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News Corporation (NWSA) Q4 Earnings Beat, Revenues Fall Y/Y
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News Corporation (NWSA - Free Report) reported fourth-quarter fiscal 2023 earnings of 14 cents per share, which beat the Zacks Consensus Estimate by 55.56% but declined 62.2% year over year.
Revenues of $2.43 billion decreased 9% year over year and missed the consensus mark by 2.43% due to lower revenues at the Book Publishing segment owing to a fall in book sales. The decline was also due to lower revenues at the Digital Real Estate Services segment because of continued challenging housing market conditions in the United States and Australia.
The decline was partially offset by higher revenues at the Subscription Video Services segment on a constant currency basis.
News Corporation Price, Consensus and EPS Surprise
Adjusted Revenues (which exclude the foreign currency impact, acquisitions and divestitures) were down 7% compared with the prior-year period.
Total EBITDA increased 8% to $341 million, primarily driven by cost savings across the businesses related to headcount and other cost reductions and lower costs at the Other segment due in part to the absence of one-time legal settlement costs of $20 million recognized in the prior-year period.
Segmental Details
Revenues at the Digital Real Estate Services segment declined 17% to $369 million, induced by a 4% negative impact from foreign currency fluctuations. Adjusted segment revenues decreased 14%.
Revenues in Move fell 24% to $146 million primarily as a result of lower real estate revenues. Real estate revenues, which represented 79% of total Move revenues, decreased 29% year over year. The decline was due to the continued impact of the macroeconomic environment on the housing market, including higher mortgage rates, which has led to lower lead and transaction volumes.
The referral model generated 25% of total Move revenues in the quarter compared with 31% in the prior year. Based on Move’s internal data, average monthly unique users of Realtor.com’s web and mobile sites declined 20% year over year to 74 million. Lead volume declined 14%.
Revenues at REA Group decreased 11% to $223 million because of 6% negative impact from foreign currency fluctuations, lower Australian residential revenues and lower financial services revenues. Australian national residential buy listing volumes declined 18% year over year, with listings in Sydney and Melbourne down 17% and 16%, respectively.
The Subscription Video Services segment’s revenues were $501 million, down 4% year over year. Foreign currency fluctuations adversely impacted the segment’s revenues by 7%. Increased revenues from Kayo and BINGE were driven by a rise in both volume and pricing, partially offset by the impact from fewer residential broadcast subscribers. Foxtel Group streaming subscription revenues represented approximately 29% of total circulation and subscription revenues in the quarter as compared with 23% in the prior year.
Foxtel’s total closing paid subscribers were more than 4.6 million, reflecting a 5% increase from the prior year, primarily due to the growth in streaming subscribers driven by BINGE and Kayo. Broadcast subscriber churn improved to 11.1% from 13.8% in the prior year. Broadcast average revenue per user for the quarter increased 2% year over year to A$84 (US$56).
Revenues at the Dow Jones segment decreased 3% year over year to $546 million. This includes a $13 million contribution from CMA which was acquired in June 2022. Adjusted Revenues at the Dow Jones segment declined 6% from the prior-year period. Digital revenues at Dow Jones represented 79% of total revenues compared with 76% in the prior year.
Circulation and subscription revenues decreased $2 million year over year. Circulation revenues declined 6%, primarily due to lower print volume and lower revenues from IBD, which was partially offset by the continued growth in digital-only subscriptions, primarily at The Wall Street Journal. Professional information business revenues grew 10%, primarily driven by the acquisition of CMA and growth in Risk & Compliance products.
Revenues from the Risk & Compliance products grew 10% year over year. Digital circulation revenues accounted for 70% of circulation revenues compared with 68% in the prior year.
Advertising revenues decreased 14% year over year, primarily due to 18% and 10% declines in digital and print advertising revenues, respectively. The decline was due to a continued weakness in technology spending. Digital advertising accounted for 60% of total advertising revenues compared with 58% in the prior year.
During the fourth quarter, total average subscriptions to Dow Jones’ consumer products reached more than 5.2 million, up 7% from the prior year. Digital-only subscriptions rose 12%. Total subscriptions to The Wall Street Journal grew 6% to nearly 3.9 million average subscriptions. Digital-only subscriptions to The Wall Street Journal grew 10% to 3.4 million average subscriptions and represented 86% of total The Wall Street Journal subscriptions.
The Book Publishing segment reported revenues of $446 million, decreased 13% year over year from the prior-year fiscal quarter’s level, primarily because of lower book sales due to lower consumer demand industry-wide and weak frontlist performance, which contributed to higher returns.
