Q1 2024 New York Times Co Earnings Call

Okay.

Operator: Good morning, and welcome to the New York Times Company's first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypad. To withdraw your question, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Anthony DiClemente, Senior Vice President of Investor Relations. Sir, please go ahead.

Good morning, and welcome to the New York Times Company's first quarter 'twenty 'twenty four earnings conference call.

All participants will be in a listen only mode.

I know a conference specialist by pressing Sparky followed by zero.

After todays presentation, there will be an opportunity to ask questions.

Ask the question you May Press Star and then one on your telephone keypad.

So with all your questions you May press star two.

Please also note today's event is being recorded.

At this time I'd like to turn the floor over to Anthony for Nike, Inc.

Anthony: Vice President Investor Relations Sir Please go ahead.

Anthony Joseph DiClemente: Thank you and welcome everyone to the New York Times Company's first quarter 2024 earnings conference call. On the call today, we have Meredith Kopit Levien, President and Chief Executive Officer, and Will Bardeen, Executive Vice President and Chief Financial Officer.

Anthony: Thank you and welcome everyone to the New York Times Company's first quarter 'twenty 'twenty four earnings conference call.

Anthony: On the call today, we had Meredith Kopit, Levien, President and Chief Executive Officer, and will bargain Executive Vice President and Chief Financial Officer before.

Anthony Joseph DiClemente: Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call. These statements are based on current expectations and assumptions, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties that are described in the company's 2023-10-K and subsequent SEC filings. In addition, our presentation will include non-GAAP financial measures, and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website at investors.nytco.com.

Anthony: Before we begin I would like to remind you that management will make forward looking statements. During the course of this call. These statements are based on current expectations and assumptions, which may change overtime.

Anthony: Our actual results could differ materially due to a number of risks and uncertainties that are described in the company's 2023 10-K and subsequent SEC filings.

Anthony: In addition, our presentation will include non-GAAP financial measures and we've provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website at investors Dot N Y T. C O Dot Com. In addition to our earnings press release, we have also posted a slide presentation.

Anthony: Relating to our results on our website at investors <unk> N Y T C O dot com and finally, please note that a copy of our prepared remarks from this morning's call will be posted to our investor website. Shortly after we conclude and with that I will turn the call over to Meredith, Thanks, Anthony and good morning, everyone.

Anthony Joseph DiClemente: In addition to our earnings press release, we have also posted a slide presentation relating to our results on our website at investors.nytco.com. And finally, please note that a copy of our prepared remarks from this morning's call will be posted to our investor website shortly after we conclude.

Meredith Kopit Levien: Thanks, Anthony, and good morning, everyone. As our Q1 results demonstrate, we're off to a strong start this year. Our strategy to become the essential subscription for every curious person seeking to understand and engage with the world is working as designed and is positioning us to sustain our growth in a dynamic media environment. Let me describe how.

Anthony: Right.

Meredith: As our Q1 results demonstrate we're off to a strong start this year our strategy is becoming a central subscription every curious person seeking to understand and engage with the world is working as designed.

Meredith: Positioning us.

They are great for a dynamic media environment let.

Meredith: Let me describe <unk>.

Meredith: First our world Class news destination.

Meredith Kopit Levien: First, our world-class news destination, combined with our distinctive products in games, sports, cooking, and shopping advice, are attracting large and passionate audiences in giant spaces. Each of these complementary products addresses a different need in people's lives, meaning there's always a reason to seek out the time. Second, our subscribers are deeply engaged. The share of subscribers spending time on our site and apps each week is now at its highest point since the surge we saw during the pandemic. That's a clear sign that we're delivering value to users and increasing their likelihood of building long-term relationships over time.

Meredith: Without a distinctive products.

Meredith: Sports cooking and shopping by Archrock.

Meredith: <unk> large and passionate audiences in giant basis.

Each of these complementary products addresses a different need in People's lives, meaning there's always a reason to seek out the time.

Meredith: Second our subscribers are deeply engaged.

Meredith: <unk> subscribers spending time on our site and App. Each week is now at its highest point since the.

Meredith: Surge we saw during the pandemic.

Meredith: That's a clear sign that we're delivering value to users and increasing their likelihood of building long term relationship with the times.

Meredith Kopit Levien: Third, the high level of engagement we see reinforces our conviction that we can grow digital-only ARPU year on year as we use our multiple pricing and monetization levers. And fourth, we've strategically designed our diverse product portfolio to also power multiple revenue streams beyond subscription, in Advertising, Affiliate, and Licensing, each of which we expect to deliver growth in 2024. In sum, our portfolio of products creates many paths for times to reach big audiences and drive the type of deep engagement that grows subscribers and revenue.

Meredith: Third the high level of engagement, we see reinforces our conviction that we can grow digital only or two year on year as we use our multiple pricing.

Meredith: They shouldn't levers and fourth we've strategically designed our diverse product portfolio.

Meredith: Also power multiple revenue streams beyond subscription and advertising and licensing.

Meredith: Which we expect to deliver growth in 2024.

Meredith: Our portfolio of products create many paths for the times to reach big audiences and drive the type of deep engagement that gross subscribers and revenue that makes our business more resilient and position us well to take advantage of new opportunities.

Meredith Kopit Levien: That makes our business more resilient and positions us well to take advantage of new opportunities, even in a rapidly changing media landscape. With focused execution and disciplined cost management, we expect that our essential subscription strategy will propel another year of improving profitability and margin expansion, as well as strong free cash flow generation. Turning now to our first quarter results.

Meredith: Even in a rapidly changing media landscape.

Meredith: With focused execution and disciplined cost management, we are essential subscription strategy will propel another year of improving profitability and margin expansion as well as strong free cash flow generation.

Meredith Kopit Levien: We had a quarter of steady revenue growth and significant AOP growth powered largely by our digital subscriptions. We added 210,000 net new digital subscribers in the quarter, making further progress on the path to our next milestone of 15 million subscribers. Volume growth in the first quarter was driven by bundle and multiproduct subscribers as well as single product subscribers, with our bundle and multiproduct subscribers accounting for over half the digital starts in the quarter. Bundle and multiproduct subscribers now represent 43% of our subscriber base, and we expect to surpass 50% by the end of next year.

