News Corp (NWSA) Q1 2027 earnings review
News Corp profit rises 43%, but real estate growth slows
News Corp, the owner of The Wall Street Journal and HarperCollins, grew profit through business data and book sales while its property portals slowed. Sales from businesses it owned a year ago rose 4% excluding currency shifts, and segment profit excluding one-offs climbed 13%. Chief executive Robert Thomson praised AI partnerships with OpenAI and Meta, yet the release gave no dollar figure for AI licensing and no numeric outlook for the year.
| Sales from businesses owned a year ago, ex-currency | +4% +6% reported revenue ($2.28B) |
|---|---|
| Segment profit (EBITDA), excluding one-offs | +13% +19% reported ($403M) |
| Profit per share, excluding one-offs | $0.28 +27% from a year ago |
| Forward outlook | Unchanged no numeric FY27 target issued |
⚖️ Verdict: ⚪ Neutral
The standing case is unchanged because steady progress at Dow Jones balanced a slowdown in digital real estate. Dow Jones grew segment profit 11%, keeping pace with its five-year target, and management boosted share buybacks to $166 million even without last year's one-off loan repayment. On the other side, Realtor.com revenue growth slowed to 5% as customer leads dropped 11%, and currency gains plus an easy book-publishing comparison accounted for a large share of the headline profit jump.
The question now is whether AI licensing fees and realtor price increases can offset shrinking web traffic and slow housing turnover. Either AI deals and premium agent packages lift margins on their own, or lower user traffic and falling home listings cap profit growth once currency tailwinds fade. Second-quarter Realtor.com revenue and any AI revenue disclosure in the quarterly filing will show which side is right.
🐂 Bull Case
Dow Jones Keeps Pace With Its Profit Goal
Dow Jones publishes The Wall Street Journal and sells business data to companies. Management targets $1 billion in annual segment EBITDA, which is profit before interest, taxes, and depreciation, by fiscal 2030. By our math, hitting that target from last year's $663 million base requires about 11% yearly profit growth. This quarter, Dow Jones raised segment EBITDA by 11% to $160 million on 8% revenue growth.
- Risk & Compliance (corporate vetting data): $104 million revenue, up 11% from a year ago
- Dow Jones Energy (commodity pricing data): $79 million revenue, up 8% from a year ago
- Wall Street Journal digital-only subscriptions: 4.7 million, up 11% from a year ago
- Dow Jones advertising revenue: $93 million, up 9% on 12% digital growth
This matters because business data carries wider margins than consumer news. Risk & Compliance held its 11% growth pace from the fourth quarter, while Energy sped up from 4% to 8%. Meanwhile, lower general and administrative costs across News Corp — down 1.2 percentage points of revenue by our math — helped lift company margins.
What to watch: second-quarter Risk & Compliance revenue growth. A reading below 10% would make the 11% annual profit pace for Dow Jones harder to keep.
Buybacks Accelerated Even Without One-Off Cash
News Corp bought back $641 million of its own shares last fiscal year, more than four times the prior year's pace. Critics noted that a one-off $380 million loan repayment from its former Foxtel cable unit paid for much of that buying. This quarter tested whether the company would slow repurchases once that cash was gone.
Instead, the publisher spent $166 million on buybacks in the first quarter, up 80% from $92 million a year ago by our math. That buying cut the diluted share count by 4.3% to 542.7 million shares, which lifted per-share profit growth above net income growth. Because first-quarter cash flow was negative, the company used its $1.78 billion cash balance to keep buying.
What to watch: second-quarter share repurchases on the cash flow statement. Another quarter near $160 million would show management will use its cash pile to maintain the buyback pace.
🐻 Bear Case
AI Deals Remain Unquantified While Web Traffic Shrinks
Chief executive Robert Thomson pitches News Corp as a supplier of training material for artificial intelligence, noting that "high quality content is the very essence of AI". He highlighted content licensing deals with OpenAI and Meta, and promised that against unpaid scraping, "To that end, we will woo and we will sue". Supporters view these deals as a high-margin revenue stream.
Yet the company still does not say how much money those deals bring in. It buries AI payments inside circulation lines as "higher content licensing revenues". Meanwhile, readers are visiting its mass-market websites less often. Monthly unique users at The Sun fell 26% from a year ago to 57 million, and New York Post users dropped 11% to 84 million.
This matters because AI answer engines can replace direct visits to news websites. While News Corp collects undisclosed licensing fees, shrinking web audiences make it harder to sell advertising at its newspapers.
What to watch: any dollar figure for AI licensing revenue or HarperCollins' share of the Anthropic legal settlement in the quarterly filing. Continued silence means investors cannot verify if AI fees offset lost web traffic.
Weak Housing Markets Slowed Real Estate Growth
Digital Real Estate Services runs REA Group, Australia's leading property portal, and Move, which operates Realtor.com in the US. Supporters point out that both portals have raised prices and sold premium packages like RealPRO Select to grow revenue even when home sales are slow. In the fourth quarter, Move grew revenue 13%.
