뉴스 코프(NWSA) 2027 회계연도 1분기 실적 컨퍼런스 콜: EBITDA 19% 증가

핵심 요약

• 뉴스 코프는 2027 회계연도 1분기 매출이 전년 동기 대비 6% 증가한 23억 달러를 기록했다고 발표했다. 같은 기간 전체 부문 EBITDA는 19% 증가해 1분기 기준 사상 최대치인 4억 300만 달러에 달했다.
• 전체 부문 EBITDA 마진은 180bp 확대된 17.7%를 기록했다. 보고 기준 EPS는 0.20달러에서 0.29달러로 상승했으며, 조정 EPS는 0.22달러에서 0.28달러로 증가했다.
• 다우존스, 디지털 부동산 서비스, 도서 출판 부문의 합산 EBITDA는 24% 증가하며 뉴스 코프의 3대 핵심 성장 동력으로서의 입지를 강화했다.
• 다우존스 매출은 8% 증가한 6억 3,000만 달러, 부문 EBITDA는 11% 증가한 1억 6,000만 달러를 기록했다. 디지털 전용 구독 건수는 10% 증가해 약 650만 건에 달했다.
• 디지털 부동산 서비스 부문은 부동산 시장 침체에도 불구하고 가장 강력한 수익 성장을 달성했다. 매출은 10% 증가한 5억 2,900만 달러, 부문 EBITDA는 34% 급증한 2억 1,200만 달러를 기록했다.
• 경영진은 다우존스의 견조한 매출 성과와 마진 확대가 지속될 것으로 예상하는 한편, 연간 잉여현금흐름은 계절적으로 하반기에 집중되는 양상이 유지될 것이라고 강조했다.

핵심 재무 데이터

사업 및 운영 실적

다우존스

다우존스는 회계연도 1분기 기준 사상 최대 매출을 달성했으며, 15개 분기 연속 전년 동기 대비 EBITDA 성장을 기록했다. 전문 정보 사업 매출은 5% 증가했다.

리스크 및 컴플라이언스 매출은 고객 수 증가, 제품 라인업 확장, 가격 책정, 거래량 증가 및 상위 판매(업셀링)에 힘입어 11% 증가한 1억 400만 달러를 기록했다. 다우존스 에너지 매출은 약 90%의 고객 유지율과 2022 회계연도 인수 이후 1분기 기준 최대 순신규 예약 증가세를 기록하며 8% 증가한 7,900만 달러를 나타냈다.

뉴스 유료 부수 매출은 디지털 부수 6% 성장을 포함해 4% 증가했다. 디지털 전용 구독 건수는 전 분기 대비 약 21만 9,000건의 순증을 기록하며 10% 증가한 약 650만 건에 달했다. 광고 매출은 기술 및 금융 부문 수요에 힘입어 9% 증가한 9,300만 달러를 기록했다. 디지털 광고는 12% 증가하며 전체 광고 매출의 70%를 차지했다.

경영진은 다우존스가 투자자 설명회에서 제시한 10억 달러 EBITDA 목표를 향해 순조롭게 나아가고 있다고 밝혔다.

디지털 부동산 서비스

REA 매출은 13%(고정환율 기준 5%) 증가했다. 호주 주거 부문의 성장은 가격 인상, 제품 침투율 확대 및 부가 상품 효과를 반영했다. 수수료율은 8% 상승했고, 통제 가능 수수료율은 14% 상승했다. 이는 전국 신규 매수 매물 등록 건수가 2% 감소하고 시드니와 멜버른에서 각각 16% 감소한 데 따른 부담을 일부 상쇄했다.

리얼에스테이트닷컴은 해당 분기 동안 월평균 순방문자 수 1,150만 명, 월평균 총방문 건수 1억 3,700만 건을 기록했다. REA는 9월에 REA 인디아 매각을 완료했으며, 이에 따라 뉴스 코프의 실적에서는 2027 회계연도 2분기부터 해당 사업이 제외된다. REA는 또한 디스틸드 지분 35%를 4억 900만 호주 달러(약 2억 9,000만 미국 달러)에 인수하기로 합의했다.

리얼터닷컴 매출은 5% 증가한 1억 6,000만 달러를 기록하며 8개 분기 연속 성장을 달성했다. 리얼 프로 셀렉트, 프리미엄 매물 등록을 통한 수익화 확대, 매출 다각화가 실적을 뒷받침했다. 신축 주택, 임대, 매도자 부문 등 인접 카테고리는 매출의 23%에 달했다.

