Q1 2025 Earnings Summary
- Strong growth in digital subscriptions at Dow Jones, with a 15% increase to 5.3 million subscribers, leading to a 4% rise in digital circulation revenue, with expectations of continued growth as promotional pricing phases out.
- Revenue generation from AI agreements, including with OpenAI, is positively impacting the News Media and Dow Jones segments, contributing to future growth.
- Dow Jones Professional Information Business shows strong underlying growth, with Risk and Compliance revenue up 16% and Dow Jones Energy revenue up 11%, despite a temporary impact from a dispute at Factiva; the segment contributes significantly to Dow Jones profits.
- Uncertainty in converting promotional subscribers to higher paying tiers: The company expressed caution about its ability to upgrade promotional subscribers, with Robert Thomson stating that "my powers and prognostication is somewhat limited."
- Softness in print circulation impacting total revenue: There was "a little softness in print, which affected total circulation revenue," despite growth in digital subscriptions.
- Lack of transparency on AI revenue contribution: When asked about AI revenues, the company couldn't provide specifics due to "confidentiality requirements," leading to uncertainty about the impact of AI deals on future revenues.
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Subscription Video Services | Q1 2025 | Scaling streaming products, modestly higher programming costs | 501(up from 486In Q1 2024) | Met |
Dow Jones | Q1 2025 | Focus on B2B growth, improved circulation revenue growth | 552(up from 537In Q1 2024) | Met |
Book Publishing | Q1 2025 | Further profit improvements expected | 546(up from 525In Q1 2024) | Met |
Digital Real Estate | Q1 2025 | Year-over-year growth expected | 457(up from 403In Q1 2024) | Met |
Capital Expenditures (CapEx) | Q1 2025 | Expected to be moderately higher | 95(down from 124In Q1 2024) | Missed |
Operating Expenses | Q1 2025 | Moderately higher expenses expected | 2,162 (COGS 1,263+ SG&A 899) vs. 2,135 (COGS 1,273+ SG&A 862) in Q1 2024 | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Professional Information Business (Dow Jones) & Factiva | Q3 2024: 10% revenue growth, no Factiva dispute mentioned. Q2 2024: 13% revenue growth, no Factiva dispute mentioned. | 8% revenue growth, with a Factiva dispute reducing overall growth by 6%. | Factiva dispute newly introduced in Q1 2025; PIB growth remains consistently strong |
Advertising Revenue & Digital Shift | Q3 2024: Advertising declined 13% in News Media, Dow Jones down 2% overall, digital representing 63%. Q2 2024: Advertising down 9% overall, digital at 52% of total revenue. | Advertising down 7% to $85 million, with digital advertising now 67% of total. | Ongoing drop in total advertising; steady digital migration across periods |
HarperCollins Performance | Q3 2024: Digital accounted for 25% of consumer revenues, margins stabilized at ~12%. Q2 2024: Digital sales up 15%, margins 15.5%. | Digital revenues rose 15% (to $129 million), margins improved to 14.8%, EBITDA up 25%. | Consistent digital sales growth, margin expansion sustained over time |
Cost Management & Headcount Reductions | Q3 2024: Achieved $160 million in cost savings with a 5% headcount reduction. Q2 2024: Exceeding a $160 million cost-out program, 5% headcount cut. | No mention of new cost initiatives or headcount reductions. | No update in Q1 2025; prior periods emphasized significant cost-saving measures |
AI-Related Opportunities & Legal Risks | Q3 2024: Introduced Generative AI product (Integrity Check) and extended Google partnership (no AI payment yet). Q2 2024: Engaged in commercial AI talks, focusing on content value. | Highlighted OpenAI partnership, plus litigation to protect journalism (e.g., Perplexity.ai case). | Intensifying AI focus with new partnerships and greater legal vigilance |
Real Estate (Move, realtor.com, Zillow) | Q3 2024: Move revenues $132 million, down 6%, launched rentals partnership with Zillow on May 1. Q2 2024: Move revenues $127 million, down 13%; no Zillow mention. | realtor.com revenues $140 million, down 1%, real estate revenues down 4%, growing adjacencies; Zillow rentals help. | Moderating revenue declines at realtor.com, Zillow partnership supports rental growth |
Foxtel’s Streaming Services (BINGE) | Q3 2024: BINGE subscribers declined sequentially for the second consecutive quarter. Q2 2024: Total streaming subs at 2.8 million, slight sequential drop. | No mention of BINGE subscriber figures or changes. | No current update for Q1 2025; subscriber softness noted in prior periods |
Corporate Restructuring & Simplification | Q3 2024: Emphasized flexibility and optionality, no firm timeline. Q2 2024: Ongoing "revolution, not evolution" toward unlocking value. | Active discussions on Foxtel’s future, citing a share price-value gap; no definitive timeline. | Continuing focus on structural changes to enhance shareholder value |
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Company Structure Optimization
Q: When can investors expect progress on optimizing company structures?
A: Management acknowledged investor concerns about the disparity between the company's inherent asset value and its share price, despite a 40% increase over the past year [4]. They are in "active discussions" regarding Foxtel and are looking to maximize value, noting that recent activities like the REA team's bid to acquire Rightmove have made it a "dynamic quarter" [4]. -
AI Revenue Impact
Q: Can you detail AI revenue contributions and prospects for HarperCollins?
A: Management could not provide specifics due to confidentiality but noted that AI revenue, particularly from the OpenAI deal, is impacting both the News Media section and Dow Jones [0]. They expect to see a positive year-on-year revenue movement across all agreements, including potential contributions to HarperCollins [0]. -
Dow Jones Circulation Growth
Q: How will Dow Jones improve circulation growth post-promotional periods?
A: Overall circulation at Dow Jones rose 11% to 5.9 million subscribers, with digital-only up 15% to 5.3 million [1]. Management is confident that phasing out discounts and adjusting prices will lead to continued positive movements in digital circulation revenue, which increased 4% year-on-year [1]. They expect the positive digital trajectory to continue as engagement and retention rates improve, with revenue growth more weighted in the second half of the year [1]. -
HarperCollins Margin Sustainability
Q: Is the books margin expansion sustainable?
A: The margin at HarperCollins improved to 14.8% from 12% in the same quarter last year, with reported EBITDA growth of 25% [2]. Digital sales rose 15%, with audio surging 26% and e-books up 7% [2]. Management believes the momentum is carrying into the current quarter and sees no reason for these trends to wane [2]. -
Dow Jones Advertising Recovery
Q: What's causing Dow Jones advertising weakness, and when will it recover?
A: Advertising softness, particularly in finance and tech, is partly due to companies being apprehensive during election periods [3]. News media advertising represents only 7% of total revenue, with over half being digital [3]. Despite declines, management expects an increase in digital advertising revenue at Dow Jones and across other properties in the current quarter [3]. -
Professional Information Business Growth
Q: Can PIB growth return to mid-teens levels?
A: Risk and Compliance revenues grew 16%, and Dow Jones Energy expanded 11% [5]. The overall growth appeared softer due to a year-on-year decline in Factiva revenue caused by a dispute impacting numbers by about 6% [5]. Management is working to resolve the dispute and enhance Factiva's user experience, including a new search deal with Google [5]. They believe that without the dispute, growth rates would align with expectations [5]. -
Foxtel Shareholder Loans
Q: What's the status of Foxtel shareholder loans post-repayment?
A: The balance of Foxtel shareholder loans now sits at AUD 545 million [3].