The New York Times Company (NYT) 2 Nov 222022 Q3 Earnings call transcript

Good morning and welcome to The New York Times Third Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Harlan Toplitzky, Vice President of Investor Relations. Please go ahead.

to conference York call. welcome quarter Company's and earnings XXXX you The Times New third Thank

Caputo, and On Kopit Chief Roland Levien, call President Vice the today, and Executive we Officer, Financial Officer. Chief have Meredith Executive President and

change remind our I forward-looking will assumptions, current the of expectations to during statements These may that this management and Before we call. like over are you begin, course would time. make statements based which on

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

a include In finally, addition, in our financial please available on we presentation the is GAAP which will have to provided measures most our release, comparable non-GAAP reconciliations website And and investors.nytco.com. press earnings our measures over at this the that, Levien. posted Meredith that after copy be will website call from With we our conclude. call the to remarks to turn prepared morning's investor I Kopit will shortly of note

good everyone. And Thanks, Harlan. morning

with largely We advertising. behind With up growth us, a our the three end multi-revenue provided in putting growth, quarter XXXX English-speaking we a operating headwinds now our the of range Even growth advancing $XXX a more with results turn slow profit progress long-term opportunity expect making profit. revenue dilution with story drive leading nearly macroeconomic Our revenue every high now we million the our for Athletic. combined We people start subscribers of than in scale. in strategy is of added and with X% the in the and the in We The the Times the and the together our XXX,XXX profit engage the quarter, overall showing we're with to that seeking by full-year differentially to we in July, a valuable people. cost are as to September. drove with out did adjusted those million was results. potential biggest strong the working. for pickup helping so slight lives sustainable acquisition results the new slowing increase subscription a as anticipated subscription most product on X%, operating in our indispensable and grew more improving quarter February. daily quarter Overall quarters the New improvement first of decline That for ideas the The world. playing continued evidence mounting that York of in of with toward and understand we model the expected, stream the and pillars millions portfolio $XXX reinforce passions, The year dollars, basis to in made I'll bundle August, becoming in revenue Times bundle, even our of makes support make in Company. a and the three net between third-quarter person and quarter in consolidated third subscriber strategy: essential lives progress our conviction on from of outlook news, their We we adjusted for in our our confidence our The steady of strategy, growth, a

and a our cross-promote QX, interconnected. begin news a our on with our products starts biggest the double you of more give what efforts quarter surfaces, percentage the bundle. also percentage starts This QX. best in we starts result bundle of deliberate was saw progress: our was taking quarter progress yet of bundle the and making record the on bundle number to third the was them to of of in for pace The net additions, sense of To

main the core rolled to Wordle news a app, app. tab added feed we out in example, and of the Play our For

Cooking across subscribers quarter substantially prominently engage our products. And efforts prospects. This bundle was of with first we and multiple the to bundle, to The new shifted market more to also the feature been more to aggressively merchandising We we it that Athletic Games. full bundle help and such onboarding has continued began the to the News, to improve part as

find current Times a The it feature. made in also with "sign Athletic We with engage easier by and for subscribers adding to Times" The

have retention. number with of Leveraging over While engagement their days, level encouraged is quarters. by to coming we're by our their Athletic; whole of drive it's early early bundle the who access; the portfolio Athletic activated bundle the priority of the by subscribers The their and our

Athletic's As and that, The we do up Athletic awareness sampling substantially in measures to large, to funnel. build hard open to increase taking sustainable a further free order of paywall audience we'll The be

quarter. of that additions on some in third slower expect We will in this time, basis did subscribers result the a as it standalone for

subscriber in here their week one value This we news-only to bundle us sports – sign journalism, we're players and cohorts more the doing bundle higher first significant encouraging Notably, of subscribers. given in relationship create few we base see than become among is each among strong global engagement with of bundle subscribers that we'll subscribers, between who true seen retention. entire Our subscribers engaging XX% engagement are to an months have shareholders. the to so, across and ambition leading is confident continued the for and in with XX%