리드 규모는 주택 시장 여건과 고품질 리드 중심으로의 전환을 반영해 11% 감소했다. 경영진은 AI 기반 워크플로 효율화가 수익성 개선에 기여했다고 설명했다. 컴스코어에 따르면 리얼터닷컴의 순이용자당 방문 횟수는 전년 동기 대비 8% 증가한 4.9회를 기록했다.

도서 출판

하퍼콜린스 매출은 9% 증가했고 부문 EBITDA는 29% 늘었다. 일반 단행본과 아동 도서 신간이 수요를 견인했으며, 전년 동기 독립 유통업체 관련 대손상각이 발생했던 기저효과도 긍정적으로 작용했다.

디지털 매출은 스포티파이, 오디블 및 신작 출간에 힘입은 오디오북의 13% 성장을 포함해 6% 증가했다. 구간 도서는 일반 소비자 매출의 66%를 차지해 전년 동기(65%)보다 소폭 상승했다. 비용은 로열티 인상, 제작비 증가, 신간 마케팅 등으로 인해 7% 증가했다.

뉴스 미디어

뉴스 미디어 매출은 광고 업황 악화와 검색 및 소셜 알고리즘 환경 변화 속에서 1% 감소했다. 더 타임스의 디지털 구독자 수는 7% 증가한 68만 6,000명으로 분기를 마감했으며, 호주 지역 디지털 구독자 수는 116만 명을 유지했다.

경영진은 뉴스 코프의 직접 유입 및 목적지 사이트 트래픽을 강조했다. 회사는 뉴욕 포스트 8,400만 명, 리얼터닷컴 6,600만 명을 포함해 미국 네트워크 전체에서 월간 순방문자 수 2억 4,900만 명을 기록했다고 발표했다. 월스트리트저널의 경우 직접 유입 트래픽이 여전히 주된 유입 경로로 유지됐다.

경영진 전망

• 다우존스: 경영진은 견조한 매출 성과 지속, 절제된 재투자 및 추가적인 마진 확대를 예상하고 있다.
• REA: 신규 서비스, 제품 개선, 인접 서비스 및 비용 효율성에 집중할 계획이다. 10월 매물 등록 건수는 전년 동기 대비 13% 감소했으나, 영업일수 하루 감소를 조정한 기준으로는 8% 감소했다.
• 리얼터닷컴: 경영진은 높은 모기지 금리와 미국 주택 시장 침체에도 불구하고 지속적인 매출 성장과 규모의 수익성 확대를 추진할 계획이다.
• 도서 출판: 경영진은 기저 트렌드가 건전하다고 평가했으나, 강력한 신간 라인업을 지원하기 위한 비용 증가를 예상하고 있다.
• 뉴스 미디어: 캘리포니아 포스트의 지속적인 출시에 따른 소폭의 추가 비용을 포함해, 2027 회계연도 1분기와 대체로 유사한 추세가 이어질 것으로 예상하고 있다.
• 잉여현금흐름: 경영진은 1분기 현금흐름 둔화 원인을 자본적 지출 시점, 매출 대금 회수 시기, 하퍼콜린스의 재고 증가 때문으로 돌렸다. 통상 하반기에 집중되는 연간 잉여현금흐름의 견조한 흐름에 대해서는 여전히 자신감을 유지하고 있다.

리스크 및 주목할 점

• 고금리가 주택 거래 활동을 지속적으로 제약하고 있다. 리얼터닷컴은 모기지 금리가 7%를 웃도는 시장 환경에서 사업을 영위했으며, REA는 매물 등록 건수 감소에 직면했다.
• 뉴스 미디어 부문은 여전히 부진한 광고 업황과 검색 및 소셜 알고리즘 변화에 노출되어 있다.
• 중동 분쟁이 다우존스 에너지 사업 활동에 영향을 미쳤으나, 경영진은 파이프라인이 개선되고 있다고 언급했다.
• 하퍼콜린스는 공급망 우려 속에서 연말 연휴 시즌 제품 공급 차질을 막기 위해 재고를 늘렸으며, 이는 1분기 운전자본 부담으로 이어졌다.
• 뉴스 코프는 AI 플랫폼의 저작권 콘텐츠 무단 사용에 대해 지속적으로 이의를 제기하고 있다. 경영진은 퍼플렉시티 및 브레이브를 상대로 법적 대응을 진행 중이며, 앤트로픽과의 15억 달러 규모 도서 저작권 합의금 중 1차분을 조만간 수령할 것으로 기대한다고 밝혔다.

