Good morning, and welcome to The New York Times Company's First Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Harlan Toplitzky, Vice President of Investor Relations. Please go ahead.

Thank you and welcome to The New York Times Company's first quarter 2020 earnings conference call. On the call today, we have Mark Thompson, President and Chief Executive Officer; Meredith Kopit Levien Executive Vice President and Chief Operating Officer and Roland Caputo, 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 and our actual results could differ materially. Some of the risks and uncertainties that could impact our business are included in our 2019 10-K. 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. With that, I will turn the call over to Mark Thompson.

Thanks Harlan. And good morning, everyone. I will start with a few high-level observations about the corona pandemic. I will then ask my colleagues, Meredith and Ron to go through the quarter in detail. Today, you are going to hear a broadly encouraging story about how the time is performing so far during the pandemic, with record breaking audiences and subscriptions, and a firm belief that we can and should continue to roll out our ambitious growth strategy for the company. But we haven't and never will lose sight of the scale of a human tragedy and economic disruption and hardship because the Coronavirus is bringing to America and the world. Some of our reporter colleagues are chronicling this tragedy on the ground every day. Although we are doing everything we can to keep them safe, they are running some of the same risks as frontline healthcare professionals. Our thoughts are never far from them, or from the patients and health workers and covering. We are incredibly grateful to them, and indeed to all of our colleagues who are working around the clock and overcoming a number of obstacles, to keep this great newspaper strong and able to serve as readers everywhere at a time when those readers need it most. Our business model with its increasing emphasis on subscription revenue and reducing reliance on ad revenue, and our fortress balance sheet, puts us in far better position than most new organizations, not just for successfully write out this storm, but for thrive in a post Coronavirus world. But we should also have the humility to acknowledge that there is much we still don't know and can’t predict about this pandemic and its economic impact. Patients responsiveness, flexibility and resilience will all be key over the coming courses. Our response…

Thanks Mark and good morning everyone. For over a decade we have made the most ambitious investment in original journalism in the company's history, the importance of that investment, and it is sensuality to our business strategy has never been more evident. So let me start by thanking the extraordinary staff of The New York Times or colleagues in the newsroom and every person in the organization who supports their work. As Mark said, the pilasters privates were awarded earlier this week and the Times was honored with threes for international reporting, for investigative reporting and for commentary. That brings the total number of pilasters awarded to this institution to 130 far more than any other news organizations. What is so inspiring about this year's awards as our executive editor Dean Baquet said on Monday is that they involved many desks and many journalists and they are a testament to a modern news organization honoring not just narrative storytelling, but also work from our visual investigations, video, television and audio teams. Our mission is to seek the truth and help people understand the world and at this incredibly difficult time, our newsroom of more than 1700 people is working tirelessly to our readers with the trusted information that they need to understand and to navigate the pandemic. When no U.S. government or public health agency was publicly tracking all County-by-County domestic cases of Coronavirus, Times Journalists left into action in late January and began building a comprehensive dataset. We made that data set publicly available so that other journalists, researchers, scientists, and government officials could study and better understand the spread of the virus. Having a deep bench of expertise has been especially helpful in this moment. You see it in the work of reporters like Donald McNeil who has…

Thank you, Meredith. And good morning, everyone. Although we do expect short term results to be negatively affected by a decline in advertising, our subscription business, which represents approximately two thirds of our revenue, provides a source of strength and resilience to a recurring revenue stream that is expected to grow further as we continue to Excel at our core mission. Adjusted diluted earnings per share were $0.17 in the quarter, $0.3 lower than the prior year. We reported adjusted operating profit of approximately $44 million in the first quarter, which is $8 million lower than the same period in 2019. Total subscription revenues increased approximately 5.5% in the quarter with digital only subscription revenue growing 18% to $130 million. This represents a continuation in the sequential increase in the rate of quarterly growth, largely as a result of the large number of new subscriptions we have added in the past year, as well as strength and retention of the dollar per week promotional subscriptions who has passed a yearlong promotional period and have graduated to higher prices. Quarterly digital news subscription ARPU declined approximately 10% compared to the prior year and approximately 3% compared to the prior quarter. Consistent with the rates of decline we reported for the fourth quarter of 2019. For both sequential and year over year ARPU trends, the large number of newly acquired subscriptions, mostly on the dollar per week promotions and the deeper promotional rates in many areas outside of the U.S. more than offset the benefit from subscriptions graduating from their introductory promotion to either step up or full price as well as a one month benefit from price increases on 500,000 of our more tenured full price subscriptions. We expect that the digital use subscription price increase, which went into effect in…

[Operator Instructions] The first question comes from John Belton of Evercore. Please go ahead.

