New York Times Company Class A Aktie

Welcome, everyone. We're super excited to have Will Bardeen, CFO of The New York Times, with us this morning. Will, thank you so much for coming.

Thanks, Jason. Great to be here.

So I want to kick off, I really like your origin story, maybe I have this wrong, but I think you -- before you became the CFO, you were, sort of, integral in designing, sort of, the firm's digital strategy. Is that fair?

Yes. I think that is fair. I've been in the CFO seat for 3 years, but had begun as the head of strategy all the way back in 2010.

In 2010. And I think your story is interesting just because not -- I can't think of many companies that have been as successful in this digital pivot as you have been. So I give a lot of credit for being the, sort of, architect of this. But my question is, as you've watched this strategy unspool over -- what are we now, do you say, 2010?

Yes. So I mean part of the leadership team over the last, say, 15 years, that has -- I mean, I think, at this stage, fair to say, The Times has transformed into a digitally native company that's innovating rapidly.

Right. So what lessons have you learned? Like if I went back and broke into your offices and rifled through your files to see like what you said then, what you're doing now, what things have changed? What's exactly the same?

Yes, that's a great question. So I might highlight a few things that were really effective over this period for The Times. And the first one, I would say, use the word differentiation. And what I mean by that is in the digital ecosystem, sort of, awash in all sorts of content. Really a relentless focus on differentiation is critical. And what that has meant for the New York Times is continuous investment into original, independent, boots-on-the-ground journalism, actual reporters reporting last year from 150 countries around the world. And we've continued to invest in that at a time when honestly, most organizations have been doing the opposite. And so to, sort of, put some numbers on that, 10 years ago, we had about 1,000 people working in our newsrooms.

And right now, it's about 3,000. So continued investment. The second thing I would really highlight, maybe a little bit more from the digital product standpoint, is habit and the recognition of designing products around essential habits in people's daily lives and recognizing that there are multiple habits that The Times can do better than anyone else. So we can focus, sort of, on surrounding curious audiences and a bunch of essential habits. So what are those? Obviously, what should you know in the news every day, but also for sports fans following your team, for home cooks, what are you cooking for dinner every night, and then for everyone now, young and old, how do you spend a little time having fun every day in a way that's actually healthy for your brain, so our puzzle games, which are going so well.

So that habit is really critical. And then the last dynamic, which I don't think we say, sort of, a digitally native company now, but in a transformation period, just the importance of technology and building a scaled digital technology platform, and that means lots of engineers and data scientists and not just to ship products, but really embedded cross-functionally in everything we do. So everything from content recommendation to pay flow optimization to pricing. And so that really being a digital company now. And those are, sort of, 3 things I'd highlight. That's brought us today to our -- what we call our essential subscription strategy, be the best news destination in the world surrounded with leading lifestyle products and then interconnect all those things into a really compelling bundle. And it's been working as designed. I mean, over the last few years, I think our annual average adjusted operating profit growth in the mid-teens. So working great.

And then you, sort of, asked like what are you surprised by or what's sort of different. I have to honestly say that if I roll back, I've been doing this for a long time, but if I roll back even 5 years ago, I never would have expected that the size of the opportunity we see in front of us just keeps getting bigger. And I think the specific thing I'd highlight there is video. And I would not have said, we're saying it now, that we absolutely believe we're on the path to being the preferred brand for watching, not just reading and listening, and watching not just news but around sports and cooking and shopping. And that's a huge new market for us. So very exciting.

And we're doing all this. I think we were chatting about this before from a position of real financial strength. So generating a lot of free cash flow, a healthy balance sheet. And what that means is we have the financial flexibility. We're very disciplined financial flexibility to be both nimble and ambitious as we pursue that opportunity.

That's great. I've noticed, to your point around daily habit, that Spotify has begun to talk about the best predictor of low churn is not the quantum of engagement, but it's more the -- your propensity to engage with their app every day. Is that ...

So we've always talked about it. We've used the word frequency, and we have essentially active days in a week. So very similar context. I mean breadth and depth is also important, and we -- but it's really that habit. It's the frequency of those things. And our strategy, to your point, has been very deliberate in recognizing all the different places we can build that in people's lives where The Times can and does, we believe, do that better than anyone else.

Yes. It's got to be so interesting. I mean I just can imagine in the old paper analog world of The Times, you'd sort of print a newspaper, you ship it out and there was just -- there wasn't any, sort of, tactile feedback in terms of what are consumers engaging with, how often, what periodicity. And so it must be great to have all of this digital data to be able to...

Yes, that's right. And that's where the technology really comes into play, the facility to understand that and kind of use it to optimize.

So there is this, sort of, meme that's running out there that I know is not new, but it just, sort of, gets a little bit louder, I would say, every quarter, which is publishing companies, sort of lamenting that the referral traffic is, sort of, coming under pressure. And some of it is just the algorithmic changes that Google might be making. And I think it's, sort of, become a little bit louder for investors because of AI overviews where people feel like Google just wants to keep you inside their ecosystem as all these AI models want to keep you on the ecosystem. You said that you're not immune to that, but when I look at your digital ad revenues, you've beaten guidance in 5 of the last 6 quarters.

So it's this weird situation where investors are inking about lower referral traffic. You've acknowledged maybe it's a bit of a headwind, but you keep beating more quarters than not. So what is driving your ad strength?

Yes. No, that's a good juxtaposition. So yes, I mean, certainly not new for us. Over the last few years, we've been talking about how the ecosystem is changing. We're navigating it. We're putting up strong results even with all that. And these tech companies are making moves that are, sort of, shaping that. I think the important thing for The Times to recognize within all that is how much throughout this whole period we've been relentlessly focused on direct relationships with -- and subscriber engagement. And what that means is having people -- getting people to seek us out directly because of the brands and the high-quality products that we have in the market, and really developing, as I said, these lifelong habitual relationships. And so when we talk about, sort of, what we're seeing in advertising now, and I wouldn't have said this 5 years ago, the reason why it's working so well is for the same reasons the subscription and consumer business is working.

One, we're in huge spaces of cultural interest, these multiple spaces, news, sports, cooking, games, shopping. We have differentiated products and coverage that continue to get better. We're generating scaled levels of engagement across that whole portfolio. And then in the case of advertising, our ad products, we have proprietary ad products that really work.

And so essentially, what we're seeing is across this portfolio, more advertisers than we've ever had before and because the ad products work, increasing shares of wallet from the advertisers who are running and we're not even -- it's important to say because I talked about the importance of video. We're still very much in the early innings, very little of this ad growth right now has anything to do with video. So that is something that is, sort of, a benefit out in the future for us. And all of this is making us quite optimistic about growth in advertising.

So when you say ad product, I sort of maybe naively think of just other's ad impressions. I don't really think of it as a product. So when you say ad product, what do you mean by that?

Yes. So briefly, I'll give the, sort of, main ad product we have is a beautiful, sort of, proprietary rich canvas called Flex Frame. It's our own product. And it's a great place visually for advertisers to be, both on the web and in our apps. So that's an example. And then beneath that, we have huge amounts of first-party data as well as one of the first things we did with AI is create one of the first AI products that enabled us to much more, sort of, thoroughly target audiences on behalf of our advertisers across our portfolio using AI, we call it BrandMatch, and that's been really effective. So when you combine great proprietary units with data generated from our subscribers extended through AI technology. It's just been a very effective differentiator in the ad market.

Okay. So ad numbers have been good. You said it's not really a function of video. We're still in early stages. When I go back and look at how you guys have articulated your video strategy at, sort of, as these 3 phases, sort of ramp up production then drive engagement and then from that engagement, monetize. I'm sure there's some overlap in terms of those that aren't discrete, but can you just give us a little bit of color on where we are on each one of those relative to today and where they might be.

Sure, happy to do that. Yes. I mean, I -- make no mistake, I said this before, our ambitions in video are very large. So the way to think about this is over multiple years, the phases we've mentioned, production ramping up production, generating engagement around the content and monetization. We are always -- we're thinking about all 3. I mean a successful strategy requires from the very beginning, conceptualizing all three, but because of the nature of the ambition we have, there is a bit of a phasing in terms of the way we approach this.

And we're very much, I would say, squarely in the production phase. And so what do we -- let me say a little bit about more of that. This year has been a year of really ramping up the amount and nature of video. And I put those in probably a few categories. One is, sort of, short-form news clips. The second category being video investigation, sort of, native journalism in video. And then the third are our shows. So really compelling long-form shows in politics and sports in -- basically across the portfolio. And what's important to recognize about this content production, we're not recreating a global news gathering effort in order to do this.

So we have, through these 3,000 journalists around the world, we have an infrastructure to actually generate the hardest part of this. And then we're layering on top essentially video production capability. And so in terms of being able to leverage, sort of, an existing cost base, if you will, and just already a differentiation, it's really attractive. So that then obviously, it doesn't help if you're creating all this content and people aren't watching it. So engagement is very important. So how are we thinking about that?

Well, first of all, I think anyone who's seen our flagship app has seen how we're continuing to expose this video in more ways. So we now have a Watch tab for short-form Watching. And then we just introduced recently a Shows tab to be able to see our shows, which many of them starting out as podcasts, now video shows. And that is definitely increasing engagement within the app. And then we also recognize there is a huge opportunity, particularly in video form given the scaled video platforms to take both our long form and our short form and selectively offer that off-platform, long form on YouTube, Amazon, short form, Reels, TikTok, et cetera. And this is just a real opportunity to expose many more people to The Times journalism and ultimately get the brand out there as The Times is the place to watch. Over time, we found we can bring people back and get more and more people engaged on platform as well.

Is there any content that you produce that you're, sort of, not, sort of, pushing out in a promotional way off platform?

I would say we're always making trade-offs about exactly what to put on and what to put off. And we're very thoughtful about that and always have been. It's not an either/or for us. We've always seen this as a way of making sure we're enabling sampling, getting new audiences, new and -- new formats, whether it's audio in Spotify, for example, The Daily really took off as a, sort of, off-platform and has become a part of essentially the full value proposition of The Times. And then that brings me to monetization because the theory of monetization here and the practice of monetization is not too complicated, given the way that we are, sort of, experience with this.

The 2 obvious things I'd say are when you get scaled engagement in video, we're absolutely confident in the premium advertising opportunity. But also just as you're increasing the value of the product experience, it will, we believe, absolutely continue to fuel the subscription business both by bringing more people in new audiences as well as increasing engagement for our existing subscribers. We believe that this is mostly additive. It's not replacement time. These are new experiences and new content. And that helps with retention and ultimately, subscriber monetization. So we're very excited about it. And we're doing -- imagining all these things, 3 things at the same time, but making sure we're building for the long term.

So can I share with you one of the things that surprises me in, sort of, the digital transition. I'm still dumbfounded by this, to be honest with you, and it has to do with book publishers, which is here we are, 1/4 of a century plus into the internet, everything is digital now. And I go look at the book publishers, not enough. 75% of their revenue still comes from the physical paper book, only 25% from all their digital products. And I just think like, okay, there's something about the readers, whoever is a book reader that just doesn't really want to go down this digital path. Is there anything like in your New York Times users that resist video or anything that you're seeing where it's just not where you get, sort of, a counterintuitive reaction where I would think, well, video is great. Everyone likes video. No one reads anymore. That would be my knee-jerk reaction.

I mean short answer is no. This isn't a -- first of all, it's really important to recognize this is not -- we're not moving people away from text reading and audio listening into video. It's -- and it's augmented. And we've always seen this with the media generally, but the time, specifically, that as we add new things, we just have more reasons for more people to engage with us more frequently. And that's everything we are seeing about video, everything about what we're building in video. We expect that to be the case here, too.

Okay. I'm going to shift to expenses now. So I was looking at your expense guidance. Third quarter '25, 5% to 6% growth, a quarter later, 6% to 7% growth and then more recently, 8% to 9% growth. So for investors that are looking at this, they're like, what is going on, like the expenses are accelerating. What's causing the acceleration? That's my most basic question. What is it that you're investing in that's causing a step-up in cost growth?

Yes. As the CFO, I very much appreciate this question, obviously. But look, I mean, at the core of this, what you're seeing in our expense growth rates is the continued, sort of, disciplined investing into the strategy. And in our case, into the journalism and digital product experiences that we think will be continuing to drive a great return, healthy long-term revenue growth. And video is the one that probably the most notable example that you're seeing in the numbers. But that's the core of it. It's our strategy, kind of, as we've laid it out, investing into journalism and digital products.

So one of the -- one of the observations I have, I think this is true is that in the last 2 quarters, your expense growth has been higher than your guidance. So I appreciate, sort of, the deliberate investment that you're making, but it feels like something else is going on in addition to that, that's, sort of, causing expenses to come in higher than whatever you thought they would do 90 days before. So what's driving that?

Yes, that's -- it's pretty simple. I'd say this is a good problem to have, which is simply that we've outperformed our revenue expectations. And so on a, sort of, marginal basis, haven't predicted the revenue outperformance and then when that comes in, particularly with things like incentive comp, on the margin -- in the quarter, you see a little bit higher than forecast expenses. So that's been the reason in those couple of quarters that's happened. I mean I think what I would want to do is step back and say, even with this, overall, we've seen very healthy revenue growth and very healthy adjusted operating profit growth.

So in the context of our strategy, this is it working as designed. And nothing about what we've seen here and what we're demonstrating changes our overall framework for how we and we would want our investors to think about our financial framework, which is continuing to grow revenue in a healthy way and AOP in a healthy way.

And so therefore, sort of, being disciplined on our cost growth and making the investments that we believe will continue to drive that, both healthy revenue growth and healthy AOP growth into the future.

So is it fair to say you would be surprised if we entered a period where the expense growth was faster than the revenue growth?

I would say, certainly, we're on track not to do that this year and nothing about our financial framework would expect. We are aiming to continue to drive long-term healthy revenue and AOP growth.

Okay. I'm going to go -- I'm going to shift to revenue here. So in the second quarter, with the higher expenses, you also guided to the third quarter for a deceleration in digital subscription revenues. So that -- so can you just unpack that a bit? Like why shouldn't investors be nervous? If I'm watching the expenses grow faster than the guide and then you look forward and you're talking about a deceleration on digital subscriptions, it's like a yellow flashing light for an investor. So what would be your counter to that?

Yes. I mean I think it's always helpful. For our business, in particular, just break down the basic components of what drives digital subscription revenue. I mean, obviously -- so I'll break that into 3 components, and then I'll get to, sort of, Q3 and -- so the first component is the obvious one of you look at how much subscriber growth there's been over the last 12 months, right? So that can fluctuate a bit, but relatively straightforward. The next 2 components, I'll just highlight for a second. For our business, the actual subscriber mix can be playing a role and, sort of, to some extent, the cohort 12 months prior and what's happening because we've got a couple of categories of products, we've got the bundle, which oftentimes either 6 months or 12 months after promotion, you're coming off that often to much higher prices.

You also have the single product subscribers, which are lower priced. Now all of these are great LTV products like they're all great, but the relative difference in any given quarter is going to play a role. And then the third piece, which is happening under the surface is the pricing performance, so -- and that's 2 categories. One is people coming off promotion, how well they're taking the step ups. And then the other one is where our, sort of, targeted price increases that we are considering all the time. And so the timing and performance of those, mostly the timing because quite frankly, I've said this repeatedly, the actual performance of these pricing step-ups, we continue to be very pleased with both off promotion and the targeted price increases. So those are the 3 components.

Can I just repeat that to make sure I got it.

Yes, sure.

Sub mix, cohort and pricing and then pricing has 2 sub-elements.

Sub-elements and volume.

Okay. Yes.

And so -- so in Q3, what I called out as being part of what was useful to help understand this is Q3 a year ago, we had a very successful net adds quarter in part to the paywalling of the Mini, which we're very pleased with and has worked out well. But because of that, there's a bit of a mix impact now this Q3 and the underlying quarter, that's playing a role. Now I want to step back and say that this, kind of, variability we've seen in the past we can certainly expect to see in the future. Overall, the drivers of our digital subscription business, we feel really good about and really healthy because fundamentally, what it is, it's based on, kind of, how I started. We continue to add value into these differentiated products.

We're continuing to see strong engagement and subscriber engagement. And therefore, as I've mentioned, we continue to be really pleased with the pricing performance. And when you add all that up, it makes us feel good about the long-term trajectory of digital subscription revenue.

I think this is true. There were periods in the past where your digital subscription numbers decelerated and then reaccelerated again, right? So anyone that thought it was the beginning of the end of the digital subscription growth was wrong. Is that true?

I mean I think that's certainly the case and this is partly why breaking it down into these 3 categories is useful because all 3 of these categories can fluctuate, right? And so you're going to see -- we have seen, and I think we can expect to continue to see some fluctuation in the absolute -- in the rates.

Okay. So I think one of the elements you reiterated was the 15 million total subs by 2027. Is that right? Do I have the numbers right?

Year end '27.

Year end '27. Okay. Still comfortable with that long-term target?

Yes, we're absolutely comfortable with the target. We believe we're well on the path to achieving it. And really important to say we've always said it's a milestone, not an end state. We're obviously -- as you hear from me, feel like we're, in many ways, just getting started around huge new market opportunities. And so, sort of, what gives me to bring it down a little bit more, what gives me the confidence to say that. I mean the first is the data that we see, just -- we continue to be -- to believe the TAM is just there. And what do I mean by that? We stopped talking about this number, but we just -- so many registered users, 150 million-plus registered users, tens of million of people coming back every week, millions, we have direct relationships with where we can call them back through alerts, et cetera.

And all that's to say that with a little over 13.3, as of the end of the last quarter, million subscribers, the total number of subscribers we have relative to the audience we're engaging, it's still a small fraction. And then the second thing, and this is the advantage of having been at this for 15 years, just the continued investment into leading products that are not only differentiated but keep getting better relative to what else is out there. And the breadth of that portfolio across news, obviously, but also sports and games, shopping and cooking and we just continue to develop this just means that the opportunity and even the TAM just, kind of, keeps getting bigger and with format innovation. And we become more differentiated within that TAM.

And then the last, I'll just touch on the importance of technology to continue to help us engage penetrate the TAM and also just optimize retention acquisition, all these things. So those are just -- and actually, I want to bring up, I mean, family plan is something that I want to bring up, in part because I think underneath family plan highlights.

Well, can you just remind everyone ...

Oh, what is family plan? Yes. So family plan is -- I mean, in any subscription business, not like we were -- we weren't first to this idea. In many ways, the original print newspaper was a family plan subscription. But it enables multiple members to share the same account with their own separate log-in. So we have one family plan subscriptions are highest priced, most premium product allows essentially 4 separate log-ins. It's going great. It's helping us expand our TAM. It's helping to -- with retention and ultimately, when you add all that up, it's the most expensive product, subscriber monetization as well. But I think what's great about family plans that underneath it is highlighting, sort of, 2 things we probably don't necessarily talk about, but are good illustrations of why there's still so much more opportunity and one is personalization.

I mean everything from having your own stats and streaks and games to your own recipe box and cooking, the ability to just keep increasing the value of the subscription and the relationship that's personal to you and therefore, the importance of having these separate logins.

And then the second is sharing. So 13.3 million subscribers, these are best. They understand the product. They are best advocates and the ability for them to be generating subscribers on our behalf is really powerful. And both of those things are, sort of, core to the family plan concept, but we are far from -- nowhere near over optimized for either of those across the idea -- the amount of personalization we can still do, the amount we can use sharing and sharing behavior to continue to drive growth. We're still in the early innings. I think of both of those concepts, family plan is a good example where that's already working.

That's great. I'm going to shift to AI. So can you -- can you remind us about your firm's philosophy as it relates to licensing your content to AI firms?

Sure. We're very disciplined in how we think about this. But we really -- we see this as an opportunity. We also recognize some of the risks given the nature of our strategy. And so what are the principles that we are focused on as we look at relationships, as we look at deals. The first is everything we do, we are doing in the context of furthering our core long-term strategy, which is fundamentally having direct relationships with people at scale with our brands and our products. So every relationship we go into, that's the lens to which we're viewing it, and every deal is ultimately helping to fuel that goal.

The second is we want to make sure that we have control over how our content is being used on the platform. Okay? And then the third is that we expect fair...

Content used on the platform.

On their platform, off-platforms, like I mean, we want to be able to control that. It's our content and we want to make sure that we put in place, sort of, how that's going to be used. And then the third is fair value exchange, sustainable value exchange. We're not looking for short term, anything here. This is about building long-term strategic value for us. So those are our principles. We are absolutely open to deals and have found plenty of occasions so far where those principles have been met and we'll continue to be open to those.

At the same time, it's critical for us to be also enforcing our rights in the court system, and we feel very good about our position there as well. And fundamentally, it's that balance between making sure we're being disciplined and principled in our strategy, protecting our rights. We're optimistic at the core of this we're creating more value. It's a really differentiated product, and that doesn't have value just to consumers and to advertisers, but to platforms as well.

Okay. That's great. So I'm going to shift to the Print business. This sort of reminds me a little bit of the book publishing business, right? When I look at it, and I would think, okay, this print business should just already be gone, who's subscribing to the New York Times print edition? But the business has been -- I mean it's seen some pressures, but it's actually remarkably durable, at least relative to what I would have thought. Is there -- would you guys spend a lot of time thinking about shutting off the print business or nudging people more to digital and sort of saving a bunch of printing costs and paper and ink and trucks and all that stuff? Or you just, sort of, let it sort of leak out, it sounds like ...

Well, look, I mean there's an amazing team managing that business. So it's like -- what I'd say about it is, yes, I mean it's -- people are always asking, is it going to be around -- it's always mischaracterized. It's still -- there's still hundreds of thousands of people who really value it. It's an incredibly good product. They're paying a lot of money for it. And so -- and then partly to your point, it's not a distraction to the digital business.

We're able to manage it very expertly and carefully, sort of, downstream from that -- and it's still a high incremental margins, right? So this is a business that will be in as long as we continue to get real economic value from it. We don't see that ending anytime soon. I will say it's in secular decline, obviously, and we don't also -- we have no expectation that, that will change. So it's continuing to manage it.

Okay. Well, well, thank you very much. Appreciate the time.

Thank you.

All right.

Good morning, and welcome to The New York Times Company's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Anthony DiClemente, Senior Vice President, Investor Relations. Please go ahead.

Thank you, and welcome to the New York Times Company's Second Quarter 2026 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 we'll be making forward-looking statements including about our business strategy and performance based on our current expectations. Our actual results could differ materially due to a number of risks and uncertainties described in the company's 10-K and subsequent SEC filings. We'll also be referencing non-GAAP financial measures for which there are reconciliations to GAAP measures in our earnings release at investors.nytco.com.

And with that, I will turn the call over to Meredith.

Thanks, Anthony, and good morning, everyone. Q2 was a great quarter for the Times. Our world-class journalism and premium lifestyle content continued to draw large audiences and powered strong results for the company. This was a quarter where we made substantial progress against all of our priorities for the year.

First, we continued to cover the world's most important stories from politics to pop culture, from wildfires to wellness. Journalists around the globe reported on the ongoing conflict in the Strait of Hormuz, escalating drone warfare between Ukraine and Russia and the rapid advances in powerful AI models. We comprehensively covered the primaries in the U.S., a historic heat wave in Europe, and an epic few weeks in New York that saw the Knicks win their first championship in over 50 years and Taylor Swift tied the knot with Travis Kelce.

Second, we presented our journalism in lifestyle products in all the ways people want to engage with them, including video. We're now producing thousands of new videos each quarter to reach the enormous audience for video in all the places people watch, including our own destinations. Just this week, we launched a shows tab in our flagship app, creating a new way to experience our long-form franchises in news, opinion, culture and lifestyle. The shows tab complements our existing Watch tab and the expanding volume of short-form video across the report.

This is all part of our strategy to engage the people we already have more and engage more people. As we do that, we intend to make the Times as preferred brand for watching the news as it is for reading and listening.

Third, we continue to add value in every part of our portfolio. We began to make a series of upgrades to our flagship news app, where we see strong subscriber engagement with the aim of making the app a more compelling experience for prospective subscribers. We also launched new listening and commenting features in our flagship news app, made cooking a better companion for home cooks with a new cook mode, launched new features to celebrate the fifth anniversary of Wordle and its consistently strong audience and continued to add features to cross-play with its growing community of engaged players.

The Athletic's approach to the World Cup represents how these 3 priorities come together to drive increasing value for audiences. The world's attention was on the games, and we delivered journalism and experiences like no one else could. Over 70 soccer experts from a 550-person sports newsroom covered the most interesting athletes, moments and stories from the tournament across 16 cities. We introduced new formats, including a daily long form World Cup show on Amazon and daily short-form recaps on the social and in our app. And we provided live updates and insights for all 104 games in popular interactive brackets that helped fans predict what would happen next. All of this led to the Athletic's biggest audiences ever and we expect these advances to power success in the NFL season and beyond.

