News Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Full-Year Performance: Full year revenues rose 2% to nearly $8.5 billion, total segment EBITDA improved 14% to over $1.4 billion, net income from continuing operations up 71% to $648 million. Fourth quarter revenues rose 1% to $2.1 billion, profitability up 5% to $322 million.
• Capital Return: Board authorized a new $1 billion stock repurchase program, with expected accelerated repurchases soon. Free cash flow for fiscal 2025 was $571 million.
• Segment Performances: Dow Jones had strong year with revenue and EBITDA growth; Digital Real Estate saw growth despite macro conditions; Book Publishing had second best revenue year on record.
• Acquisitions: Recent acquisitions include Dragonfly Intelligence, Oxford Analytica, and Zenlist; agreed to acquire Crunchyroll's Manga publishing operations in France and Germany.
• IP Protection: Focus on protecting intellectual property of authors and journalists, with efforts to sue companies violating IP rights.

Segment Performance

• Dow Jones: Full year revenue rose 4% to nearly $8.5 billion, total segment EBITDA improved 14% to over $1.4 billion. Fourth quarter revenues rose 7% to $604 million, EBITDA rose 10% to $151 million. Professional Information Business revenues up 10% in Q4, with Risk & Compliance up 21% and Dow Jones Energy up 12%. Digital circulation revenues in Q4 rose 10%. Digital revenue accounted for 83% of Dow Jones segment revenues in Q4.
• Digital Real Estate: Full year revenue up 9%, segment EBITDA up 18%. Realtor.com revenue grew for third consecutive quarter in Q4, with rentals, new homes, seller accounting for 24% of revenues. REA had 12% revenue growth (13% constant currency) to $1.25 billion.
• Book Publishing: Full year revenue up 3% to $2.1 billion, segment EBITDA up 10% to $296 million. Digital revenues up 5% supported by Spotify partnership. The business saw softness in recent months but key titles scheduled for 2026 are positive.

Guidance

• Stock Repurchase: Board authorized a new $1 billion stock repurchase program in addition to remaining from prior program, expecting accelerated repurchases soon. Fiscal 2026 pacing to benefit from Foxtel sale proceeds.
• Segment Outlook: Dow Jones trends healthy with expected margin expansion; Digital Real Estate to focus on integration of acquisitions; Book Publishing to monitor July trends; News Media to see continued recent trends.

Risks

• Macroeconomic Conditions: Impact on U.S. housing market affecting Digital Real Estate performance.
• Competition: Impact on market share and revenue in various segments.
• AI Impact: Concerns about AI undermining intellectual property and content ecosystem health.

Q: Expand on decision to accelerate buyback, where to expect increased activity, and target leverage.

A: Robert Thomson stated the buyback scale and pace will increase, driven by improved free cash flow and belief in share price discount to net asset value. Lavanya Chandrashekar mentioned fiscal 2026 pacing to benefit from Foxtel sale proceeds and no target leverage ratio stated yet.

Q: Talk about strategy at Move and adjacencies for 2026.

A: Robert Thomson highlighted positive prospects for Realtor, with growth in rentals, new homes, seller accounting for 24% of revenues. Lavanya Chandrashekar noted continued investment in Realtor, including acquisition of Zenlist for enhanced capabilities.

Q: Dow Jones revenue growth in second half, expectation for fiscal '26, and OpEx growth.

A: Robert Thomson noted strong progress at Dow Jones, with Professional Information Business as growth engine. Lavanya Chandrashekar mentioned cost growth in second half was mid-single digits, with margins expanding due to Professional Information Services growth.

Q: Update on simplifying company and U.S. housing market impact on Realtor.com.

A: Robert Thomson mentioned sale of Foxtel as simplification, and Realtor.com poised to surge when property market improves with interest rate decline.

Q: Impact of AI on publishing business and Amazon licensing deal.

A: Robert Thomson stated no negative trends from search at Dow Jones, in advanced negotiations with AI companies, and will protect IP through wooing and suing as needed.

Q: Growth in WSJ subscriptions and continuation.

A: Robert Thomson attributed growth to uniqueness of The Wall Street Journal. Lavanya Chandrashekar mentioned benefit from partnership with LSEG providing custom dashboard with higher margin.

Q: CapEx step up in fourth quarter and FY '26 outlook.

A: Lavanya Chandrashekar said CapEx in Q4 was due to pull forward in spend at Dow Jones for growth initiatives, with continued investment in Dow Jones, Realtor, and Harper, but Q4 rate not a run rate.

Q: Acquisition opportunities in Professional Information or data subscription space.

A: Robert Thomson stated they survey the landscape from a position of strength but didn't specify specific targets.