Q3 2023 News Corporation Earnings Call
Speaker 1: Today's conference is being recorded. Media will be allowed on a listen-only basis.
Speaker 1: At this time, I would like to turn the conference over to Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead. Michael Florin, Senior Vice President and Head of Investor Relations Michael Florin, Senior Vice President and Head of Investor Relations
Speaker 2: Thank you very much, operator. Hello, everyone, and welcome to NewsCars Fiscal 3rd quarter, 2023, Ernie Skull.
Speaker 2: We issued our earnings press release about 30 minutes ago and it's now posted on our website at newscorp.com.
Speaker 2: On the call today are Robert Thompson, Chief Executive, and Susan Pinucchio, Chief Financial Officer. We all have been with some prepared remarks and then we'll be happy to take questions from the investment community.
Speaker 2: This call may include certain forward-looking information with respect to newscores business and strategy. Axles else could differ materially from what it said. Newscores form 10K and form 10Q filings identify risks and uncertainties that could cause Axles else to differ and contain caution statements regarding forward-looking information.
Speaker 2: 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 the earnings released for the applicable periods posted on our website.
Speaker 2: With that I'll pass it over to Robert Thompson for some opening comments. Thank you Mike. Before discussing our results for the third quarter of fiscal year 2023, it is particularly important to begin by noting that today marks the 44th day in captivity for Wall Street Journal reporter Evan Gershkovich.
Speaker 3: who was wrongfully, willfully detained in Russia. I would like to express our thanks and that of Elmar Latour, Emma Tucker and all at Dow Jones for the unstinting support shown for Evan and his family by the US and many other governments, media companies, journalism organisations and concerned...
Speaker 3: principled people around the world.
Speaker 3: We trust that justice and common sense will prevail and that heaven will soon be released.
Speaker 3: Turning now to the third quarter results.
Speaker 3: We began to see meaningful improvements compared to the prior quarter, with certain macro and sectoral trends more positive and our cost cutting program beginning to gain traction.
Speaker 3: For context, these earnings follow record revenues and profitability in fiscal 2022, and we have been confronting the challenges of foreign exchange volatility, a surge in interest rates, persistent inflation and ongoing supply chain disruptions. Our results demonstrate the fundamental differences in the character of NewsCall compared with other proportion types, including Mint,
Speaker 3: business. For the quarter total revenues were over $2.4 billion, down only 2% year over year, as compared to the 7% decline in Q2.
Speaker 3: Adjusted revenues, excluding our acquisitions and distinctly unfavorable Forex movements, equal those of last year.
Speaker 3: Meanwhile, profitability was $320 million, down 11%, despite a tough prior year comparison and the just articulated external pressures.
Speaker 3: As for the company-wide cost reduction drive, we are well advanced in taking the difficult but necessary step of reducing headcount by 5%, which is now expected to yield more than $160 million in annualised savings by the end of this calendar year. In addition, we are strictly scrutinising spending across all categories, including the
Speaker 3: and expect further savings as we strive for efficiency and efficacy. There has been much discussion, some of it in line, some not so, about the potential impact of generative AI, and there is no doubt that it will profoundly affect the media business.
Speaker 3: Candidly, generative AI may pose a challenge to our intellectual property and to the future of journalism.
Speaker 3: As those who have experimented with ChatGBT will be aware, the answers are only as insightful and factual as the source material, and are more retrospective than contemporary.
Speaker 3: Given those presets, we see three areas in which our content will be used by generative AI creators whose products will be enhanced by our IP for which we should be compensated.
Speaker 3: trusted purveyors of business news, data and analysis.
Speaker 3: information business which reported a 38% surge in revenues including a 16% rise at our risk and compliance business.
Speaker 3: and that number was negatively affected by Forex fluctuations.
Speaker 3: Dow Jones has certainly benefited from the acquisitions of Opus and CMA, which continued their high margin growth in recent months.
Speaker 3: We will be expanding their profit product offerings over the next year with particular emphasis on renewables and carbon metrics and we are confident of many years of strong growth ahead.
Speaker 3: Digital revenues accounted for 79% of all revenues at Dow Jones, a significant increase from the 60% level during fiscal 2018. Aside from the professional information business, digital subscriptions continue to grow, up 9% to 3.3 million at The Wall Street Journal and up 10% to 4.3 million at Dow Jones as a whole, with total subscriptions now at 5.1 million.