Now let me highlight a few results from the quarter. Digital subscription revenues grew 16% as we continue to become even more essential to even more people. We added 280,000 net new digital subscribers, bringing our total subscriber base to 13.4 million and keeping us on track to our next milestone of 15 million and beyond. In advertising, both digital and total advertising growth once again exceeded our expectations with digital advertising up 21%. This was the result of a clear strategy, capable execution, strong marketer demand and high engagement.

Affiliate, licensing and other revenues also grew in the quarter. We continued to manage costs even as we invest into generational opportunities, making long-term bets video among them is how we expect to maintain and extend our strong market position and continue building a larger, more profitable company for the long term.

I'll close by noting that we delivered our Q2 results against the backdrop of a rapidly changing information ecosystem shaped by a small number of big tech companies whose moves continue to result in less traffic to publishers. The Times isn't immune to that impact, but we have 4 enduring advantages that we believe give us resilience to these headwinds and also create long-term opportunity. Let me remind you of what those are.

First, our products are in giant spaces, which deeply engage passionate audiences every day. In current events, sports, cooking, games and shopping, we offer the highest quality, most trustworthy experiences that leave people nourished, not depleted.

Second, we're one of an increasingly small number of news organizations that are committed to doing original independent reporting and high-quality content at scale. While most publishers and broadcasters are doing less of this kind of work, the Times continues to invest. This makes our news coverage and lifestyle products increasingly rare and valuable in an information environment, awash in low-quality takes and disinformation.

Third, we have a long track record of using technology to report, tell and distribute stories in all the ways that people want to engage with them. From text to audio to interactive graphics and video, we deliver information and experiences in the creative ways that make people pay attention.

Finally, our multi-revenue stream model means we have multiple complementary ways to monetize our high audience engagement.

Those 4 advantages taken together mean we're well positioned to continue making the New York Times essential for every person seeking to understand and engage with the world, and to continue to create more value for users, shareholders and society.

And with that, I'll turn it over to Will.

Thanks, Meredith, and good morning, everyone. As Meredith described, our second quarter results reflected strong progress for our business. I'll begin with a discussion of the quarter's key results, followed by our financial outlook for the third quarter of 2026. Please note that all comparisons are to the prior year period unless otherwise specified.

Overall, we saw healthy increases across our multiple revenue streams in Q2 with consolidated revenues growing 11%. AOP grew 16% as we continued to make disciplined investments aimed at further differentiating our high-quality journalism and digital products.

Now moving to our subscribers and subscription revenues. As Meredith said, we added 280,000 net new digital subscribers within the quarter, and digital-only subscription revenues grew 16.4% year-over-year to $408 million. By the end of Q2, our digital-only subscriber base was 13.3% higher year-over-year and digital-only ARPU grew 3.1% year-over-year. Total subscription revenues increased 11.7% to approximately $538 million. Both digital only and total subscription revenues were within the guidance ranges we provided for the quarter. The growth was driven by multiple products across the portfolio. We continue to be pleased with the increase in our subscriber base in the quarter as well as the performance at our pricing step-up points. We believe this reflects that our audiences appreciate the significant value we're adding to our products.

Now turning to advertising. Total advertising revenues for the quarter were $149 million, an increase of approximately 11.3%, which beat our expectations. Digital advertising revenues also came in above the guidance range we provided, increasing 20.7% to $114 million. Marketer demand in the quarter for our high-performing ad products exceeded our expectations.

Affiliate licensing and other revenues increased approximately 7% in the quarter to $75.5 million, also beating our expectations. The outperformance was primarily the result of higher Wirecutter affiliate referral revenues.

Adjusted operating costs grew 10%, largely as a result of higher compensation and benefits expenses, which included investments in our video journalism. Cost growth exceeded our guidance range primarily due to incremental variable compensation tied to financial outperformance. Increases in sales and marketing costs in the quarter included both higher marketing and promotion expenses and higher costs associated with our advertising revenues.

As I mentioned at the top, AOP grew 16% in the quarter to approximately $155 million. Adjusted diluted EPS increased $0.11 to $0.69, reflecting 19% growth. We generated approximately $266 million of free cash flow in the first half of the year. Over that same period, we returned approximately $160 million to shareholders, consisting of approximately $92 million in share repurchases and approximately $68 million in dividends. This is consistent with our capital allocation strategy, which includes returning at least 50% of free cash flow to our shareholders over the midterm.

I'll note that while our strong free cash flow in the first half primarily reflected our growing AOP and capital-efficient model, it also benefited from timing of seasonal working -- of working capital, some of which we expect to reverse in the second half. In addition, as we discussed last quarter, 2026 free cash flow will include a tax-related benefit of approximately $60 million, the majority of which we do not expect to recur beyond fiscal 2026.

I'll now look ahead to Q3. Digital-only subscription revenues are expected to increase 12% to 15% and total subscription revenues are expected to increase 9% to 11%. Digital advertising revenues are expected to increase mid- to high teens, and total advertising revenues are expected to increase high single to low double digits. Affiliate licensing and other revenues are expected to increase low to mid-single digits. This takes into account the timing shift of a marketing promotion by one of our affiliate partners, which occurred in Q2 of this year as compared to last year, where that promotion occurred in Q3.

Adjusted operating costs are expected to increase 8% to 9%. We intend to continue operating efficiently while making disciplined investments in our high-quality journalism and digital product experiences that add value for our audiences and help reinforce and expand our competitive advantages.

As we've discussed, video in particular, remains an important area of strategic investment being reflected in our results and in our guidance. We believe video allows us to have an even greater impact with the journalistic investment we are making by penetrating a large and new addressable market for us. We are confident in our ability to generate strong returns over the long term as we grow the amount and impact of video journalism in news and across the portfolio.

In summary, our strategy continues to work as designed. Our strategic priorities are all aimed at building a larger and more engaged audience over time, growing our subscriber base and powering our multiple revenue streams. We continue to expect 2026 to be another year of healthy growth in revenues, AOP and strong free cash flow generation. We also remain on the path to achieving our midterm targets for subscribers, AOP growth and capital returns. With that, we're happy to take your questions.

[Operator Instructions] The first question today comes from Jason Bazinet with Citi.

I wonder if I could just ask a question on expenses. You talked about the 2 drivers of the elevated sales and marketing. I think you said higher promo and then some costs related to video. Can you just unpack that a bit? Because I feel like your shares have reacted pretty sharply to elevated sales and marketing in the past, I think it was the fourth quarter of '24, and it ends up being nothing. It's not like a big structural change in your cost. But I wonder if you can just provide any color about how much of this is sort of temporary versus structural?

Yes, Jason, I'm happy to take that. We were pleased with our sales and marketing performance in Q2, and our approach there remains consistent. So no changes to the approach. I mentioned in my remarks, it's a little different than you characterized it in your question. There are really 2 different components to highlight there. The first is marketing. The second is actually advertising-related costs. And so in marketing, we continue to drive the majority of our subscription starts as our model is designed to do organically behind the strength of our ongoing investment in journalism and product development. And we continue to treat marketing as a useful additional growth lever. It can fluctuate, as you know, quarter-to-quarter as we continue to approach it with a lot of discipline. We're focused on efficiency and returns, leaning in when the moments call for it, for example, around the World Cup in Q2.

Now beyond marketing in Q2, there was a separate portion of the growth associated with advertising as well, and that's for a couple of reasons. First, we outperformed our ad revenue expectations in the quarter, which meant a bit higher ad COGS, incentive compensation. And then second, this year, we staffed a new middle market ad sales team to access a part of the market that we weren't serving previously, which we see as another promising way to aim to strengthen that sort of those long-term growth drivers in advertising. So overall, I'd characterize the Q2 results as reflecting our strategy working as designed to help drive healthy revenue growth and AOP growth.

The next question comes from David Karnovsky with JPMorgan.

Will, on the digital subscription outlook, the 12% to 15% range, that's a bit below where you've operated or guided over the past several quarters. So just in that context, can you speak to any volume mix or pricing factors to be aware of? And then, Meredith, maybe relatedly, you noted Times isn't immune to broader trends in publishing. We've seen reports of some platforms kind of reconsidering deals with LLMs due to traffic impact. I know you haven't engaged on these, but just maybe you can give us the lay of the land as you see it right now?

Great. I'll start with that digital subscription revenue guide. First, to say we're pleased with our overall -- over 16% growth of digital subscription in Q2. Underlying that growth, as I mentioned in my prepared remarks, was over 13% year-over-year increase in subscribers over the last 12 months as well as pricing performance, which continued to go well.

Now to your question sort of looking at Q3, it's, I think, helpful to recall that digital subscription revenue growth can be driven by a variety of factors. I'd roll them up for these purposes into sort of 3 basic categories. The first is that, as I mentioned, sort of that sub growth over the prior 12 months, even if subs can vary quarter-to-quarter, of course. The second is mix -- the mix of those subs between higher-priced bundle subs, lower-priced single product subs. And then the third, as you mentioned, is pricing step-up performance. And by step-up, I mean a couple of different things, how well are subs transitioning off promotion to higher prices as well as the timing and performance of any price increases.

So as it relates to Q3, I'd note in part the cohort impact of the paywalling of the Mini in last year's Q3. That contribution from lower-priced single product subs a year ago plays a bit of a role in the sub mix in the quarter. Overall, I'd step back and say our strategy continues to work as designed. We're focused on sustaining healthy underlying drivers of digital subscription revenue as reflected in that guide, meaning continuing to add significant value to our products, generating strong engagement around them. And then we consider asking users to pay a bit more of their time as our products become even more differentiated and valuable in their lives.

Let me take the second part of your question, David. Let me start by saying we've been saying for a while now that the overall direction of travel is less traffic to publishers from the big platforms. And as you heard me say in my prepared remarks, we delivered our Q2 results against the backdrop of a rapidly changing information ecosystem that's shaped by a small number of big tech companies whose moves are continuing to result in that less traffic. We're not immune to that impact, but we are building resilience to the trend, and we're doing that by investing in coverage and products and brands that are so good. They're worthy of being sought out and worthy of direct relationships.

We're doing that by making our destination product experiences, I'd say now, especially our apps even more effective at engaging prospects. And we're doing that, as you've heard both Will and I talk about by making video a bigger part of the experience. And I'll just say that our aim in all this over time is to become less reliant on the intermediaries. And you should imagine we are always calibrating between making our work available widely so that people can sample it and to make sure we're doing that in a way that isn't substitutional. And I think that gets at the specifics in your questions.

The next question comes from Cameron Mansson-Perrone with Morgan Stanley.

I wanted to ask about video. Competition seems to be higher than ever here, engagement issues at Netflix, YouTube investing more outside of creator video, social media platforms investing more behind short-form video. Are those trends supportive of consumer demand and therefore, your strategy? Or how do you think about the attractiveness of video investment kind of within that backdrop?

Yes. I'm happy to take that one. My short answer is yes, those trends are consistent with our direction of travel and our strategy. And I'll say, it's early days in video for the Times, but we have dramatically scaled production, and we are growing video engagement on our platform and off our platform.

Let me just reiterate what we're doing here from a strategy perspective. I think Will and I both alluded to this in our prepared remarks. We see video as a big long-term opportunity to establish the Times to be as preferred brand for watching the news as it is for reading and listening. And our efforts here are really meant to grow engagement with the audience we already have and also to reach net new audiences and build share with a new audience.

And I would say we believe video allows us to have even greater impact with our journalistic investment because we're penetrating a large market and a new market for us.

And I'll just -- I'll say on production, we're really scaling now, still early, but now producing thousands of original videos across the portfolio. Four real areas of growth in production, reporter video, news clips, our trademark visual investigations and then shows, which we've talked about extensively. It's early days on engagement, but we like what we see so far, and you've now seen us make a couple of deliberate moves to build engagement on our own platform with a Watch tab and now Shows tab for long-form watching. And we have a lot of confidence that as we build engagement at scale, we'll have a lot of ways over the long term to monetize it.

The next question comes from Kutgun Maral with Evercore ISI.

Digital advertising had another strong quarter, growing 21% and again coming in ahead of expectations, and your third quarter guidance calls for mid- to high-teens growth. I was hoping you could unpack the Q2 upside across impressions, pricing, ad formats and maybe advertiser categories. And as we look ahead, how much of the momentum reflects structural drivers like additional ad supply and share of wallet gains versus maybe timing or other factors that we should be mindful of?

And finally, are your investments in video beginning to contribute meaningfully to ad revenue at this point? And could increasing video monetization help offset the more difficult ad comps you'll face over the next several quarters?

Thanks, Kutgun, I'll take that. Both good questions. Let me just start by saying Q2 was a very strong quarter for digital advertising. You know what the rate of growth was. And I would say, as to the drivers, the strategy is kind of working as it was designed to. We are in now a number of big spaces that have a lot of appeal to marketers. We have differentiated coverage in products in those spaces. And I will just say that growth in the quarter came from across the portfolio. So everything sort of working at the same time. And across the portfolio, we now have real scale of engagement, especially in news and games and sports, but really everywhere.

And then lastly, as to the drivers, we have that very strong engagement. And then we also have ad products that really work for marketers. So campaigns renew because the ads perform. You've heard our outlook for Q3, and I think that continues to reflect healthy demand across the portfolio. We have said previously, and I'll reiterate that we are lapping, to your question about structural drivers, we're lapping strong growth in supply in the back half of the year from last year.

So I would say, overall, we continue to be optimistic about our ad business. It can be a little variable quarter-to-quarter, but we're confident in its role as a long-term growth driver.

And then remind me the second part of your question. I think you asked video, what role video played. I'll just say, you've heard me talk about how ambitious we feel about video and excited we are. It's playing a relatively minor role in the growth in advertising so far. And you're going to see us really focus on scaling production, scaling engagement and then scaling monetization, but minor role so far.

The next question comes from David Plaus with Bank of America.

Just 2 quick ones, if I may. You had an acceleration in digital ARPU in the quarter. I mean, does this reflect, is the way to think about this, like the full quarter of impact from pricing actions that you took in 1Q? Or is it sort of higher conversion to higher price tiers? Or maybe it's a little of both? What's the best way to think about that?

And then the second question is, obviously, the Affiliate, Licensing and other line has multiple different components. Presumably, you've comped the Amazon AI deal from last year at this point -- at this point. Can you sort of talk about some of the puts and takes for growth for this line for the rest of the year?

Sure. I can take both of those. On the question about ARPU, yes, I mean, as I sort of said in my previous answer and in my remarks, notable strength in digital subscription revenue in Q2, that 16.4%, and we're pleased with that ARPU growth of 3.1%. What you're seeing there, a lot of different factors at play, but we are seeing the benefits of, for example, the digital bundle price increase that we mentioned in Q1, that started sort of seeing the benefits of Q1. That was a price increase from $25 to $30 for a cohort of tenured subscribers. And I also said in my prepared remarks, we continue to be pleased with the performance as subscribers roll off their promotions. So both the retention and yield there we continue to be pleased with. So those are some of the dynamics at play and what is supporting that Q2 ARPU growth.

And then on affiliate, licensing.

Affiliate, licensing and other -- the other question. Yes, as you said and you know from previous calls, it's a mix of stuff in there, licensing deals, affiliate books, TV, film, commercial printing that can create some lumpiness, that ALO revenue growth of 7% in Q2 and being ahead of our guidance range and sort of the dynamic in Q3, it's worth noting that the -- that higher, what we call it affiliate revenue referral number takes into account the timing of a shift in a marketing promotion by one of our affiliate partners. It occurred in Q2 of this year instead of Q3, which is the quarter it happened last year.

I would say, given the sort of multiple parts in that, you've seen our guide and it takes them to -- that into account, licensing is obviously an important part of the business as well, and we're pleased with what's going on with the line, but nothing more to unpack there.

The next question comes from Benjamin Soff with Deutsche Bank.

You recently announced a local news product in at least one market, and I'm hoping you can talk about how this fits into your broader strategy and how you think about the opportunity with local news. And then could you remind us where you are in the process of ramping up production for each of the 3 types of video content in your business plan, whether that's podcasts, reporter-led video or visual investigations?

Thanks for both questions. Let me take the local one first. I would regard it as an experiment and something we're excited about and something we regard as more than anything kind of supportive of a broader local journalism ecosystem. In the specific product launch we announced, we are collaborating with a local player in the market. So I'd regard it as we are always experimenting with and testing with new ways to meet news needs and ways that we can both support and benefit from others in the ecosystem, and that's what we're doing there.

On video, I think your question is kind of where are we in the scaling of different types of video. Is that right?

Yes, that's right.

Right. So what I would say is I referred in my prepared remarks to producing, I think, in the 1,000 range of new original videos across the enterprise in the quarter. A lot of that is signature reporter video. That's a format that I think the Times is doing particularly well, and that's where a reporter in the course of sort of doing the work to unearth information in addition to the typical publishing of, let's call it, an 800-word article or a live blog, they also now can have an output, which is explaining what they found in their reporting and explaining sort of the process of how they got it, and that has the effect of getting the information out there in a new format that appeals to people and also it's kind of inherently humanizing and trust building.

So we're particularly excited about that format. And I'll just say nowhere near done, rolling that out across the newsroom, lots and lots of progress, but still a lot more to come.

In visual investigations, which is another, I'd call it, signature Times format, where we're doing something quite different than what's out there in the market at some real scale now. That is big enterprise stories where we are able to tell a unique story about something very important happening gathered from all different kinds of available video to piece together what really happens somewhere.

So the -- I think I talked in the last quarter about the work we did on understanding the bombing of the school in Minab, Iran happening at the hands of the U.S.

In the last quarter, we used the visual investigation to tell that. You should imagine we're going to keep doing that. We're going to expand that as we can. And then I'd say we're early in our shows footprint. You've heard us talk about some of the shows in politics and culture and business. But you have to imagine early days, and we will continue to expand the portfolio and experiment with different kinds of long-form formats. So all relatively early, and I would say we're excited about all of them.

The last question today comes from Doug Arthur with Huber Research.

Yes. Will, I don't want to beat a dead horse here on the costs. I think that when you came into the quarter, you were talking about 8% to 9% guide on the adjusted operating costs. You came in above that. On the sales and marketing, I mean, you mentioned a bunch of variables, including compensation, but how much of it was the success of the World Cup Athletic and kind of leaning into that? And could we see a pullback, therefore in the fourth quarter?

Yes. Thanks, Doug. So what I want to make -- I said in my prepared remarks, the reason for the sort of slightly higher cost growth in the quarter versus our guidance was primarily due to incremental variable compensation tied to financial outperformance. You'll note, among other things, that very strong advertising revenue growth in the quarter versus our expectations. So that's the sort of primary reason we exceeded our guidance.

Of course, the reason for the cost growth overall, the primary driver there is compensation and benefits associated with our core strategy, which is investing into our journalism in particular and digital product experiences, Meredith and I have both talked about video, for example.

And so just to then follow up on the sales and marketing component. As we've said, we're always -- we're very disciplined there. We're very focused on making sure that when we see opportunities in the market for efficient returns, and we think it makes sense to capture them, we do. You saw that a bit in the quarter. I mentioned one of the things in my previous answer you highlighted on it, but I wouldn't over-rotate on any specific event. It's about making sure we're driving efficient returns with the marketing spend, keeping in mind, of course, that that's a lever and we like it. But overall, our model is still very much an organic growth model, driven by our journalism and product.

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

Well, that's it. Thank you all for joining us for our second quarter earnings call. And if you have follow-up questions, feel free to reach out to us. Otherwise, we'll see you next quarter.

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

All right. We'll get started. So I'm happy to have back from the New York Times Company, Meredith Kopit Levien, President and CEO. Meredith, thank you for being here.

Happy to be here.

Okay. Great.

Spring in Boston. Better than winter.

Hot spring in Boston. Okay. So over the past 5 years, you have referred to the New York Times as the essential subscription product for someone wanting to understand and engage with the world. So there's been a lot of evolution in the product that we can cover. But at a high level, what are the key strategic pillars that have guided you as CEO during this period?

Yes. Well, there are three pillars to being the essential subscription that we've been focused on for the last 5 years. The first one is to be the world's best news destination, kind of hard stop. The second one is to have market-leading lifestyle products that help people make the most of their lives and passions. And the third one is to put those two ideas together in an interconnected product experience or a bundle so that whatever is going on in your world or the bigger world, The Times has something relevant for you every single day, and we do that at increasing scale. And I would say that those three pillars are powered by four advantages that I really think are making the whole strategy work.

The first one is that The Times now plays in really big spaces with a lot of running room, news broadly defined and also sports and games and recipes and shopping advice. Secondly, within those spaces, we have built these unparalleled content engines for original reporting and sort of journalistically rigorously created lifestyle content that are really hard to replicate. I would say the work we do in content, we reported from 150 countries in every state in this one last year. It's really hard work. And as others are doing less of it, The Times has continued to invest in it.

The third kind of strategic advantage is that we have a capability to harness technology to drive consistently strong engagement, and we do that through format innovation and feature development and innovation in the product experience and even innovation in how we use proprietary data at The Times. And then the last advantage is we're able to monetize that consistently strong engagement across multiple complementary revenue streams. And I would say all of that sort of drives our ability to get more people to have direct relationships and daily habits with The Times. And we're confident as we do that, we can build a larger and more profitable company.

Great. That was a great opener. Let's start with this. So you've often noted that The Times operates in a media environment dominated by big tech firms. And to that, I would now add AI platforms. So given that backdrop, how do you kind of balance focusing on what you can control versus the periodic need of adjusting to some of these external forces?

Yes. That's a good question. Let me say what we can control and what we put a lot of care and thought and investment into. It's that unparalleled engine for original reporting and high-quality lifestyle content production. What do I mean by that? I mean we have a giant team of the world's best journalists who go out into the world and unearth information, new information, unearth facts that really matter to people. And they do that with professional expertise and often domain expertise, and they do it by following a time-honed process for keeping that work uncompromised, and that's true if we're reporting on matters of profound civic consequence, and it's also true if we're writing product reviews of which toaster you should buy.

And they're doing that in a way that is human-led and where the output of that reporting, that sort of human-led reporting, is done in an expressive way where people really engage with it and get understanding. And it's just worth saying, even as the AI companies, in particular, aim to build substitutional products, it's very hard to imagine anyone is able to replicate what I just described. And what I just described, that need for facts, for information sort of in service to no one's interest but the public, that need is only growing. So that's the first thing I would say.

The other thing I would say, because you're asking sort of how do we balance that, our aim is to have news coverage and products that are so good that people seek them out and ask for them by name and make room for them in their lives however the ecosystem evolves. And we recognize that we operate in an ecosystem dominated by these big tech companies. And our job is to kind of make the best of that to get people to find and experience and sample our work all the while that we are really trying to get people to come and have a direct relationship with us and come to our destinations. And I think our results show that we're pretty good at that calibration.

Maybe as a follow-on to those comments about the content engine and kind of what goes into producing at that scale, what do you think the position of the company is with regards to journalistic talent, not just on news, but across the entire coverage?

Let me say the thing I'm proudest of in my 13 years at the New York Times is that we have like 1,000 more people in the core newsroom 1,000 more people. So it's about 2,300 people in the core news operation. And they're not just any people. These are the best journalists in the world doing this work to a standard for uncompromised journalism. I'm incredibly proud of that.

And they're able to go wherever the story does across the breadth of human experience. In The Athletic, we have another 550 journalists, the world's largest sports journalism operation. And then we've got close to a couple of hundred people doing rigorously reported product reviews for Wirecutter. So this is an enormous operation. I didn't even talk about Cooking and Games.

Here's the proposition for talent. And it's a proposition that I would say has worked for The Times for decades. We bring the best journalists in the world, and we give them the time and the space and the resources to do the best work of their careers. And in many instances, I always think this doesn't get talked about enough, a piece of enterprise or investigative journalism could take months or even years. So a journalist could spend many, many months working on a single body of work and have the time and the space and the resources to pursue it.

So we give them great conditions, great people to work with. We give our talent what I think is the industry's best support structure: that's lawyers and fact-checkers and editors and data scientists and visual journalists, the people who can really make their work feel magical when it comes out into the world. And we give them a giant audience, so the work has a real opportunity for impact.

So we think it's a very good proposition. I think it's a proposition that has served The Times very well. I think it served our journalists very well, and it served the public very well. We recognize it may not be for everyone, but we feel really good about where it is and our ability to continue to attract and retain the world's best talent and also to nurture and develop stars within The Times.

Got it. So when we look at the app today, right, right at the bottom next to the main feed is video and podcast. I used to kind of think of these as an extension to the core reporting, but am I right to suggest that these are sort of increasingly the destinations themselves?

