The New York Times Company (NYT) 8 Feb 232022 Q4 Earnings call transcript

Good morning, and welcome to The New York Times Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Harlan Toplitzky, Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to The New York Times Company's Fourth Quarter and Full Year 2022 Earnings Conference Call.

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

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

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

addition, presentation will include GAAP In have press on financial provided our comparable available release, in non-GAAP most our we our investors.nytco.com. measures, website which is reconciliations and to measures at earnings the

be conclude. copy shortly note finally, a posted the that our will And of after investor website remarks from we prepared please to this call morning's

that, turn will Meredith call to over I With Kopit Levien. the

XXXX understand morning, essential become first and to seeking every everyone. year Harlan, for world. the to subscription was Thanks, strategy executing the of and with the engage person our English-speaking good full serious

the nature cost our expanded multi-revenue the We're proud strong portfolio, product which stream our of differential our economics results, and value management. unit model, disciplined of of reflect

improvement follows progress basis to than drove palpable more and a journey by year. I'll more XXX XXX an basis that At point a million, few a by from adjusted and York building profitable margin Times margin. improvement XX% guidance and our highlights in New $XXX adjusted The start profit profit in improvement operating increase grew was point well the on reflects XXXX company. operating our sharing of XXXX. ahead Consolidated and over larger Notably, we Group,

dividend a profit challenging quarterly midterm repurchase target increase demonstrate our our nature of authorization share dynamic give the confidence consecutive They and for to model results also new to even grow these return, payment. to capital new a the us proven a fifth and announce the market. Moreover, annual in

digital ended XXXX. despite million net subscribers, industry many the second for of with with others year, same impacting over subscriber moment. blockbuster our additions ever digital for X result adds best including achieved We We subscription million a X.X year XXXX in at pressures that contending our recorded just net only We the print. the total behind

With metrics in there That's strong of for XX% course grew both new we with subscribers increasing taking proved bundle the bundled of more the international The than bundle over where proof digital saw well in by products. the of than each news XX% it significantly year-end. passing subscribers accounted year. prior on over Both demand share highs starts the is the subscribers year-end of by record year. quarter more successful volume and reached as new bundle. We a the XXXX, that total our roughly lifestyle bundle and for new markets Xx the choosing of of in

the future. portfolio, our continue and Spelling that accruing news efforts to like benefits engagement strong to seen between on we see than we've the subscribers we've aided yield as basis. offerings by such into across from we has And increased enjoy help a subscriber, uptake sustained higher and app. highlighting more Bee those roughly weekly given in That's retention, even our our The at to news-only points subscribers relationship XX expect its XX well percentage subscribers among bundle towards the been games, bundled engagement discover the shift as

acquisition. here part the become ahead finished long the the playing recently The of expectations we to year Athletic. We're Athletic with of adjusted the We a profit We point X-year acquisition passed assumptions outperforming game for at our of The anniversary operating of our ambitions shared for as Times overall on Athletic be that leader increasing its awareness focus journalism. The up and sports funnel building paywall opening global end, our to Athletic widening continues its bundled, hard The The in engagement of further by journalism. significantly audience To a for

We to games. Wordle, substantially to people continue year products of also introduce week tens to of each and millions our contribute the with which our players to Times' engage delight finished hit first game them other full ability and and

And on basis, a full in advertising performed difficult well relatively increasingly year market. an

with Times revenue Group York print, revenue. in advertising offsetting a in New X% digital grew strong drop slight results

promise. to broader build ad a are early on showing efforts Athletic business The Our also

subscriber share the bundle. turn higher added QX, par digital roughly of with year, we grew to as a subscribers, in the quarter. noted, tenured to I'll In on continued expectations, the the Including ARPU transition digital Digital now second subscribers to the but the XXX,XXX consecutive for consolidated with by Athletic, going prices. mostly driven quarter higher results much sequentially early net our prior revenue in quarter. The with grew the line of

