The New York Times Company added 197,000 net new digital-only subscribers in the second quarter, a positive step toward its goal of 10 million total subscribers by 2025. The company has 4.7 million total subscribers as of the end of Q2. The company now has 3.78 million paid digital-only subscribers, a 30.7% increase year-over-year. Of the 197,000 new additions, 131,000 came from digital news, and the balance came from NYT Cooking and Crossword.
For the quarter, The Times reported total revenue of $436.3 million, a 5.2% increase over $414.6 million in the second quarter of 2018. Subscription revenue was $270.5 million, representing growth of 3.8%. Subscription revenue represents 62% of total revenue.
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Advertising revenue was $120.8 million, a 1.3% increase year-over-year, and other revenues were $45.0 million, 29.7% growth year-over-year. Other revenue growth included revenue from The Times TV series, The Weekly, which airs on FX and Hulu and growth in commercial printing operations during the quarter.
Digital advertising revenue was $58.0 million, an increase of 13.7%. Print revenue was down 8%. The Times attributes the increase in digital ad revenue to direct-sold advertising on digital platforms, which includes The Daily podcast and creative services.
A big moment for us during the quarter was the successful launch of The Weekly, which premiered in June on FX and Hulu. The Weekly represents a significant opportunity to expose Times journalism to new audiences in a compelling format and were very excited about its future potential. The Weekly was the largest driver of the 30% growth in other revenue in the quarter, said Mark Thompson, president and CEO of The New York Times Company, in an August 7 news release.
Other highlights from the quarter include:
- Operating costs were $398.3 million, compared to $373.3 million in Q2 2018.
- Adjusted operating costs were $380.7 million, compared to $355.2 million in Q2 2018. Costs increased due to the addition of newsroom staff, expenses for The Weekly, costs related to commercial printing and advertising and an increase in marketing expenses.
- Operating profit was $37.9 million, down from $40.0 million in Q2 2018.
- Adjusted operating profit was $55.6 million
- Net income for the quarter is $25.2 million, or $0.15 diluted earnings per share.
- At the end of the quarter, The Times had cash and marketable securities of $846.5 million.
The company offered the following outlook for the third quarter:
- Total subscription revenue will increase in the low to mid-single digits, compared to Q3 2018.
- Digital-only advertising revenue is expected to decrease in the high-single digits.
- Total ad revenue will decrease in the high-single digits, with digital ad revenue dropping in the high-single digits.
- Other revenues will increase 25% to 30% compared to Q3 2018.
- Operating costs and adjusted operating costs will increase in the high-single digits due to continued investment in subscription drivers.
Following the second quarter financials report, NYT stock dropped from $35.58 per share on August 6 to $31.25 per share on August 7. As of 6:07 p.m. EDT yesterday, NYT stock was valued at $28.38.
Why did The New York Times stock drop so significantly after the earnings report? Perhaps because The Times is predicting a drop in ad revenue. The reason for the decrease in outlook is because the second half of 2018 was so strong in this category that The Times is being realistic in its estimates. In addition, revenue was slightly below analysts estimates of $438.7 million, says Yahoo Finance. We still think The Times has a solid plan for the future, as evidenced by its subscription growth, investment in newsroom staff and innovation.