Yes. I think it's both. Let me say, anything we are doing with format innovation is about getting more people to experience our work. So it's really meant to enhance the journalism and attract more people to that journalism. And for many people, we now have a destination that you can come to. So I'll take video as an example. We've got a Watch tab where every day, you can see roughly a couple of dozen videos from The Times sort of presented in an orderly way where it's like a whole experience from The Times that you can watch. And there are plenty of people who are engaging with The Times that way. It's true for audio, too.

But also, if you're just engaging in the today feed or you're on the website, you're in the core report, you're going to see much more video. You're going to run into much more video in our live experience. You're going to run into it within articles. You're going to see much more of a multimedia experience. And the idea here is that we can meet the reader, the listener, the watcher kind of wherever they are in terms of modality, their preferred modality for taking in the information. And we're early in that. We really like what we see so far, but much, much more to come.

As you build out the video capability, I think a question we sometimes get is kind of where is this investment going in terms of resources and format. So it'd be great if you could speak to that. And then just on the consumer end, right, as you see your users, subs ingest this video, how is that impacting their experience, right, frequency, time spent with the product?

Yes. We've got big ambitions in video. Our aim here, just stepping back, is to be as preferred a brand for watching the news and the other things that we do as we are for reading and listening to it. And you're seeing us really ramp up production. So I talked in our earnings call about how we doubled the amount of reporter video we had done. You're asking about investment. What I'll say is we've got some inherent advantage here, and I've just talked about this extensively. We've got a news team reporters and editors who can go wherever the story goes. That's sort of already there. And what we're adding to that is like a layer of video production capability.

In terms of the formats that come out of that, you're seeing us do much more, we just call it reporter-on-camera video where the reporter is explaining their story or actually bringing you into the story, more just straight up news video where in some instances, it's actually more powerful to show you the things. So we show you the things often with text or audio over it. We are intently focused on continuing to expand our trademark visual investigations, where we piece together video, a lot of it UGC, to actually unearth new facts about what happened. You've seen us do that.

And then I would say we have a lot of traction and momentum for our expanding shows portfolio. So we're making kind of full-bore shows across politics and culture and technology, and all of that is really working. You asked about engagement. It's early for all of it, but we really like what we see so far in terms of consumer engagement, both on and off platform, but early.

I guess at the same time that you're building out the video content, so we've seen some cable news networks move towards their own DTC products. They put up digital paywalls. Some of them have extended into lifestyle content. Is there a convergence here? Or is that the wrong way to look at it?

Yes. I don't know if it's the wrong way to look at it. Let me tell you how we look at it. We've got a very big ambition here. And we see video as an opportunity to get more engagement from the big audience we already have and also to get net new audience. On the question of sort of direct-to-consumer platform for it, what I'll say is we're now like 11 years into building a really powerful direct-to-consumer business where we've been building a trusted brand in news and increasingly in these other lifestyle spaces and where we can get lots and lots of people to have direct relationships and daily habits with us. And we can do that because we've been continuously adding value into our products and showing up in a very multidimensional way in people's lives.

I think video, we know video helps us do that even more, and it particularly helps us reach people who want to do all those things, but want that modality in video. So that's what I would say we are trying to do. To the extent you're asking me how that relates to what's happening sort of in other video spheres, what I'll say is we think we really benefit here from not having like an institutional incumbency. We know that there is an enormous amount of news and lifestyle content consumption happening, enormous amount, in digital video, and that's really what we're aiming to get and to win.

And you see us doing that sort of first in formats that are native to us. So video that really works on a phone, video that really works when you're engaging digitally. But make no mistake, we want to win the moment. When something big happens in news, or in any of the lifestyle spaces we play in, ultimately our long game is we want to win that moment, whether you're going to read it or listen to it or watch it. We want to win that moment sort of wherever you are coming to watch it.

Maybe just one last one on this topic. So video podcasting, we've seen you extend the reach of the content to places like YouTube or Spotify, the viewer stats and charts show clear engagement. But how do you kind of use that free access to ultimately drive consumers back to the core Times?

Yes. It's a great question. I would say we've got like one of the things that really works about our model has always been this calibration between enough gravity at the destinations and in the products that you'll make a direct relationship and ultimately pay, and we make a lot of stuff available to people to sample. And we do that, whether it's on YouTube or Spotify or any of the other places we do that, we do that to build awareness for our work and to build preference and to build consideration. And I think that is particularly important, we're talking about video, that is particularly important in video because we are now sort of teaching a whole generation of people that The Times is a place you can watch stuff too.

And so that's why you see us do this. And I'll say, I'll go -- I think The Daily and what we did in audio is pretty instructive here. The Daily is going to be 10, I think this end of this year or early next year. So The Daily has been around for a long time. It is still the largest and most successful news podcast by audience. It has a huge listenership every day. And if you actually just looked at the arc of The Daily's kind of growth and its ability to touch culture, it really coincided with an arc of growth in our subscription business. And those two things are not, they're not, one doesn't very directly send people to the other, but it certainly got people interested in The Times and got people interested in the stories from The Times. And I think the same will apply here in video.

And I'll just say, so at a high level, being on YouTube, being on Spotify gives us a chance to get new people to engage with the brand in a deep and significant way. But ultimately, we want to do that in a way that redounds to getting people to come to our destinations. And I'll just -- I'll give you a couple of examples of how we do that. We just published 2 or 3 weeks ago, the 30 Greatest Living American Songwriters in America, and we had 7 extraordinary videos with songwriters, including like break-the-Internet video, a 30-minute video of Taylor Swift that we were incredibly excited about.

And we obviously clipped that video, and we promoted it everywhere. It was promoted very extensively. But for the first week, if you wanted to watch that video, you couldn't actually watch it on YouTube. You had to come watch it on the New York Times. And just to give you, like in another part of the portfolio, another example of that, in Cooking, one of the ways we're building our Cooking funnel is we're doing collaborations with food creators who are outside the Cooking universe. And so you watch the video, you get excited about that in the universe of that creator. But if you want the recipe, you come to our app to get the recipe.

So this past quarter, The Times disclosed over 13 million paid subs, putting you closer to your 15 million goal that was by the end of '27. So we get asked this question often, but what's the best definition of your TAM, the one that you use when you think about executing to that goal?

Yes. When we think about the TAM for The Times, we think about the giant spaces we play in and what's the number of people in each of those giant spaces, news broadly defined and then sports and recipes and games and shopping advice, who are willing to pay for a product in those spaces. And what I'll say is we believe that TAM is at least as large as we've previously reported and underpenetrated by The Times. And we've got a lot of signal in our own product experience that would suggest that. We've got an audience that is many times larger than our subscriber base. And so we're able to call them to action using the sophistication of our data science and our model to get them to convert at the right moment. Who are those people? We've got 50 million to 100 million people who are coming to our sites and apps every week, much more than the 13 million and change subscribers. We've got a huge trove of podcasts and e-mails that people watch, listen to, read on a daily basis. And we've got over 150 million registered users and counting. So we really feel good about the TAM and our position within it and the running room within it.

How are we going to go after all those people as we execute on our major priorities that we keep talking about: keep crushing the coverage, do it in more formats, add value in every part of the product portfolio and then merchandise that value in ways that get people to sort of experience more of our product or experience it with their friends. As we do that, and we have running room in all of those directions, we believe we'll be able to keep penetrating that TAM.

Okay. And bringing consumers into the ecosystem, you've had success with promotional offers like $1 a week or $2 a week for family plans. I think ultimately, your digital subscription growth, though, a more powerful lever over time has been in price as you graduate subs or introduce new rates for tenured cohorts. Maybe just kind of speak to your strategy of addressing the whole demand curve as you've termed it.

Yes. We feel really good about everything. I've been at this a long time, our CFO, who's here, we've been at this for a long time. We feel very good about our pricing power and our ability to sort of drive price in the appropriate moments. And what I'll say is we've got a value-based approach to pricing. Most people come in, however they come in, a single product or the bundle, they come in at a promotional rate. And as they engage more, we've got a model that gets them to engage more. And as they do that, they step up to interim and full prices. And we feel very good about our sophistication and being able to do that. And we also feel very good about what we see at those step-up moments. That has worked really, really well.

And the idea is we want to be able to get at everybody under the demand curve, and I think you're seeing that really work. And I'll just say the thing we don't talk about enough is each part of the product portfolio is getting more valuable with every passing month and quarter and year. And so our ability to get that price, the consumers' sense of value from it is getting better and better. And the comps are not as good.

So going back to the start of '25, maybe earlier, digital advertising has been a standout metric, growth continuously outperforming expectations. We get asked this all the time. Maybe just unpack some of the drivers of that performance between supply, organic demand. I know you've introduced some new tools for marketers as well.

Yes. I'm as optimistic about our ad business as I've been. It's an exciting time in our ad business. And I'll say that it's for a handful of reasons, and they sort of look like the reasons our consumer business is working. The first one is we are in these big spaces, universal need for news, sports very appealing to marketers, games, everything else we do in lifestyle, very appealing to marketers. So we're in these big spaces and with giant engaged audience in those spaces and really well-honed, deliberately designed ad products where we have big canvases and a ton of first-party data, proprietary data that we've been able to unlock for marketers that just really, the combination of that and the canvases really sort of makes the ads work, so marketers return. And that means because we're across all these spaces now and the ads really work, we're able to get more share of wallet from the marketers who already work with us, and we are able to bring in a lot of new marketers. So that really feels like it's working.

Your Chief Advertising Officer, Joy Robbins, recently used the term never newsers to describe marketers anxious about placing their brands adjacent to news. That's probably relevant recently. I'm curious, first, how much of that is a concern for you, just given the volatile world we live in. But separately, how do you take action against that and sort of steer that demand elsewhere?

Yes. Let me say a couple more things about your prior question, it will get me to her name for activity we're seeing beyond news. You asked me before, and I think it's important to this, about sort of supply and demand. And what I'll say there is we added a lot of supply last year, particularly in the second half of the year in our big products beyond news, particularly in games and sports. And we will continue to -- and you saw us benefit from that at the beginning of this year. We'll continue to add supply. It will be across the portfolio this year and more incremental. And I think you always are adding supply as you're growing audience in addition to developing new ad products.

What you're poking at is demand question, and I probably use different words. By the way, our Head of Advertising is an extraordinary leader. She has done incredible things with this business, and we're very, very happy with that team. What I would say is I've been around ad businesses for a long time. There are always some marketers who don't want to have, in a time of intense news or difficult news, war, geopolitical turmoil, there's always -- I mean, when I was in magazine advertising, there are always marketers who don't want to run near that.

And at the same time, there are always marketers who want to be around news because news, particularly high-quality news from a trusted brand, is a pointer to "this is important." So I just want to push back on the notion that news isn't a great place for marketers, and I've seen that in my whole career. It is because of the audience that amasses and the capability of pointing to "this is important."

In addition to that, we've got all these lifestyle products now. So a marketer in any given moment who wants to work with The Times has a whole selection of places where they can do that. And I think what Joy was probably referring to is we are able to sort of capture the demand in any number of places now that are very appealing to marketers, and that's really made the business more resilient, and we're pretty excited about that.

Got it. Maybe shifting gears, I want to touch upon games. You said in an interview recently that this was the most up-and-to-the-right thing you've experienced in your career in terms of attention and cultural relevance. There's no shortage of free games on the Internet. What is New York Times getting right here?

Yes. Lots and lots of people play and love our games, tens of millions of people. It just really, really works, and let me say what I think works, some of which doesn't get talked about enough. Lots of companies make games, including big powerful tech platforms. I think the reason The Times Games have really broken through is that they are from a brand and they are associated with the brand, and they are kind of at the home of a brand that is two things.

One, its essence is about making you smarter every day. And two, it's like a shared cultural experience. And I think we really benefit from both of those things. And people tell us, and I think people know this, they don't just play the games, they play them with their family and their friends. And the games don't take a ton of time. So if you play 2 or 3 or 12 of our games, you can do it throughout the day, and there's a real sharing factor with your friends and family.

The other thing I'll say about our games is I talked earlier about our content engines having journalistic rigor everywhere. They're just really well made. We've been able to attract game makers who work at a very high standard. And I think that everything from the sort of what are the clues in Connections to how does that experience, how elegant is that visual experience, it all really works.

As you noted, 12 games on the app right now. I think half are paywalled.

I think 5 are free, so it's a little more than half now.

Okay. And then can you just discuss a bit the strategy of sort of turning free users into pay users and then obviously, how you balance conversion to paid with the benefit of obviously having that free traffic, right?

Yes. I mean the short answer is we need some megaphones. Wordle is a great megaphone, like we have these extraordinary games, tens of millions of people play. And then you need some things that are kind of sufficient gravity that lots and lots of people will also pay because it's so worthwhile in their lives. And I don't have more to say than we're always kind of calibrating with a lot of sophisticated data science about what's the right balance between those things. And it's always a balance, meaning you're always going to want to have enough out there that people can sample at real scale and stuff that's worth paying for.

By the way, I did like on Ben Thompson's podcast where he asked you if Wordle was the best media deal of all time.

Yes. It was a great deal. I'll just say that. We're so happy to own it. And I just want to give credit where credit is due. After we acquired Wordle, our team made all these other incredible games: Connections, Strands, the Midi; these were born Pips, Crossplay, these were born after Wordle. And everybody should play Crossplay if they're not; grab a friend and play Crossplay.

Okay. I want to touch upon The Athletic. So I think historically or when you did the deal, fans tended to think of it as a destination for deep sports journalism. I open the app today. There's highlights, there's scores, vertical video. Kind of just speak to the evolving strategy.

Yes. I mean the short answer is, at real scale, we are uniquely good and have been uniquely good at a particular thing in serving the sports fans, which is high-quality independent sports journalism about the team you love and the league that you follow. We are awesome at that, and we do it at a breadth and scale. Nobody else does it. What we're aiming to do, and you mentioned highlights, you mentioned even sports games, we have Sports Connections now, which really works. What we're aiming to do is meet more of the sports fans' needs.

That is, we're really good at meeting that need, but we think there are other needs we can meet, including helping you have a companion in the live game moment, including helping you test your sports knowledge as you do with games, and a number of other things. And highlights are a great example of that. There are some aspects of our journalism where showing it to you is just as important as describing it to you.

Great. Maybe just as a follow-on, I think it's sometimes forgotten the depth of soccer coverage on The Athletic. Just interested how you're leveraging that opportunity given the World Cup going to happen.

We are very excited about the World Cup. I'll be really short here and just say there are 150 professionals in The Athletic newsroom who just cover soccer in Europe and in the United States. We are highly prepared. We are very excited about this. There's a ton of reader interest and there's a ton of marketer interest and watch what we do with all of it.

So The Athletic and Wordle were both acquired, I think, in January 2022. Wirecutter was several years before that. But I think in those 3 instances, you used M&A to effectively build out your lifestyle brands. So question is, The Times is sitting on over $1 billion of cash or equivalents. So no shortage of kind of capital to execute on deals. Do you see anything in the media landscape as an opportunity today?

Let me do the sort of broad reminder of our approach generally to capital allocation. Our first priority, and you've seen us do this, video is a big, way we're doing this now, is to invest into our strategy organically, and that's why we're talking so much about video. It's a big part of the opportunity. Of course, we've got a capital return target, more than 50% of our free cash flow back to investors in the form of dividends and buybacks.

And yes, we are always open to M&A. But what I'll say there is the bar is really high. I mean we've got a really clear strategy and the bar is high financially in terms of what the return would be, and the bar is very high in terms of fitting into our essential subscription strategy in a very clear way. The Athletic did that brilliantly. Wordle did that brilliantly. Wirecutter does that brilliantly.

Okay. I think that's a good place to end it. Thank you, Meredith.

Great. What a pleasure to be here. Thank you.

Good morning, and welcome to The New York Times Company's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Anthony DiClemente, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to The New York Times Company's First Quarter 2026 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 we will be making forward-looking statements, including about our business, strategy and performance based on our current expectations. Our actual results could differ materially due to a number of risks and uncertainties described in the company's 10-K and subsequent SEC filings. We will also be referencing non-GAAP financial measures for which there are reconciliations to GAAP measures in our earnings release at investors.nytco.com. And with that, I will turn the call over to Meredith.

Thanks, Anthony, and good morning, everyone. Q1 was another great quarter for The Times. We continue to see strong demand for the uncompromised journalism and premium lifestyle content that The Times is uniquely capable of delivering. We're able to meet that demand despite operating in a media environment dominated by a small number of tech companies whose moves continue to impact traffic to publishers. The Times isn't immune to that impact, but we also see real opportunity. We have a clear strategy and enduring advantages that we believe position us well for long-term growth.

Let me remind you of those advantages. First, we've deliberately chosen to operate in big spaces with lots of running room ahead. Independent news coverage is a universal need and our lifestyle products each address large global markets. Today, we reached many tens of millions of people every week across our portfolio, and we see the opportunity to directly and deeply engage many tens of millions more.

Second, we've built an unparalleled engine for creating original reporting and high-quality content in a rigorous journalistic way, doing reporting like this at scale and across a broad range of topics, essential to people's lives is hard as others do less of it, The Times continues to invest, which makes our news coverage and our lifestyle products increasingly rare and increasingly valuable.

The Pulitzers awarded earlier this week were another indication of that value and saw The Times honored in multiple categories, including investigative reporting, breaking news photography and opinion writing, a deeply reported podcast from The Athletic network was also honored for the first time.

Third, we know how to harness technology to continually improve how we reach and engage audiences through innovations in our formats, features, product experiences and proprietary data sets.

Finally, we're able to monetize consistently high audience engagement through our multi-revenue stream model, which positions The Times for healthy long-term growth.

We believe these four advantages are durable one, and we're confident they will enable us to continue building a larger and a more profitable company for many years to come.

Now let me share a few highlights from the quarter. Digital subscription revenues grew 16%, and we added 310,000 net new digital subscribers, that brings our total subscriber base to over 13 million and puts us further down the path to our next milestone of 15 million and beyond. Subscriber growth in the quarter was driven by multiple products across our portfolio.

Digital advertising grew 32% in the quarter. This performance exceeded our expectations and was the result of a clear strategy, capable execution, strong marketer demand and high engagement across the portfolio. Affiliate, licensing and other revenues also grew in the quarter.

Finally, we stayed disciplined on costs while making focused strategic investments into our journalism and product experiences, including video, which we expect to underpin our long-term success and strong market position.

Before I wrap, I'll note that we've made progress against all of our priorities year-to-date. We continue to cover the world's most important stories from every angle. Journalists around the globe reported on the Iran war and its fallout unpacking the military strategies along the Strait of Hormuz, the political calculations in Washington, Tehran and Jerusalem and the economic implications for Americans. We brought people aboard the inspirational voyage of Artemis II with interactive graphics and video. And we published the results of a 5-year investigation into misconduct by civil rights icon Cesar Chavez, the kind of patient public-minded work that few can do like The Times.

We presented our journalism and lifestyle products in an increasing array of formats, especially video, where we see an opportunity to better engage current audiences and bring millions of new people into The Times orbit. Our signature reporting now regularly comes to life in reporter videos from John Kerry's journey to unmask the Bitcoin creator, to Climate Reporter, Raymond Zhong's 2-month expedition to Antarctic.

We're continuing to scale output here and more than doubled production of reporter video in the first quarter. We also continue to drive real impact with our trademark visual investigations, which in the first quarter, examined the U.S.'s role in the bombing of an elementary school in Southern Iran.

We also added value in every part of our portfolio in the form of new and expanded shows, features, coverage and more. In Q1, we officially launched our first multiplayer game called Crossplay.

We added a regular Sunday edition of The Daily focused on culture and debuted a new true crime podcast from Serial. The Athletic released the latest addition of authoritative NFL draft guide, The Beast. And just last week, we convened an illustrious group of music industry leaders to name the 30 Greatest Living American Songwriters in a multimedia package that included a rare interview with Taylor Swift, among others.

Continuing to execute against these priorities is how we plan to get millions more people to have direct relationships and daily habits with The New York Times. And as we do that, we expect 2026 to be another year of revenue growth, AOP growth, margin expansion and strong free cash flow. And with that, I'll turn it over to Will.

Thanks, Meredith, and good morning, everyone. As Meredith described, our first quarter was a strong start to 2026. Year-over-year, consolidated revenues grew 12%, AOP grew by approximately 27% and AOP margin expanded by 200 basis points. We saw healthy increases across our multiple revenue streams and continue to make disciplined investments aimed at further differentiating our high-quality journalism and digital products.

Now I'll discuss the first quarter's key results, followed by our financial outlook for the second quarter of 2026. Please note that all comparisons are to the prior year period unless otherwise specified. I'll start with a discussion of subscription revenues.

Digital-only subscription revenues grew approximately 16% to $389 million. We added 310,000 net new digital-only subscribers in the quarter and digital-only ARPU grew 2.4%. Total subscription revenues grew 11.3% to approximately $517 million, which was above the guidance range we provided for the quarter. We're focused on healthy long-term growth of our digital subscription revenues, and that is a function of both our overall digital subscriber base and ARPU. While subscriber net adds and ARPU can fluctuate in any given quarter for a variety of reasons, including subscriber mix and product pricing, we remain confident in the health of our subscription revenue drivers. We are adding significant value to our products and engagement remains strong across the portfolio. We continue to be pleased with the performance of our news-centered bundle as well as with performance at our pricing step-up points.

Now turning to advertising. Total advertising revenues for the quarter were $127 million, an increase of approximately 17%, which beat our expectations. Digital advertising revenues also came in above the guidance range we provided increasing approximately 32% to $93 million. The growth in digital advertising was due mainly to strong marketer demand and growth in advertising supply. Affiliate licensing and other revenues increased approximately 8% in the quarter to $68.5 million, primarily as a result of higher licensing revenues. This was in line with our guidance.

Adjusted operating costs grew 9.4%, largely as a result of higher compensation and benefits expenses, which included investments in our video journalism. Growth in sales and marketing costs included both marketing expenses and higher costs associated with our advertising revenues.

As I mentioned at the top, AOP grew 27% in the quarter to approximately $118 million and AOP margin expanded 200 basis points to 16.6%. Adjusted diluted EPS increased $0.20 to $0.61.

I'll note that our effective tax rate in Q1 benefited from stock awards that settled in the quarter. Going forward, we expect an annual effective tax rate between 25% and 26% with some variability around the quarterly rate.

I'll now look ahead to Q2. Digital-only subscription revenues are expected to increase 14% to 17% and total subscription revenues are expected to increase 10% to 12%. Digital advertising revenues are expected to increase high teens and total advertising revenues are expected to increase high single digits. Affiliate licensing and other revenues are expected to increase low single digits.

Adjusted operating costs are expected to increase 8% to 9%. We intend to continue operating efficiently while making disciplined investments in our high-quality journalism and digital product experiences that add value for our audiences and help reinforce and expand our competitive advantages.

As we've discussed, video in particular, remains an important area of strategic investment being reflected in our results and in our guidance. We are confident in our ability to generate strong returns over the long term as we grow the amount and impact of video journalism in news and across the portfolio.

Our business continues to generate strong free cash flow. In the last 12 months, we generated $542 million of free cash flow enabled by robust AOP and our capital-efficient model.

I'll note that the One Big Beautiful Bill Act resulted in lower cash tax payments of $65 million for fiscal 2025 and that the sale of some excess land at our printing plant generated $33 million of cash in Q1 of 2025.

Looking to full year 2026, we expect to benefit from the tax bill of approximately $60 million to operating cash flow. We do not expect the majority of this cash flow benefit to recur beyond fiscal 2026.

In summary, our strategy continues to work as designed. Our strategic priorities are all aimed at building a larger and more engaged audience over time, growing our subscriber base and powering our multiple revenue streams. We continue to expect 2026 to be another year of healthy growth in revenues and AOP, margin expansion and strong free cash flow generation. We also remain on the path to achieving our midterm targets for subscribers, AOP growth and capital returns. With that, we're happy to take your questions.

[Operator Instructions] The first question comes from Benjamin Soff with Deutsche Bank.

I wanted to first ask about the digital subscription revenue. It came in really strong this quarter. And I was hoping you could unpack some of the main drivers of that performance. And in particular, could you discuss how the bundle category performed given the change in disclosure? And then I have a follow-up.

So I'm happy to take that. Yes. We're very pleased with the performance in the quarter for digital subscription revenue. As we know, looking to Q2 as well, we provide quarterly guidance on that line. And what we're doing there is we've talked about in that over the long term is focusing on the function of both our subscriber base and our ARPU.

So the subscription growth in the quarter in any given quarter can fluctuate for a variety of reasons, subscriber mix, product pricing, so we're pleased with that result. And looking forward, you see the guide of 14% to 17%.