on – well on quarter, revenue subscriptions, to crossed grew of result stepping go to quarter: by million subscribers to Times of element Times subscribers, X up discernable value. marker reflects prices, shareholder more which offers from X.X with next than subscriber revenue, action. subscribers key mile our successfully profit, As drive and million I've now well than an in The way We primarily strategy milestone to efforts just and XX.X important momentum our bundle our The have more in has the million XXXX. by in the driven strategy described, a the a now of higher XX% continues million subscribers promotional Digital our XX

as key of XX% future bundle indicator revenue In news addition, pay subscribers. as than progress strategy we growth, bundle more view on subscribers a roughly our

believe to our shareholder driver power how products individual growth also drive help from people value But are is tenured exercise We value. working our subscribers. more continue realize of take best we and to increases that our our through us bundle individual long-term more on We on also pricing price volume can biggest believe products. can to

about months. to coming We to more expect in have this say the

turn now me Let to advertising.

offerings, given were we the anticipated. was in outperformed clearly categories. The our in areas deteriorating marketers. impact For macroeconomic Group, products, and The We relative advertising. stiff audio market, guidance a our our tough the conditions underperformed. tech direct-sold unique as first-party product premium strength print strength Times the while the of and York headwinds underscores of to our appeal display believe We saw Still, a of of ad expected New like several advertising wide brand slightly the digital range quarter, media data in Overall of and there that Times value most and set performance varied

at display marketers: a wide of appeal quarter. advertising our end The officially launched we the of to of on Athletic the range Speaking

buys attracting and for incremental advertisers. a time strong take difficult it from advertisers we're start. fully ad existing is off Even up, While new Athletic good business a and the market, ramp to securing demand Times is will in to The

advertising guidance, ad continued in The we But give near The headwinds confidence our business strategy opportunity us ad in longer-term driver. the As reflected the of and expect of in to the growth forward-looking Athletic as term. macroeconomic impact resilience our Times' attractiveness a

we QX, of describing and Now, about we've from a costs. benefits deliberate part to revenue, pursuing meaningfully the having some commitment growth. areas, major talked to strategy turn let been In our cost began Savings came to of time slow now. are and for see me two

reduced through digital audience become in First, driving spend. product we've growth organic and marketing subscription as we've substantially work, effective our more our engine

while invest the slowed newsroom, headcount teams across continue thoughtfully Second, in and – data – engineering, that growth our Company. areas we've widen our we moat to

growth. a shared have well poised uncertainty. Roland. powerful, are well as believe multi-revenue we are cost materialized, we working shortly have support We're clarity execute, for believe headwinds forward model of to These strategic, And our But be Given look market I when your hand questions that and AOP stream are we over expected. with and sustainable. to through been further year it efforts we to we discipline The mid-term we and largely expect a our the capture tailwinds. to to growth. strategic with managing has we target to and our ability great I'll economics, aggressively unit that, answering the them positioned envisioned future intense XXXX we we effectively, headwinds

Thank you, Meredith. good morning. And

face suggest outlook, year third we result, strong to our macroeconomic XXXX results, quarter as said, even our Meredith with headwinds. post combined quarter fourth we a full expect As

of the Group On quarter, Times than prior The year. per adjusted Turning million same higher Athletic The year, to in diluted adjusted We the by approximately quarter, the prior million, approximately $X.X $XX lower quarter, XXXX XXX,XXX net share compared was strong of product. bundled to New period reported operating than million, losses our the we $XX with net the plan. $X.XX, at profit subscribers in basis, added in adoption million. Athletic, than earnings and was approximately company million acquisition consolidated subscriptions by higher slightly profit operating expected at partially The a lost XXX,XXX by approximately the were growth new The New our $X York in Group while in digital-only the was offset profit York digital-only Times continued as Adjusted less growth $XX at new which in $X.XX

the saw first Meredith doubled starts the subscribers. what quarter, and passed bundle in we quarter on digital As noted, million we bundle the versus X the third of in percentage

approximately subscribers. also since those subscribers our home number a of slight than mainly subscribers million clearer last data growth. change using not digital-only products multi-product more, and increases to those a two we delivery XXX,XXX print tells order by likely retain quarter picture our more reporting, only us using product. pay metric The are and the public subscribers by This excluding Note multiproduct but number key digital for X we bundle that that our with the quarter, combined subscribers. bundle more is a this one by or bundle digital-only of in made the provide reflected driven metric to in As because only investors in grew to surpassed mark of the in

