due to currency headwinds that more than offset the additional $36 million from the extra week adjusted revenues for the segment increased 14.
Per cent compared to the prior year, we again saw a very strong performance in advertising as well as continued growth in circulation and subscription revenues, which was driven by the contribution from our recent content licensing deal Hyatt digital subscription and copper prices digital revenues continued to expand increasing to 35% of segment revenues from tissue.
Percent, primarily driven by the strength of digital advertising, which we expect will soon be the largest source of the thickness advertising revenues.
Within the segment revenues at News Corp, Australia increased 6% and revenues at news UK were flat as both were materially impacted by currency headwinds. The New York Post all quite continued to show strong top line growth up 23% secular.
Circulation and subscription revenues rose, 3%, including double digit digital subscriber growth across the news, Australia, and the times and Sunday times currency headwinds had a $26 million or 9% negative impact, which more than offset the $19 million benefit from the extra week.
Advertising revenues increased 8% compared to the prior year with strength in digital across all our key masthead, most notably at the Sun with digital exceeded print advertising for the third consecutive quarter benefiting from significantly higher yields and its successful launch in the U S currency negatively impacted advertising revenues by $21 million or 9%.
Partially offset by the additional $15 million from the extra week.
Segment, EBITDA was $33 million increased all play by that amount, reflecting higher revenues, partially offset by incremental investments of over $20 million related to talk T V. In the U K, which launched in April and other digital initiatives East Coast, Australia, unusually tight contributed $23 million and $16 million, respectively to the segment EBITDA.
Growth in the New York Post and wireless group, all silica and positive contributors.
East coat finishes fiscal 2022 more dependent on recurring and circulation dice revenue less dependent on advertising revenue and with greater cost discipline across the company as a consequence of navigating the past couple of years.
As for fiscal 2023, we expect to see an improvement in top line revenue growth, partially driven by the integration of ifas in C&I, but also by continued digital guidance across the company, albeit much will depend on macro conditions and the volatility of foreign currencies, we expect capex to be modestly higher in fiscal 2023 and.
<unk> strong levels of free cash flow.
For the upcoming quarter I would like to discuss a few things.
We expect cost impacts from continued supply chain and inflationary pressures together with wage inflation challenges to continue we will take necessary action to address these pressures, including pricing adjustments together with our ongoing focus on cost management.
Visibility on advertising remains limited across the businesses and we continue to expect foreign exchange headwinds given the current spot rate for the strained dollar and pound sterling compared to the prior year.
Looking at each of our segment digital real estate services, Australia residential new by lifting since July rose 7%.
Please refer to Rei for more specific outlook commentary.
As Robert mentioned across the industry in the U S inventory and active listings improved in June as we begin to cycle into more normalized year over year comparisons we still assume late volumes that move will be challenged in the short term and will look to mitigate that through yield optimization, new or enhanced products as well as balancing ongoing investment with cost discipline.
In subscription video services, we remain pleased with the performance of the streaming products and the ongoing focus on broadcast op, who and churn as we continue to migrate customers from cable we look forward to the launch of half of the Dragon Impinge later this month, which we expect will drive an improvement in net subscriber additions and we continue to expect to see step.
<unk> earnings in local currency across the year.
I'll tell change we remain focused on the integration of ifas in C&I, we expect the rate of investment in the first quarter to be higher than the prior year as we continue to invest to drive consumer subscriptions anyhow, a P. IV offerings as a reminder, over 75% of Dow Jones revenues are recurring or subscription based the majority digital with a strong March.
And we feel confident of its growth trajectory leading into 2023.
In book publishing supply chain and inflationary pressures continue to persist we look to capitalize on our global English language, right, which I am told conflicts in Outback cliffs as we look forward to the release of the rings of power on Amazon Prime in early September .
And use media, we still expect higher content licensing revenue from that platform deals as we implement element that the broader Google partnership such as subscribe with Google and also benefit from our expanded Apple relationship.
