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NYT New York Times

Participants
Harlan Toplitzky Vice President-Investor Relations
Meredith Kopit Levien President and Chief Executive Officer
Roland Caputo Chief Financial Officer
John Janedis Wolfe Research, LLC
Alexia Quadrani J.P. Morgan
Kannan Venkateshwar Barclays
Craig Huber Huber Research Partners
Thomas Yeh Morgan Stanley
Douglas Arthur Huber Research Partners
Vasily Karasyov Cannonball Research
Call transcript
Operator

Hello and welcome to The New York Times Company's First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] 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.

Harlan Toplitzky

Thank you and welcome to The New York Times Company's First Quarter 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 2020 10-K 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.

Meredith Kopit Levien

Thanks, Harlan, and good morning. The Times finished the first quarter with more than 7.8 million paid subscriptions across our digital and print products, more than 100 million registered users, and an average weekly audience of 76 million readers. That foundation, plus our unmatched journalistic breadth and a market of at least 100 million people, who are expected to pay for English-language journalism, grounds our conviction that we can substantially and profitably scale paid subscriptions over time.

Our strong financial results in the first quarter demonstrate the success of our strategy and the promise of our large and growing digital subscription base. We recorded adjusted operating profit of $68 million, an improvement of more than 50% compared to the first quarter of 2020. Digital subscription revenue increased 38% in the quarter and we added 301,000 net new digital subscriptions across News, Cooking, Games and Audm.

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 and 2019 demonstrates the advantage of our subscription-first strategy to our advertising business. In our last earnings call, I noted that fluctuations in the news cycle can lead to considerable variability in net digital subscription additions from quarter to quarter. In February and 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 second quarter, 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 performance, which prior to 2020 was our best year for net additions. There is no doubt that the news cycles of the last 5 years passed by last year's tumultuous presidential elections, racial reckoning and the COVID-19 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 of our underlying model.

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 captured the ethos of what it feels like to be a mother right now with their breakout multimedia feature, The Primal Scream.

Our metro reporters led the coverage of the multiple scandals rocking Albany, while our long-time beat 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 and the need for understanding will only grow. Outstanding journalism that helps people understand the world is central to our model, and it will continue to be the primary draw to the majority of our audiences and paying customers. But it won't be the only draw. 10 million people a week now come to The Times for needs beyond news, seeking recipes, puzzles and shopping advice.

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 Audm reflect our deeply-held belief that The Times can play an even bigger role in the lives of tens of millions more people. Combined with the differential value and demand advantages of our core news product, we believe these offerings should enable The Times to become a larger and more profitable business as we scale. 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 first quarter, a positive development given the strong correlation we've described in the past between experiencing the breadth of our report and subscribing.

Our live coverage, with which we've been experimenting aggressively since late 2019, now plays a significant role ensuring strength at the top of our funnel, as well as repeat engagement. 10 million 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. The 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 million people read a Times newsletter every week, including 5 million who start their day with our flagship newsletter, The Morning. More than 85% of our newsletter readers are not yet paying Times subscribers.

So, 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 1.7 million subscriptions and counting, Cooking and Games are succeeding as products in their own right, with a lot of runway ahead. What's particularly encouraging is their ability to enhance The Times' value in users' daily lives. In the last few months, we've begun to experiment with how we sell our multi-product bundle in 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 first quarter, we recorded $59 million of digital advertising revenue, a 16% increase over the first quarter of 2020 and, encouragingly, a 7% increase over the same period in 2019. This is the last quarter that we are 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 last year is even stronger.

Our growth in registered users has propelled the rapid expansion of our first-party data products, which are proving effective for marketers while affording our readers privacy from third-party trackers. Demand for these products is strong, driving 20% of our digital advertising revenue in the first quarter, compared with less than 10% in the same period last year. And, as of the first quarter, we have fully eliminated our reliance on third-party data targeting in direct-sold advertising. Audio advertising sales also continue 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 productions beyond The Daily, including Sway with Kara Swisher, The Argument with Jane Kosten, 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 should be regarded as structural. 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 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 newsroom but across all of our disciplines.