access to higher The quarter, additional the the the in to are Total The primary for we a growing to digital-only from began of revenue New Athletic inclusion XX-Q, bundle as to subscribers primarily at The The this in from the number bundle second the the increase bundle Athletic, subscribers we Athletic with Times digital-only subscriptions We Group the value, This revenue as in was stand-alone action grew bundle which The quarter the for revenue quarter. quarter, subscribers a subscription The subscribers existing added approximately introductory revenue the and subscription increased our promotional late the subscription we second increases the continued worth the Digital-only process subscriptions. of a year, Athletic subscriptions amount to recorded access in approximately noted in York in of York Group. in quarter. subscribers. revenue graduated for resulting reduction of to Athletic subscription and value in in a the product third million. of which portion past digital potential in enabling believe Times enable To to of account our subscription revenue large noting It's $XXX to late digital prices, began quarter second New XX% XX% both of result approximately the new allocating have we whose driver that

our to includes all Moving subscriber ARPU, digital-only which of digital products.

points quarter, X% $X.XX the prior digital-only and a of the the consolidated quarter. year-over-year ARPU $X.XX subscriber basis approximately compared the compared XX from the decline decreased ARPU primarily Athletic. result on prior year The inclusion to of is increased to For to The

guidance spend. advertising affiliate games XXXX, revenues a flat. results book associated while to million, of York Total offsetting in new advertising X.X% domestic advocacy The effect Adjusted New in due with single offset significantly quarter one-time print. costs XXXX the modestly as live from events. promotional cohort in primarily by which sequentially costs. period. employees quarter number approximately as million licensing costs higher addition Times Group. first declines addition in The revenues more nearly consistent which and marketing our advertising year-over-year XX%, revenue last of higher lower revenue result from of the pricing Wirecutter costs was in long-term of These programmatic operating the prices of year. media with X% we with decreased XX% benefit largely Media for the the decreased period half the of cost in the at The with result approximately and X% and lower Product in due revenues prices. of lower ARPU as revenues, Times second XXXX. approximately grew were media $XX or general expenses approximately Group decreased increased drivers home increased in lower approximately special related Sales were direct-sold were a a costs New revenue work compared print cost subscribers nearly from subscribers Adjusted in adjustment. I'll Athletic, out. York were fully of connection result by of from to compared We X%. development were grew more a XX% Digital as who subscriber The delivery X% Cost demonstrates the in in Athletic, number X% result impressions the New than graduating to our and X.X% The primarily York due to in from play categories. had advertising result advertising of result production digital Times a Group Print continuing growth and volumes in delivery large quarter declines the the including as were of otherwise advertising Times Meanwhile, the growth revenues strategy product impact plan subscribers York approximately with of Ex number Athletic, of higher offset Licensing deal prior the the increased mainly a X.X% provided pronounced, approximately $X the to digital a by at revenue, were costs at better although as to growth initiatives. higher New New quarter The to lower now converting a Times increase in the for was of a elevated higher subscriber Other less in and slightly partially Excluding and power both introductory subscribers, fewer the the the promotional subscription And as large declined driven by both The not employees compared servicing to than new from higher than well ongoing transitioning below the $XX growth did home liability The development Athletic, lower multiemployer in with cost one the price ARPU with item year as approximately newsroom, and offset copy. York costs marketing offset primarily declines gains to a bundle to as to prices, advertising revenue slow of costs lower subscription of discuss due year, at the digital Group. print operating gain and strategic The of The domestic the the back of pension servicing. expenses. dollars, distribution administrative quarter, million

