Hello, and welcome to The New York Time Company's First Quarter 2021 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. I would now like to turn the conference over to Harlan Toplitzky, Vice President of Investor Relations.
Mr. Toplitzky, please go ahead.
Thank you, and welcome to The New York Times Company's Q1 2021 Earnings Conference Call. On the call today, we have Meredith Kopit Levien, President and Chief Executive Officer and Roland Caputo, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that management will make forward looking statements during the course of this call. 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 20 20 10 ks 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. With that, I will turn the call over to Meredith Kopit Levien.
Thanks, Harlan, and good morning. The Tyme finished the Q1 with more than 7,800,000 paid subscriptions across our digital and print products, More than 100,000,000 registered users and an average weekly audience of 76,000,000 readers. That foundation, plus our unmatched journalistic breadth in a market of at least 100,000,000 people We're expected to pay for English Language Journalism, grounds our conviction that we can substantially and profitably Our strong financial results in the Q1 demonstrate the Success of our strategy and the promise of our large and growing digital subscription business. We recorded adjusted operating profit of $68,000,000 an improvement of more than 50% compared to the Q1 of 2020. Digital subscription revenue increased 38% in the quarter and we added 301,000 Net new digital subscriptions across news, cooking, games and autumn.
Our first quarter results also reflect a real improvement in digital advertising. That improvement was driven by a brisk Market and our work last year on refining the competitiveness of our offering and the margin profile of our business. Digital advertising growth over Q1 in both 2020 2019 demonstrates the advantage of our In our last earnings call, I noted that fluctuations in the news cycle And we need to considerable variability in net digital subscription additions from quarter to quarter. In February March, our audiences declined from their historic highs last year, and we saw fewer net subscription additions in the latter part of the quarter. We expect moderated growth to continue through the Q2, traditionally our softest of the year.
With lower forecasted second quarter performance, we now expect annual total net subscription additions to be in the range of our 2019 There is no doubt that the news cycles of the last 5 years, tapped by last year's tumultuous presidential Racial reckoning and the COVID-nineteen pandemic created unprecedented demand for Times Journalism and therefore accelerated subscription growth. At the same time, with each passing quarter, we've improved many aspects While we don't know which storylines will drive the next big news cycle, we do know that the size of our newsrooms, Its range of expertise and our continued investment in meeting more needs position us to capture that demand whatever its source. In the last few months, the breadth and reach of our journalism was on full display, while a group of data journalists In one part of our newsroom continued to update the world's most comprehensive COVID case tracker, our parenting team captures the ethos of what It feels like to be a mother right now with their breakout multimedia feature of Primal Scream. Our metro reporters led the coverage of the multiple scandals rocking Albany, while our long time lead reporter covering Premier League Football broke the news of the Super League that wasn't and our feature length documentary Framing Britney Spears, which aired on FX and Hulu had a huge cultural impact.
The world is getting no less complex It's central to our model and it will continue to be the primary draw for the majority of our audiences and paying customers. But it won't be the only draw. 10,000,000 people a week now come to the time for names beyond news, seeking recipes, Taken individually, NYT Games and NYT Cooking are among the largest journalism backed Subscription services in America and our plans for expanding our subscription portfolio through Wirecutter and Autumn Reflect our deeply held belief that The Times can play an even bigger role in the lives of tens of millions of people. Combined with the differential value and demand advantages of our core Natus product, we believe these I'll turn now to our underlying subscription drivers in the quarter and some specifics about our work ahead. While total audience, registered readers on-site and subscriber engagement are somewhat lower this year than last, These metrics are all higher than 2019.
We now have a significant base of people who read the Times Every day, a base that is substantially larger than before the pandemic. This is a result of our continued strength in news, The shift we made almost 2 years ago to a registration based model and the fact that we acquired so many new registered users in 2020. Many of those registered users are now interacting with us in new ways, which point to our opportunities for growth. For example, we saw a meaningful uptick in the range of storylines that drove user engagement in the Q1, a Positive development given the strong correlation we've described in the past between experiencing the breadth of our reports and subscribing. Our live coverage with which we've been experimenting aggressively since late 2019 now plays a significant role Sharing strength at the top of our funnel as well as repeat engagement.
