News Corporation Q3 FY2026 earnings call

• Dow Jones balances investment and returns carefully, with professional information business being a higher margin business. Risk and compliance revenues rose 19% and Dow Jones Energy had a 12% increase. - Realtor's revenue has been increasing with successive quarters of double-digit growth, driven by team efforts in building base, targeting higher premium homes, and expanding into adjacencies. - Dow Jones is constantly re-evaluating portfolio for product extensions in risk and compliance and energy offerings, with opportunities both organically and inorganically. - Benefits from AI include making products better, creating new revenue streams, and efficiencies in coding and work assistance across businesses.

At Dow Jones, the professional information business accounted for about 40% of revenues in Q3, with a significantly larger percent of EBITDA as it's a higher margin business. Digital Real Estate Services saw Australian residential new-buy listings rise 19% in April. At Realtor, core real estate revenues rose by 15% and represented 77% of total revenues. Book publishing's HarperCollins trends remain favorable. News media expects incremental costs related to California Post rollout but also benefits from new content licensing revenues.

• Expect strong free cash flow growth for the fiscal year despite moderately higher capital expenditures. - News media should see some benefits from content licensing revenues in Q4 while continuing to invest in California Post in a disciplined manner.

• Volatility in macroeconomic circumstances. - Continuing regulatory vigilance of governments around the world. - IP protection risks related to AI, such as potential legal actions over IP excesses.

Q: Hi, thanks for taking my question, Robert and Lavanya. I've just got one on Dow Jones Energy and the investment required to build out new energy benchmarks. How are you thinking about sort of the balance between continued investment into building these new benchmarks versus the return profile? And are you able to potentially quantify any investments required?

A: Overall, the professional information business accounted for about 40% of revenues in Q3, but a significantly larger percent of EBITDA is a higher margin business. And that is one reason for the record profitability margin at Dow Jones itself. And there are certainly positive trends at risk and compliance where revenues rose 19% and a 12% increase at Dow Jones Energy.

Q: Hey, thanks. Robert, you continue to report a nice upturn in realtor growth this quarter, and this is happening even amid still high mortgage rates. I guess assuming you did see a kind of better macro environment, how are you thinking about the potential uplift from that? And assuming you get that revenue, how do you think about flowing through that to EBITDA versus sort of leaning into investment either into adjacencies or AI functionality?

A: The renaissance of realtor has really preceded the recovery of the overall US housing market, which remains subject to the whims of mortgage rates. At realtor, core real estate revenues rose by 15% and represented 77% of total revenues despite the sluggishness of the market. The team has done an extraordinary job in building the base, sorting out the software, and is also benefiting from targeting higher premium homes and expanding into adjacencies.

Q: Thank you. And thinking about your risk and compliance and energy offerings, I think that you've really got accelerating demand these days. Are there areas that your clients are asking for more products that you can develop internally, organically, or where you might have opportunities to do some more tuck-ins?

A: We're constantly re-evaluating the portfolio. The risk and compliance market is enormous ($3.7 billion, growing at 11%-13%) with opportunities both organically and inorganically, like the integration of Dragonfly and Oxford Analytica.

Q: Hi, Robert. Hi, Lavanya. So my question is also around potential AI opportunities. I suppose, are you able to talk about the broad quantum of additional revenue from partnerships with AI platforms that you could receive? And if you can't give us specific numbers, perhaps how does it compare with what you've contracted to date with Meta and OpenAI?

A: Can't discuss precise details of confidential deals. The meta and OpenAI agreements are important partnerships with more than transactional aspects, and there are advanced negotiations with several companies regarding AI.

Q: Yes, hi. Thank you. Can you speak, if you would, about the benefits you guys have are getting internally from the use of AI? And is there any way of quantifying what the annual cost savings is at this stage from using AI here to save costs, et cetera, make your company more efficient?

A: Benefits from AI include making products better, new revenue streams, efficiencies in coding, and assisting work in newsroom and back office operations.

Q: Can you please talk about the drivers of the big reduction in losses in the other division? And whether you think there's a sustainable step down in those other losses?

A: Other segment losses were affected by reduced expenses, particularly related to stock compensation calculations. For a full year, the other segment is expected to be similar to prior year and potentially slightly lower.

Q: Yeah, hi, thanks for taking my question. I'm curious how we should think about the earnings profile for the news media segment. Are you able to talk about the startup costs from the California Post or the impact from the News UK in the quarter? And then just thinking about these two pieces, do we annualize them going forward or how do we think about them over the next three quarters?

A: News media revenue was 5% higher over the year. Decline in EBITDA was due to modestly tougher trading conditions in Australia and UK and launch costs of California Post. Quarter four should see benefits from content licensing revenues while continuing to invest in California Post in a disciplined manner.