Thanks everyone. Good morning. I just wanted to talk a little bit more about the subscriber trends you are seeing. So I think Meredith, you talked about expecting a higher net addition trajectory, after the crisis winds down relative to what you were seeing before the crisis. How is that impacting the way you think about the 10 million subscribers target longer term. And then I just wanted to double check one thing. I think you said you now have over 4 million digital only news subscribers as of the end of April. So that implies something North of a hundred thousand net additions for that product alone in April. Thank you.

I will go ahead and answer that. Good morning, John. I would say a version of what I said earlier, which is what drives our optimism or continued ability to drive a step function increase in net ads the idea that we are getting many more registered users in this period. And we are getting better at stimulating them to come back and get them to form a habit, so even as overall audience again, so come down. We are confident that we'll see some lift in the model. And I think your second question is, where does that leave us on the path to $10 million. I think we have said all the way through that we see that you right at the gate or a milestone goal in its own right.

I guess I would just perhaps add John. Also, what we are looking at is the is the 2016 election where we hit a peak. As we said in the first quarter of 2017, not a bigger peak as we have just hit now. And then after a couple quarters, audience is fell back. But a lot of people have come to the times because of that. And they say then we, after the Trump bump effect diminish, we had a much higher run rate of subscribers then. And particularly in what matters says about the large number of registered logged on users were gaining. We have got real confidence that although certainly a lot of people are coming to us now for the Coronavirus that many of them will stay. And we hope will become loyal long-term users and subscribers with time.

Got it. Thank you very much.

The next question comes from Alexia Quadrani of JPMorgan. Please go ahead.

Thank you. Good morning. I hope everybody is safe and well.

Thank you Alexia.

I wanted to ask you a couple of follow up questions on the heightened demand for subscriber growth. Can you walk through your thinking of maintaining your level of promotions, if you have you know I know do vacillate back and forth in the $1 to $2 a week at different times of the month. But I'm curious what you think of maintaining that sort of high level, given that you are seeing stuff so much more demand, and then just sort of staying on that topic. I understand you don't have a crystal ball, but you clearly have more insight into leadership trend to lead you on the outside. How should we think about sort of churn in these your vast of new subscribers so when this crisis begins hope fully to eventually die down.

I'm going to pass to Meredith for first part of the question. She might want to talk about second part. But I just on churn, to say manifestly with each new big event like this, we get new people in. As Meredith says, we are seeing some actually, I think very excitingly, for the New York Times Company, we are seeing some younger, more geographically and actively diverse people coming to the times. And we touched in large more than half of U.S. adults. It would be foolish to be too precise about people churn trends. I want to say the backdrop is of a company which has got far more expert at understanding every stage of the subscriber kind of life cycle including retention and, we think very good now at understanding churn. And even before the Coronavirus strike, every senior in the organization was focused on trying to make the customer journey but also the fundamental experience of times journalism. So compelling and so kind of addictive in terms of features, risk bring you back day after day that usage will be high, perceived value will be high and therefore churn will be low. But let me hand to Meredith now for the main part of the question.

Sure. Thank you, Mark and good morning Alexia. On the question of promotion what I would say is you can see this as a period where we are leaning into very strong demand and we have been aggressive in our use of dollar a week as a promotional offer. In part because we think it takes us to the outer edges of our propensity circle and the comments I made earlier about the widening of our subscriber base to include more young people, more geographic and racial and ethnic diversity. I think is a testament to that. And I would say we are also getting, and I think we have said this in prior calls, more confident about our ability to really work across the whole of the demand curve, bring people in at a promotional price and then manage them through a step up moment. And then ultimately to being a tenured subscriber that will accept the price rise because they are getting so much value out of the product. And I think, that is what I alluded to the fact that that we are feeling real confident in our pricing power, in our ability to bring people along that curve that I just described. So that is why you see us continuing to use the dollar week, because we think we can graduate, we have been successful at graduating people up. Let me say a couple of things on churn to come in behind marks. One is that the very strong core news net ads number in the quarter was a function of both high starts and low stops. So churn did play a big role in that, good news on churn. And Mark alluded to this. I think the most important thing on churn is not that we are sort of improving the mechanic of it, although you do, but I think a lot of those games have been realized. It is that we are getting better at getting people to just engage in the product and I mentioned a couple of things and I will underscore them. There was a ton of work done in advance of Corona virus and then we really leaned into it during the pandemic and still are to be better at covering things in a live way and to give people a reason to keep coming back. That is playing a big role in an engagement as is just getting people to find other things they are interested in on the times and then users are registered and logged in. We are just much more effective at being able to do that.

