New York Times(NYT) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported nearly 10% year-over-year revenue growth and approximately 28% growth in adjusted operating profit (AOP) with AOP margin expanding by about 280 basis points [13] - Free cash flow generated in the first half of the year was approximately $193 million, with about $134 million returned to shareholders through share repurchases and dividends [14][16] - Adjusted diluted EPS in Q2 increased by $0.13 to $0.58, primarily driven by higher operating profit and interest income [17] Business Line Data and Key Metrics Changes - Digital subscription revenue increased by over 15% in the quarter, with total subscription revenues growing approximately 10% to $481 million [6][16] - The company added 230,000 net new digital subscribers, bringing the total to approximately 11.9 million, with over 50% of subscribers now on bundled or multiple products [5][15] - Digital advertising revenues grew nearly 19% to $94 million, while total advertising revenues increased by approximately 12% to $134 million [9][16] Market Data and Key Metrics Changes - Affiliate, licensing, and other revenues increased approximately 6% to $70 million, with growth particularly noted in areas like gifts, apparel, and beauty at Wirecutter [10][17] - The company signed a multiyear deal with Amazon, marking its first agreement centered around generative AI, which is expected to enhance audience reach [10][32] Company Strategy and Development Direction - The company aims to continue growing its subscriber base to 15 million by 2027, focusing on enhancing product accessibility and value [29] - The strategy includes expanding video content to engage audiences more effectively, with a significant push in producing news videos and enhancing lifestyle product experiences [7][9] - The company remains confident in its ability to grow despite challenges from big tech companies affecting traffic to publishers, emphasizing the importance of direct relationships with audiences [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to continue delivering revenue and profit growth, citing strong audience engagement and a disciplined investment approach [4][12] - The company anticipates healthy growth in revenues and AOP, margin expansion, and strong free cash flow generation for the full year [19] - Management acknowledged the challenges posed by AI technologies affecting traffic but emphasized resilience through a focus on essential journalism and audience engagement [44][59] Other Important Information - The company is in the early stages of rolling out a new family plan subscription offering, which is expected to enhance subscriber retention and monetization [38] - The company plans to operate with only one reportable segment starting next quarter, streamlining its reporting structure [18] Q&A Session Summary Question: Advertising performance compared to other digital platforms - Management highlighted the broad marketer appeal of their portfolio, effective targeting with first-party data, and the introduction of new ad products as key factors driving advertising growth [22][23] Question: Amazon licensing deal details - The deal was described as consistent with the company's principles, providing fair value exchange and control over content usage, reinforcing the value of their journalism [24][25] Question: Subscriber growth towards 15 million - Management reiterated the goal of reaching 15 million subscribers by 2027, citing persistent demand and a growing audience of registered users [28][29] Question: Amazon AI deal impact on guidance - The Amazon agreement is included in the guidance, with expectations for revenue growth in the affiliate licensing and other revenue line [31][32] Question: Bundle strategy progress - Management expressed satisfaction with achieving 50% of subscribers on bundles, emphasizing the strong lifetime value of bundled subscribers [35][36] Question: Traffic headwinds from AI - Management acknowledged the impact of AI on traffic but emphasized their strategy to build direct relationships with audiences to mitigate these effects [44][59] Question: Promotional pricing strategy for bundles - Management confirmed no changes to their promotional pricing strategy, focusing on engaging subscribers and driving them towards the bundle [46][47]