Welcome to News Corporation's Second Quarter Fiscal 2026 Earnings Conference Call. Today's conference is being recorded. Media will be allowed on a listen-only basis. At this time, I'd like to turn the conference over to Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead.

Thank you very much, operator. Hello, everyone, and welcome to News Corporation's fiscal second quarter 2026 earnings call. We issued our earnings press release about thirty minutes ago, and it's now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive, and Lavanya Chandrashekar, Chief Financial Officer. We will open with some prepared remarks, and I'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corporation's business and strategy. Actual results could differ materially from what is said. News Corporation'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 the earnings releases for the applicable periods posted on our website. With that, I'll pass over to Robert Thomson for some opening comments.

Thank you, Mike. We are delighted to report excellent second quarter results with both revenue and profitability growth accelerating from the prior quarter, and we see favorable signs for the second half of our fiscal year. Revenues increased 6% to $2.4 billion for the quarter, and total segment EBITDA of $521 million expanded 9% despite a one-time inventory-related charge at HarperCollins. Net income from continuing operations was $242 million, a 21% decrease from the prior year, but that was due to the absence of a rather favorable $87 million gain on REA Group's sale of Property Guru last year. Our adjusted EPS for the quarter was 40¢, compared to 33¢ in the prior quarter, and our profitability margin rose from 21.4% to 22.1%. These results were driven by sustained growth at Dow Jones and Digital Real Estate Services, which both reported double-digit profit growth. And both have started the calendar year strongly. Given the current trajectory of our core drivers, we believe prospects for the third quarter are auspicious. The results are indicative of our ongoing transformation, both digitally and commercially, as we continue to increase recurring revenues and reduce our dependence on advertising, which has a certain cyclicality. Our consistently strong cash position has allowed us to enhance our buyback program, which has been running at four times the prior year pace, whilst preserving our financial flexibility and allowing us to focus on maximizing shareholder value. We also note that Moody's, which only recently upgraded our rating, has put our outlook on positive, reflecting the sturdiness of our balance sheet and our strong operating performance. Speaking of the future, it is clear that expectations of AI's impact are evolving, and that the more perceptive players have come to realize that provenance is paramount, and that our proprietary content is…

Thank you, Robert, and good afternoon, everyone. Our second quarter results demonstrate the continued strength and resilience of our portfolio and the benefits of disciplined strategic diversification. Despite the continued uneven economic backdrop, we posted accelerated top and bottom-line growth led by our core pillars. Now that I have been in this role for over a year, I will start off by saying that I'm even more confident in News Corporation's growth opportunities and our ability to maximize shareholder value. The second quarter marks our eleventh consecutive quarter of year-over-year total segment EBITDA growth on a continuing operations basis. These consistent results are the outcome of strong operational discipline and reflect the repositioning of our portfolio. Our focus on operational efficiency has successfully driven margin expansion and increased free cash flow, and I believe there is significant opportunity for this to continue. We remain disciplined in our focus on the three core growth pillars: Dow Jones, digital real estate, and book publishing, which collectively accounted for 95% of our profitability in the second quarter. News Corporation has evolved well beyond the scope of a traditional media company. We are now a digital-first company with a strong and growing recurring revenue base, complemented by high-margin content licensing revenues. Disciplined investment and value-accretive M&A have increased our exposure to the large and fast-growing data and information services market. We believe the B2B business of Dow Jones has a significant runway for growth and it is highly profitable. And as Robert mentioned, we are very excited to be able to showcase Dow Jones on March 16 in New York at the Nasdaq market site. We continue to make strong progress in returning value to our shareholders and have accelerated our share buyback program. In the second quarter, we repurchased $172 million in shares,…

Please limit your questions to one per participant. If you've joined via the Zoom application, please use the raise hand functionality to ask a question. If you've joined via the audio line, please press 9. Questions will be answered in the order they are received. We will now pause for a moment to assemble the queue. Okay. Our first question will come from David Karnovsky with JPMorgan. Please unmute your line and ask your question.

Hey. Thank you. Robert, I think we've seen this week the market react to AI or the perception of AI, and what that is gonna mean for companies that operate in the business services or data spaces. And it'd be great to kinda get your expanded thoughts on this reaction and you know, what you view as reasonable to worry about versus maybe what the market is potentially overweighing or maybe missing here? Thank you.

