• Revenue: $2.24 billion, up 5% year-over-year.
• Profitability: Increased 20% to $478 million.
• Net Income from Continuing Operations: $306 million, a 58% increase.
• EPS from Continuing Operations: $0.40 compared to $0.28 in the prior quarter.
• Overall Margin: Improved from 18.7% to 21.4%.
• Digital Real Estate Revenue: Increased 13% to $473 million.
• Dow Jones Revenue: Grew 3% to $600 million.
• Book Publishing Revenue: Expanded 8% to $595 million.
• News Media Revenue: Fell 2% to $570 million.
• Digital Advertising Growth at New York Post: Increased by 13%.
• REA Group Revenue: Rose 17% year-on-year to $343 million.
• Digital Circulation Revenue at Dow Jones: Grew 8% year-over-year.
• Book Publishing Segment EBITDA: Surged 19% to $101 million.
• News Media Segment EBITDA: Grew 30% to $74 million.

• Warning! GuruFocus has detected 7 Warning Signs with CTSH.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• News Corp (NASDAQ:NWS) reported a 5% increase in revenues to $2.24 billion and a 20% rise in profitability to $478 million, showcasing strong financial performance.
• Net income from continuing operations surged by 58% to $306 million, indicating significant growth compared to the previous year.
• The company successfully sold Foxtel to DAZN for AUD3.4 billion, which is expected to strengthen the balance sheet and reduce future capital intensity.
• Digital Real Estate, Dow Jones, and Book Publishing segments showed robust growth, with Digital Real Estate revenue increasing by 13% and Dow Jones segment EBITDA expanding by 7%.
• News Corp's partnership with OpenAI is progressing well, contributing to digital advertising growth and enhancing the company's AI capabilities.

Negative Points

• News Media segment revenue fell by 2% to $570 million, indicating challenges in this area despite a 30% growth in segment EBITDA.
• The ongoing customer dispute with Factiva had a negative impact on Dow Jones' professional information business revenue.
• Currency translation is expected to be a headwind in the second half of the fiscal year, potentially affecting financial performance.
• The housing market remains hostile, with 30-year mortgage rates above 7%, impacting realtor.com's performance.
• Advertising conditions remain difficult with limited visibility, posing challenges for the News Media segment.

Q & A Highlights

Q: Can you discuss the structure of the Foxtel deal and the decision to take DAZN equity as payment? Are you still engaged in an overall strategic review of News Corp? A: The Foxtel deal is subject to regulatory approvals, and we expect it to close this fiscal year. We will be close partners with DAZN, and the deal reflects our ongoing review of our portfolio to maximize shareholder returns. Our shares have risen over 26% in the past six months, indicating positive market reception.

Q: What is driving the expected earnings growth acceleration for Dow Jones in the second half, despite increased OpEx? A: The growth is driven by positive trends in Dow Jones' circulation, with digital subscriptions up 13% and a focus on average revenue per subscriber. Risk and Compliance and Dow Jones Energy are also performing well. Additionally, the second half typically sees more additions due to seasonality.

Q: What are your expectations for the proceeds from the Foxtel sale? Will there be capital management or reinvestment? A: We are focused on generating maximum value for shareholders, with a $1 billion buyback provision in place. Last fiscal year, we returned 70% of our available free cash flow through buybacks. The sale will provide us with optionality for future investments and shareholder returns.

Q: Can you provide more color on the timing of price increases for Dow Jones and the expected contributions from new products at REA? A: Digital revenues at Dow Jones are increasing, with 81% of revenues now from digital sources. The expansion of the Professional Information Business (PIB) is improving margins. For REA, new growth areas like seller-related revenues and rentals are showing significant growth, indicating strong future contributions.

Q: Is there potential for further structural optimization at News Corp, similar to the Foxtel deal? A: We are constantly reviewing the company's structure, and the Foxtel deal is evidence of our commitment to optimizing our portfolio. We have valuable assets, including realtor.com, which is showing strong growth in new revenue areas. We remain open to further strategic adjustments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.