Newspaper and digital media company The New York Times (NYSE:NYT) reported results in line with analysts' expectations in Q4 FY2023, with revenue up 1.3% year on year to $676.2 million. It made a non-GAAP profit of $0.70 per share, improving from its profit of $0.59 per share in the same quarter last year.
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The New York Times (NYT) Q4 FY2023 Highlights:
- Revenue: $676.2 million vs analyst estimates of $679.2 million (small miss)
- EPS (non-GAAP): $0.70 vs analyst estimates of $0.59 (19.6% beat)
- Free Cash Flow of $130.4 million, up from $98.57 million in the previous quarter
- Gross Margin (GAAP): 52.5%, up from 50.2% in the same quarter last year
- Digital Subscribers: 9.7 million
- Market Capitalization: $7.98 billion
Media and CommunicationsThe advent of the internet changed the game in the media and communications industries. Many of these companies now face secular headwinds as attention shifts online. Some have made concerted efforts to adapt by introducing digital subscriptions, podcasts, and streaming video platforms, and time will tell if their strategies succeed.
Sales GrowthA company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. The New York Times's annualized revenue growth rate of 6.8% over the last 5 years was weak for a consumer discretionary business. Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. The New York Times's annualized revenue growth of 8.1% over the last 2 years is above its 5-year trend, suggesting there are bright spots within the company’s product portfolio.
We can understand the company's revenue dynamics even better by analyzing its number of Digital Subscribers, which reached 9.7 million in the latest quarter. Over the last 2 years, The New York Times's Digital Subscribers averaged 17.4% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can conclude the company's average price per sale has fallen.
This quarter, The New York Times grew its revenue by 1.3% year on year, and its $676.2 million of revenue was in line with Wall Street's estimates.
Cash Is King If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, The New York Times has shown decent cash profitability, giving it some reinvestment opportunities. The company's free cash flow margin has averaged 13%, slightly better than the broader consumer discretionary sector.
The New York Times's free cash flow came in at $130.4 million in Q4, equivalent to a 19.3% margin, up 32% year on year.
Key Takeaways from The New York Times's Q4 Results It was good to see The New York Times beat analysts' operating income and EPS estimates this quarter. That was driven by better-than-expected digital subscribers (9.7 million vs estimates of 9.6 million) and strong performance from The Athletic ($38.5 million of revenue vs estimates of $35.9 million). The company's overall revenue, however, missed slightly as its digital-only ARPU fell short. Looking ahead, the company expects a high single-digit year-on-year increase in Q1 for its subscription revenues. Overall, this was a mediocre quarter for The New York Times. The company is down 2.7% on the results and currently trades at $47.19 per share.