News Corporation Class A ((NWSA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for News Corporation Class A was marked by a generally positive sentiment, particularly due to notable achievements in revenue and profitability growth. Strategic moves like successful asset divestment and strategic partnerships contributed to a credit rating upgrade. Despite some challenges in the News Media segment and market conditions such as the US housing market, the overall tone of the call was optimistic, driven by strong performance in key growth areas and strategic advancements.
Revenue and Profitability Growth
The company reported a 5% increase in revenues from continuing operations, amounting to $2.24 billion, while profitability saw a substantial rise of 20% to $478 million. Net income from continuing operations surged 58% to $306 million compared to the previous year, underscoring robust financial health.
Foxtel Sale to DAZN
News Corp agreed to sell its Foxtel unit to DAZN for AUD 3.4 billion, which is approximately seven times Foxtel’s fiscal 2024 EBITDA. This strategic move is expected to significantly impact News Corp’s balance sheet positively.
Credit Rating Upgrade
Following the agreement to sell Foxtel, both S&P Global and Moody’s upgraded News Corp’s credit rating to investment grade, reflecting the company’s improved financial standing and future growth prospects.
Digital Real Estate Segment Performance
The Digital Real Estate segment saw a revenue increase of 13% to $473 million, with an EBITDA margin increase of 26% to $185 million. Realtor.com experienced accelerated growth in revenue from rentals, sellers, and new homes.
Dow Jones Growth
Dow Jones reported a revenue increase of 3% to $600 million, with a segment EBITDA growth of 7% to $174 million. Digital circulation revenue grew at its fastest pace in two years, highlighting the segment’s robust performance.
Book Publishing Success
The Book Publishing segment experienced revenue growth of 8% to $595 million, with segment EBITDA surging by 19% to $101 million. Audio revenue saw a notable increase of 13%.
News Media Revenue Decline
The News Media segment saw a revenue decline of 2% to $570 million, although segment EBITDA grew by 30%, indicating efficient cost management amid revenue challenges.
Factiva Customer Dispute
A customer dispute in the Factiva segment led to an adverse impact of over 300 basis points on Dow Jones’ professional information business revenue, pointing to challenges in the segment.
Challenges in US Housing Market
Realtor.com faced difficulties due to a challenging US housing market, with 30-year mortgage rates exceeding 7%, negatively impacting lead volumes and average monthly unique users.
Forward-Looking Guidance
Looking ahead, News Corp has projected continued growth with a 5% increase in revenues from continuing operations to $2.24 billion. Profitability is expected to rise by 20%, with net income from continuing operations increasing by 58% to $306 million and an improved EPS of $0.40. The company plans to complete the sale of Foxtel in the second half of the fiscal year, which will further enhance its balance sheet.
In summary, the earnings call for News Corporation Class A painted an optimistic picture, with the company achieving significant growth in revenue and profitability. Strategic decisions, such as the Foxtel sale and partnerships, have led to a credit rating upgrade, while challenges in certain segments like News Media and the US housing market persist. Nevertheless, the company’s strong performance in key growth areas and forward-looking guidance suggest continued positive momentum.
