New York Times Company (The)

Good morning and welcome to the New York Times Company's third quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Anthony DiClemente, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to the New York Times Company's third quarter 2023 earnings conference call. On the call today, we have Meredith Kopit-Levian, President and Chief Executive Officer, and Will Bardeen, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call. These statements are based on our current expectations and assumptions, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties that are described in the company's 2022 10-K and subsequent SEC filings. In addition, our presentation will include non-GAAP financial measures and we have provided reconciliations to the most comparable gap measures in our earnings press release, which is available on our website at investors.nytco.com. And finally, please note that a copy of the prepared remarks from this morning's call will be posted to our investor website shortly after we conclude. With that, I will turn the call over to Meredith.

Thanks, Anthony, and good morning, everyone. Let me begin by noting this is a deeply troubling and complex period for the world, with last month's horrific attack on Israel by Hamas, the ensuing war and devastation in Gaza, and the reverberating global consequences. In this difficult moment, the times plays a vital role. With a century of expertise covering the region, our newsroom has dozens of journalists on the ground and many more around the globe doing the essential work of original reporting and analysis to illuminate and contextualize these events, just as they've been doing for more than a year and a half on the war in Ukraine. Our mission to seek the truth and help people understand the world propels our business strategy. That strategy is to become the essential subscription for every curious English-speaking person seeking to understand and engage with the world. Our strong results in the third quarter underscore that our strategy is working as designed. Being essential means creating news coverage and lifestyle products that are sufficiently valuable. They drive audiences to seek us out directly and build enduring daily habits. We believe our best opportunity to build direct, lifelong relationships is when people experience the full breadth and variety of our product portfolio packaged as a bundle. That bundle fuels our growth and our economic success in several ways. First, our multiple products give us complimentary audience funnels, each with the opportunity to meaningfully expand our reach. Second, we see better conversion of new users to paying subscribers, as our varied product portfolio captures demand for a wide range of audience interest. Third, people who subscribe to our bundle engage and retain better as the bundle creates more opportunities for them to discover and enjoy our products. And fourth, we're achieving better monetization of our engaged audiences as the full bundle enhances value for subscribers, advertisers, and licensees. For all these reasons, our essential subscription strategy continues to perform well, and we surpassed 10 million subscribers this quarter. That base of engaged subscribers gives us a large recurring revenue stream, powers our revenue streams beyond subscriptions, and enables continued investment into our competitive advantages, world-class journalism, premium lifestyle products, and the technology that underpins them. This, in turn, enables further growth and value creation. Indeed, we expect the quality and comprehensiveness of our news coverage and the scale and distinctiveness of our lifestyle products to fuel our progress toward our next milestone of 15 million subscribers. Importantly, we expect at least half of our subscribers over the next few years to be on the bundle. That matters because bundle subscribers engage more, stay longer, and monetize better than subscribers to any individual product, thereby improving our unit economics and advancing our efforts to build a larger and more profitable company. I'll turn now to the major contributors to our third quarter results. This quarter, we met or beat quarterly guidance on subscription revenues, advertising revenues, and adjusted operating costs. We added 210,000 net new digital subscribers in the quarter, and the bundle played an outsized role. It was the preferred choice for new subscribers by a wide margin and set another record in its share of overall starts. We achieved that strong net ads growth even as platforms sent fewer casual news readers to us and other publishers. We see our continued subscription growth in this environment as evidence that our investments in news and our wider product portfolio are paying off. and that our strategy is building resilience. We also saw clear evidence that our non-news funnels are increasingly effective as on-ramps to the bundle. In games, our homegrown hit, Connections, is now played by over 10 million users a week, another proof point for the scale of our opportunity in that space. And we grew the athletics audience again in the quarter, reinforcing our conviction in the very big potential we see in sports. New York Times subscriber engagement hit its highest level in the quarter in nearly three years, as measured by the percent of subscribers on our sites or apps each week. This is a testament to the depth and breadth of our news coverage, as well as the ability of our product portfolio to meet different complementary needs. We are steadily improving the monetization of our products with consolidated digital subscriber ARPU growing year on year for the second quarter in a row, as well as quarter on quarter. I'll note that in Q3, we saw the largest ever volume of bundle subscribers graduate from promotional to higher prices. We're encouraged by the retention and monetization signals we're seeing among those cohorts, though it is still early days. Total advertising revenue grew 6% in the quarter, anchored by three strengths that we believe give us long-term advantage, despite near-term ad market headwinds. Those strengths are, one, our high-performing premium display canvases and first-party data products, those of which are unique to the times and emanate from the quality of our environment and scale of user engagement. Two, the fact that we are now extending our ad products across the bundle to attract new advertisers and categories. We're just getting started here and seeing particular success with The Athletic, which grew ad revenue more than threefold in the quarter. And three, our brand's enduring appeal for the world's top marketers who can reach our big and influential audiences through multiple channels across our platforms. The overall advertising results in the quarter also benefited from better-than-expected resiliency in print, which we nevertheless expect to decline over time. On the cost side, we continue to actively manage our expenses. This cost discipline supports our ability to keep growing AOP and free cash flow, which we did again in Q3, even as we continued investing into our strategy. I'll wrap by noting that the successful execution of our strategy reinforces our confidence in the path ahead. Our journalism and lifestyle products have made us the category leader in subscription journalism by a wide margin. Our essential subscription strategy is delivering steadily improving unit economics. And with this foundation and against a backdrop of an ever-changing information ecosystem, We believe strongly in our ability to achieve our financial goals and build a larger and more profitable company. Now let me turn it over to Will for more details on the quarter.