Good morning, everyone, and welcome to The New York Times Company's Fourth Quarter and Full Year 2023 Earnings Conference Call. Please also note today's event is being recorded. And at this time, I'd like to turn the floor over to Anthony DiClemente, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to The New York Times Company's fourth quarter and full year 2023 earnings conference call. On the call today, we have Meredith Kopit Levien, President and Chief Executive Officer; and Will Bardeen, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call. These statements are based on current expectations and assumptions, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties that are described in the company's 2022 10-K and subsequent SEC filings. In addition, our presentation will include non-GAAP financial measures, and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website at investors.nytco.com. In addition to our earnings press release, we have also posted a slide presentation relating to our results, also on our website at investors.nytco.com. And finally, please note that a copy of the prepared remarks from this morning's call will be posted to our investor website shortly after we conclude. With that, I will turn the call over to Meredith.

Thanks, Anthony, and good morning, everyone. 2023 was a strong year for The Times that showcased the power of our strategy to be the essential subscription for every curious person seeking to understand and engage with the world. Our news report provided improved indispensable journalism to so many people, across the full range of human experience. Our lifestyle products served scaled audiences for games, sports, cooking, and shopping recommendations. By putting them all together and giving millions of people multiple reasons to turn to The Times every day, we delivered business growth and demonstrated our ability to penetrate a large market. We drove this performance amidst a tough year for the news industry in which we and others faced persistent headwinds. We continued to see lower levels of casual news audiences due in part to the ongoing shifts from the largest tech platforms, and our ad business grappled with the heightened market volatility impacting publishers. Our strategy is designed to both counterbalance these headwinds and position us to be a category-leading global media subscription business. Let me share the highlights from the year. We added 880,000 net new digital subscribers, bringing our total to nearly 10.4 million and progressing us on the path to our next milestone of 15 million. The bundle accounted for a majority of our new subscriber starts in the year, and bundle and multiproduct subscribers made up 41% of our subscriber base at year-end. Those subscribers continue to be more engaged, better retaining, and willing to pay more over time than single product subscribers. New York Times subscriber engagement, as measured by the share of subscribers on our products each week, reached its highest point in nearly three years by year-end. The Times now sees more digital engagement than any other American news source by total monthly time spent. We crossed $1 billion in annual digital subscription revenue for the first time in 2023. Consolidated ARPU has now grown year-on-year for three straight quarters. We see this as a testament to our well-honed pricing and merchandising strategy, which is made possible by the growing value we provide to consumers through our differentiated multiproduct offerings. It was a challenging year in the ad market for publishers, but the core of our ad business, premium proprietary ad canvases enhanced with first-party data, proved resilient and continued growing. We saw real momentum as we extended our ad products across the portfolio, particularly to The Athletic and Games, where we see a lot of room for growth. It was also a record year for affiliate and licensing revenue. Wirecutter outperformed expectations in every quarter, and in December, we announced a new multiyear licensing agreement with Apple News Plus for The