We expect incremental cost in relation to product investments across the businesses, including talk T V and now all the digital initiatives together with pressure on newsprint prices. As a reminder, we have recently raised couple of classes in both the U K and Australia This calendar year.
With that let me hand, it over to the operator for Q&A.
Okay.
Thank you.
Just to ask a question. Please think now by pressing star one on your telephone keypad.
We are asking that you. Please limit your question to only one question today is.
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It turned off to allow your signal to reach our equipment again that is star one to ask a question. It will pause for just a moment to allow everyone an opportunity to signal for questions.
And we'll take our first question from please go.
Go read.
We got off key with credit Suisse.
Hi, Robert Hi, Susan.
A quick question in relation to move.
Particularly given.
Comments, you've made around the next quarter, Susan I'm, just conscious that deal I have got it to decline.
IMT revenues in the double digits into the September quarter.
It sounds like you are more evenly.
Given the yield improvements that you've mentioned.
I guess can you expand on with it.
You're likely to see.
The revenue growth into the next quarter notwithstanding some of the challenges in the macro environment.
Robert here.
U S property market is replete with contradictions, obviously mortgage rates have risen, but by historical standards relatively low and it's been hovering around 5% in recent days.
Obviously also there are ways to get lower rates, but not in the short term.
Price increases have abated in much of the U S, meaning an entity.
Eternal increases, which tightened restrained our affordability and.
Daily active inventory in June was actually up 19% year on year, so the more listings and more opportunities for our teams.
And having more properties on the market for longer is not a problem, but generally a plus it really doesn't suit us if a house is sold in four minutes or frankly takes four years somewhere in between is ideal so it's.
It's a volatile market certainly but.
Opportunity abounds.
Thank you and Joe are Sara we'll take our next question. Please.
Thank you our next or move on to Kane Hannan with Goldman Sachs.
Good morning, guys just on the segments and first of all are there any theories next year I mean, I imagine that's going to drive a pretty strong revenue outcome just talk a bit about how we should think about that from an EBIT perspective, I suppose if there's any other key titles in the pipeline for next year that we should be thinking about.
Sure.
Obviously.
The Lord of the Ring series oldest series based on the Lord of the rings.
Is going to have a profound impact on Harper Collins performance.
The related publicity will no doubt stimulate cells, we're not in a position to give you an answer.
Current forecast for the future, but it is fair to say, it's going to be.
Significant moment for Harpercollins in coming months, and I think the only other thing that I could add to that kind of is that obviously given its going to be back close to we typically have higher margins on the backlist than what we would say in the associates heartless cashless.
Thank you Kane Sarah will take our next question. Please.
Your next move on to Craig Huber with Huber Research partners.
Oh. Thank you just a quick comment there Robert listen listen you for nine years I don't think I've ever heard you. So excited about your business. Maybe you had a few cups of coffee, but you sound very excited some of kidding there but.
Mike.
My question for you is costs for your Susan because you think across your portfolio.
If the environment does get worse here in the coming quarters.
You feel you have a room to take out costs out of your various segments.
And I guess more importantly, do you feel that you are you willing to take out cost investment spending here, if the environment gets materially worse crusher segments. Thank you.
I might take that one Craig look obviously, if our revenue grows we would expect cost to increase given the variable nature of some of our businesses and we are expecting supply chain and inflationary pressures.
Notably inflation manufacturing and Harper Collins and on newsprint prices at the Masters together with wage inflation.
Our business units so more in tune with the lasers that they can use having successfully navigated the past couple of EPS and we do have a healthy pipeline of ongoing cost saving initiatives, which gives us confidence that we can continue to take out cost to help mitigate some of those macro challenges.
Thank you Craig.
We'll take our next question please.
Thank you and next we'll move on to Alan Gould with loop capital.
Thanks for taking the question.
Robert I was wondering if you can give a little more insight on what's happening with these platform deals with.
With Facebook.
Supposedly is resisting paying for news going forward and what the implications would be in Australia, given the recent laws that have been implemented there.