Adjusted Revenues decreased 13%. Digital sales declined 10% from the prior year due to lower e-book sales. Digital sales represented 25% of Consumer revenues compared with 24% in the prior year. Backlist sales represented approximately 59% of total revenues in the quarter.
Revenues in the News Media segment dipped 9% to $571 million. Within the segment, revenues at News Corporation Australia and News UK decreased 15% and 7%, respectively, as both were impacted by negative foreign currency fluctuations. Adjusted Revenues for the segment decreased 7%.
Circulation and subscription revenues dipped 7% due to a 3% adverse impact from foreign currency fluctuations.
Advertising revenues dipped 15% due to lower print and digital advertising at News Corp Australia, lower print advertising at News UK and negative foreign currency fluctuations of 2%.
Digital revenues represented 36% of News Media segment revenues in the quarter compared with 35% in the prior year and represented 34% of the combined revenues of the newspaper mastheads. As of Jun 30, 2023, The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, were 565K compared with 508K in the prior year. New York Post’s digital network reached 145 million unique users in June 2023 compared with 198 million in the prior year.
Other Financial Aspects
News Corporation ended the quarter with cash and cash equivalents of $1,833 million, borrowings of $2,620 million and a stockholders’ equity of $8,064 million, excluding non-controlling interest of $881 million.
Net cash provided by operating activities amounted to $1,092 million during the fourth quarter of fiscal 2023. NWSA incurred capital expenditures of $499 million in the said period. Free cash flow available to News Corporation was $450 million.
DouYu, On Holding and Afya are scheduled to report quarterly results on Aug 14, Aug 15 and Aug 28, respectively.
The consensus mark for DOYU’s second-quarter 2023 earnings is pegged at 2 cents per share, up by 4 cents over the past 30 days.
The Zacks Consensus Estimate for ONON’s second-quarter 2023 earnings is pegged at 13 cents per share, up by a cent over the past 30 days.
The Zacks Consensus Estimate for Afya's second-quarter 2023 bottom line is pegged at 33 cents per share, which has remained unchanged over the past 30 days.
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News Corporation (NWSA) Q4 Earnings Beat, Revenues Fall Y/Y
News Corporation (NWSA - Free Report) reported fourth-quarter fiscal 2023 earnings of 14 cents per share, which beat the Zacks Consensus Estimate by 55.56% but declined 62.2% year over year.
Revenues of $2.43 billion decreased 9% year over year and missed the consensus mark by 2.43% due to lower revenues at the Book Publishing segment owing to a fall in book sales. The decline was also due to lower revenues at the Digital Real Estate Services segment because of continued challenging housing market conditions in the United States and Australia.
The decline was partially offset by higher revenues at the Subscription Video Services segment on a constant currency basis.
News Corporation Price, Consensus and EPS Surprise
News Corporation price-consensus-eps-surprise-chart | News Corporation Quote
Quarterly Details
Adjusted Revenues (which exclude the foreign currency impact, acquisitions and divestitures) were down 7% compared with the prior-year period.
Total EBITDA increased 8% to $341 million, primarily driven by cost savings across the businesses related to headcount and other cost reductions and lower costs at the Other segment due in part to the absence of one-time legal settlement costs of $20 million recognized in the prior-year period.
Segmental Details
Revenues at the Digital Real Estate Services segment declined 17% to $369 million, induced by a 4% negative impact from foreign currency fluctuations. Adjusted segment revenues decreased 14%.
Revenues in Move fell 24% to $146 million primarily as a result of lower real estate revenues. Real estate revenues, which represented 79% of total Move revenues, decreased 29% year over year. The decline was due to the continued impact of the macroeconomic environment on the housing market, including higher mortgage rates, which has led to lower lead and transaction volumes.
The referral model generated 25% of total Move revenues in the quarter compared with 31% in the prior year. Based on Move’s internal data, average monthly unique users of Realtor.com’s web and mobile sites declined 20% year over year to 74 million. Lead volume declined 14%.
Revenues at REA Group decreased 11% to $223 million because of 6% negative impact from foreign currency fluctuations, lower Australian residential revenues and lower financial services revenues. Australian national residential buy listing volumes declined 18% year over year, with listings in Sydney and Melbourne down 17% and 16%, respectively.
The Subscription Video Services segment’s revenues were $501 million, down 4% year over year. Foreign currency fluctuations adversely impacted the segment’s revenues by 7%. Increased revenues from Kayo and BINGE were driven by a rise in both volume and pricing, partially offset by the impact from fewer residential broadcast subscribers. Foxtel Group streaming subscription revenues represented approximately 29% of total circulation and subscription revenues in the quarter as compared with 23% in the prior year.
