News Corporation (NWSA) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

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.

Key Financial Performance

Net Income from Continuing Operations $107 million, up 67% year-over-year.

Revenues $2 billion, up 1% year-over-year despite currency headwinds.

Total Segment EBITDA $290 million, up 12% year-over-year, with margins improving from 13% to 14.4%.

Adjusted Revenues Increased by 2% year-over-year.

Adjusted Total Segment EBITDA Increased by 15% year-over-year.

Earnings per Share (EPS) from Continuing Operations $0.14, doubled from $0.07 in the prior year.

Adjusted EPS $0.17, compared to $0.13 in the prior year.

Dow Jones Revenues $575 million, up 6% year-over-year.

Digital Revenue (Dow Jones) 82% of total Dow Jones segment revenues, up 1% year-over-year.

Professional Information Business Revenues (Dow Jones) Up 6% year-over-year.

Risk and Compliance Revenue (Dow Jones) $84 million, up 11% year-over-year.

Dow Jones Energy Revenue $69 million, up 10% year-over-year.

Digital Circulation Revenue (Dow Jones) Up 14% year-over-year.

Digital ARPU (Dow Jones) Increased quarter-over-quarter and year-over-year.

Digital Subscriptions (Dow Jones) Improved by 9% year-over-year.

Digital Real Estate Revenues $406 million, up 5% year-over-year.

Digital Real Estate Segment EBITDA $124 million, up 19% year-over-year.

REA Revenues $271 million, up 6% year-over-year.

Realtor.com Revenues $135 million, up 2% year-over-year.

Book Publishing Revenues $514 million, up 2% year-over-year.

Book Publishing EBITDA $64 million, up 3% year-over-year.

News Media Revenue $514 million, down 8% year-over-year.

News Media Segment EBITDA $33 million, up 22% year-over-year.

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Operating Highlights

Digital Revenue Growth at Dow Jones: Digital circulation revenue expanded 14%, the fastest growth rate in almost three years, with total consumer subscriptions surpassing six million.

Acquisition of Oxford Analytica and DragonFly Intelligence: These acquisitions are expected to enhance the ability to provide insight and intel to companies globally.

New Book Releases: Upcoming releases include notable titles such as Shelby Van Pel’s best seller and Harper Lee's unseen short stories.

Sale of Foxtel to DAZN: The sale resulted in the transfer of $724 million of Foxtel debt off the balance sheet and an equity interest of approximately 6% in DAZN.

Growth in Digital Real Estate Services: Digital Real Estate Services saw profitability surge 19% on a 5% increase in revenues, with REA posting 6% revenue growth.

Digital Subscriptions Growth: Digital subscriptions to the Times and Sunday Times reached 629,000, rising 8% compared to the prior year.

Cost Discipline: The company focused on cost discipline, leading to an overall margin expansion from 13% to 14.4%.

Improved EBITDA: Total segment EBITDA increased 12% with adjusted total segment EBITDA expanding 15%.

Core Pillars of Growth: The company is concentrating investment on three core pillars: Dow Jones, Digital Real Estate, and Book Publishing.

Partnership with OpenAI: The partnership is expected to enhance the company's capabilities in the evolving digital landscape.

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Risk or Challenges

Political Turbulence: Political turbulence has affected some business partners, undermining their ability to plan coherently.

Economic Uncertainty: Economic and geopolitical conditions have been uncertain, impacting overall business strategy and execution.

Regulatory Issues: The need for compliance remains imperative for companies in a fast-changing regulatory environment, which can pose challenges.

Tariffs: The introduction of exorbitant tariffs has created economic uncertainty, although the direct impact on News Corp is expected to be immaterial.

Supply Chain Challenges: Volatile conditions in the supply chain, particularly concerning newsprint and imported children's and Christian books from China.

Advertising Revenue Volatility: Advertising revenue is likely to be volatile due to macroeconomic uncertainty.

AI and Legal Costs: Ongoing AI and related legal costs are expected to increase, impacting overall segment costs.

Market Conditions: Elevated mortgage rates and economic instability are creating difficult market conditions for Digital Real Estate.

Customer Disputes: A contentious client dispute has adversely impacted revenues in the professional information business.

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Guidance & Outlook

Core Pillars of Growth: News Corp intends to concentrate investment on three core pillars of growth: Dow Jones, Digital Real Estate, and Book Publishing.

Foxtel Sale: The sale of Foxtel to DAZN resulted in the transfer of $724 million of Foxtel debt off the balance sheet and repayment of AUD592 million in shareholder loans.

Partnership with OpenAI: News Corp has established a principal partnership with OpenAI to enhance its intellectual property rights.

Acquisitions: Completed acquisitions of Oxford Analytica and DragonFly Intelligence to enhance insights and intelligence offerings.

Revenue Growth Expectations: Expect improvement in growth in the second half compared to the first half, particularly in Dow Jones.

Digital Real Estate Outlook: Expect modestly higher reinvestment rates in the fourth quarter for Realtor.com to focus on growth initiatives.

Book Publishing Challenges: Expect difficult comparisons in the fourth quarter for Book Publishing.

News Media Advertising Volatility: Advertising revenue is likely to be volatile due to macroeconomic uncertainty.

Cost Management: Ongoing cost initiatives are expected to continue benefiting the News Media segment.

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Shareholder Return Plan

Shareholder Return Plan: News Corp is continuously exploring structural options to maximize returns for shareholders, particularly following the sale of Foxtel, which has improved their return on invested capital.

Cash Flow and Shareholder Value: The strong balance sheet and steady cash flow enable News Corp to maximize shareholder value creation.

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Key Q&A

Q:Is there any more color you can share around how we think about the rate of investment going into the fourth quarter?

A:There was no particular startling increase in investment in Dow Jones. We did make the acquisition and the related acquisition costs that of Dragonfly and Oxford Analytica, which will add to the professional information business.

Q:Do you mind just to clarify do you expect a similar impact in the fourth quarter from the Factiva dispute?

A:I would expect a smaller impact than what we've seen in the third quarter which was sequentially smaller than in the second quarter as well.

Q:Is there a longer-term target you can share on where Dow Jones margins can get to?

A:There’s every reason to believe that as that professional information business expands so will the overall margin as that is a higher-margin segment.

Q:How you're prioritizing the strategy going forward for capital allocation across internal investments, external investments, capital returns?

A:We have identified three core pillars, and we will look for opportunities in those three areas. What we will certainly not do is squander our hard-earned cash by overpaying for businesses.

Q:Should investors expect you guys to rationalize, simplify the company any further?

A:The Foxtel deal itself is a living, breathing example of our continuing willingness to make significant decisions about structure and focus in the interest of our shareholders.

Q:How is the endeavor of converting people from promotional pricing to higher-paying pricing going?

A:The Dow Jones team is rather confident that the phasing of subscribers from discounted entry-level offers to more standard pricing is proceeding well.

Q:Can you talk to the churn impact from those customers moving to the non-promotion plans?

A:We're learning every day about price elasticity, which is really the kernel of the dynamic pricing system that's being deployed by the team at Dow Jones.

Q:Review of Unclear Management Responses

A:Management avoided giving a direct answer regarding specific long-term margin targets for Dow Jones, stating only that margins would likely expand without providing quantitative details.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

NWS Transcript

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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.

News Corporation (NWSA) Q3 2025 Earnings Call Transcript

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NWS Report

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