10,000,000 readers came to The Times for coverage of Derek Chauvin's trial With our live experience driving much of that readership, more than a third of our registered users and subscribers engage with this coverage on a weekly basis, With that number expected to increase, thanks to a steady rollout of new innovations. Times has always had a large number of regular newsletter readers, and our newsletter audience has grown significantly since we
began asking
users to register. 15,000,000 15,000,000 people read The Times newsletter every week, including 5,000,000 The newsletters represent a promising opportunity in our subscription funnel, both to encourage registered users to subscribe and as a source of subscription value. At nearly 1,700,000 subscriptions and counting, Cooking and beans are succeeding its products in their own right with a lot of runway ahead. But what's particularly encouraging is their ability to enhance In the last few months, we think we've begun to experiment with how we sell our multi product bundle New ways. Early tests are promising and we plan to introduce a more substantial overhaul to how we price And merchandise over time, we expect the bundle to benefit conversion, retention and long term monetization.
I'll turn now to advertising. In the Q1, we recorded $59,000,000 of digital advertising revenue, a 16% increase over the Q1 of 2020 and encouragingly a 7% increase over the same period in 2019. This is the last quarter that we were comparing against revenues from the marketing services business we've now exited And also from the removal of open market programmatic advertising in our apps, so the actual improvement in digital advertising versus Our growth in registered users has propelled the rapid expansion of our first party data products, which are proving effective for marketers, while affording readers' privacy from 3rd party trackers. Demand for these products is driving 20% of our digital advertising revenue in the Q1 compared with less than 10% in the same period last year. And as of the Q1, we have fully eliminated our reliance on 3rd party data targeting in direct sold advertising.
Audio advertising sales also continued to be strong as total audio listeners grew 30% in the quarter versus last year, driven by the addition of Serial and This American Life to our portfolio. Our production is beyond The Daily, including Sway with Tara Swisher, Sure. The argument with Jane Coaston and the Ezra Klein show are also performing well with both listeners and advertisers. Print advertising was still relatively weak in the quarter and while we expect some categories to recover in the latter half of the year, we do believe that some of the pandemic losses Based on all of this, plus low comparables in the second quarter and the fact that our digital advertising business is now larger than print, we expect a I think business is now larger than print. We expect a material acceleration in our ad business in the second quarter.
Before I turn things over to Roland, I want to mention our continued focus on our people and our culture. I've described this next decade in The Times business as being about scaling our strategy of journalism worth paying for. To do that, we need a culture that attracts, develops and retains top talent, not just in our newsrooms, but across all of our disciplines. Our culture has enabled the world's most admired and influential news report and has also helped create Innovative and thriving digital business. Success from here will require that we nurture the best aspects of that culture And also evolving.
In both cases, we are making steady progress. In the last quarter, we launched a multi year plan to build a more diverse, Equitable and Inclusive New York Times that reflects the global audience we serve and supports our mission and business ambition. We also continued to advance our underlying tech strategy, which reflects the increasing importance of engineering excellence And finally, we've begun to define the future of our workplace to offer more flexibility while preserving the kind of physical togetherness It enables much of our team oriented creative work. I'm confident that all of this will propel our strategy and our growth And with that, I'll turn it over to Roland.
Thank you, Meredith, and good morning, everyone. Adjusted diluted earnings per share was $0.26 in the quarter, dollars 0.09 higher than the prior year. We reported adjusted operating profit of approximately to our core digital news product and 134,000 net new subscriptions to our stand alone digital products For a total of 301,000 net new digital only subscriptions. As of the end of the quarter, we had nearly 900,000 game The quarter with digital only subscription revenue growing 38% to nearly $180,000,000 The continued acceleration in the rate of year over year digital subscription revenue growth from 18% in the Q1 of 2020 To 37% by the 4th quarter and now 38% in the Q1 of 2021 was a result of three factors. First, the large number of new subscriptions we have added in the past year.
2nd, ongoing strength in Attention of the dollar per week promotional subscriptions who have graduated to higher prices and finally, the positive impact from our digital subscription price increase, which began late in Q1 of 2020. As you'll note in the guidance we gave, we expect that rate of growth Slow beginning with the Q2 as we begin to comp against the strong 2020 results. Digital news subscription ARPU for the quarter increased approximately 1 percentage point compared to the prior quarter and declined approximately 6 percentage 10ured full price subscriptions. ARPU related solely to domestic new subscriptions increased 1% versus the prior quarter and declined We expect to continue demonstrating pricing power throughout 2021 as the impact from subscriptions Graduating from discounted promotions and the price increase on 10 year digital subscriptions provides a tailwind to digital news ARPU throughout the year. On the print subscription side, revenues were down nearly 4%, largely due to a decline in single copy and international bulk sales.