- Move (Realtor.com) revenue: $160 million, up 5% from a year ago
- Realtor.com customer leads: down 11%; monthly unique users down 8% to 66 million
- REA Group revenue: $369 million, up 13% reported, but up 5% excluding currency shifts
- Australian home buy listings: down 2% nationally, with Sydney and Melbourne down 16%
Price increases are no longer fully offsetting weak housing volume. Move's revenue growth slowed by more than half from last quarter because of "broader macroeconomic trends and a focus on higher quality leads". In Australia, a stronger local dollar provided 8 percentage points of REA Group's 13% reported revenue growth.
What to watch: Move revenue growth and Australian listing volumes next quarter. If Move revenue growth drops toward zero, agent price increases have reached their limit in a slow US housing market.
Currency Gains and One-Offs Pushed Reported Profit Up
News Corp reported a 43% jump in net income to $215 million and a 19% rise in Total Segment EBITDA to $403 million. However, currency shifts, divestitures, and an easy comparison did much of the work. Foreign exchange added $43 million to revenue and $15 million to segment profit. Sales from businesses owned a year ago, excluding currency, grew 4%, while underlying segment profit rose 13%.
Two one-time items also flattered the comparison. Book Publishing grew segment EBITDA 29% to $75 million, but last year's quarter included a $13 million bad-debt write-off from a closed distributor. Without that write-off, book profit grew 5.6% by our math. Below the operating line, a gain from selling REA India's remaining business lifted other income to $38 million from $4 million.
What to watch: Book Publishing profit growth in the second quarter, when HarperCollins laps a $16 million inventory write-off. Underlying growth above 6% after removing that item would show genuine margin expansion.
Print Advertising Drops Cut News Media Profit
The News Media division runs newspapers in the UK, Australia, and the US, including The Times and the New York Post. Segment revenue dipped 1% to $540 million, and fell 4% excluding currency gains. Print advertising declines and lower other revenue outweighed a $17 million currency boost and higher cover prices.
Because newspaper printing and newsrooms carry fixed costs, the 4% underlying revenue drop cut segment EBITDA by 40% to $18 million, down from $30 million a year ago. Digital subscribers at News Corp Australia barely moved, ending at 1,163,000 against 1,162,000 last year.
What to watch: News Media segment EBITDA in the second quarter, which is seasonally the division's largest quarter. Another double-digit profit drop would show that California Post expansion costs and print declines are overwhelming digital subscription gains.
Risks This Quarter Did Not Answer
Three standing governance, legal, and balance-sheet concerns received no update in the first-quarter earnings release because they live in footnotes or conference call questions.
- OPIS antitrust probe: the quarterly filing's contingencies footnote will show if the Department of Justice subpoena and price-fixing lawsuits at Dow Jones Energy have escalated.
- Extended divestiture receivable: the filing will show whether the $212 million owed from the News America Marketing sale remains delayed in non-current assets.
- Corporate structure: analysts ask every quarter about simplifying the conglomerate and dual-class share structure; call remarks will show if management plans any further asset sales after exiting REA India.
💲 Other KPIs
Deferred revenue — cash customers have paid for subscriptions not yet delivered — rose 8.3% from a year ago by our math, up from $504 million last September and $543 million in June. It has grown between 8% and 10% year over year for three straight comparable quarters, supporting steady subscription revenue.
Free cash flow swung from a positive $4 million a year ago to an $89 million outflow. Operating cash flow dropped by $72 million to $13 million due to "the timing of working capital movements and higher tax payments", while capital spending rose by $21 million to $102 million.
Money owed by customers rose 13.9% from a year ago by our math, more than double the 6.4% pace of reported revenue growth. On the cash flow statement, receivables and other assets absorbed $143 million of cash this quarter compared to $77 million a year earlier.
🔮 Guidance
Unchanged. The media group did not issue quarterly or full-year numeric targets in the release, leaving its five-year $1 billion Dow Jones profit goal as the main forward benchmark. By our math, reaching $1 billion from fiscal 2026's $663 million requires about 11% annual growth, which Dow Jones matched this quarter.
❓ Key Questions
How much revenue do AI licensing deals actually generate?
Management calls content the essence of AI and touts partnerships with OpenAI and Meta, but still hides the revenue inside broader circulation lines. Investors need the dollar amount to see if AI fees compensate for a 26% drop in monthly users at The Sun.
Have Realtor.com price increases hit a ceiling?
Move's revenue growth slowed from 13% in the fourth quarter to 5% in the first quarter as customer leads dropped 11%. Management has relied on premium agent packages to grow revenue per lead, and investors need to know if agent churn is rising.
What is Risk & Compliance growth excluding recent acquisitions?
Dow Jones Risk & Compliance grew 11% for a second straight quarter, down from 19% in the third quarter of last year. Knowing the underlying growth rate and customer retention will show whether the business data unit can keep driving Dow Jones margins.
Why did customer receivables grow twice as fast as sales?
Net receivables rose 14% from a year ago to $1.86 billion while revenue grew 6%, contributing to an $89 million free cash flow outflow. Investors need to know which segment drove the working capital build and when that cash will collect.