positive We that paying expect prices. throughout as ARPU more continue to trend higher XXXX subscribers transition to

quarter the a range value digital and enduring and appeal to in expectations print, our wide data demonstrating the our and first-party ad of marketers a products even in the environment. premium exceeded both macroeconomic brand revenues Times in of the Advertising of challenging

expect which term over the long still advertising, to was in QX. decline Print notably we resilient

revenue a affiliate underscore fourth advertising, signed experimentation. XXXX. many distribution, a by as the shopping Wirecutter, agreement season. business, the multiyear end content record Our starting a holiday revenue financial enjoyed And our successful year, at we results benefit including commercial benefit begin facets to product highly this for which of across and to of of see even with driven from marketing quarter power We'll in having stretches beyond the quarter Google deal subscriptions also diverse and we of the sources and

fourth expenses to in the now turn quarter. I'll

been experiences about ready slow investments for quarter leveraging and in the done being to begin a now the for growth. digital the Over making we've second in cost year, journalism we've and years result, our a last talked row. as so We've product

factors. third As quarter, the largely of with result the this was two

digital substantially spend. marketing us subscription driving at and more become through product allowing engine audience growth effective our reduce to organic we've work, First,

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

headcount believed we reduced strategy. areas affecting We our do could in also so, without a where growth few we

Our strategic continue us execution clarity going can well confidence that forward. we manage to give strong and costs

XXXX looking I'll to ahead and close beyond. by

the entering meaningful year our XX are momentum toward year-end We with by goal of XXXX. subscribers million

through have to While in including much there to patterns current emerge stronger. and ability news we to remains is that we on shareholder getting the traffic challenges pressure varied from macroeconomic the but linear, advertising, opportunity There have to short-term we've and our path platform cycle unlikely uncertainty shown strategy a and be environment, our manage our conviction value. more market shifting in and tech create deep a

to in end, press into advantage. that two areas our big further lean To intended XXXX, we'll

First, growing share product which portfolio widening drive and will we subscriber expect expanded audience bundles, of are focused on pools prospects high-quality over and our across time. our we in growth and especially news

on Second, what bundle and increase increasing already tax. tenured from and our we far we ARPU two, subscribers first price, see price uptake experimenting that promotions on our product price individual at full are increases individual with focused intently the on on we I'll like I've subscribers. note driving progress success so for to indicated through continued transitioning products

largely influenced beat opportunity set Last anticipated. profit in Those profit tailwinds we me on drive by operating headwinds we potential have as midterm that this Even that the for strong materialized headwinds. you'll noted to and on expectation Building are as every context. shared adjusted XXXX, for June, represents several target still, the base higher all we base, seizing let profit recall, was our capturing Now we which, year target. focused performance. that aggressively we

to time years. adventure his this This you'll Now before X turn and new my last setting tireless hear professional and to grateful next he the I'm mission settle last I I as as I and to well few Head the Roland, him the about family say formally for his into commitment in of Times Harlan Relations on West from work it for who in want his Coast. business, Investor words colleagues is two life to served over ably Harlan Toplitzky has and on call. this for a our wish a The

before friend, a Roland, retire position Roland plenty off my closely is arrival will acknowledge together And properly. made send for I to just we're In whom the turned, to time want us year to have of the the long-time colleague, that Times the CFO, well We'll working midyear. next and we well our underway. search announcement meantime, of for

to Roland With hand take your over it that, back shortly. questions be and I'll to

Meredith, and good Thank morning. you,

York Times year. As Meredith losses said, in year, million very versus more today. reporting at offset the the growth than We're operating This we Athletic. for reporting results annual are fourth profit $XX an last pleased New of million The The with means of $XXX increase adjusted the quarter Group we're