Our culture has enabled the world's most admired and influential news report, and it's also helped create an innovative and thriving digital business. Success from here will require that we nurture the best aspects of that culture, and also evolve it. 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 ambitions.

We also continued to advance our underlying tech strategy, which reflects the increasing importance of engineering excellence to our growth. And finally, we've begun to define the future of our workplace to offer more flexibility while preserving the kind of physical togetherness that enables much of our team-oriented, creative work. I'm confident that all of this will propel our strategy and our growth for years to come. With that, I'll turn it over to Roland.

Roland Caputo

Thank you, Meredith, and good morning, everyone. Adjusted diluted earnings per share was $0.26 in the quarter, $0.09 higher than the prior year. We reported adjusted operating profit of approximately $68 million, higher than the same period in 2020 by $24 million. We added $167,000 net new subscriptions to our core digital news product and $134,000 net new subscriptions to our standalone 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 Games subscriptions and slightly more than 800,000 Cooking subscriptions. The international share of total news subscriptions remained at 18% as of the end of the quarter. Total subscription revenues increased more than 15% in the quarter, with digital-only subscription revenue growing 38% to nearly $180 million. The continued acceleration in the rate of year-over-year digital subscription revenue growth, from 18% in the first quarter of 2020, to 37% by the fourth quarter and now 38% in the first quarter of 2021 was a result of 3 factors: first, the large number of new subscriptions we have added in the past year; second, ongoing strength in retention 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 the first quarter of 2020.

As you'll note in the guidance we gave, we expect that rate of growth to slow beginning with the second quarter 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 points compared to the prior year, which represents a significant improvement in both trends. This improvement was primarily a result of subscriptions graduating from their introductory price to either full price or an intermediate step-up in the quarter, as well as the continued benefit from price increases on our more tenured full-price subscriptions. ARPU related solely to domestic news subscriptions increased 1% versus the prior quarter and declined approximately 4% versus the prior year.

We expect to continue demonstrating pricing power throughout 2021 as the impact from subscriptions graduating from discounted promotions and the price increase on tenured 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 a 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 first quarter of 2020 was only partially impacted by the pandemic-related business closures, increased levels of remote working and reductions in travel that negatively affect newsstand sales. 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 podcasts, as compared to the weak digital advertising revenues 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 programmatic advertising in our apps.

Excluding the nearly $3 million in revenues we earned from these areas in the prior year period, our digital advertising growth rate versus last year would have been 23%.

Our first quarter 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 million, primarily as a result of fewer television episodes, as well as lower revenues from live events, commercial printing and building rental revenue. These declines were 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 newsroom, Games, Cooking and audio employees; costs in connection with audio content; a higher incentive compensation accrual versus zero in Q1 2020; and higher subscriber servicing 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 approximately 26% largely due to growth in the number of engineers employed and a higher incentive compensation accrual than we had recorded in the first quarter 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 our investments in product development as well as in our core news and standalone journalism to drive growth. General and administrative costs increased by 7%, largely due to a higher incentive compensation accrual and increased headcount.

Our effective tax rate for the first quarter was 18.7%, which was lower than the statutory tax rate, largely due to a benefit 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 at $891 million, an increase of $9 million compared with the fourth quarter of 2020. The company remains debt-free with a $250 million revolving line of credit available.

Let me conclude with our outlook for the second quarter of 2021. Total subscription revenues are expected to increase approximately 15% compared with the second quarter 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 second quarter of 2020 and digital advertising revenues are expected to increase approximately 70% to 75% mainly as we compare against a quarter that was severely impacted by the pandemic. Other revenues are expected to increase in the low-single-digits. Both operating costs and adjusted operating costs are expected to increase in the mid- to high-teens compared with the second quarter of 2020 as we continue investing into the drivers of digital subscription growth and comp against the low spending of the second quarter 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.

Operator

Thank you.

We will now begin the question-and-answer session. [Operator Instructions] And this morning's first question comes from John Janedis is with Wolfe Research.