So now as it relates to that sort of the drivers there, ARPU was driven specifically by subscribers transitioning from promotional to higher prices and the impact of some price increases. I mentioned that a bundled price increase on the last call. All of this is part of an ongoing approach to pricing designed to address the whole demand curve based on how much value people are getting from the products.

And so I think the key thing there is multiple products across the portfolio as we add significant value to our products, we're continuing to see really strong audience and subscriber engagement, and we were really pleased in the quarter with the performance at our pricing step-up points.

Got it. And then on the ad business, one of the drivers of digital ad growth going back to last year has been introducing new supply on the platform. It looks like you're continuing to get good results from that. Can you share how you're thinking about balancing revenue growth with increasing ad load? And are you still adding new ad inventory to spaces that don't have ads today? Or is the incremental new supply coming from growing ad load on the platform?

Yes. I'll take that one. It's a great question. I'll just say it was a great quarter in advertising and the underlying drivers of the business feel really strong. I'm as optimistic as I've been about our ad business and that the real -- the biggest driver is we are in big spaces where there's real marketer demand, and we have big and engaged audiences in those spaces.

To your point, I'll note that last year, we really benefited from an increase in supply, particularly in the second half of the year and particularly in games and sports and that continued into Q1. This year, we will keep adding supply. We'll do it more incrementally and we'll do it across the portfolio. And it's also worth saying our ad products really work for marketers. We've got these kind of big beautiful canvases where you asked about ad load. We're very deliberate about how many of them we put on each page because it's really meant to be a consumer-first experience. That's kind of the magic of the model. That's why the ads work so well. And we've got very powerful data now that we've been building for years to help marketers target those ads. So they perform and marketers come back.

The next question comes from David Karnovsky with JPMorgan.

Maybe a follow-up on digital ads. Meredith, your results have consistently kind of exceeded your outlook on what looks to be an accelerated pace. And I'm curious, when you look back and you see the outcome relative to your forecast, I'm curious what's generally been driving that better-than-expected kind of digital advertising result relative to what you had forecast. Like where is that kind of incremental demand coming from?

Yes. It's a good question. I'll say a few things. They won't be a ton different from what I just said. But I do think now that the sort of structural advantage we've built in advertising is that we play in side spaces that marketers want to be in. And even within news, our news product is a really broad product with a lot of different kinds of journalism and there's a lot for marketers there. And obviously, sports and games are big. And cookie and wirecutter are really compelling for marketers. So that's kind of the big underlying driver is big spaces, lots of audience engagement in those spaces, really powerful ad products relative to, I think, what another publisher might be able to do because we have so much first-party data. All of that is working.

I'll add two more things, which is -- we've been in the ad business a very long time. The marketers who already run with us, who've been with us for years, there's opportunity to do more with them because we're in so many spaces, and we're on multiple different kinds of platforms, multiple different kinds of ad products so we can get sort of more share of wallet from marketers.

And then I'll add that, particularly because of games and sports and recipes and shopping advice. We can just bring in more different kinds of marketers, and that's -- we're really sort of evolving the ad business to be able to do that.

The last thing I'll say because you're pushing on our sort of prediction ability. I've been around our ad business for a very long time, it remains harder to predict than the subscription business, I think, for obvious reasons. But we're kind of broadly optimistic about it.

Maybe just kicking on this topic. When you look at the news flow in March, very much dominated by the Iran conflict, I think historically, investors would kind of look at that and say, "Oh, this content is a negative for advertising." But I'm curious, is that kind of still the right way to look at it that, that type of content is a challenge for marketers to put their brand next to?

I'll say two things about that. We really benefit now from having this wide portfolio of products with a lot of audience engagement in each of those products. So there are lots of places for a marketer to be. And we did this kind of step function increase in supply in the second half of last year in sports and games and you're seeing us continue to benefit from that now.

I'm going to say about news, though, which remains kind of our -- by far, the most important thing we do in terms of value creation and really important for marketers. News is a big word with a lot of meaning and it's not just -- we're in politics. We're super proud of the coverage we've been able to do on the War in Iran. I called it out in my prepared remarks.

But within our news report, we -- I mentioned the 30 greatest living songwriters in America, and we -- if I think about our is just the sort of the work we do in science-backed, health and wellness or culture more broadly, that there are so many other topics and places we have incredible style coverage. There are so many places for a marketer to be associated with The Times, do work with The Times, but they go beyond kind of some of the things that are less desirable in terms of places for a marketer to be. We really benefit from that.

The next question comes from David Plaus with Bank of America.

Just on the video initiative, which is clearly, a big focus and investment area. Is there anything you can share around early engagement metrics? Is there a certain type of content that's generating outsized viewership or certain venues on or off platform? And how should we think about the strategy and timeline of monetization there?

Yes. I'm happy to take that. It's a great question. Listen, the most important thing to say is we see video as a big long-term opportunity for The Times. And what we're really aiming for here is to establish The Times as a preferred brand for watching news and the other things we do in addition to reading and listening.

And to your point, our efforts here are really meant to grow and deepen engagement with the audience we already have and also to reach net new audiences.

As I said in my prepared remarks, Q1 was a period where we saw a lot of increase to production and that is a big focus right now. We more than doubled the production of reporter video. We've ramped up video news clips, I mentioned visual investigations, which are really different at The Times and have a lot of impact.

And then I'd say we have a lot of momentum around our shows portfolio. So shows covering the biggest ideas and politics on both sides of the isle, culture, AI. We've got an interview show with very newsworthy figures. You've got a show in shopping. We have sports highlights now. And a lot of that is getting real traction.

You asked about engagement specifically. I would say we've seen really great engagement with video. It is early. That's the most important thing I could say. It is early here, but we've seen great engagement on our site and our apps and that includes our live coverage includes the homepage. And you'll remember, we launched a watch tab in our app sort of across the destinations, we're seeing real engagement from it.

But it's early days. I think you asked about monetization. You can regard us as sort of thinking about this as a three-step strategy first, increase production. We've got a lot of inherent advantage there because we've got reporters sort of everywhere are poised to go where the story does, and we're adding a video capability layer to that, but we're in a phase of really scaling production.

As we do that. We are also building engagement, audience where we have and net new audience. And I think The Times has a very good track record of as we scale engagement monetizing in all the ways we monetize advertising. Ultimately, it makes the subscription more valuable and potentially even licensing. So the monetization sort of follows production and engagement, and we like -- it's early, but we like where we are.

The next question comes from Kutgun Maral with Evercore ISI.

I wanted to ask about AI licensing. And now that we're approaching the roughly 1-year mark with the Amazon deal, I was wondering if you could expand on how that relationship has progressed and whether your experience with that agreement has impacted your broader philosophy with AI platforms? And how should we think about the opportunity for maybe multiple AI licensing partnerships as we move forward? And maybe if there's any color you could provide on how those conversations are progressing, that would be helpful.

Yes. I'll take that one. I think we've sort of said all along. We are open to doing deals that sort of meet our conditions, which are -- is a deal or a partnership here consistent with our long-term strategy? Does it ensure sustainable fair value exchange. And do we have control over how our content is used.

And I would say we've done a partnership with Amazon because it met those conditions. And so far so good when we're learning a lot there. And I would just say, like broadly, The Times has a good track record of doing deals when the terms are right.

We also continue to believe that enforcing our rights is really important to ensuring sustainable fair value exchange over the long term. And ultimately, we believe we make journalism that is increasingly rare and increasingly valuable at real scale, and that's going to be valuable to everyone. The consumers and the LLMs, who need high-quality work, powering their systems.

The next question comes from Cameron Mansson-Perrone with Morgan Stanley.

Congrats on the Pulitzer recognition. I have two high-level ones on the video initiative. First, Meredith, you've talked in the past about capturing viewership from linear TV news declines. I'm wondering if you see that as a natural more proactive consumer shift as folks leave that ecosystem? Or what you think you need to do to attract that viewership to digital news and to The Times specifically? And then I have one more.

Yes. It's a great question, and thanks on the Pulitzers. Listen, we want to win the moment when something big is happening in the world and people are looking for where do we get the high-quality information on what's happening here, what facts are what this means, we want to win that moment. And we are endeavoring to do that in every way we possibly can. Ideally, at our destinations, but in general, that's the aim.

The thing that I think we have really -- that you can now see if you are someone who uses our apps or goes to our site is we can just show you more of the news than we've been in a position to do in a really long time. And the -- we do that with many more news clips than we've previously used. But the real unlock, I think, so far, has been reporter video where you've got somebody who goes out and report deeply on the story, just to give an example of this, David Sanger, who is an expert on geopolitics who's been with us for 4 decades. We go to War in Iran and David Sanger reports very deeply on what he thinks the dynamics are between Washington, Jerusalem and Tehran. And then we shoot a short video where he describes that. And for the consumer, they may get all they need in that short video or it may prompt them to go and like read the long form piece.

But what we know that it does is it's trust building. You sort of see the guy, you see there's a human reporter, you understand the expertise he brings to it. So we think it's a really big opportunity.

As to where the viewer is now, for all that I said about cable and broadcast, it still commands big audiences, and we are very interested in being a preferred brand and preferred place for people to see and watch what's happening.

That's interesting. One follow-up on the short-form side, which is just -- I'd be curious for your thoughts on how you view YouTube as either a potential partner given its distribution scale, in terms of surfacing Times content or as a potential competitor as you continue to kind of get more active in the digital video space.

Yes. I'll say broadly, we endeavor to have the best possible experience you could have as a news reader, watcher, listener or consumer and in all the other spaces we play in on our own destinations.

And actually, the Songwriters project that we did, if you wanted to watch that Taylor Swift video, you came to us in the beginning to watch it. It will ultimately be other places, but you came to us to watch it. That said, I think we recognize, as we always do, in each sort of phase of technological change, we exist in an operating environment and an ecosystem that is shaped by other big players, YouTube as a very big player. And so it is a way for us to also build audience and awareness.

We're early here, and we're building audience and awareness for The Times as a preferred place with great stuff to come view. And that's particularly important as we have shows, long-form shows. That -- where we're early in building audience.

Great. Thanks so much, Cameron. Operator, let's take one last question, please.

And that question comes from Doug Arthur with Huber Research Partners.

Yes, last, hopefully not least. Meredith, I know you don't break out The Athletic anymore. Can you discuss the impact it had on the quarter in terms of digital advertising, sort of disentangling that from underlying core growth? Is there any way to do that?

Never least, Doug, and I will say we don't break it out, but I'm going to reiterate something I think I've said in multiple quarters, which is we are thrilled to be in sports. There's so much marketer interest in sports. And I think The Athletic is a real source of net new audience, and it can be a source of audience growth, and it's a very compelling product for advertisers. And we believe it will continue to be and has the opportunity to be an even more compelling product for advertisers over time.

I'll point to the fact that we just in the back half of last year added highlights from some of the leagues, including the NFL, and it's really early there. We're in the build engagement phase. But over time, we're very happy with The Athletic as an ad performer. And over time, we're optimistic it will continue to be a big part of the story.

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

Great. Thanks, everyone, for joining us on the call, and have a great day.

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

All right. We're going to get started here. Before we get started, I'm going to read these disclosures. For important disclosures, please see the Morgan Stanley Research Disclosure website morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

With that, I'm really excited to welcome Meredith Kopit Levien, President and CEO of The New York Times.

Thanks for having me. Nice to be here.

Thank you so much for coming back. I thought I'd just start out maybe just talking about 2026 at a higher level. You've capped off a -- by all accounts, very successful 2025, with healthy subscriber growth, revenue growth, margin expansion to boot. Where do you see the biggest opportunity to really continue evolving your essential subscription strategy? And then within that context, maybe just talk about how you're seeing the evolution of the TAM that you set out from a subscriber point of view and across your verticals and content genres?

Happy to talk about both of those things. Let me start by saying, I think successful execution of our essential subscription strategy is now powered a handful of advantages for the time that you're going to see continue to play out. The first one gets a little bit at your -- the second part of your question, which is, our news journalism broadly defined, and our lifestyle products are all in really big markets with a lot of running room left to penetrate. That's true in news, it's true in lifestyle, it's through domestically, it's true internationally. So that's the first advantage I think we've built our way into.

Secondly, we have had more than a decade now, a very deliberate and sustained investment into the quality of those products. I think you see that if you're following the news in the last 36, 48 hours in news journalism, but it is true across all of our products that I think are coverage engines are producing work that is just more rare and valuable and they're doing it at a time when others are retreating. So it makes -- kind of widens the gap it makes more need for it.

Third, we've got a really good track record now of consistent innovation in our formats to meet kind of users where they are with the kind of experience they're looking for and that has the potential to really drive engaged audience for the time.

And then lastly, our model now has multiple revenue streams based on that engagement with the potential to grow. So this year, what you're going to see us do is really lean into those advantages and capitalize on them even more. And we'll do that by continuing to sort of cover the world's most important stories in a differentiated way. We'll do that in more formats, especially video. Last year and this year, we've added consistently to each of our products, added value, new shows, games, new kinds of coverage. And we'll do all of that in service to getting more people to have a direct relationship and a daily habit with The Times.

And to your question about the sort of TAM for The Times, I think the most important thing to say is the audience for The Time, the total audience is much larger than the total subscriber base for The Times, and we've got lots of signal that the TAM is at least as large as we've previously said. We've got something now like 150 million user registrations and counting. We have 50 million to 100 million people who come to our sites and our apps, every week. We've got millions of people beyond our sites and apps who watch our shows and listen to our podcast, read our newsletters. And I just looked the other day, we have, I think, 120 million social followers and that number is growing.

And all of that just gives us a lot of confidence about that thing I said at the beginning, sort of further market -- a lot of room for further market penetration on the path to our next milestone of [ 15 million ] and beyond.

Got you. That's very helpful. I want to touch on all of that. But I think in particular, this evolving relationship that the consumer has with news, clearly, the news cycle is not letting up and that is an opportunity for you to add differentiated value. But I do think there's also a growing concern about distressed news, social media, AI concerns in terms of disruption, what capabilities does The New York Times have to have over the last 5 years to remain an indispensable source of information and value to the consumer?

Yes. Let me first say, we see persistent demand for our news report. It's true in big news moments like the one we're seeing now, but it's -- we see persistent demand for it, kind of no matter what. That's the first and most important thing to say. And we've got a strategy that has been designed to your point, to build resilience to all the things you're talking about, low trust, changing media habits, the platform is keeping more traffic to themselves. And that strategy has enabled us to have these products, including our world-class news coverage that are more rare and more valuable such that more people actually seek them out. They ask for them by name. They go directly to them in moments of real need. And we have a lot of confidence we'll be able to continue to do that. We've been in the business of building direct relationships and daily habits now for more than a decade.

You asked about capabilities. I will say there are some capabilities already built in to The Times. I pushed on this a little bit in your first question. But I'll say a little bit more that are going to power -- we believe will power our growth. From here, the first is, we've got now 3,000 people doing world-class news journalism and the other kinds of content we make who are -- that is an engine that can point to wherever the story goes, issues of profound geopolitical consequence like we're seeing right now or in things happening in your everyday life. And that capability is already there.

We've also got a product team and a track record of building destinations that are sort of worthy of coming to even when there are lots of alternative ways to get bits of the times here and there or get other kinds of information. And then the other sort of capability already built in that I think we don't talk about enough is our brand. We've got a world-class brand that's highly recognized and well known for quality and rigor certainly for what it does in journalism and a brand that's expanding, which I think we'll talk about.

As far as capabilities, to add, we've talked a lot about adding a layer of video to everything that I just described. And I think that helps us in a number of ways, including getting one of the things you poked on in your question, which is just making more people see our work as easily accessible for them and trustworthy. You can see a reporter sort of at the scene of an event. You saw some of this in our coverage yesterday and today so far or with expertise to talk about that, you're more likely to trust them.

Got you. Before I get to the video journalism piece of this, I did want to ask about that brand in terms of the fact that increasingly, it does seem like you're able to grab subscribers through a number of different funnels, the bundle first and foremost, but also some of these non-news products like games or cooking, does that change the brand identity of New York Times over time? And how does that change maybe your go-to-market approach?

Yes, I would say we've got this very deliberate approach. We think about our brand a lot. We've got this parent brand, The New York Times, which has like universal awareness and a lot of understanding, although more opportunity for people to understand what it is. And then we've spent the last decade building a product experience that is about meaning even more the news to more people and more parts of their lives. And I would say those 2 ideas work release symbiotically.

If you think about The Times brand, it really imbues everything else we do with an expectation of quality and rigor and authority, and my favorite example of that is games. People play our games because our games are great, but I think our games have become the cultural sensations. They are in part because they're associated with this brand that's all about making you smarter every day. And it's those 2 things together that are really powerful.

And then on the flip side, you may not think The New York Times is for you, but if you cook your family dinner every night or you love the NFL, we've got thousands -- many, many thousands of recipes, and we've got like 70 people covering the NFL and ultimately, if we make a relationship with you from that, we've got a better chance of having a relationship with you for the whole. And by the way, if we don't, you're still really valuable to us.

Great. Look, can you talk a little bit about that in terms of the ways that you might present organically opportunities for the consumer to move down the funnel, if they are coming from one channel, how you introduce them to the broader value proposition that might be?

Or even sort of within a channel. So let me say the first thing to think about there is we've got a really big top of the funnel. Just take those 150 million registered users. Our job is to call those people to action so they engage more and ultimately, hopefully, they convert, they pay, they stay, they pay more over time. And we have a lot of levers to do that.

I'll give you a few examples of how we do it. In games, just over the last, I think, 2 years, you now have to register if you want to have your stats and streaks, you have to register to get a badge. So if you solve [indiscernible], you get a badge, if you want to share your experience in certain ways with friends, you've got to be a registered user. And you've got to think we're adding value all the time to our products. This is true for games, it's true for all of our products. So there are more reasons to get people to register and then to get them to come back.

The other thing I'll say is our sort of data science capabilities to target and communicate with people to call them back across the whole portfolio gets better and better. In news, that also applies. One of the things we're very focused on now is getting more people who are not already subscribers. I'd call this kind of middle funnel work to download and use our apps. Right now, our apps or news apps at core flagship. Time's app is primarily used by subscribers, but we've got all these features where you're compelled to register because your today feed is more personalized and you've got a new feed where you can save things, and we even have features, journalistic features that are designed for a registered user to get more value out of them, like our 100 Best List In Culture. So we are already using levers to kind of get reengagement, and I think we have a whole lot more in front of us.

Got you. So talk about that top of funnel health then because I think last year, one of the big considerations that you were really focused on was navigating some of the changing relationships you have with big tech, and that was a headwind to traffic at a broader level. I think a lot of the initiatives you've been embarking on have helped stimulate engagement across these different channels within the existing user base. What else have you been able to do to increase the aggregate size of your audience in terms of just keeping that top of funnel healthy?

Yes. It's a great question. And I will say again, we see persistent demand for kind of everything we do and so much of our strategy for a decade now has been about making us less and less reliant on the intermediaries. And I think we've really made some progress to that. And 2 things are true at the same time. We've got the big tech platforms, including the AI companies who've used our work with -- in unlawful ways, keeping more audience to themselves, and you've seen us build resilience in the ways that we're describing.

And I would say we have a lot of confidence in our ability to compel more engagement for our work. If you -- if I go back to the priorities that I talked about, continuing to do extraordinary coverage on a wider and wider set of issues, that plays a role in it. Doing that in more formats and particularly video is a way to bring new audiences in our video tab in the core app is a place where you can experience the whole of The Times is for free, and we're also taking that video. We produce so much more video and we can make it available now in places like TikTok and Instagram and YouTube, which ultimately are building awareness and the top of the funnel, part of building top of the funnel for The Times. So keep being great at the coverage, do it in more formats.

I talked before about adding value to each one of our products. We're doing that in a very deliberate way to stimulate engagement for the people we already have, but also to drive new audience to us. We just launched a game called [indiscernible] first multiplayer game, deliberately multiplayer game, that's really intended to get at new people who may not otherwise play our games.

Within cooking. We launched a show on YouTube called The Pizza Interview, which brings celebrities into our test kitchen and the device as they talk about their latest thing while making a pizza with our chefs.

And the point of all that, I could give you lots and lots of other examples, is that new value brings new people into the ecosystem, and we have a lot of confidence we can continue to do that.

Got you. One particular area that it does seem like at least totally, you really are increasingly focused on is the video initiative. So I wanted to get your thoughts just broadly about how you think about the opportunity here, the size of this initiative in terms of how it gets you excited and how much do you think this could be as an investment opportunity, a growth opportunity relative to, say, like audio historically or podcasting? Like what -- how should we think about what you're seeing here is the opportunity?

Yes. Look, we think video is a really big -- has the potential to be a really big long-term opportunity to grow the engaged audience for The Times. It's hard stop. We're incredibly excited about it for that reason. And the aim, the way we talk about it inside The Times, is our aim is for The Times to be as preferred brand for watching the news and all the other things we do as we are for reading and listening. So our ambitions are big, and they're long-term gear.

In terms of how to think about the opportunity, we know that many, many people now, the number of people who get their news and information in the other spaces we play in from video, particularly from the video platforms or from TB, it's enormous. So we see ourselves as pushing our work into an even bigger markets.

And then in terms of how to think about kind of the opportunity, there are some things that are analogous to audio. I'm going to name the one that I think about all the time. If you listen to The Daily, The Daily has been around now for like close to a decade, I think maybe even a full decade. Originally, everybody thought the magic of it. It's a very, very successful show and people love the magic of it with the host or the format. In reality, the magic of The Daily was that every single day, we could plumb this huge newsroom with people all over the world. We made an emergency episode yesterday with David Sanger and Mark Mazzetti who are both experts on what is happening in the Middle East, we can plumb this giant newsroom.

And I think -- and a lot of that, by the way, is a capability that's already there. And you should regard that there's an analogy there to what we're trying to do in video. And then I'll just say it's early days in terms of impact to audience, but we really like what we see so far in engagement with the video tab in our core app, even just watch this Iran story. I'm saying watch it. So much of the engagement with the journalism now is seeing things on the top of the home page now for much of the day yesterday. It was a series of photos and videos. So we're pleased with what we see so far. It's early, but we like it and the opportunity to take our work and put it off platform where we can build even more audience scale for it feels really exciting.

Do you see this taking a greater form where you get closer to something akin to what you might see on cable news now? Or is it still in a different direction where you're showing your work and leveraging video to really display the core investigative journalism?

Yes. We've been really careful to say we're not looking to sort of replicate something that's already out there. I think we all know the cable news does a lot of great things, and we also see the direction of travel. There is enormous opportunity and digital video to get a huge audience, and that's really where we're focused. And I do think last year, we did 2 things that were really foundational for The Times. You'll see more and more of it, but they're both worth naming. One, we arrived at these kind of scalable formats. You saw -- you see a lot of it today actually in covering what's happening in the Middle East. But what are those scalable formats, reporter on camera video, one; two, just we have journalists everywhere. They can now show you some of what's happening and you're getting tech server video just to take you to the place.

And then we've also now got a real track record of launching shows, long-form shows, that are really touching culture. So I think that The Ezra Klein Show is one of our most successful shows in terms of audience growth. It is a big show that explores some of the biggest ideas on the political left. And we launched a show, I think, a year ago now called Interesting Times with Ross Douthat, which is exploring the biggest ideas on political rights, and that is a fast-growing show. So we're sort of able to do all of it. And the more that we can produce, the more we -- even long form in whatever form the journalism should take, we can also kind of chop that up and put it where the consumer is in a way that ultimately we believe will make them want more from The New York Times.

Okay. Makes sense. I want to circle back to that relationship with big tech and AI in particular. Last year, you signed an Amazon deal, which I think was your first really real foray into allowing someone to train on your content. And beyond the licensing revenue that you're getting it seemed like there was an angle that supported the opportunity to expand your reach in some ways as well. Maybe just talk about what you're hoping to see there and the evolution of these potential commercial [indiscernible] and whether or not it makes sense to [indiscernible]?

Yes. We like the Amazon partnership for a lot of reasons. It's very early, so I can't be specific about anything related to audience. But what I will say is part of the opportunity in addition to the licensing is to be able to put our work in front of audiences and in ways we might not otherwise reach. So 2 examples of that are The Times appearing on Alexa devices or in Alexa Plus in ways where we might not otherwise. And I would say kind of broadly our area [indiscernible] in working with any of these big tech partner has to follow 3 principles. Is there a sustainable fair value exchange? Do we have control over our work? And ultimately, is this good for our long-term strategy at the time, which is about building engaged audiences for our work and direct relationships in daily habits?

Okay. Great. Last year, you also rolled out a family plan. We did, and it seems like it's gaining traction. I believe reported it's 3% of your digital subscriber base, roughly. Can you just maybe share any early learnings from that launch? And how should we think about the opportunity that you're trying to target here, whether there might be any evidence of cannibalization of existing subscribers that you might be switching into an add-on as opposed to a discrete?

