Lavanya Chandrashekar
Chief Financial Officer at News
Thank you, Robert, for the kind introduction. I am delighted to be with all of you today and look-forward to meeting many of you in the coming months. I'm excited to join NewsCorp amid the company's continued impressive digital evolution. As Robert mentioned in December, we announced an agreement to sell Foxtel to, which for will allow for a greater focus on our core growth pillars will meaningfully strengthen our balance sheet and should reduce our future capital intensity. Turning to the quarter. Foxtel's financial results are reflected as discontinued operations for fiscal 2025 and 2024 second-quarter and year-to-date periods and subscription video service is no longer a reportable segment. I will not speak to Foxtel's results on this call and they are excluded from the numbers I will be discussing today. But more information will be available in the 10-Q to be filed tomorrow morning. We will also be filing an 8-K with recast historic financial information. News Corp reported fiscal second-quarter revenues on a continuing operation basis of $2.2 billion, rising 5% year-over-year and total segment EBITDA of $478 million, increasing 20% year-over-year. Margins improved by nearly 270 basis-points to 21.4%. The three core pillars, Dow Jones, digital Real Estate and book publishing collectively grew revenue by 7% and segment EBITDA by 16%. Second-quarter adjusted revenues rose 4% compared to the prior year with the difference from reported primarily due to currency impact, while adjusted total segment EBITDA rose 20% versus the prior year. For the quarter, we reported earnings from continuing operations per share of $0.40 compared to $0.28 in the prior year. Adjusted earnings from continuing operations per share were $0.33 in the quarter compared to $0.27 in the prior year. Moving to the individual segments, starting with Dow Jones. Dow Jones reported revenues of $600 million, up 3% year-over-year, similar to the first-quarter and was again the largest segment contributor to overall company revenue. Digital revenue accounted for 81% of total Dow Jones segment revenue this quarter, improving 3 percentage points from last year. Overall, professional information business revenue, which reflects our B2B products rose 4% year-over-year, notwithstanding an over 300 basis-point adverse impact from Factiva, primarily due to the ongoing customer dispute that we mentioned last quarter with the impact greater in the second-quarter. This quarter, the growth came from new customers, new products and improved yield at-risk and compliance, which grew 11% to $80 million, including a modest negative FX impact due to European exposure and Dow Jones Energy, which grew 10% to $68 million with customer retention remaining very strong at over 90%. During the quarter, Risk; Compliance enhanced its product offerings with the acquisition of World ECR, a London-based provider of export control and trade sanction news. And in energy, we continue to see strong demand for newer products associated with carbon, retail fuels and liquefied petroleum gas and experienced robust pipelines and strong closing rates. Within the Dow Jones consumer business, circulation revenues rose 3% versus the prior year, benefiting from improved digital circulation revenues of 8%, double the quarter one rate and the highest quarterly growth in two years. We have started to benefit from the conversion to higher pricing from our digital subscriptions added in the past year via introductory promotional offers. Digital ARPU also increased quarter-over-quarter. Digital circulation revenues accounted for 73% of circulation revenues for the quarter, up from 70% in the prior year. Digital-only subscriptions improved by 13% year-over-year and by 27,000 sequentially, negatively impacted by the phasing of marketing promotions and seasonality, particularly related to students and some industry headwinds from search algorithms. That said, we do expect stronger volumes in the 3rd-quarter. Bundling subscriptions for the quarter improved by 45% year-over-year to over 950,000, while also benefiting from improved yield with the focus on the three-product bundle of Wall Street Journal, Market Watch and Barons. Print volume declined by 16% year-over-year, but its sequential decline was the lowest since the 4th-quarter of fiscal 2021. Advertising revenue of $121 million moderated from the prior quarter to a decline of 4% year-over-year as print declined 10% with digital flat, an improvement from the first-quarter. Digital represented 64% of advertising revenues, up from 62% last year. Dow Jones segment EBITDA for the quarter grew 7% to $174 million with margins increasing to 29%. Moving on to digital real-estate. Digital real-estate had another exceptional quarter with segment revenues of $473 million, up 13% versus the prior year and 12% on an adjusted basis. Segment EBITDA was $185 million, up 26%, driven by higher profit contribution from REA Group, the highest-growth since 2021. Adjusted segment EBITDA grew 25%. REA had an outstanding quarter with revenues rising 17% year-on-year to $343 million, marking its highest-ever quarterly revenue on record. Growth