Welcome to the News Corp's First Quarter Fiscal 2025 Earnings Conference Call. Today's conference is being recorded. Media will be allowed on a listen-only basis. At this time, I'd like to turn the conference over to Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead.

Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal first quarter 2025 earnings call. We issued our earnings press release about 30 minutes ago and it's now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We will open with some prepared remarks and I'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS. The definitions and GAAP to non-GAAP reconciliations of such measures can be found in the earnings release for the applicable periods posted on our website. With that, I'll pass over to Robert Thomson for some opening comments.

Thank you, Mike. There is no doubt we have begun fiscal 2025 robustly with record first quarter revenue and record first quarter profitability. Revenue rose 3% year-over-year to $2.58 billion, while profitability surged 14% to $415 million. Our profit margin rose from 14.6% a year ago to 16.1%, and recurring circulation and subscription revenues continued to expand, as our reliance on a sometimes volatile advertising market has declined markedly. Our net income jumped from $58 million last year to $144 million and our EPS was $0.21 compared to $0.05 in the same quarter last year. That we have achieved these record first quarter results in macro conditions, which were far from auspicious tells much about the successful transformation of News Corp over the past decade. Meanwhile, the just-completed election has highlighted the importance of trusted journalism in a media maelstrom in which some journalists routinely mistake virtue signaling for virtue. Artificial intelligence harvests and recycles informational infelicities. And so it is critical that journalist inputs have integrity, which is why our partnership with OpenAI is so crucial and why we will certainly seek to challenge AI companies misusing and abusing our trusted journalism. We have indicated in the past that we would prefer to woo rather than sue artificial intelligence companies, hence the alliance with OpenAI, but we have reached a point where litigation is also essential. Dow Jones and the New York Post have started proceedings against the perplexing perplexity, which is selling products based on our journalism, and we are diligently preparing for further action against other companies that have ingested our archives and are synthesizing our intellectual property. We hope that litigation will not be necessary, but we intend to defend vigorously our rights and our journalism. This matter is an imperative for our society and for…

Thank you, Robert, for those kind words and thank you for a wonderful partnership and your guidance and support over the years, which I shall always value. It's been an absolute pleasure to work alongside you. As Robert said, after nearly eight years in this role and over two decades at News Corp, I'm going to take some much desired time-off to spend with my family. It has been a privilege to help Robert lead News Corp's transformation into the global news and information powerhouse it is today and I truly believe that the Company has an incredibly bright future ahead. I think so fortunate over the years to have had the support of both Rupert and Lachlan together with our Board of Directors and I would like to sincerely thank them all. Most importantly, I want to thank the talented teams past and present across News Corp, who I've had the privilege of working with together with my hugely talented and hard-working finance team who I will miss most of all. I'm committed to supporting Lavanya during the transition and will be a willing resource going forward. With that, I'll take you through the quarter. We have now grown profitability year-over-year for six consecutive quarters by transforming the earnings profile of Dow Jones to focus more on B2B and information services, capitalizing on the upswing in Australian listing volumes at REA while reinvesting and enhancing Realtor's product offerings, revitalizing HarperCollins with strong digital revenue growth and signing a landmark agreement with OpenAI, leveraging the value of our incredible content across the news portfolio. This has helped to drive record first quarter revenue and profitability together with our firm focus on the execution of our digital-first strategy, supported by focused M&A and organic reinvestments and disciplined cost initiatives, all underpinned…

[Operator Instructions] Our first question comes from Alan Gould from Loop Capital. Please unmute yourself to ask a question.

Thanks for taking the question. I've got a general question on OpenAI. So I see Dow Jones, you have content licensing revenue in there. Can you give us some sense on how much AI revenue came in during the quarter? How was split between Dow Jones and the news media segment? And what are the possibilities for getting some AI revenue for the HarperCollins division? Thank you.

Well, thanks for the question. We can't be more specific than we already have been about the distribution of AI revenues, particularly from the OpenAI deal, but you will see it having an impact in the news media section. There's no doubt about that as in subsequent quarters. And it is also a part now of the revenue and profit profile of Dow Jones. But other than that, I'm not at liberty to say anything more given confidentiality requirements.

I think, Alan, the only thing I could add to that is, I know we've had some questions in the past about measure done in Australia and the impact of that. And I think all we can say is collectively across all our agreements that we would expect to see a positive year-on-year movement in relation to revenue.

Thank you. Alan.

Best of luck, Susan.

Thanks Alan.

Thanks, Alan. Luke, we'll take our next question, please.

Our next question comes from the line of David Karnovsky from JPMorgan. Please unmute yourself to ask your question.

Hey, thank you for the question. Robert, I think you noted an expectation for Dow Jones consumer circulation growth to improve from here as you cycle past promotional periods. Can you dig in here a little bit, provide any color around that process? What gives you confidence you can bring those promo subs into higher paying tiers? And then as we look out over the medium-term, what should we consider possible in terms of a normalized growth rate for that circulation line? Thank you.

David, thanks for the question. Obviously, for legal reasons, my powers of prognostication are somewhat limited. But I think you can see that overall circulation at Dow Jones rose 11% to 5.9 million subs, while digital-only rose 15% to 5.3 million. Now, Almar and the team have been very confident that with the phasing of discounts and subsequent price movements, we would see positive movements in digital circulation revenue. And that is evidenced now with the 4% increase in digital circulation revenue on the same quarter last year. Now obviously, there was a little softness in print, which affected total circulation revenue, but the team confidently expects the positive digital trajectory to continue in this quarter as engagement and retention rates improve.

And, David, we -- just again without giving specific guidance on this, we would expect the rate of increase in revenue for digital to step up at Dow Jones and be more weighted in the second half of the year as those phase customers step up.

