News (NWSA) - 2024 Q3 - Quarterly Results

Financial Performance Overview Third Quarter Fiscal 2024 Results News Corp's Q3 FY2024 revenues slightly decreased by 1% to $2.42 billion, with net income down 29% to $42 million, while Total Segment EBITDA increased 1% and Adjusted EPS rose to $0.11 Q3 FY2024 Key Financial Highlights | Metric | Q3 FY2024 | Q3 FY2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $2.42 billion | $2.45 billion | (1)% | | Net Income | $42 million | $59 million | (29)% | | Total Segment EBITDA | $322 million | $320 million | 1% | | Reported EPS | $0.05 | $0.09 | (44)% | | Adjusted EPS | $0.11 | $0.09 | 22% | - Revenue decline was driven by lower advertising at News Media, lower physical book sales, challenging U.S. housing market conditions, and a $21 million negative foreign currency impact, partly offset by higher Australian residential revenues at REA Group and strong growth in Dow Jones' professional information business[5] - The company is focused on its strategic transformation, promoting its journalism in the age of Generative AI, and has extended its Google partnership; an intense review of the company's structure is underway for maximum flexibility[3][4][5] Segment Review Segment Performance Summary Q3 revenue growth was led by Digital Real Estate Services (+7%) and Dow Jones (+3%), while other segments declined, with Dow Jones showing the highest EBITDA growth at 8% and News Media declining 24% Segment Revenues and EBITDA (Q3 FY2024 vs Q3 FY2023) | Segment | Q3 2024 Revenues (M) | Q3 2023 Revenues (M) | % Change | Q3 2024 Segment EBITDA (M) | Q3 2023 Segment EBITDA (M) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Digital Real Estate Services | $388 | $363 | 7% | $104 | $102 | 2% | | Subscription Video Services | $455 | $477 | (5)% | $66 | $68 | (3)% | | Dow Jones | $544 | $529 | 3% | $118 | $109 | 8% | | Book Publishing | $506 | $515 | (2)% | $62 | $61 | 2% | | News Media | $530 | $563 | (6)% | $26 | $34 | (24)% | Digital Real Estate Services Digital Real Estate Services revenue grew 7% to $388 million, driven by REA Group's 15% surge in Australia, partially offset by Move's 6% decline in the challenging U.S. market, with Segment EBITDA up 2% to $104 million - REA Group's revenues increased 15% to $256 million, benefiting from price increases, increased depth penetration, and a 6% rise in national residential buy listing volumes[14] - Move's revenues decreased 6% to $132 million due to lower real estate transaction volumes in the U.S., though lead volume saw a 4% year-over-year increase, its first in over two years[15] Subscription Video Services Subscription Video Services revenue fell 5% to $455 million due to foreign currency impact, with total paid subscribers decreasing 1% to over 4.5 million, and Segment EBITDA down 3% to $66 million - Foxtel Group streaming subscription revenues accounted for approximately 29% of total circulation and subscription revenues, up from 26% in the prior year[16] Foxtel Closing Subscribers (as of March 31) | Subscriber Type | 2024 (in 000s) | 2023 (in 000s) | | :--- | :--- | :--- | | Total Paid Subscribers | 4,537 | 4,585 | | Kayo (Paid) | 1,442 | 1,309 | | BINGE (Paid) | 1,453 | 1,484 | | Residential Broadcast | 1,239 | 1,369 | - Broadcast ARPU for the quarter increased 2% year-over-year to A$85 (US$56)[17] Dow Jones Dow Jones revenues increased 3% to $544 million, driven by 10% growth in professional information, with digital revenues at 81% and Segment EBITDA growing 8% to $118 million - The professional information business saw strong growth, with Risk & Compliance revenues up 15% to $76 million and Dow Jones Energy revenues up 15% to $63 million[21] Dow Jones Average Consumer Subscriptions (Q3) | Product | 2024 (in 000s) | 2023 (in 000s) | % Change | | :--- | :--- | :--- | :--- | | Total Digital-only | 5,068 | 4,347 | 17% | | The Wall Street Journal (Digital-only) | 3,715 | 3,299 | 13% | | The Wall Street Journal (Total) | 4,217 | 3,888 | 8% | - Digital advertising revenues grew 4%, while print advertising revenues declined 11%; digital advertising now accounts for 63% of total advertising revenues[23] Book Publishing HarperCollins' revenues decreased 2% to $506 million due to lower physical book sales, offset by a 5% rise in digital sales, with Segment EBITDA increasing 2% to $62 million - Digital sales increased 5% compared to the prior year, driven by strong market growth for downloadable audiobooks, which benefited from a new Spotify partnership; digital sales represented 25% of Consumer revenues[26] - Backlist sales remained strong, representing approximately 63% of consumer revenues in the quarter, up from 60% in the prior year[26] - Key titles in the quarter included Blood Money by Peter Schweizer, Mostly What God Does by Savannah Guthrie and Fangirl Down by Tessa Bailey[25] News Media News Media revenues declined 6% to $530 million due to a 13% drop in advertising