Q1 2024 News Corp Earnings Call
<unk> media will be allowed on a listen only basis.
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.
Thank you very much operator, Hello, everyone and welcome to news Corp's fiscal first quarter of 2024 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, we often with some prepared remarks.
And they'll be happy to take questions from the investment community.
This 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.
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 release for the applicable periods posted on our website.
With that I'll pass over to Robert Thomson personal opening comments.
Thank you Mike.
World Replete with uncertainty you use core is proud to report rising revenues and increased profitability in the first quarter of fiscal 2024.
These distinctly positive results come despite inauspicious macroeconomic conditions, including steep interest rates and unfavorable foreign exchange fluctuations the.
Central for even greater profitability should be even more pronounced when we return to economic equilibrium.
These results followed the three most profitable years since the creation of the New news cool and our digital transformation has continued apace and in our view. These results certainly highlight the disparity between the value of our company and our share price, which we believe does not reflect our present profitability yet alone the potential of our incomparable growing.
Businesses.
We are acutely focused on enhancing long term value for all of our investors and in that quest have the patent advantage a prized assets whose value. We believe is increasing we are also assiduously reviewing our structure in our quest to optimize that value.
Our first quarter revenues rose modestly to $2 $5 billion, while profitability rose, 4%, marking the second consecutive quarter of profit growth in these challenging conditions. We believe these positive results are a harbinger of a potential in the medium and long term.
We expect to continue to drive our digital growth the scale of which has been transformative over the past decade. It is worth noting a couple of metrics for context and to highlight the intrinsic value of our company in 2014 print related advertising accounted for 39% of our revenue and now it is trading at less than 5%.
While digital revenues exceeded 50% of revenues last year up almost 300%.
Our loyal investors understand the inherent value of our assets and the scale of our dramatic transition, but we believe the market has yet to fully comprehend the magnitude of the metamorphosis all the future potential of our platform. We have been and expect to continue to generate significant free cash flow this fiscal year.
And we have a $1 billion buyback plan, well underway and ample opportunity to be opportunistic.
Opportunistic efficacy, we've shown in our purchases of Opus and CMA for Dow Jones to high margin digital businesses with recurring revenues, which have added much profitable prowess. Their impact means that we are at a pivotal point in our Dow Jones business. The <unk> segment at Dow Jones is now outpacing the BTC.
Segment, and contributing to profit and at a far higher margin.
The net result is that we expect both Dow Jones and used corporation are becoming more profitable more digital and even less dependent on the ebb and flow of advertising.
That is why we are highlighting the Dow Jones results today, and expect to be providing increasing visibility over the coming year. So that potential investors can appreciate the full glory of a valuable assets, while we intensify our institutional introspection on structure.
As a reminder, Dow Jones profitability has more than doubled since we re segmented in fiscal 2020 generating close to $500 million in segment EBITDA last year with strong growth prospects ahead, and the EBITDA margin has been utterly transformed in Q1 fiscal 18. It was approximately 9% in Q1 fiscal 'twenty.
It was 12, 8% and in Q1 this fiscal year 23, 1%.
We certainly agree with the perceptive commentators and analysts who suggest that new scores undervalued and its asset quality underappreciated aboard our leaders and our teams deserve much credit for skillfully navigating the turbulent media waters of the past decade waters, which have proven treacherous for many media companies.
As always we remain focused on maximizing that value to the benefit of all shareholders.
We are also looking to the future in maximizing the value of our premium content for AI.
We are in advanced discussions with a range of digital companies that we anticipate will bring significant revenue in return for the use of our unmatched content sets generative AI engines are only as sophisticated as the inputs and need constant replenishing to remain relevant and we are proud to partner with responsible purveyors of IR products.
And the prescient leaders.
One observation about generative AI, we often hear about misinformation and disinformation to the point, where the very words, it become politicised and polluted the potential for the Proselytising of the perverse will become ever more real with the inevitable inexorable rise of artificial intelligence, but however, artful.
The artificial intelligence it is no match for great reporting and for genuine journalistic NAS.
On the subject of journalism I would like to pay tribute to our reporters in the middle East and in Ukraine, who are each day, taking calculated risks to bring insight and intelligence to readers around the world during a period of unpredictable turbulence and I would like to highlight the fight of Evan Gush Kovich The Wall Street Journal reporter who.
It's been unjustly incarcerated in Russia for more than seven months nearly for doing his job as a journalist.
