It has been about a month since the last earnings report for New York Times Co. (NYT). Shares have added about 0.7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is New York Times due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

NY Times Q2 Earnings Top, Subscription Revenues Rise Y/Y

The New York Times Company continued its decent performance in the second quarter of 2024. The company's adjusted earnings per share came in at 45 cents, which surpassed the Zacks Consensus Estimate of 40 cents. The figure marked an increase from the year-ago adjusted earnings of 38 cents a share. Total revenues of $625.1 million came ahead of the Zacks Consensus Estimate of $623 million and increased 5.8% year over year. 

The company added approximately 300,000 net digital-only subscribers compared with the end of the preceding quarter, propelled by bundle and multi-product subscriber additions along with other single-product subscriber additions.

Furthermore, The New York Times Company consistently grew its digital-only average revenue per user (ARPU). The ARPU increased to an impressive $9.34 in the second quarter from $9.15 in the year-ago period. This increase in ARPU can be attributed to subscribers transitioning from promotional pricing to higher rate plans and price hikes for tenured non-bundle subscribers.

Subscription revenues of $439.3 million grew 7.3% year over year. Subscription revenues from digital-only products jumped 12.9% to $304.5 million. This reflects an increase in bundle and multiproduct revenues and a rise in other single-product subscription revenues, partly offset by a decline in news-only subscription revenues. Print subscription revenues dropped 3.6% to $134.8 million due to a decrease in domestic home-delivery revenues.

The company ended the quarter with roughly 10.84 million subscribers across its print and digital products, including roughly 10.21 million digital-only subscribers. Of the 10.21 million subscribers, about 4.83 million were bundle and multiproduct subscribers. 

Management envisions third-quarter 2024 total subscription revenues to increase about 7-9%, with digital-only subscription revenues anticipated to rise approximately 12-15%.

Total advertising revenues of $119.2 million rose 1.2% from the prior-year period. Digital advertising revenues increased 7.8% to $79.6 million. This can be attributed to higher revenues from display advertising at both The Athletic and The New York Times Group. 

Meanwhile, print advertising revenues fell 10% to $39.6 million in the quarter under review. The metric decreased mainly in the technology and luxury categories.

For the third quarter of 2024, the company foresees flat to a low-single-digit increase in total advertising revenues. It envisions a high-single-digit jump in digital advertising revenues.

We note that other revenues jumped 4.9% year over year to $66.6 million during the quarter under review due to higher licensing and Wirecutter affiliate referral revenues, partly offset by lower books, television and film revenues.

Adjusted operating costs rose 4.4% to $520.4 million during the quarter. Management anticipates adjusted operating costs to increase 5-6% in the third quarter of 2024.

The total adjusted operating profit increased 13.6% to $104.7 million during the quarter under review, while the adjusted operating margin expanded 110 basis points to 16.7%.

Segment Details

The New York Times Group’s revenues increased 4.4% year over year to $585.2 million. Subscription revenues rose 6.5% to $410 million due to growth in subscription revenues from digital-only products, partly offset by a decline in print subscription revenues. Advertising revenues dropped 0.2% to $112.1 million due to declines in print advertising revenues, partly mitigated by higher revenues from digital advertising.

Revenues totaled $40.5 million in The Athletic segment, up 33.4% year over year. Subscription revenues rose to $29.3 million from $24.6 million in the second quarter of 2023, mainly due to an increase in subscribers with The Athletic. Advertising revenues jumped to $7.1 million from $5.4 million in the second quarter of 2023, principally due to higher revenues from display advertising.

Financial Aspects

The New York Times Company ended the quarter with cash and marketable securities of about $724 million, reflecting an increase of $14.8 million from $709.2 million as of Dec 31, 2023. The company incurred capital expenditures of about $9 million during the quarter. Management envisions capital expenditures of about $40 million in 2024. The company generated a free cash flow of $119.3 million during the six months ended on Jun 30, 2024.

During the quarter, the company repurchased 208,083 shares of its Class A common stock for an aggregate amount of approximately $9.5 million. As of Aug 2, 2024, about $201.5 million remains available and authorized for further repurchases.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 9.21% due to these changes.

VGM Scores

At this time, New York Times has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise New York Times has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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