애널리스트 Q&A 주요 내용

AI 라이선싱 및 지식재산권

로버트 톰슨 CEO는 뉴스 코프가 모델 및 제품 개선을 위해 최신 콘텐츠가 필요한 전문 버티컬 공급업체를 포함한 여러 AI 플랫폼과 활발히 협상을 진행 중이라고 밝혔다. 그는 계약이 완료된 후 뉴스 코프의 회계 실적에 재무적 영향이 가시화될 것이라고 언급했다. 회사는 이미 오픈AI 및 메타와 파트너십을 체결한 상태다.

AI 기반 효율화 및 제품

뉴스 코프는 AI 관련 비용 절감 규모를 구체적으로 수치화하지 않았다. 라반야 찬드라셰카르 CFO는 엔지니어링, 품질 테스트, 고객 서비스, 데이터 분석, 재무 운영 및 마케팅 전반에 AI가 활용되고 있다고 밝혔다.

경영진은 또한 디지털 부동산, 오디오북, 저비용 텍스트 및 오디오 번역 분야에서 제품 기회를 발굴했다고 설명했다. REA와 리얼터닷컴은 중개인, 매수자, 매도자의 경험을 개선하기 위한 AI 애플리케이션 개발에 협력하고 있다.

검색 트래픽 및 디지털 광고

경영진은 뉴스 코프의 목적지 브랜드와 직접 유입 트래픽이 일반 검색 콘텐츠에 의존하는 여타 언론·출판사와 차별화되는 요소라고 강조했다. 월스트리트저널의 광고 성장은 기술 및 금융 고객사가 견인했으며, 직접 방문이 여전히 주요 트래픽 원천으로 유지됐다.

잉여현금흐름 발생 시점

경영진은 해당 분기의 현금흐름 압박에 대해 분기 마지막 달에 매출이 집중되면서 2분기로 대금 회수가 지연된 점, 하퍼콜린스의 재고 증가 및 자본적 지출 시점 등이 영향을 미쳤다고 설명했다. 회사는 연간 잉여현금흐름이 견조할 것이라는 기존의 자신감을 유지했다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Welcome to News Corp's First Quarter Fiscal 2027 Earnings Conference Call. Today's conference is being recorded. Media will be allowed on a listen-only basis. [Operator Instructions] At this time, I would like to turn the conference over to Michael Florin, Senior Vice President and Global Head of Investor Relations. Please go ahead.

Michael Florin

Thank you very much, operator. Hello, everyone, and welcome to News Corp's Fiscal First Quarter 2027 Earnings Call. We issued our earnings press release about 30 minutes ago, and it's now posted. On the call today are Robert Thomson, Chief Executive; and Lavanya Chanchashaker, Chief Financial Officer. We have some prepared remarks, and we'll be happy to take questions from the investment community. .

This call may include certain forward-looking information with respect to News Corp's business and strategy. actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties and that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial measurements such as total segment EBITDA, and adjusted segment EBITDA and adjusted EPS. The definitions and GAAP to non-GAAP reconciliations of such measures can be found in the earnings releases for the applicable periods posted on our website.

With that, I'll pass it over to Rob Thomson for some opening comments.

Robert Thomson

Thank you, Mike. Following a year of record revenue and record profitability in fiscal 2026, we began the new fiscal year with our first quarter revenue, 6% higher than prior year at $2.3 billion. while total segment EBITDA surged 19% to $403 million. Our positive results were bolstered by strong performances across our 3 growth engines, Dow Jones, Digital Real Estate Services and Book Publishing, which saw a collective segment EBITDA increase of 24% compared to the prior year, even though economic conditions were volatile with conflict in the Middle East, tariff turbulence and interest rate increases. And our margin for the quarter was 17.7% compared to 15.9% in the same quarter last year, while Star earnings per share were $0.29 compared to $0.20 a year ago, and adjusted EPS were $0.28 compared to $0.22. The 19% increase in total segment EBITDA marked 14 consecutive quarters of growth and we have also reported 13 consecutive quarters of year-on-year revenue increases on a continuing operations basis. .

Our company has been transformed over the past decade of the digital age, and we believe the business is primed for further growth in the age of AI when trusted sources will inevitably become more valuable and consumers and companies will be able to prompt agents to seek out those sources. In the Agentic age, individual agents will be potentially free of the political bias and media myopia that characterize some old school digital aggregators and will seek out sources that provide tangible value. We are traversing an era that rapidly exposes the femoral but which rewards companies with a cogent and coherent tech trajectory. Business is ultimately transactional. And digital drops, superficial slop is not the concrete insight sought by companies or the brilliant books sold by readers or property intelligence sought by families making the most important investment buying a home. And we have network now, meaning that those 3 growth areas are clearly more than the sum of their prosperous parts. In the U.S., we have just experienced an election, which has inevitably prompted politicization of everything from water to wattage. At least, there has been more focus on the integrity of inputs necessary in the AI age and we believe our content is an absolutely essential input.

