Despite Mixed Q1 Results, New York Times Shares Gain 3.6%

The American daily newspaper, The New York Times (NYT), published mixed results for its first quarter of fiscal 2022, with earnings beating and revenue missing estimates.

Shares gained 3.6% on the news before ending the day up 1.6% at $39.49 on May 4.

Q1 Results in Detail

The publishing house reported adjusted earnings of $0.19 per share, one cent higher than analyst estimates but much lower than the comparative prior year figure of $0.26 per share.

The huge decline in earnings was driven by one-time costs related to the acquisition of The Athletic Media Company, which was completed on February 1, 2022. Moreover, operating losses at The Athletic segment, formed post the acquisition, added to the declining bottom line.

However, adjusted operating profit at The New York Times Group segment remained fairly stable, balanced by growing digital subscription and advertising revenue growth and higher costs.

On the revenue front, the company’s consolidated revenues of $537.42 million jumped 13.6% year-over-year but fell short of consensus estimates of $546.01 million.

NYT’s subscription revenues advanced 13% year-over-year to $372 million on the back of higher subscriber growth for its digital-only products, a higher pricing shift from promotional pricing, and the addition of The Athletic.

Meanwhile, advertising revenues of $116.3 million grew 19.7% compared to the same period last year. This growth was driven by a 12.6% increase in digital advertising revenue and a 30.9% jump in print advertising revenue. 

NYT ended the quarter with 9,108,000 paid subscribers, boosted by the addition of 1,101,000 subscribers from The Athletic acquisition.

Q2FY22 Outlook

Based on the current business momentum as well as its expectations from the acquisition of The Athletic, NYT guided for the second quarter of fiscal 2022.

Total subscription revenues are expected to grow by 12% to 14% over the comparative period, and total advertising revenues are forecasted to grow by mid-single digits.

Additionally, adjusted operating costs are projected to grow between 18% and 22% as the company continues to invest in the drivers of digital subscription growth.

Executive Comments

Happy with the company’s performance and steadfast on its target to reach 15 million subscribers by 2027, Meredith Kopit Levien, President and CEO of NYT, said, “We’re confident that we can attract, retain, and monetize subscribers and drive profitable growth.”

“While we experienced real momentum in news, it was not the only driver of strength in the quarter. Wordle brought an unprecedented tens of millions of new users to The Times, many of whom stayed to play other games, which drove our best quarter ever for net subscriber additions to Games and we’re off to a great start on our work with The Athletic,” Levien added.

Analysts’ View

Responding to NYT’s quarterly performance, Guggenheim analyst Currey Baker maintained a Hold rating on the stock but lowered the price target to $41 (3.8% upside potential) from $44.

Baker noted that NYT’s subscriptions improved owing to the ongoing Russia-Ukraine war news propaganda coupled with the Wordle acquisition. The analyst lowered the adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) forecast due to the drag on operating profit from The Athletic acquisition, which has resulted in a downward price target reversal.

Overall, the NYT stock has a Moderate Buy consensus rating based on two Buys and one Hold. The average New York Times price forecast of $50.33 implies 27.5% upside potential to current levels. Meanwhile, its shares are down 17.8% year-to-date.

Ending Thoughts

Looking at NYT’s results and outlook, it seems that the media house is on a roll for some hit performances in the future. The company even scores a “Perfect 10” on TipRanks smart score system, meaning that the stock is most likely to outperform market expectations.

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