Q1 2025 New York Times Co Earnings Call
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Speaker Change: At this time I'd like to turn the floor over to Anthony DiClemente, Senior Vice President and Investor Relations. Please go ahead.
Speaker Change: Thank you and welcome to the New York Times Company's first quarter 2025 earnings conference call.
Speaker Change: On the call today, we have Meredith Kopit Levien, President and Chief Executive Officer, and William Bardeen, Executive Vice President and Chief Financial Officer.
Speaker Change: Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call These statements are based on our current expectations and assumptions which may change over time
Speaker Change: Our actual results could differ materially due to a number of risks and uncertainties that are described in the company's 2024-10K and subsequent SEC filings.
Speaker Change: In addition, our presentation will include non-GAAP financial measures and we have provided reconciliation to the most comparable GAAP measures in our earnings press release, which is available on our website at investors.nytco.com.
Speaker Change: 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
Speaker Change: And finally, please note that a copy of the 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.
Meredith: As our first quarter results show, we've had a strong start to the year. Our strategy is working and our business is growing and demonstrating resilience amidst the current economic and geopolitical uncertainty. Let me say how.
Meredith: First, we have a diverse portfolio of world-class news coverage and leading lifestyle products which means there's always a reason for millions of people to turn to the time.
Meredith: Our coverage is sought out by people from all walks of life trying to understand a busy and important news moment, and each of our lifestyle product is in a space with sizable audience interest.
Meredith: That means the Times draws 50 to 100 million people each week looking to become more informed about the world and also to play games, follow the sports teams they love, cook and shop.
Meredith: Second, we have multiple complimentary revenue lines, subscriptions, advertising, affiliates and licensing, all of which are growing at a healthy rate and we believe have ample opportunity for continued growth.
Meredith: Third, our model generates significant free cash flow, and our balance sheet is strong, which enables us to keep investing in the unparalleled journalism and best-in-class product experiences
Meredith: Taking together these points mean we see running room in every direction and we're confident we're continuing to build a larger and more profitable New York Times company.
Now let me share a few highlights from the quarter.
We added 250,000 net new digital subscribers [inaudible]
Meredith: surpassing 11 million digital only subscribers and bringing our total subscriber base to 11.7 million. This puts us further along the path to our next milestone of 15 million total subscribers.
Meredith: Digital subscription revenue are largest and fastest growing revenue stream increased by more than 14 percent.
Meredith: Engagement was consistently high in the quarter, who leads by our expert reporting on multiple big stories simultaneously.
Meredith: Our lifestyle products, beloved by users, help drive high engagement as well. And they contributed meaningfully to bundle growth, which is a key element of our strategy in action.
Meredith: Beyond subscription, digital advertising grew 12%, which is our strongest growth rate in three years. We see this as evidence that the strategy that has propelled our subscription business is working for advertising too.
Meredith: We have a diverse set of products and categories with broad marketer appeal, a large and deeply engaged audience that marketers are able to target effectively and a suite of high performing ad products that we continue to expand and improve.
Meredith: We're still in the early stages of leveraging these advantages across our full portfolio and expect them to keep powering at revenue growth.
Meredith: Licensing an affiliate revenue screw strongly in the quarter as well, and we see them as sustainable growth levers.
Meredith: Finally, we stayed disciplined on cost growth, even as we continued to make journalism and product investments aimed at building on our market conditions for the long term.
Meredith: House close with a reminder of our priorities to the year and share a bit about the traction we're getting on each of them.
Meredith: Our first priority is to continue to comprehensively cover the most important stories with the deep reporting independence and expertise the time is known for.
Meredith: That kind of coverage resulted in four Pulitzer prizes earlier this week.
Meredith: They honored Doug Mills once in a lifetime photos capturing the near assassination of President Trump last July .
Meredith: an unflinching account of the Civil War in Sudan and a revelatory look at the failed strategy in America's 20-year war in Afghanistan.
Meredith: The Times also want to prize for a collaboration with the Baltimore banner for a series on the tragic impact of the opioid crisis in Baltimore.
