The New York Times Company (NYT) 7 Feb 242023 Q4 Earnings call transcript

Good morning, everyone, and welcome to The New York Times Company's Fourth Quarter and Full Year 2023 Earnings Conference Call.

[Operator Instructions]

Please also note today's event is being recorded. And at this time, I'd like to turn the floor over to Anthony DiClemente, Senior Vice President of Investor Relations. Please go ahead.

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

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

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

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

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

we our investors.nytco.com. website to posted press to slide a earnings relating at on In addition our our also have also results, release, presentation

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

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

Anthony, person engage XXXX essential strong for Times curious for The be understand to power was showcased world. strategy subscription everyone. and the good year that the of every a with our Thanks, the and seeking morning, to

so provided report of improved people, news range Our journalism indispensable many the original full to across providing human experience.

in faced year drove for our which penetrate industry We large a multiple millions to a tough day, ability people cooking recommendations. every By performance delivered and news shopping of others and to putting The this serve sports, persistent together Our games, and we demonstrated products business all and for lifestyle growth giving headwinds. audiences scaled turn we market. them the amidst Times reasons to

market the news tech heightened see to of grappled levels impacting from and to part continued publishers. We the with platforms, our ongoing the shifts volatility business audiences due ad largest casual in lower

global category-leading position headwinds is a to Our us counterbalance be media both designed subscription these to and business. strategy

to starts share million of digital subscribers. subscribers me bundle XX% progressing and the of a our engaged, to on from The for subscriber added better-retaining us net nearly be milestone base accounted bundle XX.X the up We XXX,XXX to and new year. total and next our of path subscribers the year-end, multiproduct made million. our XX highlights Let our bringing at subscribers, subscriber majority time continue pay over to and year, single-product than in those more more willing the

nearly reached engagement Times of highest X We any point the for by total $X than as quarters. in by news New year-on-year more year-end. spent. time And Times digital ARPU on The its revenue by annual York X share each engagement subscribers products measured sees source first years week, has the subscriber consolidated now our other digital crossed grown time in in monthly subscription And XXXX. American billion for straight now

this testament offerings. to pricing see consumers differentiated to the a growing by we strategy, our through provide as which and is We possible merchandising multiproduct made value our well-honed

and The our of to the our and Athletic extended It and as for proved every canvases a products with data publishers, momentum proprietary enhanced licensing was also lot agreement multiyear the saw December, ad growing ad we continued portfolio, across first-party year we Games in we Apple with year core and the for business, a ad new a quarter Wirecutter market in and It a challenging record and Plus Athletic we premium was expectations where particularly licensing room. real News running but in outperformed ad of resilient Wirecutter. see The announced revenue. affiliate for

overall expense throughout of property underscore platform. discipline We to the the of substantially competitive redirecting some while areas and largest world's value has this unique exerted growth our slowed like advantage. resources by our cost Deals that invest tech intellectual year continuing recognized in and

share, and earnings of business strong drove operating adjusted the profit across free this cash progress All per flow growth.

a In a highest XXXX, digital-first, business decade subscription-first into fact, since each point ago. began in our more than transformation hit their

basis also Inclusive even we business of improved expanded Print the continued experience The margin Athletic, by delivered We points. decline. to XXX secular our as that profitability

in Our growth the increase journalism, annual This expert results reflect announce we is also central to which the continue cash-generative the our how us positions term. dividend. expect to sixth to model give us also our long value financial consecutive nature and of to to confidence the investing create over independent

results. subscription subscribers revenue, quarter our Digital in our beat below came of adjusted quarter. We new digital below fourth revenue operating and or the quarterly met I'll XXX,XXX slightly net advertising guidance guidance now in on turn end came advertising other in total digital In QX, and the we guidance. added total our to low and costs.

peak We subscriptions. attribute gifting and ambitious subscription healthy by our Those program period base existing the a strong of cooking, for distinct demand games, season continued subscribers for robust deal BXB to for large performance multiple drivers drivers. more a propelled include

in high of engagement is to subscriber topics. addition existing all news This range across a

for from improvements machine and Wirecutter how Consistent The QX. Athletic, in benefited we conversion. further and learning with our we use engagement strategy, audience, grew in Cooking, also to We maximize audience Games

huge palpable This The X-year more particularly to efforts and for enhance infrastructure on and in strong. ongoing progress with see a growth a our on was stories available which to our recently The are Athletic, sampling. top our ambition destination its passed improve anniversary Times thanks make news coverage, sports sports for to The technical was Audience for become making Athletic opportunity We globally.