Let me begin the more detailed X that Jesus with increasingly valuable Peerless, Dow Jones, where revenues rose 4% in Q1, despite the volatility of the AD market. While segment EBITDA was lifted by an impressive 10% as revenue and profit contribution continued to expand in the professional information business.
Dow Jones offers a unique set of services and products for global business users and readers as a result, many of our customers encountered Dow Jones products. Several times each day not just the Wall Street Journal Barrons market watch and Dow Jones, Newswires, but also our risk and compliance Dow Jones energy and Factiva.
Risk and compliance revenue surged, 23%, thanks to increased demand from the financial and corporate sectors seeking to minimize risk and maximize compliance I trust all of the institutions on the call today aspire to those two worthy goals RNC has expanded revenues by over 600%, let me repeat that number overseas.
600% since we relaunched news in 2013.
It's worth emphasizing that the business is fully digital and has retention rates of over 90%.
Dow Jones energy, which includes both Opus and CMA continues to see excellent double digit revenue growth driven in part by higher pricing and is exceeding our initial expectations. Thanks to the global energy transition and opportunities emerging in renewable energy along with continued reinvestment.
Our customer base is growing as we launched compelling products and create critical pricing benchmarks. We are genuinely impressed by the vitality and drive an initiative among our new colleagues at Opus and CMA.
Factiva is benefiting from its innovative partnership with decision and Factiva should be an important building block in the future given that it has a database of 33000 and sauces in 32 languages for more than 200 countries and territories that impressive content collection complements our contemporaneous news offerings as we.
We seek to serve corporate professional and consumer audiences.
Across Dow Jones subscription volume remained strong with digital subscriptions, reaching $4 6 million up 12%, while total subscriptions reached $5 3 million up 8%.
Our teams are focused on reducing churn and maximizing the lifetime value of each and every subscriber.
As for advertising, we saw particularly improvement in trends with declines of past quarters, abating and digital advertising down only 2%.
In digital real estate it was a tale of two markets during the quarter with the Australian property market, improving and the U S market still bearing the burden of particularly high mortgage Reits, which obviously suppressed demand.
It is fair to say that the revenue rebound in the Australian market certainly surpass the sluggishness in the U S market.
R E I reported strong growth in listing volumes and the two key markets of Sydney, and Melbourne, and our valued clients were keen to subscribe to premium products, thus improving yield.
We also saw resounding topline performance and volumes remained strong in October.
Rei, India is the number one property portal in a country with a rapidly expanding middle class and both its audience and revenue continued to surge during the quarter.
As Rei has disclosed the total audience in India in the quarter was up 16% year over year, while revenue during the quarter was 25% higher than a year ago.
Given a relative political stability in India, and ongoing economic growth I E. A India is a jewel in the crown.
In the U S realtor dot com like the industry at large was affected by the unusually high interest rates, which do appear to have plateaued and are expected to ease over the coming year.
But the short term conditions do not change our long term optimism for realtor to capitalize on the increasing digitization of the worlds largest property market.
It is easy to buy transit traffic in the short term, but that is merely a sugar high that leads to digital diabetes. We have a long term commitment to all Americans, who are buying and selling a home and to real estate professionals. We also have the ability to leverage our unique media platforms from WSI Dot com to the New York post among many others who.
<unk> had a combined monthly audience of over 200 million Uniques in September.
These are verified authenticated numbers not shaken cockpit coctile of Cockamamie.
On the Diamond Eagle's energetic decisive leadership realtor is building on the gains of his predecessor, and focusing on developing core markets core clients and core profitability. The realtor team is working even more closely with Rei executives in ways that are benefiting both businesses with a sharing of software marketing mechanics and I.
I insights.
The script for a publishing business. He was completely rewritten in the first quarter. After a few difficult quarters segment EBITA at Harper Collins slipped, 67% revenues posted a healthy 8% increase and that growth combined with cost initiatives undertaken over the past year and an easing of supply chain inflight.
<unk> impacts recalibrated the performance of topical ones.
The logistical upheaval at Amazon has passed return rates are far lower in both our frontlist and backlist notch gains during the quarter.
Among the many and varied strong sellers, where Tom like by Ann Patchett, Steven copper head by Barbara Kingsolver.
The collector by Daniel Silva, and remarkably bright creatures by Shelby Van Pelt.