Speaker 3: The strong performance overall came despite an insipid ad market in the US, with continued weakness in tech advertising, though we did see an improvement in demand in April , so the auguries have improved. Dare I say, the failure of Silicon Valley Bank has been a catalyst for other US financial institutions to try to reassure customers and highlight their own solidity, and the Wall Street Journal, Barron's and MarketWatch are vital platforms for any financial firm aspiring to bolster its credentials.
Speaker 3: In Australia, FoxTile Group continues to build on its streaming success.
Speaker 3: Streaming now accounts for two thirds of the total Foxtel subscription base and that revenue growth is more than offsetting the decline in broadcast.
Speaker 3: Fears that our world-class streaming products would be a catalyst for cannibalisation have been unfounded. Broadcast churn is at near record low levels, with Foxtel retail churn in March under 10%. That success is also a tribute to our marketing and customer service teams at Foxtel and to the leadership of Patrick Delaney and Siobhan McKenna.
Speaker 3: demand and seemingly some flexibility on pricing in the months and years ahead.
Speaker 3: After a couple of tough quarters fortunes have certainly improved at Harbour Collins with a bevy of bestsellers and some moderation of supply chain snafus. Margins were higher in the third quarter compared to the first half. We also have an attractive roster of books in this in upcoming quarters so we believe we are on a journey to the sunlit uplands.
Speaker 3: Orders improved in a quarter and our titles prospered in particular Rhonda Santas's the courage to be free Barbara Kingsolver's Demon Copperhead as well as Colin Hoover and Taron Fisher's Never Never and Ben Hall's Saved
Speaker 3: In the fourth quarter, Kat Timp is already topping the cellar lists with you can't joke about that. If I could make a self-interested recommendation, it is worth a read or a listen.
Speaker 3: Last week, we also published the latest incarnation of the Magnolia Table Cookbook. We are justifiably optimistic about the prospects for the Bridgeton Prequel, Quint Charlotte, by Julia Quint and Shonda Rhymes, which went on sale this week, coinciding with the launch of the new Netflix series.
Speaker 3: The news media segment reported a substantial improvement over the second quarter, with advertising in constant currency increasing 2%, though down 5% in US dollars.
Speaker 3: This increase was a vastly different outcome to that of most media companies in most countries.
Speaker 3: We are confident that our teams are more skilled in sharing advertising insights across borders and platforms. And that innate intelligence is reflected in our revenue numbers.
Speaker 3: One success story is thesun.com where total page views in the quarter search 94% year-over-year reaching close to a billion views. The site which has benefited from the partnership with the New York Post and our other US properties has triumphed in tough times and notably the Sun's US digital advertising revenues now exceed those of the British platform.
Speaker 3: In the UK, connected listing hours at wireless hit an all-time high, reaching an average of 8.4 million per week in the quarter, a 10% increase from the prior year, and reflective of our superb coverage of the Premier League, which reaches its seasonal crescendo in coming days, hopefully with an against the odd stride by Arsenal.
Speaker 3: And as for the New York Post, the previously perennial lossmaker continue to be profitable in the third quarter and to build on its important influence on the national debate. Engagement at the Post's digital properties rose 4% over the prior year to 690 million page views in March, providing a powerful platform for its compelling content. At Digital Real Estate Services,
Speaker 3: Obviously enough, the interest rate surge and the company uncertainty in the housing market have had an impact in the US and Australia. But these are not permanent conditions and the digitisation of the property market is far from complete.
Speaker 3: There were signs of improvement in the market this quarter, but we understand that the increase in rates has had an impact on affordability and created uncertainty for potential house sellers and buyers. When that uncertainty evaporates, we'll be primed to take full advantage of the opportunity. In the midst of the challenges, Realtor is focusing on adjacencies, particularly on the sell side and rental segment.
Speaker 3: seen in coming quarters.
Speaker 3: Since the campaign began in February , the project has generated more than half a billion impressions and shown the unique power we have to bolster brands and turbocharged traffic. Realtor.com also further integrated UpNest into its seller experiences in Q3 and is seeing significantly higher conversion rates. At REI revenues were softer in Q3 compared to the prior year due to the lower listing volume though we are seeing encouraging signs with realestate.com.au reaching almost 132 million visits in March, the highest total in 16 months and the fifth highest on record.
Speaker 3: With indications that prices and demand are against strengthening in Australia, we believe we are poised to process.
