It has been about a month since the last earnings report for New York Times Co. (NYT - Free Report) . Shares have added about 8.7% in that time frame, outperforming 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 Q4 Earnings Tops, Digital Subscribers Increase
The New York Times Company posted better-than-expected fourth-quarter 2018 results and registered higher digital-only subscriptions. Digital advertising also improved significantly. This was the tenth straight quarter, when this NY-based company delivered positive earnings surprise, while revenue also beat the Zacks Consensus Estimate for the fifth consecutive quarter.
The company delivered adjusted earnings from continuing operations of 32 cents a share that beat the Zacks Consensus Estimate of 28 cents but fell 15.8% from 38 cents recorded in the year-ago period. The newspaper publisher's total revenue of $502.7 million rose 3.8% year over year, and came ahead of the Zacks Consensus Estimate of $479.3 million.
Let’s Delve Deep
Subscription revenue fell 2.2% to $263.6 million, principally due to extra week in 2017. Excluding the impact of the additional week, subscription revenue rose 5%. Revenue from digital-only subscriptions products jumped 9.3% to $105.3 million. Management now projects total subscription revenue in first-quarter 2019 to increase in the low to mid-single digits, while digital-only subscription revenue is likely to rise in the mid-teens.
Total advertising revenue came in at $191.7 million in the reported quarter, up 5% year over year. In the preceding quarter, total advertising revenue had increased 7.1%. Total advertising revenue in the first quarter of 2019 is projected to decline in the low to mid-single digits.
Print advertising revenue fell 10.2% to $88.3 million in the quarter under review, following a decline of 0.7% in the preceding quarter.
Digital advertising revenue surged 22.8% to $103.4 million, following an increase of 17.3% in the preceding quarter. Management expects digital advertising revenue to increase in the mid-teens during the first quarter of 2019.
Management expects to take total digital revenue to $800 million by 2020. The company ended 2018 with a total digital revenue of $709 million.
Adjusted operating costs came in at $408.7 million during the quarter, up 8% year over year on account of rise in marketing expenses, labor and raw material costs from commercial printing, and costs associated to advertising business. This was partly offset by fall in print production and distribution costs with respect to newspaper. Management now anticipates adjusted operating costs to increase around 10% in the first quarter of 2019. Total adjusted operating profit declined 11.2% to $94 million.
Other Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $826.4 million, and total debt and capital lease obligations of approximately $253.6 million. The company incurred capital expenditures of about $8 million during the quarter. Management envisions capital expenditures of $45-$55 million in 2019. The company’s board of directors also raised the quarterly dividend by a penny to 5 cents a share.
The New York Times Company has come a long way from being a sole provider of news content and advertising on print publications. The company is no longer restricted to print. As readers swarmed to the Internet, advertisers followed suit and so did newspaper companies. Trimmed print operations paved way for online publications that led to the development of paywalls. The New York Times Company’s pricing system for NYTimes.com. The company notified that the number of paid digital subscribers reached 3,360,000 at the end of fourth-quarter 2018 – rising 265,000 sequentially and 27.1% year over year. The company has set a goal to reach more than 10 million subscriptions by 2025.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.