Often lost in a debate is that intelligent content is actually the essence of AI. Infrastructure is not AI, silicon is not I Water is not AI. These are but necessary components. AI runs on created content, and we create that core intelligence. That intelligence is dependent on the content that our journalists, our writers, our teams across the world and across cultures create day after day, minute after a minute. So we, as a company, play a crucial role in creating the inputs that are contributing to the extraordinary outputs that people are experiencing. The outputs enhancing so much of the personal and of the professional. They are value-added experiences, and we are creating that core value and we do so with core values. As for the AI platforms, we note that anthropic has signaled with fanfare its intent to IPO in the near future. Publishers have serious concerns about Antropic's unlicensed use of copyrighted content to power its AI tools.

Consistent with our woo and sue strategy, we remain vigilant about protecting our IP. We will not tolerate any abuse of our IP and more broadly, the undermining of the very value of creation and creativity in our society. As we journey, and some other people stumble into the AI age, News Corp is no peripheral participant. We are a primary provider of the essential ingredients AI companies need to operate thoughtfully and productively. We are glad to have principal partners in OpenAI and Meta and others who appreciate the crucial role our inputs play. So we remain optimistic that other platforms will choose compensation over conversation, principal over plunder, and that they will understand that digital [indiscernible] is inimical to their own interests.

Turning to our segments. Dow Jones once again posted robust results with first quarter revenue rising 8% year-on-year to $630 million. while EBITDA increased 11% to $160 million, marking the 15th consecutive quarter of year-on-year EBITDA growth. Margin expanded by 80 basis points to 25.4% compared to the prior year, and we remain focused on building our high-margin professional information business. The Risk & Compliance business increased revenue 11% over the prior year, and the recent spate of painful fines for prominent financial institutions highlights the need to minimize risk and maximize compliance. The Dow Jones Energy business expanded 8% despite the Middle East conflict that inevitably had an impact on our activities. The team has pivoted savvily in the circumstances, and we are seeing a potent revenue pipeline that we expect will become more obvious later in the year. The news business saw circulation revenue expand 4% for the first quarter versus prior year, with digital volumes rising 10% to average nearly 6.5 million subscriptions during the period.

Advertising demand particularly across tech and finance helped fuel 9% revenue growth period overall with digital advertising achieving double-digit growth for the fourth consecutive quarter at 12%. And Elmar and Dowl Jones team remain firmly on track to reach the $1 billion EBITDA target that was outlined at the Dow Jones Investor briefing earlier this year. Speaking of investor briefings. Cam McIntire and the REA leadership team just held a particularly successful Investor Day in Australia and highlighted the company's revenue resilience and growth potential even in a market experiencing short-term disruption. Core messages, whether AI should be an accelerator for growth providing enhanced services for agents, sellers and buyers, and that the company has increased yield markedly even in times of a lagged listings growth and elevated interest rates.

Overall, in the Digital Real Estate Services segment, revenues for the first quarter rose 10% to $529 million and EBITDA surged 34% to $212 million. as REA and realtor.com both showed their structural strength in markets that were challenged. That excellent performance, obviously, augurs well for our company when market conditions become less hostile and more specious. At REA, revenues rose 13%, benefiting from high yield and the positive impact of a stronger currency despite a 2% national decline in listings. The team continued to sharpen their strategic focus by completing the sale of REA India to Orem and by agreeing to take a 35% stake in Distilled, the leading multi-vertical digital marketplace in Ireland, where our company has a strong media presence and we'll be able to deploy that network to enhance the business.

In the U.S., realtor.com defied a depressed market, posting its eighth consecutive quarter of top line revenue growth at 5% and achieving considerable gains in profitability. In a housing market constrained by 7% plus mortgage rates Damian and the team have exhibited exceptional discipline in their operational focus and AI integration. And that approach has converted revenue growth into meaningful bottom line expansion. They also continue to lead the industry in engagement with 4.9 visits per unique user in Q1 according to comScore, well above their competitors, while realtor.com remains the leading publisher of residential real estate news in the world's largest property market. In Book Publishing, revenues for the first quarter rose 9% to $582 million, while profitability surged 29% to $75 million. And our margins rose to 12.9% compared to 10.9% in the prior year. Audio books delivered a sterling performance with 13% year-on-year growth, propelled by a global partnership with Spotify and by a focus on enhancing audio as a higher-yielding listening event.