our Total play in consistency over due number Games a has larger-than-anticipated decline. who homegrown revenue puzzle, below which every Connections, players. came the primarily the expectations now revenue Print week from Wordle hit of to million our in people and XX weekly from in also quarter benefited ad

conflict. Middle by the was news digital performance, Our including East impacted podcasts, hard avoiding some like marketers topics

advertising extended our and potential we as canvases was confident ad of our data We display more to the proprietary in business digital offering nonetheless our first-party are resilient of portfolio. core our long-term and

Wirecutter, by record-setting holiday in a season beyond Revenue in quarter, advertising the and for and subscriptions grew strength driven licensing. XX%

with close me make our many what's thoughts to essential people. Times The a habit At millions about an Let more core, strategy for is designed daily ahead. its few

to daily priority people continue our now valuable out lifestyle top that directly Our journalism and us is seek enduring scale making products and so build at habits.

the However, evolves. information ecosystem

multi-revenue year's to ongoing to While expect us combined many our be we of market with persist, headwinds we and cost model leader. portfolio discipline last well multiproduct position scaled believe stream a industry

I'll that with over and more after take a for turn it Will results, closing your thoughts details few let me Now to and to on questions. our return

challenging Thanks, execution In dynamic financial essential subscription of good strategy XXXX, everyone. Meredith, and morning, strong despite the a drove results environment. and successful our

Our revenue strengthen products value portfolio streams. designed and our our grow to subscriber lifestyle market-leading news and was subscriber multiple base, of and lifetime engagement increase

we've moderated subscriber creation. our scaled, while for long-term to has base growth overall our continuing investments position strategic value As prioritize expense help that us

financial flow, digital even Our delivering revenue, the AOP, We subscription, demonstrate year results ongoing Print. as strategy cash the is flow finished designed. free we and stronger for that full market saw in X% revenue Overall growth declines free offset as increased EPS year cash than revenues position. growth in our more and year XXXX affiliate an and and licensing in increases in

resulted expanded year-over-year this AOP Combined approximately AOP our over cost XX% to margin our business in points cash-generative XXX moderating growth, growth and evident. XX%. nature with model was of The also by of basis

million free $XXX flow, in the For million the up from year. $XXX full approximately of year XXXX, cash we generated approximately prior

cash lower compared $XX In XXXX million combination AOP in benefited addition lower million million lower to of growth, capital stock and returned and to driven being cash $XX from dividends working taxes, We approximately by $XXX through flow in repurchases. CapEx XXXX. shareholders in a free to outflows

cash we've Over shareholders. XX% the of to free our last X nearly years, flow returned

announced also share, As $X.XX of Meredith $X.XX in our our of to reflecting increase per mentioned, durability dividend a the confidence strategy. we

otherwise financial the I'll XXXX. specified. followed that quarter's unless our first of results comparisons year for period quarter the Now are the note to Please fourth all outlook prior discuss by key

in fourth to of XXXX, were of fiscal a quarter reminder, calendar company's As a fewer X the quarter the due fourth XXXX. XXXX the change to days in there in compared

the earnings fewer impact of of comments today X in be will excluding the fewer XXXX. a estimated the and which days days. reconciliation includes on a the this My of basis, revenues, the reported published XX Page X includes morning costs of on release both revenues impact

in start business. a of our new XXX,XXX quarter. added I'll subscribers the digital approximately discussion subscription net We with

in multiproduct total at base As well additions exceeding of XX% along path to years. bundle and our the and Meredith led up coming made way the described, year-end, XX% the

benefited largest the $X.XX, to approximately transitioning our for bundled prices we to subscribers. tenured third of the Total on digital-only number of single-product of had QX, quarter ARPU year-over-year X%. impact from the to higher grew increase and an subscribers In increase date digital price consecutive

While early, news-only encouraged it retaining step-ups. is bundle better we through still continue to than relatively subscribers subscribers that monetizing and are these be