Athletic and Wirecutter. Deals like this underscore that our intellectual property has unique value recognized by some of the world's largest tech platforms. We exerted cost discipline throughout the year and substantially slowed overall expense growth while redirecting resources and continuing to invest in our areas of competitive advantage. All of this progress across the business drove strong earnings per share, adjusted operating profit, and free cash flow growth. In fact, in 2023, each hit their highest point since our transformation into a digital-first, subscription-first business began more than a decade ago. Inclusive of The Athletic, we expanded the margin by 100 basis points. We delivered that improved profitability even as our print business continued to experience secular decline. Our results also reflect the cash-generative nature of our model and give us the confidence to announce the sixth consecutive annual increase to our dividend. This financial growth also positions us to continue investing in expert independent journalism, which is central to how we expect to create value over the long term. I'll turn now to our fourth quarter results. In Q4, we met or beat quarterly guidance on digital and total subscription revenue, other revenue, and adjusted operating costs. Digital advertising came in slightly below the low end of our guidance, and total advertising came in below our guidance. We added 300,000 net new digital subscribers in the quarter. We attribute the strong performance to multiple distinct drivers: those include continued healthy demand for Games, peak season for cooking, a more ambitious subscription gifting program propelled by our large base of existing subscribers, and a robust deal period for B2B subscriptions. This is all in addition to high existing subscriber engagement across a range of news topics. We also benefited from further improvements in how we use machine learning to maximize audience engagement and conversion. Consistent with our strategy, we grew the audience for The Athletic, Cooking, Games, and Wirecutter in Q4. Audience growth on The Athletic, which recently passed its two-year anniversary with The Times, was particularly strong. This was thanks to our ongoing efforts to enhance coverage, improve our technical infrastructure, and make more stories available for sampling. We see a huge opportunity in sports and are making tangible progress on our ambition for The Athletic to become a top destination for sports news globally. Games benefited from consistency in the number of people who play Wordle every week and also from our hit homegrown puzzle Connections, which now has over 15 million weekly players. Total ad revenue in the quarter came in below our expectations due primarily to a larger-than-anticipated decline in print revenue. Our digital performance, including podcasts, was impacted by marketers avoiding some hard news topics like the Middle East conflict. We are nonetheless confident in the long-term potential of our digital advertising business, and our core display offering was resilient as we extended our proprietary ad canvases and first-party data to more of our portfolio. Revenue beyond subscriptions and advertising grew 10% in the quarter, driven by a record-setting holiday season for Wirecutter and strength in licensing. Let me close with a few thoughts about what's ahead. At its core, our strategy is designed to make The Times an essential daily habit for many millions more people. Our top priority now is to continue making our journalism and lifestyle products so valuable at scale that people seek us out directly and build enduring daily habits. However, as the information ecosystem evolves, while we expect many of last year's industry headwinds to persist, we believe our multiproduct portfolio and multi-revenue stream model, combined with ongoing cost discipline, position us well to be a scaled market leader. Now let me turn it over to Will for more details on our results, and I'll return after that with a few closing thoughts and to take your questions.