Foxtel’s total closing paid subscribers were more than 4.6 million, reflecting a 5% increase from the prior year, primarily due to the growth in streaming subscribers driven by BINGE and Kayo. Broadcast subscriber churn improved to 11.1% from 13.8% in the prior year. Broadcast average revenue per user for the quarter increased 2% year over year to A$84 (US$56).
Revenues at the Dow Jones segment decreased 3% year over year to $546 million. This includes a $13 million contribution from CMA which was acquired in June 2022. Adjusted Revenues at the Dow Jones segment declined 6% from the prior-year period. Digital revenues at Dow Jones represented 79% of total revenues compared with 76% in the prior year.
Circulation and subscription revenues decreased $2 million year over year. Circulation revenues declined 6%, primarily due to lower print volume and lower revenues from IBD, which was partially offset by the continued growth in digital-only subscriptions, primarily at The Wall Street Journal. Professional information business revenues grew 10%, primarily driven by the acquisition of CMA and growth in Risk & Compliance products.
Revenues from the Risk & Compliance products grew 10% year over year. Digital circulation revenues accounted for 70% of circulation revenues compared with 68% in the prior year.
Advertising revenues decreased 14% year over year, primarily due to 18% and 10% declines in digital and print advertising revenues, respectively. The decline was due to a continued weakness in technology spending. Digital advertising accounted for 60% of total advertising revenues compared with 58% in the prior year.
During the fourth quarter, total average subscriptions to Dow Jones’ consumer products reached more than 5.2 million, up 7% from the prior year. Digital-only subscriptions rose 12%. Total subscriptions to The Wall Street Journal grew 6% to nearly 3.9 million average subscriptions. Digital-only subscriptions to The Wall Street Journal grew 10% to 3.4 million average subscriptions and represented 86% of total The Wall Street Journal subscriptions.
The Book Publishing segment reported revenues of $446 million, decreased 13% year over year from the prior-year fiscal quarter’s level, primarily because of lower book sales due to lower consumer demand industry-wide and weak frontlist performance, which contributed to higher returns.
Adjusted Revenues decreased 13%. Digital sales declined 10% from the prior year due to lower e-book sales. Digital sales represented 25% of Consumer revenues compared with 24% in the prior year. Backlist sales represented approximately 59% of total revenues in the quarter.
Revenues in the News Media segment dipped 9% to $571 million. Within the segment, revenues at News Corporation Australia and News UK decreased 15% and 7%, respectively, as both were impacted by negative foreign currency fluctuations. Adjusted Revenues for the segment decreased 7%.
Circulation and subscription revenues dipped 7% due to a 3% adverse impact from foreign currency fluctuations.
Advertising revenues dipped 15% due to lower print and digital advertising at News Corp Australia, lower print advertising at News UK and negative foreign currency fluctuations of 2%.
Digital revenues represented 36% of News Media segment revenues in the quarter compared with 35% in the prior year and represented 34% of the combined revenues of the newspaper mastheads. As of Jun 30, 2023, The Times and Sunday Times closing digital subscribers, including the Times Literary Supplement, were 565K compared with 508K in the prior year. New York Post’s digital network reached 145 million unique users in June 2023 compared with 198 million in the prior year.
Other Financial Aspects
News Corporation ended the quarter with cash and cash equivalents of $1,833 million, borrowings of $2,620 million and a stockholders’ equity of $8,064 million, excluding non-controlling interest of $881 million.
Net cash provided by operating activities amounted to $1,092 million during the fourth quarter of fiscal 2023. NWSA incurred capital expenditures of $499 million in the said period. Free cash flow available to News Corporation was $450 million.
Zacks Rank & Stocks to Consider
NWSA currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Consumer Discretionary sector are DouYu International (DOYU - Free Report) , On Holding (ONON - Free Report) and Afya (AFYA - Free Report) . DouYu and On Holding sport a Zacks Rank #1 (Strong Buy), and Afya carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DouYu, On Holding and Afya are scheduled to report quarterly results on Aug 14, Aug 15 and Aug 28, respectively.
The consensus mark for DOYU’s second-quarter 2023 earnings is pegged at 2 cents per share, up by 4 cents over the past 30 days.
The Zacks Consensus Estimate for ONON’s second-quarter 2023 earnings is pegged at 13 cents per share, up by a cent over the past 30 days.
The Zacks Consensus Estimate for Afya's second-quarter 2023 bottom line is pegged at 33 cents per share, which has remained unchanged over the past 30 days.