The New York Times said digital subscriber numbers soared in the third quarter, leading to bumper profits and keeping the newspaper on course for their ambitious long-term subscriber target.
Thanks to the 460,000 additional subscribers gained in the third quarter, digital subscription revenues grew double digits year-on-year to $367 million. Overall revenue topped $701 million for the quarter, a jump of 9.5%. Profit soared by more than a quarter to $81.6 million.That amounted to earnings per share of 50 cents. A measure of the average revenue generated per digital user increased 3.6% to $9.79.
Strategies like a new Family Plan and more video content are paying off for the publisher, as it reported strong digital subscriber growth that fueled profit gains, putting the company on-track to reach 15 million subscribers by 2027. This quarter’s subscriber growth was more than double what analysts were expecting.
The company gave a positive outlook for the rest of the year and considered itself on-track for continued subscriber growth. It expects digital subscription revenue to grow 13% to 16%, pushing total subscription revenues up to 10% next quarter.
The family plan’s performance “substantially de-risks” the 2027 target of 15 million subscribers, according to Deutsche Bank analysts.
“The strong performance so far from the new family plans paired with healthy underlying growth in the single-product category, puts the company on track for healthy sub growth over the next 1-2 years,” they said in a note.
The Times now has 12.33 million subscribers. Over 70% of NYT revenue comes from subscription fees, making subscriber numbers essential for the company’s growth.
One potential risk of bundling several users under one account, counted as two subscriptions for the purposes of company metrics, is the loss of multiple single users that would have otherwise had their own subscription. The company disclosed around 2% of digital subscribers are on the family plan.
Doug Arthur, equity analyst at Huber Research said growth in the family plan is not being seen as “cannibalizing.” In an analyst note he said the company views it as “average revenue per user additive.”
Video has been a big push too, with video content appearing on the home page as well as a new “watch” tab on the NYT app where readers can focus on video content.
“We think it’s a big opportunity for the company, and we’re in early days of it,” said New York Times Chief Executive Meredith Kopit Levien. She said it was a means to engage new and existing users on and off the NYT platforms.
The company had said they would not separate out licensing revenue for a new generative AI deal with Amazon in the earnings, which comes under a generalized “affiliated licensing and other” category. That segment grew 8%, but is expected to have growth of mid single digits in the next quarter, year-on-year.
“That revenue line has a lot of different items that can both create some variability quarter to quarter as well as make it difficult to isolate the contribution of any one particular item,” said Chief Financial Officer Will Bardeen.
“Given our strategy to make our news journalism and product portfolio more valuable to more people, we expect this revenue line to grow over the long term as part of our multi-revenue stream model,” he added.