Revenue from domestic home delivery print subscriptions grew 0.5% in the quarter as home delivery price increases more than offset year over year subscription declines. Total daily circulation declined 12% in the quarter compared with prior year, while Sunday circulation declined 2%. As a reminder, the Q1 of 2020 was only partially impacted by the pandemic related business closures, increased levels of remote working and reductions in travel Total advertising revenues declined approximately 8.5% in the quarter As print continued to be severely impacted by reduced spending by advertisers during the pandemic, despite digital advertising's return to growth. Digital advertising grew approximately 16% in the quarter compared with the prior year, primarily as a result of higher direct sold advertising, including traditional display and As compared to the weak digital advertising revenue seen in March of last year at the outset of the pandemic. It's worth noting that this is the last quarter that we are comparing against revenues from the marketing services business we've now exited and also the removal of open market Last year, it would have been 23%.
Our Q1 digital advertising revenue is better than the guidance we gave in early February. This was largely the result of better than expected revenue from technology and media advertisers in targeted ad products and audio. Meanwhile, print advertising declined approximately 32% with entertainment, travel and luxury categories hit hardest. Other revenues declined 10% compared with the prior year to $47,000,000 primarily as a result of fewer television episodes as well as lower revenues from live events, commercial printing and building rental revenue. These declines are partially offset by an increase in Wirecutter affiliate Referral revenue.
Adjusted operating costs were higher in the quarter by 1.4%. Cost of revenue increased approximately 3% as a result of growth in the number of newsrooms, games, cooking and audio employees, And digital content delivery costs. This was partially offset by lower print production and distribution expenses, lower content Costs related to fewer television episodes and lower travel and entertainment costs. Sales and marketing costs decreased Approximately 18%, driven by lower media expenses and advertising sales costs. Product development costs increased by approximate 26 Largely due to growth in number of engineers employed and a higher incentive compensation accrual than we had recorded in the Q1 of 2020.
It's also worth reiterating that we plan to continue adding to headcount in this area over the foreseeable future as we expect to continue leaning into Costs increased by 7%, largely due to a higher incentive compensation accrual and increased headcount. Our effective tax rate for the Q1 was 18.7%, which was lower than the statutory tax rate largely due to from stock price appreciation on stock based awards that settled in the quarter. As we've said previously, we expect our tax rate to be approximately 27 on every dollar of marginal income we record with significant variability around the quarterly effective rate. Moving to the balance sheet. Our cash and marketable securities balance ended the quarter $891,000,000 an increase of $9,000,000 compared with the Q4 of 2020.
The company remains debt free with $250,000,000 revolving line of credit available. Let me conclude with our outlook for the Q2 Total subscription revenues are expected to increase approximately 15% compared with the Q2 of 2020, with digital only subscription revenue expected to increase approximately 30%. Overall advertising revenues are expected to increase approximately 55% to 60% compared with the Q2 of 2020 and digital advertising revenues are expected to increase approximately 70% to 75%, mainly as we compare against the quarter that was severely impacted by the pandemic. Other revenues are With the Q2 of 2020, as we continue investment into the drivers of digital subscription growth and comp against the low spending of the Q2 of last year that resulted from actions taken during the early weeks of the pandemic. And with that, we'd be happy to open it up for questions.
Thank you. We will now begin the question and answer session. At this time, we will pause momentarily to assemble the roster. And this morning's first question comes from John DeNietz with Wolfe Research.
Hi, good morning. Meredith, given your slightly moderated tone for subscribers this year, can you talk about your confidence level around the longer term opportunity? I know you've talked about $20,000,000 or more subs over, say, longer term. Does that still seem doable? And big picture, how tied is the growth to the new cycle?
Good morning, John. Both good questions. My short answer to your first question is absolutely no change In our level of confidence in the long term opportunity, we see no reason why we can't have a subscriber base 2, 3, 4 times what we have today. We remain incredibly excited about that long term opportunity. On your second question, I think you're asking me the degree to which the news cycle plays a role.
Just ask the second question again. I want to make sure everything is right. Yes.
I mean, just based on the comments around late 1Q and 2Q, knowing it's seasoned, Obviously, there's been a lot of talk about a slowing news cycle and how that impacts subs. And so I guess one narrative would be, if the news cycle slows, is there more of a Longer term discussion here that we should have around, say, the scrap or acquisition?