Meredith: In Q1, our newsroom continued its work with unmatched coverage of the early months of the new administration, and its impact at home and abroad, among other outstanding reporters.
Back in.
Meredith: We're innovating in video and audio to make our reporting more accessible to more people.
Meredith: Users love our growing video library, especially our reporter-led videos that provide an entry point into major storylines and our audio offering, which includes both our signature podcast and automated voice powered by AI.
Meredith: on platform engagement with both audio and video more than doubled in Q1.
Meredith: Third, we're making each of our products more valuable than more people with new content and shows featured games and other enhancements.
Meredith: Already this year, we added to our suite of original interview shows with the debut of interesting
Meredith: Games began data testing new puzzles and unveiled a new friends tab to encourage communal play.
Wirecutter, launched detailed reviews of everyday essentials in skincare care.
Meredith: and the athletic published The Beast. It's deeply reported and uniquely comprehensive guide to the NFL draft.
Meredith: with a host of new digital features. That's just the beginning and we've got much more in the pipeline for the remainder of 2025.
Meredith: And finally, all of this is intended to drive a larger age audience for the time.
Meredith: That is exactly what we are seeing, even in an ecosystem dominated by big tech platforms that have generally been sending less and less traffic to publisher.
Meredith: We also continue to rank first among digital news destinations in time spent predictor
Meredith: Everything I just described shows that our essential subscription strategy is working as designed.
Meredith: with a valued product portfolio, multiple revenue streams, significant free cash flow generation, and a strong balance sheet, we believe we are well positioned to navigate an uncertain market environment.
Meredith: and we remain confident in our long-term grip drivers and our ability to continue delivering even more value to even more people and to our shareholders. And with that, I'll turn it over to Will for more details on the quarter.
Will: Thanks, Meredith. Good morning, everyone. As Meredith said, our 2025 first quarter results demonstrate a strong start to the year. For subscriber growth, revenue growth, AOP growth, margin expansion, and free cash flow generation.
Will: We reached 11.7 million total subscribers at the end of Q1. [inaudible]
Will: With bundle and multi-product subscribers, now making up approximately 49% of the total, we are well along the path to exceeding 50% this year.
Will: Our strong audience and subscribers engagement in the quarter helped power healthy growth across our multiple revenue strings.
Will: We also continue to operate efficiently, while making disciplined investments aimed at further differentiating our high-quality journalism and digital products.
Will: When taken together, ALP grew by approximately 22% year-year and ALP margin expanded by approximately one hundred and eighty basis points year-over-year.
Will: We generated approximately $90 million of free cash flow in the first quarter, including a one-time benefit of approximately $33 million from the sale of excess land at our college
Will: Over that same period, we returned approximately $81 million to shareholders, consisting of approximately $59 million in share repurchases and approximately $22 million in dividends. Soff, David Karnovsky, Thomas Yeh, Kannan Venkateshwar,
Will: This is consistent with our capital allocation strategy of returning at least 50% of free cash flow to our shareholders over the mid-term.
Will: Now I'll discuss the first quarter's key results, followed by our financial outlook for the second quarter of 2025.
Will: Please note that all comparisons for the prior year period, and must otherwise spend the
I'll start with a discussion of our subscription business.
Will: We added approximately 250,000 net new digital subscribers in the quarter with growth coming from multiple products across our portfolio.
Will: Total digital only R-Poo grew 3.6% to $9.54 as we stepped up subscribers from promotional to higher prices and raised prices on some tender subscribers.
Will: We continue to be encouraged by the results we're seeing at pricing step-up points.
Will: We are also pleased with the strong engagement we are seeing as we continue to add value to our products.
As a result, we remain confident in our arcoot trajectory .
Will: With both higher digital subscribers and higher total digital only ARPU in the first quarter Digital only subscription revenues grew, approximately 14% to $335 million.
Will: Total subscription revenues grew approximately 8% to $464 million, which was in line with the guidance we provided for the quarter.