And then just a quick follow-up on advertising if I may. I'm just really on digital advertising. How widespread the weakness across your different advertisers, it was really isolated to several verticals. So you really saw cuts across the forward, and you mentioned, you know, some strong numbers of the daily. I'm curious if you saw pull back in advertising at the daily.

Yes. Mark, I'm happy to take that one. I would say broadly the advertising trends are sort of follow what is going on macro economically. So we have seen pressure everywhere, as I said earlier in general, in both print and digital, particularly in digital. Some of the categories like tech and financial services and telecom, where we tend to do bigger, integrated collaboration has held up better and will likely continue to hold up better. One of the trends we have talked about for a while is just the idea that we will have a larger concentration of advertisers and a smaller number of categories. And I think it is fair to say, in both print and digital we saw more pressure in our legacy categories. And I think we can assume that that will continue through the crisis. And your second question was about the daily, we try and answer you will tell me if I'm getting to your actual question. I already mentioned the surge in audience. And I would say, marketer demand for the daily continues to be strong. Though demand for everything we do from an advertising perspective is softer than it was before the pandemic. But the daily - though it is because the audience cans are so significant and because demand is strong relative to other places. The Daily was still very good story for us in the first quarter. And I think will continue to do all year.

Thank you. that was very helpful. Thank you.

And actually Alexia I just have one final point come back once again to churn. Just I'm not sure quite how clearly we said this in our written remarks. As you know, we are involved in the number of exercises of setting new subscribers who were previously on $1 week to higher prices. And we also as you know, we mentioned we got a general price rise going through the system for tenured subscribers. Before the Coronavirus hit we were continue to see we think very encouraging results on both of those as actually better than our modeling beforehand. So the underlying story with all these changes, the price was in very encouraging for the long-term future of the model. And as you have heard, we think it is more likely that the Coronavirus will be as it were retentive and have a positive effect on retention and as it will all things being equal reduce propensity of the churn on top of that. So this is the - the churn picture is looking actually very good I would say.

Thank you.

The next question comes from Vasily Karasyov of Cannonball Research. Please go ahead.

Thank you. Good morning. I have a couple. One, I wanted to ask you if you could remind us how print subscription revenue usually behaves in an economic downturn? If we could isolate it from the COVID-19 impact what normally happens in environments of economic recession? And then, quick question for Roland. Roland, I think in your prepared remarks, you said that the revenue from the Weekly is down due to COVID-19. Can you explain maybe why that happens? Is it type of advertising. That would make sense to me. Thank you.

Thank you Vasily. I think maybe Roland, you should address both of these dresses.

Okay, great. Hi, Vasily. How are you? So a home delivery and revenue associated with it. The question is, is about how that reacts, I guess in a recessionary period. So the answer is actually it holds up very, very well. If you look at how that worked 2008, 2009 we actually were able to raise prices during that period. And if we looked at the reaction of consumers now during the pandemic, we actually have seen an increase in new starts both locally and across the country. So we expect that to hold up very well. But the single copy side of it is really where we will get hurt the most, with the closure of all the outlets. And we see some of that demand is getting swept up in home delivery for folks who had a single copy habit and now can't get a single copy. More and more of them are already home delivery. So that is very stable in a recession. The question about the weekly, I think it is in the guidance for Q2 and it is not about advertising revenue, it is about a lower number of episodes that we expect to air. And we book revenue when we air the episodes. And I think Meredith mentioned also for going forward with our agreement, with ESX and Hulu, we expect to make fewer episodes in the coming months and we expect that to be longer from, so that the economics will change somewhat. But to just repeat what Meredith said on the bottom line, we don't expect any significant impacts from that.

The next question comes from Doug Arthur of Huber Research Partners. Please go ahead.

Yes thanks. Two questions. First, digital subscription revenue was up about 18.3 or so in Q1. You are saying high twenties in Q2 I believe. You sort of talked about some of the contours of that, but is that mostly because of higher volume? Is it the impact of the one of the price increase? So what is the driver of the delta between Q2 and Q1 and I have got a follow-up with cost.

Okay. Meredith, do you want to answer that question.

I'm happy to. I think it is a combination of those things probably driven more by volume, but as we have said, on price in particular, so the very large number of people coming in on a promotional price, but we are seven, eight months in now to stepping those folks up. And that is going very well. It is broadly in line with what we saw on the step up sometime back for 50% off. And then we have also, I think Roland mentioned this in his prepared remarks, we have also taken a large number of tenured subscribers, through a price increase and annual increase in that has also gone well. So I think it is a combination of all of those things.

And Doug you had a question on coast as well.