XX% rate of versus XX%. Our an quarter expected the effective tax was rate for third approximately marginal

million balance $XXX company balance quarter $XX with dollars of quarter. million credit to of company purchase remains the debt-free with XXXX. and cash to marketable approximately Moving available. the repurchase the quarter authorization. Share million, million company's and compared second at the sheet, third of remains quarter a end million approximately $XXX line an the The during $XX the to the our securities totaled ended subsequent the continued Approximately shares revolving $XX repurchases of under currently increase

an the cash and returns our of we see willingness return in when shares activity high-end with free value XXXX targeting XX% the our our June XX% beyond market. to of Day capital compensation capital impact guidance to repurchase offsetting provided of reflects $X.XX opportunity we to exceed Investor are flow. at our continuing shares of together share-based Taken attractive that view the quarterly expect dividend, we The repurchase the our of the payment

evaluate of will capital Within to for capital our the context prudent continue opportunities we return. structure,

of note weeks XX Let the me extra conclude on of impact compared XXXX with that reflects as our the for outlook with of for The the does Times fourth Athletic. The in XXXX guidance consolidated are New The the in morning. prior same Please XXXX of that fourth our the release York quarter which include guidance week The Athletic not an Group, this fourth published The period acquisition outlook of results XXXX. Athletic. to section the earnings of in the effect on company's included has been consolidated of this Comparisons the we to of quarter our quarter

Times macroeconomic Other the quarter fourth York be the increase compared with quarter was in on New technology compared subscription to Group, of revenue challenging conditions, XX% digital-only comparisons the year, low-single-digits. top especially to largest fourth due approximately ever, are revenues the increase which be to digital expected to Adjusted category. with expected lower XXXX, approximately approximately with revenues The revenues XXXX, quarter quarter increase XX% costs are in mainly the with expected last operating flat digital and advertising of are XXXX. our compared to to to expected overall XX% subscription of For to of fourth Both are total XX%. by expected

product digital we uncertain at the investing moat, that continue areas strategically to like costs in macroeconomic our development. environment, while and closely look Given journalism widen

$XXX and $XXX updating full for further million for between Given million. and guidance and we year the our quantifying AOP our range are performance outlook through QX, to our September

this to our thoughts. guidance the backdrop, feel some updated soundness with final And turn our for of I'll macroeconomic challenging we strength reflects model the back Given that, subscription and essential Meredith of it strategy.

Thanks, Roland.

the market takeaways. open and for drive with bundle, line We're to Q&A, which addressable the more we Before our better our ability revenue. few underpins reiterate key let making volume great a me progress and penetrate

and grow Given strength subscription-first, already to our we ongoing growth. enable slow will model our confidence in happy best us to for cost business. aggressively chasing build with that stream able investments up the actively a headwinds, open it believe Even to that, will tailwinds been the be multi-revenue And our questions. to larger, we'd profitable amid of made, we're more and And us profit. we've macroeconomic position we've the strategy revenue

Instructions]. [Operator

Our first from from Thomas comes Yeh Stanley. Morgan question

really impacting or all maybe macroenvironment starting appreciate about really. I Can this see bundle the on We're advertising adoption across to talk color the on more a broadly on as uncertain the the bit increased on strategy. related to a more space the growth ARPU churn you offsetting more not shift side, or you there's acquisitions. towards selling subscription bundle, an higher impact whether impact

net we typically, uptick I seasonal relative the similar. think, XQ, XXX,XXX to the sequentially was XQ. see in And adds subscriber

ongoing product there. noise if to some the wondering is merchandise additional you Just causing changes how the

and, you'll say add few you a Roland, as I'll things see fit.

on The both to I'd as the more Times very, we've to on things very impact back long broadly. The environment ad we than have the say first been as history, been the doing have tended changes thus if far thing case that's And macroeconomic business. is subscription look say business our in at

history would what that's So suggest.

Typically, add appeal do we year-end the for on continue medium target we feel we marker, mile the XX really a part good point it's to the news as say, next and real about bundle. on in well. the in acceleration and but other of that the September. But And XXXX. track bundle as we itself, making the that think subscribers in to general, going to people pickup news have million in have quarter, in would neighborhood number will we we're August whatever everyone slow by to And of to term more remind just further we XX% the also progress the far I'll for is appealing things did, well a our we're net ultimately, as continue penetration now As be the strategy. pay believe and summer, of We it, cycle, pattern. I saw very number in just I'll people. somewhere of

the add that would the The didn't one thing side signs negative I business. we see any is retention of on

had matter we was As it than recently. of a better tick fact, seen

So about were happy that. we

little might bit did You that the and a that. see expect in from economy, of to we cancellations not see

