It has been about a month since the last earnings report for New York Times Co. (
NYT Quick Quote NYT - Free Report) . Shares have added about 2.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is New York Times due for a pullback? 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 Q1 Earnings Top, Subscribers Increase Y/Y
The New York Times Company delivered first-quarter 2023 adjusted earnings of 19 cents a share, which beat the Zacks Consensus Estimate of 16 cents and our estimate of 15 cents. However, the metric declined 9.5% from the prior-year reported figure.
Total revenues of $560.7 million fell short of the Zacks Consensus Estimate of $564 million and our estimate of $562.4 million. Markedly, total revenues increased 4.3% year over year. We note that subscription revenues improved year over year. Digital-only subscriber average revenue per user increased on a sequential basis to $9.04 from $8.93 in the preceding quarter. Both digital and print advertising revenues declined year over year due to cyclical challenges. Nonetheless, the company’s strategic bundled subscription offering is gaining momentum. Subscription Revenues Rise
Subscription revenues of $397.5 million grew 6.9% year over year. The upside can be attributed 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 and higher revenues from The Athletic stand-alone subscriptions.
Subscription revenues from digital-only products jumped 14.1% to $258.8 million. However, print subscription revenues fell 4.4% to $138.8 million due to lower domestic home delivery revenues, which declined 4.2%. The company ended the quarter with roughly 9.73 million paid subscribers across its print and digital products. Of the 9.73 million subscribers, approximately 9.02 million were paid digital-only subscribers. There was a net increase of 190,000 and 790,000 digital-only subscribers compared with the preceding quarter and the first quarter of 2022, respectively. Management envisions second-quarter 2023 subscription revenues to increase about 6-8%, with digital-only subscription revenues anticipated to rise approximately 12-15%. A Look at Advertising Revenues
Total advertising revenues of $106.2 million witnessed a decline of 8.6% from the prior-year period. The challenging macroeconomic environment hit digital and print advertising spend.
Print advertising revenues declined 8.7% to $45 million in the quarter under review. The metric decreased primarily in the media, advocacy, finance and technology categories, partly offset by growth in the luxury category. Meanwhile, digital advertising revenues fell 8.6% to $61.3 million. This year-over-year decrease was due to lower revenues from podcasts and creative services, partly offset by the addition of digital advertising revenues from The Athletic. For the second quarter of 2023, The New York Times Company expects a low-to-mid-single-digit decline in digital advertising revenues and a 4-8% decline in total advertising revenues. Other Highlights
We note that other revenues jumped 15.8% year over year to $57 million during the quarter under review due to higher revenues from television and film, licensing and commercial printing. The New York Times Company estimates high-single-digit growth in other revenues in the second quarter of 2023.
Adjusted operating costs rose 6.3% to $506.7 million during the quarter. Management anticipates adjusted operating costs to increase approximately 6-8% in the second quarter of 2023. The company expects expense growth to decelerate later in the year compared with the second quarter guidance. The total adjusted operating profit decreased 11.4% to $54 million during the quarter under review. Higher adjusted operating costs and lower advertising revenues more than offset higher digital subscription and other revenues. Segment Details
The New York Times Group’s revenues increased 1.3% year over year to $532.1 million. Subscription revenues rose 3.3% to $373.5 million due to growth in subscription revenues from digital-only products, partially offset by decreases in print subscription revenues. Advertising revenues fell 10.8% to $102.1 million, stemming from soft digital and print advertising revenues.
The adjusted operating profit decreased 8.8% to $61.8 million. This can be attributed to higher adjusted operating costs and lower advertising revenues, partially offset by higher digital subscription and other revenues. Revenues totaled $28.6 million in The Athletic segment, primarily from subscription revenues. Subscription revenues rose to $24.1 million from $10.4 million in the first quarter of 2022, mainly due to an increase in digital-only subscribers with The Athletic and the favorable impact of an additional month in 2023. The adjusted operating loss amounted to $7.8 million. Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $474.4 million, reflecting a decrease of $11.9 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 2023. Free cash flow in the quarter was approximately $45 million. The board of directors authorized a $150 million share repurchase program in February 2022. As of May 5, 2023, the company repurchased 3,937,593 shares for about $135.7 million, and $14.3 million remained under the authorization. In February 2023, The New York Times Company’s board of directors also approved a new $250 million Class A share buyback program. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -12.33% due to these changes.
At this time, New York Times has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, 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 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 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.