Meredith: Turning now to our first quarter results, we had a quarter of steady revenue growth and significant L. P. Grace Howard largely by our digital subscription business. We added 210000 net new digital subscribers in the quarter, making further progress on the path.

Meredith: Our next milestone.

Meredith: 15 million subscribers volume growth in the first quarter was driven by bundle and multi product subscribers as well as single product subscribers with our bundled multi product subscribers accounting for over half the digital starts in the quarter bundled multi product subscribers now.

Meredith: At present, 43% of our subscriber base and we expect just surpassed 50% by the end of next year.

Meredith Kopit Levien: Forward to driving subscriber growth is having products that deliver unique value. That starts with news, where just this past Monday, the Times was recognized with three Pulitzer Prizes, our industry's highest honor. The awards showcase the many ways our journalism impacts society. Investigative reporter Hannah Dreyer was honored for documenting the pervasive exploitation of migrant children in unsafe working conditions, a series that led to sweeping reforms in business and government. Katie Engelhardt, a contributor to the Times Magazine, won for her intimate portrait of a mother's dementia and her family's ensuing legal, emotional, and ethical struggles.

Meredith: Florida, driving subscriber growth is having products that deliver unique value.

Meredith: That starts with news we're just this past Monday the times was recognized with three Pulitzer prizes, our industry's highest honor.

Meredith: The awards showcased many ways our journalism impacts society.

Meredith: Investigative reporter Hannah Dreier was honored for documenting the pervasive exploitation of my grandchildren.

Meredith: Unsafe working conditions, a series that let just sweeping reforms.

Meredith: Business and government.

Meredith: Katy Engelhart the contributor to the times magazine, one for her intimate portrait of a mother's dementia and her family's ensuing legal emotional and ethical struggles and we received the international reporting prize for investigative work.

Meredith Kopit Levien: And we received the International Reporting Prize for our investigative work into the origins and aftermath of the Israel-Gaza war. This is recognition of the importance of our ongoing and extensive coverage of the war, which has included thousands of articles and photos, hundreds of videos, and real-time reporting from around the world. Beyond illuminating the most urgent stories of the day, we are continuously expanding our coverage, making it more accessible, and evolving how our journalism comes to light.

Meredith: Origins and aftermath, Israel Gods of war.

Meredith: As a recognition of the importance of our ongoing and extensive coverage of the war, which has included thousands of articles that has hundreds of videos and real time reporting from around the world.

Meredith: Beyond eliminating the most urgent stories of the day, we are continuously expanding our report, making it more accessible and evolving how our journalism comes to life.

Meredith Kopit Levien: That includes producing more personally relevant reporting on science-backed health and wellness, and it includes experimenting more ambitiously with audio by introducing the ability to listen to much of our news via AI-powered automated voice and also by introducing a new Listen tab in our core news app. The performance of games in the quarter provides further evidence for how creating more valuable products translates into user and business impact. We now have two puzzles, Wordle and Connections, with tens of millions of weekly users and another homegrown hit in Strands, our daily word hunt game released in March.

Meredith: That includes producing more personally relevant reporting into science backed health and wellness.

Meredith: They increased experimentation more ambitiously with audio by introducing the ability to listen to much of our report by AI powered automated voice and also by introducing a new listen tab in our core news app.

Meredith: The performance of games in the quarter provides further evidence for how creating more valuable products translates into user and business impact. We now have two puzzles mortal and connection with tens of millions of weekly users and another homegrown hits.

Meredith: Strands are daily word Hot game released in March our growth here means we have lots of opportunities to deliver more value to more people. As one example, we're unlocking the ability for subscribers to play the full archive.

Meredith Kopit Levien: Our growth here means we have lots of opportunities to deliver more value to more people. As one example, we're unlocking the ability for subscribers to play the full archives of more than a thousand portal puzzles. Given the very strong engagement with games and our focus on continuing to add product value, we expect to be able to increase monetization over time. We're also adding value at The Athletic, where we've been deliberate about building awareness, and it's paying off.

Meredith: Plus where it'll puzzles.

Meredith: Given the very strong engagement with games and our focus on continuing to add product value, we expect to be able to increase monetization.

Meredith: Hi.

Meredith: We're also adding value at the athletic where we've been deliberate about building awareness and it's paying off.

Meredith Kopit Levien: Audience levels were up again in Q1, both year-on-year and quarter-on-quarter, helping fuel advertising growth and keeping us on track to profitability by next year. The Athletic is making the most of major moments of fan interest, like the Super Bowl and March Madness, and excelling in its always-on coverage of coaching changes, free agency, drafts, and other news impacting teams.

Meredith: At what audience levels were up again in Q1, but year on year and quarter on quarter, helping fuel advertising growth and keeping us on track to profitability by next year.

Meredith: Yeah, let it gets making the most of major amendment a fan interest like the Super Bowl and March Madness.

Excelling in its always on coverage of coaching changes free agency drops and other news impacting team.

Meredith Kopit Levien: We're as excited as ever about the giant opportunity we see in sports and making steady progress on our ambition to become a top destination for sports news globally. We delivered another quarter of the modest year on year ARPU growth we've been targeting since 2022. Our ability to successfully transition subscribers on promotional prices to higher prices is a durable driver of ARPU expansion and the primary reason we're confident we'll see continued ARPU growth this year. Total advertising revenue came in slightly better than guidance thanks to print declining less than expected. We continued to feel the impact of some marketers avoiding certain hard news topics last quarter.

Meredith: We're as excited as ever about the giant opportunity, we see in sports and making steady progress and their ambition to become a top destination for sports news globally.

Meredith: We delivered another quarter of the modest year on year ARPA growth, we've been targeting since 2022.

Meredith: Our ability to successfully transition subscribers promotional prices the higher prices is a durable driver of <unk> expansion and the primary reason, we're confident we'll see continued growth this year.

Meredith: Total advertising revenue came in slightly better than guidance, thanks to print declining less than expected.

Meredith: Continued to feel the impact of some marketers avoiding certain hard news topics last quarter, even still we are seeing a pick up in advertiser demand. So far in Q2, and we're steadily expanding our high performing AD products across the entirety of our product portfolio.