We saw particular strength in our Christian books business, including Reba Mcentire is not that fancy rebar was clearly not describing the Harper Collins performance.
And speaking of Christian books, we look forward to publishing a new book by his Holiness Pope Francis next spring.
I would like to highlight a new partnership with Spotify to broaden the reach of audio books. This is a project we have discussed for some time with the estimable, Daniel <unk>, with whom I share a passion for books and for the Arsenal Football club. The new partnership has begun with the UK and Australia and in the U S announced yesterday.
And we are genuinely confident that it will be positive for both companies for authors and for those who love to read and to listen to books. This market has needed a strong new entrant and Daniel and his team are among the most skillful players on the pitch.
That subscription video services revenues were up in constant currency for the seventh consecutive quarter as expected the decline in EBITDA was mainly due to sports rights costs and Forex fluctuations, but we have no doubt that our streaming strategy has been successful at a time when other companies in other markets are struggling.
Overall paid streaming subscriptions rose 8% on the same quarter last year, while broadcast churn was down from 14, 2% to 11.4% showing that the two products are undoubtedly complementary.
But the team at Fox tell is far from complacent and so we're on the cusp of launching a new streaming aggregation product hubbell, which will greatly simplify the search for fascinating entertainment and sports from our own companies and from those of our cherished partners to the benefit of all in particular to the benefit of views.
The news media segment faced macroeconomic headwinds and volatility caused by algorithmic changes at the large platforms, but these trends are more ephemeral than a turtle.
Subscriptions continue to increase at the times and Sunday Times, which reported an 8% rise and at News Corp, Australia, where we saw a 4% increase in digital subs as I mentioned earlier, we are increasingly less reliant on advertising, which is now a smaller fraction of our overall revenue and focused on digital recurring revenue streams.
We saw strong performance at wireless in U K, which had a record 45 million listening hours as the April to September period up 17% from the prior year. According to Rage led.
Led by sports and news.
Our teams in the UK and Australia also acutely cost conscious and we are retooling the infrastructure to reflect a contemporary and future initiatives, including printing operations advertising networks and back office expenses, Rebecca and our teams in the U K has been leaders in creating programmatic AD partnerships, which enable old.
To increase yield and harvest valuable data.
This was in another way and historic quarter.
Our executive Chair Rupert Murdoch announced that he will be transitioning to chairman Emeritus next week at our AGM.
I can personally assure you that there has been no change in his heightened levels of curiosity in energy since the announcements and his vast experience will be an important ongoing resource for the company.
All of US at your school stand on the shoulders of a giant.
And I genuinely look forward to Lachlan, becoming soldier next week his thoughtful engagement with our teams already enhances the business each working day and his passion for principal journalism is obvious to all who work with them.
There is no doubt that lachlan multi disciplinary expertise and his philosophical integrity will be invaluable as we continue the next phase of our crucial journey.
And now our esteemed CFO, Susan Panocha will provide more financial granularity.
Thank you Robert and good afternoon, everyone.
As Robert mentioned, we are pleased with the positive starts the new fiscal year, returning to revenue growth and placing the second consecutive quarter of profit growth. Despite the macroeconomic conditions we have.
Diligently executing on our long term plan to drive greater value for our shareholders and believes this is yet to be reflected in our current market value.
Our first quarter total revenues were $2 $5 billion up 1% compared to the prior year, marking the first year over year revenue growth since the fourth quarter of fiscal 2022.
Adjusted revenues also grew 1% compared to the prior year.
Total segment EBITDA was $364 million up 4% compared to the prior year Harper Collins was the largest contributor to the profit improvement, which is encouraging on the back of last year's challenging results. Adjusted total segment EBITDA grew 5% versus the prior year.
For the quarter, we reported earnings per share of five cents compared to seven cents in the prior year adjusted earnings per share was <unk> 16 cents in the quarter compared to 12 cents in the prior year.
Moving onto the results for the individual reporting segments, starting with digital real estate services segment revenues were $403 million down 4% compared to the prior year and notable improvement from the fourth quarter right on an adjusted basis segment revenues declined just 2%.
Got the revenue declines segment, EBITDA rose, 3% to $122 million due to higher contributions from the Rei grid and cost saving initiatives that.
That were partially offset by revenue headwinds adjusted segment EBITDA rose a healthy 8%.
