The New York Times Company said Wednesday during its second-quarter report that its digital-only subscriptions leaped 36% in the quarter, offsetting a nearly 7% decline in print subscriptions over the past year, but digital advertising revenue slipped 2.4%.
The company reported adjusted earnings of 24 cents per share, down 12 cents from last year, but soundly topping the average 19 cents per share that analysts were expecting, according to Yahoo Finance. Total revenue for the second quarter rose 11.5% to $555.7 million, from $498.5 million in the 2021 second quarter. That topped analyst expectations, on average, for $552.2 million in revenue.
That included a 13.1% jump in subscription revenue to $383.6 million, and a 4.1% gain in advertising revenue to $117.4 million.
But digital advertising revenue fell 2.4% to $69.3 million, though it was up 3.4% from the first quarter. The drop was offset by a 15% spike in print advertising revenue, to $48.1 million. Subscription gains were all on the digital side.
“Our advertising revenue is cyclical and it’s subject to significant fluctuations as a result of exogenous conditions,” President and CEO Meredith Kopit Levien said during the conference call with analysts to discuss results. Digital advertising saw “real pressure” in tech, streaming and finance during the quarter.
“Having been in and around the ad business for a long time, I would call the patterns we’re currently seeing in line with what we’d expect given the macroeconomic uncertainty,” Levien said, adding, “We fully expect digital advertising to be a growth driver over the midterm.”
The company ended the quarter with 9.17 million paid subscribers, up 30.9%, but that included just 760,000 print subscribers, a 6.7% drop in newspaper subscriptions from the 2021 second quarter. Digital-only subscriptions, however, surged 36% to 8.4 million, from 6.2 million last year. Compared with the first quarter, digital subscriptions rose by 82,000, while print subscriptions fell by 20,000.
On a net basis, the company added 387,000 digital subscribers. “We are feeling confident that our churn number is manageable,” the CEO said. “And there’s nothing in the quarter that we’re seeing that makes us overly concerned about churn.”
A bright spot in the results was the 26% gain in multiproduct digital subscribers, or those who sign up for The Athletic, the sports-focused outlet purchased on Feb. 1, as well as games, cooking and Wirecutter products in addition to digital news, an approach the company refers to as the “bundle.”
“We’re really pushing the bundle,” Levien said. “We’re intervening in the news flow to get people to buy the bundle instead and having real success with that… We’re incredibly focused on that at this point.”
The Times does not disclose data on how long readers stay on their sites, but Levien said the quarter was a “relatively strong period” for subscriber engagement, which was broadly in line with same period last year.
Average revenue per user on the digital side excluding the Athletic slipped 1.2% to $9.04, a drop of 5.3% since the first quarter. The company said one factor there was the increasing popularity of games following the purchase of Wordle on Jan. 31, which has brought in new users.
Levien also pointed to the growth of the Times newsletters as a tactic showing “real progress” for increasing subscriber engagement and retention.
Higher overall revenue could not make up for a 19.6% jump in operating costs, and operating profit slid 29.5% to $51.7 million. Adjusted operating profit fell 18% to $76.2 million.
The declines reflected expected operating losses at The Athletic, which posted an adjusted operating loss of $12.6 million for the quarter. The Athletic’s performance is expected to improve in the second half of the year, executives said.
The New York Times Group’s adjusted operating profit slipped 4.4% to $88.8 million.
Levien said that given the slowing economy, the company expects to slow spending growth in the second half. “The big difference is going to be in our marketing spend,” CFO Roland Caputo said during the call. “We don’t expect to slow cost growth in journalism or in our engineering.”
The company posted net income of $61.8 million, or 37 cents per share, up 13.7% from $54.3 million, or 32 cents per share, in the 2021 second quarter. The results included a $34.2 million, or 15 cents per share, gain related to a deal to lease and subsequently sell four acres in Queens, New York, adjacent to the company’s printing and distribution facility.
New York Times shares slipped 23 cents in morning trading to $30.91. The stock is down 36% since the start of the year.