News Corp signals further AI partnerships and ramps up share buybacks amid digital revenue strength

Earnings Call Insights: News Corporation (NWSA) Q1 2026

MANAGEMENT VIEW

* CEO Robert Thomson highlighted continued momentum following a record profitability year, noting "News Corp continued to increase both revenue and profitability in the first quarter of fiscal 2026 led by strength at Dow Jones and Digital Real Estate Services and bolstered by digital and AI related revenues." He reported that revenue for the period rose 2% to $2.14 billion, with total segment EBITDA up 5% to $340 million. Total net income from continuing operations was $150 million, and adjusted EPS for the quarter was $0.22.
* Thomson emphasized the value of intellectual property in the AI era, saying "Information and sophisticated data are the essence of AI. And without these essential ingredients, AI is but empty, vacuous, ignorant infrastructure." He referenced ongoing legal actions and partnerships in AI, including a positive relationship with OpenAI and anticipated further deals: "We expect to announce further partnerships in the near future. We anticipate these deals will have a positive impact on our results."
* Dow Jones saw EBITDA rise 10% and revenue growth at Risk & Compliance of 16%. Digital-only subscriptions to The Wall Street Journal surged 11%, with digital circulation revenues rising from 72% to 75% of total circulation revenue.
* Digital Real Estate Services experienced a 9% year-on-year revenue boost at realtor.com, with new homes and rentals comprising 22% of revenues. The company welcomed Cameron McIntyre as Chief Executive of REA Group.
* Book Publishing faced a write-off related to the closure of a distributor, but recent weeks showed improvement and several new releases became bestsellers.
* CFO Lavanya Chandrashekar stated, "we have repurchased at a rate of approximately $2.5 million per day over 4x the previous pace. We are confident in the company's growth potential and continue to believe the stock is trading at a significant discount to net asset value." She noted "results demonstrate the continued strength and resilience of our digital businesses."

OUTLOOK

* Management expects strong free cash flow for fiscal 2026, alongside continued aggressive share buybacks. Chandrashekar reported, "we expect fiscal 2026 pacing to benefit from the repayment of approximately $380 million of Foxtel shareholder loans."
* Dow Jones is expected to maintain healthy revenue growth in B2B, with a slight increase in cost growth for Q2. Digital Real Estate expects "continued healthy revenue growth alongside growth in adjacencies" at Realtor, benefiting from improving market conditions. Book Publishing trends were encouraging in October, with Q2 expected to benefit from improved ordering and a stronger frontlist. News Media is focused on cost efficiencies amidst challenging advertising conditions.
* Capital spending for the year is anticipated to be up moderately, with investments in HarperCollins supply chain logistics and technology.

FINANCIAL RESULTS

* News Corp reported Q1 revenues of over $2.1 billion, up 2% year-over-year, and total segment EBITDA of $340 million, up 5%, with margins rising to 15.9%. Adjusted EPS was $0.22 compared to $0.20 in the prior year.
* Dow Jones reported revenues of $586 million, up 6% year-over-year, with digital revenues accounting for 84% of segment revenue. Risk & Compliance revenues reached $94 million, up 16%. Dow Jones segment EBITDA rose to $144 million, with margins approaching 25%.
* Digital Real Estate segment revenues were $479 million, up 5% year-over-year. Segment EBITDA was $158 million, up 13%. Realtor.com achieved revenues of $152 million, up 9%.
* Book Publishing revenue was $534 million, down 2%, and segment EBITDA was $58 million, down 28%, impacted by a $13 million receivable write-off. Digital sales represented 23% of consumer revenues.
* News Media revenues rose 1% to $545 million, with segment EBITDA up 67% to $30 million.

Q&A

* Kane Hannan, Goldman Sachs: Asked about sustainability of double-digit revenue growth at Realtor. CEO Thomson responded, "We are delighted by the growth in revenue at Realtor, which is expanding despite a U.S. housing market still somewhat hamstrung by high interest rates...we have built a site that is a holistic housing experience and -- which is the leader in residential property news in the U.S."
* David Karnovsky, JPMorgan: Queried about buyback acceleration and WSJ price increases. Thomson replied, "the rate of the buyback has accelerated markedly actually at 4x the previous rate...we certainly have the potential to increase the buyback, if that is the optimal strategy." On WSJ pricing, "we're at the early stage of testing and reviewing subscription pricing. But believe that there is definitely elasticity..."
* Entcho Raykovski, E&P: Asked about Factiva dispute settlement and PR/communications revenue. Thomson said, "much improvement at Factiva, which had been hobbled by that legal dispute, but increased revenues 9%." CFO Chandrashekar added, "what we got from the settlement of the dispute was very modest. The good news is we are bringing in new customers into that space."
* Craig Huber, Huber Research: Asked about further business simplification. Thomson responded, "we are certainly not allergic to structural changes...the recent sale of Foxtel...is eloquent testimony to that willingness to simplify..."
* David Joyce, Seaport Research: Queried about Risk & Compliance growth. Thomson replied, "The Know Your Client regulations...are also a source of new business. So while we saw 16% growth in the most recent quarter, we're confident that further growth is indeed possible."
* David Fabris, Macquarie: Asked about News Media trajectory. Thomson noted, "we saw a slight increase in revenue, but also the benefits of leadership and cost discipline...margin at News Media rose from 3.3% last year to 5.5%." Chandrashekar highlighted ongoing cost savings initiatives.

SENTIMENT ANALYSIS

* Analysts' tone was neutral to slightly positive, with questions focusing on sustainability of growth, buyback strategy, and digital business momentum. Inquiries about potential upside and elasticity in pricing suggested cautious optimism.
* Management's tone in prepared remarks was confident and assertive, emphasizing aggressive buybacks, digital growth, and legal/partnership action in AI. In Q&A, management maintained confidence, referencing optionality and strategic flexibility, but rarely committed to specific targets: "We have genuine optionality, and we will exercise that optionality with all of our investors in mind."
* Compared to the previous quarter, analysts showed greater interest in digital and AI-related developments, while management continued to emphasize digital transformation, shareholder returns, and IP protection.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language shifted to emphasize more aggressive capital returns and anticipated AI partnership announcements, as well as a more robust outlook for Digital Real Estate and Dow Jones.
* Management's tone remains confident, with increased focus on digital and AI-related revenue streams and buybacks, compared to prior quarter's focus on transformation and asset divestiture.
* Analysts pivoted from macroeconomic and asset simplification concerns to questions on digital business growth, buyback acceleration, and monetization of IP in the AI era.
* Key financial metrics improved slightly from Q4 2025, with higher segment EBITDA and stronger digital revenue contributions. Strategic priorities now clearly target AI partnership monetization and digital expansion.

RISKS AND CONCERNS

* Book Publishing faced "blustery wins" due to market softness and a $13 million distributor write-off, though signs of recovery are noted.
* Macro uncertainty and advertising headwinds persist, but management cited cost efficiencies and digital revenue growth as mitigating factors.
* Analysts raised concerns over sustainability of digital revenue growth and elasticity of subscription pricing, with management indicating ongoing monitoring and adaptation.

FINAL TAKEAWAY

News Corp's first quarter fiscal 2026 results reflect increasing digital and AI-related revenues, robust performance at Dow Jones and Digital Real Estate, and a heightened pace of share buybacks, underpinned by confidence in the company’s growth trajectory and undervaluation. The company anticipates further AI-related partnerships and ongoing improvements in Book Publishing and digital segments, supported by cost efficiencies and strategic capital allocation.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/nwsa/earnings/transcripts]

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