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NY Times (NYT) Q4 Earnings Beat, Subscription Revenues Rise

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The New York Times Company (NYT - Free Report) continued with its positive earnings surprise streak in fourth-quarter 2020. However, total revenues fell short of the Zacks Consensus Estimate after surpassing the same in the preceding two quarters. While the top line improved marginally, the bottom line declined year over year.

Notably, the digital-only subscriptions increased during the quarter under review. However, we note that both print and digital advertising revenues showcased a decline from the year-ago period. Management anticipates decline in total advertising revenues in the first quarter of fiscal 2021. Nonetheless, digital advertising revenues are projected to increase.

The New York Times Company delivered adjusted earnings from continuing operations of 40 cents a share that beat the Zacks Consensus Estimate by a penny but declined 7% from 43 cents in the year-ago period. The newspaper publisher's total revenues of $509.4 million missed the Zacks Consensus Estimate of $511 million but improved marginally by 0.2% on a year-over-year basis.

We note that this Zacks Rank #3 (Hold) stock has gained 11.2% compared with the industry’s rally of 11.8% in the past six months.

Subscription Revenues Rise

Subscription revenues improved 14.7% to $315.8 million primarily due to increase in the number of subscriptions to the company’s digital-only products, which include news product, and Cooking, Games (previously Crossword) and audio products. Revenues from digital-only products jumped 36.8% to $167 million.

Print subscription revenues fell 2.9% to $148.8 million on account of fall in retail newsstand revenues. Revenues from domestic home delivery subscription products rose 2.2% during the quarter under review.

The New York Times Company Price, Consensus and EPS Surprise

The New York Times Company Price, Consensus and EPS Surprise

The New York Times Company price-consensus-eps-surprise-chart | The New York Times Company Quote


The company ended the quarter with approximately 7,523,000 subscriptions across its print and digital products. Management notified that the number of paid digital-only subscribers reached roughly 6,690,000 at the end of the quarter — rising 627,000 sequentially and 2,295,000 year over year. Of the 627,000 total net additions, 425,000 came from the digital news product, while remaining came from Cooking, Games and audio products.

Management now projects first-quarter 2021 total subscription revenues to increase about 15%, while digital-only subscription revenues are projected to surge approximately 35-40%.

Advertising Revenues Still Soft

Total advertising revenues were $139.3 million in the reported quarter, down 18.7% year over year. In the preceding quarter, total advertising revenues had slumped 30.2%. Total advertising revenues in the first quarter of 2021 are projected to decline in the high-teens.

Print advertising revenues fell 37.9% to $49.1 million in the quarter under review, following a decline of 46.5% in the preceding quarter. The metric declined as the ongoing pandemic further accelerated secular trends, severely impacting the entertainment, media and luxury categories.

Digital advertising revenues decreased 2.3% to $90.1 million, following a decline of 12.6% in the preceding quarter. The fall in digital advertising revenues was due to lower creative services revenues. Management expects digital advertising revenues to increase in the low- to mid-single digits in first-quarter 2021.

Other Highlights

We note that other revenues declined 12.1% to $54.3 million during the quarter under review due to fewer television episodes, and decline in revenues from commercial printing and live events. These were partly mitigated by higher Wirecutter affiliate referral revenues. Management anticipates other revenues to decline approximately 10-15% in the first quarter of 2021.

Adjusted operating costs fell 0.1% to $411.7 million during the quarter. Management anticipates adjusted operating costs to increase in the mid-single digits in the first quarter of 2021, as the company continues to invest in the drivers of digital subscription growth. Total adjusted operating profit grew 1.4% to $97.7 million during the quarter under review.

Financial Aspects

The New York Times Company ended the fourth quarter with cash and marketable securities of about $882 million, reflecting an increase of $82 million compared with the third quarter and an improvement of $198.1 million compared with the year-ago quarter. The company has a $250 million revolving line of credit through 2024. As of Dec 27, 2020, the company had neither outstanding borrowings under the credit facility nor other outstanding debt obligations. It incurred capital expenditures of about $5 million during the quarter. Management envisions capital expenditures of about $50 million in 2021.

Wrapping Up

The New York Times Company has been diversifying business, adding new revenue streams, realigning cost structure and streamlining operations to increase efficiencies. The company has not only been gearing up to become an optimum destination for news and information but also has been focusing on lifestyle products and services. It has been keeping pace with the changing times by utilizing technological advancements to reach their target audience more effectively. The company’s business model with greater emphasis on subscription revenues positions it to mitigate the impact of the ongoing pandemic to an extent.

Key Picks

TEGNA Inc. (TGNA - Free Report) flaunts a Zacks Rank #1 (Strong Buy). The company has an estimated long-term earnings growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox Corporation’s (FOXA - Free Report) bottom line has outperformed the Zacks Consensus Estimate by a significant margin in the last reported quarter. The company carries a Zacks Rank #2 (Buy).

Roku, Inc. (ROKU - Free Report) , which carries a Zacks Rank #2, has a trailing four-quarter earnings surprise of 42.7%, on average.

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