Good day, and welcome to the News Corp's Fiscal 2022 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded. [Operator Instructions]. At this time, I would now like to turn the conference over to Mike Florin, Senior Vice President and Head of Investor Relations. Please go ahead.

Thank you very much, Sarah. Hello, everyone, and welcome to News Corp's Fiscal Fourth Quarter 2022 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'll open with some prepared remarks, and then we'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 our earnings release for the applicable periods posted on our website. With that, I'll pass it over to Robert Thomson for some opening comments.

Thank you, Mike. The overuse of superlatives really is unbecoming. But the past quarter and the full year have created so many unprecedented records that reflect well on all of News Corp, and we believe have created a platform for future performance and enduring returns for our investors. These accomplishments, which necessarily demand the use of superlatives, follow intense digital transformation by the businesses and focused acquisitions that we expect will provide increased revenue and healthy profits far into the future. Profitability for the full year rose 31% to a record $1.67 billion, and that followed a 26% surge in the previous year, which itself was a record. Revenues rose a robust 11% despite incipient economic uncertainty and unfavorable ForEx fluctuations that outweighed the benefit of an extra week. In total, the favorable results were reflected in our reported EPS of $1.05, compared to $0.56 in the prior year. It is worth noting that we saw enhanced success in each and every business segment last year, and we are confident of our prospects in fiscal 2023. Our core pillars, Dow Jones, Digital Real Estate Services and Book Publishing, all notched record results that exceeded the sterling performance of the previous fiscal year when new benchmarks were set across most of the company. And it's worth noting that our net cash from operating activities was a record $1.35 billion, topping the previous year's record of $1.24 billion. That extra cash has enabled us to return capital to shareholders and to be pointedly poised for opportunistic investments of the kind that have already transformed the Dow Jones business, making it more digital, more premium and more profitable. The successful journey of our media properties is unlike any in the world, as has been the principal pursuit of change in terms of trade…

Thank you, Robert. Fiscal 2022 was another record year for News Corp. We have taken significant steps over the years to reshape and strengthen the portfolio, reduce fixed costs, transition to become more digital and generate incremental high-margin revenues. I will come back to some thoughts about our fiscal 2023 outlook. But suffice to say that News Corp is well positioned as we move into fiscal 2023, given the strength of our asset mix and balance sheet and the continued diversification of our revenue base. Fiscal 2022 fourth quarter total revenues were almost $2.7 billion, up 7%. The fourth quarter includes an extra week, which positively impacted revenues by $110 million. That impact was more than offset by foreign exchange headwinds of $139 million. Excluding the impact of foreign currency fluctuations, acquisitions and divestitures, fourth Quarter adjusted revenues grew 9% compared to the prior year, including the extra week. Total segment EBITDA was $315 million, up 50% versus the prior year, primarily due to higher overall revenues and lower costs in the Other segment, partially offset by higher costs from recent acquisitions and the negative impact from foreign currency fluctuations. The current quarter results include a onetime $20 million legal settlement charge for Insignia. Adjusted EBITDA grew a healthy 34% versus the prior period. For the quarter, we reported earnings per share of $0.19 compared to a loss of $0.02 in the prior year. Adjusted earnings per share was $0.37 in the quarter, compared to $0.16 in the prior year. Our free cash flow generation remains strong and remains a key area of focus. Moving on to the results for the individual reporting segment for the fourth quarter, starting with Digital Real Estate Services. Segment revenues were $443 million, an increase of 7%, compared to 74% revenue growth in the…

[Operator Instructions]. And we'll take our first question from Entcho Raykovski with Credit Suisse.

Rob, Susan, it's Entcho here. I've got a question in relation to Move, particularly given those comments you've made around the next conversation. I'm just conscious that Zero have guided to declines in their IMP revenues in the double digits into the September quarter. It sounds like you are more positive given the yield improvements that you've mentioned. I guess, can you expand on whether you're likely to see in your revenue growth into the next quarter, notwithstanding some of the challenges in the macro environment?

Entcho, Robert here. Look, the U.S. property market is replete with contradictions. Obviously, mortgage rates have risen. But by historical standards, they are relatively low and have been hovering around 5% in recent days. Obviously, also, there are ways to get lower rates than that in the shorter term. Our price increases have abated in much of the U.S., meaning internal increases, which patently strained affordability. And I mentioned earlier, our active inventory in June was actually up 19% year-on-year. So the more listings, the more opportunities for our teams. And having properties on the market for longer is not a problem, but generally a plus. It really doesn't suit us if a house is sold in 4 minutes or, frankly, takes 4 years, somewhere in between is ideal. So it's a volatile market, certainly, but opportunity abounds.

Next, we move on to Kane Hannan with Goldman Sachs.

Just on the book segment and The Lord of the Rings series, next year. I mean I imagine that's going to drive a pretty strong revenue outcome. Can you talk a bit about how we should think about that from an EBITDA perspective? I suppose if there's any other key titles in the pipeline for next year that we should be thinking about?

Kane, obviously, The Lord of the Rings series or the series based on The Lord of the Rings is going to have a profound impact on HarperCollins' performance, and the related publicity will no doubt stimulate sales. We're not in a position to give you an accurate forecast for the future, but it is fair to say it's going to be a significant moment for HarperCollins in coming months.