Speaker 3: And that is also true in India where Housing.com is the leading digital property platform and saw 21% year over year growth in average site visits in the quarter. It is worth noting this metric as India has just passed China as the most populous country and continues to have relative political stability.
Speaker 3: and enormous economic potential. As I said at the outset, there has been much tangible progress in the third quarter.
Speaker 3: enormous economic potential. As I said at the outset, there has been much tangible progress in the third quarter, and the auguries are certainly positive for coming quarters.
Speaker 3: We will absolutely focus on our core engines of growth.
Speaker 3: enduring value for our shareholders. And now to provide more insight into third quarter developments, I turn to Susan Pinucio.
Speaker 4: Thank you Robert. Our financial results this quarter demonstrated tangible improvements from the first half which combined with the implementation of our aggressive cost actions should position News Corp well for FIT School 2024.
Speaker 4: Third quarter total revenues were over $2.4 billion down just 2% year over year, which was a significant improvement from the second quarter rate and included a $98 million or 4% negative impact from foreign currency headwinds. Excluding the impact of foreign currency fluctuations, acquisitions and divestitures, third quarter adjusted revenues were flat compared to the prior year.
Speaker 4: with improving trends at the news media, subscription video services and book publishing segments, offset by the decline at digital real estate services segment.
Speaker 4: Advertising trends were mixed across our geographies.
Speaker 4: Total segment EBITDA was $320 million, 11% lower compared to the prior U's record Q3
Speaker 4: Results included $7 million of professional fees related to the proposed merger with Fox and the potential fail of move.
Speaker 4: adjusted total segment EBDA declined 15% versus the prior year. For the quarter we reported earnings per share of 9 cents compared to 14 cents in the prior year. Adjusted earnings per share were also 9 cents in the quarter compared to 16 cents in the prior year.
Speaker 4: Before I discuss the quarter, I wanted to provide an update on our headcount reduction program. Reductions across the business units will vary given the differing nature of our businesses and costs work done to date. We currently expect the annualised gross cost savings to exceed $160 million, up from our initial estimate of at least $130 million.
Speaker 4: with the majority of the savings to be reflected in fiscal 2024. We also expect to incur approximately $90-100 million of cash restructuring charges related to the headcat reductions in the second half of fiscal 2023.
Speaker 4: Moving on to the results of the individual reporting segment starting with Digital Real Estate Services.
Speaker 4: on both the US and the Australian housing markets.
Speaker 4: the decline 26% to $102 million impacted by lower revenues, the negative impact related to currency headwinds and higher costs related to RIA India, partially offset by lower costs that move, adjusted segment EBITDA to climb 24%.
Speaker 4: REA revenues were $222 million which declined 10% on a reported basis or down 4% on a constant currency basis.
Speaker 4: The revenue decline was primarily driven by lower residential revenues and to a lesser extent softness in financial services.
Speaker 4: and Melbourne down 20% and 18% respectively.
Speaker 4: Those declines were partially offset by the annual price increases in the residential and commercial businesses, increased uptake in premium products including Premier Plus, favourable depth penetration and another robust performance from REA India which maintained its audience leadership.
Speaker 4: Like our other businesses at News Corp, REA is taking steps to reduce expenses with a focus on discretionary operational spend and marketing costs. Please refer to REA's earnings release and their conference call following this call for more details.
Speaker 4: At move, revenues were $141 million, down 17% compared to the prior year. Real estate revenues were down 23%, driven by lower lead and transaction volumes, reflecting broader housing market challenges. Lead volume fell 30%, while realtors' average monthly unique users declined 24% to $72 million in the third quarter, based on internal metrics, yet up from the $66 million in the second quarter.
Speaker 4: markets, accelerating our Go Direct path for new homes and building out the rentals vertical. Turning to the subscription video services segment, revenues for the quarter were $477 million, down 3% compared to the prior year on a reported basis due to foreign currency headwinds.
Speaker 4: On a constant currency basis, revenues rose 2% versus the prior year, the fifth consecutive quarter of growth in constant currency.
Speaker 4: more than offset broad car revenue declines, benefiting from both volume growth and higher pricing at KL and Binge.
Speaker 4: Total closing paid subscribers across the Foxtel group improved to nearly 4.6 million at quarter-end, up 6% year-over-year. Total paid streaming subscribers were approximately 3 million, increasing 16% versus the prior year and accounted for approximately 65% of Foxtel's total paid subscriber base.