We had a plethora of successful titles, including Ann Patris Whistler, Rebecca Kwan's Type story and Daniel Silvers Ransom. We were delighted to reincarnate one of AgateChristi's most indomitable and encourageable characters Ms. Maple, thanks to the talented Luciole in the intriguing novel Murder At The Grand Alpine Hotel. The enduring breadth of our catalog will be on full display in the second quarter, including the knockout success of Silvestor Stallone's The Steps, which debuted as a #1 seller at the end of September. We are excited about titles from Brian Kilmed, Baba King Silver and Veronica Roth, As well as [indiscernible] much awaited adaptation of the Magician's Nephew, the CS Lewis Classic, which should benefit from extensive promotion ahead of the Fibra Premier. In the meantime, the late great Jeffrey Archer has had customer success with Adamaniv, which became an immediate best seller.

News Media continues to navigate complex market pressures including a challenging advertising environment and the ongoing evolution of the search and social algorithm landscape. As mentioned earlier, that search landscape will change dramatically with the advent of agentic AI. Revenues for the segment declined slightly versus prior year to $540 million, while EBITDA was $18 million for the quarter, which included modest investments in both the California Post and News24, our Australian-based broadcast network whose global reach has expanded rapidly. In the U.K., the Times grew digital subscribers by 7% to finish the quarter with 686,000 subs while advertising at TalkSport benefited from vibrant streaming growth. Thanks in part to the World Cup. Advertising would have benefited further had England as it should have made the final. In Australia, total digital subscribers held at $1.16 million, while digital ARPU remained resilient.

The New York Post is preparing to celebrate a notable milestone later this year, the 225th anniversary of its founding by Alexander Hamilton. And it has rarely been in such strong financial shape, having previously suffered decades of losses before the recent turnaround, which was built on a still study print subscription business and the material expansion of digital revenues. Our strong first quarter performance is a testament to the company's collective focus on higher margins and our determination to develop digital businesses with recurring revenues and promising prospects. These qualities have clearly set us far apart from other media companies or what you might call trade media. And some of that trade media has indeed become tragic media.

At News Corp, we remain committed to driving growth and profitability while exercising judicious cost discipline and prudent capital stewardship with the clear goal of creating value for all our shareholders. In this quest, we are grateful for the astute leadership of our Chair, Lachlan Murdoch and our Board of Directors. We also recognize the enduring residents of our Chairman Emeritus, Rupert Murdoch, and lowered the commitment and creativity of our employees around the world.

And now I turn to our Chief Financial Officer, Lavanya Chandrashekar for further insight into an excellent quarter for the company.

Lavanya Chandrashekar

Thank you, Robert, and good afternoon to everyone. Our first quarter results demonstrate the continued strength and resiliency of the business and its consistent earnings power. We delivered another quarter of double-digit profit growth with increased profit margins led by our core growth engines. We achieved record first quarter profitability marking our 14th consecutive quarter of year-over-year total segment EBITDA growth on a continuing operations basis. Our focus on operational efficiency has driven meaningful margin expansion and we continue to see substantial runway for further improvement. We have posted updated slides highlighting our first quarter performance, along with the trending schedule to the Investor Relations section of the News Corp website.

As I mentioned last quarter, while we believe many in the investment community appreciate that News Corp has a very valuable portfolio of assets and treat at a discount to net asset value, with which we certainly agree. We are also continuing to deliver profit growth at a faster rate than most companies in our peer group, including those in the information services sector. We have demonstrated strong earnings and free cash flow power built in financial flexibility and a clear focus on maximizing value. Turning to the quarter. Revenue for the quarter were $2.3 billion, up 6% year-over-year, and total segment EBITDA was $403 million, up 19%. And margins expanded by 180 basis points to 17.7%. Our core growth engines, Dow Jones, Digital Real Estate Services and Book Publishing, continued to generate outsized performance and collectively grew segment EBITDA by 24% this quarter. On an adjusted basis, revenue increased 4%, and total segment EBDA grew 13%. The Earnings per share were $0.29 compared to $0.20 in the prior year. Adjusted EPS were $0.28, up from $0.22.

Turning to Dow Jones. This was a record first quarter with revenues of $630 million, growing 8% year-over-year. Digital revenues represented 85% of total segment revenue, up from 84% in the prior year. Risk and Compliance revenues increased 11% to $104 million, supported by customer growth, product expansion and pricing. We continue to see growth in both feed and platform revenue including for value-added solutions, such as advanced screening and monitoring and investigative research. The majority of incremental revenue growth this quarter was driven by higher volume and product upsells. At Dow Jones Energy, as anticipated, revenues grew 8% to $79 million, improving from the prior quarter rate supported by an improved pipeline of new business. We had the highest first quarter increase in net new bookings since the acquisition in fiscal 2022. Customer retention remains very strong at approximately 90%. Other Information Services revenues declined 4%, lapping the resolution of a customer dispute in the prior year.

