News Corp (Class B)

1) Record Financial Performance - News Corp reported a record revenue of $2.3 billion for Q4 2026, an 11% increase YoY. - Total segment EBITDA surged 31% to $423 million, marking the highest fourth quarter profit on record. - Net income rose 167% YoY to $230 million, with reported EPS at $0.33 compared to $0.09 last year. - For the full year, revenues increased 7% to $9 billion, and total segment EBITDA rose 15% to over $1.6 billion.

2) Segment Highlights and Growth Drivers - Dow Jones: Q4 revenues grew 7% to $644 million, with EBITDA up 20% to $181 million. B2B products accounted for over 50% of segment profitability. - Digital Real Estate Services: Revenues increased 19% to $553 million, with EBITDA expanding 46% to $222 million. Realtor.com achieved 13% revenue growth, marking its seventh consecutive quarter of growth. - Book Publishing: HarperCollins reported a 15% revenue increase to $566 million, driven by strong demand for new titles and digital formats, including a 16% rise in audiobook revenues.

3) Strategic Initiatives and AI Engagement - The company is actively pursuing partnerships in the AI space, emphasizing the importance of quality content in AI applications. Ongoing collaborations with OpenAI and Meta are expected to enhance revenue streams. - Legal actions are being taken against companies that misuse News Corp's content, reinforcing the company's commitment to protecting its intellectual property. - News Corp is focusing on simplifying its structure through divestitures, including the recent sale of REA India, to streamline operations and enhance shareholder value.

4) Operational Efficiency and Shareholder Returns - Free cash flow improved 42% YoY to $811 million, reflecting strong EBITDA growth and working capital improvements. - The share buyback program accelerated significantly, with $643 million repurchased in fiscal 2026, over four times the previous year's rate. - The company is committed to maximizing shareholder value and believes its stock is undervalued, with ongoing efforts to drive profitability and cash flow.

5) Outlook and Market Considerations - The company remains optimistic about continued growth in fiscal 2027, particularly in the Dow Jones and Digital Real Estate segments. - Challenges include potential impacts from rising mortgage rates on the housing market and geopolitical tensions affecting client demand. - The earnings call did not provide specific guidance for Q1 2027, leaving some uncertainty regarding immediate future performance.

Bottom line: News Corp's robust financial results and strategic focus on digital transformation and AI partnerships position it well for continued growth, making it an attractive investment for shareholders despite potential market headwinds.