It's per Adjusted and quarter. noting that $X.XX, This amortization earnings of acquired full periods. EPS diluted earnings the $X.XX quarter in was to to share prior better Turning of diluted assets modified across share per the than of year. impact was worth the adjusted the of the comparability to year. improve intangible $X.XX definition exclude we've the the adjustment $X.XX for

operating the million approximately while same increase compared $XXX The $XX over New the year million operating losses profit approximately $XXX than million. XXXX operating Times an prior Group quarter, $XX in million. Athletic profit million, Adjusted of adjusted was adjusted had higher period reported We York in the of The at of by $X to

the products. by by fourth digital-only continued to the increases of bundle. our approximately quarter, in subscribers new bundled as XXX,XXX grew the XXX,XXX upgraded who number and the new new added digital-only adoption Meredith net subscribers the subscriptions, strong of In growth quarter, subscribers by and with, net augmented company noted, of subscribers, in number bundled digital-only The bundle driven multiproduct mainly existing to XXX,XXX

to revenues. Moving

the and release. and The reports year result, as quarter included GAAP revenues its fourth days found company can a compared XXXX. on adopted and extra with XX-week A fiscal fiscal of the release reminder, published a be morning has our this calendar reconciliation change as of on XX a estimated X earnings to XXXX revenues an basis. both As Page a earnings

today on impact comments provide additional exclude the to the revenues estimated comparisons. of X My like-for-like days will

estimating is subjective. impact the X of cost extra the cost However, days difficult more for than

the of grew in nearly and the in introductory $XXX subscriptions. large subscribers from new of growing revenues digital-only to year increased million. as subscriptions promotional with subscription the subscription number a quarter, whose Athletic revenue to prices, XX.X% inclusion the subscriptions XX% of past revenue we've revenue higher the approximately Total subscription result Digital-only subscription primarily graduate added approximately standalone

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

the quarter, to subscriber digital-only basis, early ARPU from benefit the delivery prior ARPU Print due quarter price of the decreased subscriber quarter. volumes points to fully first digital-only dilution acquisition nearly copy. a lower the single approximately declined home increased to prior year XXXX from X% basis the offset revenues sequential On not our both in compared did home The subscription X% delivery as For compared increase and Athletic. XX

estimated was X.X% of of total Meanwhile, almost The from at The the advertising the quarter. XXXX, than revenue. Athletic the print the X.X% by New direct higher Again, X more Times services and driven more excluding approximately impact than lower revenue was advertising decreased advertising advertising days, in addition category. by primarily creative X% compared the York as revenue Group in Digital sold luxury advertising with declined growth by offset revenues higher

in in result which from and entertainment basis, advertising also also entertainment and issued advertising categories. from the revenues X Digital a guidance the days, sold a of categories. performance our the guidance fourth advocacy quarter advertising impact and both print exceeded GAAP luxury quarter. third exceeded advertising the On better-than-expected Print largely direct beat the in digital and expectations we additional includes as of the programmatic

the revenue approximately licensing revenues and the Other a approximately primarily despite expiration agreement. revenue revenue, prior X.X% million Wirecutter compared affiliate of live result higher of the higher to $XX Facebook increased licensing event with as year higher

guidance in by All quarter. of XX% revenue the this revenues. due Wirecutter grew more was affiliate better-than-expected television which lower partially to from by Other offset than revenues, outperformed results

XXXX, plan approximately while to approximately X% X.X% Inclusive Athletic costs higher York the Group results extra the of by cost year. at higher. were half associated compared costs The with consistent growth of the These adjusted primarily of New with in days, addition as with costs on X due our in Times slow to back were the were operating the quarter The guidance

print a the result discuss York Times increased impact raw growth New cost from days for higher employees in number as approximately revenue newsroom now The the in of Cost the costs. quarter, I'll the X additional who XX% Group. work drivers the and material of in of the

XX%, approximately was as elevated of due year, increased in costs portfolio. decreased which period growth digital to and with below development a expenses a spend. our marketing approximately development largely Sales improving X/X product marketing $XX million, Media lower expanding of product were Product of and costs in number media last expenses. digital result approximately connection employees the XX%