Thanks, Meredith, and good morning, everyone. In 2023, the successful execution of our essential subscription strategy drove strong financial results despite a challenging and dynamic environment. Our portfolio of market-leading news and lifestyle products was designed to grow our subscriber base, increase subscriber engagement and lifetime value, and strengthen our multiple revenue streams. As our subscriber base has scaled, we moderated our overall expense growth while continuing to prioritize strategic investments that help position us for long-term value creation. Our full year 2023 financial results demonstrate that our strategy is delivering as designed. We saw increases in revenue, adjusted operating profit, earnings per share, and free cash flow growth as we finished the year in an even stronger market position. Overall revenue for the year increased 5% as growth in digital subscription, affiliate, and licensing revenues more than offset ongoing declines in print. Combined with moderating cost growth, this resulted in adjusted operating profit growth of 12% year-over-year and expanded our adjusted operating profit margin by approximately 100 basis points to over 16%. The cash-generative nature of our business model was also evident. For the full year 2023, we generated approximately $338 million of free cash flow, up from approximately $114 million in the prior year. In addition to being driven by adjusted operating profit growth, free cash flow benefited from lower cash taxes, lower CapEx, and lower working capital outflows compared to 2022. We returned approximately $114 million to shareholders in 2023 through a combination of $69 million in dividends and $45 million in stock repurchases. Over the last two years, we've returned nearly 61% of our free cash flow to shareholders. As Meredith mentioned, we also announced a dividend increase of $0.02 to $0.13 per share, reflecting our confidence in the durability of our strategy. Now I'll discuss the fourth quarter's key results followed by our financial outlook for the first quarter of 2024. Please note that all comparisons are to the prior year period unless otherwise specified. As a reminder, due to a change in the company's fiscal calendar in 2022, there were five fewer days in the fourth quarter of 2023 compared to the fourth quarter of 2022. Page 23 of the earnings release published this morning includes a reconciliation of revenues, excluding the estimated impact of the five fewer days in 2023. My comments on both revenues and costs today will be on a reported basis, which includes the impact of the five fewer days. I'll start with a discussion of our subscription business. We added approximately 300,000 net new digital subscribers in the quarter. As Meredith described, bundle and multiproduct additions led the way and made up 41% of our total base at year-end, well along the path to exceeding 50% in the coming years. Total digital-only ARPU grew year-over-year for the third consecutive quarter to $9.24, an increase of approximately 3%. In Q4, we had the largest number to date of bundled subscribers transitioning to higher prices and benefited from the impact of our digital price increase on tenured single product subscribers. While it is still relatively early, we continue to be encouraged that bundle subscribers are retaining and monetizing better than news-only subscribers through these step-ups. As a result of both higher digital subscribers and digital-only ARPU in the fourth quarter, digital-only subscription revenues grew approximately 7% to $289 million, and total subscription revenues grew approximately 4% to $430 million. Both were in line with the guidance we provided last quarter. Now turning to advertising, total advertising revenues for the quarter were $164 million, a decline of approximately 8%, which was below our guidance. Digital advertising came in slightly below the low end of our guidance in the quarter, declining approximately 4% to $108 million as advertising demand for some of our products was adversely impacted in the quarter by marketer sensitivity to certain news content adjacencies. Other revenue exceeded our guidance, increasing approximately 10% to $82 million. Licensing was a strong contributor, and Wirecutter affiliate revenues benefited from a record-setting holiday season. Moving now to costs and the progress we are making in driving adjusted operating profit growth and free cash flow growth. We continue to demonstrate cost discipline in Q4. Adjusted operating costs came in better than our guidance, decreasing by approximately 1%. Even as overall adjusted operating costs declined, we continue to allocate resources to our most strategic investments, including world-class journalism and the technology and product development that unlocks its digital distribution. Investments in these areas have enabled us to increase penetration of our addressable market, fuel organic subscriber growth, and improve our operating leverage. Cost of revenue declined approximately 3%. Our continued investments in journalism were more than offset by having five fewer days in the quarter as well as lower print production and distribution and advertising servicing costs. Sales and marketing costs were up approximately 9%. We saw high return paid marketing opportunities in the quarter as the bundle continued to enable better marketing efficiency. Product development costs increased 5%, as we continue to strategically invest into the product and technology teams enabling our digital subscriber growth. General and administrative costs were down approximately 1% as we continue to drive efficiencies in nonstrategic areas. As a result of revenue growth and disciplined cost management, adjusted operating profit increased approximately 9% to $154 million. Adjusted operating profit margin was approximately 23% in the quarter, an increase of approximately 160 basis points compared to the prior year. This also translated into strong earnings growth as adjusted diluted EPS increased by $0.11 to $0.70. EPS growth in Q4 was also aided by higher interest income and a lower tax rate. I'll now look ahead to Q1 for the consolidated New York Times Company. Total subscription revenues are expected to increase 7% to 9% compared with the first quarter of 2023, and digital-only subscription revenues are expected to increase 11% to 14%. Overall advertising revenues are expected to decrease mid-single digits, while digital advertising revenues are expected to increase low to high single digits. We continue to experience limited visibility in the advertising market, particularly around ongoing print declines. Other revenues are expected to increase mid-single digits. Adjusted operating costs are expected to increase 5% to 7%, which reflects an overall commitment to cost discipline as we pursue our growth strategy. Our approach on costs has been to relentlessly reallocate resources from nonstrategic work to areas of highest impact. At the same time, we intend to continue targeted strategic investments into independent journalism, news, lifestyle products, and technology that position us for growth and market leadership over the long term. We expect that these investments will be reflected in the growth of our cost of revenue and product development expense lines. We expect adjusted operating profit and earnings growth to be weighted to the back half of the year due to the seasonality of advertising and affiliate revenue. I'll close by noting that we remain on track to achieve our previously stated midterm targets for subscribers, adjusted operating profit growth, and capital returns. With that, I'll send it back to Meredith to wrap up.