Meredith Kopit Levien: Even so, we are seeing a pickup in advertiser demand so far in Q2, and we're steadily expanding our high-performing ad products across the entirety of our product portfolio, which together gives us optimism. Revenue beyond subscriptions and advertising exceeded guidance driven by a strong quarter for licensing and wire. We believe the value of Wirecutter's rigorous, research-backed recommendations will keep increasing, and we're investing to cover more products in more categories, which should build an even bigger business over time.

Meredith: Which together give us optimism.

Meredith: Revenue beyond subscriptions and advertising exceeded guidance driven by a strong quarter for licensing and wire cutter.

Meredith: We believe the value of wire cutters rigorous research back recommendations will keep increasing and we're investing to cover more products in more categories, which should build an even bigger business overtime.

Meredith Kopit Levien: We remain disciplined on costs and are aggressively reallocating investments to strategic areas. This discipline, together with capable execution, resulted in another strong quarter of AOP growth and healthy free cash flow. I'll wrap by reminding you of what we're trying to do every day: build scaled products so valuable to people that they will be sought out, asked for by name, and worthy of direct relationships and daily happiness. The combination of our world-class news destination plus market-leading lifestyle products means we have complementary offerings in big spaces, each with multiple growth levers fueling multiple revenue streams. Together, we believe these make our business more resilient and well-positioned for continued value creation. Now, I'll turn it over to Will for more details on the quarter.

Meredith: We remain disciplined on costs and are aggressively reallocating investments to strategic areas.

Meredith: This discipline together with capable execution resulted in another strong quarter of the A&P growth and healthy free cash flow.

Speaker Change: I'll wrap by reminding you of what we're trying to do every day.

Speaker Change: <unk> scaled products, so valuable to people that they will be sought out ask for by name and worthy of direct relationships and daily habits.

Speaker Change: The combination of our World class news destination, plus market, leading lifestyle products means we are complementary offerings and big spaces, each with multiple growth levers fueling multiple revenue streams together, we believe these make our business more resilient as well.

Speaker Change: Well positioned for continued value creation.

Speaker Change: Let me turn it over to will for more details on the quarter.

William Bardeen: Thanks, Meredith. And good morning, everyone.

Will: Thanks, Meredith and good morning, everyone as Meredith stated our Q1 financial results demonstrate a strong start to the year.

William Bardeen: As Meredith stated, our Q1 financial results demonstrate a strong start to the year and position us to deliver another year of AOP growth, margin expansion, and healthy free cash flow generation. Our portfolio of market-leading news and lifestyle products is working as designed to grow our subscriber base, increase subscriber engagement, and strengthen our multiple revenue streams. As our subscriber base has scaled, we've moderated our overall expense growth, driving operating leverage, even as we continue to prioritize strategic investments that help position us for long-term value creation.

In addition, us to deliver another year of a O P growth margin expansion and healthy free cash flow generation.

Will: Our portfolio of market, leading news and lifestyle products is working as designed to grow our subscriber base increased subscriber engagement and <unk>.

Will: Strengthen our multiple revenue streams.

Will: As our subscriber base has scaled we've moderated our overall expense growth driving operating leverage even as we continue to prioritize strategic investments that help position us for long term value creation.

William Bardeen: We grew overall revenue in the first quarter by approximately 6% as increasing digital subscription, licensing, affiliate, and digital advertising revenues more than offset ongoing declines in print. Combined with slower-than-expected cost growth, AOP grew by approximately 41 percent year-over-year, and quarterly AOP margin expanded by approximately 320 basis points to 12.8 percent. Our free cash flow generation continues to be strong, and consistent with our broader expectations for capital allocation, we returned $51 million to shareholders in Q1.

Will: We grew overall revenue in the first quarter by approximately 6% and increasing digital subscription licensing affiliates and digital advertising revenues more than offset ongoing declines in print.

Will: Combined with slower than expected cost growth a L. P grew by approximately 41% year over year and quarterly a op margin expanded by approximately 320 basis points to 12, 8%.

Will: Our free cash flow generation continues to be strong and consistent with our broader expectations for capital allocation, we returned $51 million to shareholders in Q1.

William Bardeen: This included approximately $32 million in share repurchases and $19 million in dividends. Now, I'll discuss the first quarter's key results, followed by our financial outlook for the second quarter of 2024. Please note that all comparisons are to the prior year period unless otherwise specified.

Will: This included approximately $32 million in share repurchases and $19 million and dividends.

Will: Now I'll discuss the first quarter's key results followed by our financial outlook for the second quarter of 2024.

Please note that all comparisons are to the prior year period, unless otherwise specified.

William Bardeen: I'd also like to note that there was one additional day in the first quarter of 2024 compared with the first quarter of 2023 as a result of 2024 being a holiday. I'll start with the discussion of our subscriptions. We added approximately 210,000 net new digital subscribers in the quarter, with growth coming from multiple sources across our portfolio of products. As Meredith mentioned, bubble and multiproduct subscribers now make up 43% of our total base, along the path to exceeding 50% by the end of next year.

Will: I'd also like to note that there was one additional day in the first quarter of 2024 compared with the first quarter of 2023 as a result of 2024 being a leap year.

Will: I'll start with the discussion of our subscription business.

Will: We added approximately 210000 net new digital subscribers in the quarter with growth coming from multiple sources across our portfolio of products.

Will: As Meredith mentioned bundle and multi product subscribers now make up 43% of our total base along the path to exceeding 50% by the end of next year.

William Bardeen: Total digital only ARPU grew 1.9% year over year to $9.21 as we continue to step up subscribers from promotional to higher prices and raise prices on tenured non-bundled subscribers. The promising bundle monetization we're seeing at step-up points, combined with the increasing number of bundle subscribers transitioning to higher prices throughout the year, suggests a tailwind to ARPU in the back half of the year. Additionally, as Meredith highlighted, we continue to improve the products in our portfolio and are seeing that value reflected in higher levels of subscriber engagement.

Will: Total digital only <unk> grew one 9% year over year to $9.21 as we continue to step up subscribers from promotional to higher prices and raised prices on tenured non bundled subscribers.

Will: The promising bundled monetization, we're seeing a step up point.

Will: Bind with the increasing number of bundle subscribers transitioning to higher prices throughout the year suggests a tailwind to <unk> in the back half of the year.

