New York Times Co. 2026 Q2 Earnings Call

Thank you. Welcome to The New York Times Company second quarter 2026 earnings conference call. On the call today, we have Meredith Kopit Levien, President and Chief Executive Officer, and Will Bardeen, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that we'll be making forward-looking statements, including about our business, strategy, and performance based on our current expectations. Our actual results could differ materially due to a number of risks and uncertainties described in the company's 10-K and subsequent SEC filings. We'll also be referencing non-GAAP financial measures for which there are reconciliations to GAAP measures in our earnings release at investors.nytco.com. With that, I will turn the call over to Meredith.

Thanks, Anthony. Good morning, everyone. Q2 was a great quarter for The Times. Our world-class journalism and premium lifestyle content continued to draw large audiences and power strong results for the company. This was a quarter where we made substantial progress against all of our priorities for the year. First, we continued to cover the world's most important stories, from politics to pop culture, from wildfires to wellness. Journalists around the globe reported on the ongoing conflict in the Strait of Hormuz, escalating drone warfare between Ukraine and Russia, and the rapid advances in powerful AI models. We comprehensively covered the primaries in the U.S., a historic heatwave in Europe, and an epic few weeks in New York that saw the Knicks win their first championship in over 50 years and Taylor Swift tie the knot with Travis Kelce.

Second, we presented our journalism and lifestyle products in all the ways people want to engage with them, including video. We're now producing thousands of new videos each quarter to reach the enormous audience for video in all the places people watch, including our own destinations. Just this week, we launched a Shows tab in our flagship app, creating a new way to experience our long-form franchises in news, opinion, culture, and lifestyle. The Shows tab complements our existing Watch tab and the expanding volume of short-form video across the report. This is all part of our strategy to engage the people we already have more and engage more people. As we do that, we intend to make The Times as preferred a brand for watching the news as it is for reading and listening. Third, we continued to add value in every part of our portfolio.

We began to make a series of upgrades to our flagship news app, where we see strong subscriber engagement with the aim of making the app a more compelling experience for prospective subscribers. We also launched new listening and commenting features in our flagship news app, made cooking a better companion for home cooks with the new Cook Mode, launched new features to celebrate the fifth anniversary of Wordle and its consistently strong audience, continued to add features to Crossplay with its growing community of engaged players. The Athletic's approach to the World Cup represents how these three priorities come together to drive increasing value for audiences. The world's attention was on the games, we delivered journalism and experiences like no one else could. Over 70 soccer experts from a 550-person sports newsroom covered the most interesting athletes, moments, and stories from the tournament across 16 cities.

We introduced new formats, including a daily long-form World Cup show on Amazon and daily short-form recaps on social and in our app. We provided live updates and insights for all 104 games and popular interactive brackets that helped fans predict what would happen next. All of this led to The Athletic's biggest audiences ever, we expect these advances to power success in the NFL season and beyond. Let me highlight a few results from the quarter. Digital subscription revenues grew 16% as we continued to become even more essential to even more people. We added 280,000 net new digital subscribers, bringing our total subscriber base to 13.4 million and keeping us on track to our next milestone of 15 million and beyond. In advertising, both digital and total advertising growth once again exceeded our expectations with digital advertising up 21%.

This was the result of a clear strategy, capable execution, strong marketer demand, and high engagement. Affiliate licensing and other revenues also grew in the quarter. We continued to manage costs even as we invest into generational opportunities. Making long-term bets, video among them, is how we expect to maintain and extend our strong market position and continue building a larger, more profitable company for the long term. I'll close by noting that we delivered our Q2 results against the backdrop of a rapidly changing information ecosystem shaped by a small number of big tech companies whose moves continue to result in less traffic to publishers. The Times isn't immune to that impact, we have four enduring advantages that we believe give us resilience to these headwinds and also create long-term opportunity. Let me remind you of what those are.

