What To Expect From News Corp’s Q3 Earnings
News Corp (NASDAQ:NWSA) is scheduled to announce its third quarter fiscal 2017 results on Tuesday, May 9. The company saw better-than-expected Q2 results, as both its revenue and earnings per share were in line with market expectations. In Q2, the company’s revenues decreased 2% year-over-year (y-o-y) to $2 billion, primarily due to the impact of foreign currency fluctuations and declines in advertising revenues in the News and Information Services segment. In addition, the company’s total adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was 14% higher compared to the prior year, driven by continued growth in the Digital Real Estate Services and Book Publishing segments, partially offset by lower programming rights costs at the Cable Network Programming segment. The Digital Real Estate (16%) segment posted strong growth on the back of higher revenues at both REA Group and Move in the second quarter. We expect this trend to continue in the near term, and accordingly expect the company to post strong numbers in Digital Real Estate segment in the third quarter. However, we also expect the company to post lower overall sales during the third quarter, due to continued downtrend in News and Information Services segment.
In terms of the bottom line, we expect News Corp to continue focusing on fiscal discipline and maintaining strict control over its operating expenses to grow its margins. Reuters’ compiled analyst estimates forecast revenues of $1.84 billion and earnings per share of $0.04 in Q3 2017.
Guidance
In Digital Real Estate Services, the company expects an increase in EBITDA contribution and improved revenues at realtor.com combined with continued growth at REA in the third quarter. For the Book Publishing segment, the company expects to reap benefits from a strong release slate, including Veronica Roth’s Carve the Mark. Also, the company expects its rights costs to go down modestly in local currency, given the absence of EPL rights, in the Cable Network Programming segment.
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