HarperCollins followed up an "historic" quarter in the period ended December 31, 2020, by posting a 45% jump in profits and a 19% increase in revenue in the quarter ended March 31, 2021, over the comparable period in 2020. Sales rose to $490 million, while EBITDA (earnings before interest depreciation and amortization) hit $80 million.
Susan Panuccio, CFO of HC parent company News Corp, said the sales increase was "broad based," driven by solid gains in the general trade and children's divisions in the U.S. and increases in the U.K. and in its foreign-language categories. Backlist was the big driver for the revenue increase, accounting for 62% of revenue in the quarter, Panuccio said. She pointed to such backlist hits as the Bridgerton series and continued interest in The Boy, the Mole, the Fox and the Horse.
In terms of format, digital sales jumped 38% in the quarter. E-book sales were up 38%, and digital audiobook sales rose 42%.
Although costs rose in the quarter—primarily due to higher royalty, employee, and production costs—margins improved by three percentage points, Panuccio said.
News Corp CEO Robert Thomson said he still expects the purchase of the Houghton Mifflin Harcourt trade division to close by June 30, and told analysts he expects the addition of the company to boost both HC's sales and profitability soon. "Brian Murray and the team have a history of successfully integrating businesses," Thomson said. "And so we fully expect profits to increase at HMH and thus at HarperCollins and thus at News Corp."
News Corp operates on a fiscal year that ends on June 30, and through the first nine months of fiscal 2021, profits were up 53% over the comparable period in fiscal 2020. Sales increased 19%, to $1.49 billion.
The one trouble spot on HC's otherwise bright financial performance are comparisons to last year's results. "Overall industry trends remain favorable," said Panuccio, "but we continue to monitor closely the sustainability of recent consumer spending patterns, such as the increasing free time for consumers to read and the increase in the average number of books purchased. We continue to expect performance to moderate in the fourth quarter, in part due to the strong performance in the prior year, which benefited from increased consumer demand at the onset of COVID-19 lockdowns and restrictions as well as the successful release of Magnolia Table Volume 2."