Yes. So let me say a couple of things about that. The first one is, of course, the news cycle plays a role and has played a role in our in many ways. Various stories in the last 5 years, particularly the stories of the last year, Have been an accelerant to the model, but I would say 2 other things are happening that are One, quarter over quarter, year over year, we are getting better at the underlying It's getting better at the underlying engine of driving subscription and building habit. And as I said in my prepared remarks, We feel really pleased with where we are today from an engagement standpoint, and the only habit standpoint versus 20 So we feel very confident that there's still wide interest to you.
I'll also say and I'll say 2 more things. I don't think the world is getting any less interesting. I don't think it's getting any less complex. And we fully expect even as the tide goes out On one set of stories that it always comes back in on another set. So we are not worried, that there won't be High demand for you even as the story lines change and I talked in my prepared remarks about The enormous investment we've made in our newsroom and we're not prepared to meet some of that investment.
We're I'll say we've also put quite a bit of investment into meeting News needs to be in different ways. I mentioned real time coverage, 5 news that's a mean where I'd say people will come into the times, first before, I'd say before 2019 in a really big way. If something was happening, unfolding in real time, you might have turned on cable news or gone to Twitter and we are getting much better. Still lots of room to go, but getting much better meeting that need today. We are getting much better at meeting the need For the daily habit of showing up in your inbox with the morning newsletter and newsletters beyond that.
So I'm really confident that we're going to keep meeting the need for understanding in news And we're going to add and sort of innovate how we do that. And that news will Continue to be the central engine of the model and a real creator of demand, that helps us sell the whole bundle.
Got it. Thanks. And maybe can you talk about media expenses going forward? Do they start to tick up Significantly to drive or reaccelerate subscriber growth and can you give any more color on churn?
Sure. I'll answer the first And the second one, Roland may have color to add to this. On media, I'll just remind you that the vast majority of our Some come in through organic means, but actually goes a little bit to the point I made before. Our news Product is a huge kind of self propelling engine of demand. So We are still getting most of our subs not through paid media in periods of Lower news cycle or less high news demand, we also end up buying less media because the rate of I'd say on churn, we're broadly very happy with churn.
We When we compare ourselves to other content based digital media companies, we think our churn Overall retention and monthly churn are at a world class level versus last year. I'd say that the newest We had a huge surge in new subs last year and the newest cohorts, folks who came in last year are retaining Slightly less well than in the past, but I'd say not in a troubling way and we're broadly very happy Roland, I don't know if you want to add to either of those points.
No, I actually really think you hit all the major points. Nothing to add on that one. Thanks a lot.
Thank you.
Thank you. And the next question comes from Alexia Quadrani from JPMorgan.
Thank you very much. Just a couple of questions. First, if you could maybe elaborate a A little bit on what the demos look like in the new subscribers in Q1, if it's any different than the past, sort of mix of U. S. International, that sort of color.
And then secondly, Meredith, you have I think the outlook for digital advertising has changed On and off throughout the years as the world has evolved and the model has changed a bit. I'm curious, I know you mentioned it's Very healthy outlook for digital advertising for the remainder of the year. I'm curious if your long I'm happy to talk about both of
those. Thanks, Alexia. Sure. I'm happy to talk about both of those. Thanks, Alexia.
On demos, In general, I think I give a version of this answer every quarter. In general, in very high news periods where we're bringing a lot of people in, The audience tends to be getting a little bit younger and a little bit more varied geographically and that holds up Both domestically and internationally. So, we've been sort of steadily Tacking toward more of the new subscribers coming in being under 40 and more from parts of the country In the world where we've not been mutually penetrated, in quarters where There's sort of less kind of high news demand. It tends to go the other way. But I'd say very The time is continuing to bring in younger subscribers and subscribers from more various places and there was nothing that happened in 1st quarter, that changed that trajectory.
I think I've also said in the past, we don't ask Genographically of our new subscribers, we do more of that over time in the beginning. So our data isn't great here, but it's generally under We're varied as we grow the base. On advertising, I'll say a few things. Our ad team did very, very good work last year in a really difficult ad market Margin profile of the business. And I'll be specific about that.