Now, Turning to Advertise [inaudible]
Will: Total advertising revenues for the quarter were 108 million dollars and increase of approximately 4% which is higher than the guidance we provided for the quarter.
Will: Digital advertising revenues also came in above the guidance we provided increasing approximately 12% to 71 million dollars.
Will: Digital advertising reviews increased primarily due to areas of strong market or demand and new advertising supply.
Will: Affiliate, Licensing, and other revenues, previously labeled as other revenues, increased approximately 4% in the quarter to $64 million.
Wirecutter, Affiliate Revenues, and Licensing Revenues continue to perform well.
Will: Adjusted operating costs grew 4.9 percent in the quarter. This was slightly better than our 5-6 percent guidance range.
Will: Adjusted deluded EPS in Q1 increased 10 cents to 41 cents, primarily driven by higher operating profit and higher interest income.
Will: I'll now look at head to Q2 for the consolidated New York Times company [inaudible]
Speaker Change: Digital only subscription revenues are expected to increase 13-16% and total subscription revenues are expected to increase 8-10%
Speaker Change: Digital advertising revenues are expected to increase high single digits and total advertising revenues are expected to be flat to increase low single digits.
Speaker Change: Affiliate licensing and other revenues are expected to increase mid-single digits.
Speaker Change: Adjusted operating costs are expected to increase 5-6% [inaudible]
Speaker Change: We intend to continue maintaining a disciplined approach to costs while making investments in our high quality journalism and digital product portfolio that adds value for our audiences.
Speaker Change: In summary, our essential subscription strategy is working as desired. With a valued product portfolio, multiple revenue streams, significant free cash flow generation, and a strong balance sheet, we believe we are well positioned to navigate in a certain market environment.
Speaker Change: The impact of tariffs on our business has been immaterial to date and our growth drivers feel strong.
Speaker Change: We continue to expect healthy growth in revenues in AOP, margin expansion, and strong free cash flow generation for the full year. And we remain on the path for our midterm targets for subscribers, AOP growth and capital returns.
with that, we're happy to take your questions.
Speaker Change: Biden's gentleman at this time will begin the question and answer session to ask a question you may press star and then one using a touch tone telephone to withdraw your questions you may press star and two.
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Speaker Change: Once again, to ask a question, you may press star then one [inaudible]
Speaker Change: Our first question today comes from Benjamin Soff from Deutsche Bank. Please go ahead with your question.
Benjamin Sauf: Good morning, everyone. Thanks for the question. I wanted to dig into the strength in digital ad revenue this quarter. So were there any areas in particular where you saw a take-up in activity? And then could you give us an update on what you've been seeing in that business since the tariff announcements? Thank you.
I'm happy to take that good morning.
Benjamin Sauf: Thanks for the question. I think broadly now, we are...
Benjamin Sauf: We're talking about and thinking about our ad business the same way we think about our consumer business.
Benjamin Sauf: You know, we are in big categories, which brought appeal to the end user in this case to the marketer. We've got engaged audiences that marketers can target effectively. We've got a suite.
of high performing and sort of well-cloned.
Benjamin Sauf: Ad products, and we're still relatively early days of extending those products across the portfolio. So we have a lot of confidence in the growth drivers and long-term and the potential resilience of the business.
Will: And, yeah, I don't know, will if you've had anything to that.
Great!
Okay. Thanks, Ben.
Speaker Change: Fed, if you don't have a follow-up operator, we'll take our next question.
Speaker Change: Our next question comes from Thomas Yeh, from Morgan Stanley . Please go ahead with your question.
Thomas Yeh: Thanks so much, good morning. I wanted to ask about the news-only subscriber base, which I think saw the least detrition in this corridor that we've seen since the bundle strategy really took off.
Thomas Yeh: Have we reached a greater level of stability on that cohort? And...
How much opportunity is there still to drive conversion?
Thomas Yeh: of those legacy news subscribers into the bundle. And then in a similar vein, can you maybe just revisit your appetite for standalone product price increases and whether in an uncertain economic environment changes that capitalist at all? Thanks so much.