And by of number years, general due to business approximately offset growth with in onetime and support year. needed accrual compensation incentive and enterprise the last employees lower XX% building partially costs administrative technology compared to several an a were by in higher the costs last the increase maintenance over costs, our as higher

intangible quarter: We in roughly multiemployer had connection plan and company's in two of pension million charge A $XX.X withdrawal a asset. with the from million special items impairment $X an the a

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

consistent an approximate year-end XXXX, million in general performance the light funded XXX% result in the a of surplus. largely status strong qualified XXXX. ended we with is the $XX Our plans This reported funded XXX% at with year market pension

Moving sheet. to the balance

tax cash debt-free our worth Our a the with the approximately change the line ended credit quarter flows this that company million at XXXX. was the and securities deductibility XXXX $XXX by third approximately million affected remains year. expenditures. $XXX $XX that generation The with of in marketable $XX past cash an revolving estimate of million cash and adversely resulted It's this of compared available approximately quarter development of noting lower in We research in balance increase million,

years. over We these expect deductions X value of next to the recapture the

fourth the million, shares to of $XX end the purchase to quarter. the approximately quarter during and the totaled continued repurchases company Share subsequent

the our As XX% cash have our our at cash midterm to to at to announced while updating and will target shareholders, to to free shareholders model, strength of June continued our free us business. least of flow Investor We in now Day. business return confidence of the thoughtfully which maintaining aim noted, allow of in Meredith capital the we're the capital given the balance XX% flexibility sheet to cash-generative continue invest to more XX% of return we the return flow strategic nature

million our existing share Directors of target, Board authorization, increase is addition light this the in under to $XXX return capital updated million to quarterly a approved share nearly $X.XX per remaining to in which both has And repurchase and dividend our authorization. of $X.XX $XX the

quarter Group New guidance with Company. for Let The me in XXXX Times York a X the practice in outlook which of calls change consolidated conclude This our to first the for last York Times in the only. represents quarterly provided I New

now are We quarter this in Athletic first the with correspond XXXX. the making our lapping of The change of of to acquisition

and the quarter the first As XXXX X company a reflects February X, result result, as Athletic a The of XXXX, months on The Athletic's quarter. acquired approximately reminder,

of to of expected digital to compared overall increase expected digital-only X% Total a digits compared X% first low first XXXX, the in decrease the are strong approximately revenues macroeconomic to to and with to to subscription XXXX, advertising revenue Both in the XX%. single conditions the due subscription XXXX. increase to quarter and with expected XX% comparison with are mainly revenues quarter first quarter

digits. to the Other in revenues and expected X% of by expected the quarter are to costs operating Both X% increase increase adjusted compared XXXX. operating are first with costs approximately to mid-single

half with to compared the We this first second quarter growth expect slow expense of guidance. the year in

happy take to we're that, And with your questions.

Instructions]. [Operator

question David comes first from Karnovsky JPMorgan. from Our

midterm capital you updated to a operating maybe update just haven't a this, the background Meredith, later, to Can you bit, on discuss year targets. than the less the return revisit program. your

better allocations and of that understand increase the to dividend? you're confidence to you business what buyback seeing to wanted gives Just kind the in the

-- expect of of the just of growth kind you'd willing cost in now would not or half in grow year. sort back cost mentioned margin say few dropping a And then the sure Roland, if I'm you be to XXXX? to overall

Sure.