We exited Our less profitable marketing services business, we had a thesis, gosh, 5, 6 years ago. That can be really additive in our ad business. And in fact, what we've learned is that the demand is really highest For our media products, which are just fundamentally higher margin endeavor, demand is getting stronger and stronger for Our first party data product, which confirms registration based model we're now making faster than expected progress on And the creative work that we still do a bunch of creative work, but we did that previously through Fairly cumbersome lower margin marketing services businesses. And now we're able to do that work in a way That is nearly always appended to the media and therefore at a deal level, we like the margin That's all a long winded way of saying, we like the profile of the ad business, the digital ad business better than we have I still would say, no question, it's the secondary endeavor. And the main idea here would remain scaling our direct to consumer digital subscription business.
I do think now we've In those two businesses, the real thing we've been pulled off last year as we have those 2 businesses running like entirely On the same high octane gas, which is registered logged in users, the data we can use In privacy form ways and we like that a lot. And I think overall, it does mean a better business. It is still not the main idea, not the main growth driver.
And if I could just squeeze in one more, just circling back Your comments earlier about churn just tweaking up just slightly, I guess it's understandable given the huge number of Subscribers that came on last year, I'm just curious if it changes at all or has you revisit the algorithm in terms of the price hikes Coming off of the promotional rates, given that tweak in churn or not necessarily?
Yes. I'll say 2 things, and Roland I should add more color here. We're very comfortable with where churn is. And I'll just say again, it's been one of the biggest accomplishments And we're very comfortable Everything we see in the model and where it is exactly right. We bring in a giant surge of new people in a single year.
They're Slightly less qualifying, so that the newest cohort is slightly less sticky, but only slightly. And churn broadly is still a very, very good story. Our algorithms are getting a lot better. That's the point. If you train the models and they get smarter and so we also like what we're seeing and Roland touched on this Our pricing strategy and our ability to use algorithms to determine who goes to full
Hi, Alexia. We're still really comfortable with our pricing strategy and the way we're going about it with the modeling. As a matter of fact, we actually are testing a second intermediate price, which sits Somewhere between the intermediate step up price we've been using and full price to try to take a little bit even more advantage of the demand curve, but we haven't increased or decreased the number of folks. The model hasn't increased or decreased Number of folks that it is sending to full price. So still comfortable with the model.
No problems there.
Thank you very much.
Thanks, Joanne.
Thank you. And the next question comes from the line of Vivekateshwar with Barclays.
Thank you. Ron, just to follow-up on the previous comment you made on the intermediate price. Is there any difference in the kind of subscription that people get for the intermediate price? Or is it just some kind of a bridge till you step people up To full price. And then broadly, when you think about price increases over the course of this year, I guess, There is a cohort that already has which came in, in 2018 during the promotional phase, which has either seen a price increase Already or we'll see a price increase over the course of the year, which is the second time their price would be raised, I guess, in the last 2 years.
So could you talk about the churn of that particular cohort and how that's behaving and retaining? And lastly, on the advertising side of Sorry, I'll follow-up with advertising after that.
Okay. So, good questions. And actually, there is not a differentiated experience for subs across this pricing range. What we're really trying to do is not push price on someone who's not apt to accept The price increase as much as someone else would. So we're trying to divide the population in that way.
But there's no difference In the subscription experience that someone going all the way to full price versus someone going to a midpoint price receives. Your second question was sort of about that second moment, that second price increase. Our experience to date with that is we're very comfortable with that. It is another test of that person's So we do see a bit of drop off there, but we're perfectly comfortable with the level that we're seeing there. And of course, we will take action To lean a little bit into trying to save the person and keep them with the brand than pushing the price, because we're still more Good in scaling, then monetization at this point.
Roland, the only thing and Kanaan, the only thing I would add to that is that we also And I keep saying a version of this, but we get sort of steadily better, but we get steadily better at retaining through engagement as well and the product proposition, keeps getting better. We're investing in the newsroom. We're investing in the digital product experience and over
Got it. And then on the advertising front, Meredith, a lot of the Comments that you've made, I mean, it sounds like some of these improvements are structural and therefore there could be a bit more correlation between subscriber growth Advertising going forward and we should see less volatility. Is that the right way to read your comments on advertising and should that be more linear going forward?
I think that is strategically correct with a couple of caveats. So, I'd Say, having a very large now, we also said today for the first time, we have 100,000,000 Registered users, so a large registered user base with whom we have direct relationships It's extremely important. It's not just the subscriber base, I would say. It's the audience, the engagement, the fact that these people are fully addressable to us and That is all very positive. That's what I mean when I say the ad business and the subs business now run on the same high octane gas.
