Financial results at HarperCollins in the second quarter of fiscal 2024 looked a lot like its first quarter performance—a modest sales increase, but a huge jump in earnings. For the quarter ended December 31, 2023, sales rose 4% over the comparable period a year ago, to $550 million, while EBITDA (earnings before interest, taxes, depreciation, and amortization) shot up 67%, to $85 million.
Unlike the first quarter, however, in which sales of physical books were credited with the improved results, HC parent company News Corp pointed to a 15% increase in digital sales for the revenue—and profit—gains with sales of downloadable audio leading the way, jumping 29%. News Corp CEO Robert Thomson attributed the increase in digital audio to a “flourishing” market and to the entrance of Spotify into the space; Spotify contributed "incremental" sales in the period since its U.S. launch in November, CFO Susan Panuccio added. Total digital sales represented 21% of consumer revenue in the quarter, up from 19% a year ago, and News Corp said that audio accounted for about half of all digital sales—a record high, Panuccio noted.
On the print side, sales of Christian books had another good quarter, while general book sales were led by The Pioneer Woman Cooks – Dinner’s Ready! by Ree Drummond, The Little Liar by Mitch Albom, Tom Lake by Ann Patchett and My Effin’ Life by Geddy Lee.
Panuccio attributed the jump in profits, which she said exceeded expectations, to fewer returns, an improved supply chain, and lower manufacturing, freight, and distribution costs. The CFO also credited HC’s management team with lowering the publisher’s cost base, an effort that has included layoffs.
For the first six months of fiscal 2024, HC sales were up 4%, to $1.07 billion, with profits jumping 67%, to $150 million, giving the publisher an operating margin of about 14%. Panuccio said that she didn’t expect HC to continue to post such huge profit gains for the rest of the year, but did say News Corp anticipates that the publisher will finish the year with a margin over 10%, compared to a 8.3% margin in what was a difficult fiscal 2023.
