News Corporation Class A ((NWSA)) has held its Q3 earnings call. Read on for the main highlights of the call.
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News Corporation’s recent earnings call painted a generally optimistic picture, highlighting robust performance in key areas such as Dow Jones and Digital Real Estate Services. The company also benefited from strategic gains following the sale of Foxtel. Despite facing challenges in the News Media segment and issues with Factiva and Realtor.com, News Corp’s strategic focus on digital growth and asset realignment positions it well for future success.
Significant Increase in Net Income
News Corporation reported a remarkable 67% increase in net income from continuing operations, reaching $107 million in the third quarter compared to the previous year. This substantial growth underscores the company’s effective financial strategies and operational efficiencies.
Strong Performance by Dow Jones
Dow Jones demonstrated impressive results with a 6% revenue growth and a 12% surge in profitability. The margin increased from 21.7% to 23%, while digital circulation revenue expanded by 14%, marking the fastest growth rate in nearly three years.
Successful Sale of Foxtel
The strategic sale of Foxtel to DAZN was a significant move for News Corp, removing $724 million of debt from the balance sheet and resulting in a 6% equity interest in the rapidly growing sports streaming platform DAZN.
Digital Real Estate Services Growth
Digital Real Estate Services experienced a 19% surge in profitability on a 5% increase in revenues. The segment’s margin improved from 26.8% to 30.5%, with REA posting 6% revenue growth, or 11% on a constant currency basis.
Book Publishing Revenue Growth
The Book Publishing segment saw revenues expand by 2% to $514 million, with EBITDA rising by 3% to $64 million, reflecting steady growth in this area.
Challenges in News Media Segment
The News Media segment faced an 8% decrease in revenue due to tougher advertising conditions. However, the segment’s EBITDA grew by 22% thanks to cost-saving initiatives, highlighting the company’s ability to adapt to challenging market conditions.
Factiva Revenue Impact
A customer dispute led to a 200 basis point adverse impact on professional information business revenues at Dow Jones, particularly affecting the Factiva product, which remains a concern for the company.
Realtor.com Lead Volume Decline
Realtor.com experienced a 17% decline in lead volumes year-over-year, with average monthly unique users falling by 8% to 66 million. This decline is attributed to shifts in audience acquisition strategies and ongoing affordability issues.
Forward-Looking Guidance
Looking ahead, News Corporation is focused on a strategic transformation towards digital growth, emphasizing three core pillars: Dow Jones, Digital Real Estate, and Book Publishing. The company reported a 67% surge in net income and a 1% revenue growth to $2 billion, despite currency headwinds. The sale of Foxtel to DAZN was a strategic move to eliminate debt and secure a stake in DAZN. The company’s transformation is driven by strategic asset realignment, cost discipline, and an emphasis on intellectual property, aiming to maximize shareholder returns.
In conclusion, News Corporation’s earnings call reflects a positive outlook, with strong performances in key segments and strategic moves like the sale of Foxtel. While challenges remain in the News Media segment and with products like Factiva and Realtor.com, the company’s focus on digital growth and asset realignment provides a solid foundation for future success.