Will: Additionally, as Meredith highlighted we continue to improve the products in our portfolio and are seeing that value reflected in higher levels of subscriber engagement.

William Bardeen: This pattern is increasing our confidence in the ability to improve monetization through single product pricing over time and is one driver of the modest year-over-year ARPA expansion that we continue to target for the midterm. As a result of both higher digital subscribers and digital-only ARFU in the first quarter, digital-only subscription revenues grew approximately 13% to $293 million, and total subscription revenues grew approximately 8% to $429 million. Both were in line with the guidance we provided last quarter. Now, turning to advertising.

Will: This pattern is increasing our confidence in the ability to improve monetization through single product pricing over time and as one driver of the modest year over year Arco expansion that we continue to target for the mid term.

Will: As a result of both higher digital subscribers and digital only argue in the first quarter digital only subscription revenues grew approximately 13% to $293 million and total subscription revenues grew approximately 8% to $429 million.

Will: Both were in line with the guidance, we provided last quarter.

William Bardeen: Total advertising revenue for the quarter was $104 million, a decline of 2.4%. This was slightly better than our guidance of a mid-single digit decline, as print advertising performed modestly better than expected. Digital advertising results were within our guidance range in the quarter, increasing approximately 3% to $63 million. Other revenues exceeded our guidance, increasing approximately 8% to $61 million, as licensing and Wirecutter affiliate revenues continued to be strong drivers of growth in

Will: Now turning to advertising.

Will: Total advertising revenue for the quarter.

Will: <unk> was $104 million a decline of two 4%.

Will: This was slightly better than our guidance of mid single digits decline as print advertising performed modestly better than expected.

Will: Digital advertising results were within our guidance range in the quarter, increasing approximately 3% to $63 million.

Will: Other revenues exceeded our guidance, increasing approximately 8% to $61 million as licensing and wire cut affiliate revenue wire cutter affiliate revenues continued to be strong drivers of growth in Q1.

William Bardeen: Adjusted operating costs came in better than our guidance, increasing by 2.2%. Our underlying cost growth in Q1 continued to reflect our discipline of relentlessly reallocating resources to areas with the highest impact. We also benefited in Q1 from some unexpectedly favorable compensation and benefits items that helped drive the outperformance relative to our guidance range. Cost of revenue increased approximately 3%, largely due to our continued investment in journalism. The cost of revenue was favorable to our expectations, in part due to the timing of content at Hiring Club.

Will: Adjusted operating costs came in better than our guidance increasing by two 2% our underlying cost growth in Q1 continued to reflect our discipline of relentlessly reallocating resources to areas of highest impact.

Will: We also benefited in Q1 from some unexpectedly favorable compensation and benefits items that helped drive the outperformance relative to our guidance range.

Will: Cost of revenue increased approximately 3% largely due to our continued investment into journalism.

Will: Cost of revenue was favorable to our expectations in part due to timing of content and hiring costs.

William Bardeen: Sales and marketing costs decreased approximately 3%, largely due to lower subscriber acquisition costs as our products continue to drive the majority of starts organically. Product development costs increased approximately 11% as we continue to strategically invest in the product and technology teams, enabling our digital subscriber growth. Adjusted general and administrative costs were down approximately 4% as we continued to drive efficiency.

Will: Sales and marketing costs decreased approximately 3% largely due to lower subscriber acquisition costs as our products continue to drive the majority of starts organically.

Will: Product development costs increased approximately 11% as we continued to strategically invest into the product and technology teams, enabling our digital subscriber growth.

Will: Adjusted General and administrative costs were down approximately 4% as we continued to drive efficiencies.

William Bardeen: I'd also like to note that in the first quarter, we recorded a severance charge for approximately $4 million due to targeted reductions in certain areas of the business. Our steady revenue growth and disciplined cost management in Q1 translated into strong earnings growth as adjusted diluted EPS increased 12 cents to 31 cents. EPS growth in Q1 was also aided by higher interest income. Our tax rate in the quarter was approximately 27%, close to our expected ongoing marginal tax rate of approximately 26%.

Will: I'd also like to note that in the first quarter, we recorded a severance charge of approximately $4 million due to targeted reductions in certain areas of the business.

Will: Our steady revenue growth and disciplined cost management in Q1 translated into strong earnings growth as adjusted diluted EPS increased 12% to 31 cents.

Will: EPS growth in Q1 was also aided by higher interest income.

Will: Our tax rate in the quarter was approximately 27% close to our expected ongoing marginal tax rate of approximately 26%.

William Bardeen: I'll now look ahead to Q2 for the Consolidated New York Times. Total subscription revenues are expected to increase 6% to 8% compared with the second quarter of 2023, and digital only subscription revenues are expected to increase 11% to 14%. Overall advertising revenues are expected to increase in low single digits, while digital advertising revenues are expected to increase in high single digits. As Meredith noted, we're seeing a pickup in ad demand so far in Q2 and are continuing to expand our first-party premium ad products to more surfaces across our product portfolio.

Speaker Change: I will now look ahead to Q2.

Speaker Change: Holiday to New York Times Company.

Speaker Change: Total subscription revenues are expected to increased 6% to 8% compared with the second quarter of 2023 and digital only subscription revenues are expected to increase 11% to 14%.

Speaker Change: Overall advertising revenues are expected to increase low single digits, while digital advertising revenues are expected to increase high single digits.

Speaker Change: As Meredith noted, we're seeing a pickup in AD demand. So far in Q2 and are continuing to expand our first party premium AD products to more surfaces across our product portfolio.

Speaker Change: Other revenues are expected to be flat to increase low single digits.

William Bardeen: Other revenues are expected to be flat to increase in low single digits. Adjusted operating costs are expected to increase 4 to 5 percent, which reflects that we are investing for growth in a disciplined manner and that we don't currently anticipate the unexpectedly favorable common benefits cost performance to extend beyond Q1. I'll close by noting that due to our strong Q1 profit performance, we now expect our AOP and earnings growth in 2024 to no longer be back half-weighted. With our essential subscription strategy working as designed, we remain on track to achieve our previously stated midterm targets for subscribers, AOP growth, and capital return. With that said, we're happy to take your questions.

Speaker Change: Adjusted operating costs are expected to increase 4% to 5%, which reflects that we are investing for growth in a disciplined manner.