Yeah. David, a very salient question. There is a fundamental misconception about the impact of AI on News Corporation. AI is retrospective and synthesizes generic content sometimes imperfectly. But it is past tense, often past imperfect. We have contemporary creative proprietary content, which is only accessed if AI companies pay us. Our woo or soo strategy, we've been consciously building a moat, and it is a moat with saltwater crocodiles, with sharks, and an even more dangerous species, lawyers. More importantly, the moat separates commodity content from our premium prescient IP. Now let's be clear. Anthropic is already set to pay out $1.5 billion for inappropriate use of pirated books, and we and our authors will get a large chunk of that money later this year. And we have a partnership with OpenAI whose expertise will enhance our editorial business and real estate products, while our editorial will enhance OpenAI products. Now we're not complacent, we're certainly not naive or digital dilettantes. But we are absolutely confident about our ability to create compelling premium content and experiences in an age in which many AI companies will be recycling rubbish. I mean, it is worth remembering that AI models need data. Otherwise, they are just lines of inert code. They need real-time, real-world data, and that's what we produce every single minute of every single day. Without compelling content, these AI operators are not omnipotent. They are not unique, they are eunuchs.

Thank you, Dave. Luke, we will take our next question, please.

Our next question will come from Entcho Raykovski with Evans Partners. Please unmute your line and ask your question.

Hi, Robert. Hi, Lavanya. My question is a follow-up to David's question, actually. I mean, given this is such a topical issue in the market at the moment, I'm just curious as to whether you're comfortable around the investment into Dow Jones which is required including to deal with any AI threat? I think you mentioned last quarter that some of the CapEx is linked to continued investment in technology. I suppose are you able to quantify this? And again, just curious whether, you know, the launch of tools like Claude Legal for example, given it's worried the markets, whether you see it as having a negative impact on your operations? Thank you.

Encho, to the last point, absolutely not. We are fully confident in the Dow Jones professional information business for the reasons that I outlined in the previous answer. And we're also very confident about the trajectory this quarter and next quarter. And we don't normally give forward guidance, but that's as much forward guidance you're gonna get. And it's particularly positive at this stage. And it's positive because we do have unique information, and it's a high-margin business, but it's not a retrospective content set. It's a contemporary content set. And I disconnect between the reality of the threat of AI and the reality of the needs of AI. And we are a company that fulfills the needs and face a very limited threat. We're not a collection of legal case studies. We're a collection of contemporary content, much of it journalistic. And in the book business, we are a collection of unique works written by authors that cannot in any way be used without our permission and their permission. And we certainly look forward to making the most of that. And the fact is that we already have AI deals, and negotiations are advanced for other AI deals.

Yeah. And Encho, maybe I can take your question on CapEx. Looking forward to seeing you next week in person. Yes. We do expect total CapEx to be up moderately this year. And that was the case in the first half as well. Having said that, Dow Jones CapEx specifically within that is going to be modestly down this year. Overall, we will generate very strong free cash flow growth for the year, despite the slightly higher increased investment in CapEx. Then I'd just conclude by saying we do invite you to join us for the Dow Jones Investor Day to really see the strength and opportunity of this business. Thank you, Encho.

Thanks, Encho. Luke, we'll take our next question, please.

Our next question will come from the line of David Joyce with Seaport Research. Please unmute your line and ask your question.

Thank you. I'm kind of following on the capital expenditures question, where else would you be allocating to drive returns? How would you prioritize? Are there things that you can do to accelerate your strategies given the one big new bill act in case that helps with overall free cash flow allocation plans?

David, I think we've made very clear that we see three core drivers of the business. And that is Dow Jones, Digital Real Estate, and HarperCollins. And those businesses are traveling very well at the moment, and we will allocate cash accordingly. Thank you, Dave. Luke, we will take our next question, please.

Our next question will come from David Arvest with Macquarie. Please unmute your line and ask your question.

Yes. Thanks for taking my question. Look. I mean, kind of in the same vein as the prior question a little bit. But, you know, with the broad valuation de-ratings across your operating segments and your balance sheet, your cash generation, can you just remind us of your M&A strategy and maybe talk to areas of interest to what could be complementary to News Corporation? Or would the preference right now be kind of just to monitor AI developments and execute the buyback?