I think it's fair to say, we've entered a new sizable phase we have a three year agreement with Facebook in Australia.
But beyond that we have open discussions with Facebook on the role of professional content in areas from sport to video to the meadows.
Just one brief diversion to be candid some of the political pressures on Facebook to censor content, rather perverse of definition of disinformation misinformation is often political and disingenuous. So some sympathy for them and the incidence but more broadly.
We set out with a clear eye and redefining the values news content and that value. Shortly has been redefined permanently positively and that's definitely to the benefit of journalists and communities around the world. We have extended our significant Apple deal, thanks to Tim and Eddy, who but firmly believe in us.
Our engagement with Google is creative and purposeful thanks to Sundar and his team are we.
However, I still waiting patiently for commission checks from other publishers around the world.
Thanks Alan.
We'll take our next question please.
Thank you and next we'll move on to Dan.
With Macquarie.
Hi, guys. Thanks for your time.
Good performance in our Michigan plant non tamed Nicola can you give us a feel if this is acquisition impacted and if so what is it excluding acquisitions. Please.
No there's no acquisitions in risk and compliance.
Within the segment, but not risk and compliance.
Thanks, Darren and Sarah will take our next question. Please.
Yes.
Brian to Brian Han Morningstar.
[laughter].
The strategic moves that you guys would like to deal with but cannot do due to the fact that you don't have 100% of it.
And Susan what is the revenue base of risk and compliance and now within Dow Jones.
Brian I think I missed the start of your question, but I presume it was about.
The structure of digital real estate.
Yeah.
Would you like to do with you, but you cannot do it because you don't own 100% of it.
But look we're very proud of our performance.
Leave it to add Alan and the team there to give you specifics, but passionate generally.
About digital property.
There's real cooperation between and among the chains and we do see a confluence in a broader market.
Trends with more emphasis on providing a cell site solutions in the U S market, which is the strengths characteristically the Australian market, where we provide premium solutions for agents more more broadly useful we're constantly reviewing the structure of the company were institutionally introspective and certainly never complacent self-satisfied was smug.
And Brian just in relation to the number for risk and compliance the annual revenue is 225.
Hi T J.
'twenty, excluding week, 53% growth in the full year, and we had a 19% pricing peaceful.
Thank you Brian So we'll take our next question. Please.
Thank you and next we'll move on to David Karnofsky with J P. Morgan.
Hi, This is actually John on for David just touching on the U S real estate market again, but given the current crosscurrents.
Stabilizing market against a weakening macro backdrop, how should we think about the performance of the different product offerings that move, particularly as it relates to some of the more referral based services versus the more leads everyone. Thanks.
Well John the most important aspect for US is listings the number of leads and then our ability through sort of the traditional lead model as well as the referral model to maximize the value of each of those leads and then as I mentioned.
Mortgages those leads now had more value because the refi market has imploded and the origination market.
Increased relative importance.
What we've got.
The team at Rialto.
Is an ability to maximize returns on any particular late in <unk>.
So.
That model will be.
Something that provides as robust revenues.
Regardless of a certain amount of volatility or volatility indeed, it that might be efficacious for the market.
And Sean maybe I can just add to that as well given some of the headwinds that we face within the cohort Lee Chen with volumes down we have had success in driving increased revenue given higher yields.
Right.
<unk> launched a hybrid crop market, the IP, which we're starting to see cross so thats getting traction as well so that's helping to mitigate some of those headwinds.
And one further point, John even AD sales at realtor Dot com.
Become more precise more focused taking the advantage of that.
Yield lessons elsewhere in our media properties and ads were up 11% at realtor Dot com last year.
Thank you Sarah we will take our next question. Please.
And we have no further questions. So I would like to turn the conference back over to Mike Florin for any additional or closing remark.
Great. Thank you Sara. Thank you all for participating today have a great day, and we look forward to speaking with you in the near future.
Sure.
Thank you and that does conclude today's teleconference. We do appreciate your participation you may now disconnect.
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