Speaker Change: And we don't currently anticipate the unexpectedly favorable comp and benefits cost performance to extend beyond Q1.

Speaker Change: I'll close by noting that due to our strong Q1 profit performance. We now expect our L. P and earnings growth in 2024 to no longer be back half weighted.

Speaker Change: With our essential subscription strategy working as designed we remain on track to achieve our previously stated mid term targets for subscribers Aoki growth and capital returns.

Speaker Change: With that we're happy to take your questions.

Operator: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press the star and then one on your touch-tone telephone. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. To withdraw your question, you may press star and two. Again, that is the star and then one to join the question. Our first question today comes from David Karnovsky from J.P. Morgan. Please go ahead with your question.

Speaker Change: Ladies and gentlemen at this time, we'll begin the question and answer session.

David Karnovsky: Hey, thank you. Just two for me.

Speaker Change: To ask a question you May press Star and then one on your Touchtone telephone.

Speaker Change: If you are using a speaker phone, we do ask that you. Please pickup your handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: Withdraw your question you May press star into.

Speaker Change: Again that is star and then one to join the question queue.

Speaker Change: Our first question today comes from David Karnofsky from J P. Morgan. Please go ahead with your question.

David Karnofsky: Thank you just two for me Meredith you spoke to very high engagement around your games product wanted to know how you think about translating this.

Meredith Kopit Levien: Meredith, you spoke of very high engagement around your games product. I wanted to know how you think about translating this, you know, to registrations and ultimately to subscriptions or bundle sign-ups. And can you also speak to the opportunity around building more advertising into games?

David Karnofsky: Registrations, and ultimately to subscriptions or bundled side out.

David Karnofsky: And can you also speak to the opportunity around building more advertising into games and then for will on the adjusted cost in the quarter growth was nicely the growth was nicely below your outlook.

William Bardeen: And then for Will, on the adjusted cost in the quarter, the growth was nicely below your outlook. I wanted to follow up here on what came in lower. Are there any shifts to remaining quarters to be aware of? You noted some timing benefits. And just given the result in Q1 and the outlook, do you have any update on your margin for the year? Thank you.

Speaker Change: Wanted to follow up here on what came in lower are there any shifts to remaining quarters to be aware of you noted some timing benefit.

Speaker Change: And just given the result in Q1 and the outlook do you have any updated view on margin for the year. Thank you.

Meredith Kopit Levien: Thanks for the question, David. I'll start with games. I mean, the first thing to say is we have invested in a product people really love, and we know that they love it because they're deeply engaged, and I would just say broadly that engagement gives us monetization power over time, both in subs and in ads. In subs, I would say the games funnel, so, you know, people coming into the app store, downloading the app, or on the web, finding games is a very effective entry point for someone just in your relationship with the times that can be when they come in, and we get them to register.

Speaker Change: Hey, Thanks for the question David I'll start on games I mean, the first thing to say is we have invested into a product people really love.

Speaker Change: And we know that they love it because they are deeply engaged and I would just say broadly that engagement gives us monetization power over time burden in subs.

Speaker Change: And and and and and subs I would say that game final so people come into the App store or downloading the app or on the web finding games, it's very effective entry point for someone just enduring relationship with the times that can be they come in and we get them.

Meredith Kopit Levien: That can be We come in, and we sell them a bundle subscription. We offer a bundle subscription, or it can be they come in, and we sell them a game subscription. And if they buy that game subscription, we have the potential to use that, you know, harness that direct paying relationship to introduce them to other things. Obviously, with games, there's lots of surface area to do that. And then I'll just say, you know, one of the things we've learned over time in the model is that, you know, high engagement and the continuous addition of new value can mean you have pricing power that you can exercise because people love the product so much and engage with it so often.

Speaker Change: Register that can be we come in and we sell them a bundle subscription we offer a bundle subscription or it can be they come in and we sell them game subscription and if they buy that game subscription we have potential to use that to harness that direct relationship to introduce them.

Speaker Change: The other things and obviously with games Theres lots of surface area to do that and then I'll. Just say you know one of the things we've learned over them over time and the model is that high.

Speaker Change: High engagement and the continuous addition of new value chain, Jeremy you have pricing power that that you can exercise because people love the products that much and engage with them. So often so we've got lots of optimism there on and I would just say plenty of running room.

Meredith Kopit Levien: So, we've got lots of optimism there on ads. I would just say plenty of running room to introduce more ad products within games in a way that is friendly to sort of the broad proposition that we have free games. We have paid games. One of the places that will be focused in the back half of the year is in the games app. It's awesome, and got a redesign, and so you'll see some ads there that you haven't seen before. And I would just say there's lots of room for experimentation on the kinds of ad products within games as well, because, obviously, the formats are different, so we're very excited about that.

Speaker Change: To introduce more AD product within games in a way that is friendly to sort of a broad proposition that we have a free games paid games one of the places that will be focused in the back half of the year is in the games App, which is awesome and then got a redesign and say you'll see them.

Speaker Change: Youll see some out there that you you haven't seen before and I would just say there's lots of room for experimentation on the kinds of ad products.

Speaker Change: Within games as well because that obviously that the formats are different so we're very excited about that.

William Bardeen: And David, on cost, you know, we're quite pleased with the overall cost performance in the quarter, which, you know, is core reflective of the discipline that we've been discussing for some time.

Speaker Change: And David on <unk>.

Speaker Change: Costs.

David Karnofsky: But we're quite pleased with the overall cost performance in the quarter, which this quarter reflects the.

William Bardeen: Now, as I said in my remarks, the outperformance relative to our guidance range was also in part due to some unexpectedly low comp and benefits items in Q1 that we don't expect to extend beyond the quarter. So, looking forward, our Q2 guide of 4 to 5% is what to focus on there, which we believe really reflects investing for growth in a disciplined manner. And, you know, maybe a couple of steps back to put the year in context.

Speaker Change: The discipline that we've been discussing for some time now as I said in my remarks, the outperformance relative to our guidance range was also in part due to some unexpectedly low comp and benefits items in Q1 that we don't expect to extend beyond the quarter. So looking forward, our Q2 guide of 45%.

Speaker Change: Is what you're focused on there, which we believe really reflects investing for growth in a disciplined manner and.

Speaker Change: Maybe a couple of steps back points to put the year in context.