was again driven by a combination of residential yield increases, continued strong growth in national listings and customer contract upgrades. Residential yield growth improved by 14%. Newbuy listings rose approximately 4% with Sydney and Melbourne each up 2%. Please refer to REA's earnings release and their conference call for more details. Realtor's revenue for the quarter of $130 million were up 2% compared to the prior year, marking the first year-over-year improvement since the 4th-quarter of fiscal 2022. At Realtor, real-estate revenues were essentially flat as lower referral and lead-generation revenues were largely offset by accelerating growth from adjacencies. Lead volumes fell 2%, while average monthly unique users for the quarter fell 6% year-over-year to 62 million at realtor.com. However, Realtor continues to maintain strong audience share despite much higher competitive marketing spend, underscoring the strength and quality of their audience. Realtor also continued to show strong traction on new revenues as seller, new-home and rentals represented 20% of revenues and we anticipate continued strong growth in these adjacencies going-forward this fiscal year. At Book Publishing, momentum from the prior year continued with the year-over-year growth improving from first-quarter with revenues of $595 million, up 8%, while segment EBITDA improved by 19% to $101 million. Margins expanded by 150 basis-points to 17% as positive operating leverage was underpinned by strong digital and back list performance. We saw strong growth in Christian Publishing from higher Bible sales and very strong sales in the UK, as Robert mentioned. Harper continued to benefit from strong physical book orders and continued robust audio book growth across all regions. HARPA Collins posted digital revenues of $120 million, increasing 9% from the prior year, driven by strong order book growth across all regions, including increased adoption at Spotify and increased performance from Audible. In total, digital sales represented 21% of consumer revenue, in-line with the prior year. Audio books grew 13% year-over-year, a slower rate than quarter one as we began to lap the initial rollout from Spotify in the UK, Australia and US. The back list contributed 61% of consumer revenues, up from 60% last year. Turning to News Media, overall revenue performance improved from the first-quarter with advertising declines moderating and the segment benefited from increased cover prices and subscription pricing across Mastheads. Revenues for the quarter were $570 million, down 2% versus the prior year, while adjusted revenues fell 3%. Note that both periods were recast to include the contribution from Sky News Australia, which previously had been included in the subscription video service segment. Sky News contributed $17 million in revenues, flat compared to the prior year. Segment EBITDA showed strong improvement, rising 30% year-over-year driven by cost-savings initiatives as we mentioned last quarter, most notably at the UK from the benefits of the commercial printing joint-venture with DMG Media and lower top costs. Adjusted segment EBITDA increased 28%. Turning to the outlook. Market trends remain mixed geographically. And given the current spot rates for the Australian dollar and pound-sterling versus the US dollar, we expect currency translation to be a headwind in the second-half. Some of the themes across each of our segments. At Dow Jones, the team remains focused on B2B growth, including upselling and new products across Risk and compliance and Dow Jones Energy. As Robert mentioned, for total Dow Jones, we expect to see improvement in growth in the second-half. We expect expenses to be modestly higher year-over-year due to investment, notably in B2B. However, we will continue to focus on cost efficiencies to drive growth. At digital real-estate, Australian residential new buy listings for January were up 3%. Refer to REA for more detailed outlook commentary. Realtor.com will continue to focus on technology improvements and enhanced content and product offerings with the goal to be best-positioned to drive share when the housing market recovers. We hope to see some revenue improvement, notably from continued growth from adjacencies, but continue to monitor macro trends. We currently expect the rate of reinvestment to be modestly higher in the second-half as we continue to focus on growth initiatives. At Book Publishing, as mentioned last quarter, we hope to see further profit-improvement in fiscal 2025, albeit likely at a much more modest rate due to difficult prior year comparisons and quarter three will be impacted by facing a frontless releases. At News Media, while we expect the segment to continue to benefit from lower talk TV costs together with savings associated with the new commercial printing joint-venture with DMG in the UK, advertising conditions remain difficult with limited visibility and coupled with ForEx headwinds, we anticipate a more challenging second-half. As mentioned last quarter, we expect other segment costs to be higher than last year, including ongoing AI and related legal costs. With that, let me hand it over to the operator for Q&A.