And I think the only other thing that I could add to that, Kane, is that, obviously, given it's going to be back list, we typically have higher margins on the back list than what we would see in the first year for front list titles.

Next, we move on to Craig Huber with Huber Research Partners.

Just a quick comment there. Robert, I've been listening to you for 9 years. I don't think I've ever heard you so excited about your business. Maybe you had a few cups of coffee, but you sounded very excited. Kidding there, but like -- my question for you is costs for you or Susan. As you think across your portfolio, if the environment does get worse here in the coming quarters, do you feel you have a room to take out costs out of your various segments? And I guess, more importantly, do you feel -- are you willing to take out cost investment spending here if the environment gets materially worse across your segments?

I might take that one, Craig. So look, obviously, if our revenue grows, we expect cost to increase given the variable nature of some of our businesses. And we are expecting supply chain and inflationary pressures most notably in manufacturing at HarperCollins and on newsprint prices at the mastheads together with wage inflation. Our business units are so far more in tune with the levers that they can use having successfully navigated the past couple of years. We do have a healthy pipeline of ongoing cost-saving initiatives, which gives us confidence that we can continue to take our cost to help mitigate some of those macro challenges.

Next, we'll move on to Alan Gould with Loop Capital.

Robert, I just wondering if you can give us a little more insight on what's happening with these platform deals with Facebook, which supposedly is resisting paying for news going forward. And what the implications would be in Australia, given the recent laws that have been implemented there?

Alan, I think it's fair to say we've entered a new Facebook phase. We have a 3-year agreement with Facebook in Australia. But beyond that, we have open discussions with Facebook on the role of professional content in areas from sport video to the Metaverse. Just one brief diversion. To be fair, some of the political pressures on Facebook to sensor content are rather perverse. The definition of disinformation or misinformation is often political and disingenuous. So some sympathy for them in that instance. But more broadly, look, we set out with a clear aim of redefining the value of news content, and that value surely has been to be defined permanently and positively. And that's definitely to the benefit of journalists and communities around the world. We have extended our significant Apple deal, thanks to Tim Manet, who both firmly believe in news. And our engagement with Google is creative and purposeful, thanks to Sundar and his team. We are, however, still waiting patiently for commission checks from other publishers around the world.

And we move on to Darren Leung with Macquarie.

Good performance in Risk & Compliance, 19% growth in the quarter. Can you give us a feel if this is acquisition impact? And if so, what is it excluding the acquisitions, please?

No, there's no acquisitions in Risk & Compliance basically within the period segment, but not Risk & Compliance.

Next, move on to Brian Han, Morningstar.

So strategic moves that you guys would like to do with REA, but cannot do due to the fact that you don't own 100% of it? And Susan, what is the revenue base of Risk & Compliance and now within Dow Jones?

Brian, I think I missed the start of your question, but I presume it was about the structure of digital real estate. Is that right?

Yes. What would you like to do with REA, but you cannot do it because you don't own 100% of it?

Look, we're very proud of REA's performance. I would leave it to Owen and the team here to give you specifics. And we're passionate generally about digital property. As you know, there's real cooperation between and among the teams. And we do see a confluence in a broader market trends with more emphasis on providing sell-side solutions in the U.S. market, which is the strengths characteristically the Australian market, where we provide premium solutions for agents. More broadly, for News Corp, we're constantly reviewing the structure of the company. We're institutionally introspective and certainly never complacent self-satisfied or smug.

And Brian, just in relation to the number for Risk & Compliance, the annual revenue was $225 million for '22, 2020, excluding week 53, so 18% growth in the full year, and we had a 19% growth in Q4.

Next, we'll move on to David Karnovsky with JPMorgan.

This is actually John on for David. Just touching on the U.S. real estate market again. But given the current cross-currents of a stabilizing market against a weakening macro backdrop, how should we think about the performance of the different product offerings that move, particularly as it relates to some of the more referral-based services versus the more lead-heavy ones?

Well, John, the most important aspect for us is listings the number of leads and then our ability through the traditional lead model as well as the referral model to maximize the value of each of those leads. And then as I mentioned earlier on, mortgages, those leads now have more value because the refi market has imploded and the origination market has increased and relatively important. So what we've created with the team at Realtor is an ability to maximize returns on any particular lead. And so that model will be something that provides us robust revenues regardless of a certain amount of volatility, volatility indeed, that may be efficacious for the market.

And John, maybe I can just add to that as well. Given some of the headwinds that we face within the core legion with volumes down, we have had success in driving increased revenue given higher yield. And we've also recently launched the hybrid product, Market VIP, which we're starting to see growth, and that's getting traction as well. So that's helping to mitigate some further headwind.

And one further point, John, even ad sales at Realtor.com have become more precise, more focused, taking the advantage of our yield lessons elsewhere in our media properties, and ads were up 11% at Realtor.com last year.

And we have no further questions. So I would like to turn the conference back over to Mike Florin for any additional closing remarks.

Great. Thank you, Sara. Thank you all for participating today. Have a great day, and we look forward to speaking with you in the near future. Take care.

Thank you. And that does conclude today's teleconference. We do appreciate your participation. You may now disconnect.