10-QPeriod: Q2 FY2023

Fox Corp Quarterly Report for Q2 Ended Dec 31, 2022

Filed February 8, 2023For Securities:FOXAFOX

Summary

Fox Corporation (FOXA) reported a strong financial performance for the second quarter of fiscal year 2023, with total revenues increasing by 4% to $4.6 billion and net income attributable to stockholders soaring by 49% to $313 million compared to the prior year period. This growth was driven by significant contributions from its Television segment, which benefited from increased advertising revenue due to the FIFA Men's World Cup, political advertising from the U.S. midterm elections, and additional NFL games. The Cable Network Programming segment saw relatively flat revenues but a substantial decline in Segment EBITDA, largely due to increased programming rights amortization and digital investment costs. Despite higher selling, general, and administrative expenses, the company's overall profitability improved significantly, evidenced by a 71% increase in Adjusted EBITDA to $531 million for the quarter. Management highlighted strong liquidity with approximately $4.1 billion in cash and cash equivalents and an undrawn $1.0 billion revolving credit facility. The company also announced an increased stock repurchase authorization of $3 billion, signaling confidence in its financial health and commitment to returning capital to shareholders. Recent strategic developments include the dissolution of a special committee formed to explore a potential combination with News Corporation.

Financial Highlights

49 data points
Beta

Revenue

$4.61B

Net Income

$313.00M

6.8% Net Margin

EPS (Diluted)

$0.58

Total Assets

$23.13B

Cash & Equivalents

$4.06B

Free Cash Flow

-$610.00M

Financial Statements
Beta
Revenue$4.61B
SG&A Expenses$550.00M
Interest Expense$89.00M
Net Income$313.00M
EPS (Basic)$0.58
EPS (Diluted)$0.58
Shares Outstanding (Basic)541.00M
Shares Outstanding (Diluted)543.00M

Key Highlights

  • 1Total revenues grew 4% to $4.6 billion in Q2 FY2023, driven by strong performance in the Television segment.
  • 2Net income attributable to Fox Corporation stockholders surged 49% to $313 million.
  • 3Television segment revenue increased 6%, boosted by FIFA World Cup, NFL advertising, political ads, and TUBI growth.
  • 4Cable Network Programming Segment EBITDA decreased significantly by 47% due to higher sports programming rights and digital investment costs.
  • 5Adjusted EBITDA saw a substantial increase of 71% to $531 million, reflecting improved overall operational profitability.
  • 6The company maintains strong liquidity with $4.1 billion in cash and cash equivalents and an unused $1.0 billion credit facility.
  • 7Fox Corporation announced an additional $3 billion stock repurchase authorization, bringing the total to $7 billion, indicating a commitment to shareholder returns.

Frequently Asked Questions

The primary drivers of the 4% revenue increase to $4.6 billion were higher affiliate fees, advertising, and other revenues. Specifically, the Television segment benefited significantly from advertising revenue generated by the FIFA Men's World Cup, political advertising associated with the U.S. midterm elections, additional NFL regular season games, and continued growth at TUBI. The Cable Network Programming segment saw relatively flat revenues, with increases in other revenues partially offsetting slight decreases in affiliate fees and advertising.

Profitability improved significantly. Net income attributable to Fox Corporation stockholders increased by 49% to $313 million. This was driven by a substantial turnaround in the Television segment's EBITDA, which went from a loss to a significant gain, and a strong increase in Adjusted EBITDA by 71% to $531 million. While the Cable Network Programming segment experienced a significant drop in Segment EBITDA due to increased costs, the overall financial performance was positive.

Fox Corporation maintains a strong liquidity position. As of December 31, 2022, the company had approximately $4.1 billion in cash and cash equivalents and an unused $1.0 billion unsecured revolving credit facility. The company also reported a decrease in net cash used in operating activities for the first six months of the fiscal year compared to the prior year, primarily due to higher Segment EBITDA and lower sports rights payments.

The company demonstrated a commitment to shareholder returns by announcing an additional $3 billion in stock repurchases, bringing the total authorization to $7 billion. This signifies management's confidence in the company's financial strength and future prospects. The filing also noted the dissolution of a special committee exploring a potential combination with News Corporation, indicating a focus on current operations and capital allocation strategies.