That is a yes to the question you're asking. Yes, I do think that bodes well for advertising. Having come and sort of grown up in the ad business and run our ad business, I will also say we have Competitive product versus other publishers and probably any traditional media company highly competitive. But we are still in a world where you've got Google and Facebook and Amazon now increasingly you've got these giant platforms With a particular offering and scale and at a price that is unmatched. So I'd say we're very confident about our ability to win share.
We are very confident now that in a brisk market, There's a lot of business to be won. That's going very well. We think we've got the right proposition. But I would just say the ad market is It's a what's the word? It's a finicky thing and you've still got other companies that kind of dominate the dynamics.
And so, we temper our excitement about it with that in mind. It's a demand driven market, more than a supply driven market. We have awesome supply, probably better than anybody else's, but it's a demand driven market.
Got it. Thank you so much, guys.
Thank you. And the next question comes from Craig Huber with Huber Research Partners.
Great. Thank you. I've got a few questions if I could. If I could start, I want to ask you if I could about your marketing costs. They were down, as you know, 21% Year over year to $36,000,000 What should we expect for that dollar amount going forward for your marketing spend?
How much of that decrease by design Your marketing costs you think ended up hurting the number of new ads for digital subscriptions in the Q1? I mean, how much of a correlation do you think there is there?
I'll give a short answer. Roland gives the longer answer. The short answer is that's by design and I'll point back to what I I think an answer to John's question, which is the biggest engine we have is organic. And when that engine when the news Cycle flows a little bit. Marketing actually becomes much, much less efficient and you don't see us spending more money because it's less efficient.
As things pick up, you'll see us spending more money again. But Roland, you can give us even more colorful answer, I think.
Yes. No, I think that's generally right. I mean, we don't see that the cutback in marketing spend hurt our net adds at all. But if you go back and look at the comps, we did really pull back dramatically if you go through last year in the early half. So I think you'll probably see us reintroducing some marketing spend as we get into the Q2.
But again, we gauge it based on how well we think it's going to perform in market.
So my next question guys, For potential price increases on the digital front for the remainder of the year, can you give us just a sense of how you think about phasing that in over the course of the year? How many people are you expecting to hit with a higher price increase? I'm just trying to get a sense just for modeling purposes.
Yes. For modeling purposes, you think about 100,000 folks per quarter in that range We'd be seeing a I'm assuming you're talking about the tenured price increase.
Yes, yes. But that's Obviously, it's not a very big number, say 400,000 roughly for the year.
Yes, 4 and change for the year.
That means you're telling me that you're obviously trying to volume here and you're not trying to scare anybody away. So that model Well,
I mean, we look at a whole Set of attributes that determine when we pull the trigger on the tenured price increase and our current outlook is that a little bit over $100,000 a quarter is what we think we'll see the rest of the year.
Roland, let me just add that is for tenured subs. We also understand an enormous number of people Stepping up the price, which Roland has just described.
That and right, the number of people stepping up off of the big year we We had last year in terms of new subscribers, you can imagine is going to be very large. We're estimating for the full year that's 1,500,000 or 1,600,000 folks will see an increase from their promotional price.
But also on the cost front, you've obviously said you thought costs for this upcoming quarter will be up, I think you said mid to high teens. So I want to get to the bottom of this. In the first Quarter, you said it would be up mid single digits, it's up about 1.5%. What's the delta there, please? What did you not spend as much on as you originally thought
So it really came down to media spend and a bit of the hiring ramp.
Okay. I guess my last question, Meredith, you mentioned registered users now are about 100,000,000. What is the Daily visitors on average you guys have now to the main website or main app or monthly, what's the number to add right now on your data?
That's a good question. We don't answer that one. But what I'll say is, we have more people who use New York Times every day Now, no, we've had at any point in our history. But we've not disclosed that number.
Okay. Thank you.
Higher, Higher is the answer.
Okay. Thank you. And the next question comes from Thomas Yeh with Morgan Stanley.
Hi, good morning. Thanks for taking my questions. Yes, following up on the 100,000,000 plus registered user base, can you talk a bit about any of the strategies that you're undertaking around Encouraging sign ups through that funnel. I mean beyond article limits that were implemented some years ago and engaging users with more content, What are some of the mechanisms you're building to convert those for users? And then any update on your prior guidance for modest operating profit growth given The strength in 1Q and 2Q guidance on the financials, how should we think about the cadence of some of the investments you're making?