Thanks, Will. Our portfolio of differentiated news and lifestyle products is delivering growth and steadily improving unit economics, and we believe our multi-revenue stream model makes our business more resilient in a complicated environment. With this foundation, we believe strongly in our ability to create value through a premium product portfolio and world-class independent journalism, at a time when it is rare and more needed than ever. And now we're happy to take your questions.

Our first question today comes from Thomas Yeh from Morgan Stanley.

I wanted to ask about the evolving relationship with big tech. I think you've historically approached commercial agreements with the philosophy of being able to drive engagement back to your own properties in light of some of the details around the open AI litigation and the deal with Apple News. Can you maybe just help us dimensionalize the structure of a licensing deal that you would see as proving not cannibalistic? And how do you kind of weigh the benefits and the offsets associated with an opportunity like that?

Yes, I'll begin, Thomas. Will can follow up as he thinks is appropriate. You have seen the deals we've executed over the past few years, including the one I mentioned in my prepared remarks about our recent partnership with Apple News Plus for The Athletic and Wirecutter. We typically look for three key factors: first, does this align with our core subscription strategy, meaning is it aiding us in establishing direct relationships? This can be achieved through straightforward interactions or by boosting audience engagement and brand visibility, as we aim to do with Apple News Plus for The Athletic. We definitely see this partnership fulfilling that goal. Secondly, we assess whether our intellectual property rights are being respected and utilized responsibly, and whether there is a fair exchange of value involved. Whenever we consider collaborations with major tech companies or any partners, these are the factors that guide our decision-making. I believe we have a strong history of forming agreements that meet these criteria.

Is the attribution still critical to building and reinforcing the overall IP? Like is that something that you would ever potentially forgo in an AI situation that would be economic and still beneficial to you?

Yes, I understand what you're saying. I'll say two things, both kind of related to what I've already said. One is, I think the most important thing we can do as a business, and I talked about this a bit in my prepared remarks, is to have products that are so valuable at scale and widely understood for their brand marks and the credibility and the trustworthiness they provide that people are inclined to build a direct relationship with us and will come to us on a very regular basis. So that's the main game we are playing. To the extent that there are other ways to tap into the vast arsenal of IP that we create every day that we've created for close to two centuries, we are open to that as long as there is fair value exchange and it's supportive of the broader business model.

And then maybe just to squeeze one last one for Will. I wanted to revisit the capital allocation philosophy. You reiterated the 50% return of free cash flow over the medium term. But I think you've been pacing a little bit below that in 2023. Was there any specific reason that led to a pause in repurchase activity and potential uses of cash that you see as an attractive opportunity to maybe drive organic growth instead?

Thanks, Thomas. I think you should just take our capital allocation strategy as unchanged; that target 50% over the medium term, and we have said don't expect that sort of to be linear to any quarter, even any year. Over the last two years, we've returned 61% in a combination of dividends and share repurchases. I think you can expect us to continue to track against our target over the mid-term.

Our next question comes from David Karnovsky from JPMorgan.

Meredith, I don't know what you're willing to say on the lawsuit with open AI, though any thoughts would be welcome. But maybe separate to that, are you still in discussions with other AI platforms for potential licensing deals? And can you speak to how the discussions might be going and the prospects for any agreements near-term? And then Will, just a question on the outlook. The Q1 cost growth looks to be a touch above the pace of the past few quarters. I know sometimes there's timing issues. I want to see if there's any call out here. And if you could provide any view on the cost trend for the remainder of the year?

I'll start. Thanks for the question. And as you suggest, we're in active litigation, so there's not much I'll say about the case specifically, but more broadly on making deals, and this goes a little bit to the way I answered Thomas' question. You've seen the deals we've done over the last couple of years. You can imagine we are talking to potential partners all the time. We are being really selective and thoughtful about what partnership makes sense for us in the context of our strategy and our rights being respected to our IP and fair value exchange for that IP.

I'll address the question regarding cost growth guidance. I don't have any specific comments for Q1, but I want to emphasize that cost growth can vary from quarter to quarter, as seen in the past and something we can expect occasionally. Overall, the key themes to focus on are cost discipline and the strategic reallocation of resources to areas that have a high impact. We are concentrating on improving efficiency in general and administrative expenses, as well as in sales and marketing, while also seeking efficiencies in our print supply chain and other legacy areas. The second theme is our commitment to making targeted strategic investments that we believe will add value to our journalism and product development, ensuring we invest for the long term and strengthen our competitive position. These are the two main themes to consider.

Our next question comes from Ashton Wells from Evercore ISI.