Speaker 4: Pades of Scribers for KO reached a record of over 1.3 million. Up 14% year over year net ads from the prior quarter improved to 183,000 the largest sequential increase in seven quarters with the start of the popular winter sports codes in March.
Speaker 4: Revenues also benefited from a price rise implemented in February .
Speaker 4: Binge-paid subscribers grew 22% year-over-year, or 109,000 net ads from the last quarter, to nearly 1.5 million subscribers, benefiting from the successful release of The Last of Us. As Robert mentioned, on March 30th, Foxtel introduced advertising within the Binge Basic product.
Speaker 4: The product accounts for approximately 30% of all bin subscribers. We expect a modest revenue contribution from advertising beginning in the fourth quarter. Foxtail ended the quarter with over 1.3 million residential broadcast subscribers. Broadcast churn continued to improve down to 200 basis points year over year to 12.3%.
Speaker 4: In fact, Foxtel retail churn was just under 10% for March 2023. Broadcast APU rose 2% to over $84 Australian dollars. Segment EBITDA in the quarter of $68 million was down 14% versus the prior year. Adjusted segment EBITDA declined 9% reflecting higher sports costs due to contractual escalators and enhancements.
Speaker 4: Digital revenues accounted for 79% of total revenues this quarter, up 3 percentage points from last year. Circulation and subscription-based revenues represented over 80% of total revenues, up 3 percentage points from the prior year, underscoring the stability and recurring nature of the revenue base. On an adjusted basis, revenues were flat, impacted by weaker advertising and the lack of
Speaker 4: of segment revenues.
Speaker 4: Risk and compliance revenues rose 16% despite a 3 percentage point negative impact from foreign currency, led by an increase in demand for screening and monitoring and financial crime search products. The pipeline remains robust, most notably in EMEA.
Speaker 4: Opus and CMA's strong revenue performance is helping reshape Dow Jones revenues to be more recurring as we have increased pricing across our customer base. As Robert mentioned, its carbon index offering continues to expand and we expect will lead to the creation of new products for current and new customers.
Speaker 4: retention rates for OPUS and CMA's products remained well over 90% in the quarter.
Speaker 4: Circulation revenues declined 1%. The modest decline was driven by lower print volumes and some softness in IBD.
Speaker 4: Total Dow Jones digital only subscriptions grew 10% year over year or by 208,000 sequentially, the highest net ad since the fourth quarter of fiscal 2021.
Speaker 4: The focus this year has been on the launch of bundles which expanded to include IBD in the third quarter.
Speaker 4: Advertising revenues declined 14% to $88 million and accounted for 17% of Dow Jones revenues this quarter. Within advertising, digital fell 17% and print was down 8%, with notable impacts from the technology and finance categories as we mentioned last quarter.
Speaker 4: While the advertising market remains challenged, we are seeing encouraging signs with the rate of decline abating. After hitting a low in December , each successive month showed an improvement with March notably down mid-single digits and we saw further improvements in April .
Speaker 4: Dow Jones segment EBITDA for the quarter grew 24% to 109 million as cost growth moderated from the first half, albeit the business is still experiencing the impact of inflationary pressures.
Speaker 4: The results also reflect the lapping of transaction costs related to the Opus acquisition last year. Segment EBITDA margins rose to over 20%, adjusted segment EBITDA for the quarter declined 11%.
Speaker 4: At book publishing, revenues were flat at $550 million driven by higher Christian book sales offset by foreign currency fluctuations. After a challenging first half of the year, we saw some positive trends with stability in Amazon orders in North America following the reset in first half, as well as stronger performance from several recent titles. Segment EBITDA declined 9% to $61 million, cost rose approximately 1% reflected.
Speaker 4: of revenues for the quarter, up slightly from last year. Digital sales declined 3% this quarter and accounted for 23% of consumer sales in line with the prior year. On an adjusted basis revenues rose 2% and segment EBITDA fell over 7%. Turning to news media, revenues were $563 million.
Speaker 4: down 3% and included a $42 million or 7% negative impact on revenues from foreign currency fluctuations. The adjusted revenues rose 4% improving from the prior quarter rate.
Speaker 4: gain 2% in constant currency.