Yes. Look, we were excited about the family plan before it launched. We like everything we've seen since we launched it. It's good. It's good. I'll say The Times is always a sort of inherently shareable experience. Think about people passing sections of the Sunday paper. This is that idea but it did much, much greater scale at real digital scale.

And family plan is good for at least 3 things. One goes to your question about cannibalization. One, it's good for market penetration. So we are bringing -- you've got a subscriber to The Times bringing in more subscribers to The Times, that's very good. And particularly as you think about families, in some cases, bringing the next generation in. So it's good for that, too. It's good for revenue. The person who buys the family plan is paying a premium to have that plan. So it's ultimately good for subscriber revenue. And so far, it looks like it will be good for retention.

I've long had this belief, and we believe in our products that it used to be if you used one more sort of desk or read from one more desk at the times, you were more likely to retain -- to sort of stay, stay longer pay more and then it was if you use more than one product, you're more likely. And now we really have a thesis that -- and if you do it with more of your friends and family, you're that much more likely to retain. so far, we like all of that.

Okay. Understood. Pricing in more general terms for the subscription product, as we think about how subscribers are coming through, whether it's on the bundle or some of these single product offerings, does this change your philosophy on how you might be structuring the relative value proposition that you're driving increased value potentially on a relative basis towards the bundle? How do we think about managing that dynamic?

I would say we've got a merchandising constructs that we've been at for a while now that's really working. We like it. We will continue to use it and that construct is aimed at our ultimate goal, which is healthy, long-term subscriber revenue growth. And it goes like this. We want to get as many people as we possibly can to buy our news entitled all access bundle. So as many people as we can, we want to do that. And we are also delighted to have every single product subscriber that we can possibly have. I'd regard it as all sort of working together, that kind of two-pronged approach working together to help us get at the whole of the demand curve, big markets, big demand curve to penetrate, the merchandising construct is allowing us to do both of those things. I think you're asking me, do we change? We're going to continue to do what we're doing here. Really working.

I do believe there's a broader sense that engagement is directly correlated with pricing power. So you've spoken, I think, historically about how healthy engagement trends are. Should we consider that as directionally correlated to your ability to graduate these subscribers as they move through their promotional pricing into higher tiers? And how would you say that, that rubric of when you trigger that graduation has changed?

Yes. Listen, to your original question, engagement is absolutely a leading indicator of willingness to pay in general and then willingness to pay more over time as you get more value. And I have a lot of confidence that we will continue to be able to graduate people to higher prices for 2 reasons. One, the products are just inherently all getting more valuable; and two, our ability to stimulate engagement in those products in a lot of the ways I talked about before, our capability there is getting better.

It's worth saying just because you asked about pricing, that there are 2 ways people pay -- come to pay higher prices. One is we step them through a kind of very deliberate move from promotional to interim and higher prices. That continues to go well, and we're -- that system has not really changed. We get better and better at it. And the other is we consider list price increases when it makes sense in terms of the value. We're delivering. You should expect us to continue to deploy pricing both of those pricing strategies.

Okay. Got you. All right. Shifting to advertising. That's been a real source of meaningful upside and acceleration within your digital business. Can you maybe just help unpack the volume element versus the pricing growth and engagement trends obviously potentially a supporting factor to it relative to maybe ad load, I guess, in terms of just previously unmonetized services, like what exactly is driving this incredible strength that we're seeing?

Yes. We had a great year. We're optimistic and excited about the ad business going forward as well. I'll break it down into 3 things. You're asking me about supply. What I'll say about ad supply, last year was a big year for new supply coming into games and sports in particular. This year, you're going to see us add supply incrementally in every part of the portfolio. So just as an example, Wirecutter towards the end of last year felt like an exciting place to add more ads. And then as far as medium- and long-term opportunities for advertising, video played a very minor role in our ad story last year, and we think over a long time horizon, that's going to be an important part of the ad story at The New York Times. So that's how I think of supply.

In terms of demand, we have more products so we can get more share of wallet from the marketers we already have, probably the most important thing is now that we have these big products that are building scale beyond news, we just appealed to a lot of different marketers. That's particularly transports, but it's true across the portfolio. The game sports, shopping. These are all big categories where marketers spend money.

And I would add, because the sort of amount of supply we have and the breadth of that supply, we can just go after a whole new swaths of the market that we did not have -- we were not staffed to go after what I'd call sort of small and mid-market companies, and we've just built a team sort of more better staff to do that. So optimistic on the demand side. And the last thing I'll say, I always say that our ads work, so the marketers come back, our targeting capabilities get better and better.

You mentioned sports advertising. Do you think that's been an area of incredible strength across the industry. Are you seeing evidence that towards coverage like specifically The Athletic is a beneficiary of that same trend that we're seeing on the video side with actual live sports? And how should we think about the Olympics that's been going on and the World Cup that's coming as potentially like levers to really drive continued monetization of [indiscernible]?

Yes. Short answer, Athletic was a really important part of the success story in advertising last year. We expect it to continue to be a really important part of it. I joked that -- I said in my [indiscernible], it is very fun, to be in sports marketers want to be around sports. We have a really high-quality product with really high-quality audience and high-quality engagement. And what I want to say is we believe we'll be in a position to keep growing that audience and engagement for the Athletic. That's a real focus. So we're excited about it. It's big sporting events, sure, definitely good. And the combination of big sporting events that the athletic covers in a very deep way. There's a little bit of coverage from the times on the kind of more general interest topics and The New York Times together is a really nice combination.

Okay. Got it. Before we run out of time, I did want to hit on expenses and investment areas. I think there's been an increased focus in recent quarters on a little bit of an acceleration in expense growth relative to historical levels at a company level. How much is that really related to new product innovation initiatives that we just talked about or maybe just can you provide more details on what kind of incremental investments and what they're going towards?

Yes. Well, we've talked a bit about video as an important part of the incremental investment. Let me make a step back point, which is to say nothing is changing in our broader approach to building a larger and more profitable New York Times company. And I think we've got a very good track record now of investing into areas of opportunity, particularly in journalism, particularly in product innovation and format innovation, I'd regard video as like that. It's a particularly big and good long-term opportunity to build audience, but we are going to go about that and we are going about it in a really disciplined way. And what you're seeing now is we're kind of adding a layer to scale production in video.

We are also very, very focused on building engaged audience for that video and have a track record of doing that well in all of our products and all of our formats. And when we do that, we believe we'll have an opportunity to monetize that. So we're going about all of this in a very disciplined way that aims to really build on the competitive advantage of The Times, but to do so in a way where revenue is growing faster than expenses.

What about on the marketing side? I think historically, that has been also a source of debate about the immediate effect you might be seeing from stimulating subscriber growth in the current quarter relative to maybe some of the longer-term effects of extending the lifetime subscriber value of an incoming subscriber whether that's related to brand building or consumer indication of the value, can you maybe just talk about how we should think about your need to continue educating the consumers about the enhanced value of your product as it continues to build?

Let me say, relative to marketing, the most important engine and relative -- the most important engine of demand of new subscriptions at The New York Times is what I would call product-driven growth. So the journalism and the product itself doing the work to drive the audience, the engagement, people to subscribe. Marketing, paid marketing remains a minority of how we drive people to start a subscription with The Times. A lot of the sort of focus and investment is on the journalism and the product to do it.

When we do spend money on paid marketing, the majority of that spend goes to returns -- very returns-driven direct marketing, and we kind of get better and better at that. And from time to time, we do put brand work into the market. You saw some of it at the end of the year. Last year, we had a campaign called It's Your World to Understand, which really was meant to drive [indiscernible] for The Times and also [indiscernible] of our offering. And that can sometimes make it look kind of lumpy quarter-to-quarter. But overall, the broad message is we are still heavily leaned into a product-driven approach to growth and marketing represents not the majority of how we drive that growth, brand or direct.

Okay. Makes sense. I think we're out of time. Any last thoughts you want to leave investors with?

I think it's an extraordinary time in the world, and I think the rare and valuable news coverage from the New York Times is sort of showing what it can do in a moment like this, but that is true across our portfolio. I think the products are getting more rare, more valuable and have the opportunity to be more distinctive to our audience.

Thank you so much, Meredith. I appreciate your time.

Good morning, and welcome to The New York Times Company Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Anthony DiClemente, Senior Vice President, Investor Relations. Please go ahead.

Thank you, and welcome to The New York Times Company's Fourth Quarter and Full Year 2025 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 2024 10-K and subsequent SEC filings.

In addition, our presentation will include non-GAAP financial measures and will 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 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. 2025 was a great year for The New York Times, thanks to strong execution against a clear long-term strategy. We added 1.4 million net new digital subscribers, bringing total subscribers to

[Technical Difficulty]

My apologies, it seems we've lost connection with our speakers. Please hold while we reconnect.

Ladies and gentlemen, thank you for your presentation. We've joined by the speakers back in.

Okay. We're going to try that again. With that, Meredith, go ahead.

All right. Thanks, Anthony, and good morning again, everyone. 2025 was a great year for The New York Times, thanks to strong execution against a clear long-term strategy. We added 1.4 million net new digital subscribers, bringing total subscribers to 12.8 million. This puts us further down the path to our next milestone of 15 million subscribers and beyond. Engagement across the portfolio was strong, which contributed to significant growth in digital advertising. We generated more than $2 billion in total digital revenues for the first time. We also grew adjusted operating profit more than 20% and expanded margin to 19.5%.

Our fourth quarter results were a fitting capstone to the year and reflect contributions from every part of our portfolio. We added 450,000 net new digital subscribers in the quarter and digital subscription revenues grew 14%. Advertising beat our expectations with digital advertising up 25% and total advertising increasing 16%.

Licensing, affiliate and other revenues also grew. We delivered this growth by engaging and monetizing audiences across multiple products and revenue streams, which is a clear example of our strategy in action. AOP grew and margins expanded in the quarter even as we continue to invest into our world-class journalism and premium product experience.

Let me spend a few minutes putting these results in a broader strategic context as we begin the new year. The information ecosystem is changing rapidly and the challenges media companies face remain steep. We're operating in a polarized low-trust environment shaped by a few powerful platforms whose actions create headwinds for publishers. We believe that The Times is well positioned to navigate these trends given the differentiated value we have developed based on years of strategic investment. There are even bigger opportunities ahead, and we are confident that we can pursue them ambitiously and profitably, thanks to the durability of our essential subscription strategy and a handful of unique advantages. Let me name them.

First, our world-class news coverage and each of our lifestyle products addresses a big global market. Hundreds of millions of people around the world engage with news, sports, games, recipes and shopping recommendations in their daily lives. We already reach many tens of millions of them every week across our portfolio and see the opportunity to engage directly and deeply with many millions more than we do today.

Second, we've built a unique engine for creating original independent journalism and high-quality content at scale. Our core New York Times newsroom is one of the few that can go wherever the story does and reported from on the ground in more than 150 countries in every U.S. state last year. The Athletic is the world's largest sports journalism operation. Our in-house Games team has a track record of producing original puzzles that are cultural sensations and played by millions.

Cooking has more than 25,000 vetted recipes and a growing video catalog that gets people excited for their next meal. And Wirecutter experts rigorously review thousands of consumer products every year. Providing independent human-made journalism and lifestyle products that resonate with huge audiences around the world is not easy. While others have been doing less of it, we continue to thoughtfully invest, making what we do more rare and more valuable to more people.

Third, we are constantly innovating to express our journalism and content in all the ways and formats that audiences want to consume it. We're using AI to make our reporting more accessible, and we're rapidly growing our offering in video, which represents a major new audience opportunity for us. As linear TV continues to decline and viewing habits shift even more to digital platforms, we see a long-term opportunity to establish The Times as a preferred brand for watching news in addition to reading and listening.

Finally, we've developed multiple digital revenue streams to monetize consistently high engagement. We're confident that our product portfolio will continue to fuel strong digital subscription revenue growth, and that digital advertising and our other digital revenue streams are positioned for healthy growth as well.

We plan to further capitalize on these advantages in 2026 in a few ways. We'll keep covering the most important stories with independence and rigor. We'll do that in more formats and places, especially with video. We'll add even more value in every part of our portfolio through new shows, coverage areas, games and product features, and we'll thoughtfully navigate the changing technological landscape to make The Times even more valuable to more people.

Executing well against these priorities is how we plan to get millions more people to have direct relationships and daily habits with The New York Times. And as we do that, we expect 2026 to be another year of subscriber growth, revenue growth, AOP growth, margin expansion and strong free cash flow.

I'll close by reflecting briefly on history. 2026 is a year of milestones, the 250th birthday of America and the 175th anniversary of the founding of The New York Times. Trustworthy independent journalism has been a crucial part of our country's success, and that's just as true today as it was in 1851. But it requires continued vigilance to ensure journalism can play its essential role in society, and it requires continued reinvention for a journalism business to succeed.

Over the course of nearly 2 centuries, The Times has experienced the advent of radio, broadcast TV, cable TV, the Internet, smartphones, social media and now AI. Local markets turned into national and then international ones. Daily habits accelerated into a need for near instantaneous information.

Amidst this relentless change, The Times has adapted, thrived and played a crucial civic role. Today, we anchor the daily habits of millions who rely on our journalism and lifestyle products, making us more essential to more people than ever before. This track record strengthens the conviction we have in our ability to continue to deliver on our mission and to build a larger and more valuable company as we do.

And with that, I'll hand it over to Will.

Thanks, Meredith, and good morning, everyone. In 2025, we delivered strong results, including another year of healthy revenue growth, AOP growth, margin expansion and strong free cash flow generation. As Meredith said, we continue to grow our subscriber base over the course of the year, adding 1.4 million digital subscribers. We also grew total digital-only ARPU and drove strong subscriber engagement. This led to an increase of approximately 14% in digital subscription revenues and helped power our multiple revenue streams, including digital advertising, which increased 20%.

We grew overall revenue in the full year by approximately 9% as increases in digital revenues were partially offset by ongoing declines in print. These healthy revenue results, coupled with our disciplined approach to costs throughout the year drove operating leverage.

AOP grew by approximately 21% year-over-year in 2025 to $550 million and AOP margin expanded by approximately 190 basis points to 19.5%. We delivered these results even as we continue to prioritize strategic investments aimed at further differentiating our high-quality journalism and digital products.

We generated approximately $551 million of free cash flow in 2025. That strong free cash flow generation primarily reflected our robust AOP and our capital-efficient model. We also benefited during the year from lower cash taxes due to the change in tax law for R&E expenditure deductions as well as from the net proceeds of the sale of excess land at our printing facility.

Over the course of the year, we returned approximately $275 million to shareholders. This included approximately $165 million in share repurchases and approximately $110 million in dividends. Today, we announced an increase in the quarterly dividend from $0.18 to $0.23, consistent with our capital allocation strategy. I'll note that as of year-end, we had $350 million remaining on our share repurchase authorization.

Now I'll discuss the fourth quarter's key results, followed by our financial outlook for the first quarter of 2026. Please note that all comparisons are to the prior year period unless otherwise specified. I'll start with our subscription revenues. We added approximately 450,000 net new digital subscribers in the quarter, bringing our total subscriber count to approximately 12.8 million. Subscriber growth came from multiple products across our portfolio. We also continue to be pleased with the rollout of our family plan subscription offering.

Total digital-only ARPU grew year-over-year to $9.72 as we stepped up subscribers from promotional to higher prices and raised prices on certain tenured subscribers. We continue to be encouraged by the results we're seeing at pricing step-up points, which we believe reflect the value we continue to add into our products. As a result, we remain confident in our ARPU trajectory.

I'll note here that following the fourth quarter of 2025, we plan to make a change to our subscriber disclosures. We will continue to report total digital-only subscribers and total digital-only ARPU. However, we will discontinue reporting digital-only subscribers and ARPU by the categories of bundle and multiproduct, news-only and other single product as well as the percentages represented by group corporate, group education and family subscriptions. We believe total digital-only subscribers and total digital-only ARPU will best align with how we manage the business for long-term growth.

With both higher digital subscribers and higher total digital-only ARPU in the fourth quarter, digital-only subscription revenues grew approximately 14% to $382 million. Total subscription revenues grew approximately 9% to $510 million, which was in line with the guidance we provided for the quarter.

Now turning to advertising revenues. Total advertising revenues for the quarter were $192 million, an increase of approximately 16%, which is higher than the guidance we provided for the quarter. Digital advertising revenues also came in above the guidance we provided, increasing approximately 25% to $147 million. The growth in digital advertising was due mainly to strong marketer demand and new advertising supply.

Affiliate, licensing and other revenues increased 5.5% in the quarter to $100 million, primarily as a result of higher licensing revenues. This was in line with our guidance.

Adjusted operating costs grew 9.7%. This was above the 6% to 7% guidance range that we provided last quarter. I'll note that the primary reason for costs coming in above the guidance range was higher expenses associated with incentive compensation programs related to our financial outperformance. AOP grew 13% in the quarter to approximately $192 million and AOP margin expanded 50 basis points to approximately 24%. Adjusted diluted EPS in Q4 increased $0.09 to $0.89, primarily driven by higher operating profit.

I'll now look ahead to Q1. Digital-only subscription revenues are expected to increase 14% to 17%, and total subscription revenues are expected to increase 9% to 11% Digital advertising revenues are expected to increase high teens to low 20s and total advertising revenues are expected to increase low double digits. Affiliate, licensing and other revenues are expected to increase high single digits.

Adjusted operating costs are expected to increase 8% to 9%. We intend to continue operating efficiently while making disciplined investments in our high-quality journalism and digital product experiences that add value for our audiences.

As we've discussed, video in particular, remains an important area of strategic investment being reflected in our guidance. We are confident in our ability to generate strong returns as we grow the amount and impact of video journalism in news and across our portfolio.

In summary, our strategy is continuing to work as designed. The strategic priorities for the coming year that Meredith highlighted are all aimed at building a larger and more engaged audience over time, growing our subscriber base and powering our multiple revenue streams.

For the full year 2026, we expect another year of healthy growth in revenues and AOP, margin expansion and strong free cash flow generation. In addition, we remain on the path to achieving our midterm targets for subscribers, AOP growth and capital returns.

With that, we're happy to take your questions.

[Operator Instructions] The first question today comes from David Karnovsky with JPMorgan.

Meredith, when we look at that 20% digital ad growth last year, just with hindsight, is it possible to kind of break that out between kind of new supply, new products or just engagement and then kind of how much opportunity you see on these fronts?

And then for Will, the adjusted cost guide for Q1 is a bit above recent trends. So I wanted to see if you could unpack some of the drivers there. And you mentioned video specifically. I'm not sure if there's a way for you to kind of dimensionalize the impact there.

Yes. I'll start on ads. I mean the first thing to say is we were very happy with the performance last year. And I'd say we feel good about what we see as sort of all 3 elements of the ad business in terms of supply, which you asked about. We did add more ad supply in a number of places last year. And I would say as we have more opportunities to engage audience, we should have more opportunities to add new and different kinds of supply. And I'll also say on supply, we have a really good track record of -- and we did a lot of this last year of making the supply we already have more valuable, and that's with data and improvement to the canvases and overall performance.

In terms of demand, I would say that picture has improved. It's improved in a couple of ways. One, we can do bigger deals with the marketers we already work with because there's more to offer. And two, and I've talked about this for a while now, I think we appeal to more marketers because we're now at scale in multiple spaces that are very appealing to marketers.

And then the last thing to say, and I think I've said a version of this for years, our ad products really work. They're performing. And so because of that, marketers come back and they buy more. And that's, I would say, thanks to the quality of both the canvases and the sort of way we apply those canvases and also to our targeting tools. And then lastly, I would just say we really believe in our ad leadership and the team and execution has been kind of strong across the board.

Will, I think the next part of the question.

Yes, happy to take the question, David, on the cost guide. So looking forward on cost and investments, I think the most important thing to say is that our overall approach isn't changing. So we don't guide beyond the quarter, but we remain focused over the long term on sustaining healthy revenue growth, AOP growth and margin expansion, in other words, growing revenues faster than growing costs. And we do that by managing costs very closely while also making strategic investments that continue to differentiate us.

And as Meredith and I both said in our remarks, as you mentioned in your question, that does include investment into video, which we're excited about. We ramped -- began ramping that up, particularly in the back half of '25. The Q1 expense guide reflects the year-over-year impact of that ramp of volume and video production at both The Times, The Athletic across the portfolio. Also, just full cost. We also continue, as we've said in the past, to value the flexibility to lean into areas like sales and marketing when there are good returns in the market or we see a good opportunity to run a brand campaign.

But stepping back with respect to cost investments, overall resource allocation approach reflects ongoing cost efficiency combined with that thoughtful investment into the journalism and digital product experiences that we really think are going to add value to our audiences over time. And it's that disciplined approach that enables us to continue to target not just the healthy revenue growth, but also year-over-year AOP growth and margin expansion for '26 and beyond.

The next question comes from Benjamin Soff with Deutsche Bank.

I wanted to ask first about capital allocation. You had another healthy year of free cash flow. Your balance sheet is obviously in a pretty strong position. So what are your latest thoughts on capital allocation as we head into 2026? And how do you think about perhaps updating your shareholder return target as you continue to build up cash? And then I wanted to ask about password sharing. To date, you've primarily focused on approaching that with a carrot, not a stick. Could you talk about how you think about password sharing on your platform broadly and the different tools that might be available to help unlock that opportunity?

Sure I'll take the capital allocation question and that Meredith can take the password sharing question. Definitely appreciate the question. We're clearly pleased with both the strong free cash flow generation and the strong balance sheet. At this time, what I'd say is no change to our strategy here. We believe our capital allocation strategy continues to serve us well. And recall, the top priority on that is continuing high-return organic investment into our essential subscription strategy.

And I think you hear with some of our remarks today and as we've been narrating over the last call or 2, video is an exciting opportunity for us there. And then after that, we intend to return at least 50% of our free cash flow to shareholders over the midterm. That's our stated target. And you've seen and continue to see a balance as we are on pace for that target between dividends and share repurchases. I note today in my remarks, the $0.05 increase to the dividend from $0.18 to $0.23 and this track record of repurchases with $350 million of the authorization remaining at the end of the year.

And then we like having a strong balance sheet. It's a dynamic time in the media industry. So we're comfortable with that. Any M&A would have a very high bar. We're very pleased with the pace of our strategy and the spaces we're in. So that's sort of the specifics to say we're pleased with our capital allocation strategy and nothing to change at this time.

Great. Why don't I take password sharing? I think there's 2 answers to that. The first one is to say we -- and I talked about this in my prepared remarks, we still regard ourselves as playing in these very big spaces, news coverage broadly defined and then sports, games, recipes, shopping advice, all of which have a lot of running room in them. So we see a really big market opportunity and regard ourselves as still having lots of room to penetrate there. So that should give you a sense of how we think about password sharing as like potentially an opportunity down the line, but we're still in a phase of really wanting to bring more people into using and engaging with The Times.

And the way we've done that so far, like in the last 6 or 9 months is with our family plan, which we are incredibly excited about. So that's almost like the carrot version of password sharing family plan is going very, very well. And I would say it's got 3 elements to it that really work for us. One, it is a sort of further penetration move and it is helping us do that. People are bringing new people into an opportunity to engage with The Times, and we're very excited about that. That's our own subscribers, getting other people in their lives to subscribe. And a lot of the things we do at The Times are sort of fundamentally shared or shareable experiences.

The second thing to say with family plan is because it is priced at a premium, it's just like additive out of the gate to revenue and the same -- again, the carrot version of using password sharing crackdown as the stick. And then the third thing to say is like a broad point that our whole model runs on very strong engagement from people and family plan is yet another way to improve engagement of our subscribers and ultimately, retention.

We've long had the insight if we can get you first, it was to read across more topics, you'd be more likely to stay longer, pay, pay more over time. And then if we could get you to engage with more products, that was true. And now it's if we can get you to do it with the people you love and interact with, that is also true. So our version for now in a certain moment where we still feel like we're relatively early in market penetration of dealing with sort of the -- what you're describing as password sharing is family plan. But I don't rule out something else to [indiscernible].

The next question comes from Thomas Yeh with Morgan Stanley.

One more on the video journalism initiative, which sounds like an area you're really deciding to lean in on. I think to date, you've been adding more videos of reporters explaining their work as kind of a brand trust or social media marketing tool. Can you just talk about how you see the evolution of that product towards something you mentioned may be closer to what we see on linear TV and how that fits into the investment needs that Will referred to?

And then on the non-news single product growth that was again a pretty big contributor to subscriber growth this quarter. I know you'll change the disclosure going forward, but maybe one last time, can you add color on what's been driving that strength across Games or Athletic and what you're seeing there?

