News Corporation

Welcome to News Corp's second quarter fiscal 2026 earnings conference call. Today's conference is being recorded. Media will be allowed on a listen-only basis. At this time, I'd 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 second quarter 2026 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 repaired 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 GAAP to non-GAAP reconciliations of such measures can be found in the earnings releases for the applicable periods posted on our website. With that, I'll pass over to Robert Thompson for some opening comments.

Thank you, Mike. We are delighted to report excellent second quarter results with both revenue and profitability growth accelerating from the prior quarter, and we see favourable signs for the second half of our fiscal year. Revenues increased 6% to $2.4 billion for the quarter, and total segment EBITDA of $521 million expanded 9%, despite a one-time inventory-related charge at HarperCollins. Net income from continuing operations was $242 million, a 21% decrease from the prior year, but that was due to the absence of a rather favorable $87 million gain on REA Group's sale of property Guru last year. Our adjusted EPS for the quarter was 40 cents compared to 33 cents in the prior quarter, and our profitability margin rose from 21.4% to 22.1%. These results were driven by sustained growth at Dow Jones and Digital Real Estate Services, which both reported double-digit profit growth, and both have started the calendar year strongly. Given the current trajectory of our core drivers, we believe prospects for the third quarter are auspicious. The results are indicative of our ongoing transformation, both digitally and commercially, as we continue to increase recurring revenues and reduce our dependence on advertising, which has a certain cyclicality. Our consistently strong cash position has allowed us to enhance our buyback program, which has been running at four times the prior year pace, whilst preserving our financial flexibility and allowing us to focus on maximising shareholder value. We also note that Moody's, which only recently upgraded our rating, has put our outlook on positive, reflecting the sturdiness of our balance sheet and our strong operating performance. Speaking of the future, it is clear that expectations of AI's impact are evolving and that the more perceptive players have come to realise that provenance is paramount and that our proprietary content is valuable. Let us be clear. Anthropic has already agreed to pay $1.5 billion for using pirated books. We and our authors at HarperCollins naturally expect to receive our fair share of that payout starting later this calendar year. What is the point of acquiring cutting-edge semiconductors if they are being deployed to repurpose gormless, factless, feckless content sets? What is the point of spending billions on energy generation when that energy is powering the prosaic, not the profound? We do believe an increasing number of insightful AI creators understand this content contradiction and will indeed pay a premium for our premium content. AI companies must provide meaningful services with reliable, relevant, contemporary information, not biased bilge or retrospective rubbish. Ignoring the obvious need to fund fecundity will mean that AI stands for artificial intransigence. Turning to our segments. Dow Jones delivered robust results for the quarter, with revenue rising 8% and segment EBITDA increasing 10% compared to the prior year. It was a record quarter for the business on multiple fronts, including a 29.5% profit margin and improvement of almost 50 basis points versus the prior year. It also marked the fourth consecutive quarter of double-digit EBITDA growth for the segment. Digital advertising reached a record level of $87 million for the quarter, rising 12%, supported by the strength of demand, in particular from the financial services sector. The Dow Jones professional information business continued to provide crucial intelligence for customers this quarter, with revenues increasing 12% overall, thanks to a 20% surge at risk and compliance. All of our B2B verticals made positive contributions, with Dow Jones Energy posting double-digit growth and Factiva and NewsWise both growing modestly during the period. Intelligence, insight, meaningful metrics and astute analysis remain non-negotiables for global corporations and their executives, especially against a backdrop replete with uncertainty and volatility. On the consumer side, digital volumes increased 12% to over 6 million subscriptions, led by our continued push into enterprise partnerships, embedding our content in corporate work streams, while the Dow Jones team is intensely focused on increasing yield and conscious of the responsibility to deliver reliable news at a moment when much journalism is mere activism. We recently announced a partnership with Polymarket that will selectively bring data to users across the Wall Street Journal, Barron's, MarketWatch and Investors Business Daily. Fresh investment in the Wall Street Journal's influential opinion pages saw the launch of Free Expression, an expansion of the vertical that introduced fresh writers to the editorial board's august