After enduring a challenging fiscal year that ended June 30, 2023, during which sales dropped 10% and profits fell 45%, HarperCollins saw results bounce back in fiscal 2024, with sales rising 6%, to $2.09 billion, and EBITDA (earnings before interest, taxes, depreciation, and amortization) jumping 61%, to $269 million. The publisher had a particular strong fourth quarter, with sales soaring 15% and earnings skyrocketing 256%, marking HC’s best fourth quarter since 2018.
Gains in the year were led by sales of digital audiobooks and e-books, which offset lower sales of print books. For the year, digital sales represented 23% of consumer revenues, up from 22% in fiscal 2023, according to HC parent company News Corp. While e-book sales were up, audiobooks were the big digital driver, increasing 18% in the year and 28% in the final quarter, helped by sales through Spotify.
The big fourth quarter fulfilled one of HarperCollins CEO Brian Murray’s predictions, made to PW last year, that sales of digital audiobooks would eclipse e-book revenue. In an interview about fiscal 2024 results, Murray said that he believes there is still room for more growth in the audio space, due to a combination of more Spotify promotions and more aggressive marketing by Audible.
Murray wasn’t worried about the dip in print sales, seeing it more as an adjustment to a more efficient supply chain than a lack of interest in print books. He noted that one factor in the growth in profits was a decline in returns and that, with most accounts running lean on inventory, he expects to see strong orders for the second half of the year.
Murray had previously called fiscal 2024 a year of transformation, and the company indeed made a number of signification changes, including putting the HarperCollins Children’s Book Group under the direction of Morrow Group head Liate Stehlik while letting Suzanne Murphy go, shuttering the Inkyard Press imprint, and promoting Rich Thomas to senior v-p and executive director of publishing at HarperCollins Children’s Books. The publisher also reworked its sales operation under president of sales Ed Spade. In addition, Spade and Stehlik combined the integrated marketing, marketing design, and rights teams at William Morrow and HCCB.
Murray explained that the rash of changes had two basic causes. For nearly four years, he said, HC had made few organizational changes as it fought to keep pace with the different needs of the supply chain caused by Covid. But with pandemic response measures mostly in the past, it became necessary for HC to adjust to a new marketplace and to develop an organization that could “meet customers where they buy books now,” he said.
Murray acknowledged that the year required some painful decisions—the restructuring included a number of dismissals and layoffs, as well as the offering of buyouts to some salespeople needed to be made—but added that, for the most part, the changes are behind HC, noting that the publisher is looking forward to creating new ways to publish and market books. “We did a really deep dive on what needed to be done and it is gratifying to see the payoff in these financial results,” Murray said.
The U.S. accounted for about two-thirds of HarperCollins’s sales growth in fiscal 2024, Murray said, with the U.K. showing nice growth as well. The company’s 10-year-old foreign language publishing program also had a good year, and has added $100 million in revenue to the company since its inception, he added.
Asked about sluggish sales of children’s books, Murray attributed much of the softness to book bans, which have made booksellers and librarians cautious in determining the books they buy. As a result, he suggested, they are relying more on tried and true backlist titles, making it harder to break out frontlist books, particularly in the middle grade space. On the positive side, Murray said, HarperCollins's research indicates that young people are still interested in reading, and buying, print books. To reach that audience, the publisher is devoting much of its marketing efforts to developing relationships with social media influencers, he said.
Results for HarperCollins’s fiscal 2024 don’t include the booming sales of J.D.Vance’s Hillbilly Elegy, which sold 877,000 copies in July after former president Donald Trump selected the Ohio senator as his running mate. Murray predicted that the new print run of the book will hit at least 1 million copies. Still, Murray said, despite how well Hillbilly is doing, the publisher has realized that it has been depending too heavily on nonfiction books, and has begun adding more fiction to its list.
News Corp executives repeatedly called HC a core asset, promising to keep investing in the publisher. The company’s CFO, Susan Panuccio, added that, with costs stabilizing at HC after a few “choppy years,” she expects the publisher to show more profit improvement in fiscal 2025—although likely not at the rate of fiscal 2024, when margins rose to 12.8%, from 8.4% in fiscal 2023.
In terms of M&A, Murray said that HC continues to look for potential acquisitions and would press the button if the right deal comes along. He added that, more broadly, he is very encouraged by where the market for books stands now, and is expecting a solid finish to calendar 2024. "I like our momentum," he said.