Ari I had a very strong quarter with revenues rising 4% year on year on a reported basis to $261 million, which included an $11 million or 4% negative impact from foreign exchange growth was driven by residential yield increases and growth in national listing along with 25% revenue crisis Rei India.
Results were partially offset by a modest decline in financial services revenue due to lower settlement activity.
Our old <unk> listings rose, 1% with Sydney, and Melbourne up, 16% and 14%, respectively, enabling a put pressure on yields please refer to our earnings release and their conference call. Following this call for more details.
News revenues of $142 million were down 16% compared to the prior year relatively similar to the fourth quarter trend absent. The 50 <unk> week impact for the quarter real estate revenues fell 20% driven by lower lead and transaction volumes reflective of the broader industry trends.
Lead volumes fell 11% year after year, while Realtors average monthly unique users declined 12% from the prior year to 76 million in the first quarter based on internal metrics, but improved from 74 million in the fourth quarter.
As Robert mentioned, despite challenging market and competitive conditions with made solid progress in Q1 across a number of strategic areas, including S. C O improvement expanding our sell side offerings, including the launch of a listing agent toolkit deepening our collaboration with news Corp's powerful global platform to drive further H and the recent launch of <unk>.
Brand campaign.
Turning to the subscription video services segment revenues for the quarter with $486 million down approximately 3% compared to the prior year on a reported basis due to foreign currency headwinds importantly on an adjusted basis revenues rose, 1% versus the prior year, the seventh consecutive quarter of growth.
Streaming revenues accounted for 30% of circulation and subscription revenues. This is 25% in the prior year and again more than offset broadcast revenue declines benefitting from both a year over year increase in subscribers and price rises at Cowen binge.
Total closing paid subscribers across the Fox talc rate reached almost $4 6 million at quarter end up 2% year over year.
Total paid streaming subscribers with 3 million, increasing 8% versus the prior year, although declining sequentially impacted by list that put things related to the strikes in Hollywood as well as typical seasonality at the end of the winter sports cut in September.
<unk> ended the quarter with over 1.3 million residential broadcast subscribers down 9% year over year broadcast churn continue to improve down 280 basis points to 11, 4%, while broadcast ought to rose 3% to over 85 Australian dollars helped in part by a prosper is a non platinum subscribers important.
In July.
Segment EBITDA in the quarter of $93 million was down 16% versus the prior year driven by contractual price Escalations in Fox Sports rights agreements adjusted segment EBITDA declined 10%.
We completed the debt refinancing in the first quarter, which included securing a new $1 2 billion Australian dollar credit facility as we said last quarter given the improved performance and the completion of the refinancing. This provides a pathway for repayment of a shareholder lines.
Moving onto that change Dow Jones had a strong quarter with revenues of $537 million up 4% year over year Spitefully lapping recent acquisitions digital revenues accounted for 81% of title revenues. This quarter up two percentage points from last year circulation and subscription dice revenues represented over 81% of total revenue.
Is up approximately one percentage point from the prior year underscoring the stability and recurring nature of the revenue base on an adjusted basis revenues grew 3%.
We are continuing to say very strong growth in our professional information business with revenues rising 14% year, I think he driven by risk and compliance and strong gains at Dow Jones energy.
The posted modest growth benefiting from a new licensing deal retention across day to day offerings remains that I said, 90% with nearly all of the revenue is recurring.
He spent compliance revenues rose, 23% with consistent growth between financials and corporates Europe remained the largest territory at over 50% of revenues and also the fastest source of great secular trends remain very favorable with global corporations navigating complex sanctions and tried guidance, particularly as it relates to Russia and China.
We were really pleased with the 20% growth attachments energy, which benefited from price escalations, the rollout of new products and new customers.
The results also benefited mid single digits from onetime items and the World Clinical Forum and new annual event, this quarter, which leverage the wider Dow Jones experiencing corporate events.
Circulation revenues gained 1% versus the prior year with digital only subscriptions growing 12% year over year or 101000 sequentially, which was principally driven by an increased focus on Dow Jones bundling offer as they look to better leverage subscription acquisition cost across multiple products capitalize on minimal overlap between products and drive.
Greater engagement from customers, we believe that in the medium term bundling boot drive higher RP per subscriber energy's long term churn.
Advertising revenues declined 3% to $91 million due to 6% and 2% declines in print and digital advertising revenues, respectively with trends improving from the fourth quarter advertising accounted for 17% of title revenue was 66% being digital up 100 basis points from last year.
