The News Corporation (ASX: NWS) share price has shot up 7.88% in early trade today following the release of its first quarter FY21 results.
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Top line results
For the quarter ending September 30, News Corp reported a mixed result as it was disrupted by COVID-19.
Total revenue fell to $2.12 billion, reflecting a 10% decline to the prior corresponding period (pcp). The $200 million shortfall was primarily due to the sale of News America Marketing.
Net income rose to $47 million compared with a net loss of $211 million in the prior year. This included non-cash impairment charges of $273 million and higher total segment earnings before interest, tax, depreciation and amortisation (EBITDA).
The company recorded total segment EBITDA of $268 million, a 21% increase on the $221 million from Q1 FY20. The increase was attributed to strong growth in Digital Real Estate services, Dow Jones and publishing books segments.
Adjusted earnings per share (EPS) were 8 cents compared to 4 cents over the pcp.
Free cash flow for the quarter was at $65 million, a large improvement on the negative $83 million in the prior year. Not only did the business provide higher cash to its operating activities, but also lowered capital expenditure.
News Corp closed the quarter with a healthy cash balance of $1.5 billion.
Management commentary
Commenting on the results, News Corp chief executive Robert Thomson said:
News Corp has started the fiscal year strongly, with higher revenue in many of our segments during the first quarter, and a 21% increase year-on-year in profitability, despite the disruptive economic consequences of COVID-19.
It is clear that the digital landscape is changing fundamentally, and the company has been an important catalyst for that change. The principle of a premium for premium content is now recognised, and there will inevitably be further developments in algorithmic transparency and the digital advertising market, two areas in which News Corp has been a leading advocate.
Segment review
Digital Real Estate services
Digital Real Estate services flourished, despite property markets being unsettled by the pandemic, and restrictions on home inspections. Move, the operator of realtor.com, recorded record revenues and profit contribution for the quarter headed by its referral model. This played an important role in overall profitability to the group.
Segment EBITDA jumped to $37 million, an uplift of 45% of the pcp.
Dow Jones
Dow Jones posted a record first quarter in profitability and higher revenues, driven by a record average consumer product subscription. The provider of business news and analysis noted its digital-only subscriptions led the pack with a 29% increase over pcp.
Segment EBITDA rose to $23 million, an increase of 47% over the comparable period.
Book Publishing
Book Publishing continued its strong performance in digital sales, most notably in the general and children's book categories. Both e-book and downloaded audiobook sales grew, gaining 20% over Q1 FY20.
Segment EBITDA soared to $22 million, an 41% advance on the pcp.