William Bardeen: You know, what we mean by disciplined growth there; we're focused on relentlessly reallocating our resources to areas of highest impact, in particular our differentiated journalism and product and technology. These are the areas which sustainably fuel organic subscriber growth based on our strategy. And then in terms of sort of overall, you know, AOP growth and margin expansion, we're expecting that for the year, and we made the comment that we're just given the strong profit growth we saw in Q1. We're no longer expecting growth to be weighted to the back half.

Speaker Change: What we mean by disciplined growth there we're focused on relentlessly reallocating our resources to areas of highest impact in particular, our differentiated journalism and product and technology. These are the areas, which sustainably fuel organic subscriber growth based on our strategy.

Speaker Change: And then in terms of sort of overall.

Speaker Change: Key growth and margin expansion, we're expecting that for the year strong free cash flow generation and we made the comment that we're just given the strong profit growth we saw in Q1.

Speaker Change: We're no longer expecting the growth to be weighted to the back half of the year.

Speaker Change: Great. Thanks, a lot David operator, we'll take our next question. Please.

Operator: Our next question comes from Jason Bissonnet from Citi. Please go ahead with your question.

Operator: Great. Thanks a lot, David. Operator, we'll take our next question, please. Our next question comes from Jason Bissonnet from Citi. Please go ahead with your question. I just had a very simple question. Would you guys just mind?

Speaker Change: Our next question comes from Jason <unk> from.

Jason: <unk> Citi. Please go ahead with your question.

Jason: I just had a very simple question would you guys just mind summarizing some of the promotions that you've done on the digital side, how those promotions have changed and what.

Jason: Youre looking for as those promotions roll off what are some of the key metrics you guys are going to be looking for to measure success.

Jason: Yes.

William Bardeen: Sure, I'll take that. I mean, overall, we, you know, our promotional strategy is all about maximizing the lifetime value of our subscriber base. And we're, we're, you know, modeling this very carefully. The general way to think about our promotions is that we bring the vast majority of our bundle subscribers, which is our primary offering, in on a dollar a week and then step them up. Over time, to higher prices. That is driven by a lot of data science that is measuring a variety of input into that.

Speaker Change: Sure I'll take that I mean overall we.

Speaker Change: Our promotional strategy is all about.

Speaker Change: Maximizing the lifetime value of our subscriber base.

Speaker Change: Modeling this very carefully.

Speaker Change: The general way to think about our promotions is that we bring the vast majority of our bundled subscribers, which is the primary offering and on.

Speaker Change: On a dollar a week.

Speaker Change: And then step them up.

Speaker Change: Over time, the higher prices.

Speaker Change: That is driven by a lot of data science.

Speaker Change: That is measuring a variety of.

Speaker Change: Input into that.

William Bardeen: And, you know, what we're looking for, as you can imagine, at those step-up moments, is retention and monetization. And, as we've said last quarter and will reiterate this quarter, we've been very pleased with what we're seeing on both of those fronts, as we have increasing numbers of bundle subscribers coming in throughout.

Speaker Change: And what we're looking for as you can imagine at those step up moments is retention and monetization and as.

Speaker Change: What we said.

Speaker Change: Last quarter and reiterating this quarter, we've been very pleased with what we're seeing on both of those fronts as we have increasing numbers of bundle subscribers.

Speaker Change: Coming in throughout the year.

Speaker Change: Yeah.

Operator: That's great. Thank you, Jason. Operator, we'll take our next question, please.

Speaker Change: That's great. Thank you Jason operator, we'll take our next question. Please.

Operator: Our next question comes from Vasily Karasyov from Cannonball Research. Please go ahead with your question.

Speaker Change: Our next question comes from the silly tariff styles from Cannonball Research. Please go ahead with your question.

Vasily Karasyov: Thank you. Good morning.

Speaker Change: Thank you good morning Mary.

Meredith Kopit Levien: Meredith, I wanted to ask you to talk in a little more detail about the underlying trends in digital advertising. Maybe you could break down for us the growth that you had and you expect in Q2 by volume versus price, because it looks like you are going to have a higher growth rate against tougher comps. So can you help us understand, maybe for both display and digital, what is driving this variance in quarterly performance? And if there are any comps that are coming up that are getting easier for you in terms of volume or price? So, thank you very much.

Speaker Change: I wanted to ask you to talk in a little more detail.

Speaker Change: The underlying trends in digital advertising.

Speaker Change: Maybe you could breakdown for us the growth that you had and you expect in Q2 by volume versus price.

Cannonball Research: Because it looks like you are going to have a higher growth rate against tougher comps. So can you help us understand maybe for both display and digital what is driving this variance in quarterly performance.

Cannonball Research: If there are any comps.

Cannonball Research: Coming of that getting easier for you in terms of.

Cannonball Research: Volume or price. So thank you very much.

Meredith Kopit Levien: Yeah, good morning. I think the most important thing to say is just what I said in my prepared remarks, which is that demand is picking up in Q2, and you see that in the guide. And I'll also say we are going to be sort of rolling out more ad supply continuously for the rest of the year. So we're bringing the high-performing ad products to places in our portfolio where we're seeing a lot of marketer demand, and seeing that demand really grow, like the games app and sports.

Speaker Change: Yeah. Good morning, I think the most important thing to say is just what I said in my prepared remarks, which is that demand. We're feeling demand pick up in Q2 and you see that in the guide and I'll also say really.

Speaker Change: You know are going to be a sort of rolling out more AD supply continuously for the rest of the year that we're bringing the high performing products.

Speaker Change: Two places in our portfolio, where we're seeing a lot of market or demand and seeing that demand really grow like the games App and sports.

Meredith Kopit Levien: And when I say high-performing ad products, I mean premium canvases with first-party data. We are still in a process of extending that to other parts of the portfolio, with kind of more ahead than behind us. And that really makes the sort of pick-up in demand plus that, and then just the kind of broad appeal of the times with multiple places for marketers to get a message out, and multiple ways for marketers to put a big idea into the world. All of that gives us hope.

Speaker Change: And when I say I'm high performing AD products, I mean premium campuses with first party data we are still in the process of extending that to other other parts of the portfolio.

Speaker Change: But kind of more ahead.

Speaker Change: Then then behind us and that really makes the sort of pickup in demand.