Speaker 4: Advertising revenues at News UK rose 8% in constant currency, led by a strong digital advertising performance, which is continuing to benefit from the growing scale of the sum.com in the US and in improved performance at the Times and Sunday Times. Advertising was flat at News Australia in constant currency and notably both Australia and the New York Post benefited from an improvement in print advertising this quarter.
Speaker 4: Segment E Bada of $34 million declined 13%, reflecting a much more modest decline from the first half rate as incremental year-over-year investments related to the Talk TV initiative in the UK and other digital initiatives in Australia slowed to approximately $13 million. Newsprint costs remain a challenge, having $14 million of negative impact on the digital economy.
Speaker 4: or about 4% to revenue growth and will impact prior year compares. We continue to face some supply chain and inflationary pressures and advertising conditions remain uncertain. However, it is important to note that the company's exposure to advertising has materially declined as a result of the reshaping of our portfolio, including the acquisitions of Opus and CMA.
Speaker 4: improvements in profitability in the fourth quarter, as we continue to implement aggressive cost initiatives.
Speaker 4: for more specific outlook commentary.
Speaker 4: At Move, like the third quarter, we expect lead volumes to remain challenged in the near-term and we will continue to balance marketing spend and reinvestment in adjacencies with necessary cost reductions elsewhere.
Speaker 4: year to be relatively stable to the prior year despite a step up in sports rights costs in the second half related to annual contractual escalators.
Speaker 4: At Dow Jones, we saw an improvement in advertising in April , albeit visibility remains limited, as the prior year compares will be further impacted by the extra week in fiscal 2022.
Speaker 4: We expect the rate of investment spending to slow which would lead to improved profitability in the fourth quarter. We have now fully lapped the OPUS acquisitions in the third quarter and will lap CMA in June .
Speaker 4: In book publishing, April revenue trends were soft, consistent with industry data, but we expect cost pressures to start to moderate and are optimistic about our release slate, which as Robert noted, includes Magnolia Table Volume 3 from Joanna Gaines and Queen Charlotte, a prequel to Bridgerton from Julia Quinn and Shonda Rhimes.
Speaker 4: At news media, advertising trends remain volatile with limited visibility. We expect total segment costs decline in part due to lower incremental costs related to the Talk TV investment, which launched in April 2022, and we hope to see improved profitability for the segment. We have also seen moderating newsprint cost pressures in the UK.
Speaker 1: With that, let me hand it over to the operator for Q&A. Thank you. We will now start the Q&A session. Please limit your questions to one per participant. If you have joined via the Zoom application, please use the raise hand functionality to ask a question. If you have joined via the audio line, please press star nine. Questions will be answered in the order they are received.
Speaker 1: We will now pause a moment to assemble the queue. Our first question comes from David Karnofsky from JP Morgan.
Speaker 2: how consumers receive their news and information and what opportunities are risked out and suffer you in terms of your relationship with readers. And then maybe as a follow on what use cases DC for the technology and the generation or repackaging of some of the news content you're
Speaker 5: it is. Thank you.
Speaker 3: David, a very thoughtful question. We're obviously at an early stage of the e-evolution of generative AI. It will have a profound impact and I was recently take-dosing our teams and in recent months, Harvakon Japan has been using sophisticated programs to create images for manga stories by transforming a sketch or a photo or just inputting words three separate.
Speaker 3: generative AI programs that you use an image from our library to create complete manga sets, obviously saving a lot of time and transforming potentially the character of that business. But it's not only going to have an impact on content, it will clearly have a profound impact on the management of the business.
Speaker 3: customer service or billing or whatever. I mean, one contradiction of any business is that the more you customise, the harder and more expensive it is to scale. And that contradiction can be overcome with AI. I think as the well-known management consultant Socrates observed, the secret of change is to focus all of your energy not on fighting the old but building the new.
Speaker 1: Thanks, David. Layla will take our next question, please. Our next question comes from Kane Hennan from Goldman Sachs.
Speaker 1: Thanks, David. Leila, we'll take our next question, please. Our next question comes from Kane Hennan from Goldman Sachs.
Speaker 6: Thanks for the question. Maybe just the cost out. I'm interested, I suppose, you know, some of the commentary there, particularly Dow Jones and then books was pretty positive on the top line outlook and how things have been improving. Just interested why the cost out target's been upgraded, you know, with that backdrop. And I suppose there's a follow on to that, just what the net benefit of the cost out program was in the first quarter, you know, if we think about it.
