Following a difficult fiscal year ended June 30, 2023, in which sales and earnings both fell, HarperCollins began fiscal 2024 with a bang, with earnings jumping 67% and sales increasing 8%. According to HC parent company News Corp, revenue rose to $525 million in the quarter, up from $487 million, and EBITDA (earnings before interest, taxes, depreciation, and amortization) rose to $65 million, from $39 million, in the first quarter of fiscal 2023. “The script was completely rewritten in the first quarter of our publishing business,” said News Corp CEO Robert Thomson.
Thomson attributed the sales gain primarily to the increase in physical book sales, which were helped by a return to a more normal ordering pattern from Amazon following the e-tail giant's reset of its inventory levels last summer. Results were particularly strong at HarperCollins Christian Publishing, Thomson said, citing Reba McEntire’s Not That Fancy as a key contributor. A number of trade frontlist titles did well in the quarter, and frontlist accounted for 39% of sales, up from 35% in the first quarter of fiscal 2022.
Digital sales increased 3% compared to the first quarter of fiscal 2023, representing 22% of consumer sales. Digital audiobooks accounted for 45% of overall digital revenue, coming closer to proving HC CEO Brian Murray’s prediction that audio sales will someday surpass sales of e-books. To that end, Thomson was extremely bullish on Spotify’s U.S. digital audiobook launch, which was announced on Tuesday, declaring that “we are genuinely confident” Spotify’s entrance into the market will bring benefits to authors and readers. While not mentioning Audible by name, Thomson added that the digital audiobook market has “needed a strong new entrant.”
The huge first quarter profit gain was due to lower returns as well as lower manufacturing, freight, and distribution costs, as supply chain challenges and inventory and inflationary pressures have begun to ease, executives said. Even with the layoffs implemented by HC, News said employee costs were higher in the most recent quarter compared to a year ago. CFO Susan Panuccio said that while News Corp expects HC’s sales and earnings to increase year over year compared to fiscal 2023, that will not grow at the rate achieved in the first quarter. Still, Panuccio said, the company expects HC’s EBITDA margin, which was was 12.4% in the first quarter, to return to double digits for the full year after dropping to 8.3% in fiscal 2022.