<unk> segment EBITDA for the quarter grew 10% to $124 million with margins, improving 120 basis points to 23.1% our highest first quarter margin since news Corp's acquisition of Dow change driven by the strong data pay performance, which is on track to be the largest contributor to Dow Jones profitability in fiscal 2024.
At book Publishing we saw a big recovery from fiscal 2023 results revenues were $525 million up 8%, while segment EBITDA increased 67% to $65 million compared to the prior year.
Margins improved as a 400 basis points to 12, 4% you will recall the results a year ago was significantly impacted by the Amazon reset of inventory levels and right sizing of its warehouse footprint.
Our strong performance this quarter benefited from the success of some key Frontlist titles as Robert mentioned and also saw increase in pack with styles, including a notable increase in Christian publishing.
Return rates improved materially while inventory levels appear to have normalized inflationary costs are beginning to moderate with lower manufacturing costs helped by product mix and lower freight and distribution costs this quarter.
The backlist contributed 61% of revenues down from 65% last year, while digital sales rose, 3% this quarter and accounted for 22% of continuing the sales within the 22% downloadable audio accounted for 45% of digital revenues on an adjusted basis revenues gained 6% and segment EBITDA rose 59%.
St.
Turning to news media overall trends continue to be mixed geographically revenues were $548 million down 1%. This is the price while adjusted revenues declined 2%.
Advertising declined 5% and was down 6% in constant currency, while circulation and subscription rates, 2% and was flat in constant currency.
Is Australia advertising, so some improvement compared to the fourth quarter, while the U K weakened notably in digital.
As Robert mentioned, we did see declines in our traffic at several masked heads related to changes in algorithms at the large platforms, which we are monitoring closely and have been felt across the wider publishing industry.
Segment EBITDA of $14 million declined $4 million results included approximately $3 million related to one time costs. As a result of the proposed combination of printing operations in the UK with T. M G.
This initiative demonstrates the continued focus on driving cost efficiencies across our news media businesses.
Before we look at the outlook for the next quarter I would like to touch on free cash flow first quarter free cash flow is typically lower due to the timing of working capital payments, including sports rights payments at Fox Town. Initially it was also impacted from the lower Harper Collins sales in Q4 of the prior year.
We anticipate generating strong and positive free cash flow for the year weighted to the second half consistent with prior years.
As for the outlook similar to our comments last quarter, we are continuing to operate in a difficult environment that remains unpredictable in the short term that said, we expect the second quarter to continue to show an improvement in revenues and profitability.
Looking at each of our segments at digital real estate services strain residential nearby listings from tighter grew 16%. Please refer to Rei for more specific outlook commentary at news U S housing conditions remain challenging and we are expecting some reinvestment in marketing to improve share of voice levels, including the recently launched advertising campaign.
And also in product development to ensure we are best positioned to take advantage of market conditions when they increase in.
In subscription video services as mentioned last quarter, we continue to expect modestly higher expenses for the full year driven by sports rights and some costs related to the launch of Fox tail streaming aggregation service hub.
But remain on track to deliver relatively stable results for the in local currency.
<unk> change, we hope to see continued improvements in advertising declines, but as typical visibility is limited we continue to expect modestly higher overall expenses for the full year and strong revenue growth and basically revenues.
At book publishing, we expect year over year improvements versus the prior year revenue and profit growth is expected to be more modest in the first quarter, given overall industry trends and a normalization of return rates.
Media revenue trends remain mixed geographically and we will continue to focus on ongoing cost efficiencies 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.
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Questions will be answered in the order. They are received we will now pause a moment to assemble the queue.
Okay.
Okay.
Our first question comes from Lucy Huang from UBS.
Hi morning, and thanks for taking questions and my one question is emulation chimneys. There just wonder if you can give us the update into the competitive landscape.
The last one just any early thoughts on the race in the U S Court ruling around agent commissions like do you think this could have an impact on industry dynamics more broadly and I guess for me is just longer term. Thanks.
Yes, Lucy Who's first of all we'll have to see what transpires on appeal and in that particular case, but it's clear that the U S property market has already been.
Evolving if rather incrementally.
Our focus is solely on providing the best possible service with vendors for purchases and for real estate professionals and will continue to build audience through the use of a rather large media platforms. We've been taking advantage of the present downturn in the market to build out our cell site operations.