Speaker Change: Plus that.

Speaker Change: And then just kind of broad appeal of the times with.

Speaker Change: Multiple places for marketers to get our message out and multiple ways for marketers to put a big idea into the world all of that gives us.

Speaker Change: Optimism.

Speaker Change: In the AD business.

Vasily Karasyov: Thank you, and would it be fair to- Let me add one more beat, which may be, you know, the ads are efficacious. They work, those premium canvases and first-party data are high-performing in the context of a publisher ad offering, so we have a lot of confidence. Thank you. And a quick follow-up. Would it be fair to say that the high-performing ads, what you refer to as high-performing ads, have much higher CPMs than display that you call out in the release?

Speaker Change: Thank you and would it be faster than we had 111 more beat which maybe we should.

Speaker Change: You know the ads are efficacious.

Speaker Change: They they work there's premium canvases and first party data or high performing in the context of a publisher AD offerings that we have a lot of confidence in them.

Speaker Change: Thank you and quick a quick follow up would it be fair to say that the high performing ads, what you referred to as high performing ads that they have much higher CPM than display that you call out in the release.

Meredith Kopit Levien: The way we think about it, the sort of core of the digital ad business that we've been talking about for, you know, years now, is premium ad canvases. We have an ad unit called FlexFrame, which is like a, you know, a large canvas unit that can do a lot of different things, and that, plus targeting with our first-party data, which we've been building for years now, is sort of the core of the business. That's, that's what we're talking about.

Speaker Change: The way, we think about it the sort of core of the digital AD business that we've been talking about for years now.

Speaker Change: Is premium mass kansas's Mac unit called flex frame winter like that.

Speaker Change: Large campus unit that can do a lot of different things and that.

Meredith Kopit Levien: That's bought in a lot of different ways. Mostly directly, some programmatically, but that's, that's what we're referring to. And that is generally a high CPM business in the context of publishing.

Speaker Change: Targeting with our first party data, which we've been building for years now.

Speaker Change: It's sort of a core of the business. That's that's what we're talking about that's brought a lot of different ways.

Speaker Change: Mostly directly some some programmatically, but that's that's what we're referring to and that is generally.

Speaker Change: Our high CPM business in the context of the publishing industry.

Operator: Thanks, Vasily. Operator, we'll take our next question.

Speaker Change: Thanks facility operator, we will take our next question. Please.

Operator: Our next question comes from Thomas Yeh from Morgan Stanley. Please go ahead with your question. Thanks.

Speaker Change: Our next question comes from Thomas <unk> from Morgan Stanley. Please go ahead with your question.

Thomas L. Yeh: Thanks so much. Yeah, just following up on the Bunzel graduation question, can you help us just think through the cadence of the wave of eligible cohorts that are coming up for graduation? I think, Will, you mentioned some greater back half opportunity on ARPU. Just to kind of put a finer point on it, is it right to interpret your comment as the year of your growth on subscriber ARPU should pick up in speed in the second half?

Thomas: Thanks, So much yeah, just following up on the bundling graduation question can you help us just think through the cadence of the wave of eligible cohorts that are coming up for graduation, I mean, well you mentioned some greater back half opportunity on <unk> just to kind of put a finer point on it is it right to interpret your comment as the year over year.

Thomas: Growth on subscriber or <unk> should pick up in speed in the second half.

William Bardeen: So Thomas, you know, a couple points there. You know, I think that the only sort of color I'd say on sort of bundle cadence is that the cohorts are just getting bigger through the course of the year. So we're just seeing more and more coming through. And then, you know, as you know, we don't guide on our poo.

Speaker Change: So Thomas.

Thomas: A couple of points there.

Thomas: I think the only color I'd say on through.

Thomas: Bundled cadence as debt.

Thomas: We're just getting bigger through the course of the year. So we're just seeing more and more coming through.

Thomas: And then.

Speaker Change: You know, we don't guide on <unk>.

William Bardeen: I think there are a couple of things that I mentioned that are just giving us general confidence in what we have targeted, which is essentially modest year-over-year growth and total digital-only ARFU. And those two things are that the experience we've been seeing so far on the bundle step-ups is encouraging retention and monetization. So, you know, as that plays out with bigger and bigger cohorts, that's one of the things that is giving us confidence in our food trajectory.

Thomas: I think there are a couple of things that I mentioned that are just giving us general confidence in.

Thomas: What we have targeted which is essentially.

Thomas: Modest year over year growth in total digital only or two and those two things are that the experience we've been seeing so far on the bundle step ups is encouraging.

Thomas: Retention and monetization. So so as that plays out with bigger and bigger cohorts. That's one of the things that is giving us confidence in our trajectory and then the second.

William Bardeen: And then, as we mentioned, single product subscribers. And this is something that, as we think over time, is also giving us confidence, which is the increasing amount of engagement that Meredith has highlighted. And as we've found in the past, more engagement gives us pricing opportunities over time and also is a talent monetization. So with those two, among, you know, several levers, we feel good about the ARCrew trajectory, given the target we've sort of put out there for modest year-over-year ARCO expansion.

Thomas: As we mentioned single product subscribers and this is something that as we think over time as all.

Thomas: So, giving us confidence, which should be increasing amounts of engagement back Meredith as highlighted.

Thomas: And as we found in that pattern more engagement and that gives us pricing over time.

Thomas: Pricing opportunities over time, and also with the talents monetization so with those two among several levers we feel good about the ARPA trajectory given me target, we've sort of put out there the expectation for modest year over year, which you mentioned.

William Bardeen: Okay, makes sense. I mean, on the standalone pricing front, I think last year you kind of pulled the lever on more tenured subs. Is it safe to say that there potentially is more appetite for that given the success of that rollout and the engagement that you spoke to?

Speaker Change: Okay makes sense I mean on the Standalone pricing front.

Speaker Change: I think last year, you kind of pull the lever for more of the tenured subs is it safe to say that there potentially is more appetite for that given the success of that rollout and the engagement that you spoke to.

William Bardeen: I think it's safe to say that, you know, as we continue to add value to the products and see that value, you know, reflected in increasing levels of engagement, meeting consumers are really experiencing that value. We're always looking at pricing, and that's something that, as a lever, you should just continue to expect us to look at and use as a way to continue to improve monetization over time.