John Janedis

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 talked about 20 million or more subs over, say, longer-term. Does that still seem doable? And big picture, how tight is the growth to the new cycle?

Meredith Kopit Levien

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 that's 2, 3, 4 times what we have today. We remained incredibly excited about that, 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 I've heard it right.

John Janedis

Yeah, I mean, just based on the comments around late 1Q and 2Q, knowing it's seasonal. And obviously, there's been a lot of talk about a slowing news-cycle have an impact to 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 subscriber acquisition?

Meredith Kopit Levien

Yeah.

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 many ways. The various stories the last 5 years, which is really the stories of the last year, had been an accelerant to the model, but that I would say 2 other things are happening that are really significant. One, quarter-over-quarter, year-over-year, we are getting better at the underlying mechanics, getting better at the underlying engine, 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 game habit standpoint versus 2019.

So, we feel very confident that there is still wide interest in news. I'll also say, 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 from another set.

So we are not worried that there won't be high demand for news.

Even as the storylines change, and I talked in my prepared remarks about the enormous investments we've made in our newsroom. And we are prepared to meet some of that investment.

We are prepared to meet that demand, wherever the story goes. I'll say, we've also did quite a bit of investment into meeting news needs in new and different ways. I mentioned real-time coverage, live news, that's a need, where I'd say, people didn't come to The Times first before, I'd say before 2019 in a really big way. It's something that's 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 do 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 a morning newsletter and newsletters beyond that.

So, I'm really confident that we're going to keep meeting the need for understanding the news. And we are going to add and 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.

John Janedis

Got it, thanks. And maybe, can you talk about media expenses going forward? Do they start to pick up significantly to drive or reaccelerate subscriber growth? And can you give any more color on churn?

Meredith Kopit Levien

Sure. I'll answer the first question, and the second one, Roland may have color to add to that. On media, I'll just remind you that the vast majority of our subs come in through organic means, that actually goes a little bit to the point I made before.

Our news product is a huge kind of self-propelling engine of sub demand.

So, we are still getting those to our subs, not through paid media. In periods of lower news cycle or less timing. And we also end up buying less media, because the rate of return isn't as good. But the overarching engine is much, much more reliant on organic means. I'd say, on churn, we are broadly very happy with churn. When we compare ourselves to other content-based digital media companies, we think our churn - our overall retention and monthly churn are at a world-class level versus last year, I'd say that the newest cohort, a huge surge in new subs last year and the newest cohort, subs that 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 with what we're seeing on churn. But, Roland, I don't know if you want to add to either of those points.

Roland Caputo

No, I actually really think you hit all the major points, nothing to add on that one.

John Janedis

Thanks a lot.

Meredith Kopit Levien

Thank you.

Operator

Thank you. And the next question comes from Alexia Quadrani from J.P. Morgan.

Alexia Quadrani

Thank you very much.

Just a couple of questions.

First, if you could maybe elaborate a little bit on what the demos look like in the new subscribers in Q1, if it's any different than in 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 year as the world has evolved and the model has changed a bit. I'm curious, I know you mentioned it's being very, very healthy outlook for digital advertising for the remainder of the year. I'm curious if your long-term view of digital advertising has changed at all or maybe you can update us on how you see that, how the outlook there is?

Meredith Kopit Levien

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 for 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, it's we've been sort of steadily tracking toward more and more of the new subscribers coming in under 40, and more from parts of the country and the world, where we've not been hugely penetrated. In quarters, where there is sort of less - kind of high news demand, it tends to go the other way. But I'd say, very broadly, The Times is continuing to bring in younger subscribers and subscribers from more varied places. And there is nothing that happened in the first quarter that changed that trajectory. And I think I've also said in the past, we don't ask a ton of questions demographically of our news subscribers. We do more of that over time than the beginning.

So our data isn't great here. But there's generally - and they're generally more 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 and margin profile of the business. And I'll be specific about that. We exited our less profitable marketing services business. We've 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 new products, including fundamentally a higher-margin endeavor. Demand is getting stronger and stronger for our first-party data products, which confirm registration-based model, we're now making faster-than-expected progress on. And the creative work that we - we still do a bunch of creative work. But we did that previously through fairly cumbersome lower-margin marketing services business.