Speaker Change: Thanks, Thomas, I'll take that. So first, you know, what you're seeing there with the news only
Speaker Change: is our strategy working as design as we've been telegraphing quite some time. And I think sort of underlying the, you know, we've talked about how the, you know, there's a lot of value in the product.
Speaker Change: We're pleased with what we're seeing at pricing step-up moments. News only has been one of the places where for tenor-
Speaker Change: cohorts at the right times when we see the opportunity.
We've been asking those.
Speaker Change: Readers to pay a little bit more. So I think what you should expect to see there is a continuation of us exercising our strategy, and we continue to...
Speaker Change: You know, primarily market the bundle and over time would expect more and more people to be on the bundle so it's just our strategy working as design there with regard to, you know, price increases on single product, you know, I simply sort of say that. Yeah.
Speaker Change: You know, of the digital subscription business and of our crew growth, our crew is very, you know, very strong. We're adding a lot of value to the products. Meredith talked about the great pipeline for the rest of the year. You've been seeing strong audience and subscriber engagement.
Speaker Change: We've been pleased with the pricing step-up performance, as I mentioned, and we continue to see lots of running room across the drivers. So I think you can expect us to continue to execute the strategy going forward that you've seen over the last couple of years.
Speaker Change: Great. Thanks a lot Thomas. Operator, let's take our next question.
Speaker Change: Our next question comes from David Karnovsky from JP Morgan. Please go ahead with your question.
David Kornofsky: Hi, thank you. Well, maybe just following up on some of the subscriber dynamics, just done bundle and multi-product RPU, the number was lower quarter over quarter. I know there's a lot there under the surface. Maybe you could just unpack a bit, the drivers in terms of, you know, promo net ads versus kind of the sub-year graduating.
David Kornofsky: And then just a separate topic, Meredith. You've talked a bit more recently, I think about the importance of video on the platform. I don't know if you can dig in a bit on where you're seeing the most engagement and kind of what innovation is still available to you there.
Speaker Change: Great, well wanted. Yeah, I can start with that question about the bundle R2 and the trends there.
Speaker Change: So, let me just say, you know, overall we're pleased with that year of year increase in total digital only Arphu we delivered in Q1 and the health of its drivers as I just said in my response to Thomas's question.
Speaker Change: And I've said this before, it's that total digital only our food number that we focus on. We break out those subscriber types to really help illustrate and understand, you know, how we're using the bundle in our full product portfolio to capture the entire demand curve.
Speaker Change: You know, I don't think there's sort of more to unpack there. We've obviously provided Q2 guidance on digital subscription revenue growth, which is, you know, what we're trying to maximize over the long term, which is of course a function of both the growth and our subscriber base and our view. And, you know,
Speaker Change: Specifically to our two, I've mentioned sort of our confidence in the trajectory due to the value right into the products, the engagement, the pricing performance that we're encouraged by and the running room we see that.
Speaker Change: Yeah, I'm happy to take the video, I can't remember if you have a video and audio, but I'm happy to talk about both of them and will give me a good point to key off, which is just going to value.
Speaker Change: We're adding to the product. We are making a lot more video and audio.
Speaker Change: especially reporter video, which is a way for people to get a taste of a story and also...
Speaker Change: See how a reporter got the story, so it both gives people a way into a story that may in itself be kind of enough.
Speaker Change: to understand the story or it makes them interested to go and read.
Speaker Change: Further, and it also does double duty in showing the work which we think is really good for building trust. People love it, it's driving a lot of engagement.
Speaker Change: I'd say we are also doing more embedded video and multimedia just as part of the report. So you see that if you are in our app every day. We're also doing more short form video off platform. So we cut that from our longer work and it helps us get new audiences you know engaged.
Speaker Change: In the Times and we continue to expand podcast and podcast video we launched.
Speaker Change: I think I said in my prepared remarks, we launched a
Speaker Change: Show called Interesting Times, which is both a video and an audio show with Rost out that we have a culture show coming this quarter and we are also continuing to expand and improve automated voice so you can listen to more of the report and automated voice and the quality of that voice is getting better and I would just say all of that is good for engagement and it's making the report more accessible to people and making more people [inaudible]
Thank you. Thank you.
