News Corporation

Welcome to News Corp's fourth quarter and full year fiscal 2025 earnings conference call. Today's conference is being recorded. Media will be allowed on a listen-only basis. At this time, I would like to turn the conference over to Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead.

Thank you very much, Operator. Hello, everyone, and welcome to News Corp's fiscal fourth quarter 2025 earnings call. We issued our earnings press release about 30 minutes ago, and it's now posted on our website at newscorp.com. On the call today are Robert Thompson, Chief Executive, and Lavanya Chandrasekhar, Chief Financial Officer. We'll open some prepared remarks, and they'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA, and adjusted EPS. The definitions and gap-to-non-gap reconciliations of such measures can be found in the earnings release for the applicable periods posted on our website. With that, I'll pass it over to Robert Thompson for some opening comments.

Thank you, Mike. We are honoured to report a sterling performance sustained across the four quarters of fiscal 2025, which was a record year for profitability on a continuing operations basis. For the full year, revenues rose 2% to nearly $8.5 billion and total segment EBITDA improved 14% to finish the year at just over $1.4 billion, a record for the company on a continuing operations basis. while our net income from continuing operations increased 71% to $648 million. Profit margins also increased by 170 basis points to 16.7%. For the fourth quarter, revenues rose 1% to $2.1 billion, while profitability grew 5% to $322 million, and net income from continuing operations rose a handsome 28% to $86 million. These robust record results have enhanced our financial position and thus our ability to return capital to shareholders. That potency was reflected in our free cash flow for fiscal 2025, which was $571 million compared to $540 million in the prior year, even though we expanded CapEx at Dow Jones, including at its rapidly growing professional information business. Hence, the Board last month authorised a new $1 billion stock repurchase program, in addition to the approximately $300 million remaining from the previous $1 billion program authorised four years ago. As we indicated in our announcement, we expect to begin executing repurchases at an accelerated rate soon after the release of these results. In short, a significantly larger total and a significantly faster tempo. We remain dedicated to driving value across our three pillars, Dow Jones, digital real estate services and book publishing, which accounted for the vast majority of our total segment EBITDA for the year. The recent sale of Foxtel Group to our partners at DAZN further focused our portfolio and bolstered our cash position, while the teams have made savvy acquisitions for all three of the core businesses over the past year. And it has also become clear over the past year that discerning audiences crave content that is profound and purposeful and pithy amidst a morass of mediocrity and mendacity. Our writers and journalists and creators of all kinds are conscious of both the responsibility and the opportunity, cognizant that we are at an historic inflection point in the age of AI. That AI age must cherish the value of intellectual property if we are collectively to realize our potential. Much is made of the competition with China, but America's advantage is ingenuity and creativity, not bits and bytes, not watts, but wit. To undermine that comparative advantage by stripping away IP rights is to vandalize our virtuosity. We need to be more enlightened, to eulogize Eunoia socially and commercially. Take the example of President Trump. He has written many successful books, in particular The Art of the Deal, which is still reporting notable sales. Is it right that his books should be consumed by an AI engine, which then profits from his thoughts by cannibalising his concepts, thus undermining future sales of his book? Suddenly, The Art of the Deal has become The Art of the Steel. Is it fair that creators are having their works purloined? Is it just that the President of the United States is being ripped off? Companies are spending tens of billions on data centers, tens of billions on chips, tens of billions on energy generation. These same companies need to spend tens of millions or more on the content crucial for their success. And they need to ensure that the content ecosystem remains healthy, that there is a vast range of varied and verifiable sources, and that a deeply derivative woke AI does not become the default pathway to digital decay. In the meantime, we will fight to protect the intellectual property of our authors and journalists and continue to woo and to sue companies that violate the most basic property rights. Turning now to the segments, Dow Jones had another strong year, with revenue in EBITDA rising 4% and 8% respectively. The business exited the year with strong momentum, reporting a healthy 7% increase in revenue for the fourth quarter to $604 million, significantly higher than the annual rate of 4%, while EBITDA for the fourth quarter rose 10% to $151 million. Our professional information business expanded revenues 10% overall for the fourth quarter, higher than the full year rate of 7%, supported by risk and compliance and Dow Jones Energy, where revenues increased by 21% and 12% respectively for the quarter. The addition of Dragonfly Intelligence and Oxford Analytica this quarter further solidified risk and compliance as a premier source for any business aiming to thoughtfully and legally navigate an increasingly complex global landscape. Compliance failures remain a serious issue for global financial institutions and sanctions regimes are a legal labyrinth. If no, your