audience. We are establishing new AI partnerships, which we expect to generate additional revenues, including an expanded deal with Bloomberg for AI rights for our peerless Dow Jones content. We also bolstered Factiva's GenAI capabilities with expanded licensing rights from more than 8,000 premium news and business information sources. To highlight the vast potential of Dow Jones, we will be holding an investor briefing next month in New York. I have no doubt that you will find the Dow Jones proposition to be commercially compelling in the age of AI. In digital real estate services, we have seen signs of strong growth in our US business, even though the housing market remains far from normal. Despite the lingering challenges, Realtor.com's revenues grew by 10% in the quarter, building upon its performance in the first quarter, led by premium products and notable improvement in lead volume, which posted double-digit gains. The quarter also benefited from gains in audience share and continued expansion across realtor.com's adjacencies. We firmly established our position as the leading publisher of residential real estate news and are striving to expand unique features that support sellers, buyers and realtors. Realtor.com's share of visits among the real estate portals continued to grow in the second quarter based on ComSchool, while unique visits per user for the same period continued to surpass the industry at 4.8 times, almost double that of homes.com and far superior to Zillow. In Australia, revenue growth at REA of 7% benefited from continued double-digit yield growth and an improvement in listing volumes in Sydney and Melbourne, coupled with strong growth in financial services. Competition is bringing out the best in REA, which posted record audience numbers in November with unique users of over 13 million, an increase of 9% versus prior year. The team in Australia is savvily adopting AI applications that enhance the service for our customers and prove that AI is certainly more friend than foe. No one wants housing hallucinations. HarperCollins revenues grew a healthy 6%, a significant recovery after a sluggish first quarter, and we have mounting optimism for the second half of the year. We've benefited from a strong front list in general books, as well as particularly strong growth in our faith segment as readers searched for meaning amidst the contemporary chaos. The core creative value of our books was highlighted by the continuing success of our Wicked collection and the stunning sales of Heated Rivalry, which inspired the steamy streaming series. Ice hockey stereotypes are melting away as players pursue each other and a puck. Other notable releases included Mitch Albom's Twice, Senator John Kennedy's How to Test Negative for Stupid, and Jasmine Mass's Bonds of Hercules. And the third quarter is off to a strong start, with Peter Schweitzer's The Invisible Coup and Pennsylvania Governor Josh Shapiro's memoir Where We Keep the Light. In the months ahead, we anticipate a Bridgerton boost with the recent premiere of Season 4 on Netflix, and are honoured to publish the first book by Pope Leo XIV. Peace be with you. As the Pope has sagely observed, we cannot let the algorithms write our stories, and we remain passionately committed to protecting the IP of our authors in the age of AI. Across the news media segment, revenues for the quarter were flat despite a challenging print advertising market, and EBITDA fell 5% compared to the prior year. In the UK, the Times and the Sunday Times continued to build on Q1 performance, with digital subscribers rising 7% to total 659,000. While advertising trends were mixed overall, the Times achieved a record second quarter with digital advertising revenue up mid-teens. Newscore Australia reached nearly 1.2 million total subscribers, surpassing the prior year by 4%, and there was an improvement in ad trends compared to the first quarter and a modest increase in circulation revenue. Last week, we celebrated the launch of the California Post, which is bringing editorial enlightenment to the West Coast and is built on the renewed profitability of the New York Post. The early audience numbers are impressive, and we will update you on our progress in the next earnings call. The launch itself highlighted the potency of and comparative advantage of our network effect, as the WSJ, Realtor and Bible Gateway, our HarperCollins faith site, all contributed to generating traffic for the new website and app. In conclusion, we are pleased with the strength displayed across the business throughout the second quarter, and the signs so far are patently positive for the second half of the year. We have a robust balance sheet, particularly strong free cash flow, and have continued to execute on our expanded buyback program with a keen focus on maximizing shareholder value. As AI angst afflicts some sectors, we believe the company is well positioned to profit over the coming quarters and years. We are poised with poise. We remain grateful for the thoughtful leadership of our Chair, Lachlan Murdoch, the enduring support of our Board, and the sterling efforts of our teams around the world. And now, for deeper insight, I cede to our Chief Financial Officer, Lavanya Chandrasekhar.