It has been about a month since the last earnings report for New York Times Co. (
NYT Quick Quote NYT - Free Report) . Shares have lost about 8.7% 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 its most recent earnings report in order to get a better handle on the important catalysts.
NY Times Q4 Earnings Beat, Subscription Revenues Up Y/Y
The New York Times Company delivered fourth-quarter 2022 adjusted earnings from continuing operations of 59 cents a share, which beat the Zacks Consensus Estimate of 44 cents and increased 37.2% from the prior-year reported figure. Total revenues of $667.5 million came ahead of the Zacks Consensus Estimate of $647 million and improved 12.3% year over year.
Markedly, subscription revenues rose during the quarter. Both digital and print advertising revenues increased from the year-ago period. The New York Times Company is gradually heading toward its goal of 15 million subscribers by the end of 2027. Subscription Revenues Rise
Subscription revenues of $414.1 million grew 17.9% year over year. The upside was primarily due to an increase in the number of subscribers to the company’s digital-only products, the benefits of subscriptions graduating to higher prices from introductory promotional pricing, the inclusion of subscription revenues from The Athletic and the impact of additional six days in the quarter.
Subscription revenues from digital-only products jumped 31% to $269.2 million. However, print subscription revenues fell 0.6% to $144.9 million due to lower domestic home delivery revenues, which declined 0.6%. The company ended the quarter with roughly 9.55 million paid subscribers, with about 10.98 million paid subscriptions across its print and digital products. Of the 9.55 million subscribers, approximately 8.83 million were paid digital-only subscribers, with roughly 10.26 million paid digital-only subscriptions. There was a net increase of 240,000 digital-only subscribers and 240,000 digital-only subscriptions compared with the preceding quarter. Management envisions first-quarter 2023 subscription revenues to increase about 6-9%, with digital-only subscription revenues anticipated to rise approximately 13-16%. A Look at Advertising Revenues
Total advertising revenues of $179.2 million witnessed an increase of 1.4% from the prior-year period. Print advertising revenues rose 2.6% to $67.3 million in the quarter under review. The metric increased primarily in the luxury category.
Meanwhile, digital advertising revenues inched up 0.6% to $111.9 million. This year-over-year increase was due to the impact of additional six days in the quarter, higher direct-sold advertising at The New York Times Group and the addition of advertising revenues from The Athletic, which helped mitigate lower creative services revenues and headwinds from the macroeconomic environment. For the first quarter of 2023, The New York Times Company expects digital advertising revenues and total advertising revenues to decline in the low single digits. Other Highlights
We note that other revenues jumped 12.1% year over year to $74.3 million during the quarter under review as a result of higher Wirecutter affiliate revenues and revenues from live events and licensing. These were partly offset by lower television revenues. The New York Times Company estimates mid-single-digit growth in other revenues in the first quarter of 2023.
Adjusted operating costs rose 8.4% to $525.7 million during the quarter. Management anticipates adjusted operating costs to increase approximately 6-8% in the first quarter of 2023. The total adjusted operating profit increased 29.7% to $141.8 million during the quarter under review as higher digital subscription revenues from The New York Times Group segment and the impact of additional six days more than offset operating losses at The Athletic. Segment Details
The New York Times Group’s revenues increased 7.3% year over year to $637.6 million. Subscription revenues rose 11% to $390 million due to growth in subscription revenues from digital-only products and the impact of additional six days in the quarter. Advertising revenues fell 1.6% to $173.9 million, stemming from soft digital advertising revenues.
The adjusted operating profit jumped 36% to $148.7 million. This can be attributed to higher digital-only subscription revenues and the impact of additional six days in the quarter. Revenues totaled $29.9 million in The Athletic segment, primarily from subscription revenues. The adjusted operating loss amounted to $6.9 million. Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $486.3 million, reflecting a decrease of $588.2 million from $1.07 billion as of Dec 26, 2021. Approximately $550 million was utilized to fund the buyout of The Athletic in February 2022.
The company incurred capital expenditures of about $7 million during the quarter. Management envisions capital expenditures of about $50 million in 2023. The board of directors authorized a $150 million share repurchase program in February 2022. As of Feb 3, 2023, the company repurchased 3,344,445 shares for about $112.1 million, and $37.9 remained under the authorization. The company’s board of directors also approved a new $250 million Class A share buyback program. The company’s board announced a dividend of 11 cents a share to be payable on Apr 20, 2023, to shareholders of record as of the close of the business on Apr 5, 2023. This reflects an increase of 2 cents from the previous quarter. How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -23.81% due to these changes.
At this time, New York Times has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, New York Times has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.