NEW YORK TIMES CO

EXECUTIVE OVERVIEW

We are a global media organization focused on creating and distributing high-quality news and information that helps our audience understand and engage with the world. We believe that our original, independent and high-quality reporting, storytelling, expertise and journalistic excellence set us apart from other news organizations and are at the heart of what makes our journalism worth paying for. For further information, see “Item 1 — Business – Overview” and “– Our Strategy.”

We generate revenues principally from the sale of subscriptions and advertising. Subscription revenues consist of revenues from standalone and multi-product bundle subscriptions to our digital products and subscriptions to and single-copy and bulk sales of our print products. Advertising revenue is derived from the sale of our advertising products and services. Other revenues primarily consist of revenues from Wirecutter affiliate referrals, licensing, commercial printing, the leasing of floors in our Company Headquarters, television and film, retail commerce, our live events business and our student subscription sponsorship program. Our main operating costs are employee-related costs.

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Beginning with the third quarter of 2023, we have updated our presentation of total operating costs to include operating items that are outside the ordinary course of our operations (“special items”). These items have been previously presented separate from operating costs and included in operating profit. We recast operating costs for the prior periods in order to present comparable financial results. There was no change to consolidated operating profit, net income or cash flows as a result of this change.

In the accompanying analysis of financial information, we present certain information derived from our consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). We are presenting in this report supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non-operating retirement costs and certain identified special items, as applicable. In addition, we present our free cash flow, defined as net cash provided by operating activities less capital expenditures. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures and should be read in conjunction with financial information presented on a GAAP basis. For further information and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, see “— Results of Operations — Non-GAAP Financial Measures.”

This report includes a discussion of the estimated impact of the five fewer days on our year-over-year comparison of revenues where meaningful. Management believes that estimating the impact of the five fewer days on the Company’s operating costs and operating profit presents challenges and, therefore, no such estimate is made with respect to these items. For further detail on the impact of the five fewer days on our results, see the discussion below and “— Results of Operations-Non-GAAP Financial Measures.”

2023 Financial Highlights

•The Company added approximately 880,000 net digital-only subscribers compared with the end of 2022, fueled by bundle and multi-product subscriber additions.

•Total digital-only average revenue per user (“ARPU”) grew 2.6% year-over-year to $9.18 driven primarily by subscribers graduating from promotional to higher prices and price increases on tenured non-bundled subscribers.

•Operating profit increased 36.8% to $276.3 million in 2023 from $202.0 million in 2022. Operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items discussed below under “Non-GAAP Financial Measures” (or “adjusted operating profit,” a non-GAAP measure) increased 12.0% to $389.9 million in 2023 from $347.9 million in 2022. Operating profit margin (operating profit expressed as a percentage of revenues) increased to 11.4% in 2023, compared with 8.7% in 2022. Adjusted operating profit margin (adjusted operating profit expressed as a percentage of revenues) increased to 16.1% in 2023, compared with 15.1% in 2022.

•Total revenues increased 5.1% to $2.43 billion in 2023 from $2.31 billion in 2022.

•Total subscription revenues increased 6.7% to $1.66 billion in 2023 from $1.55 billion in 2022. Digital-only subscription revenues increased 12.4% to $1,099.4 million in 2023 from $978.6 million in 2022. The Company ended 2023 with approximately 10.36 million subscribers across its print and digital products, including approximately 9.70 million digital-only subscribers. Of the 9.70 million digital-only subscribers, approximately 4.22 million were bundle and multiproduct subscribers. Compared with the end of 2022, there was a net increase of 880,000 digital-only subscribers.

•Total advertising revenues decreased 3.5% to $505.2 million in 2023 from $523.3 million in 2022, due to a decrease of 8.5% in print advertising revenues and a decrease of 0.2% in digital advertising revenues.

•Other revenue increased 13.8% year-over-year as a result of continued strength in licensing and Wirecutter affiliate referral revenues.

•Operating costs increased 2.1% to $2.15 billion in 2023 from $2.11 billion in 2022. Operating costs before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items (or “adjusted operating costs,” a non-GAAP measure) increased 3.9% to $2.04 billion in 2023 from $1.96 billion in 2022.

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•Diluted earnings per share were $1.40 and $1.04 for 2023 and 2022, respectively. Diluted earnings per share excluding amortization of acquired intangible assets, severance, non-operating retirement costs and special items discussed below under “Non-GAAP Financial Measures” (or “adjusted diluted earnings per share,” a non-GAAP measure) were $1.63 and $1.32 for 2023 and 2022, respectively.

