Following a financial year that ended with mixed results, HarperCollins showed improving momentum in the first quarter of its fiscal year 2027, which ends next June.
In the three-month period that ended September 30, revenue rose 9% to $582 million, compared to a year ago EBITDA, a measure of operating profitability, increased 29%, to $79 million. Earnings were boosted by the absence of the publisher’s $13 million write-off of the collapse of independent distributor Baker & Taylor, which eroded earnings in the previous fiscal year
News Corp attributed the numbers to high demand for physical and digital books in the general trade and children’s categories. Sales were strong for Ann Patchett’s Whistler, Daniel Silva’s Ransom, and R.F. Kuang’s Taipei Story, the company said.
Digital sales rose 6% compared to a year ago, driven by a 13% increase in audiobook sales that the company credited to its partnership with Spotify and its efforts to improve the profitability of audiobook listening. Backlist had a good quarter, accounting for 66% of consumer revenues, up from 65% a year earlier.
HarperCollins was one of News Corp’s three businesses that “collectively delivered robust results despite volatile economic conditions,” News Corp CEO and director Robert Thomson said in a statement on Wednesday.
Although free cash flow was weaker in the quarter, the company attributed the decline to the timing of revenue collections and higher HarperCollins inventory, which it increased in preparation for the holiday selling season amid ongoing supply-chain concerns.
“Given all of the supply chain issues that we’ve—that people are having, this was really to make sure that we protected our ability to have an outstanding holiday season on HarperCollins,” News Corp chief financial officer Lavanya Chandrashekar said on an earnings call Wednesday. She said she remained confident the company would generate strong free cash flow for the full year.
Thomson noted that News Corp is defending its intellectual property against AI companies as well as exploring AI’s potential to improve products and lower operating costs.
The company expects to begin receiving its portion of Anthropic’s $1.5 billion settlement in a landmark copyright case brought by authors over its use of copyrighted books to train its AI models, he said. Noting Anthropic’s October 26 release of its filing for a public offering, Thomson said publishers still “have serious concerns” about the AI company. News Corp also has ongoing legal disputes over copyright issues with tech companies Perplexity and Brave, he said.
“Consistent with our woo-and-sue strategy, we remain vigilant about protecting our IP. We will not tolerate any abuse of our IP and more broadly, the undermining of the very value of creation and creativity in our society,” Thomson said.
“And I would emphasize that not only are we pursuing companies that steal our content but also taking an aim at those companies which knowingly purchase that purloined content,” he added. “They are obviously receiving stolen goods and should cease and desist.”
Thomson said audiobooks at HarperCollins will continue to evolve as Spotify and Audible experiment with AI, which could make production cheaper and more sophisticated.
“AI is going to really provide a role in helping to bring books to life through these vivid voices and the ability to generate a compelling audio experience that makes the book even more valuable,” Thomson said. “There’s so many more choices in reading voices, sound effects and other techniques and tools and creativity that will bring words to life. And don’t forget as well how AI will enable much more cost-effective translations into multiple languages, both in text and audio and thus reach new audiences and generate new revenue.”