Thomas: I think it's safe to say that as.

Thomas: As we continue to add value to the products and see that value.

Thomas: Reflected in increasing levels of engagement, meaning consumers are really experiencing that value. We're always looking at pricing and thats something that as a lever you should just.

Thomas: Continue to expect us to look at.

Thomas: And use.

Thomas: Way to continue to.

Thomas: Improved monetization over time.

Operator: Great. Thanks so much, Thomas. Operator, next question, please.

Speaker Change: Great. Thanks, so much Thomas operator next question. Please.

Operator: Our next question comes from Doug Arthur from Huber Research Partners. Please go ahead with your question.

Speaker Change: Our next question comes from Doug Arthur from Huber Research Partners. Please go ahead with your question.

Douglas Middleton Arthur: Yeah, good morning. Will, I was struck by the sales and marketing being down, I don't know, 6% or something in the quarter and your comment that, you know, the funnel, the organic traffic is driving more of the growth. Is that something, I mean, obviously, we've seen that before with NYT, is that something you think 2024 will benefit from for the rest of the year?

Douglas Middleton Arthur: Yeah good morning.

Douglas Middleton Arthur: I was struck by the.

The sales and marketing being down.

Douglas Middleton Arthur: 6% or something in the quarter.

Meredith Levien: In your comment that you're.

Douglas Middleton Arthur:

Douglas Middleton Arthur: The fund all the organic traffic is driving more of the growth is that something I mean, obviously, we've seen it before with N Y T is that something you think the 'twenty 'twenty four will benefit.

Speaker Change: Rest of the year, and then I've got a follow up.

William Bardeen: Yeah, I think, you know, let me make sure I'm clear that, you know, I think we've always experienced and continue to expect the vast majority of our subscribers coming in organically. I think, in any given quarter, that can fluctuate. You know, we're very conservative in terms of the amount of marketing we're actually spending. And so that sales and marketing line can fluctuate, you know, for a few reasons. But one of the main ones will just be how much media we're putting into the quarter.

Speaker Change: Yes, I think.

Douglas Middleton Arthur: Make sure I am clear that.

William Bardeen: I think we've always experienced and continue to expect to experience. The vast majority of our subscribers coming in organically I think on any given quarter that can fluctuate.

William Bardeen: We're very in terms of the.

William Bardeen: Amount of marketing, we're actually spending.

William Bardeen: So that sales and marketing line can fluctuate for a few reasons, but one of the main ones will just be how much media, we are putting into the quarter, we're really ROI focus there.

William Bardeen: We're really ROI focused there, and you know, we certainly consider leaning in when we see subscriber acquisition costs being particularly attractive. And that'll, you know, so I think you can expect that to fluctuate around the quarter. Overall, as you've seen, this is a line, given our strategy and everything we've said about the way our model works, that we have seen leverage on and that we continue to expect to get leverage on over time.

William Bardeen: And we certainly consider leaning in when we see subscriber acquisition costs being particularly attractive.

William Bardeen: And.

William Bardeen: So I think you can expect that to fluctuate around the quarter overall as you've seen this is a line given our strategy and everything we've said about the way our model works that that we have seen leverage on and that we continue to expect to get leverage on overtime.

Douglas Middleton Arthur: Okay. Do you have a follow-up? Yeah, I have just a nitpick about on page 17 of the press release.

Speaker Change: Okay do you have a follow up.

Douglas Middleton Arthur: Yeah, I have just a nitpick. On page 17 of the press release, you've got this Content Licensing item, very small, $563,000. Is that, A, is that new, and B, is that an add-back to adjust?

Speaker Change: Yeah, I have just a nitpick on.

Douglas Middleton Arthur: On page 17 of the press release, you've got this.

Douglas Middleton Arthur: Content license.

Douglas Middleton Arthur: Licensing.

Douglas Middleton Arthur: Very small 563000 is that a <unk>.

Douglas Middleton Arthur: Is that new and B is that an add back to adjusted EBITDA.

William Bardeen: Okay, so we're just making sure we understand what you were describing. I'm looking at the schedule on page 17 with these, you know, parts broken up. Yeah, so what that represents is, is essentially inter company licensing between the New York Times and The Athletic for use of athletic content at the time. Okay, and I mean, it looks, I mean, it gives.

Douglas Middleton Arthur: Okay. So just making sure we understand what you were describing.

William Bardeen: Yes.

William Bardeen: Looking at the schedule on page 17 with these.

William Bardeen: That's broken out.

William Bardeen: Yes, so what that represents is is.

William Bardeen: Essentially entered company licensing between New York Times and the athletic.

William Bardeen: For use of athletic content at the times.

Douglas Middleton Arthur: Okay, and I mean it look, I mean because you're laying out your costs here, so it looks like it's an it's sort of a duplication ad back, is that, is that, in terms of normalized Eva Dye, is that a fair way to think about it? We can deal with that later. It's it's an expense to NYT, Doug, and then revenue to the athletics. So, you know, being for the consolidated company wouldn't have an impact.

William Bardeen: Okay, and I mean, it looked at I mean, because youre laying out your costs here. So it looks like it's in it's sort of a duplication add back.

Douglas Middleton Arthur: Is that in terms of normalized EBIT.

Douglas Middleton Arthur: EBITDA is that a fair way to think about it.

Douglas Middleton Arthur: We can deal with this later.

Douglas Middleton Arthur: It's expense to N y T. Doug and then revenue to the athletic so.

Douglas Middleton Arthur: For the consolidated company wouldn't wouldn't have an impact.

Douglas Middleton Arthur: If were.

William Bardeen: We can do We can follow up to make sure that we're talking about the same thing, but if we understand you right, that's the explanation.

Speaker Change: We can we can do we can follow up offline to make sure that that.

William Bardeen: We're talking about the same thing, but if we understand you're right. That's the explanation.

Unknown Executive: All right, well, with that. Thank you all for joining us this morning. We look forward to talking to you again next quarter.

Speaker Change: Alright, well with that.

Operator: Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.

Unknown Executive: Thank you all for joining us. This morning, we look forward to talking to you again next quarter.

Operator: Ladies and gentlemen, the conference has now concluded we thank you for attending today's presentation. You may now disconnect your lines.