•Net cash from operating activities for 2023 was $360.6 million and free cash flow (net cash provided by operating activities less capital expenditures, a non-GAAP measure) was $337.9 million compared with $113.7 million in 2022.

Industry Trends, Economic Conditions, Challenges and Risks

We operate in a highly competitive environment that is subject to rapid change. Companies shaping our competitive environment include content providers and distributors, as well as news aggregators, search engines, social media platforms and emerging products and tools powered by generative AI. Competition among these companies is robust, and new competitors can quickly emerge. We have designed our strategy to take advantage of both the challenges and opportunities presented by this period of transformation in our industry.

We and the companies with which we do business are subject to risks and uncertainties caused by factors beyond our control, including economic, geopolitical and public health conditions. These include economic weakness, instability, uncertainty and volatility, including the potential for a recession; a competitive labor market and evolving workforce expectations, including for unionized employees; inflation; supply chain disruptions; rising interest rates; and political and sociopolitical uncertainties and conflicts (including the war in Ukraine and the Israel-Hamas war). These factors may result in declines and/or volatility in our results.

We believe the macroeconomic environment has had and may in the future have an adverse impact on both digital and print advertising spending. Additionally, we believe that there may be marketer sensitivity to some news topics, impacting overall advertising spend.

We are experiencing a competitive labor market and pressure on compensation and benefit costs for certain employees, mainly in technology roles. In addition, although we have not seen a significant impact from inflation on our recent financial results to date, if inflation increases for an extended period, our employee-related costs are likely to increase. Our printing and distribution costs also have been impacted in the past and may be further impacted in the future by inflation and higher costs, including those associated with raw materials, delivery costs and/or utilities.

The media industry has transitioned from being primarily print focused to digital, resulting in secular declines in both print subscription and print advertising revenues, and we do not expect this trend to reverse. We actively monitor industry trends, economic conditions, challenges and risks to remain flexible and to optimize and evolve our business as appropriate; however, the full impact they will have on our business, operations and financial results is uncertain and will depend on numerous factors and future developments. The risks related to our business are further described in the section titled “Item 1A — Risk Factors.”

Liquidity

Throughout 2023, we returned capital to shareholders through dividends and share repurchases and continued to manage our pension liability as discussed below. As of December 31, 2023, the Company had cash, cash equivalents and marketable securities of approximately $709 million and was debt-free.

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Capital Return

The Company aims to return at least 50% of free cash flow to stockholders in the form of dividends and share repurchases over the next three to five years.

We have paid quarterly dividends on the Class A and Class B Common Stock each quarter since late 2013. In February 2024, The Board of Directors approved a quarterly dividend of $0.13 per share, an increase of $0.02 per share from the previous quarter. We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividend program will be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.

In February 2022, the Board of Directors approved a $150.0 million Class A share repurchase program. In February 2023, the Board of Directors approved a $250.0 million Class A share repurchase program in addition to the amount remaining under the 2022 authorization. The authorizations provide that shares of Class A Common Stock may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. Through February 14, 2024, we repurchased 4,761,893 shares under these authorizations for an aggregate purchase price of approximately $170.5 million (excluding commissions), fully utilizing the 2022 authorization and leaving approximately $229.5 million remaining under the 2023 authorization. We expect to repurchase shares to offset the impact of dilution from our equity compensation program and to return capital to our stockholders. There is no expiration date with respect to these authorizations.

Managing Pension Liability

We remain focused on managing our pension plan obligations. We have taken steps over the last several years to reduce the size and volatility of our pension obligations, including freezing accruals under all but one of our qualified defined benefit pension plans, making immediate pension benefits offers in the form of lump-sum payments to certain former employees and transferring certain future benefit obligations and administrative costs to insurers.

As of December 31, 2023, our qualified pension plans had plan assets that were approximately $83 million above the present value of future benefits obligations, compared with approximately $70 million as of December 31, 2022. We made contributions of approximately $10 million and $11 million to certain qualified pension plans in 2023 and 2022, resp ectively. We expect to make contributions in 2024 to satisfy minimum funding requirements of approximately $13 million. We will continue to look for ways to reduce the size and volatility of our pension obligations.

While we have made significant progress in our liability-driven investment strategy to reduce the funding volatility of our qualified pension plans, the size of our pension plan obligations relative to the size of our current operations will continue to have an impact on our reported financial results. We expect to continue to experience volatility in our pension costs, particularly due to the impact of changing discount rates, long-term return on plan assets and mortality assumptions on our qualified and non-qualified pension plans. We may also incur additional withdrawal obligations related to multiemployer plans in which we participate, as well as multiemployer plans from which we previously withdrew.

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