Thank you, Dave. Luke, we'll take our next question, please.

Our next question comes from the line of Kane Hannan with Goldman Sachs. Please unmute and ask your question.

Good morning, guys. And, Susan, thanks for your help over the years and best of luck to the future. Maybe just the books margin this quarter. Just talk about sort of the sustainability of that? I mean, how much of that 250 basis points expansion is the title performance and the back book contribution just maybe more of the digital contribution sort of underlying efficiencies that are more sustainable?

Kane, you're quite right. We obviously had a strong quarter at HarperCollins, but it's fair to say that momentum has carried across to the current quarter. Whichever way you look at the numbers, HarperCollins is traveling well. Our margin improved to 14.8% from 12% in the same quarter last year. And as we've already said, the reported EBITDA growth was 25%. Now significantly, our digital sales rose 15% with audio surging 26%. And also significantly, e-books, which had been somewhat soft, rising a solid 7% after a period of relative sluggishness. There's no reason to suggest that those trends will suddenly wane.

Thank you, Kane. Luke, we'll take our next question, please.

Our next question comes from the line of Entcho Raykovski with Evans and Partners. Please unmute your line to ask a question.

Hi, Robert. Hi, Susan. Before I ask my questions, Susan, all the best for life after News Corp. So my question is really two-fold. Firstly, looking at advertising at Dow Jones, it has suffered and it's underperformed some peers. I mean, you obviously acknowledged some of the weakness and I get that it's a smaller part of the segment, but are there any business-specific issues or factors which are causing this and what is your thinking around when we might see a recovery? And just secondly, the Foxtel shareholder loans, I think I can probably say that there has been a more recent repayment. Are you able to give us an indication of where they sit now post that repayment, and apologies if I missed this. Thank you.

Entcho, I think during an election period, certain companies are a little bit apprehensive about advertising. So we have seen some softness in finance and tech at Dow Jones. But overall, we do bear in mind that news media advertising is itself only 7% of total revenue and more than half of that is now digital revenue. When you look at Dow Jones in particular, there was a fall in digital revenue, digital advertising revenue and a slightly larger fall in print advertising. But candidly, in the current quarter, we are expecting an increase in digital advertising revenue at Dow Jones and frankly across our news media properties, including the New York Post, UK Mastheads and Australia.

Entcho, thanks for your kind words. And just in relation to the Foxtel loan, it is in the filings and that the balance now sits at AUD545 million.

Thanks, Entcho. Luke, we'll take our next question, please.

Our next question comes from the line of Craig Huber with Huber Research. Please unmute to ask your question.

Yeah. Hi there. Likewise, Susan, thank you very much for all your help over the years and best of luck to you after News Corp. You've done a great job. Robert, just curious what's -- can you help me just understand it, it's been a year here since you announced your Company is looking to optimize structures gone through the Board of Directors and all that. You made the public announcements that we're sitting here literally 12 months later and stuff. When should investors expect something to materially happen here? I mean it's been a full year. I mean, why the delay -- is the delay because of this Murdoch family issue going through the court system? Is that what's delaying this whole thing? I mean, I just can't believe you lie to me that you guys make an announcement and then nothing happened for a year unless something came out of left field that you were not expecting. So can you just help us understand what the delay is here, please?

Craig, I think you'd have to admit it's been a rather dynamic quarter with the REA team bidding to acquire Rightmove. And as mentioned, we're in active discussions over Foxtel and active means active. But there's no doubt that does not remove the disparity between inherent value of our assets and the values reflected in the share price. I did the math in the earlier statement and only the enumerate would not appreciate that discrepancy, but there are quite a few moving parts, whether the continuing express growth at the Dow Jones professional information and the cyclical slump in the US housing market, which obviously affects Realtor and the value of our property portfolio and the Foxtel discussion. So without being sector-specific, we are indeed looking to maximize value. I believe that our current value at the moment is not fully represented in the share price. Even with the 40% increase in that share price over the past year.

Thank you, Craig. Luke, we'll take our next question, please.

[Operator Instructions] Our next question comes from the line of Lucy Huang with UBS. Please unmute and ask your question.

Hi, Robin, Susan. Thanks for taking questions. I've just got one on professional information services. So within Dow Jones, growth is kind is up 8% in the quarter for this business. How should we be thinking about the new rate of growth moving forward? Because I guess last year this business was growing in the low to mid-teens? And do you think some of the new AI and data products that you've released can accelerate growth back into that mid-teens level over the next couple of months?

Lucy, as you can see, Risk & Compliance revenues are still continuing there, express growth at around 16% year-on-year and there was another 11% expansion at Dow Jones Energy. And what you're seeing in that seeming softer growth is the impact of the dispute of -- at Factiva, where there was a decline year-on-year dragging down the overall revenue increase. Two things there. One, we hope the dispute will be resolved. And secondly, the team is working diligently to enhance the user experience at Factiva. We have just announced a search deal with Google, which should improve customers ability to both retrieve and deploy valuable intelligence. And without being specific about margins, overall, PIB accounted for 40% of total revenue and well over 50% of Dow Jones profits.

And, Lucy, just to follow up on Robert's comments, the sort of the underlying growth rates within Risk & Compliance and Energy are actually very healthy, as Robert said. That Factiva dispute has impacted the numbers by about 6% this quarter. And so actually, if you added that backlog, you'd be up at the rate that you were sort of expecting. And as Robert said, we'll see how that dispute plays out, but that certainly had the impact in Q1.

Thank you, Lucy. Luke, we'll take our next question, please.

At this time, we have no further questions. I'll now hand it over to Michael Florin for closing remarks.

Well, thank you, Luke, and thank you all for participating. Look forward to talking to you again soon. Have a wonderful day.