Yes. Just looking at the reclassification Roland, if I go back to Q1 of 2019, it looks like about 30% of SG&A is being kind of re bucketed into cost, production costs of goods. And I guess that is mostly in circulation. And I know you broke it down. But can you just describe a little bit the thinking behind the re bucketing?

Sure. So the idea here is, like, our previous presentation really was a vestige of how the business had been run for many, many decades. And so the idea is to create a presentation that is much more representative of how we are running the business today. So we have that cost of revenue category. And that is really content creation, what it costs us to service our subscribers and our and our advertisers, all the print production and distribution. And also the digital content delivery. So the cloud costs associated with sorting our content on the web. Our costs to produce that content. And then breaking out product development as a single line item. And that is really the cost to produce and enhance our apps and our in our web products and then isolating sales and marketing so that there is a better illustration of what we are spending there. And then really, G&A is the general management. It does include corporate enterprise tech. So, the cost of the accounting system that is going to be in G&A and our other unallocated costs. But we really wanted to isolate the areas where we are investing.

Okay, thank you very much.

The next question comes from Craig Huber of Huber Research Partners. Please go ahead.

Yes, hi. Good morning. Thank you. maybe I could start my first question Meredith or Mark? When you think about the opportunity set long-term here in terms of the addressable market for your digital subscribers. Can you just sort of update us on your thoughts on that in the past, you sort of talked about it as far as the people outside the U.S., college educated English speaking and stuff, but if you want to talk with that, please. And I have some follow ups. Thank you.

Meredith, why don't you take this one.

Yes, I'm happy to. We have we have a few different ways of looking at it. But every way we look at it with essentially suggest that there is no fewer than 100 million people in the addressable target audience of English speaking, college educated, some demonstration of willingness to pay for use and some more. So and I think as time has gone on, we have been using that number 100 million for probably a couple of years now, I think it is probably getting bigger not smaller. And that is the number 100 million people roughly half in the United States and half outside the United States. And I would say, just based on what we have shared today in terms of number of subscribers we have now. I think we have still got a lot of revenue room on converting that addressable audience. And one more thing that is worth saying, this was I don't think we have said quite enough about this. This is just a very strong period domestically, but it was also a very strong period internationally. And we have launched I think you talked about this a quarter ago new approach internationally where we are more aggressive in pricing, assuming that we are a second breed in this market and particularly markets beyond Canada and Australia, beyond the English speaking world. So we have gotten more aggressive with pricing and also with how we apply the meter, in markets like Latin America and Southern Europe and parts of Asia and India. And you know, we are just at the beginning of that. And I think that opens up everything we have seen so far would suggest that the addressable audience and also gives us a very good approach to getting at that audience.

I would just add Craig briefly, in some of the numbers Meredith mentioned in her remarks, are really striking. I mean we got this as a comScore number, 163 million unique in the U.S. and as I said, our own modeling, suggest to Indian people came to the Times in March. That is a far greater number than we were seen five or 10-years ago. When I arrived at the time in 2012, we were seeing unique numbers of unique way under a hundred million typically. And I think there is a real sense of the real times as a brand that is broad appeal, kind of moving up a huge size. This is both becoming a genuinely global news provider but also reaching into younger, more diverse, more geographically spread or is just those historically have a taste. I think sometimes the people who follow the posting very closely miss the fact that the times is becoming of much broader appeal than some of those classic stereotypes would suggest. So I think within that of course the, the kind of the fishing grounds, but for more engaged users, for people who could become subscribers, they also grow bigger. So I think very encouraging.

Then my other question I wanted to ask on the legacy part of the business, am I correct thinking that on your print volumes for circulation, that roughly 15% is non home delivery? If that is the case, I assume the overwhelming majority of that is going away right now, keeping this virus right now and stuff. And when you take that in conjunction with you, I think you said the fall off of the acceleration maybe in the home delivery is come down a little bit worse, but nothing overly significant sounds like if I have that. Underlying number was down roughly 10% between daily and Sunday in the first quarter. Maybe might be, I'm thinking might be down 25% or so if not worse in the second quarter. When you think about that in conjunction with advertising for printing, you are down 60% plus right now. And I don't, I know you don't want to make this main focus of the call, but just long-term, you guys are positioned your company here to eventually shutdown the hard copy paper. Does this environment now that numbers you are seeing on the print volume side to print advertising side in your mind potentially accelerate the move to a digital only product here? A long-term here. And what sort of points you look for? There is, it is just when you get to a free cash flow negative, is that, is that when you would cut off the print version, go to digital only down the road here. I know it is not anytime soon, but what is your sort of thought there is the, is my main question.

