News Corp reported strong Q3 results with record profitability at Dow Jones, driven by professional information businesses. Realtor.com showed strong growth despite a sluggish housing market, and management gave a positive outlook for Q4 with strong free cash flow growth expected for the fiscal year. Dow Jones professional information business now accounts for ~40% of revenues; Risk & Compliance revenues rose 19%, and Dow Jones Energy revenues rose 12%.
News Corp reported strong Q3 results with record profitability at Dow Jones, driven by professional information businesses. Realtor.com showed strong growth despite a sluggish housing market, and management gave a positive outlook for Q4 with strong free cash flow growth expected for the fiscal year. Dow Jones professional information business now accounts for ~40% of revenues; Risk & Compliance revenues rose 19%, and Dow Jones Energy revenues rose 12%.
Management highlighted advanced negotiations with several AI companies for IP licensing, emphasizing that IP is a critical input for AI alongside semiconductors and energy. They are also leveraging AI internally for product improvements (e.g., Factiva, audiobooks) and cost…
Management expressed optimism about revenue growth, AI licensing deals, and realtor's positioning for a housing recovery, despite some near-term headwinds like mortgage rates.
Realtor core revenue up 15% despite sluggish housing market. Management expressed optimism about revenue growth, AI licensing deals, and realtor's positioning for a housing recovery, despite some near-term headwinds like mortgage rates.
Reported gross margin was 50.76%, reinforcing the quarter's better-than-guided profitability.
Management highlighted advanced negotiations with several AI companies for IP licensing, emphasizing that IP is a critical input for AI alongside semiconductors and energy. They are also leveraging AI internally for product improvements (e.g., Factiva, audiobooks) and cost efficiencies.
Realtor core revenue up 15% despite sluggish housing market. Management expressed optimism about revenue growth, AI licensing deals, and realtor's positioning for a housing recovery, despite some near-term headwinds like mortgage rates.
Moderately higher capital expenditures are expected for the fiscal year, as communicated earlier, with strong free cash flow growth still anticipated.
Management expressed optimism about revenue growth, AI licensing deals, and realtor's positioning for a housing recovery, despite some near-term headwinds like mortgage rates.
“We're testing AI for both translation as well as for the creation of audiobooks.”
“revenue per existing home sales are now at a 20% higher level than they were in 2022.”
REA Group's outlook commentary signals improving Australian housing market conditions, with an upward revision to April listings growth.
“Australian residential new-buy listings for April rose 19%. Please refer to REA for more detailed outlook commentary, which now assumes lower operating cost growth.”
underpinned by recurring revenues and expect to report strong results in the fourth quarter. Some themes by segment. At Dow Jones, we expect continued strong revenue performance and improved margins. At Digital Real Estate Services, Australian residential new-buy listings for April rose 19%. Please refer to REA for more detailed outlook commentary, which now assumes lower operating cost growth. At Realtor, we hope to see continued revenue improvement, albeit the overall housing recovery could be impacted in the shorter term by rising mortgage rates. At book publishing, overall HarperCollins trends remain favorable, and we expect to benefit from a stronger front-list program. At news media, we expect to incur some incremental costs compared to the prior year related to the rollout of the California Post, but should also see some benefits from new content licensing revenues. While third quarter cash flows were impacted by the timing of working capital, we expect strong free cash flow growth for the fiscal year despite moderately higher capital expenditures as we had communicated earlier this year. With that, I'll turn it over to the operator for Q&A.
News Corp has escalated its legal dispute with Perplexity over alleged IP misuse, indicating a hostile relationship with the private AI search company.
“as for the perplexing perplexity, we are now not the only media company that has brought an action.”
Hi, Robert. Hi, Lavanya. So my question is also around potential AI opportunities. I suppose, are you able to talk about the broad quantum of additional revenue from partnerships with AI platforms that you could receive? And if you can't give us specific numbers, perhaps how does it compare with what you've contracted to date with Meta and OpenAI? And again, maybe just drilling down into that, how much will the meta open AI partnership still live on a combined basis? I know you can't talk about individual contracts, but if you can talk about it on a combined basis, that would be useful.
Thank you. And so we obviously can't discuss the precise details of confidential deals. But the meta agreement is an important partnership, as is our agreement with OpenAI. And both agreements are more than purely transactional. We'll be exchanging insights as the use of AI evolves exponentially. And you will be able to see the impact in our accounts over the next decade. few years. There's no doubt about that. As for AR itself, we are in the midst of advanced negotiations with several companies, and it is clear that many have come to recognize that the purchase of IP is as important as the acquisition of semiconductors or the securing of stable energy sources. IP powers AI. IP is an input imperative. And as always, there is a mix of wooing and suing. We would prefer the former, but we will never shy away from protecting our property rights. The integrity of creativity must be safeguarded. And for example, as for the perplexing perplexity, we are now not the only media company that has brought an action. And that's because we would argue that the IP excesses have been so egregiously egregious that that even certain other media companies have noticed. Now, we're looking very much forward to the discovery process because we have full confidence that fascinating, illuminating material will surface. We will always be open to a settlement, but the figure needs to be meaningful. And the deals do keep rolling. Bloomberg, for example, buying Dow Jones AI riots, the $1.5 billion anthropic settlement project, the OpenAI partnership, the Meta agreement, and various other negotiations. Now, the way to think about these negotiations is that there will be substantial deals with the larger horizontal AI companies and then multiple meaningful agreements with specialist verticals who require both archive and updates in their areas of specialist expertise. So these are indeed propitious times for our IP.