And should we expect some of those investments to accelerate in the back half? Thank you.
Sure. Let me take the second question first, which is just to say, as I said in my prepared remarks, We are building a business with an underlying model and a strategy that should propel a larger and more Profitable business every time. I wouldn't regard what we said in the last call as guidance so much as direction of travel. And nothing has changed in In terms of our assumption and direction of travel, I said that in a couple of places in the prepared remarks. On your first question, I'm making sure you guys can you know what, I just got a note from my team, On your first Question, I'll say a few things and you can tell me if this is in the zone of what you're asking about.
1 100,000,000 registered users now. We still do bring in a good number of new registered users every week. So, there is still more activity happening on driving registrations. I'd say The thing that's going to change now is that's less of a focus. Last year's enormous audience and news cycle presented an opportunity for us to really scale that.
We are incredibly focused now For us to really scale that, we are incredibly focused now on getting those registered users to return. And I mentioned in my prepared remarks a number of the sort of zones of opportunity. We've got a huge zone of opportunity in email, 15,000,000 people using an opening reading at Times e mail every week, 5,000,000 people Who use the daily, on a very I'm sorry, not the daily, the morning on a very regular basis. And so there's a really big opportunity in email to have it be a more intentional driver in funnel from registration to subscription and you're going to see us get, just much more intentional and focused On that, another place where you'll see activity with registered users is, we have very, very high engagement in our app. And once we get a registration, we're much more able to direct people to download the app and begin to use The app, so you'll see more activity there.
And then something I mentioned in the prepared remarks, and I think I probably said in every one of these calls for some time, We know that people experiencing the breadth of our report, so more topics, more different storylines It drives, it's a behavior that correlates with paying and staying. And so you can imagine that, we're To stimulate that now that we've got registered users and they're addressable to us. And so I'd say generally, you'll see a shifting From driving more RGGIs, although I don't want to suggest we're anywhere near the top or not, to getting registered users to And just the last bit there is and maybe this is implied, but registered users convert, obviously at a Significantly higher rate than anonymous users. So that's why the focus there.
Yes, that makes sense. And maybe if I can Please one last in. Meredith, can you pine on the evolution of regulatory events in Australia around news on Big Tech platforms and any read throughs you might have on a kind of broader Thank you.
Sure. Try not to opine. I'll give you the state of things. I should say one more thing on the last question. Roland touched on this before, but one of the other things that the really big Registered user base gives us the opportunity to keep training our algorithms.
And I think I said a version of this in the prepared remarks. We've or I've said it in prior calls, we've got a dynamic Meter now, so we are able to customize when we actually ask a registered user to subscribe and we've got Machine learning that's getting better and better at how we do that. So I should have said that before as well. On the platforms, I'll say we are we continue to watch with real interest everything that's Happening in the legislative and regulatory environment, I'd say there has broadly for the last couple of years now been a shift In the direction of platforms seeking and being willing to make commercial agreements in the form of licensing Arrangements with publishers, we obviously have one of those arrangements now with Facebook for their news tab and we Certainly don't rule out, there being more there. So we're watching that with interest.
We have a really clear Strategy that we are in the business of scaling our direct to consumer digital subscriptions and To do that, we need direct relationships with users and we want people to experience our journalism on our destination where we think they get The best of it, the best experience of it, our work in context, and we also believe that platforms Get a lot of value from publishers, get a lot of value from the original work and use that courses through their systems. And We think the compensation has to be right. So, we think about all those things when we consider whether and how to work And I'd say I don't rule out more to come there, but have nothing to report.
Great. Thank you so much. Very helpful.
Thank you.
You're welcome.
Thank you. And the next question comes from Doug Arthur with Huber Research Partners.
Yes, thanks. Two questions. On the you have a comment in the press release about a sizable and Sustained investment in the journalistic engine. Meredith, is the newsroom now over 1800? I mean, are you adding More resources there, can you comment on that?
Sure, and good morning. I've said this Few times in the past, I would the newsroom now is it's well over 1700, and I'd say that number doesn't include The people we have many of the people we have making recipes and puzzles and producing wire cutters, Product reviews. So depending on we even think about what do we call the newsroom. You can assume That, particularly in the standalone products area that we are continuing to invest in the content. And we've said that Before, as far as investing in the newsroom itself, so the work of our core news report, we have Continued to invest, I'd say thoughtfully and we will continue to invest thoughtfully and that investment tends to go to Ensuring we can cover the biggest stories of our time in a leading way and then also meeting more news needs.