Overall, Professional information business revenues increased 5%. In the news business, circulation revenues grew 4%, while digital circulation increased 6%. We continue to optimize yield and posted accelerated year-over-year and quarter-over-quarter growth in digital direct subscription ARPU and expect further improvements in fiscal 2027. Digital circulation represented 76% of total circulation revenue compared to 75% in the prior year. Digital-only subscription grew 10% year-over-year to nearly 6.5 million with sequential net adds of approximately 219,000 benefiting from the timing of enterprise subscription deals topped the highest sequential net adds in almost 3 years. Advertising revenue increased 9% to $93 million, driven by 12% growth in digital advertising, while print grew 4%. Both improving from the prior quarter rate. Growth was led by strong performance in the technology and finance categories. Digital advertising represented 70% of total advertising revenue, up 2 percentage points from the prior year.

Dow Jones segment EBITDA for the quarter grew a healthy 11% to $160 million, with margins increasing to 25.4% and improving by 80 basis points versus the prior year. Turning to digital real estate. Segment revenues were $529 million, up 10% reported and 4% on an adjusted basis. Segment EBITDA was $212 million, up 34% reported and 23% on an adjusted basis, benefiting from strong profit contributions at both REA and at realtor.com. REA revenue grew 13% and 5% in constant currency. Growth was driven by the Australian residential business, led by price increases increased depth penetration and growth in add-on products, resulting in 8% growth in yield or 14% growth in controllable yield. The growth was partially offset by lower listing volumes and geo mix. National new buy listings in the quarter fell 2%, with Sydney and Melbourne down 16%. Very importantly, realestate.com.au averaged 11.5 million monthly unique visitors and 137 million monthly visits for the quarter, nearly $100 million more than the nearest competitor.

As a reminder, News Corp's results include the revenue and losses from REA India this quarter. The divestiture of this business closed in September, and our results starting the second quarter will no longer include REA India. During the quarter, REA announced an agreement to take a 35% stake in distant, which is the leading multi-vertical digital marketplace operator across Ireland and Northern Ireland, an owner of Ireland's #1 property portal Jaf.ie. The investment is expected to be AUD 409 million or approximately USD 290 million. Please refer to REA's earnings release for more details. The presentation materials and a webcast from the recent Investor Day are posted on REA'S website for your reference.

In the U.S. realtor.com continued to make very strong progress this quarter despite the difficult U.S. property market conditions with revenues rising 5% to $160 million, driven by strong execution and lapping tougher year ago comparisons. And importantly, realtor continues to demonstrate improved profitability as it realizes further cost efficiencies through the integration of AI into its workflow. Realtor has now grown revenues 8 straight quarters, an impressive trend given the macro environment. This quarter, revenue performance was driven by the growth in Real Pro Select, its premium marketing solution for top-performing agents and teams. Strong demand for and increased penetration of Real Pro Select continued to drive higher yields, complemented by a strategic focus on higher-priced listings, which offer greater monetization potential. We continued to diversify the revenues with adjacencies, comprising new homes, rentals and sellers increasing to 23% of revenues. Lead volume declined 11% impacted by the broader market conditions, coupled with the repositioning of customer acquisitions to higher quality and higher value leads.

Importantly, revenue per existing homes sold, a proxy for yield rose 25% compared to quarter 4, 2022. Based on comScore for the first quarter, realtor.com continues to lead the industry in engagement with 4.9 visits per unique user, increasing 8% year-over-year and maintaining substantial leads over Redfin and Homes.com.

Turning to Book Publishing. HarperCollins posted another strong quarter. Revenues grew 9% to $582 million, outperforming recent industry trends. Segment EBITDA was $75 million, up 29% year-over-year driven by the strong top line performance and lapping the bad debt write-off related to an independent distributor in the prior year. On an adjusted basis, revenue and EBITDA increased 8% and 29%, respectively. Costs increased 7% this quarter, driven by higher royalties, manufacturing and marketing expenses related to new frontlist releases. Results were driven by strong demand for new releases in general trade and children's. Digital revenue at HarperCollins grew 6% with titles such as [indiscernible] Whistler driving strong growth at both Spotify and Audible, leading to a 13% increase in revenue from audio books. This quarter, the backlist contributed 66% of consumer revenues compared to 65% last year.

At this time, we continue to anticipate the commencement of the anthropic settlement payments in the near term. At News Media. Revenues declined 1% to $540 million as challenging advertising conditions were partially offset by currency favorability of the Australian dollar. Segment EBITDA was $18 million, down $12 million year-over-year which included disciplined investment at the New York Post and tougher trading conditions.