We and detail strong in we had that. think add like answer, our more update execution. But and give first is is we're real of on confidence We itself think strategy. one. seeing, return one strong a the short year just you can Roland, what a I a year model to I -- which may very durable reflects the a strong capital

really cash to the I doubling And increase percentage the mean, that believe shareholders. want for the just we aim the to minimum we at we're return I of pleased flow this to return in illustrates Well, to capital time. that to that confidence return shareholders say free business and us to real desire

both announced the increase company's new balanced thing capital. levels And I'd and the approach the last is say share I the we authorization to the purchase reflect dividend at returning guess

-- question, second And to to a got believe. I'd say think, our just increase I I XXXX. cost your aim what to expansion, like is but year was to margins in related margin modestly David, this cost we

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

to things. extra quarter. $XX Meredith, $X.X seasonally Athletic the annual of The run million towards that's Two a strong fourth quick you days. this million a evolving quarter. did according It's advertising But rate. I in realize had table

to have You Is pleased that that. be somewhat statement? with fair a

I'll off we Athletic I'd we that on, and like optimistic Athletic, we're We're be And about start. just about on are far. giving ads as The The and to could see basically on real what -- ads driver I so excited a affirming of but go promising a say, advertising.

advertisers kind I Athletic mean, Is there of or any you're what I'm attracting? -- any but advertising can the time, contours of type The around on of all you put what -- type

see same are kind and September, advertisers, but -- different one wide and Times in particular us two get giving different the from advertisers. a of had those we One, days buckets. We Roland of The to ads we the but we're great are we targeting campaigns with of And That's say really to pretty I'd Harlan base question. nodding. people. The campaigns, early there a pleased things got in some the Times of think advertisers I launched The Athletic, has

one. that's So

there's promise as just there's then Times think get, a around our we and sports went just of And built of you and a who that a former very and Times build The all feels would business with couple head it spend real advertisers and category whole of sent who him, and ads necessarily folks Athletic The team, say And we well. two, as out doesn't money there of over know, I they've from The a promising. lot to

give Athletic very small -- technical was detail. when I'll a That business which a ad kind acquired audio The did of lot an one The podcasts, They of great. have largely more Athletic's have you we it. business. are

You should them. listen to

to And is a imagine have we so, can building of trove a kind including rich business things and the here all like just great than on what we're more meaningful done with canvases, display. display with that The The with Times want the ad premium you run do of marketers first-party partnerships building something Times adding business, and data we've

You we're Times, at can we're The Athletic. to all good the that kind imagine, of and that bringing at

just then, sort Roland, And question. contextual Great. one of

In does of bundled multiproduct kind down How is as Athletic? of terms how to people million, a there from what much is how print? that of X.X much number comes of going at? number break mean of terms are give in of that that I way this subscriber The to some color

Yes.

of exclude print. changed first the all, I quarter, of to think definition So that last we

number. exclusively X.X million So is exclusive that a -- that digital is

the level first set. So thing that's to

as and have those how see we disclosed, many have subscription, And You've their folks news track also can how you of many categories in subscription. increases folks other subs well. got you'll in Athletic that their two

a So count well there a as as bundle will standalone.

the news else. that of a something they least obviously, in at entitlement majority and the So folks have have

And that's piece to that fastest far just the growing is would bundle. that, the add I So biggest of chunk. by the

Okay.

you included call it total So multiproduct to print. That subscribers. used

You've wiped out. that

You've cleaned that up.

That's up. right. We cleaned that

from comes Vasily question Research. from next Cannonball Our Karasyov

seeing kinds you headwinds and to past of the how wanted in on to would detail were but you trial to or recessional, color and it, going in you this it you Meredith, touched behavior talk to through subscribers subscribers are inflation, I that. So that. retention strategies, want what prepared adjust practices you over your and stuff that in your -- whatever more ask Are several in on appreciate call behaving that macro some you're remarks, quarters like finding we acquisition surprising your any strategies? causing to

energy we're subscribers think like engagement, to great the really front seeing and gone to well on not as my of engagement huge And put gone resources which us. lot to say we of I deliberate or with us. people has We bundled much if subscriber experience And into Sure. see. we well. intervention other question. the Subscriber on things that why potential subscribers I'd Broadly, and in focus were answer surprised is, subscriber what area was is a were bundled get part it's if more, they of they so new a subscribers do or XXXX,

really my our building the bundle new also games, And in you're second understanding alluded and of additional drives engage behavior. engage that you or I product, you've cooking Athletic are We buy a you -- with The with if to news, a also that that versus with if you so it's is retentive or engaged a prepared what engagement subscriber if remarks.