ARPU result were approximately X% to fourth quarter, digital digital-only subscribers million. with approximately guidance As revenues in $XXX higher quarter. to the in revenues total line X% and and subscription provided the a million, Both grew both digital-only of $XXX subscription we last grew

advertising which of advertising. for our guidance. were was Total X%, the million, $XXX Now below turning revenues approximately decline a to quarter

advertising quarter, to declining low the some for sensitivity to content approximately in the of demand products adversely in Digital million end advertising news X% was guidance slightly impacted certain $XXX marketer below by as quarter came in adjacencies. our the our of

strong record-setting revenue holiday our guidance, from Other $XX benefited to Wirecutter season. Licensing and XX% approximately increasing revenues was affiliate a a million. exceeded contributor

free growth. progress costs to in growth flow driving now AOP Moving and are we and the making cash

guidance, continue X%. better costs approximately decreasing came demonstrate QX. than our cost operating in discipline We in by Adjusted to

Even strategic development as unlocks allocate product its journalism and to including to overall most world-class investments, continue costs declined, resources and our digital the we that distribution. technology adjusted operating

X%. areas of market, increase improve and of Investments these revenue addressable our operating have growth fuel Cost approximately to subscriber our leverage. enabled penetration declined organic us in

were by lower more advertising Our servicing as fewer than and in having Print costs. and the production X offset days continued investments distribution in quarter well as journalism

development and subscriber enabling marketing X%. invest we We quarter were costs continue in return efficiency. to as product growth. the opportunities X% bundle strategically Product digital and the saw paid as our approximately increased costs the high to up teams better technology Sales into continued marketing enable marketing

as nonstrategic General X% and down in approximately administrative areas. were we drive continue to costs efficiencies

X% As was $XXX approximately prior points increased XX% of approximately margin compared of disciplined million. and XXX an increase quarter, the management, the a revenue in cost year. to result AOP to AOP growth approximately basis

Company. Times into $X.XX. tax lower a QX QX rate. diluted EPS to aided This translated to strong earnings' EPS also now income as I'll for increased New $X.XX was growth ahead and interest in by the consolidated also growth York adjusted higher look

are X% revenues expected subscription mid-single to to expected digits, first and digital-only XX% of digital while decrease XX%. advertising to digits. quarter Total to expected are increase revenues with revenues revenues XXXX increase, X% subscription to Overall the low-to-high expected increase single are compared are to advertising

around are we expected growth continue revenues expected advertising X% We limited Print to in costs increase overall Adjusted increase to to the Other which as operating to an market, ongoing are experience reflects discipline strategy. to pursue visibility digits. our declines. X%, commitment particularly cost mid-single

long costs approach Our and leadership the nonstrategic to that relentlessly same growth intend journalism, technology investments lifestyle highest and strategic the from to been of market position reallocate on the us areas and into work to over continue for products time, impact. targeted news independent has term. we At resources

We reflected development these expense growth revenue be cost lines. will product expect of and that our in the of investments

We the the to revenue. due of back to of advertising seasonality affiliate growth be to half the expect earnings' and year AOP weighted and

remain by midterm our track we noting growth returns. stated and subscribers, on for to close targets I'll capital that previously AOP achieve

that, With up. Meredith it to to back send wrap I'll

Will. Thanks,

delivering ever. unit Our this a foundation, resilient growth environment. at is product when more makes we a multi-revenue lifestyle believe economics, and our in and journalism believe improving our value and of differentiated it strongly news in we portfolio premium time needed portfolio world-class is create independent through With rare a our business ability than to more complicated products stream steadily model and and

And now your questions. we're happy to take

[Operator Instructions]

our question from Yeh comes And first Morgan Stanley. today Thomas from

wanted I tech. about ask the relationship to evolving with big

commercial deal of benefits the cannibalistic? help that proving see associated the details you maybe and of in just do approached of dimensionalize philosophy And licensing offsets historically you us litigation to able with a as how would of and of opportunity kind OpenAI engagement that? the some structure Can properties the an I the back Apple News. to with own weigh you you've like being not with drive the your the deal light think around agreements

can me Yes. he Will I'll fit. behind sees start, Thomas. come in as

strategy done the over you've looking you're we've referenced seen this referring We're The make deals and prepared and Athletic the Apple for in Does just X of couple sense remarks -- I years, done that direct -- partnership through subscription to essential my to for Plus very audience can Apple are Plus News Wirecutter. that is with I in the last in in We one we've with the context helping brands Apple generally things. in our case News And some our by for of grow us or of Athletic. mean, way awareness relationships. ways and build built helping direct through The it us be this which we've just the

time engage And responsible sort partner a are any of a say, that. standards. big tech way we've And is we respected matter, we to look it with And dimension live there track I up deals think making. our for at used value being considerations fair good IP and and of of the then a certainly in rights exchange. appropriately we're those those would doing any to We doing that or partner see got as that I look the record

still something and AI forgo attribution situation beneficial overall building potentially to an would economic the still reinforcing you ever you? be IP? that is would critical and the Is that to Like in that

one I make try Maybe want your I time. question. to sure understand that more

Yes.