Turning to free cash flow. First quarter free cash flow was impacted by the timing of working capital and capital spending. We continue to be focused on driving strong free cash flow. And as a reminder, our free cash flow generation tends to be second half weighted due to seasonality. Turning to the outlook. At Dow Jones, we expect continued strong revenue performance, and we will support this growth with disciplined reinvestment and expect continued margin expansion. REA continues to be focused on driving value in the marketplace through new offerings, product enhancements and adjacencies while pursuing cost efficiencies. October listings were down 13% year-over-year but down 8%, removing the impact of 1 less working day. At realtor, despite difficult housing conditions due to higher rates, we remain focused on driving continued revenue growth and scaling profitability.

At Book Publishing, overall trends remain healthy. Like the first quarter, we expect higher cost to support a strong front list program. At News Media, we expect broadly similar trends to quarter 1, including modest incremental costs compared to the prior year related to the continued rollout of the California post.

With that, I'll turn it over to the operator for Q&A.

Operator

[Operator Instructions] Our first question comes from Brent Penter with Raymond James.

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Brent Penter

Just a couple on AI. Robert, you talked about the value of your content as an AI input. As you evaluate the AI deals that you've done so far, how do you think about the value you're getting out of those deals relative to a potential opportunity cost? And what have you learned from those deals? And then you also quickly mentioned agentic AI. So just as muse becomes a bigger topic -- how do you feel you're positioned for people using Agent AI to manage their consumer subscriptions?

Robert Thomson

Brent, first of all, we feel we're very well positioned in the agentic age and the agents themselves will be seeking out individual stories and servicing them, which is certainly more beneficial to us than what you might call egregious aggregation. We're in active negotiation on several fronts, and those talks with AI platforms are progressing well. Clearly, we can't reveal any details of confidential deals. But once they are concluded, you'll be able to see the impact in our accounts very clearly. There's no doubt, we already have important partnerships with OpenAI and Meta. And apart from the other large players, which you might call horizontal platforms, we're in discussion with specialist verticals who need our content and our immediacy to freshen their models and create compelling products for their specialist clients. As for litigation, we do expect the first tranche of the $1.5 billion Atopic book settlement to be received in the near term, as Lavanya indicated. And we still have issues with Antropic, we have cases against the perplexing perplexity and the not so Bravura brave. I noticed that New York Times has also brought an action against brave this week. .

And I would emphasize that not only are we pursuing companies that still our content, but also taking it in at those companies, which knowing we purchase that per line content. They are obviously receiving stolen goods and should cease and desist. As for the subscription cancellation issue, look, if making it difficult for subscribers to cancel is a core part of your strategy then clearly, you have a problem and you need a new strategy. You should be making it impossible for people to subscribers that is to cancel by exceeding their expectations and delivering quality journalism that provides unique insights and absolute value and that's our strategy.

Michael Florin

Thank you, Brent. Mariana, we'll take our next question, please.

Operator

Our next question comes from Ailsa Lei with UBS.

Ailsa Lei

My question is on the higher year-on-year CapEx. If you could please give more color on what drives the spend and how we should be thinking about the rest of FY '27.

Lavanya Chandrashekar

Sure, Ailsa. Thank you for the question. The CapEx increase in this quarter was entirely driven by timing. We continue to be very confident in our ability to deliver strong free cash flow for the year.

Michael Florin

Thank you, Ailsa. Mariana, we'll take our next question, please.

Operator

Our next question comes from Entcho Raykovski with Evans and Partners.

Entcho Raykovski

I've also had a question related to free cash flow. I mean, given it was a little bit weaker in the quarter. And I also appreciate the seasonality. But can you provide a little bit more color around the timing factors which drive the working capital movements in the quarter. So putting CapEx to 1 side, obviously, the operating activities cash was quite a bit lower Yes. So some further color would be appreciated.

Lavanya Chandrashekar

Thanks, Entcho. Yes, so I'll give you a little bit more color. I mean like other than the CapEx timing, the other thing that impacted free cash flow this quarter was the timing of working capital. And so what do I mean by the timing of working capital? It's really 2 things. One is from a revenue perspective, more of our revenue was weighted into the back -- the last month of the quarter. And that was really good news coming from the strength of the both the Dow Jones business as well as HarperCollins. And so obviously, that money gets collected in the second quarter. And then the second thing was a slight increase on inventories at HarperCollins again this is to -- given all of the supply chain issues that we -- that people are having, if this was really to make sure that we protected our ability to have an outstanding holiday season on HarperCollins. As you said, our cash flow does tend to be more second half weighted due to seasonality free cash flow continues, remains a key focus for us in terms of value expansion, and I am very confident that we will generate strong free cash flow for the year.