Yes. Thomas, I'm happy to take both of those. The first thing to say about video, and I think you got this in both of our prepared remarks is we just see it as a really big long-term opportunity to establish The Times as a preferred brand for watching news in addition to reading and listening to that news. And there are sort of 3 parts to it, one of which you're asking about specifically production and then engagement and monetization.

In terms of production, which is what I think you're pushing on, you can regard us as being in a phase where we're really beginning to scale it. And I think to your point, what we feel really good about from 2025 is we've arrived at sort of 2 things: one, scalable formats, and I'll name them and also kind of a video language for The Times that feels like it's really, really working.

So what does that look like? You mentioned reporter videos. We are scaling that up. And one of the inherent advantages we have in the model is an enormous -- one of the world's most robust reporting forces. So you can imagine how that scales. In addition to reporter video, I think we've really distinguished ourselves and are still in early days of it with what we call visual investigations. You've seen a lot of that recently. That is something we're doing more and more of. I think that becomes even more important in sort of a low-trust environment.

We're just showing more. So they're straightforwardly showing more of what is happening when a reporter is on the scene somewhere in news clips. And then we've made a really deliberate effort to turn our hit podcast in most cases, into full bore video shows, and that's going very, very well.

And in terms of where all that is playing out, you're seeing us do that in our new Watch tab, which we launched last year in the core app of The Times, and that's -- it's early days, but we're very, very happy with what we're seeing there so far. And then also putting more of our video in all the places people engage with news of platform, which we think is a really important part of our long-term engaged audience growth strategy. So we feel very good about all that.

The most important thing to say is its early days and the phase we're in right now is really ramping up that production and building a wide engaged audience for it. So more engagement from the people we already have and then net new audience to engage with video.

I think your second question was about single product.

Growth in non-news.

Yes, growth in non-news. I'll just say we're really pleased with the strong net adds growth in the quarter. I'd say it's our strategy working as designed. And as you've heard us say before, the great thing about the model is we have multiple levers for growth and the different levers, the different products in the portfolio are going to play different roles at different times. And I would even say all of our products played some role in the quarter, and that is almost always true depending on the time of year. Some are driving subscriber growth, some are driving audience engagement, but it's all sort of a system that's working together, and we're super excited about what we saw in the quarter.

The next question comes from Kutgun Maral with Evercore.

One on ARPU and a follow-up on costs. On the digital-only subscriber ARPU side, growth has historically been a highlight over the last few quarters, up in the 3% to 4% range. That growth decelerated a bit more than expected in the quarter. Based on your Q1 outlook, it certainly seems like overall digital-only subscription revenue growth will remain healthy. But any more color on ARPU specifically and the moving pieces for 2026 would be appreciated.

And to follow up with another question on costs, Will, I appreciate that you don't guide beyond the quarter, but I think despite the very attractive strength in net adds, advertising, free cash flow and other parts of the story, there will be some consternation on costs. So I just wanted to see if there's anything more you can share on the trajectory over there. Should the takeaway be that the high single-digit growth range exiting 2025 in the first quarter of 2026 is perhaps the new normal? Or should we expect a deceleration back to the mid-single-digit range in the back half of the year as you begin to lap some of these investments in video?

Yes, I'll take both of those. Why don't we just start with the second one. I think the key thing to say there is simply that we remain very focused on sustaining not just the healthy revenue growth, but also AOP growth and margin expansion. So very disciplined on costs and investments, and I described that in my remarks. And I think that's the framework that I want to make sure to leave you with that we're very focused on.

I'll move to ARPU. I totally appreciate the question. We sort of provide, as you noted, quarterly guidance on digital subscription revenue growth, which is the thing that we're trying to maximize over the long term. And that's a function of both our sub base and our ARPU. And as you've seen and can expect to continue, ARPU growth in any given quarter can fluctuate for a variety of reasons.

Those can be the volume and mix of sub additions and where the -- what's the nature of the sub? Are they on a promotion? Are they tenured? Are they international, domestic? We have some different pricing. And then the timing of targeted price increases can play a role as well.

So as you noted in our guidance, we're expecting strong digital sub revenue growth in Q1 of 2026. And I think it's maybe worth calling out as we begin '26, some of the color you asked for, we do expect, in particular, to see the benefit of an increase in the digital bundle price to $30 from $25. A tenured cohort of bundled subscribers began paying those higher prices in Q1. And as we had expected from some of our earlier testing, we tend to test all of our pricing. The results so far are very encouraging.

So while we don't guide to ARPU specifically, overall, we continue, as I said, to be pleased with the health of the ARPU drivers, and we see multiple factors that are giving us confidence in our ARPU trajectory over time. At the basic level, we're continuing to add value to our products. As they become more valuable, we're seeing strong audience and subscriber engagement. So an appreciation among our audience for that value. And then we remain pleased with the performance of our pricing step-up points, including when we raise prices on some groups of tenured subscribers.

The next question comes from Jason Bazinet with Citi.

Sorry to do this, another one on costs. So you said in the fourth quarter, the expenses were a bit higher because of incentive comp. But going forward, it's more of the investments you're making. Is the incentive comp just sort of spread across all the cost items you disclosed? Or is it isolated in one? And same thing on the video investments. Are those across...

I appreciate the question. Yes. So let me take the Q4 dynamic there. As I said, primary reason for the difference between the guidance and what we came in at those higher expenses were associated with the incentive compensation programs and our financial outperformance. Now I'll note here that, for example, having such strong advertising revenue performance meaningfully higher than our expectations in Q4, which is a very big ad quarter, has an impact on the full year and multiyear financials that are tied to our incentive plans.

And that did impact your question, all 4 of our expense lines in the quarter. G&A was where that impact was the most obvious, but it might also be helpful for me in response to your question to note that it's also kind of its impact on sales and marketing line in particular.

As we disclosed in our earnings release, our marketing media expenses in the quarter were up only 1.8%. So higher compensation expenses were also a factor in why that overall sales and marketing line was up over 11.5% in Q4, and it plays -- it's really in all those lines. So that's kind of that main story in Q4. Underlying that included we had started to ramp up our video investments and continue to make disciplined investments in those areas that are positioning us for sustainable growth for the long term. And I think that -- I've already talked about that in the context of the guide going forward.

The next question comes from Kannan Venkateshwar with Barclays.

Meredith, when we look at the growth in advertising, obviously, it looks like there's a lot of upside there. Is it something that you could see as potentially a way to manage your ARPUs in the aggregate? In other words, instead of raising price, would you use some of the advertising to essentially make the product affordable for customers and grow your subscribers a bit faster by leaning in on advertising. So it would be great to get your thoughts on that.

And then on the AI front, I mean, obviously, there's a lot of litigation expense building on that. But it would be good to get some sense of time lines around this as to when you expect resolution? And when we think about the puts and takes, obviously, there's some licensing fees you could get out of some of these models. But at the same time, how do you view the threats from AI longer term? Like how do you weigh the opportunity versus cost on that front?

Yes. Thanks, Kannan. Let me start on the AI question. And then I think I heard you on the advertising question. If not, you can -- I'll try and answer it, you can redirect me if I didn't hear you quite right. I would say on AI, we continue to see headwinds. We've been talking about that for a while now. But our strategy of building differentiated products at scale, which are worthy of seeking out and building assets with make us really resilient to those headwinds in a rapidly changing and a pretty low trust ecosystem.

And over the long term, we believe what we do is going to be even more valuable to consumers and to business partners and ultimately, even the LLMs themselves in an information ecosystem where it's harder and harder to find things that are true and valuable and worthwhile.

So -- and we're already using, and we've talked about this in prior calls, we're using AI to make our work more accessible to do a number of things in the subscription model. We've got an AI-powered ad product that is really working. So we're already sort of harnessing AI in effective ways to make the business more productive and build our engaged audience.

I think the question -- do you want to try one more time on the ad question, just to make sure I heard it right, and then I'm happy to answer it.

Sure. I mean, basically, the question is you can get ARPUs through advertising or through subscription fees. So is there a path where you -- because your advertising revenues are growing faster, you grow prices slower and therefore...

I see what you're asking. Yes. Yes. Let me just say, broadly, one of the things that we are most excited about in terms of our strategy and our model, and I talked about this in my prepared remarks, one of the unique advantages that The Times has is we have this multi-revenue stream model, and you saw that really working.

And so particularly as we focus on building a larger and more valuable New York Times Company, the sort of what powers that is building our engaged audience and having an opportunity to monetize that audience, particularly as we're building in early chapters through advertising is awesome. And you're really seeing that play out.

And I could talk about that literally in every part of the portfolio, and every part of the portfolio contributed to the ad success in 2025, and we expect every part of the portfolio to play a role going forward. But in places like Games, we've got -- we now -- I think we have 11 games now and 6 of them and maybe off by one, I think, are free games, and we monetize the enormous amount of engagement we get with our free games first through advertising, and that's a great and exciting aspect of the business.

And as we build The Athletic and really widen people's understanding of the power of The Athletic, if you're a sports fan and what it can do and really make the audience bigger, we've been very, very happy with what it can do as a commercial business as an ad business. So I'd regard it as a whole system working together. And ultimately, what we're doing is also building funnels for future subscription growth, and it all kind of works together. It's all very deliberate.

Okay. Great. Operator, let's take one final question.

The final question comes from Doug Arthur with Huber Research.

Last but not least, the -- just on that single product growth, which there's been quite a few questions on. I mean, I guess the question is, are you -- do you remain confident that it's sort of expanding the funnel, expanding the TAM and you are getting or do have the potential to convert strongly engaged single product users to more valuable bundle type subscriptions. Is that working? And then I've got a follow-up.

My short answer on that, Doug, is yes. We -- this is a whole system. All of the products beyond news broadly defined are playing a role in the funnel. We really like what we see in terms of how it's working. in the subscription funnel and ultimately bringing people into initial products and then being able to engage them more over time. And as we engage them more, they become more valuable to us in multiple ways. So yes, yes, yes to what you're asking.

And I'll just add on the back of that, absolutely to the subscription business. And as Meredith said, the power of those multiple products from Games to The Athletic and supporting the ad results we're seeing is also part of the encouraging story that we're telling.

And Cooking and Wirecutter too.

Doug, you had one last follow-up.

Yes. There's been chatter in the press about the contract negotiations with the news guild. I guess, focused particularly on remote work guidelines. Is there anything to see there? Is there anything you can comment on?

We have a long history of working with a number of unions at The Times and productive relationships with all of our unions, and we are, I think, well prepared to move through this contract period as we have been in the past. And we're very confident that The Times will continue to be a great place for, in this case, journalists and ad people who are most of the folks represented in the current negotiation to work.

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

Great. Well, thank you, everyone, for joining us for the call, and we'll see you next quarter.

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

So thank you all for joining us. I'm John Hodulik, the telecom and media analyst here, and I'm very pleased to announce our next speaker is Meredith Kopit Levien, the President and CEO of The New York Times. Meredith, thanks.

Nice to be here. Thanks for having me.

Yes. Absolutely. Thanks for joining us again this year. As we always do, first of all, we've got 35 minutes for Q&A, and I've got a number of questions to go through. But if anybody has questions in the audience, please use the app and they'll hit the iPad here, and I'll filter them through the conversation.

So Meredith, what we always do here, end of year. It's been a great year for New York Times. The stock has done very well. The results have been great. Maybe we could start by framing for the audience your priorities for the company as we look out to 2026.

Yes, I'm happy to do that. And we were just chatting about last week's awesome deal book conference. If you were there, this almost goes without saying, but you would have just like felt so intensely how much dynamism there is in media and in tech. And I just think the first thing to say is the thing we do at our core high-quality independent journalism has like never been more important given all of that dynamism. And our essential subscription strategy really continues to work like precisely as designed through that dynamism.

So our pursuit of being the world's best news destination, the fact that we now have multiple market-leading lifestyle products, and we've put it all together in this interconnected product experience and bundle is making The Times relevant in the daily lives of tens of millions of people. So it's all really working.

In terms of our priorities for that strategy going into the new year, they're going to look a lot like what our priorities were this year. The first one is just to continue to cover the world's most important stories ambitiously and with the best journalistic talent there is. Secondly, to do that in like every conceivable format that people want to take it in and especially video.

The third one is to keep adding value in every part of our product portfolio. And if you look back at 2025, like literally in every dimension, news, sports games, recipes, shopping, we added multiple new things, multiple ways for the consumer to experience that value. And sort of all 3 of those priorities add up to the fourth one, which is to get many more people to come to The Times directly and daily have a direct relationship with us. So you're going to see us continue to be very focused on those things in 2026.

Great. And I think we'll touch on a lot of those topics. Maybe we'll start with driving customers or people to the service. You're at nearly 12 million digital subscribers heading into the year. Year-end goal was 15 million by middle '27.

Milestone not an end state, yes.

Exactly. Exactly. Milestone. The question we get a lot is how big is the addressable market for The New York Times? And sort of what can you do to sort of expand that TAM?

Yes. We have a lot of confidence that the TAM is at least as big as we've publicly said, and that confidence comes from a lot of market signal. We've got 150 million registrations with The Times broadly and growing. We have 50 million to 100 million people who are using our sites and our apps every day. Many millions who come to The Times every single day, all to say, if anything, I think we're underpenetrated in the addressable market. And I said earlier, I'll say again, at the core of that is really high-quality independent journalism, our news report, which is today more broad and more deep than it has ever been with more journalists sort of covering more things from more places, and we're making that accessible in so many more formats. And that's part of how we widen the engaged audience for our work. It's a really important part of it.

But it's also worth saying for -- and I know a lot of you in the room, I think most of you know this well, but for anybody who thinks of us as kind of primarily a news report, I would say we now also have the world's largest sports journalism newsroom with just 60 people who cover the NFL alone. And obviously, we're covering every major sport. That goes a long way to our potential to widen the audience. We have tens of millions of recipes and are developing new ones every year. We have games that literally tens of millions of people play every single day.

Our shopping website, Wirecutter drove like $1 billion of commerce last year. We keep opening up new categories of coverage. I could go on and on in that. I'll say geographically, we've already widened the audience. The fastest-growing audience for the enterprise now in the United States is in the South and in the Midwest. So really widening beyond the coast. We have a huge international opportunity that we're just at the beginning of getting at. I know we're going to talk about video and young people, but I have a lot of confidence there.

And the last thing I'll say for anybody who believes that The Times news report or broadly defined is for kind of one political group or people who identify with one little group or another, I'll say, one of our fastest-growing shows, it's a video podcast is a conservative show, opinion show hosted by Ross Douthat called Interesting Times, and I encourage everybody to listen to it. He's basically exploring all the big ideas on the new right, and it has a huge audience and is very, very ascendant at The Times.

That's great. Family plans are also a relatively new development.

New and awesome.

Okay. Well, let's hear how awesome. How did the uptake then -- and can family plans be a meaningful driver of the 1 million-plus subs you need to hit that 2027 milestone?

Yes. I want to just start by saying we have a lot of drivers, a lot of levers in the model. We have a lot of confidence in family plan, but it is just one of multiple levers in the model. I hope we get to talk about more of them. But we really like what we see on family plan so far. It's early but it feels like it's really working. It was certainly a major contributor in the last quarter.

And here's why we like family plan so much. I mean fundamentally, The New York Times has always been set up to be this great shared experience, even if you go back to thinking about the Sunday paper and passing the different sections around. But it's really good for market penetration, one. It's additive to revenue because if you buy a family plan, you're already or you upgrade to a family plan, you're paying more. And it's great for engagement, and that is ultimately great for retention. And the way I think about it is we've been on this kind of progressive journey with engagement and retention.

When we were predominantly a news product a decade ago, we used to -- we had this big insight that we were really focused on, which was if we could get you to read across one more topic, you were more likely to pay, stay, pay more over time. And then as we added products to the bundle, it was like if we could get you to engage with one more product, you were more likely to engage, pay, stay, pay more over time. And now it's like -- and if we can get you to do it with your friends, your family, the people you love, all those things are also true. So we have a lot of optimism about family plan, but it is one of multiple things. We have real optimism with that.

And it seems like some recent commentary, it's -- you're seeing a lot of adoption with the existing base. Is it actually helping to drive new customers or sort of I guess it's early days, but do you expect it to have an impact on churn as well?

Yes. What I'll say is so far, the early adoption and what you saw in the third quarter was majority about upgrades because that's where we were marketing it. But in the third quarter, I think in September, we also began to market family plan to new subscribers of the bundle, prospects to the bundle and prospects for games. So you could buy a bundle family plan or a games family plan.

And I'll just tell you, if you have not already, you should search for on YouTube, a film we made with Eli Manning, which we obviously cut into, I think, a 30 and a 60. The long version is -- they're all awesome, watch the long version, where he is choosing amongst the other Mannings who he's going to share his 3 additional. But really, really high hopes for all of it.

Cool. Third quarter was your highest quarter of single product net adds. Can you talk about why you decided to move the mini behind the paywall and maybe the criteria that management uses to make these decisions?

Yes. That's a good question. Let me say we were really happy with the performance in the quarter and subscribers came from like across the whole portfolio, which is the model kind of working as it's designed to work. And in any given time period, different products are going to perform differently. That's the case now in subs. It's also the case in ads.

On the decision to make the MINI a paid game, I would think about that in terms of the time having been on a -- having it be a real strategic pillar to always be doing two things that seem like they're in opposition, but we have to do both at the same time. One is to continually be finding the widest possible engaged audience for the work. And the second is to be adding more and more value to the paid product so that there is more and more willingness -- there are more people willing to pay or more willingness to pay for that paid product. And that's what you saw us do with the MINI. We are always calibrating between what is the right moment to do that.

And in the case of the MINI, we had a sense based on the engagement characteristics of the game and sort of the MINI in the context of games more broadly that we could make it a paid product without really losing a huge kind of free-to-play audience, and that has played out. We're very happy with the performance. And we also timed its sort of going into the paid product set with the release of a new game into the sort of full spectrum. We had a game in beta called Pips, which is a great logic puzzle that everybody should be playing. I'm not very good at it.

But Pips sort of came out as a major game for the whole audience at the same time. And so it made sense. And we now have 5 free-to-play games and 5 games that are either fully or in part behind the paywall. And you should also know that we are always working our robust pipeline for new games. So there are always new games in development at the same time.

So it was very powerful in driving subs this quarter. Are there other levers that you could pull either in games or in other parts of the business to sort of drive the subscriber -- to drive people into the sort of paid subscriber base?

Yes. I mean one of the things we have real confidence in is that the model across the whole of the portfolio has multiple levers in it. And you can regard the MINI as kind of like a microcosm of what gives us that confidence that we can keep penetrating the market.

The idea is that as we prioritize adding value in each part of the portfolio, we're getting optionality to choose kind of when in which part of the portfolio and where it makes sense to make something into a paid product. And one of the things that's really helped us is the tech and our ability to use data is getting better and better, so we can really understand the dynamic of how we grow audience and where is the right kind of place and moment to ask people to pay.

I'll just say stepping back, the thing -- two things to hold in mind as you think about those levers and the experience with the MINI in particular, we are always trying to balance growing that engaged audience with making sure there's -- we're monetizing in direct ways, and we're balancing those two things in service to long-term value creation. And the great thing about our model because we have multiple revenue streams, subs, ads, licensing, affiliate, all of that engagement we're growing is monetizable to us in one way or another.

Right. And it's leading not just to subscriber growth, but you talked about steady year-over-year ARPU growth going forward. Can you talk about sort of the drivers of this and just your overall confidence you can maintain those trends and still sort of maintain pricing power?

Yes. You asked about subscriber growth earlier, and now you're asking about ARPU. It's just worth saying the thing we're ultimately trying to maximize is long-term subscriber revenue growth, subscription revenue growth. And that is a function, obviously, of the number of subscribers and also ARPU.

We're really pleased with where we've gotten so far in ARPU. And obviously, we don't guide to ARPU, but we have -- we're expecting to have another strong quarter in fourth quarter of subscription revenue growth. And what gives us confidence in sort of the ARPU trajectory going forward is, one, that thing that I keep saying, which is we are adding -- each part of the portfolio is already very valuable and kind of getting more rare and valuable relative to other things, but we're adding more kind of with every passing quarter and year, one.

Two, we have seen, and we've talked about this for a couple of years now, kind of consistently strong subscriber engagement, and that is a very good signal of willingness to pay and pay more over time. And then lastly, we used to talk about this so much more than we do now, our ability to get people to pay more at the step-up moment, so to move up to an interim or a full price is just -- we continue to be really pleased with what we see there.

Great. You started off talking about ways to drive engagement and maybe sort of widen the focus from a demographic standpoint or to pull in people of different ages. And I think the -- what you've done on the video and audio side has been a big part of that. Can you talk about the engagement from these new mediums and what that's doing to your business, especially the launch of the watched tab that you saw that you did in October? Just what are the early sort of returns that we've seen from that development.

Yes. So I have no doubt that all the things we're doing around format innovation and particularly more video is helping to drive that consistently strong engagement. And I'll give you two things from the year that we are concluding. One, we've doubled just the amount of news video. So we are covering the big stories of the day now much more with video than we were before. And that's coming off of a year where we really increased the production there, and it's still early days in that. And two, now more than half of all the people who are coming to The Times and engaging with The Times on our own platforms are engaging with video. So that is really great.

And I want to say it is not just about engaging the audience we already have more, which we certainly believe we are doing. It is also about using video and new formats to bring new audiences to The Times, and we're going after that really ambitiously. We've got more news video. We've got a lot more just reporter on camera video, talking about their stories in short form, which is great for any number of reasons. We have more shows and those shows are getting sort of bigger and broader and you can find them in more places and they're touching culture even more.

And then we have video efforts in every part of the lifestyle portfolio, including one of my favorites on -- the Athletic now, you've got highlights, not just the highlights, not just game footage, but footage mixed with our signature journalism from the NFL, from the NBA and the NHL. So kind of video in many, many places.

The Watch tab specifically launched in the third quarter, launched in our flagship app. And there, it is really early, but we really like what we see so far in terms of engagement and just the kind of the reviews of it have been very, very positive. And the way to think about that is it is by no means all that we're doing in video. What it is, is like a home where you can go and sort of see the report, the best of our video in one scrolling experience. And you're getting news video, of course, kind of time to the news of the day, but also video from all the other parts of the portfolio.

Right. It seems that over time, I mean, that Watch tab is so easy to use. And on a mobile basis, it would seem that over time, it could become the primary way with which people, on a mobile basis, engage with New York Times.

What I would say is in a future state, imagine the New York, when people think of The New York Times, they are thinking they're just as likely to think about watching The Times as they are reading and listening to The Times.

I also want to say, though, we are really focused on the engagement and impact of all of our work, and we regard video as additive, but it is by no means the only thing we're doing. And all of the ways that we can engage the audience we already have more and engage new audience, that's text, that's video, that's audio, that's multimedia, that's data visualization, we are hard at work on all of it. The idea is widest possible audience for to work deeply engaged.

And it's early days, but is it reaching a younger demo?

I mean it's hard to imagine it's not, right? We know that huge swaths of people, especially young people now are getting a lot of their news on the hyperscaled video platforms. And so all this increase in production of video, and again, still early at it, is allowing us to have our brand, have our stories in this really fresh, modern way in front of a new generation. And now with the Watch tab and the video kind of coursing through the whole portfolio, we're giving them when they do ultimately come to us, we're giving them sort of a way to experience the thing that made them seek us out to begin.

And how do you see the Watch tab product evolving? Do you expect that over time, it will branch out into sort of non-New York Times content as well?

That's a good question. Right now, we are focused on really widening the audience for it and getting a lot of engagement. And we're focused on taking the work of the journalism we already have and making it great in video and even more impactful in video.

And I will say, as you go through the tab, you're going to see a lot of news, but you're also going to see cooking and athletic and Wirecutter and like you're going to see great stories from culture in The New York Times. So it is a really robust experience with our journalism, and we're just at the beginning of it.

And I know that there's no advertising on the tab as it stands now. What is there...

Yes. Listen, we've got a really good track record of build a great product, get real audience and engagement for it. And once you do that, introduce all the ways to monetize it, including with advertising.

Got you. Okay. Moving on to a new topic, AI. How does New York Times think about AI? And is it a friend or foe for the company?

Listen, I think The New York Times has a real -- if you step back, The New York Times has a really great track record now, certainly over the last decade of harnessing technological innovation to grow audience, to grow engagement and to grow value for society and to grow value for shareholders. And I have a lot of confidence we will do that with AI as we have done that with digital technology and mobile technology and kind of everything else that has come before it.