I described Our budding engine for real time coverage and live coverage, that's been an area of investment, although there I'd say that's As much about digital product and engineering investment as it is, about adding more journalists. We've made a big investment in audio journalism. I named some of the podcasts that are starting to do really well from a listener standpoint and also from an advertising standpoint. So that's how I'd regard investment into the newsroom. To the extent you're asking me about, Does that scale with our expectations of subscaling?
I'd say no, not at the same pace. We really like where we are in terms of the breadth of expertise in our newsroom, And we're certainly going to keep adding to it, but not at the same level that we're scaling the subscriber base.
Okay, great. And just one quick follow-up. My recollection is you shut down a couple of in house advertising Operations last year, what's the impact on the year over year comp in revenues for 2020 1 in digital advertising from sort of the timing of that and the impact.
Roland might give A slightly more precise answer here, but I think what I said in my prepared remarks is the We would have been up somewhere in the neighborhood of like 23% in digital advertising, If we've not been comping against the closure of the last of our marketing services And also the fact that we took open market programmatic out of our apps. That was the big comp as well from the Q1.
Okay, great. Thank you.
You're welcome.
Thank you. And the next question comes from Vasily Karasyov from Cannonball Research.
Hi Vasily.
Good morning. Thank you. I have a question about the outlook for subscriber additions this year. So can you tell me please what changed And what was wrong with your model or where did you have to adjust your model from February when you were talking about adding between 2019 2020 Number of subs, years 2019 2020 and now?
Yes. Happy to join.
And then What that factor is? And is it possible that, that factor will change in a quarter or 2, like how fluid that is?
So, let me answer the second part of the question first, which is, it is of course possible that it changes. We've said this In the past, and I'll say again, there is sort of more underlying stability in the whole thing because of the registration Model, but we said there could be considerable variability from quarter to quarter. And what we saw in the Q1 Really strong January and then the sort of change in the news cycle Combined with the opening up of activities that people Could do sort of following a year of quarantine combined with better weather combined with the prevalence of vaccines, That all sort of happened at once, and I'd say it came a little faster than we were expecting probably because of the compounding Continue into the Q2 is because the Q2 traditionally tends to be just a slower period for audience and news engagement. But I'll say, as I said, I think in answer to an earlier question, we have seen periods where the tide has gone out A little bit on one particular storyline or a few storylines and it always comes back and we regard the Underlying drivers, are strong, very strong in comparison to 2019.
And I'd say we've got plenty of room ahead to optimize the model and optimize the funnel On our roadmaps now. And I'll just I think I said this before, but I don't think it's hard to say. I mean, Obviously, the news cycle plays a big role in the model and so too does our work on the underlying mechanics a bit. It's hard to piece those things Apart, but I don't think the it's hard not to regard this as a moment in time right now.
Thank you. And a quick follow-up not follow-up, a quick question. Why Did you feel like you needed to disclose the number of registrations, the 100,000,000? I don't think you've talked about it before in this level with this level of precision. I think you were saying that you had A very large database.
So can you give us an idea?
Yes, that's a great question. Listen, we really believe that the registration model Has just improved our ability to get at those users and get them to form a habit and ultimately pay and And honestly, we were waiting for it to be a big enough number, that it felt worthy of sharing. We think the fact that We don't think we're done, just to be clear, at $100,000,000 And as I said earlier, we're still getting more registrations. But at $100,000,000 that gives us Really sizable population around whom we can intervene to stimulate return and So we disclosed it because we want to make the point that it's a really important part of the model. It's really working And it's a base on which we're building lots of other optimizations.
So I mentioned our algorithms getting smarter about when to ask people to pay. I mentioned our newsletters, having more use today than at any other point. I mentioned How important it is to get people to download and use the app and the registration model helps us do all those things. So, we really exposed it, 1, because it's now the size that we're very excited about and 2, we think it's a really important factor in the underlying model and it gives us a lot of confidence
Thank you very much.
You're welcome.
Thank you. And This concludes our question and answer session. I would like to turn the conference back over to Harlan Toplitzky for any closing remarks.
Thank you for joining us this morning. We look forward to talking to you again next quarter.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.