I think digital-only subscriber ARPU in Q4 was down modestly from Q3. What drove the sequential decline? And how should we be thinking about ARPU growth in the first half of 2024 as more bundled subscribers are stepped up? And related to this, how are the bundle step-ups performing versus your expectations?

Sure. Let me take that. The way to think about the sequential decline in ARPU is very much a reflection of things we've seen before, which is a good quarter of net ads. Given the nature of our promotional pricing strategy, we expect to see that when that happens. I think the important thing for us to focus on, obviously, is the year-over-year ARPU growth in the quarter. Looking forward, we expect modest year-over-year ARPU expansion for digital-only subscribers. I talked about in my remarks the drivers of that expansion in Q4. The step-ups from the larger bundle cohorts we brought on are going to be one of the main drivers in 2024 as well. We remain encouraged by what we see; those bundle subscribers at those step-up moments are retaining better and monetizing better than news-only subscribers.

Our next question comes from Doug Arthur from Huber Research Partners.

Got two questions. Meredith, the deal with Apple News Plus that started late in the fourth quarter. Did you get any read-through at all? Or is it just too early? What kind of expectations do you have there?

Great question. Tiny impact, I think I'm looking at Will and Anthony, if they want to characterize that anymore, but tiny impact, just based on the timing and then, obviously, bigger impact to come. There are a handful of things we're particularly excited about in this deal. One is, as we've talked about with you and others, we are very focused on building audience and brand awareness and use of The Athletic, and we see Apple News Plus as a great way to do that. Apple is doing a lot of interesting things in sports, and it is a great partner for us. The Times has big ambitions for The Athletic in sports, and we see this as helping us achieve that. So it's good in many ways, and you can expect to see the impact as we move forward.

Doug, did you have another question or are you all set?

I just didn't want to beat a dead horse, but it seems like your digital advertising outlook for Q1 is more constructive than what we just witnessed in the fourth quarter. I'm just trying to gauge your conviction level on that.

Yes. Let me preface it by saying advertising is hard to call. We don't have a ton of visibility, but I'll say a few things. We did in digital in the fourth quarter, experience a significant amount of what I would describe as marketer news avoidance; you have the war between Israel and Hamas break out in early October, and that had an adverse effect in both display and audio. At the same time, what you see us doing to capture up some of the demand to work with The Times—we're extending our ad products aggressively to other places in our portfolio beyond news. The Athletic and Games have been real bright spots so far, and we see a lot of opportunities in both of those areas and potentially also in Cooking and Wirecutter. So I would say we're optimistic about reaching out to more market interest while remaining focused on our core ads, which are doing well despite the volatility.

Our next question comes from Vasily Karasyov from Cannonball Research.

Meredith, do I understand correctly that when you say in your prepared remarks that the headwinds in the advertising market carry into this year, including the current events in the Middle East, do you mean advertisers are reluctant to advertise next to content driven by recent events? Or is there something more structural? You also mentioned publisher volatility, and I was wondering if you could explain what the TAM means?

Yes, it was a volatile advertising market that tends to hit publishers hard when it happens. We have a lot of structural confidence in the core of our ad business. Premium canvases and first-party data and our core New York Times product are now extending out to our other offerings, and that is really working. So, that's the message I want to convey. To the extent you're asking how we think about publishers relative to platforms or any other business that are in the ad business in a big way, I would say marketers use publishers differently than they use the big platforms. One of the things that gives us a lot of confidence is while we tend to get more middle and upper funnel advertising—meaning not direct response, more brand advertising in most parts of our portfolio—our ads, because of the way we sequence them and leverage first-party data, are performing well. What you're watching us do is extend those ads across more parts of the portfolio. So, we have a lot of hope for our Athletic, Games, Cooking, and Wirecutter products. Lastly, I'd like to mention that we have begun experimenting with AI in our ad business and are looking forward to better targeting at scale through generative AI. We recently initiated an experiment regarding augmenting Spanish language translation for our content, which we're enthusiastic about, and you can expect to see further experiments in this space in the future.

And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back to Anthony DiClemente for any closing remarks.

That's it. Thank you all for joining us this morning, and we very much look forward to talking to you again next quarter. Take care.

And ladies and gentlemen, with that, the conference has concluded. We thank you for attending today's presentation. You may now disconnect your lines.