And so, now we're able to do that work in a way that is nearly always dependent to media. And therefore, at deal level, we like the margin better.

So 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 in some time. I still would say, no question, it's the secondary endeavor. And the main idea here remains scaling our direct-to-consumer digital subscription business. I do think now we've gotten those 2 businesses. The real thing we pulled off last year is we have those 2 businesses running like entirely on the same high-octane gas, which is registered logged-in users, whose data we can use in privacy in more 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.

Alexia Quadrani

And if I could just squeeze in one more, just circling back to 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 how do you revisit the algorithm in terms of the price hikes coming off of the promotional rates, given that tweak in churn or not necessarily?

Meredith Kopit Levien

Yeah, I'll let - I'll say 2 things and Roland should add more color here. We're very comfortable with where churn is. And I'll just say again that it's been one of the biggest accomplishments over the last 4, 5 years. We see dramatically increased retention and reduced churn. And we're very comfortable with everything we see in the model and where it is exactly, right? You're bringing in giant surge of new people in a single year. They are 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.

You train the models and it may get smarter.

And so, we also like what we're seeing. And Roland touched on this in his prepared remarks, our pricing strategy and our ability to use algorithms to determine who goes to full price and who doesn't is working very, very well. Roland, I don't know if you want to add anymore color to that.

Roland Caputo

Sure. Hi, Alexia.

We are 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 the number of folks that it is sending to full price, so still comfortable with the model, no problems there.

Alexia Quadrani

Thank you very much.

Meredith Kopit Levien

Thanks, Alexia.

Operator

Thank you. And the next question comes from Kannan Venkateshwar with Barclays.

Kannan Venkateshwar

Thank you. Roland, 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 2018 during the promotional phase, which has either seen a price increase already or will 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.

Roland Caputo

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 is 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 is 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.

So our experience to date with that is we're very comfortable with that. It is another test of that person's elasticity of demand.

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 interested in scaling than monetization at this point.

Kannan Venkateshwar

Got it.

Meredith Kopit Levien

Hey, Roland, the only thing is - Kannan, the only thing I would add to that is that we also, I'd say, and I think we take a conversion of this, but we get sort of steadily better. We get steadily better at retaining through engagement as well and that product proposition keeps getting better.

We are investing in newsroom.

We are investing in the digital product experience over time that has a positive.

Kannan Venkateshwar

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 and 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?

Meredith Kopit Levien

I think that is strategically correct with a couple of caveats.

So, I'd say, having a very large - we also said today at this time, we have 100 million registered users.

So, large registered user base with, whom we have direct relationship is 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 we update on that. That is all very positive. That's what I mean when I say the ad business and subs business now are on the same kayak team, yeah.

So, that is a yes. To the question you're asking, yes, I do think that, that bodes well for advertising. Having common to the grown up in the ad business and run our ad business, I will also say, we have a highly 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 is a lot of business to be won; that's going very well, if we got the right proposition. But I would just say the ad market is a finicky thing, and you've got other companies that kind of dominate the dynamics.

And so, we tamper our excitement about it with that in mind. It's a demand-driven market, more than a size-driven market.

We have awesome supply, probably better than anybody else is, but it's a demand-driven market.

Kannan Venkateshwar

Got it. Thank you so much, guys.

Operator

Thank you. And the next question comes from Craig Huber with Huber Research Partners.

Craig Huber

Great. Thank you. Few questions, if I could. To start, I want to ask, if I could, about your marketing costs. They were down 21% year-over-year to $36 million. What should we expect for that dollar amount going forward for your marketing spend, and how much of that decrease by design in your marketing costs you think ended up hurting the number of new adds for digital subscriptions in the first quarter? I mean, how much of a correlation do you think there is there?