Speaker 3: attribute to the diligence of our teams undertaking difficult work. And to emphasize, that's just one element of the cost cutting that's underway at the company as we severely scrutinize everything from tech spend to travel expenses. So the total savings number next year will obviously exceed that total.
Speaker 4: And Kay and just to add, our business units, they're quite experienced at identifying areas for improvement and we can leverage those across the group as we look for cost savings, which is one of the reasons we've been able to drive additional cost savings. We're not going to get into the details about the net off of the cost savings, but we can expect that as we head into fiscal 2020, we'll be able to see that as we head into fiscal 2020.
Speaker 1: or from Q1, we really would expect to see the majority of those cost savings hit the P&L. Thanks, Caine. Leila, we'll take our next question, please. This next question comes from Craig Huber from Huber Research. You may use star six to unmute, Craig.
Speaker 7: Yeah, hi, Craig Huber, thank you. I have a similar question on the cost. Obviously, you've announced 5% head headcount reduction three months ago, roughly about 2% of total costs. Can you quantify what the other cost savings you're talking about is? I mean, a few copies, just
Speaker 4: reduce headcount, don't touch other stuff, and you guys are taking costs out elsewhere. Can you quantify that for us? Is that possible? We haven't quantified it, Craig, but what I can say is it cuts across lots of different areas. You know, we're looking at discretionary spend, as you'd expect, office expenses, T&E. We have a look across our print sites and we're constantly looking for opportunities around...
Speaker 2: Thanks, Greg. Thank you. Layla will take our next question, please.
Speaker 6: Next question will come from Darren Lung from Macquarie. Hello guys, thanks for the opportunity. I just wanted to ask around the high printing costs and supply chain issues in books, please. So I think we're talked about it being a headwind in prior periods and looking at it looks like it's flat versus the prior year. Can you just give us a few words?
Speaker 3: We are seeing enhanced paper costs still coming through and we're seeing some additional fuel costs that are coming in because of the inflationary pressures. So it was a little bit mixed. We are seeing them moderating, but they have been up. And so, Darren, just to supplement, Susan, of course, what has been particularly prevalent over the past year is the change in purchasing with Amazon and now that they've...
Speaker 8: from Loop Capital. Thanks for taking the question. Robert Susan, I'm always shocked how well the news media business continues to hold up. Two things on there. Can you give us a little more detail of what's happening with TalkTV and the plans to turn that profitably? And secondly, can you give us a little more detail of what's happening with TalkTV and
Speaker 3: Just shocked to see print advertising actually doing better than digital advertising this quarter. What is happening there? Well, I want to talk to you. We've always said it will be a low-cost high quality project and it will constantly review progress and technological developments that give us flexibility in delivery and reduce expenses.
Speaker 3: and dice programs in different formats for different time zones and as you can imagine increasing our video expertise generally is a core priority for all our businesses.
Speaker 4: And Alan, just on the print side, I mean, look, it has been a pleasant surprise and we've seen this over the last couple of years as it relates to print advertising. It really just depends on the categories. Down in Australia, they've seen a pickup in travel advertising, which has really helped down there as the markets have started to open up. They do get some good tailwinds from retail in different quarters as well. So it really is variable each quarter.
Speaker 7: Your line is open. Yes. Sorry about that. Your book revenues held up much better than we thought in the quarter. I mean, given the issues you guys have called out in the past about Amazon and warehouses, issues with them and stuff, can you just talk through that? Do you think that's all behind you now?
Speaker 3: Craig, as I mentioned earlier, there clearly has been an adjustment at Amazon. That adjustment, as we understand it, is complete. And so those awkward moments are past. And now really it's down to the quality of the front list and expanding the impact of our traffic.
Speaker 3: backlist, for example, in the most recent quarter of backlist was 60% of sales, as you know, backlist generally is more profitable for us. And so now we have an opportunity to make the most of our excellent authors and our marketing potential.
Speaker 4: And Craig, we're also, I mean, for April , we've just had the results come in and there has been a little bit of softness just in consumption. So we're still waiting to see where consumption settles down in the post-COVID world. But pleasingly, the results for Q3 were much better than the first half.
Speaker 2: Thank you, Craig. Thank you. Thanks, Craig. Leila, we'll take our next question, please.
Speaker 2: At this time, we have no further questions, so I'll hand back to Michael Florence for closing remarks. Great. Well, thank you, Leila, and thank you all for participating. Have a great day, and we'll talk to you soon. Take care.