Yahoo Finance NY Times (NYT) Q1 Earnings Top, Subscribers Increase Y/Y
The New York Times Company NYT delivered first-quarter 2023 adjusted earnings of 19 cents a share, which beat the Zacks Consensus Estimate of 16 cents and our estimate of 15 cents. However, the metric declined 9.5% from the prior-year reported figure.
Total revenues of $560.7 million fell short of the Zacks Consensus Estimate of $564 million and our estimate of $562.4 million. Markedly, total revenues increased 4.3% year over year.
We note that subscription revenues improved year over year. Digital-only subscriber average revenue per user increased on a sequential basis to $9.04 from $8.93 in the preceding quarter. Both digital and print advertising revenues declined year over year due to cyclical challenges. Nonetheless, the company’s strategic bundled subscription offering is gaining momentum.
Subscription Revenues Rise
Subscription revenues of $397.5 million grew 6.9% year over year. The upside can be attributed to an increase in the number of subscribers to the company’s digital-only products, the benefits of subscriptions graduating to higher prices from introductory promotional pricing and higher revenues from The Athletic stand-alone subscriptions.
Subscription revenues from digital-only products jumped 14.1% to $258.8 million. However, print subscription revenues fell 4.4% to $138.8 million due to lower domestic home delivery revenues, which declined 4.2%.
The company ended the quarter with roughly 9.73 million paid subscribers across its print and digital products. Of the 9.73 million subscribers, approximately 9.02 million were paid digital-only subscribers. There was a net increase of 190,000 and 790,000 digital-only subscribers compared with the preceding quarter and the first quarter of 2022, respectively.
Management envisions second-quarter 2023 subscription revenues to increase about 6-8%, with digital-only subscription revenues anticipated to rise approximately 12-15%.
The New York Times Company Price, Consensus and EPS Surprise
The New York Times Company price-consensus-eps-surprise-chart | The New York Times Company Quote
A Look at Advertising Revenues
Total advertising revenues of $106.2 million witnessed a decline of 8.6% from the prior-year period. The challenging macroeconomic environment hit digital and print advertising spend.
Print advertising revenues declined 8.7% to $45 million in the quarter under review. The metric decreased primarily in the media, advocacy, finance and technology categories, partly offset by growth in the luxury category.
Meanwhile, digital advertising revenues fell 8.6% to $61.3 million. This year-over-year decrease was due to lower revenues from podcasts and creative services, partly offset by the addition of digital advertising revenues from The Athletic.
For the second quarter of 2023, The New York Times Company expects a low-to-mid-single-digit decline in digital advertising revenues and a 4-8% decline in total advertising revenues.
Other Highlights
We note that other revenues jumped 15.8% year over year to $57 million during the quarter under review due to higher revenues from television and film, licensing and commercial printing. The New York Times Company estimates high-single-digit growth in other revenues in the second quarter of 2023.
Adjusted operating costs rose 6.3% to $506.7 million during the quarter. Management anticipates adjusted operating costs to increase approximately 6-8% in the second quarter of 2023.
The total adjusted operating profit decreased 11.4% to $54 million during the quarter under review. Higher adjusted operating costs and lower advertising revenues more than offset higher digital subscription and other revenues.
Segment Details
The New York Times Group’s revenues increased 1.3% year over year to $532.1 million. Subscription revenues rose 3.3% to $373.5 million due to growth in subscription revenues from digital-only products, partially offset by decreases in print subscription revenues. Advertising revenues fell 10.8% to $102.1 million, stemming from soft digital and print advertising revenues.
The adjusted operating profit decreased 8.8% to $61.8 million. This can be attributed to higher adjusted operating costs and lower advertising revenues, partially offset by higher digital subscription and other revenues.
Revenues totaled $28.6 million in The Athletic segment, primarily from subscription revenues. Subscription revenues rose to $24.1 million from $10.4 million in the first quarter of 2022, mainly due to an increase in digital-only subscribers with The Athletic and the favorable impact of an additional month in 2023. The adjusted operating loss amounted to $7.8 million.
Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $474.4 million, reflecting a decrease of $11.9 million from $486.3 million as of Dec 31, 2022.
The company incurred capital expenditures of about $6 million during the quarter. Management envisions capital expenditures of about $50 million in 2023.
The board of directors authorized a $150 million share repurchase program in February 2022. As of May 5, 2023, the company repurchased 3,937,593 shares for about $135.7 million, and $14.3 million remained under the authorization. In February 2023, The New York Times Company’s board of directors also approved a new $250 million Class A share buyback program.
We note that this Zacks Rank #1 (Strong Buy) stock has risen 20.7% so far in the year compared with the industry’s growth of 18.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Solid Picks
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Rogers Communications, which operates as a communications and media company, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 10.4%.
The Zacks Consensus Estimate for Rogers Communications’ current financial-year revenues and EPS suggests growth of 22.9% and 30.6%, respectively, from the year-ago reported figure. RCI has a trailing four-quarter earnings surprise of 2.4%, on average.
The TJX Companies, which operates as an off-price apparel and home fashion retailer, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.5%.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 12.9% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 6%, on average.
General Mills, which manufactures and markets branded consumer foods, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 7.5%.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and earnings suggests growth of 6.3% and 7.4% from the year-ago period. GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
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