Meredith Kopit Levien

I'll give a short answer. Roland will give you a long answer. The short answer is that's by design. And that's what I said, I think when I answered the John's question, which is the biggest engine we have is organic. And when that engine - when the news cycle slows 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. Roland, you can give an even more colorful answer.

Roland Caputo

No, I think that's generally right. I mean, we don't see the cut back 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 the last year in the early half.

So, I think, you'll probably see us reintroducing some marketing spend as we get into the second quarter. But, again, we gauge it, based on how well we think it's going to perform in market.

Craig Huber

My next question, guys, for potential price increases on the digital front for the remainder of 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 you're expecting that can bear with a higher price increase? I just want to get a sense for our modeling purposes.

Roland Caputo

Yeah.

For modeling purposes, you think about 100,000 folks per quarter in that range, would be seeing - I'm assuming you're talking about the tenured price increase.

Craig Huber

Yes. Yes. But, obviously, it's not a very big number. It seems 400,000 roughly for the year.

Roland Caputo

Yeah, 400,000 and change for the year.

Craig Huber

That means you're - that's telling me that you're obviously trying to volume here, you're not trying to scare anybody away.

So that model…

Roland Caputo

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, it's a little bit over 100,000 a quarter is what we think we'll see for the rest of the year.

Meredith Kopit Levien

Roland, let me just add, that is for tenured subs.

Roland Caputo

Yes.

Meredith Kopit Levien

We also have an enormous number of people stepping up in price, which Roland had just described.

Roland Caputo

That's right. The number of people stepping up off of the big year 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 1.5 million or 1.6 million folks will see an increase from their promotional price.

Craig Huber

But also on the cost front, you've obviously said, you thought costs for this upcoming quarter would be up.

I think you said, mid- to high-teens. 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? Why did you not spend as much on it than we originally thought when you told them?

Roland Caputo

So, it really came down to media, media spend and a bit of the hiring ramp.

Craig Huber

Okay. I guess, my last question, Meredith.

If you mentioned registered users now are about 100 million. What is the daily visitors on average you guys have now to the main website, or main app, or monthly? What's the number of that right now on your data?

Meredith Kopit Levien

That's a good question, we don't answer that one. But what I'll say is, we've more people who use New York Times every day now than we have had at any point in our history. But we've not disclosed that.

Craig Huber

Okay. Thank you.

Meredith Kopit Levien

Higher, higher is the answer.

Operator

Okay. Thank you. And the next question comes from Thomas Yeh with Morgan Stanley.

Thomas Yeh

Hi, good morning. Thanks for taking my question. Yeah, following up on the 100 million-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 limit 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.

Meredith Kopit Levien

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 as an underlying model and a strategy that should propel a larger and more profitable business over time. I wouldn't regard what we said in the last call's guidance so much as direction of travel and nothing has changed in terms of our assumptions and the 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 - you know what, I just got a note from my team, you can't hear me. Give me one second and I'm going to answer the other question. I am just going to take my headsets off and pick up my phone, hold on. That's cool, holding the phone now. On your first question, I'll say a few things and you can tell me if this isn't in zone of what you're asking about. 100 million 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 new cycle presented an opportunity 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 number of the - sort of zones of opportunity. We've got a huge ton of opportunity in e-mail. 15 million people using - opening, reading Times, e-mail every week. 5 million people who use The Daily on a very - I'm sorry, not The Daily, The Morning on a very regular basis.

And so, there is a really big opportunity in e-mail to have it be a more intentional driver in the funnel from registration to subscription. And you're going to see us get just much more, 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 drive. It's a behavior that correlates with paying and staying.

And so, you can imagine that we're working to stimulate that, now that we've got registered users and they are addressable to us.

And so, I'd say, generally, you will see a shifting from driving more regis, although, I don't want to suggest we're anywhere near the top, we're not to getting registered users to return. 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.

Thomas Yeh

Yeah, that makes sense. And maybe, if I can squeeze one last in, Meredith, can you opine 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 opportunity there? Thank you.