I’m going to ask Roland to address this substantively, but let me just start off by saying, we believe that our print product has got many, many years of a successful and profitable life ahead of it. Our principal strategic focus, as you know, is building a big visual business, but we love offering products. So do it is, it is subscribers, as Roland said, actually, we have seen very, very encouraging signs in many ways in terms of fresh demands, the print product during the corona virus crisis. So we are very committed. I mean, this is clearly a tough time for this product. Single copy sales as you have suggested are have been massively hit for completely obvious reasons. I think you probably will confirm that than much less than 15% of the total revenue from print. But if I would just say as Chief Executive, we are really still committed to the print product. And we see as part of our portfolio for a long time to come. And Roland why don't you take of it?

Sure. First of all, I want to say is that there is not been an increase in the trend of a home delivery declines. So nine consecutive quarters, that volume has dropped between 6% and 7%. We don't see that changing and we have been able to pass through because of the value of the product and the loyalty of the subscriber base, we have been able to pass to price increases on an annual basis. So I don't see that trend changing it all. On the single copy side, it is somewhat less than 15% of our revenue. And the single copy side that is been in slow decline for I want to say 25-years or something like that. But admittedly, I think the COVID crisis if that changes the landscape of retail and outlets that will change the landscape of single copy. Yet to be determined how many folks have a very strong single copy habit and will then move to a home delivery subscription. So I don't see that being a giant change in our in our revenue profile there. On the ad side, though, our experience has been that most dollars that leave from the print advertising product do not return. So I would say there is probably an acceleration there. And I guess the last thing I want to say is to remind folks that the print newspaper is profitable without $1 of advertising. And so as long as there is sufficient demand, and we will continue to have a print product, and we will continue to be cash generative.

I will only add to that our launching of the new home section in print is a testament to our belief that there is still a deeply engaged and very high value customer and we think there is still lots of imagination and innovation to put into that product. So we still think there is more to come there in terms of delivering real value to our audience.

If I could just ask a question here. Your outlook for advertising for the second quarters. Does is assume anything materially different in the month of June that when you saw in the month of April?

Roland may come in behind me and give a sharper answer. But I would say, as you think about our remarks on advertising for - I would take what you think about our business generally and the trends that you see generally applied. And then and put them in the macroeconomic context I described. And I think that is as much as we are ready to say.

Thank you.

The next question comes from Kannan Venkateshwar of Barclays. Please go ahead.

Thank you. This is [Calvin] (Ph) on for Kannan. I have two questions. The first one is on cost of print. Can you talks about how much it costs you can take out in print segments to offset revenue declines. You mentioned advertising costs earlier, but any other drivers of cost flexibility there? And the second is on pricing. Does the current economic environment change how you are approaching price step ups on those promo subs are rolling off? In other words, are you say proactively or reactively stepping up? More subs to say a $1 to $2 instead of a dollar to full price. Thank you.

Thank you. Thanks Calvin. Roland why don’t you take this.

Yes. So on the print costs, I'm not going to cite a video, but we found for many years, we have been on a path to driving more and more efficiency and very successful at that and I expect that to continue. There will be some changes we make either internally or with our partners, as a. So we would chase efficiencies, I think we'll chase them a little bit more aggressively given this the ad dollars, being less than we otherwise would have expected. Not much more to say that we will continue to chase that. On the pricing side first, we have paused our price increase on digital subs. So we had the first trench of tenured subs that were lined up to get a price increase. That occurred in March. There were a few more or less than 200,000 that, came a little later, we are notified and haven't started paying higher prices yet. We would have hit another tranche in early fall we have made a decision to pause that, and wait and see and we'll reinstate that when we believe is appropriate. Maybe Meredith wants to talk a little bit about the dollar and week promotion and how we are managing that.

Yes, I'm happy to Roland. I think I said this earlier, but I will say again, we are seven or eight months into being at an annual renewal for people. The first group of folks who came in on a dollar a week and it is, growing at least as well as our expectations. And it is going basically broadly in line with what we saw for the 50% off folks who moved up to full price prior to dollar a week being our primary promotion. So we are pleased with that and, and I will say we expect, what we are seeing so far, but we also expect to get continually better at it. We have said in prior calls that we are training algorithms to sort out what are the engagement signals we can use to determine who we step up, partially how we go to full price. And I would say, bit by bit we get a little bit better at executing on this, but in general, this has gone very well and you should take as a single of our continued use of the promotion, recognizing how important price is to be in a role economics, that we have built confidence in our ability to get people up in price.

This concludes our question and answer session. I would like to turn the conference back over to Harlan Toplitzky for any closing remarks.

Thank you for joining us this morning. We look forward to talking to you again next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.