We're to leverage Roland. expectations ability deliver for some Does starting follow-up on on model, mentioned. into your the the environment a expansion in nice you advertising view margin as as change the see to Just next year? operating

those this of reason At a expectations. to come Yeah. point, strong. still think the off We core business see don't is we the

to mentioned, been on a You've quarter strategic able into side, future be that actual on seen follow and Meredith we believe of as quarters. side. this good And will that illustration the return through we've what the And the we to do expect durable. cost cost to be

So still about we that. good feel

advertising I'll that reflected everything in suggested. anticipated we've seeing we're that's been just in largely add what we and

comes question from Karasyov Vasily next Research. The Cannonball from

to that starting And on to a that predict wanted all to so, were if you talk remember in kind the of what ago would into we why? of the it quarter. or expectations trends because you subscriber middle you little that? for years quarter do Has your couple digital was of like And about and a hard your growth now now a you what acquisition earlier business versus just when visibility look I ask even retention based changed? have

things. of couple A

Thomas' of said, long long point was said the we churn, do also model see remains last can now, year, control lot going of lot see think our to quarter question of change don't this to at visibility we feel product, like we a for durability we at talked And that drive of product we things when of levers, news quite that increasing a ebb subscriber well. we've and continue so one change. drivers. year two far. years number a maybe ability few and as sending felt mentioned a this And a or thing to big different now much where seeing linear the flow. quarter product really things is it We've needed point lot fair was how as to such. you're really the think to it of certainly seen news that on of some of don't factors, would which exogenous It And also were of underlying from last sites. us gives The year I'll revenue from We good driving was years the moment. the leading enhance about and good means manageable we've on storylines we've churn, getting of control kind our feel that kind platforms a good. the more But big a been we churn What past And two pretty any be we there, And a you're cycle. guide is things big audience and the of are level, have said about track The the we the talked net varied and that's different on – that works. going over that year And greater audience that got don't about to just kind very anything widening about cycle stories. we've make working. keep change. about lot as value we as feel sense exogenous set, really And the we to we're new product expect over this less is is to audience. adds amount subscription most in do That's pretty and Roland away about ways interventions but I'll in we we adapting changes a shifting – kind the say differential we the reasons. ability key bit suggest that had is because part the ecosystem. a I'll sort that's I variability what which control, tech engagement, pattern as been to some of quality record also the this also itself changes. good indicator at. quarter. important will in the of importance there's that set then to through the to very, And of our sending And Obviously, the a to in of they much that

Huber question comes next from Research Arthur from Partners. Doug The

going in adds. follow in Two quarter, of of Or I've questions. media you year strength the kind a on big forward? contained Roland, got of the some XX% a to ago? the then expenses drop funnel net third that the up that is the And you just there expenditure because is that sustainability feel can keep

get the we've the a It's the we to XX%. made where marketing. But think the contribute to much that I we've quite used of the improvements been are some work comp though for while to point predicting believe did investments the with now we've more the a do latter, at have starting pay made really product off are there we to done in to paid that product, the we

So we forward. the this we'll sustainable completely approach going and kind of take as that do see

working that's quite So happy out. about we're how

digital Or onboarded about some that an benefit you comparison? way when does million. you're the it's like million. X.X The of include Is little that apples-to-apples bundle? just The subscriber under Athletic, confused Meredith, X.X I'm now, a the reporting it looks was number that. on

access access of the kind of that's been all-digital have a on to bundle The our current and huge engage. the to subscribers Roland the include short The and focus, them Athletic it does area activate getting about getting to answer reporting. subscribers may then benefit But is and say of more all specifics

reporting, the is on who – access was Athletic. everyone that has paid who and Just has subscription to The access

at I the quarter. subscribers of enabled of very a get prepared quarter. remarks, access The large of this happened But to our existing very That last as number it most So, in to happened my mentioned bundle we Athletic. end

of So X quarter. you first see have into number over we now this full number so is bundle a But the the bundle large on added and million that folks subscribers.

So there. that is the big push

point. Just you as I loss guided that of million for well a that at Athletic, The XXXX. to when you below That running acquired plus Meredith, fair? a quick $XX looks this like follow-up, you're think Is

Fair.