client is a priority, then you should surely be a client of Dow Jones. At Dow Jones Energy, the team has created a portfolio of innovative products, including the Global Carbon Market Report and RackPro from Opus. This focus on our customers' emerging needs is a core factor behind our retention rates, which are north of 90% across Dow Jones Energy. Factiva showed improvement over the second half of the year, thanks to a new generative AI data product and a concentrated focus on courting new customers in sectors such as communications and public relations. On the consumer side of the business, we reported 10% growth in digital circulation revenues in the fourth quarter and saw increases in both print and digital advertising of 3% and 1% respectively, as companies increasingly understood the power and the prestige of our platforms, including the Wall Street Journal, Barron's, MarketWatch and Investors Business Daily. Digital real estate revenues rose 9% for the year, while the segment posted increased EBITDA of 18%. At Realtor.com, revenue grew for the third consecutive quarter in the fourth quarter, despite the especially sluggish US housing market. We are particularly pleased with the three growth areas targeted by Damien Eales and the team. Revenue across rentals, new homes and seller accounted for 24% of revenues for the quarter, a rise of five percentage points year over year. These trends provide evidence that realtor should thrive when the US housing market ultimately nears normalcy after a period of punitively high mortgage rates and remarkably low turnover. Realtors' reach has extended despite the depressed markets, with the share of visits significantly expanding in June, when there were 256 million visits, four times that of Homes.com and more than twice that of Redfin, according to Comscore. We are working to enhance our relationship with the National Association of Realtors to the benefit of both partners, and crucially, to the benefit of Americans seeking to buy or to sell a home. REA posted another healthy year in fiscal 2025, with 12% revenue growth or 13% on a constant currency basis to $1.25 billion, while audience reach saw continued improvement. For the year, realestate.com.au saw an average of 132 million visits per month, four times that of the nearest competitor. In fact, 12.1 million people visited the site each month, of which 6.4 million were exclusive to REA. There is no question that REA's business thrives on competition and we look forward to meeting the changes and the challenges ahead in the Australian market with our customary spirit of creativity and innovation. Book publishing posted its second-best revenue year on record in fiscal 2025, with a 3% increase to $2.1 billion, while segment EBITDA expanded by 10% to $296 million. Margins were nearly 14% for the year, an improvement of over 90 basis points compared to the prior year. Performance was weighted to the first half due in part to the impact of a strong frontless schedule and the success of Hillbilly Elegy and Wicked. We have seen softness in the overall book market in more recent months, and that trend was reflected in some of our divisions, though our religious and children's book divisions continue to perform well. Key titles scheduled for fiscal 2026 should pretend positively for the full year, with a new book from Daniel Silver last month and upcoming works from the pioneer woman Reed Drummond, Mitch Elbaum and R.F. Kong. Sylvester Stallone's memoir, The Steps, will no doubt prove inspiring upon its release in November. And we are looking forward to the exclusive release of previously unpublished stories by Harper Lee, the author of To Kill a Mockingbird. Our global reach was enhanced by the agreed acquisition of Crunchyroll's manga publishing operations in France and Germany, and that transaction is expected to close before the end of this calendar year. We already have a strong network of manga contacts through our book business in Japan and believe that our team's collective expertise will enable us to prosper from one of the fastest growing sections of the book reading market. Digital revenues grew 5% for the year, supported by the partnership with Spotify, who last month announced plans to expand audiobook offerings for premium customers in the UK, Australia and parts of Europe. In news media, Profitability improved 15% for the year, despite a challenging advertising environment, reflecting our editorial creativity and cost consciousness. There were also benefits to our mastheads from our digital partnerships with the principled platforms, and subscription growth at News UK and News Corp Australia. The Times and Sunday Times in particular again built on their healthy circulation base, closing the year with 640,000 paying digital subscribers, compared to 594,000 a year ago. The phenomenal expansion in influence and the improvement in profitability over the past decade of the New York Post continued in the last year. The masthead plays a unique role in the New York area, but also far beyond. And to reflect that prowess, we have just announced plans to expand in California, which surely needs the puckish profundity that characterizes the Post. Soon, all will not be quiet on the Western Front. To conclude the fiscal year with such impressive results against a backdrop of complex macro conditions and political dynamics is a testament to our transformation. That work simply would not be possible without the astute leadership of Lachlan Murdoch, the support of an enlightened board and the enduring resonance of our Chairman Emeritus Rupert Murdoch. We also salute the invaluable contributions of our employees around the world. And now, I cede to Lavanya Chandrasekhar, our Chief Financial Officer, who will provide granularity and sagacity.