Good morning and welcome to The New York Times Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, that this event is being recorded. I'd now like to turn the conference over to Harlan Toplitzky, Executive Director of Investor Relations and Financial Planning and Analysis, please go ahead.

Thank you and welcome to The New York Times Company's second quarter 2021 earnings conference call. On the call today, we have Meredith Kopit Levien, President and Chief Executive Officer; and Roland Caputo, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call. These statements are based on our current expectations and assumptions, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties that are described in the company's 2020 10-K and subsequent SEC filings. Given the impact of the COVID-19 pandemic had on our business in 2020 we will also present certain comparisons of our operating results 2021 to 2019 which we believe in many cases provides useful context for our current year results. In addition, our presentation will include non-GAAP financial measures and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website at investors.nytco.com. With that, I will turn the call over to Meredith Kopit Levien.

Thanks, Harlan, and good morning everyone. the success of our strategy, the strength of the market for paid digital journalism, and our unique opportunity to meet that demand. That milestone followed the second quarter with strong revenue and profit growth, modest net subscription additions and progress on advancing our underlying model. Total subscription revenue grew 16% in the quarter, the largest year-on-year subscription revenue gained in more than a decade. Advertising revenues surged compared with the same period last year. The combined strength in these two revenue streams more than offset cost growth and as a result we recorded $93 million in adjusted operating profit, a 78% improvement compared to the same quarter in 2020. We saw moderated growth in net subscription additions in the second quarter, which we expected, given that Q2 is traditionally our softest of the year and we were comparing against last year's historic results at the beginning of the COVID crisis. We added 142,000 net digital subscriptions with roughly half in News and the balance in Cooking and Games. We continue to expect that our total annual net subscription additions will be in the range of 2019, although that remains difficult to predict with precision. Our advertising performance was better than expected, with total revenue up 66% year-on-year. As with subscriptions, the biggest factor in the Game and Advertising nearly 80% year-on-year and more than 22% over the same period in 2019. It was also another strong quarter for demonstrating the breadth, reach, and impact of our journalism with unparalleled coverage of the devastating events in South Florida, the political crisis in Haiti, and the still surging pandemic. Pulitzer Prizes were announced in June and The Times was the only news organization to win more than one this year. Culture writer Wesley Morris won the Pulitzer for commentary for his urgent and moving essays exploring the intersection of race and culture, and for the seventh time in our history, The Times won the Pulitzer Prize for Public Service, journalism's highest honor for our Coronavirus coverage. This body of work is the quintessential example of the expansive journalism The Times can uniquely deliver. More than 1000 journalists contributed to our Coronavirus reporting, as did many others across the company, including engineers, data scientists, product designers and product managers. The work of our data journalism team, in particular, is worth noting. The Times launched an around-the-clock effort to track every known Coronavirus case in the U.S. and made that data publicly available. That coverage continues to fill a vacuum that has helped local governments, healthcare workers, businesses and individuals, better prepare through each stage of the pandemic. It has also brought out new audiences who rely on and return to our products repeatedly. Demonstrating the strength of our journalism across platforms and subject matters, in mid July, The Times was nominated for the Primetime Emmy Award for best documentary for our film Framing Britney Spears. The film ignited intense scrutiny of court ordered conservatorships and continues to resonate with audiences globally. We've produced and as part of our New York Times Presents series, our partnership with FX that was recently extended. I'll turn now to our underlying revenue drivers in the quarter and share some specifics about the work ahead. As we've said in prior calls, we expect to feel the effects of comparing our results against last year's heightened news cycle for the remainder of the year and we believe that while the new cycle will continue to have significant effects on our subscription growth, we are increasing our control over the levers of the models. Our audience in the second quarter was below the historic highs of 2020 driven largely by declining engagement with the COVID story domestically, but as we saw last quarter, our average weekly audience was larger than in the same period in 2019 and every prior period. For the second quarter in a row, we were also pleased to see readers engage across a broader range of storylines than they did last year. We view this as a positive leading indicator of future net subscription additions as we have seen that experiencing the breadth of our report correlates with paying and staying. We're leaning into that breadth, both within our core news experience and across our adjacent products, like Cooking, Games and Wirecutter, by experimenting more aggressively with programming to expose more of our audience to the full value of The Times. With sustained strength relative to 2019 and prior years and overall audience and with more than 100 million registered users, we are also experimenting more aggressively and we believe more successfully on our customer journey and access model and as a our pace of new registrations continues to be healthy, we have now begun to focus even more on getting registered users to subscribe and to engage more deeply once they do. That experimentation with our access model has given us increasing insight into when our readers are ready to subscribe, which in turn is leading to higher conversion rates. As a result, our digital monthly net subscription additions have grown each month since lows in March. We believe we have additional room to optimize conversion as we strengthen engagement in key areas like newsletters and our growing body of live experiences. Last quarter we noted that the newest cohort of new subscriptions appeared to be retaining slightly less well than in the past, which contributed to a small increase in overall churn. Q2 domestic news churn was unchanged from the first quarter and remains at a comfortable level. While we experienced an uptick internationally in non-core markets, we believe our churn overall is generally at a healthy level. We also believe that our increased focus on subscriber engagement and on making the subscriber experience clearly superior to registered and anonymous experiences, will help maintain healthy churn levels and we remain confident in our overarching approach to graduating subscribers from promotional prices to step up and full prices. We continued in the last quarter to lay the groundwork for a more strategic bundled subscription offering that has the potential to be more widely appealing and uniquely valuable to millions of people in their daily lives. Throughout the quarter we ran tests on our all-digital access bundle which combines News, Cooking and Games. These tests demonstrated that there is meaningful demand for the bundle and that those who choose it are better at retaining than those who subscribe to only one product. Building on these promising results, we plan to do more testing around pricing, positioning, and marketing of the all-digital access bundle in the second half of the year. And this fall, we plan to launch a paid subscription products for Wirecutter and experiment further with Audm, both of which over time have the potential to widen the appeal and value of The Times bundle. Given the opportunity we see an addressable market of at least 100 million people who are expected to pay for English-language journalism and a unique moment in which daily habits are up for grabs we are continuing to invest in the value of our individual products and the broader bundle. That includes investing thoughtfully into our news operation to cover the most important stories of our time and to meet more news needs. It means investing into our adjacent products, to meet a broader array of life needs as we have done with Cooking and Games, each of which is now closing in on 1 million subscriptions. And it means investing to build the underlying tech product experience and company culture required for us to scale. We believe these investments will enable us to grow our market share and also to build a larger and more profitable company over time. I'll turn briefly now to the drivers of advertising growth. Our Ad business is no doubt benefiting from an advertising market recovery, but we also believe we're seeing the effect of the groundwork we laid to build competitive advantages. Those advantages include our robust first party data targeting capabilities, our large and growing suite of hit podcasts and our ability to create unique multiplatform collaborations that help marketers launch new ideas and products into the world. Now before I turn things over to Roland, let me share an update on the company's ongoing emphasis on an investment in building out a world-class digital product development team. As we focus on scaling our strategy of journalism worth paying for, our ability to attract, develop and retain top talent in areas well beyond journalism is paramount. This is especially the case in engineering which is now one of our largest business side functions. I'm happy to say that later this month we will officially welcome a new Chief Technology Officer, Jason Sobel who joins us after five years at Airbnb and half a dozen years at Facebook during its early days of growth. Jason joins our other highly talented times leaders who are steering our digital product development work to its next phase of growth. And with that, I'll turn it over to Roland.