And there is definitely a downturn in the existing home sales. When you have an annual rate of $3 9 million, which is well below the normal average of $5 5 million.
We certainly foresee stronger activity longer term on the sell side a bit like the Australian market and we've acquired a company up Miss which is particularly strong in that area.
And there are interesting lessons for the U S market generally from Australia about what happens when the market turns others tightly much suppressed demand here at the moment in Australia, we saw listings in Melbourne and Sydney a.
Search 14, and 16% in the last quarter and those numbers were even higher in October Melbourne listings. So it's 32% in Sydney sold 33%. So we look forward to similar surging absorbing in the U S market when mortgage rates moderate.
Thank you Lucy Laila, we will take our next question. Please.
Our next question comes from Alan Gould from Loop capital. Please limit yourself to ask a question.
Thank you Robert I was wondering if you could get into a little bit more detail about this the deciduous the reviewing our structure and secondly, if you could comment on how the recent real estate law suit might affect the realtor and move thank you.
I think Ellen I answered the second question.
Just now.
I will have to wait for the appeal there the market itself is still obviously.
Suffering from the heavy burden of mortgage Reits here in the U S.
As for structure.
Luke.
We agree with the general thesis that the company has been transformed over the past decade, and the full value of our encumbered assets is not fully represented in the share price and that's a tribute to the leaders of all of our businesses from Rebecca in London, Patrick Foxtail into all our teams who've navigated through fundamental changes in each of these sectors and through the pandemic and the subsequent.
Surge in interest rates and as you can divine from today's numbers, we are in a truly different positions. Most media companies with a robust balance sheet and are poised for even greater growth and profitability in coming years, we need economic Kevin's return to equilibrium.
But at the same time, we are consciously and constantly reviewing our structure and have already taken tangible steps to clarify internal corporate structures to ensure that we have maximum flexibility in the overall structural consideration.
Thanks, Alan Laila, we will take our next question. Please.
Our next question comes from David Karnofsky from J P. Morgan Your line is open.
Yes, hi, Thank you this is Ted.
<unk> on for David.
I wanted to ask if you could give us an update on digital ad trends.
Any color you can share on the quarter and expectations moving forward.
It would be appreciated.
Obviously the trends across the mass heads vary by segment and region and algorithm changes can have a short term impact.
But we do have a strong relationship with both Google and Facebook and they tend to respond thoughtfully too.
Infelicity that we identified.
Particular to call out Sundar Pichai in his trusty team, who are conscious of the importance of journalists and journalism spin.
Specifically at Dow Jones advertising was down 3%, which was a marked improvement after the 14% decline in the prior quarter.
Both digital and print reported improvement in trend lines.
There was a more modest decline of 8% in the UK, but but most of that was actually in print and digital advertising was flat compared to the same quarter last year.
And the New York post well flat overall actually saw an increase in print related advertising SC paper continued to expand its social political and commercial reach.
Yeah.
Thank you Ted Laila, we will take our next question. Please.
Our next question comes from Andrew Rykowski from Evans and partners.
Hi, Robert Hi, Susan.
So I just wanted to ask given that there have been some public comments from a shareholder over the past months about a proposal to spin out Rei.
Interested in your comment as to whether you see merit in that proposal and is that something you're willing to explore or are you looking at otherwise as you've spoken about of causing if closing the valuation gap and if I can quickly start was taken money there as well hopefully a straightforward one.
Given our foxtail re finance side of the quarter.
When do you think the shareholder lines will be re pipe are there any other impediments or hurdles to that re payment taking place now thank you.
And so it would obviously be inappropriate to comment on any shareholder in particular and actually inappropriate to comment on any shareholder comments are.
But as I've made clear we are conscientious of reviewing our structure undertaken taken steps corporately to ensure that we have maximum flexibility.
That of itself.
Flex the constant institutional introspection that characterizes the way we oversee these very valuable assets.
And then Joe just in relation to your question on Fox Tower, We expect a modest return this year and anticipate the bulk of the repayments to come over the next few years, that's obviously dependent on the current plans and cash flow position.
Thanks, and Joe Leila will take our next question. Please.
Our next question comes from Craig Huber from Huber Research, Craig you May dial star six on your T patronage.
Yes.
Great. Thank you.
Robert It's nice to hear that you guys are reviewing your structured.
<unk> talked about for the last 10 years or so I mean, the company is very complicated for investors outside investor standpoint, So I'm glad to hear you guys are well.
