New York Times Company (The)

Good morning, everyone, and welcome to the New York Times Company's fourth quarter and full year 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please call 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 and then one on your telephone keypad. To withdraw your questions, you may press star and two. We also know today's event is being recorded. At this time, I'd like to turn the floor over to Anthony DiClemente, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to the New York Times Company's fourth quarter and full year 2023 earnings conference call. On the call today, we have Meredith Kopit-Levington, 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 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 GAAP measures in our earnings press release and is available on our website at investors.nytco.com. In addition to our earnings press release, we have also posted a slide presentation relating to our results also on our website at investors.nytco.com. 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. 2023 was a strong year for the Times that showcased the power of our strategy to be the essential subscription for every curious person seeking to understand and engage with the world. Our news report proved indispensable to so many people, providing original journalism across the full range of human experience. Our lifestyle products serve scaled audiences for games, sports, cooking, and shopping recommendations. By putting them all together and giving millions of people multiple reasons to turn to the Times every day, We delivered business growth and demonstrated our ability to penetrate a large market. We drove this performance amidst a tough year for the news industry, in which we and others faced persistent headwinds. We continued to see lower levels of casual news audiences due in part to the ongoing shifts from the largest tech platforms, and our ad business grappled with the heightened market volatility impacting publishers. Our strategy is designed to both counterbalance these headwinds and position us to be a category-leading global media subscription business. Let me share the highlights from the year. We added 880,000 net new digital subscribers, bringing our total to nearly 10.4 million and progressing us on the path to our next milestone of 15 million. The bundle accounted for a majority of our subscriber starts in the year. Bundle and multi-product subscribers made up 41% of our subscriber base at year end. And those subscribers continue to be more engaged, better retaining, and willing to pay more over time than single product subscribers. New York Times subscriber engagement as measured by the share of subscribers on our products each week, reached its highest point in nearly three years by year end. And the Times now sees more digital engagement than any other American news source by total monthly time spent. We crossed a billion dollars in annual digital subscription revenue for the first time in 2023, and consolidated ARPU has now grown year on year for three straight quarters. We see this as a testament to our well-honed pricing and merchandising strategy, which is made possible by the growing value we provide to consumers through our differentiated multi-product offerings. It was a challenging year in the ad market for publishers, but the core of our ad business, premium proprietary ad canvases, enhanced with first-party data, proved resilient and continued growing. And we saw real momentum as we extended our ad products across the portfolio, particularly to the athletic and games where we see a lot of running room. It was also a record year for affiliate and licensing revenue. Wirecutter outperformed expectations in every quarter, And in December, we announced a new multi-year licensing agreement with Apple News Plus for the athletic and wire cutter. Deals like this underscore that our intellectual property has unique value recognized by some of the world's largest tech platforms. We exerted cost discipline throughout the year and substantially slowed overall expense growth while redirecting resources and continuing to invest in our areas of competitive advantage. All of this progress across the business drove strong earnings per share, adjusted operating profits, and free cash flow growth. In fact, in 2023, each hit their highest point since our transformation into a digital first, subscription first business began more than a decade ago. Inclusive of the athletic, we also expanded margin by 100 basis points. We delivered that improved profitability even as our print business continued to experience secular decline. Our results also reflect the cash generative nature of our model and give us the confidence to announce the sixth consecutive annual increase to our dividends. This financial growth also positions us to continue investing in expert, independent journalism, which is central to how we expect to create value over the long term. I'll turn now to our fourth quarter results. In Q4, we met or beat quarterly guidance on digital and total subscription revenue, other revenue, and adjusted operating costs. Digital advertising came in slightly below the low end of our guidance, and total advertising came in below our guidance. We added 300,000 net new digital subscribers in the quarter. We attribute this strong performance to multiple distinct drivers. Those drivers include continued healthy demand for games, peak season for cooking, a more ambitious subscription gifting program propelled by our large base of existing subscribers, and a robust deal period for B2B subscriptions. This is all in addition to high existing subscriber engagement across a range of news topics. We also benefited from further improvements in how we use machine learning to maximize audiences engagement, and conversion. Consistent with our strategy, we grew audience for the athletic, cooking, games, and wire cutter in Q4. Audience growth on the athletic, which recently passed its two-year anniversary with The Times, was particularly strong. This was thanks to our ongoing efforts to enhance coverage, improve our technical infrastructure, and make more stories available for sampling. We see a huge opportunity in sports and are making palpable progress on our ambition for the athletic to become a top destination for sports news globally. Games benefited from consistency in the number of people who play Wordle every week and also from our hit homegrown puzzle, Connections, which now has over 15 million weekly players. Total ad revenue in the quarter came in below our expectations due primarily to a larger than anticipated print revenue decline. Our digital performance, including podcasts, was impacted by marketers avoiding some hard news topics like the Middle East conflict. We are nonetheless confident in the long-term potential of our digital advertising business, and our core display offering was resilient. as we extended our proprietary ad canvases and first-party data to more of our portfolio. Revenue beyond subscriptions and advertising grew 10% in the quarter, driven by a record-setting holiday season for Wirecutter and strength in licensing. Let me close with a few thoughts about what's ahead. At its core, our strategy is designed to make the Times an essential daily habit for many millions more people. Our top priority now is to continue making our journalism and lifestyle products so valuable at scale that people seek us out directly and build enduring daily habits, however the information ecosystem evolves. While we expect many of last year's industry headwinds to persist, we believe our multi-product portfolio and multi-revenue stream model, combined with ongoing cost discipline, position us well to be a scaled market leader. Now let me turn it over to Will for more details on our results, and I'll return after that with a few closing thoughts and to take your questions.