revenues and reduced digital traffic, resulting in Segment EBITDA falling 24% to $26 million - Advertising revenues decreased $28 million, or 13%, due to lower print advertising at News Corp Australia and lower digital advertising from a decline in traffic at some mastheads[30] - Digital revenues represented 38% of segment revenues, an increase from 36% in the prior year[32] - Closing digital subscribers at News Corp Australia grew to 1,113,000 from 1,043,000 in the prior year; The Times and Sunday Times closing digital subscribers grew to 582,000 from 554,000[32] Cash Flow Cash Flow Summary Net cash from operating activities for the nine months ended March 31, 2024, increased to $844 million, driven by lower working capital and higher EBITDA, resulting in free cash flow of $378 million Free Cash Flow Reconciliation (Nine months ended March 31) | Metric | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $844 | $670 | | Less: Capital expenditures | ($353) | ($350) | | Free cash flow | $491 | $320 | | Free cash flow available to News Corporation | $378 | $258 | - The increase in net cash from operating activities was primarily due to lower working capital and higher Total Segment EBITDA, partially offset by higher restructuring payments[33] Consolidated Financial Statements Consolidated Statements of Operations Q3 FY2024 total revenues were $2.42 billion, a slight decrease from the prior year, with net income at $42 million and diluted EPS of $0.05 Q3 FY2024 Statement of Operations Highlights (in millions) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenues | $2,423 | $2,447 | | Income before income tax expense | $64 | $91 | | Net income | $42 | $59 | | Net income attributable to News Corporation stockholders | $30 | $50 | Consolidated Balance Sheets As of March 31, 2024, News Corp reported total assets of $16.54 billion, total liabilities of $7.64 billion, cash of $1.94 billion, and total equity of $8.91 billion Balance Sheet Summary (in millions) | Metric | As of March 31, 2024 | As of June 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,943 | $1,833 | | Total current assets | $4,128 | $4,053 | | Total assets | $16,544 | $16,921 | | Total current liabilities | $3,042 | $3,165 | | Total liabilities | $7,636 | $7,976 | | Total equity | $8,908 | $8,945 | Consolidated Statements of Cash Flows For the nine months ended March 31, 2024, operating activities generated $844 million in cash, leading to a net increase of $123 million in cash and equivalents, totaling $1.94 billion Cash Flow Summary (Nine months ended March 31, in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $844 | $670 | | Net cash used in investing activities | ($404) | ($440) | | Net cash used in financing activities | ($317) | ($382) | | Net change in cash and cash equivalents | $123 | ($152) | Non-GAAP Financial Measures Note 1 – Total Segment EBITDA This note reconciles Q3 FY2024 Net Income of $42 million to Total Segment EBITDA of $322 million, representing a 1% increase from the prior year after various adjustments Reconciliation of Net Income to Total Segment EBITDA (Q3, in millions) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net income | $42 | $59 | | Add: Income tax expense | $22 | $32 | | Add: Other, net | $10 | ($14) | | Add: Interest expense, net | $19 | $25 | | Add: Equity losses of affiliates | $2 | $10 | | Add: Impairment and restructuring charges | $35 | $25 | | Add: Depreciation and amortization | $192 | $183 | | Total Segment EBITDA | $322 | $320 | Note 2 – Adjusted Revenues and Adjusted Segment EBITDA This note adjusts Q3 FY2024 reported revenues of $2.423 billion to $2.440 billion (flat year-over-year) and Adjusted Total Segment EBITDA increased 1% to $331 million, accounting for various impacts Reconciliation to Adjusted Revenues and EBITDA (Q3, in millions) | Metric | As Reported | Adjustments | As Adjusted | | :--- | :--- | :--- | :--- | | Revenues | $2,423 | $17 | $2,440 | | Total Segment EBITDA | $322 | $9 | $331 | Note 3 – Adjusted Net Income and Adjusted EPS This note reconciles Q3 FY2024 reported net income of $30 million (EPS $0.05) to an adjusted net income of $65 million, yielding an Adjusted EPS of $0.11, up from $0.09 Reconciliation of Net Income and EPS to Adjusted Figures (Q3) | Metric | Reported | Adjustments | Adjusted | | :--- | :--- | :--- | :--- | | Net Income Attributable to Stockholders (M) | $30 | $35 | $65 | | EPS | $0.05 | $0.06 | $0.11 | Note 4 – Constant Currency Revenues This note highlights a $21 million negative foreign exchange impact on Q3 FY2024 revenues, showing total revenues were $2.444 billion on a constant currency basis, a flat year-over-year performance Reconciliation of Reported to Constant Currency Revenues (Q3, in millions) | Metric | Q3 2023 Reported | Q3 2024 Reported | FX Impact | Q3 2024 Constant Currency | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,447 | $2,423 | ($21) | $2,444 | (1)% | 0% |