Looking at that seriously I mean, when I look at the stock I mean, I've looked at it 35% to 40% conglomerate discount that's embedded in your stock in order to justify the socket.
We have a low twenty's here and stuff so.
I guess, we'll see what happens I hope so.
Significant happens on that front, if I could ask a question about books I mean, it's nice to see the recovery from a year ago are you guys seeing anything.
In the bulk area, whether it be on the cost side or on the revenue side.
Stop you from getting back to the EBITDA level, you're at in the low three hundreds.
In fiscal 'twenty, one 'twenty two.
Thank you.
Craig look obviously Harpercollins is journey through a rather unique period of unusual circumstances, the pandemic logistical issues that Amazon cost pressures.
And it has emerged from the Congress this confluence of complexity with strong front backlist and margins are actually dramatically improvement proving from the 4% in the final quarter of last fiscal to 12, 4%. So we are seeing that margin improvement already.
And.
There's also no doubt that there's reason for excitement about the entry of Spotify into audio books.
Over the past few years audio books have been by far the fastest growing sector in Spotify itself is really transform both the concept and the experience of streaming.
So Daniel and I had been discussing audiobooks for for a few years and we've reached an agreement on a model that is great for orders for book lovers.
Spotify and for Us and the early signs from the UK and Australian markets is certainly positive and if those trends hold audio which now comprise about 45% of digital sales reach a far higher threshold level that we'll be generating significantly more revenue and as you asked we are improving our EBITA.
And Craig maybe just to add you know we do expect continued profit growth in the balance of the year given certainly the pie compares them subject of course to that consumer demand that Robert talked about that we expect it to be at a more modest rate than Q1 and.
And we heightened what the EBITDA margin from a positive to last year and in the light up with digits for the full year, having to live with the 12.3% in Q1. So I expect that margin rate will be more of the medium term when we look to lift it.
Thanks, Craig Laila, we will take our next question. Please.
Our next question comes from Brian Han from Morningstar, Please limit yourself to asking one question.
A real little Susan can you. Please clarify did you guys say in Dow Jones B to B earnings are larger than be to see earnings or did you mean its contribution to growth is now larger than b to C.
They are largely on track to be larger for the full year.
So I guess, we could say on track to be larger.
And they were for the quarter.
And there are obviously higher margin.
Digital high retention rates.
Thank you thanks, Brian Leila will take our next question. Please.
Our next question comes from Darren Leung from Macquarie.
Hi, guys. Thanks for the opportunity.
One on move please.
The real estate revenues, rather sit down 20% and you called out listings and 11.
It occurred but sort of implies that yield.
I appreciate it was down about 9% can you talk a little bit about the drivers on this spot players and how we should be thinking about the year driver in the remainder of the year. Thanks.
Jeremy We don't as you know you give out specific yield some you may recollect that actually over the course of probably the last 18 months with being seen increases in yields that have helped us offset some of those declines.
Imagine in the current market, it's obviously challenging to be pushing yields up in the in the U S.
So look I think what we would say is that we just continue to balance out.
Where we think we can push yields in certain markets.
The current macro environment.
That's probably all we can say on that.
Thank you Darin label. Thanks.
Thanks.
Yeah.
Yeah.
Thank you Darren sorry, Laila, we will take our next question. Please.
I wouldn't go to Craig Huber with a follow up.
Yeah.
Okay.
Yes.
Follow up question on Realtor Dot Com. Please can you maybe just comment a little further on what you're planning on doing a cost side of the business for the rest of the fiscal year here I understand obviously pressure on the top line, but I mean, where do you guys think profits build to dot com or can they go to assure the book.
Issue on the topline from a macro standpoint, but you want to invest more it sounds like on the R&D side, and then marketing. Thank you.
Craig look I think if you think about the next quarter you could probably expect costs to be relatively in line with what we've seen in Q1.
As we mentioned, we do want to continue to invest in that business, we see a huge opportunity in that business when the market picks up and we want to make sure that we're in the best position to take advantage of that and.
Some of the investment areas that we're looking at building out product investment, having a local marketing obviously just given the competitive position there it's really important that we do that.
So we will probably back in some of those cost investments depending on how revenue trends.
Thank you.
Thank you Craig Layla any other questions.
There are no further questions on the line at this time right well. Thank you all for participating have a wonderful day and we'll talk to you soon take care.
Yeah.