energy well. would driving into executing put has gone a lot and and we're on that, So of very I that say, focused

broadly, think now. far, to focus, churn able I hold to important have level. I'll a add I manageable a maybe a this to given further It a little to been good, so But think at ago ongoing bundle I And base be role we back we it level. add because that. keep in important -- year the so and churn that. we've We think quite to the was said you're a time, at size It's But that an really of manageable be done it. strategy going to even story. the just plays net the will poking

comes question next from Our Thomas from Yeh Stanley. Morgan

implement experiments that from more positive around stand-alone And these individual sequential trend include you what color helpful? products? would digital continue throughout some be subscriber you're planning really Meredith, for any on that 'XX. a you expectations to Does a ARPU there cited mentioned change from pricing perspective benefit to

And secondly, trends the then the of ad just on any XQ. into drivers color

I low same in days. headed you extra as the the pressures be up stayed updated macro seems be into we than months, the the Has excluding core single or great? think of last XQ, cited down that picking digit better sequentially to kind that trends the few would as

So can I all I that. think remember

on play transitioning So there here. going be of continue the One successful subscribers are is interim the at model ARPU, that's story things a few here. promotions to part to from at That's a well. we huge And and obviously full and prices.

And driver. so, one. big That's a that's

than to Two, And bundle versus that higher is sort we're I'll individual price. is of price transition going the just through a the individual to to on as pricing well. the power And itself, a transition point, of subscribers every remind assumption the on expensive that bundle time, full a carries of even promotion. product prices products little the bundle over then, you more course, promotion, at any

as increases stand-alone the a so portion the to to population last individual other prepared I said to price sharply. what full go of effect the see. news question, more transition And positive of has products. you're we since the to well. have one, Two, asking ARPU. very And So market been three, your continuing we on more bundled Yes, like tenured think year in then uptake the in end and remarks, who subscribers testing price are I we products,

So experience far, you, we've got here. I'll remind just

forget always or is this I 'XX. 'XX if think I

a XXXX, we did price in major think increase. I

of model a role one as and that's play tenured subscribers. of is first well. went doing ARPU went And done us a subscriber launch for First improvement, year. we're and and all rigorous that, And about we well. And pay this news it had in focus test kind we what should very I monetization here real since for And that way. that

think that's first So question. the I

think ads, a to we've strategy within but really market earlier, from complicated differently -- this One, in fare better The On question us. cycles. but The the market, goes Athletic, the Athletic and benefits categories right got and a categories, things. Doug's few It in tough range that think I with market, we before is in look, Different a even I helps of it's Times a ads. wide play

For fourth other example, strong categories and the quarter weren't. was luxury in

the general, marketer really the thing then wits is of to that help Times interest offers, environment and strong And marketers keep that the ways helps target I'm sort first-party the So a for a just I'm our in powerful premium saying really benefiting us. us. is in of with which -- very going Times data body growing can basic privacy-forward

the think just model advertising. enduring I really are in strategy and So the

Evercore comes question Ashton ISI. from next Our Welles from

Should media Quick in but they expenses. below question 'XX? seems XXXX, rate. on that dropped also like that spend, I going some XXXX elevated it run get marketing were elevated XXXX we the expect with they into forward

products journalism marketing reduction enabling continue product improve the we plan. the the reduction, over development, time. digital So our making that quite been the a And always to let me to that part market some in talk time spend. spend our we're marketing that's and communicated a of We've in our little through our enabled bit about that that. as investments has Reducing has in for

this there you about quarter a that I forward, vicinity, we where in want can Going spend to think it be think some may brands.

rate the on I always think, the see table. for that that's So run did other But future. We typical pretty you near can not a in that, than do QX. this,

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

the morning, again quarter. to to forward company you and you talking joining this Thank next us looks for

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

disconnect. may You now