Great. Thanks, David. Operator, let's take our next question, please.
Speaker Change: Our next question comes from Jason Bazinet from City. Please go ahead with your question.
Thanks so much.
You guys have done incredibly well with your-
Speaker Change: Digital Subscription Strategy. I just had a question in terms of your tactics that you employ when someone comes off of the promo price.
Speaker Change: What happens then? Like, how do you manage it? Because it's a big step up to the full price, which sort of belies the catch all the area under the demand curve. But at another level, I maybe I've missed it but I just haven't heard you guys talk about how you sort of the tactics to graduate someone up to full price from promo price.
We then take in a lot of signal and understand [inaudible]
Speaker Change: You know, how well they're engaging. Overall, we have strong engagement, but if you can imagine that engagement can vary depending on and.
Speaker Change: the nature of the subscriber. And so over time, what we're doing then is asking people to pay more.
Speaker Change: when we're seeing the strength of that engagement, and so we have both.
Speaker Change: Sometimes bringing people at the step-up moment, whether that's six months or twelve months.
Speaker Change: to the full price. And we also bring up people sometimes to the intermediate prices.
Speaker Change: and every once in a while we will decide to let people, let someone stand promotion longer as well. So there's a range of pricing and we're continuing managing that. Underlying that, it's obviously what we've talked about here.
Speaker Change: I just mentioned a couple of times with our scripts, the value of the product that...
We continue to add value to it.
Speaker Change: and continue to keep that engagement strong. We'll look to keep driving daily habit. And with that, we feel really confident about our art group trajectory and
Speaker Change: and the ability to bring people up to higher prices over time. And I'll just have a beat that, you know, underlying all that is very dedicated data science that we're getting better, it's better deploying and sort of executing around and the tech is obviously getting better and better.
Speaker Change: Great. Thanks a lot Jason. Operator, let's move to our next question.
Speaker Change: Our next question comes from Doug Arthur from Huber Research Partners. Please go ahead with your question.
Doug Arthur: Yeah, two questions. Meredith, if you take the athletic digital ad revenues out...
Doug Arthur: It looks like underlying was up 5.5% if I have that right. Is that about what you expected and any any comment on that mid single digit underlying growth in digital?
Doug Arthur: I'll just say broadly, we feel optimistic about all the drivers in our ad business. We like the performance in the quarter. We like the trajectory. We're on and we like it kind of across. [inaudible]
Doug Arthur: Support Folio, and I'll just, you know, refer back to what I said in my prepared remarks about the ad business now really feeling strategically akin to the consumer business where we're in. [inaudible]
Doug Arthur: These broad spaces, news, and sports, and games, and recipes and shopping advice, a lot of market or appeal, a lot of engaged audience in all of those spaces, you know, improving ability to target that audience and add products.
Doug Arthur: That were still in early days of extending across the portfolio. So I would say, you know, the results are good. You see the guide. We kind of feel good about all of it.
Speaker Change: Okay, I think this was already asked, I'm not sure it was answered, but the single product sequential growth was slightly up. Was that a surprise? Or is that a seasonal thing with gifting around Christmas, Eddie Kamen on that? [inaudible]
Speaker Change: I wouldn't, you know, provide any more color than what I've said, you know, in any kind of given order, you can see some variations, you know, overall
Speaker Change: What we're really focused on is what I mentioned, adding value to the products.
Speaker Change: Partly by identifying areas of 10-year cohorts that we see lots of signs, value the product so much that asking them to pay a bit more over time makes sense. And we can see it continue to see running room across those drivers.
Speaker Change: Great. Ladies and gentlemen, at this time in showing no additional questions, I'd like to turn the floor back over to Anthony DiClemente for closing comments.
Speaker Change: Great, we'll just want to say thank you all for joining us once again this quarter and we'll see you next quarter.
Speaker Change: And with that, we'll conclude today's conference call and presentation with you. Thank you for joining. You may now disconnect your lines.