HarperCollins Rebounds with Strong Financial Performance in Fiscal 2024

HarperCollins saw a strong fiscal 2024, with a 6% sales increase and a 61% EBITDA rise, driven by digital growth and strategic restructuring. Future outlook is positive.

on Aug 12, 2024

After a difficult fiscal year ending June 30, 2023, where HarperCollins experienced a 10% drop in sales and a 45% decline in profits, the publisher saw a remarkable turnaround in fiscal 2024. Sales increased by 6% to $2.09 billion, while EBITDA (earnings before interest, taxes, depreciation, and amortization) soared by 61% to $269 million. The fourth quarter of the fiscal year was particularly impressive, with sales surging by 15% and earnings jumping by 256%, making it HarperCollins' best fourth quarter since 2018.

This resurgence was primarily driven by strong growth in digital audiobooks and e-books, which offset a decrease in print book sales. Digital formats accounted for 23% of consumer revenues, up from 22% the previous year, with audiobooks leading the charge—rising 18% over the year and 28% in the final quarter, thanks in part to sales through Spotify.

HarperCollins CEO Brian Murray, who had previously predicted that audiobook sales would surpass e-book revenue, expressed optimism about the future growth potential in the audio space, citing more promotions from Spotify and aggressive marketing efforts by Audible. Despite the dip in print sales, Murray viewed this as a natural adjustment to a more efficient supply chain rather than a decline in interest in physical books. He pointed to a decrease in returns and leaner inventory levels as positive signs for strong orders in the second half of the year.

Fiscal 2024 was also a transformative year for HarperCollins, with significant organizational changes. Among these were the consolidation of the HarperCollins Children’s Book Group under Morrow Group head Liate Stehlik, the closure of the Inkyard Press imprint, and the promotion of Rich Thomas to senior v-p and executive director of publishing at HarperCollins Children’s Books. Additionally, the sales operation was revamped under president of sales Ed Spade, who combined marketing, design, and rights teams across divisions.

Murray explained that the restructuring was necessary to adapt to a post-pandemic marketplace and align with current consumer buying habits. While acknowledging the challenges and difficult decisions, including layoffs and buyouts, Murray expressed satisfaction with the positive impact these changes had on the company's financial results. He emphasized that HarperCollins is now focused on exploring new ways to publish and market books.

Geographically, the U.S. contributed to about two-thirds of HarperCollins's sales growth, with the U.K. also showing solid performance. The company’s foreign language publishing program, now a decade old, added $100 million in revenue since its inception.

Regarding the sluggish sales of children’s books, Murray attributed this to the impact of book bans, which have made booksellers and librarians more cautious. However, HarperCollins is optimistic about the continued interest in reading among young people and is focusing on developing relationships with social media influencers to reach this audience.

The fiscal 2024 results do not include the recent success of J.D. Vance’s Hillbilly Elegy, which sold 877,000 copies in July after former president Donald Trump selected Vance as his running mate. Murray expects the book's print run to exceed 1 million copies. Despite this success, HarperCollins recognizes the need to diversify its offerings by adding more fiction to its list, moving away from an overreliance on nonfiction titles.

News Corp, HarperCollins' parent company, reaffirmed its commitment to the publisher, highlighting it as a core asset and indicating plans for continued investment. CFO Susan Panuccio projected further profit improvements in fiscal 2025, though not at the same rate as the previous year, which saw margins rise to 12.8% from 8.4%.

On the topic of mergers and acquisitions, Murray confirmed that HarperCollins remains open to potential deals and expressed confidence in the current state of the book market, expecting a strong finish to calendar 2024. "I like our momentum," he concluded.