News Corporation (NWS) Earnings & Analysis

Latest quarter

News Corp reported Q1 FY2027 revenue of $2.3 billion, up from $2.1 billion a year earlier, and diluted earnings per share of $0.29, compared with $0.20. The company’s filing attributed the revenue increase to growth in digital real estate, book publishing and Dow Jones.

The filing said REA and Move contributed to digital real estate growth, while higher physical and digital sales lifted book publishing. Dow Jones benefited from higher circulation, subscription and advertising revenue. News Media revenue declined, with lower print advertising partly offset by favorable currency movements.

Gross margin was 56.7%, compared with 56.1% a year earlier. The filing said operating expenses increased, primarily because book publishing costs rose with sales volume and the mix of titles. It also said cash provided by continuing operations fell because of payment timing and higher tax payments, partly offset by higher total segment EBITDA.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Lavanya Chandrashekar said Dow Jones Risk & Compliance revenue grew through customer gains, product expansion and pricing, with much of the incremental growth coming from higher volume and customers buying additional products. She said technology and finance customers drove advertising growth, while digital direct subscription revenue per user improved.

In digital real estate, Chandrashekar said Australian residential growth at REA came from price increases, greater use of premium listings and add-on products. Lower listing volumes and geographic mix partly offset those gains. At Realtor.com, she said demand for its premium agent-marketing product helped lift revenue despite difficult housing conditions, and AI integration helped improve cost efficiency.

For HarperCollins, Chandrashekar cited demand for new general-trade and children’s releases and growth in audiobooks. She said costs increased because of royalties, manufacturing and marketing for new releases. At News Media, she described challenging advertising conditions, partly offset by favorable currency movements, and investment in the New York Post.

CEO Robert Thomson said News Corp was negotiating with AI platforms over content use and was also discussing agreements with specialist platforms. He said the company already has partnerships with OpenAI and Meta and continues to pursue cases over content use.

Asked about cost savings, Chandrashekar said, “We’re not quantifying cost savings.” She identified engineering, customer service and data analytics among the areas where AI was helping efficiency. In response to a question about cash flow, she said capital spending and working-capital timing affected the quarter, including revenue weighted toward its final month and higher HarperCollins inventory.

Guidance

Chandrashekar expects higher book publishing costs to support the front-list program, as in the first quarter. For News Media, she expects trends broadly similar to the first quarter, including modest incremental costs compared with the prior year from the continuing California Post rollout.