Michael Florin

Thank you, Entcho. Mariana, we'll take our next question please.

Operator

[Operator Instructions] Our next question comes from Craig Huber with Huber Research.

Craig Huber

I've got a couple of questions on AI, if I could, please. Can you just -- is it possible for you to quantify for us AI cost savings at your company, either at 1 or 2 segments or maybe for the whole company? I mean how significant are AI cost savings for you, right, like an annual run rate or something like that? And then secondly, where are you the most excited about using AI to enhance your products and services.

Lavanya Chandrashekar

I'll do the first part of your question, Craig. We're not quantifying cost savings. What I would say is that we are focused on driving cost efficiencies in a disciplined manner, always protecting the long-term strength of the business. And AI is increasingly becoming a tool and a capability that allows us to do so. I mean, 1 of the -- a few examples maybe is what I can give you. One, I mean, obviously, in terms of our product development in terms of engineering, folding quality testing, et cetera, that's definitely a place where we're seeing -- I mean, our teams are using AI. They're extraordinary curious about being able to do so, they're doing so in a disciplined and with the right card rails, but that is driving efficiencies. Customer service is another area where we are definitely driving efficiencies. Also anything which is automated -- being able to automate certain data analytics kind of work -- what I would say stepping back, I'd say that we're actually using AI across all of our functions across all of our business units. You see it in operations, you see it in finance operations. You see it in marketing. And so I mean, this is an extraordinarily curious and driven organization and the ability to use AI to drive both top and bottom line growth is enormous.

I'll hand it off to Robert to talk about the second part.

Robert Thomson

Yes, Craig. Look, in terms of products, really right across the company. We are talking to each other, creating new experiences, new interfaces for our customers, for our clients. And if you look, for example, at digital real estate, AI is going to enhance the real estate experience, not undermine. And we'll ensure that we use our understanding of the market, our unique data sets. Our unique real estate at a trial to leverage AI to the benefit of the customers. And that's a guiding principle both real and REA. And those 2 companies are talking to each other virtually every day about the implementation of new AI applications. And just 1 other -- 1 of many other examples, AI and HarperCollins and audio books. Obviously, we're seeing Spotify innovate as is Audible and AI is going to really provide a role in helping to bring books to live through these vivid voices and the ability to generate a compelling audio experience that makes the book even more valuable. It really does transform audio books. So there's so many more choices in reading voices, sound effects and other techniques and tools and creativity that will bring words to life. And don't forget as well how AI will enable much more cost-effective translations. And the multiple languages, both in text and audio and thus, reach new audiences and generate new revenue.

Michael Florin

Thank you, Craig. Mariana, we will take our next question, please.

Operator

Our next question comes from Douglas Wardlaw with JPMorgan.

Unknown Analyst

Robert, we've heard from some publishers in Internet platforms this earnings season about the headwinds from search traffic and AI overlays. Your digital stayed at double digits. So maybe you're seeing something different. Can you speak to engagement trends generally or just a test of your digital advertising growth over the past few quarters?

Robert Thomson

Yes, Doug, we're very fortunate that our companies are destination sites. And at a couple, we've actually seen recent increases in traffic to some of the larger sites. And so our experience is rather different to those sites, which rely on what is called evergreen content, that is sites thinking that endless lists or gardening or food would fatten their traffic. Well, those sites have definitely been on a digital diet in the AI age. Generic does not flourish as synthesis proliferates. So the Evergreen turned out to be rather seasonal and has been withering on the vine. For example, our larger sites, realtor, REA, Bible Gateway are different types of experiences in that we -- at a monthly level, we have 249 million uniques in the U.S. so it's a huge audience, but it's also a network, 84 million at the New York Post. 66 million realtor, for example. And so hard news specialist intelligence, unique expertise remain huge traffic drivers. And these really are our strengths.

And as I say, we do have a particularly potent network effect. So for example, realtor dot-com can drive traffic to viable gateway, which can drive traffic to WSJ.com and New York Post and vice versa. So we have our own circular system, which is particularly valuable at this time.

Lavanya Chandrashekar

Yes. I'll just add on Robert in terms of ad revenue growth. we did see notable strength at the Wall Street Journal. And really, it's coming from both the tech sector as well as the finance sector, and it's the kind of the unique positioning that they're able to get by advertising with the journal. And I'd also say that direct traffic at the Wall Street Journal is the -- it's a predominant source of traffic at the Wall Street is direct traffic.

Michael Florin

Thank you Doug, Mariana, we'll take our next question.

Operator

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

Michael Florin

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