The comes from Morgan. David next J.P. from question Karnovsky

you Meredith, the bundle potentially drive increasing your in remarks, to products noted prices on uptake. prepared standalone

something especially hitting year think you now Just just is Since interested profit, you're the One know like weaker a week to about fourth it of to operating period? benefit adjusted as execute extra the quarter? that potentially that, the Roland. how we're possible for the to of when's right kind terms in guiding on time of quantify economic

thing first way that the think say value, about shareholder more value. is, volume believe to to best broadly, The create we we continue when to growing is

way grow approach we're positive and and So, and other say strong of period measured history realized we're here and what to are living rises. we of inflation what both testing I'll paying price of doing are a learning to price. call a volume to kind through inflation close effect. attention prolonged what companies taking around a we've got optimal the always now I'd looking for is and But

And some with increase years will couple of now, ago remember, think, news, we on a that Roland. price did a tenured I

most who the to two tend take bundle reasons, how sort do to the it, is are products do be way out to to individual and the And compel the tenured really also we're optimal for opportunity our tested that. into the because out people the figured there thinking So, now, ourselves, value that across an of subscribers asking product. kind that's ones way of of to getting

that we as that volume figure our we if price, So, point out find through work can optimal and share we'll way more. and of

question adjusted $XX to David, to worth your but week is that week, able ascribe week, million about to that the not about profit XXrd the think to I perfectly an think it operating the XXrd about costs is we're basis. way on

comes Huber from Research The next from question Craig Partners. Huber

changed have how a say, question. bit basis, talk a you just versus, further year might digital have now can ago, on engagement products Meredith, via first my little you is like-for-like a about that

while on quite are about engagement I'll And subscriber the we say quantify that, it. focused feel across broadly don't just portfolio. We we intensely good

XX% the described but said, we've on to far, model the but as engagement to I've subscribers that getting think bundle to kind important and from is broadly than on ways very a and level is news volume next on the it. and to to people I'm we're better. on the the we're And people bundle – bundle engagement that's grows, And engage XX% of continuing focus. we're using everything described, good, to The able important better why is important even driving that's like, huge is And we're subscriber and Roland you our kind into been enterprise we've of we first bundle, base bundle, area we to the mile hold of pleasing get – obviously, all to it again, doing priority telling something That's see Athletic continue get so bundle as I'll marker to perspective. of Even more say a the subscribers.

just good these one plenty There's that feel that in the and feels say to bundle, got engagement. each I'll feel ecosystem, thing. products don't Within control say to across good. about record drive And audience. a of to subscriber stuff of and track comes And to adapting way we continue confident get broadly of people I'd There's engagement. a the we still lot we've So, then good bunch levers back all whatever in more product terms have a of to there, our in overall platforms but we come really

real questions if quick, could. I two other My

chance have to, you journalists How $XX your you here, potentially program. Roland, buyback are number left about million here? once you beginning your upping about and share year? Is thinking question, my is versus, think the any that? size the significantly also, could, we as where dividend guys you And that nitpick newsroom then, if there now, say, about your think, management directors, quick forward your capital exhaust that And wanted of team you the And of given one if exhausted on board pretty to at of quarter talk obviously, can mentioned order. your Are sheet. the balance potential very I in going increase I clean well. is could that you, returns in

questions. first I'll take the

policy board. would and So, our would have return that say don't might capital a we be conversation we I moves about the with prospectively make the a to have more lot today. it

to which I be bit think last announced of a think our able capital to step to we showed I return a shareholders. think positive made the and shift was a moves we philosophy, February in

newsroom having of bundle thoughtfully year. I'll Harlan, to I think we've number growing we is across macroeconomic we've to I as We particularly a disclose across the product beyond we a Roland. our the environment, the news, growing happy forget believe been long what think I'm growing it's experience current to invest newsroom. said but question, about the now a investments, moat X,XXX And first take and human little that around then the this continue is but always valuable that breadth those for here. differentially into Maybe time, products. I a conscientious now. But is and of modestly. very in bit say, X,XXX

closing question-and-answer our Harlan Toplitzky conference to back I like over concludes for would session. remarks. the any turn to This

you morning. next for Thank you to us again to joining We quarter. look this forward talking

you The Thank conference today's attending now concluded. presentation. has for

now may You disconnect.