Yahoo Finance Why Is New York Times (NYT) Down 0.9% Since Last Earnings Report?
It has been about a month since the last earnings report for New York Times Co. (NYT). Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is New York Times due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
NY Times Q4 Earnings Beat, Subscribers Increase Y/Y
The New York Times Company continued with its decent performance in the fourth quarter of 2023. The company's adjusted earnings per share came in at 70 cents, surpassing the Zacks Consensus Estimate of 60 cents. This marked a substantial 18.6% increase from the year-ago reported number. Total revenues reached $676.2 million, missing the Zacks Consensus Estimate of $681 million. However, the metric increased 1.3% year over year.
The New York Times Company added approximately 300,000 net digital-only subscribers compared with the end of the preceding quarter, propelled by bundle and multi-product subscriber additions. This surge in subscribers pushed the company's total subscriber count to 10.4 million.
Furthermore, The New York Times Company achieved consistent growth in its digital-only average revenue per user (“ARPU”). The ARPU increased to an impressive $9.24 in the final quarter from $8.93 in the year-ago period. This increase in ARPU can be attributed to subscribers transitioning from promotional pricing to higher rate plans and the introduction of price hikes for tenured non-bundle subscribers.
Subscription Revenues Rise
Subscription revenues of $430.4 million grew 3.9% year over year. Subscription revenues from digital-only products jumped 7.2% to $288.7 million. This reflects an increase in bundle and multiproduct revenues and a rise in other single-product subscription revenues, partly offset by a decline in news-only subscription revenues. Print subscription revenues dropped 2.2% to $141.8 million due to a decrease in domestic home-delivery revenues.
The company ended the quarter with roughly 10.36 million subscribers across its print and digital products, including roughly 9.7 million digital-only subscribers. Of the 9.7 million subscribers, about 4.22 million were bundle and multiproduct subscribers. There was a net increase of 880,000 in digital-only subscribers compared with the fourth quarter of 2022. Management envisions first-quarter 2024 total subscription revenues to increase about 7-9%, with digital-only subscription revenues anticipated to rise approximately 11-14%.
A Look at Advertising Revenues
Total advertising revenues of $164.1 million declined 8.4% from the prior-year period. Digital advertising revenues decreased 3.7% to $107.7 million. This can be attributed to five fewer days in the final quarter of 2023 as well as declines in revenues from podcasts and creative services. Meanwhile, print advertising revenues fell 16.2% to $56.4 million in the quarter under review. The metric decreased mainly in the energy and entertainment categories and due to the five fewer days in the fourth quarter of 2023. For the first quarter of 2024, the company foresees a mid-single-digit decline in total advertising revenues. However, it envisions a low-to-high-single-digit jump in digital advertising revenues.
Other Highlights
We note that other revenues jumped 10% year over year to $81.7 million during the quarter under review due to higher licensing and Wirecutter affiliate referral revenues, partly offset by lower book, television and film revenues and the five fewer days in the quarter. Adjusted operating costs fell 0.7% to $522.3 million during the quarter. Management anticipates adjusted operating costs to increase between 5% and 7% in the first quarter of 2024. The total adjusted operating profit increased 8.5% to $154 million during the quarter under review, while the adjusted operating margin expanded 780 basis points to 22.8%.
Segment Details
The New York Times Group’s revenues remained flat at $638.4 million. Subscription revenues rose 3.3% to $403.6 million due to growth in subscription revenues from digital-only products, partly offset by a decline in print subscription revenues. Advertising revenues dropped 11.3% to $154.2 million due to declines in both digital and print advertising revenues.
Revenues totaled $38.5 million in The Athletic segment, up 31.3% year over year. Subscription revenues rose to $26.9 million from $23.5 million in the fourth quarter of 2022, mainly due to an increase in subscribers with The Athletic. Advertising revenues jumped to $9.9 million from $5.3 million in the fourth quarter of 2022, principally due to higher revenues from display advertising.
Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $709.2 million, reflecting an increase of $222.9 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 2024. The board of directors authorized a $250 million share repurchase program in February 2023 in addition to the amount remaining under the 2022 authorization. As of Feb 2, 2024, the company had repurchased 4,502,142 shares for about $158.5 million, fully exhausting the 2022 authorization and leaving $241.5 million under the 2023 authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -20% due to these changes.
VGM Scores
Currently, New York Times has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, New York Times has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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The New York Times Company (NYT) : Free Stock Analysis Report
