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01/11 03:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company demonstrated strong financial performance with revenue and EBITDA growth, particularly in Digital Real Estate and Dow Jones segments. The accelerated stock repurchase program and positive outlook for Risk & Compliance and News Media further enhance sentiment. Despite some challenges in Book Publishing and cautious management responses, the overall outlook is optimistic, supported by strategic initiatives and market recovery potential. With no significant negative factors from the Q&A, the stock is likely to experience a positive movement in the short term.
Revenue Revenue for the period rose 2% year-over-year to $2.14 billion. The increase was driven by strength in Dow Jones and Digital Real Estate Services, despite a weak performance in Book Publishing.
Total Segment EBITDA Total segment EBITDA increased by 5% year-over-year to $340 million. This was negatively impacted by a $13 million write-off related to the expected closure of a book distributor.
Net Income from Continuing Operations Net income from continuing operations was $150 million, up slightly from $149 million last year. The increase reflects overall improved profitability.
Adjusted EPS Adjusted EPS rose from $0.20 to $0.22 year-over-year, reflecting improved earnings performance.
Dow Jones EBITDA Dow Jones EBITDA rose 10% year-over-year, driven by a 6% increase in revenue. Risk & Compliance revenues surged 16%, and Dow Jones Energy revenues grew 7%.
Digital Real Estate Services Revenue Realtor.com delivered a 9% revenue boost year-over-year, attributed to premium offerings and higher yields. REA Group revenue rose 3% (5% in constant currency), with residential yield growth of 13%.
Digital Real Estate Services Margin The margin in Digital Real Estate Services increased from 30.6% a year ago to 33%, reflecting improved operational efficiency.
Book Publishing Revenue Book Publishing revenue declined 2% year-over-year to $534 million, impacted by a $13 million receivable write-off and weaker U.S. market conditions. However, trends improved in recent weeks.
News Media Revenue News Media revenue rose 1% year-over-year to $545 million, driven by higher cover and subscription prices in the U.K. and Australia.
News Media EBITDA News Media EBITDA grew 67% year-over-year to $30 million, supported by cost efficiencies.
AI-related revenues: News Corp has seen growth in digital and AI-related revenues, with plans to announce further partnerships in the near future.
Eco-Movement acquisition: Dow Jones expanded its professional information business by acquiring Eco-Movement, which provides unique data sets for EV charging stations.
Book Publishing: New releases like R.F. Kuang's 'Katabasis' and Harper Lee's collection of stories have become bestsellers. Upcoming releases like 'Wicked: For Good' are expected to boost sales.
Digital Real Estate Services: Realtor.com posted a 9% revenue boost year-on-year, driven by premium offerings and higher yields. Growth areas include sell-side, new homes, and rentals.
Australian property market: REA Group saw a 3% revenue increase, with auction levels in Melbourne and Sydney showing signs of recovery.
New York Post expansion: Plans to launch the California Post early next year, leveraging the New York Post's growing influence.
Digital transformation: Digital revenues now account for 62% of News Corp's business, nearly doubling since fiscal 2018.
Cost efficiencies: News Media segment EBITDA grew 67%, driven by cost efficiencies.
Share buybacks: Accelerated share buyback program, repurchasing at a rate of $2.5 million per day.
AI and IP protection: News Corp is actively pursuing legal action against companies using pirated content and is emphasizing the value of intellectual property in the AI age.
Shift in revenue composition: Dow Jones and Digital Real Estate now account for 49% of revenue and 84% of EBITDA, reducing reliance on advertising revenue.
M&A strategy: Strategic acquisitions like OPIS and CMA have strengthened the portfolio, while divestments like News America Marketing have streamlined operations.
Book Publishing: Weak performance in the Book Publishing segment due to slowing orders from readers and retailers, and a $13 million write-off related to the expected closure of a book distributor. This segment also faced challenges from difficult prior year comparisons and softer U.S. market conditions.
Digital Real Estate: Uneven macroeconomic environment and softer listing volumes in Australia, driven by a tough prior year comparison. Additionally, the divestment of PropTiger in India and discontinuation of the housing edge offering due to regulatory changes may impact growth.
Advertising Revenue: Decline in print advertising revenue, which was only partially offset by an increase in digital advertising revenue. Advertising trends remain mixed, with difficult conditions in some segments.
Macroeconomic Uncertainty: Ongoing macroeconomic uncertainty, which could impact various business segments, including Digital Real Estate and Book Publishing.
Regulatory and Legal Risks: Potential legal and regulatory challenges related to AI and content piracy, as well as the need to pursue legal action against companies using pirated content.
Supply Chain Logistics: Increased capital spending on new supply chain logistics facilities for HarperCollins, which may temporarily impact free cash flow.
Share Buyback Program: The company is accelerating and expanding its share buyback program, repurchasing shares at a rate of approximately $2.5 million per day, over 4x the previous pace. This reflects confidence in the company's growth potential and belief that the stock is trading at a significant discount to net asset value.
Digital Real Estate Outlook: The company expects improving market conditions driven by a reduction in mortgage rates to lead to continued healthy revenue growth alongside growth in adjacencies such as new homes, rentals, and sellers. Australian residential new buy listings for October were down 3%, but the company remains optimistic about growth opportunities.
Book Publishing Outlook: October trends were encouraging, and the company expects Q2 to benefit from the timing of ordering and a stronger front list. Investment in new supply chain logistics facilities for HarperCollins is expected to deliver additional cost savings.
Dow Jones Segment Outlook: The company expects continued strong revenue growth in B2B, particularly in Risk & Compliance and Dow Jones Energy. Cost growth is expected to be slightly higher in Q2 due to prior year comparisons.
Capital Expenditures: Capital spending is anticipated to increase moderately from the prior year, driven by investments in new supply chain logistics facilities for HarperCollins and continued investment in technology.
Free Cash Flow: The company expects strong free cash flow in the current fiscal year.
Share Buyback Program: News Corp has materially increased the rate of its share buybacks, citing a belief that its shares are undervalued. The company has been repurchasing shares at a rate of approximately $2.5 million per day, which is over four times the previous pace. This accelerated and expanded share buyback program was announced in July 2025. The company remains confident in its growth potential and continues to believe its stock is trading at a significant discount to net asset value.
The company demonstrated strong financial performance with revenue and EBITDA growth, particularly in Digital Real Estate and Dow Jones segments. The accelerated stock repurchase program and positive outlook for Risk & Compliance and News Media further enhance sentiment. Despite some challenges in Book Publishing and cautious management responses, the overall outlook is optimistic, supported by strategic initiatives and market recovery potential. With no significant negative factors from the Q&A, the stock is likely to experience a positive movement in the short term.
The earnings call reflects strong financial performance, with revenue and EBITDA growth, and strategic moves like the Foxtel sale enhancing financial health. The partnership with OpenAI and acquisitions indicate a focus on growth. The Q&A highlights positive sentiment from analysts about buybacks and Realtor's prospects. Despite some vague responses, the overall tone is optimistic, with management expressing confidence in growth areas like Dow Jones. The positive aspects, such as increased shareholder returns and strong revenue growth, outweigh concerns, leading to a likely stock price increase in the next two weeks.
The earnings call presents mixed signals. The sale of Foxtel and partnership with OpenAI are positive, but challenges in supply chain, advertising, and market conditions are concerning. Financials show growth, yet guidance is vague. Q&A highlights management's confidence but lacks specifics. Without market cap data, the stock's reaction is uncertain, warranting a neutral outlook.
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