And we certainly have a lot of people working on AI and working with AI to begin to do that. And I'm just going to give you a handful of examples that I think sort of get at what I'm talking about. You can now listen to most of The New York Times news report in an automated voice that makes the report much more accessible to people, and we're in like the third generation of that voice. It's an AI, and it's awesome. I get a lot of my news that way.

We've got reporters in the newsroom using AI to come through huge troves of documents, public documents. They can do that now much more productively, much more efficiently, which just enhances the quality of the journalism. We have metrics conversion and scaling recipes and cooking powered by AI.

If you were buying gifts with Wirecutter, our search is much better on Wirecutter now because of AI, and we're using it in all the ways you would imagine to personalize the customer journey. We've been using AI for years in the monetization points and just to target our own marketing more effectively. Now I will say what I'm describing assumes our IP will be used in a lawful way, but we have a lot of confidence in our ability to harness technology to grow value for everyone.

So along those lines, first of all, you have an existing deal with Amazon. How should we think about the opportunity to license the content...

Yes. I mean we have said all along, we are open to doing deals when they support our essential subscription strategy when we see those deals as providing sustainable fair value exchange. And when the terms of those deals allow us to have real control over how our work, how our IP is used and we have a track record of doing deals when the terms are right. And at the same time, you see us enforcing our rights in court because we regard all of that together as building toward a world where there's long-term sustainable fair value exchange here.

Right. And along those lines, last week, you filed a lawsuit against Perplexity adding to the existing lawsuits with Microsoft and OpenAI. How do you make the decision whether to seek settlement in court or move ahead with negotiations for a licensing agreement?

I would regard those two things, the idea of participation in the deals market that exists now and the enforcement of our legal rights as kind of other piece and building toward all in service to a market where there is sustainable long-term fair value exchange.

Got you. It seems like the recent acceleration in digital advertising revenue growth has been driven by new ad supply in specific verticals, namely sports, games and new audio and video impressions. Is a low 20s sort of high teens growth rate in digital advertising sustainable?

Let me say a few things about the ad business. First, we are really happy with the performance this year. We're very excited about it. We regard the ad business now kind of like we regard the consumer business, which is we have these rare and valuable products in really big spaces where there's a lot of consumer demand. We have an enormous amount of audience engagement for those products, which makes us really appealing to marketers well in news and well beyond news out. And we have great ad products, really great canvases with a lot of first-party data that we can use to target audiences marketers are trying to reach in great ways. So we don't guide past the quarter. We've guided to another strong quarter of growth in digital advertising and advertising, but we -- I would just say we feel really good about where we are and really excited about the ad business.

Great. Let's sort of pivot to the cost side. Can you talk about your approach to cost management? And is your cost growth trending higher over time? And if so, what are the drivers behind that?

Yes. I mean, I think, we've got a very good track record now of actively managing our costs while very deliberately and thoughtfully investing into the areas that sort of constitute our long-term competitive advantage, which has been our journalism and our -- the quality and the strength of our digital products. I have a lot of confidence you're going to continue to see us do both of those things.

And I would say I've talked a lot about video. Video feels like an opportunity where we see real potential for investment leading to long-term returns, and we are seizing that opportunity.

Yes. I would say the output of that equation is that you've been able to drive sort of 200 basis points of margin improvement per year over the last couple of years. Do you see that as a sustainable sort of rate of growth over the next several years?

We're really pleased with where we've gotten on margin in the high teens so far. We are always endeavoring to build a larger and a more profitable company, and we are highly, highly focused on revenue growth, AOP growth margin expansion. And I've just described to you many, many levers for growth in the model.

I think as we continue to build our engaged audience, that's like the most important high-octane gas in the whole -- in the tank of everything we do at -- The New York Times. And as we continue to build our subscriber base, I think you're going to continue to see us find leverage in that model.

Great. And then maybe one on the balance sheet. You have no debt and cash building on the balance sheet. How should we think of sort of uses of cash going forward?

Yes. I mean, listen, we have a nicely cash-generative model that's really working. We like that, and we like having the strong balance sheet we do, particularly at a time of real dynamism and opportunity in the market.

In terms of capital allocation broadly, sort of no change to what we've been saying for a while now, which is our first priority is to invest into furthering the essential subscription strategy. It's the best way we can create value for society and in this context for shareholders. And beyond that, we continue to be committed to returning at least 50% of our free cash flow to shareholders.

And should we think of more of a focus on buybacks or dividends or sort of what is your [indiscernible]?

I would say we're doing both, and I wouldn't read too much into sort of the near-term fluctuations in one or the other.

Got it. All right. Maybe to wrap up, I would say we've had almost 2 days here of conversations with companies. And I would say New York Times is one of the few companies I can think of that has sort of successfully made the pivot from an analog business to a digital business. What would you say are the sort of high-level sort of learnings from your experience in driving that? Then Netflix is the other one which obviously made a lot of news here yesterday.

What I would put New York Times, you had a business that people were really worried about. And now the vast majority of your business is digital. And from what we've seen in the last several quarters, accelerating nicely. So what would you say were the main drivers behind that success?

I love that question. And I'll say I've been here for more than a dozen years now. Our CFO, who is our -- who's here with me today, Will Bardeen has been here for like 21 years, was our Head of Strategy before that. I think we would both say it's been really fun to get to create a long-term strategy and then really give the time and the space and the resources and the like the diligence and the care to letting that long-term strategy play out.

I can't say enough about that. I think the unique structure of The Times has allowed us to do that. So that's like my biggest lesson, which is pick the right strategy and then really stick to it. And we have done that now for more than a decade. I mean it feels like our jobs get more fun because we're getting to see the fruits of it and also imagine the next tranche of real value creation and opportunity seizing for The Times.

If I were to be even a little bit more specific, the lesson that has repeated -- I've had 4 jobs at -- The New York Times. I've been in this one for more than 5 years, but I was Head of advertising. I ran the sub business, and I took over the whole sort of product center of the company. The lesson in all 4 of those jobs that has repeated again and again and again is the answer to like every value creation question begins with can we find the widest possible audience for the work and get them to engage, engage more, engage more directly, have more of a habit with us. All the ways we make money stem from that. And so we have been relentlessly, relentlessly focused on that.

I'll say two more things that I've kind of said in the course of our conversation that are worth naming out loud. -- even going back a decade, we refused to choose between these two opposing ideas of having a giant audience free, wide free layer where you really get engagement and then having products that are not just worth paying for, but increasingly so to more and more people. We have forced ourselves to like relentlessly pursue both of those things. And I think that some of what you're seeing in the ad business now is a function of that. But that -- and the continued -- obviously, continued growth in subscribers is a function of that.

And then the last thing I'll say is I think what we do in every dimension, high-quality independent journalism first and most, but also sports journalism, shopping advice, recipes, games. All of those things, the way that we do them are getting more rare and more valuable against a backdrop of lots of other things happening in the information ecosystem that are not about quality or getting sort of the best stuff to people or the fairest, most independent kind of stuff that people really need to live their lives in a full and joyful way.

That's perfect. Great summary, Meredith. Thanks for being here.

Thank you so much for having me.

Good morning, and welcome to The New York Times Company's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Anthony DiClemente, Senior Vice President, Investor Relations. Please go ahead.

Thank you, and welcome to The New York Times Company's Third Quarter 2025 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 our 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 2024 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 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. Q3 was another great quarter across the board at The Times. Our results affirm that our strategy is working as designed. We have world-class journalism and a portfolio of leading lifestyle products in giant spaces where people spend a lot of time. Those products are so valuable that people seek them out by name, form habits and make room for them in their daily lives. And our multi-revenue stream model with subscription, advertising, licensing and affiliate revenue lines that are all growing gives us multiple ways to monetize that value.

The media and technology environment is changing rapidly, presenting significant opportunities for companies with the talent, products, intellectual property and brand equity to successfully capitalize on those shifts. The Times is one of those companies. We have a long track record of evolving to meet changing markets and new consumer needs. That, combined with our clear strategy and strong economic foundation gives us real confidence that we're well positioned to keep building a larger and more profitable company for years to come.

Now let me share a few highlights from the quarter. We added 460,000 net new digital subscribers, bringing our total subscriber base to 12.3 million. This puts us further along the path to our next milestone of $15 million. These results reflect the value of having multiple levers across our full product portfolio to drive subscriber growth.

Digital subscription revenue increased by 14% in the quarter, propelled by strong audience engagement across the enterprise. That engagement is evidence of our continued ability to deliver increasing value to users. We're doing this in several ways by expertly and ambitiously covering the most important news, by expanding our efforts in video, audio and AI to make our reporting more accessible to more people and by making each of our products more valuable with new content, shows, features, games and other enhancements.

In Q3, we advanced all these priorities. We substantially grew the amount and impact of our video journalism in news and across the portfolio, both on our platform and in the scaled places where people are consuming it. We've now turned most of our award-winning podcasts into video shows that demonstrate both The Times convening power and our ability to influence the conversation across news and culture. We made video a more prominent part of our flagship Times app with a new watch tab and featured placements on our home feed.

In cooking, we're expanding the library of both instructional videos and entertaining shows. And at The Athletic, we are now enhancing our signature analysis and reporting with NFL game footage. We also continue to innovate around our use of AI in the quarter. More and more people are using automated voice to engage with our news report.

We're using AI to improve personalization, targeting and monetization across our customer journey, marketing and ad products. And AI now powers features like metric conversion on recipes and richer search on Wirecutter. Beyond video and AI, we keep adding value to our games portfolio.

This quarter, we launched a new logic puzzle, Pips, which is off to a great start. Turning to advertising. We had another really strong quarter with digital advertising growing over 20% and total advertising growing nearly 12%. This performance reflects how our strategy to create a larger, more durable digital ad business is working. That entails having a portfolio of compelling products in spaces with broad marketer appeal in addition to news, particularly sports, games and shopping, a large engaged audience that marketers can target effectively and a growing supply of high-performing ad products across a range of formats.

Licensing and affiliate revenues also grew in the quarter. The growth in licensing, in particular, is another proof point for how we're able to monetize the increasing value of our products. Finally, we stayed disciplined on expense growth in the quarter even as we invest into our journalism and product experiences, which is a source of our long-term advantage.

I'll close with a few thoughts on our path ahead. What we do has never been more important or more valuable. Our independent journalism, trustworthy information and compelling product experiences help people understand the world and lead richer, fuller lives. Even in an environment where the moves of big tech companies are leading to less and less traffic for publishers, we see large and persistent demand for what we do.

Against a backdrop of a changing ecosystem, we are confident in our ability to widen the number of people who use and engage deeply with The Times on and beyond our own platforms. That means becoming even more essential to even more people. And as we do that, we expect to deliver even more value for shareholders and for society.

With that, I'll turn it over to Will for more details on the quarter.

Thanks, Meredith, and good morning, everyone. As Meredith described, our 2025 third quarter results demonstrate another strong quarter for subscriber growth, revenue growth, AOP growth, margin expansion and free cash flow generation. We saw healthy growth across our multiple revenue streams again in the quarter and continued to make disciplined investments aimed at further differentiating our high-quality journalism and digital products.

Year-over-year, consolidated revenues grew approximately 9.5%, AOP grew by approximately 26% and AOP margin expanded by approximately 240 basis points. We generated approximately $393 million of free cash flow in the first 9 months of the year, which reflects our capital-efficient model. We also benefited in Q3 from lower cash taxes paid due to the recent change in tax law that allows us to fully deduct R&D expenditures in the current year.

Over that same period, we returned approximately $191 million to shareholders consisting of approximately $110 million in share repurchases and approximately $81 million in dividends. This is consistent with our capital allocation strategy of returning at least 50% of free cash flow to our shareholders over the midterm.

Now I'll discuss the third quarter's key results, followed by our financial outlook for the fourth quarter of 2025. Please note that all comparisons are to the prior year period unless otherwise specified. I'll start with our subscription revenues. We added approximately 460,000 net new digital subscribers in the quarter, bringing our total subscriber count to approximately 12.3 million. Subscriber growth came from multiple products across our portfolio.

We also continue to be pleased with the rollout of our family plan subscription offering. Total digital-only ARPU grew 3.6% to $9.79 as we stepped up subscribers from promotional to higher prices and raised prices on certain tenured subscribers. We continue to be encouraged by the results we're seeing at pricing step-up points, which we believe reflects the value we continue to add into our products. As a result, we remain confident in our ARPU trajectory.

With both higher digital subscribers and higher total digital-only ARPU in the third quarter, digital-only subscription revenues grew approximately 14% to $367 million. Total subscription revenues grew approximately 9% to $495 million, which was in line with the guidance we provided for the quarter.

Now turning to advertising revenues. Total advertising revenues for the quarter were $132 million, an increase of approximately 12%, which is higher than the guidance we provided for the quarter. Digital advertising revenues also came in above the guidance we provided, increasing approximately 20% to $98 million. The strength in digital advertising was due mainly to strong marketer demand and new advertising supply.

Affiliate licensing and other revenues increased approximately 8% in the quarter to $74 million, primarily as a result of higher licensing revenues. Adjusted operating costs grew 6.2%. This was just above the 5% to 6% guidance range that we provided last quarter. Adjusted diluted EPS in Q3 increased $0.14 to $0.59, primarily driven by higher operating profit.

I'll now look ahead to Q4. Digital-only subscription revenues are expected to increase 13% to 16% and total subscription revenues are expected to increase 8% to 10%. Digital advertising revenues are expected to increase mid- to high teens and total advertising revenues are expected to increase high single to low double digits. Affiliate licensing and other revenues are expected to increase mid-single digits. Adjusted operating costs are expected to increase 6% to 7%.

We intend to continue operating efficiently while making disciplined investments in our high-quality journalism and digital product experiences that add value for our audiences.

In summary, our essential subscription strategy is continuing to work as designed with a valued product portfolio, multiple revenue streams, significant free cash flow generation and a strong balance sheet, we believe we are well positioned to navigate a dynamic market environment. As we enter into year-end, we continue to expect healthy growth in revenues and AOP, margin expansion and strong free cash flow generation for the full year.

With that, we're happy to take your questions.

[Operator Instructions]

Our first question comes from Thomas Yeh with Morgan Stanley.

Two, just on the video formats, I was hoping you could dimensionalize the opportunity around that push. I think the big focus sounds like it's centered on building engagement and brand. But I guess, how should we think about how it affects advertising? Do you see this as maybe another aperture for expanding into video advertising opportunities? And then also maybe just touching on what kind of incremental investment needs this push might entail?

And then secondly, on the family plan, it looks like it now represents 2% of your digital-only subscriber footprint and looks like it also came through predominantly on the game side versus the bundle. Can you talk about just what stage of the rollout you're in? And if there's any appetite to push further on that in terms of maybe restricting sharing somehow on your non-family plan?

I'm happy to take both those questions, Thomas. Let me start on video. I think the first thing to say is we think it's a big opportunity for the company, and we're in early days of it. We know lots and lots of people are seeking out and getting their news and the other kinds of content we make in the form of video. And so we think having more video gives us a big opportunity to engage the people we already have more and to engage even more people and to do that both on and off our platform.

And you asked specifically about advertising, I'd say we are early here. Our first priority is to do what I've just described, which is to drive more engagement. And ultimately, having a wider engaged audience is what drives every part of our business, subscriptions, advertising, affiliate licensing. So we just think -- we think this is a really important part of our go-forward growth plans, and we're very excited about what we're doing there.

On family plan, we are really excited about this. We're -- it definitely played a role in the quarter. Family plan is good in a bunch of ways. It's good for market penetration. There, you can think of it as the subscribers we already have, bringing in other subscribers. And because the family plan subscription is priced at a premium, it's additive to subscription revenue. It's great for engagement. It's great for retention.

And then I think you asked specifically about it's weighting to games versus the bundle that is not. I would not think about it that way. I would think about it as we've presented a family opportunity in both the bundle and in games, and we are really excited about the performance of both.

And the next question comes from Benjamin Soff with Deutsche Bank.

I was wondering if you could talk a bit more about the growth rate in OpEx for 4Q, kind of what's driving that higher growth rate? And should we expect that to continue at similar levels going forward? And then on capital allocation, your cash balance has continued to grow nicely even as you've been returning 50% of free cash flow to shareholders I wanted to check in and see what your latest thoughts were there and how you might potentially go about deploying that cash.

Sure. Thanks. I'll take both of those. So look, on the cost for Q4, the guidance -- and this is relevant to Q3 and going forward, I think the most important thing I always want to say stepping back we remain focused over the long term on sustaining healthy revenue growth, AOP growth and margin expansion. So everything we talk about in cost is in the context of that. Now we do that -- our approach to that and our strategy is to be both disciplined in costs and efficiency, but also making long-term investments that are helping to further areas that best position us for sustainable growth.

And that's our world-class news journalism lifestyle products. and the product development that underpins our content. Now that includes areas like video, which Meredith said in her remarks, which we're excited about.

So specifically, to your questions on Q4 and Q3, a couple of things we're seeing there is that continued investment into the journalism products, so areas like video. We also have, as you see in Q3 results, and you can expect in Q4, flexibility to lean into areas like sales and marketing when there are good returns in the market or when we see a good opportunity for a great brand campaign.

We had to have one in the market now. It's a world to understand, which we really like. And then the last thing to note is that there can be some variable expenses correlated with revenue performance that can lead to fluctuations in any given quarter. This played a bit of a role in Q3. It could well end up playing a role in Q4 as well. So that disciplined approach overall to being really focused on cost efficiency while also making investments is what you're seeing in our cost performance throughout the year as well as in the Q4 guide.

There's a question on capital allocation...

Capital allocation, okay, go ahead.

Yes. On that one, I would just say no change in strategy there. We believe the capital allocation strategy is working really well for us. So the key thing is top priority for us has always been we have at a core, our organic growth strategy, essential subscription strategy, so investing into high-return opportunities to continue that growth. We just mentioned video, for example.

And then to this point of Meredith talked about in the remarks, a dynamic market environment. We like having a strong balance sheet that gives us optionality to capture opportunities should we see them, including opportunistic additional capital return. That's at least 50% is our -- is the capital return target. And then it's just worth making sure to reemphasize that our bar for capital allocation is really, really high. So you've seen that in our track record thus far with any M&A we've done, and you can expect us to continue to have that very high bar going forward.

And the next question comes from David Karnovsky with JPMorgan.

Maybe following up on the Watch tab. I wanted to see if you could speak a bit to the functionality of the product. Is the goal to make that highly personalized ? Or are you also kind of highlighting top stories and other parts of the coverage? And how do you think about the process of inserting ads there?

And then just secondly, regarding other single product, I think this is the best quarter for net adds on record. Maybe you could just break that down across the various single products and for games specifically, how material were factors like putting mini crossword behind a paywall or PIPs, which you rolled out in August?

I'm happy to take both of those, David. Thank you. Let me start with video and the Watch tab, and I'll step back just a little bit and note a number of things we're doing in video and the Watch tab is kind of one of them. We now have on our site and in the app substantially more news video on whatever the major stories of the day are. We have many more reporter videos with reporters essentially explaining their work and humanizing the journalism. That's great for enhancing trust, and it also serves as a teaser to longer-form work that we do.

We turned most of our podcasts now into full-length shows. The Watch tab and the work we've done in the today feed to get people to watch video more and go to that tab is all just kind of part of that broader effort to get more engagement with more and more of the journalism in video. In addition, by the way, to reading and listening, neither of those things are going away.

In the Watch tab specifically, I would say it is early days on your question about advertising. The most important thing we can do is get lots and lots of people to engage with our video on platform, in the tab and off-platform. And the more we do that, the more opportunity, I think, it opens up across all of our revenue lines. So I'm sort of long term optimistic about that.

On your question about single product subscriptions and games, we are really pleased with the strong net adds growth in the quarter, and I would say it's kind of a strategy working as it's designed to do. We've got multiple growth levers, including games that are all going to play different roles in sort of different quarters and games definitely played a role here.

On the MINI specifically, which I think you asked about, the idea here is that we were pretty intentional about long-term value creation in the case of the MINI, our decision to make that a paid subscription, very intentional one. We believed and it's proven to be the case that we would do it in a way that did not sacrifice in a big way, engaged audience. So we feel great about that. And the idea here is that we've got sort of multiple ways to monetize across the portfolio, including in games. And what we're optimizing for here is having the widest possible audience for all of our work, in this case, games and also having plenty of reasons for people to feel like they should pay.

And you could sort of extrapolate that to the kind of broader theory of how we make free pay decisions across the enterprise. I think the thing to know on games is we are always adding value to the portfolio. We've got a robust pipeline kind of at all times of new games in development and a very good track record here, and we're just excited about the opportunity.

And the next question goes from -- goes to Kutgun Maral with Evercore ISI.

Two, if I could. First, advertising continues to be an area of strength in the quarter, and you expect the momentum to carry into the fourth quarter. I know you called out marketer demand and new advertiser supply, but can you unpack the dynamics there a bit more? How much of this is attributable to the underlying market compared to uptick from some of the new product innovations that you've been actively rolling out across the portfolio?

And second, on affiliate licensing and other revenues, you had a healthy third quarter. Is there anything more you can share on Q4 and the outlook for the slight deceleration in growth to mid-single digits? I know we're not talking about 2026 just yet, but I was hoping for more color, especially in the context of the Amazon AI partnership.

Why don't I take the advertising question, Will, you'll take the one on other revenue. Look, I think the first thing to say is we're really pleased with what we saw in the quarter and frankly, so far all year. And it's a little bit of everything working to answer your question directly. The big picture here is we kind of see the ad business increasingly like we see the consumer business. The consumer strategy is to mean more to more people. And in advertising, we're kind of providing more value to more advertisers in more ways.

So we've got these really big products in big spaces where there's lots of consumer interest, especially in news and I would say games and sports but also shopping and cooking. We have lots of engagement for all of those products, which allows us to really effectively target people at scale. We have great ad products. By the way, we've been at that targeting and at those ad products for many years now, very deliberately building first-party data, very deliberately building a suite of proprietary ad products. And we're continuing to sort of extend those across the portfolio.

And we keep innovating in our ad products. So our AI-powered brand match, which I think we launched a year ago is really also helping on the targeting front. All of that means we've got ad products that work, and I think we're executing well. So the sort of broad answer is it's a little bit of everything that you're pointing to.

And then on affiliate licensing and other and the dynamics there, it's just always important to remember that, that revenue line has a lot of different items that can both create some variability quarter-to-quarter as well as make it difficult to isolate the contribution of any one particular item. And so we've said this in the past, it's obviously not just affiliate. And licensing, it's multiple licensing deals there. It's booked TV film, it's commercial printing. So a lot of different dynamics.

And I think the most important thing to say there, looking forward, not just Q4 but into the future, as you said, is just given our strategy to make our news journalism and product portfolio more valuable to more people, we expect this revenue line to grow over the long term as part of our multiple -- our multi-revenue stream model.

And the next question comes from Doug Arthur with Huber Research Partners.

You didn't break out The Athletic as promised. Any color on it? Was it additive in line? Any color would be helpful.

Doug, I'll just say we continue to be very pleased with the performance of The Athletic. It remains on track for all the things we wanted to do. I mentioned in my remarks, sort of consistently strong engagement across the portfolio and the addition of video in lots and lots of places. I think this was the quarter where we introduced NFL footage. We already had NBA footage.

We introduced NFL footage, and we're combining that with our signature journalism and our reporting, and I think that's a great product experience for engagement. NFL is a huge part of what The Athletic covers. And we're continuing to build audience and awareness for the brand, Athletic. And I would just say it's all going well, big contributor in advertising, all going very, very well. And it's still early.

Excellent. Just as a follow-up on the surge in single product subscribers. Are you getting the conversion of those over time that you expect? I mean, how is that playing out to higher-value products?

I think the best way to describe it is we really -- it's really the model working kind of as it's designed to work. Our single products are serving as a wonderful engine of audience and engagement and in many instances, or funnels to get people to subscribe either to the individual product or to the bundle. That's all kind of working as we expected it to. And they're also all proving to be very valuable to the sort of multi-revenue stream monetization. I've called out games and sports, in particular, as being big spaces that marketers see real value in and want to be around.

And we have on games, scaled audience, lots and lots of people who play our games. And in The Athletic, we are really growing the audience. So we see a big opportunity there. But I would say it's all kind of going. It's all working as it's designed to as far as driving subscription, advertising and ultimately, the whole model.

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

Well, thanks, everyone, for your interest and for joining us on the earnings call. We'll see you next quarter.

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

Very excited to have New York Times and Will Bardeen, CFO of The New York Times, joining us today. Thank you for joining us.

Thank you. I'm very glad to be here.

Yes. This is great. I don't think we have ever done a fireside.

No.

All right. I will try not to screw it up.

I guess I'm going to -- I'm relatively new to your story. I don't know exactly how many years we've covered it. But when I went through sort of, at least backward-looking, sort of your strategy, and I was talking with Anthony about this, he said, "Oh, yes." He says you've got a pretty good handle in terms of what we're doing. He says, "You really need to meet Will because he was really the architect of this before he became our CFO."

