Mar 7, 2024 - Business

Exclusive: Condé Nast CEO says business missed revenue goal in 2023

Illustration of Condé Nast magazines with Ben Franklin on the cover

Illustration: Shoshana Gordon/Axios

Condé Nast posted flat revenue gains year-over-year in 2023, CEO Roger Lynch told Axios in an interview. The losses in advertising, mostly print, were offset by growth in its subscription, e-commerce and events businesses.

Why it matters: A shift to diversify its revenue outside of advertising has helped the company shift from losing money to breaking even over the past three years.

  • Lynch said moving to a place where the company is consistently breaking even has helped it invest in growth areas, particular in digital. Those investments will help drive a more sustainable business long-term.

Yes, but: In posting flat revenues, the company did fall slightly short of its goals for the year, Lynch said in a note to staff obtained by Axios Thursday.

  • But Lynch feels strongly that the company's progress in building its consumer business, which includes subscription and e-commerce, will drive the firm towards growth in 2024.

By the numbers: Overall, the company grew its consumer revenue 7% year-over-year, Lynch said. Revenue from events, including major tentpoles like Vogue's Met Gala, was up 19% year-over-year.

  • "Print advertising revenue saw a much smaller-than-expected decline and all other areas of advertising together were flat to prior year," Lynch noted.

Between the lines: The company's digital revenues only recently began to surpass its print business, but Lynch feels confident that shift will continue.

  • New digital subscription starts were up 100% last year, Lynch said. E-commerce revenue was up 39% year-over-year.

Catch up quick: Lynch joined Condé Nast in 2019 after stints leading Sling TV and Pandora. Over the past few years, he has led a global effort to streamline Condé Nast's operations across its brands, which has resulted in several major changes at the firm.

  • Last year, the company said it would lay off roughly 5% of its staff — around 300 employees.
  • That decision drove hundreds of members of the unionized staff at several Condé Nast brands, including Vogue, GQ and Vanity Fair, to stage a walk out.

Be smart: Lynch said the company doesn't have plans for any further reductions. He also said the firm didn't have plans to consolidate more of its brands, as it did earlier this year when it folded its music site Pitchfork under GQ.

  • That situation, Lynch said, "was sort of a unique situation."
  • "It was less about combining Pitchfork into GQ, as it was about putting Will (GQ editor Will Welch) over that title in addition to GQ," he added.

The big picture: The broader digital media landscape has been reeling from a volatile ad market that has resulted in thousands of layoffs and various cost-cutting measures.

  • Lynch believes that despite its own cuts, Condé Nast is in a much stronger position than many of its rivals, thanks to investments in diversifying the firm's revenues. (The company has been pushing toward a goal of surpassing $2 billion in revenue for the past several years.)
  • Consumer revenue, subscriptions and e-commerce, now make up nearly 40% of the firm's business in the U.S.

What's next: Total operating costs in 2024 will remain the same as they have been for the last three years, Lynch said in his note to staff.

  • But more investments will shift the company's digital and consumer business, including in areas like marketing technology, e-commerce capabilities and subscription programs.
  • Lynch said the company doesn't have any immediate plans to acquire more brands, but rather focus on the strength of its current titles.
  • "I don't think scale is a strategy," Lynch said.
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