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that One build will Yes, and what to so I us X bit I are things, thing with their said. can widely kind related are I people a the do what you're a business, credibility valuable they prepared think is, very direct and talked I'll remarks, in as saying. and of about say understand this already is important my both most we inclined scale relationship for have kind I've products a that at and basis. the marks brand to of and understood on a the to trustworthiness us, regular provide come to

that main centuries. So extent to that's game ways there IP other tap day created the vast to we for every the to we we've create are that playing into close X that of are the arsenal

fair to business is We that broader as are it's the of value open supportive exchange there as model. and long

wanted maybe just Okay. philosophy. the last And then That's to to helpful. for capital allocation Will. one squeeze I one revisit

that cash uses as repurchase free organic of bit and reason return in drive pacing below any activity that that you over XXXX. of led pause been in XX% But you've attractive the little reiterated think a flow there I to instead? a growth potential specific cash to maybe an see medium opportunity the You term. Was

Thanks, Thomas.

I allocation to to should think that over that even the as don't have capital any year. and sort term, take expect you target linear of any we strategy just our quarter, unchanged, medium be said, XX%

you in XX% track the years, a expect over X and continue I to combination last share we've against returned the can dividends repurchases. And our Over to think midterm. target of us

next David from comes from question Karnovsky Our JPMorgan.

for are discussions and licensing any in to though speak on other you're the term? willing don't to you with would near can But And discussions Meredith, welcome. going to OpenAI, with potential any be still maybe you agreements AI deals? thoughts how know that, might lawsuit for be the what platforms say the separate I prospects

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couple we've years. seen deals You've last the the done over of

to the You can of that for partnership the about rights and of all imagine thoughtful say time. fair directly what in selective our context AI exchange we value for complaint are partners And the in strategy talking us being being we're IP IP. potential really we talking you've seen are to I'd potential Generative that and partners. sense respected our our and makes

take I'll cost to say the for QX, expect I'll there to occasionally. don't and I in growth specifically seen think variation be see guide call some you've I'm not quarter-to-quarter -- there's in that that certainly that anything growth question. cost can simply out that that past can

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number theme one. that's So

believe we theme make then that term we're make for sure continue really strategic position. to and that targeted product our value is competitive development in number our And investing our are in solidifying will long we journalism to X the creating investments and

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Evercore Welles comes from from Our ISI. next question Ashton

of growth your ARPU QX to expectations? subscriber And down from the the we bundle bundled And digital-only decline? half drove What be think sequential stepped as are versus performing how more step-ups up? in subscribers should in ARPU related are this, the modestly about QX. XXXX I was first thinking how

Sure.

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going So forward. expectation that's the

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coming step-up throughout but So retaining see moments subscribers. those and we'll bundle than numbers better these better the by only in have subscribers encouraged we monetizing what at remain we increasing year, that are

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

late Got you the with expectations in Or it News deal X get the what And on Plus quarter, questions. Meredith, at early? of there? any started all? kind Or are is is too fourth that read-through Apple it impact? your did just the

question. Will at looking and and to obviously, want Anthony, characterize to just the but timing based I'm impact then, they if Great tiny think, on impact, bigger Tiny I come. impact, anymore, that

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question Doug, all you or you're have set? did another

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question comes Vasily Our Cannonball next from from Research. Karasyov

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a to that was hard market volatile happens. ad Yes. Listen, it think when publishers I hit it tends

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about tend publishers, in the they the platforms. the to use think say big that your other do platforms big ad part question convey So the think or message want business or relative use the of would asking other and I they differently a you're any To marketers extent way, before. business I to I -- we answered than that's I how publishers to in

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in to addition and to AI we that's beginning Generative target using in use advertising. how So AI

today's turn over DiClemente like closing gentlemen, ladies to we'll Anthony concluding question-and-answer with the I'd be session. back that, remarks. floor And for and to any

we us That's to this very it. Take all quarter. joining talking you care. you forward Thank look to and next for again morning, much

thank concluded. ladies attending And conference that, has the and for you We gentlemen, today's with presentation.

now may your lines. disconnect You