HarperCollins’ profits jumped in fiscal 2024

After a difficult fiscal year ending June 30, 2023, in which revenues fell 10% and profits fell 45%, HarperCollins bounced back in fiscal 2024, with revenues up 6% to $2.09 billion and EBITDA (earnings before interest, taxes, depreciation, and amortization) up 61% to $269 million. The publisher had a particularly strong fourth quarter, with revenues up 15% and profits up 256%, making it the best fourth quarter for HC since 2018.

The gains in the year were largely due to sales of digital audiobooks and e-books, which offset lower sales of print books. According to News Corp, HC’s parent company, digital sales accounted for 23% of consumer sales during the year, up from 22% in fiscal 2023. While e-book sales rose, audiobooks were the big digital driver, rising 18% during the year and 28% in the last quarter, helped by sales through Spotify.

The strong fourth quarter fulfilled one of HarperCollins CEO Brian Murray’s predictions that he had made to PW last year that digital audiobook sales would surpass e-book revenue. In an interview about fiscal 2024 results, Murray said he believes there is room for further growth in audio due to a combination of more Spotify advertising and more aggressive marketing from Audible.

Murray was not concerned about the decline in print sales, seeing it as an adjustment to a more efficient supply chain rather than a lack of interest in print books. He noted that one factor in the profit growth was a decline in returns and that he expects strong orders in the second half of the year given that most customers are running low on inventory.

Murray had previously described fiscal 2024 as a year of transformation, and the company did indeed make a number of significant changes, including placing the HarperCollins Children’s Book Group under the leadership of Morrow Group head Liate Stehlik while laying off Suzanne Murphy, closing the Inkyard Press imprint, and promoting Rich Thomas to senior VP and executive director of publishing at HarperCollins Children’s Books. The publisher also overhauled its distribution operations under distribution president Ed Spade. In addition, Spade and Stehlik consolidated the integrated marketing, marketing design, and rights teams at William Morrow and HCCB.

Murray explained that the spate of change had two fundamental causes. For nearly four years, he said, HC made few organizational changes as it struggled to keep up with changing supply chain demands brought about by Covid. But with pandemic response measures largely a thing of the past, it became necessary for HC to adapt to a new market and develop an organization that could “meet customers where they now buy books,” he said.

Murray acknowledged that the year required some painful decisions — the restructuring included a number of layoffs and furloughs, and some vendors had to be offered severance packages — but added that the changes were mostly behind HC, noting that the publisher was looking forward to finding new ways to publish and market books. “We’ve taken a deep look at what needed to be done, and it’s gratifying to see that reflected in these financial results,” Murray said.

About two-thirds of HarperCollins’ revenue growth in fiscal 2024 came in the U.S., Murray said, and the U.K. also showed good growth. The company’s 10-year-old foreign-language publishing program also had a good year, bringing the company $100 million in revenue since its inception, he added.

Asked about sluggish sales of children’s books, Murray attributed the weakness largely to book bans that have made booksellers and librarians cautious about the books they buy. As a result, Murray said, they rely more on tried-and-true backlist titles, making it harder to pull out frontlist books, especially in the middle grades range. On a positive note, HarperCollins’ research shows that young people are still interested in reading and buying print books, Murray said. To reach that audience, the publisher devotes much of its marketing efforts to building relationships with social media influencers, he said.

HarperCollins’ 2024 fiscal year results do not include booming sales from JDVance’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 edition of the book will reach at least 1 million copies. Still, Murray said, despite the good hillbilly The publisher has realized that it has relied too heavily on nonfiction and has begun to include more fiction in its offerings.

News Corp executives have repeatedly described HC as a core asset and pledged to continue investing in the publisher. The company’s chief financial officer, Susan Panuccio, added that with costs stabilizing at HC after a “troubled few years,” she expects the publisher to post a stronger increase in profits in fiscal 2025 — though probably not to the extent seen in fiscal 2024, when margins rose to 12.8% from 8.4% in fiscal 2023.

On the mergers and acquisitions front, Murray said HC continues to look for potential acquisitions and would push the button if the right deal came along. He added that overall he was very encouraged by where the book market is now and that he expects a solid finish to the 2024 calendar year. “I like our momentum,” he said.