Revenue: $2 billion, up 1% year-over-year. Net Income: Increased 67% to $107 million. Total Segment EBITDA: Increased 12%, with a margin expansion from 13% to 14.4%. Adjusted Revenues: Up 2% year-over-year. Adjusted Total Segment EBITDA: Increased 15% year-over-year. Reported EPS: $0.14, doubled from the prior year. Adjusted EPS: $0.17, up from $0.13 in the prior year. Dow Jones Revenue Growth: 6% increase, with profitability up 12% and margin rising to 23%. Digital Real Estate Revenue Growth: 5% increase, with profitability up 19% and margin improving to 30.5%. Book Publishing Revenue: $514 million, up 2%, with EBITDA rising 3% to $64 million. News Media EBITDA Growth: 22% increase year-over-year.

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Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

News Corp (NASDAQ:NWS) reported a 67% increase in net income from continuing operations, reaching $107 million in the third quarter. Total segment EBITDA increased by 12%, with the overall margin expanding from 13% to 14.4%. Dow Jones posted a 6% revenue growth, with profitability surging 12% and the margin rising from 21.7% to 23%. Digital Real Estate Services saw a 19% increase in profitability on a 5% revenue increase, with margins improving from 26.8% to 30.5%. The sale of Foxtel to DAZN resulted in the transfer of $724 million of Foxtel debt off News Corp's balance sheet, improving financial flexibility.

Negative Points

Political turbulence has affected some of News Corp's business partners, creating challenges in planning and operations. Currency headwinds negatively impacted revenues, although they still managed a 1% increase. Factiva's ongoing customer dispute had a 200 basis point adverse impact on Dow Jones' professional information business revenues. Realtor.com faced a decline in lead volumes by 17% and a decrease in average monthly unique users by 8% year over year. News Media segment revenues were down 8% year over year, challenged by tougher advertising conditions.

Q & A Highlights

Q: Can you provide more details on the investment in Dow Jones for the fourth quarter and how it might impact future growth? A: Robert Thomson, CEO, explained that there was no significant increase in investment for Dow Jones. The acquisition of Dragonfly and Oxford Analytica will enhance the professional information business. The company remains focused on both consumer and professional segments, with expectations of continued double-digit revenue growth, particularly in Risk and Compliance and Energy.

Story Continues

Q: Regarding the Factiva dispute, do you expect a similar impact in the fourth quarter, and what are the long-term margin expectations for Dow Jones? A: Lavanya Chandrashekar, CFO, noted that the impact from the Factiva dispute should decrease in the fourth quarter. Margins are expected to expand as the Professional Information Service business grows, which will lead to better operating leverage and a more favorable revenue mix.

Q: How is News Corp prioritizing capital allocation given its strong balance sheet, and are there any M&A opportunities? A: Robert Thomson, CEO, stated that the company will focus on its three core pillars for potential acquisitions and will not overpay for businesses. The company has been careful with cash management, maximizing investments, and ensuring returns through dividends and buybacks. The recent upgrade to investment grade by Moody's and S&P enhances their financial flexibility.

Q: Should investors expect further simplification of the company, particularly regarding Digital Real Estate and Factiva? A: Robert Thomson, CEO, emphasized that the company is open to making significant structural decisions to benefit shareholders. While there is interest in Digital Real Estate, the current US property market undervalues realtor.com. The company remains focused on maximizing shareholder value and is confident in its strategic direction.

Q: How is the strategy of converting Dow Jones subscribers from promotional to higher pricing progressing? A: Robert Thomson, CEO, reported that digital subscriptions rose 14%, and the strategy of moving subscribers to higher pricing is proceeding well. This is reflected in a 7% increase in circulation revenues. The company is focused on increasing average revenue per subscriber and expects continued positive trends in digital numbers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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