New York Times’ Q3 Revenue Misses Expectations Despite Growth In Digital Subscriptions
New York Times’ (NYSE:NYT) stock slid slightly after reporting mixed fiscal third quarter results on November 1, as its earnings came in ahead of market expectations but revenues missed. Below we highlight some of the most notable items from the earnings release.
- NYT again reported unprecedented growth in digital subscriptions, which helped the company stabilize its subscription revenues in the third quarter. The company’s total subscription revenues increased 14% year-over-year (y-o-y) in the quarter, with digital-only subscription revenue growing strongly at 46% y-o-y to $86 million. In addition, the company’s other revenues grew 18% y-o-y, largely due to affiliate referral revenue associated with the Wirecutter and Sweethome acquisition in 2016.
- However, NYT’s advertising revenue declined 9% y-o-y, primarily due to 11% growth in digital advertising, largely offset by continued headwinds in print advertising (-20%).
- The company’s overall revenues grew 6% y-o-y to $386 million, driven by strong digital revenues. In terms of total subscriptions, the company now has around 3.5 million total subscriptions (print and digital) by far. In Q3, digital-only new subscriptions grew 60% y-o-y to 154,000, of which digital news products saw a net increase of 105,000 new subscriptions in this quarter.
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- On the expense side, the company’s operating costs decreased 2% y-o-y in the quarter, due to lower severance, print production and distribution costs, and savings in international operations. NYT’s adjusted operating profit increased 44% y-o-y to $56 million in the third quarter, driven by the growth in digital and print subscription revenues. The company also posted adjusted earnings of 13 cents per share.
- NYT’s lower print advertising revenue was mainly due to declines in display advertising (-22%), primarily in the luxury, real estate, technology and telecommunications and travel categories. The increase in the company’s digital advertising was driven by gains in smartphone branded content, marketing services and programmatic.
- Going forward, NYT expects its total subscription revenues to grow around 10% y-o-y in Q4. In addition, it expects the digital subscription revenue to grow at a solid 40% y-o-y. However, the company also expects its overall advertising revenue to decline in low double-digits, with digital advertising flat or decreasing slightly.
Our $16 price estimate for New York Times is around 10% below the current market price.
Have more questions? Please refer to our complete analysis for New York Times
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