So I would love to just start, if you could just give us, even just to paint the context, roll the clock back. You're sitting there with this iconic brand. Presumably you have some mandate to pivot to digital. Just walk us through like what was up on the whiteboard, what was the hypothesis? And then what were the broad contours of your strategy a few years ago and how has it evolved to where we sit today? What is it that you've learned along the way?

Well, I could spend the next 35 minutes talking about that, that would be fun. But yes, so as you know, I've been in the CFO seat for about the last -- a little over the last 2 years. But I started as Head of Strategy for New York Times back in 2010. And so I was part of the leadership team that drove the digital transformation.

And that means everything from launching the digital paywall in -- for news in 2011, to developing cooking and games as standalone paid products. We really got that going around 2015. Buying Wirecutter in 2016. The acquisition of The Athletic just a few years ago. And all of that was an effort, a very deliberate effort, to transform the business into a global digital subscription leader, sort of united by the brand of The New York Times and the value proposition and the mission.

What I'd say is, fast-forward now 15 years, and we now have sort of a name for this as of 2025, we call it the Essential Subscription Strategy. It's called the Essential Subscription Strategy. Essential, because we believe we're now essential and aspire to be essential in many people's daily lives.

And it has 3 pillars. So the first pillar is being the best news destination in the world. The second pillar is surrounding that news destination with leading lifestyle products in these huge spaces that are essential in a lot of people's lives beyond news: sports, games, cooking, shopping advice. And then connecting these products together into an integrated bundle.

And so we -- it's been 15 years, you can imagine all the things we envisioned, all the things we've learned. I think one thing I'd highlight is the central thesis that we had when we embarked on this strategy has completely proven out. And what I mean by that thesis is that independent, fact-based, expertly reported, human-made journalism of the highest quality, combined with cutting-edge digital technology, could be a great business model and drive significant shareholder value creation.

And I think just last year, you can see that with our digital subscription revenue growth of 14%, AOP growth of 17%. First 2 quarters of this year, you can see us sort of continuing at a similar pace.

And I would say there are lots of things you learn that you weren't necessarily surprised by. That was a conviction we have that's proving true. There are a lot of other things that I would say I'm sort of pleasantly surprised. You can imagine sort of having this strategy, but you're always looking towards sort of the rolling next 5 years, where -- what levers of growth do you have next. And the thing I've been so pleasantly surprised about with this long-term strategy is just how many times we're just uncovering and unlocking new growth levers around this central idea. And so here we are 2025, looking ahead, let me just talk about maybe a few of those.

So number one, let's take journalistic innovation, format innovation. So when we started, we were -- as The New York Times, we thought about ourselves, I think most people thought of us as primarily text-based, maybe photo and multimedia. But we're now scaling in audio, we're scaling in video. So the current -- sort of the present, it's happening rapidly, but certainly the future of the New York Times is not just reading us, it's listening to us and it's watching us.

Secondly, I talked about the product. So we started as this digital news product. We now have these leading products, these big complementary lifestyle spaces. And those appeal to not just people in the United States. One of the big sort of pleasant surprises when we rolled out the bundle was just seeing how resonant the bundle was internationally, not necessarily what we'd expected when we put it together. And that's giving us a lot of excitement for international growth.

And then finally, I'll just highlight the economics. So we called it the Essential Subscription Strategy. We call it that. Digital subscription is absolutely at the center of our model, but we have advertising, affiliate and licensing revenue streams now, very strong revenue streams that are part of multi-revenue stream model. And each of these revenue streams are high incremental margin revenue stream. So we're really pleased to sort of see that.

So when you add it all together, the thing that I kind of continue to be energized by having been with this journey for so long is just how many more growth levers we continue to see coming out of this strategy. And it just gives us a lot of confidence for the ability to continue to grow revenue, AOP and expand margins for the long term.

Okay. I'm not -- I don't want to put words in your mouth, but I want to -- can I just probe on this strategy a little bit? Because the way I would have described it, looking from the outside, right, with no information, is a little bit differently than that. So in 2010, I think the hypothesis was people are not going to pay for news, right? I think that was sort of the governing thought. There were no analogs, right? Everything was free and you're never going to get anyone buy the paywall.

So I've looked at your strategy as: how can we take a consumer that has a narrow interest, with cooking, with sports, with games, and at least begin to get our hooks in them and then sort of open up into a broader portfolio of everything that The Times has to offer? And so it's all about sort of casting a wide net, piquing someone's interest and then expanding that relationship, in a classic software sense, land and expand, right? Is that the wrong way to describe what you're doing?

I wouldn't call it the wrong way. I appreciate the notion. I would say maybe coming from the fact that we were a newspaper that thought of ourselves as meaning always a lot in sort of a general way to a lot of people. But I think what I'd highlight, the nuance in there is a newspaper, a news organization was always made up of a lot of different things that connected sort of in different ways to different people. And we very much realized that from the very beginning.

So part of this was how can we rebuild those -- that collection of needs so that the person who really is interested in sports, so the person who's really -- they have a reason to subscribe? And so in that sense, I take a little bit of your point, but we've always seen it as a very expansive strategy. I mean delightfully, we kind of continue to be more and more surprised about how expansive we think we can make it. But that was always the case.

And it was really the pillars of it were journalism -- high-quality journalism, the kind I described, is worth paying for. Two, we can and should have direct relationships for that. And three, that we should anchor that habitual behavior we are cultivating across all these needs with the subscriber relationship as the economic anchor. And so everything else has been built around those 3 principles.

That's great. I have the pleasure of speaking to a lot of bearish investors on your stock. And surprisingly, one of the things that comes up over and over again is "The New York Times is not going to hit this 15 million subscriber number by 2027." And you guys seem totally like unfazed by this line of inquiry. It's just -- and to me, I think it -- personally, I just think it's sort of irrelevant because it's a KPI that's out there and it's an aspiration and I'm just more focused on your free cash flow. But can you just address sort of when you laid out that 15 million subs by 2027, was that an aspiration, is it a hard target? How confident do you feel in your ability to hit it? Is it even important to you?

Sure. I mean it's an aspiration to 2027, it's something we absolutely are still aiming for. We see a real path to get there. And I do want to highlight to the point about how many people we think we can ultimately get to subscribe. We see it as just a milestone along the way. No, I appreciate there's an investor debate. You, Jason, have to at least make assumptions about how quickly we're not going to penetrate the market and all that.

So what I'd maybe do is just highlight why we have so much confidence in the levers to drive subscriber growth at these kinds of levels. And the first one is we think the TAM is absolutely there. We have 150 million-plus registered users, and growing. We have 50 million to 100 million users coming to us every week. So we just see persistent demand for what we do across the portfolio. We ended last quarter at 11.9 million total subscribers. And so just sort of simple math, this is still a reasonably small percentage of this engaged reach and audience that we have.

The second thing I'll say, and this has been the case now over the last 15 years, so it's just something I have a lot of pattern recognition for. We continue -- we, The New York Times, continues to become more and more differentiated within this TAM. The New York Times brand, we've earned for decades sort of this reputation for quality and rigor. And even just as importantly, while so many other people in the market are not only not investing, sometimes disinvesting, we've just been deliberately, and in a disciplined way, continuing to invest into these incredibly valuable products to mean more things to more people, across more demos, more geographies.

And then the third thing, that may be not quite as apparent from the outside, is how much part of our deliberate investment strategy as well has been going into building really world-class technology capabilities. And so what that enables us to do is make sure we're using every kind of tool in the toolbox to help drive engagement, drive conversion of this TAM. That's everything from we have really sophisticated AI machine learning models that are helping us do -- run a dynamic paywall. We have value-based pricing, it's a very sophisticated value-based pricing approach, which I imagine we might talk a little bit more about.

And then things like personalized content recommendation. I mean there are plenty of other digital subscription leaders who, in other categories, who are -- who do a lot there. But that's something we're continuing to drive as well. So when you add all that up, we are pretty confident that we've got a lot of levers to continue to penetrate the TAM.

Okay. That's great. I risk sort of trying to explain something complicated in words that should be done with pictures, but I'm going to try and do this. When I went back and looked at long, I think, roughly 2010 to 2020, on your news-only pricing and news-only volume, there is this very clear relationship. As you lowered prices, you got more volume. When you rejiggered your disclosures where we started to get bundled and news-only, again, for a couple of years, there is this very clear relationship. It's as you raised news-only prices, fewer subs; as you dropped bundled prices, more subs. It just screamed elasticity of demand to be all over.

And this is a couple of years ago. And Anthony said to me, he's like, "Yes, but you haven't given us any credit for any data point that isn't on this P x Q chart." And I said, well, that's because we've gone 12 years without you putting up a data point that's off the P x Q chart, right? It's just an elasticity story.

In the last 4 quarters, maybe 5, you're putting up data points that are off that sort of demand curve, right, where you're getting prices that are higher than you've ever got, right? I mean not in absolute terms, but you're getting higher prices without degradation in quantity. And that seems new to me, maybe it's about 1 year old. Do you look at the data the same way? Do you feel like the last 4 or 5 quarters are as important as they seem to me on the outside?

Well, the way I'd describe it is our sort of approach and strategy to pricing and everything, it's always been about how can we sort of maximize our potential long-term revenue growth. Obviously, P x Q is part of that equation. And so you're sort of -- then we sort of -- there's some -- we described our strategy as confusing but it's working. So by exposing those buckets, I think it was hopefully helpful in seeing some of the data of how it works.

It's great.

Now the way I would describe what that is, in other words, what we've always been doing, and because it's been a deliberate sort of strategy been refining, why you sort of see these dynamics, it's a reflection of a very sophisticated, value-based pricing approach that I don't know how common this is actually, which is one of the reasons why maybe it's -- it was a little hard to decipher.

But what we're trying to do is capture, sort of at all times, aim to capture the entire demand curve for everything that we offer. And we have this rich product suite of standalone products all the way up to the full bundle. And the way we've done that is we -- it's a few steps.

So we bring people in. Most people, not all, but most people we're bringing in on promotional pricing. And we're doing that because we're not always sure whether they're going to fully appreciate the value of everything that we have. We ideally want them in on the bundle. That's the best way to get them exposed to the value. But we'll take subscribers however they want to come in; they're all great.

And then what we're doing is, during this promotional period, we are doing everything we can to introduce them to everything we do and we're looking at their engagement. And we have really sophisticated ML models, understanding what kind of engagement is happening. And then when we get to a certain point, based on the offer that someone came in on, we'll raise and ask them for more money.

And many, many people we're asking them to go all the way up to the full price. But based on the engagement behavior we're seeing, it's important to recognize, sometimes we bring people up to intermediate prices. And occasionally, we'll be also just extending someone's promotion because we think that's the best way for this group of subscribers to maximize lifetime value.

And then it's also important to recognize because it's an important part of the story, that for these cohorts of really tenured subscribers who is absolutely clearly appreciating the full value of The Times, everything we offer, all the value we're adding, we then raise prices or at least consider raising prices over time. And so all of this is sort of a way of making sure we are capturing that full demand curve.

And what's giving us confidence, we don't guide on ARPU, we think of this as an important metric, but what we're really focused on is long-term revenue growth. So we don't guide on ARPU. But we have a lot of confidence in that sort of high-quality subscriber growth that's reflected in being able to grow both subscribers and ARPU.

And that confidence is based on the fact that we just continue to add lots of value into the products, that we're seeing really strong engagement in response to the value we're adding. And we're watching these step-up points really closely all the time, and we continue, we've said this repeatedly, we continue to be pleased with what we're seeing. When we ask people to pay more money, we're seeing really good retention performance, really good monetization performance. So that's just giving us a lot of confidence that this model is working well, and we just continue to refine it, and we're continuing to get more data that enables us to do it even better and better over time.

So in this sense, the fact that your business is becoming more digital gives you just much more signal from the consumer that you never really had.

Absolutely. That's absolutely the case.

Okay. I'm going to shift to digital ads. I think you did almost 20% digital ad growth in the last quarter, much better than you've done for quite some time, I think better than a lot of investors were expecting. I guess the question is, was there something different or unusual about this quarter? Like I mean, is that normal? It feels like pretty extraordinary.

Well, our Head of Advertising is here, Joy. So I would say it's because of Joy. And she is great and she's been here a couple of years, and I do think leadership matters. But what I -- like I have been here 15 years as well and I've seen a lot of cycles of advertising. I do think there's something here that's really exciting that's worth calling out.

And the way I would describe it is we designed the bundle, we called it the Essential Subscription Strategy, we designed it for consumers. And what I think we're seeing and finding now is that the very elements that make the consumer subscription strategy work, we now can identify sort of the analogous drivers in the ad business, and it's really exciting.

So kind of what do I mean by that? I'll break it into just kind of 3 categories. The first is advertising supply, the second is advertising demand and then the third is ad performance.

So when I say advertising supply, we've got this now bundle of lots of engaged consumers across all of these big spaces, not just news, but sports, games, shopping advice, cooking. And as we've expanded all of this audience, we've been rolling out supply to all this engaged audience. So more ad supply, great.

The second thing though is just as important, this is an integrated system. A lot of the supplies coming into these categories. I mentioned, sports, games, shopping advice, cooking. These are categories of a lot of marketer demand.

And so what does that mean? It expresses in a couple of ways. One, our traditional existing advertisers find more reasons to spend with us where there's a better chance of getting more of their investment dollars. But we're also seeing net new advertisers into the brand who may not have considered The Times top of mind before, because of our presence in sports, the scale that we're at in games. So people are starting to come and just ask for The Athletic and ask for games and we are able to satisfy that in ways we hadn't.

And then the third piece, which is all of these are related, as I said, it's a system, is ad performance, because we have all those registered users I talked about, all the subscribers. This is immense amounts of first-party data. It enables us to target effectively, we have high-performing ad products. And one of the many places, we've been investing into AI. We also then can use AI tools to essentially enhance our targeting capability to other parts of the inventory. And so this is an integrated system. In quarters where everything is working, it can be -- drive some pretty impressive growth.

And I think when we look at each of those drivers and levers, people often ask the question, what inning are you in? We do see lots of running room. We just think this is a really powerful model. I always -- we only guide advertising a quarter ahead. It's, obviously, there are a lot of other factors in advertising, macro, et cetera. But this is to me a fundamentally exciting sort of development for our ad business, that's been a long time coming. It's built sort of on the back of this bundle strategy. And it's giving us more optimism, me, more optimism, someone who's been here, about the sort of long-term growth potential of advertising than I've ever had.

That's great. You mentioned using AI to sort of help fuel your ad business. I want to flip it around and talk about AI as a source of revenue. I candidly get a little bit confused when I listen to the Wall Street Journal or I listen to Gannett or I listen to you in that there doesn't seem to be a through-line, like anything that's consistent at the AI paying money to publishers to tap into their reservoir of content, nor is there any sort of consistency in terms of, I think, how the publishers are sort of thinking about how to partner, not partner, sue AI firms.

So can you just start at a high level and just remind us, like what is your philosophy regarding AI? Do you feel like we're at a point where there will be some harmonious relationship between these AI firms and publishers? Or is it still very much a TBD?

I'm happy to -- I mean, I will say sort of our approach has been very consistent and very deliberate. And so let me describe what I mean by that, because AI is a technology and with a lot of potential, but it's not the first sort of big platform development that we've been navigating, right?

So the way I'd say it is that we have a deliberate approach to doing deals with platforms, and always have, that we think gives us a really good chance to capture significant opportunity here. We have a really valuable IP that is valuable to others, at the same time that we're managing risks. I don't want to pretend there aren't risks to this stance. And those principles are really clear for us, and they have been for quite some time.

So the first thing is we do deals that we believe are consistent with our strategy. I've described our strategy. And what I mean by that is, ultimately, we think this -- any deal we do is going to have to support, over the long term, more engaged, habitual, direct relationships with the brand and products of The New York Times. So that's sort of number one.

Number two is we expect to require control over the way our content is used. And number three is, for the use of that content, based on the use, we expect sustainable and fair value exchange. And so those 3 principles have governed how we do deals with platforms in the past. We are -- we just did one with Amazon. That's the first that was sort of centered around AI specifically.

But what I'd say is we're certainly open to doing more deals as long as those principles are met. At the same time, it's really important, and always has been, this is not new, that we're enforcing our rights. And so we're doing both of those at the same time.

Now in terms of what it means for revenue and the model, I just -- we've said, and I'll continue to say, we believe we have a multi-revenue stream model for which licensing can be an important growth driver. And if we follow these principles, which we intend to, then we believe it's only going to be sort of supportive and helpful to our long-term strategy.

So for us, it's consistent, and we'll let what others do, do what they do as well.

Great. I'm going to shift and talk about your marketing spend. You spend about 5% of your revenues, I think, on external marketing. There is a little bit of, I think, an adverse reaction in your stock. I think it was in the fourth quarter when the marketing spend was a little bit -- at least the market perceived, it was elevated. It's since sort of quieted down a bit.

But I know investors are so focused on this metric. I would just love for you to just share about, what is your philosophy regarding marketing spend? What are the metrics that you're looking at, the channels you're using? And I think you guys just launched a pretty interesting new ad campaign, which implies that there might be a new chapter in terms of how you're thinking about getting new customers to use The Times.

Yes. No, I'm glad you saw that. It's not a new chapter, but let me explain maybe a little more about our approach to marketing, but then also sort of how marketing fits, because I actually think that's in some ways the most important thing to describe. So for the -- I'd highlight for the purposes of this of 2 types of marketing. One is returns-driven paid media and the other is brand marketing.

I'll start with returns-driven paid media. That's the bulk of what we invest in with marketing. So I'll start there. And it's exactly, based on the description, what you'd expect, meaning we're closely tracking the ROIs. How do we do that? We're estimating lifetime value of the subscribers we acquire. We're looking at the cost to acquire the subscriber. And we are making sure that we believe we're getting a really good return on the capital we're investing into that marketing, because there are a lot of factors that impact returns in every given quarter. That will fluctuate accordingly. But overall, we think it's a great use of our capital. When we have those opportunities, we'll do them.

And the last thing to say is this is an area, like many I've talked about, where we think AI, and AI is allowing us to continue to work on improving the efficiency of our spend, which we can then use to either put more capital to work or get better returns on the spend we're doing. So that's the return-driven paid media. And then we use for that, by the way, search, social channels, like nothing too revolutionary there, always looking for the best opportunities.

The second category, brand marketing, you mentioned. We -- that is even more lumpy because we're not always doing it. We are in market right now with an exciting brand campaign.

It's good, by the way.

Oh, good. I'm glad to hear that. Yes. No, it's -- we've got great brand marketers. So when we find the right idea, we do think brand marketing can be really valuable and important to help with awareness, to help with new product launches. So you potentially see that in any given quarter, and that will be a bit lumpier.

But I think the important sort of thing to do with our marketing is just to frame it that it's an important and valuable lever. We clearly spend and invest into it. But it's not -- our model is not fundamentally reliant on that. Most of what our investment, most of what our attention is it's -- we called it product-driven growth in the past. It's about the investments to journalism and the product.

And that's sort of represented by the fact that the vast majority of the starts we get are organic, meaning we are not using marketing to drive those starts directly. They're coming organically. They're people, because they're either coming directly or through other channels, to our stories that we're putting out every day, the product features that are engaging people and bringing them back. And it's that sort of disciplined investment that represents the core of how we sort of expect strategically to grow over the long term, with marketing being a really important and valuable lever alongside that.

So that leads -- that is my next question. I was looking at your product development costs. In 2019, they were about half of what your sales and marketing budget is. And now the 2 are almost comparable. Is that what you're referring to?

That's exactly what I'm referring to, is that. So the 2 pillars, journalism and product development. And product development is basically means all of the sort of technology we're investing in, as well as the people who are very good at developing that technology. And it's everything from our app designs to the new formats, format innovation, to the data and tech platforms that enable us to take all of this data and get so much insight and run machine learning models. And all the AI I've been talking about. So the ability to have us sort of be managing dynamic paywalls and content recommendation, ad targeting, so all of this is part of that investment.

And I think the way that we -- the reason why we think this is just such a great investment is you're seeing the results in the metrics that we care about, in the engagement of users, in the pace of sub growth, through conversion, retention.

And really importantly, leverage. I mean this is where we believe, not just by looking at that line, it's really powering the entire model. And so by -- we have the kind of luxury in many ways, we have the scale, the audience and subscriber scale, as well as the resources, to invest into this. And we can invest relatively sort of large amounts in absolute dollars relative to others, but given our scale, it's not that significant. So we're able to get real leverage and you can see sort of ultimately one of the reasons we continue to be confident in driving our profit growth and margin expansion is because of the results of that product development.

That's great. So this feels like more of a Wall Street question, but I'm going to ask it because I get it all the time from investors. And I think what some investors are fishing for is this sort of discontinuity in your P&L and they're like, "Oh, my gosh, what happens if the print business goes away? Is this going to be a bad day or a good day? Or what does the P&L look like if I artificially slice the revenues and income statement, digital on one side, print on the other?"

And so I would just love a perspective from you in terms of how you guys think about that print business. Do you have sort of internal numbers where you can measure with some precision if print is still profitable? And do you see a time in 5 years or 10 years or 15 where there won't be a print business?

So we measure print, like everything, very closely. So we certainly understand the economics of print. And what I'd say is not going to be too dissimilar to what we've long said, which is that, it's no secret, print is in secular decline. We expect that decline essentially just to continue. And we've sort of put that into all of our economic expectations. It's always built into our guidance and in our targets when we put those out in 2022.

And the thing that I do want to make clear, because we're not in print as a charity, sort of nostalgic case, these are really valuable subscribers. There are advertisers that still really love print as well. And so we continue to manage the business for that value and the sort of continued sort of sense that it's sort of always been mischaracterized, for us, by the way, I don't -- this isn't for the whole industry, it's not for other companies, but for us, that sort of sense that print is on the last gas, is far from the case. And we continue to just manage it, to get the value out of it. As long as that customer demand is there, it's a very high-value product for us.

Okay. My last question, on uses of cash. You guys have said you return roughly 50% of your cash in the form of buybacks and dividends. But I can't help but notice, I mean at least on our numbers, $1 billion-ish of cash, short term, long term and securities that you have on hand today. You guys have always said you're very disciplined in your M&A. And I think historically, you've always been very conservative in terms of how you think about the right amount of cash to hold on the balance sheet.

But what -- can you just frame for us, for the cash that you're going to generate going forward that's not used for dividends, not used for buybacks, are you still on the hunt for sort of intelligent M&A? Is that the right way to think about it? Or should investors think maybe more cash will get returned to shareholders than the 50%?

Totally appreciate the question. First, we're really pleased to have such a cash-generative model. That's great. And our -- no change to our capital allocation strategy. We think it's a very good strategy for long-term returns, attractive returns on capital.

So what is that? We're investing first and foremost into the organic growth of the business, everything we talked about. Secondly, we're returning significant capital to shareholders. We have a target out of returning at least 50% of our free cash flow, and emphasis on at least.

I mean to the very specific point of your question, we also have a very strong balance sheet. And what I'd say about that is at a time of such sort of dynamic change in the industry, we see value to the optionality. And what do we mean by optionality? So I do want to make clear, part of that optionality is potentially increasing returns to shareholders, should we see the opportunity to do that attractively.

And then the other is potentially M&A, as you described. And as we've said, and you just said, we have a really high bar for M&A. What does that mean? I mean I was the Head of Strategy and Corporate Development for a long time, so I'm happy to sort of do a little bit more there to shed more light on that. It's got to be, any M&A, consistent with our brand, supportive of accelerating that Essential Subscription Strategy, that strategy we've described, and promises or we expect particularly high returns, risk-adjusted returns, on capital.

And what does it mean to support the strategy? I mean, I think you've seen in our track record what that looks like. We consider whether we -- there's an opportunity to add a product that adds value to the bundle. So we did that with The Athletic, we did that with Wirecutter. We consider whether in a space we're already in, whether there's something we could buy that could help sort of supercharge growth in that category. We did that with Wordle very effectively with games.

And then we're always considering whether there's some sort of capability that might -- we could build it, we could buy it. And we did that with company in audio called Audm, which helped us with our audio capability. So that just sort of gives an example. So there's no -- we're very strategically disciplined.

So that's just sort of -- we consider it. But when we kind of step back and think about where we are, we love the spaces we're in. They're big spaces. The strategy is working as designed. We don't feel like we need anything. But at a time of such dynamism in the industry, having that strong balance sheet and these resources, we think having the optionality has real value over the long term to create attractive returns on capital to our shareholders.

That's great, Will. Thank you so much for the time.

Sure. Thank you.