David, we have the option of optionality. We are constantly looking for investments externally that make sense for the business, but not at unreasonable prices. And you can see from our recent acquisitions, that's been precisely the case. We obviously invest organically where we see growth opportunities within the company, and then there's the buyback. And I'll pass to Lavanya for a little articulation of that.

Yeah. Thank you, David, for that question. On the buybacks, we definitely evaluate this on a continuing basis. And we are focused on maximizing and driving shareholder value. As you would have seen from our announcement, we bought back $172 million worth of shares in the second quarter. At the current stock price, we expect the rate of purchases will be higher in the second half and the total dollars repurchased will be meaningfully more in the second half than in the first half.

Thank you, David. Luke, we'll take our next question, please.

Our next question will come from Craig Huber with Huber Research. Please unmute your line and ask your question.

Great. Thank you. Robert, this is a two-part question for you. I always like to ask you, has anything changed in your mind about investors' thoughts and wishes that you guys would help, you know, simplify your company here? It seems like you're doing a lot better fundamentally across the businesses here, but anything changed in your mind to help simplify the company any further here? And my added question I wanted to ask you was on homes.com out there in the marketplace, you know, versus realtor.com, you're doing quite well here recently with the revenue growth at realtor.com, roughly 10% type growth in revenues there. Is homes.com in the marketplace concerning you all given all the amount of money that they're putting in place to run that operation? Or is it having any negative effect on you? Worried about it? Are you doing anything significant to change your operation to combat that? Thank you both.

Craig, look, we're consciously constantly examining structure, and our focus is on generating value, long-term value for our shareholders. We have a robust balance sheet, strong free cash flow, positive growth trajectory, and as I said earlier, the option of optionality. As for homes.com, look, we're absolutely delighted with the progress at realtor, which is going from strength to strength. Look. And, obviously, homes.com is complicated. It's at least a fixer-upper. And while some people suggest that it's more of a knockdown, I think that comparison is a little unkind. For us, the focus is absolutely on realtor whose revival is real. And whose trajectory is particularly positive.

Yeah. If I could just add to that, maybe some details on that. I mean, as Robert said in his remarks, I mean, we're really pleased with the engagement that we have seen on realtor.com. We have the highest engagement across all of the portals with five visits per unique user. We have gained audience share up to 29%, and when you look at our visits, we have three times the number of visits as homes.com, two times the number of visits as Redfin. And we've had the fastest revenue growth here in this last couple of quarters that we've seen in the last four years. And that's without the property market being meaningfully better, and we do know that the property market will recover, and so there's a very long successful runway here for realtor.

Thank you, Craig. Thanks, Craig. Luke, we'll take our next question, please.

Yes. As a reminder, if you would like to ask a question, please use the raise hand functionality to put them in the queue. Our next question will come from Elsa Lee with UBS. Please unmute your line and ask your question.

Hi, Robert. Hi, Lavanya. Thank you for the question. My question is on circular revenue at Dow Jones. You've called out consumers and now rolling off promotional pricing which will be supportive of ARPU. Can you share any colors on how you're thinking about pricing growth going forward and maybe the balance between acquiring new subs versus ARPU?

Oh, look. Thank you for the question. The Dow Jones team has successfully secured a significant increase in enterprise customers, where we are incorporating WSJ content into the work streams of companies. Now those tend to be large deals with lower churn and significantly lower marketing costs, but obviously, in the shorter term, they will have a modest impact on ARPU. But the innovative subscription team at Dow Jones believes that we have genuine elasticity on price given our unique editorial experience. Our ability to track potentially vulnerable subscribers is improving each passing month, as is our ability to identify high usage subscribers who can be targeted with dynamic pricing that reflects the importance of their reading relationship with the journal. Now, obviously, our focus is on recurring revenues, but it should also be noted that digital advertising revenue rose 12% during the quarter compared to a year earlier and to a record high. So not only does Dow Jones have a growing audience, it has a very desirable digital demographic.

Yeah. And maybe I'd add to that, Elsa. We did take price on digital new customers and on certain tenured customers here in the recent past. We're also working on optimizing a number of our promotions, and I do want to point out that excluding our enterprise customers, our ARPU has been improving at a healthy rate.

Thanks, Elsa. Luke, we will take our next question, please.

At this time, we have no further questions. I will hand the call to Michael Florin for closing remarks.

Well, great. Thank you all for participating today. Have a wonderful day, and we'll talk to you soon. Take care.