First, our products are in giant spaces which deeply engage passionate audiences every day. In current events, sports, cooking, games, and shopping, we offer the highest quality, most trustworthy experiences that leave people nourished, not depleted. Second, we're one of an increasingly small number of news organizations that are committed to doing original, independent reporting and high-quality content at scale. While most publishers and broadcasters are doing less of this kind of work, The Times continues to invest. This makes our news coverage and lifestyle products increasingly rare and valuable in an information environment awash in low-quality takes and disinformation. Third, we have a long track record of using technology to report, tell, and distribute stories in all the ways that people want to engage with them, from text to audio to interactive graphics and video. We deliver information and experiences in the creative ways that make people pay attention.

Our multi-revenue stream model means we have multiple complementary ways to monetize our high audience engagement. Those four advantages, taken together, mean we're well-positioned to continue making The New York Times essential for every person seeking to understand and engage with the world, and to continue to create more value for users, shareholders, and society. With that, I'll turn it over to Will.

Thanks, Meredith, and good morning, everyone. As Meredith described, our second quarter results reflected strong progress for our business. I'll begin with a discussion of the quarter's key results, followed by our financial outlook for the third quarter of 2026. Please note that all comparisons are to the prior year period unless otherwise specified. Overall, we saw healthy increases across our multiple revenue streams in Q2, with consolidated revenues growing 11%. AOP grew 16% as we continued to make disciplined investments aimed at further differentiating our high-quality journalism and digital products. Moving to our subscribers and subscription revenues. As Meredith said, we added 280,000 net new digital subscribers within the quarter, and digital-only subscription revenues grew 16.4% year-over-year to $408 million. By the end of Q2, our digital-only subscriber base was 13.3% higher year-over-year, and digital-only ARPU grew 3.1% year-over-year.

Total subscription revenues increased 11.7% to approximately $538 million. Both digital-only and total subscription revenues were within the guidance ranges we provided for the quarter. The growth was driven by multiple products across the portfolio. We continue to be pleased with the increase in our subscriber base in the quarter, as well as the performance at our pricing step-up points. We believe this reflects that our audiences appreciate the significant value we're adding to our products. Turning to advertising. Total advertising revenues for the quarter were $149 million, an increase of approximately 11.3%, which beat our expectations. Digital advertising revenues also came in above the guidance range we provided, increasing 20.7% to $114 million. Marketer demand in the quarter for our high-performing ad products exceeded our expectations. Affiliate licensing and other revenues increased approximately 7% in the quarter to $75.5 million, also beating our expectations.

The outperformance was primarily the result of higher Wirecutter affiliate referral revenues. Adjusted operating costs grew 10%, largely as a result of higher compensation and benefits expenses, which included investments in our video journalism. Cost growth exceeded our guidance range, primarily due to incremental variable compensation tied to financial outperformance. Increases in sales and marketing costs in the quarter included both higher marketing and promotion expenses and higher costs associated with our advertising revenues. As I mentioned at the top, AOP grew 16% in the quarter to approximately $155 million. Adjusted diluted EPS increased $0.11 to $0.69, reflecting 19% growth. We generated approximately $266 million of free cash flow in the first half of the year. Over that same period, we returned approximately $160 million to shareholders, consisting of approximately $92 million in share repurchases and approximately $68 million in dividends.

This is consistent with our capital allocation strategy, which includes returning at least 50% of free cash flow to our shareholders over the midterm. I'll note that while our strong free cash flow in the first half primarily reflected our growing AOP and capital efficient model, it also benefited from timing of seasonal of working capital, some of which we expect to reverse in the second half. In addition, as we discussed last quarter, 2026 free cash flow will include a tax-related benefit of approximately $60 million, the majority of which we do not expect to recur beyond fiscal 2026. I'll now look ahead to Q3. Digital-only subscription revenues are expected to increase 12%-15%, and total subscription revenues are expected to increase 9%-11%.

Digital advertising revenues are expected to increase mid to high teens, and total advertising revenues are expected to increase high single to low double digits. Affiliate licensing and other revenues are expected to increase low to mid single digits. This takes into account the timing shift of a marketing promotion by one of our affiliate partners, which occurred in Q2 of this year as compared to last year, where that promotion occurred in Q3. Adjusted operating costs are expected to increase 8%-9%. We intend to continue operating efficiently while making disciplined investments in our high-quality journalism and digital product experiences that add value for our audiences and help reinforce and expand our competitive advantages. As we've discussed, video in particular remains an important area of strategic investment being reflected in our results and in our guidance.