After the conclusion of the second quarter of 2021, The New York Times grew to more than 8 million subscribers, less than 2 million subscribers away from its goal of 10 million subscribers by 2025. During the second quarter, The New York Times Company reports total revenue of $498.5 million, a 23.5% increase over $403.8 million in revenue in the second quarter of 2020.

Revenue growth in all categories

Subscription revenue was $339.2 million, representing a 15.7% increase year-over-year. Subscription revenue represents 68% of The New York Times’ total revenue. Advertising revenue, which took a big hit during COVID, rebounded to $112.8 million, a 66.4% increase year-over-year, and other revenue, including affiliate revenue earned from the Wirecutter, grew to $46.5 million, an 8.7% increase year-over-year.

“Just after the end of the second quarter, The Times crossed another mile marker on our path to scaling direct, paying subscriber relationships: We now have more than 8 million paid subscriptions across our digital and print products – a testament to the success of our strategy, the strength of the market for paid digital journalism, and our unique opportunity to meet that demand. That milestone follows a second quarter with strong revenue and profit growth and progress on advancing our underlying model,” said Meredith Kopit Levien, president and CEO of The New York Times Company, in yesterday’s news release.

“We continue to expect that our total annual net subscription additions will be in the range of 2019, although that remains difficult to predict with precision. And we believe that while the news cycle will continue to have significant effects on our subscription growth, we are increasing our control over the levers of our subscription model,” Kopit Levien added.

Subscriber numbers

Though subscriber growth is slowing, the company has now exceeded 8 million subscribers, but at the end of the second quarter, The Times had 7.9 million subscribers, compared to 7.8 million at the end of the first quarter of 2021. Paid digital-only subscriptions total just over 7.13 million, a net increase of 142,000 since the end of the first quarter of 2021 and 1.46 million at the end of the second quarter of 2020. Of the company’s total net additions, 77,000 came from the digital news product and the remaining 65,000 came from Cooking, Games and Audm products.

Subscription revenue growth

The company attributes their subscription revenue growth to the increase in the number of subscriptions to the company’s digital-only subscription products and price increases following the expiration of subscribers’ initial promotional pricing offers. Of the company’s total subscription revenue of $339.2 million, $190.1 million came from digital-only products, a 30.3% increase. The balance of $149.1 million came from print subscriptions, an increase of 1.3%.

Other quarterly highlights

• Total net income was $54.3 million, or $0.32 diluted earnings per share, compared to $23.7 million, or $0.14 diluted earnings per share, for the second quarter of 2020.
• Digital advertising revenue was $71.0 million, a 79.6% increase year-over-year.
• Print advertising revenue was $41.8 million, a 48% increase year-over-year.
• Total operating costs were $421.4 million, a 12.4% increase year-over-year.
• Sales and marketing costs were $53.6 million, a 35.2% increase year-over-year.
• Product development costs were $39.7 million, a 28.1% increase.
• The company had $8 million in capital expenditures during the second quarter of 2021, compared to $5 million for the same quarter last year.
• As of June 27, 2021, the company had cash and marketable securities of $946.6 million, an increase of $64.6 million since the end of 2020.

Third quarter outlook

So what’s next? The New York Times Company provided the following outlook for the third quarter:

• The company estimates total subscription revenue in Q3 will increase between 13% and 15% with a 25% to 30% increase in digital-only subscription revenue.
• Total advertising revenue will increase between 30% to 35% with digital advertising increasing between 40% and 45%.
• Other revenue will grow approximately 5% in the third quarter.
• Operating costs will grow between 18% and 20%.

Insider Take

Though growth in total subscribers is slowing, that is to be expected. The company has successfully executed on its digital-only subscription products strategy, and they remain on pace to exceed their goal of 10 million subscribers long before 2025. Other positives in this report are the double-digit increases in total revenue, the rebound of advertising revenue (print and digital), and the company tempering their expectations because 2021 results are hard to compare to 2020 results. COVID drove a lot of people to subscribe to reputable news sites like The Times, and it was also a presidential election year, increasing the desire for news. At the same time, advertising revenue in luxury and travel categories tanked. Under new leadership since September 2020, The Times is continuing to grow in a strategy way, and the company is marching toward their goals of serving as a leading global news organization with a long-term, sustainable financial future. Is The Times “failing” as a former president suggested? We don’t think so.