Meredith Kopit Levien

Sure. I will try not to opine, although, I'll give you the state of things. And I should say 1 more thing on the last question. Roland touched on this before, but 1 of the other things that really big registration - registered user base gives us is the opportunity to keep training our algorithms. And, I think, I said a version of this in the prepared remarks, we've - or I said 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 at how we do that.

So, I should have said that before as well.

On the platforms, I would say, 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 platform seeking and being willing to make commercial agreements in the form of licensing arrangements with publishers. We obviously have 1 of those arrangements now with Facebook for their news tab and we certainly don't rule out they're 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 that 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 news that, courses through their systems.

And so, we think the compensation has to be right.

So we think about all those things when we consider whether and how to work with the platform. And I'd say, I don't rule out, more to come there, but I have nothing to report.

Thomas Yeh

Great. Thank you so much. Very helpful.

Meredith Kopit Levien

You're welcome.

Operator

Thank you. And the next question comes from Doug Arthur with Huber Research Partners.

Douglas Arthur

Yeah, thanks. 2 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 1,800? I mean, are you adding more resources there? Can you comment on that?

Meredith Kopit Levien

Sure and good morning. I've said this a few times in the past. I would the newsroom now is well over 1,700 and I'd say that number doesn't include the people we have - many of the people we have making recipes, winning puzzles, and producing Wirecutters' 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, 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 would regard investment into the newsroom. To the extent you're asking me about, does that scale with our expectations of subs scaling? 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 are scaling the subscriber base.

Douglas Arthur

Okay, great. And just 1 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 2021 in digital advertising from sort of the timing of that and the impact of...

Meredith Kopit Levien

Yeah. Roland might give a slightly more precise answer here. But I think what I said in my prepared remarks is the comp, 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 business, and also the fact that we took open market programmatic out of our apps that was the big comp as well from the first quarter.

Douglas Arthur

Okay. Great. Thank you.

Meredith Kopit Levien

You're welcome.

Operator

Thank you. And the next question comes from Vasily Karasyov from Cannonball Research.

Meredith Kopit Levien

Hi, Vasily.

Vasily Karasyov

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 and 2020 number of subs, years 2019 and 2020, and now?

Meredith Kopit Levien

Yes, happy to talk about. Yes.

Vasily Karasyov

So - and then, what that factor is? And is it possible that that factor will change in a quarter or two, like how fluid that is?

Meredith Kopit Levien

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 first quarter was 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 the compounding effects of all of those things at once. And the reason we've suggested that it could continue into the second quarter is because the second quarter traditionally tends to be just a slower period for audience and news engagement. But, I'll say, as I said, I think an answer to an earlier question, we have seen periods, where the tide has gone out little bit on one particular storyline or few storylines and it always comes back. And we regard the underlying drivers as 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, and I said this before, but I don't think, it's hard to say, I mean, obviously, the news cycle plays big role in the model.

And so, 2 just our work on the underlying mechanics of it, 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.

Vasily Karasyov

Thank you. And a quick follow-up, not follow up, a quick question. Why did you feel, like you want - you needed to disclose the number of registrations, the 100 million? 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 data base.

Meredith Kopit Levien

Yeah.

Vasily Karasyov

So can you give us an idea?

Meredith Kopit Levien

Yeah, 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 stay. And honestly, we were waiting for it to be a big enough number, that itself worthy of sharing. We think the fact that the number - we don't think we're done, just to be clear, the 100 million. And as I said earlier, we're still getting more registrations. But at 100 million that gives us really sizable population around whom we can intervene to stimulate return and draw people in a new way.

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 based on which we're building lots of other optimization.

So, I mentioned our algorithms getting smarter about when to ask people to pay. I mentioned our newsletters having more news 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. And we really exposed it, one, because it's now the size that we're very excited about; and two, we think it's a really important factor in the underlying model and it gives us a lot of confidence about how we grow from here.

Vasily Karasyov

Thank you very much.

Meredith Kopit Levien

You're welcome.

Operator

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.

Harlan Toplitzky

Thank you for joining us this morning. We look forward to talking to you again next quarter.

Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation.

You may now disconnect your lines.