Thank you, Meredith and good morning. While subscription unit growth was modest in the quarter, substantial growth in both subscription and advertising revenues which were a result of fundamental strength in the underlying business delivered strong financial results, especially when compared with the news results from the second quarter of 2020. Adjusted diluted earnings per share was $0.36 in the quarter, $0.18 higher than the prior year. We reported adjusted operating profit of approximately $93 million, higher than the same period of 2020 by $41 million and higher than 2019 by $37 million, which is an important comparison point given the impacts that the pandemic had on our 2020 results. We added 77,000 net new subscriptions to our core digital news products and 65,000 net new subscriptions to our standalone digital products, for a total of 142,000 net new digital digital-only subscriptions. As of the end of the quarter we had approximately 930,000 Games subscriptions and approximately 830,000 Cooking subscriptions. The international share of total news subscriptions remained at 18% as of the end of the quarter. Total subscription revenues increased 15.7% in the quarter. As Meredith said, this is the highest rate of subscription revenue growth in well over a decade with digital-only subscription revenue growing more than 30% to $190 million. Digital-only subscription revenue grew as a result of the large number of new subscriptions we have added in the past year, continued strength in retention of the dollar-per-week promotional subscriptions who have graduated to higher prices, and finally, the positive impact from our digital subscription price increase, which began late in the first quarter of 2020. Digital new subscription ARPU for the quarter increased approximately one percentage point compared to the prior year and nearly five percentage points compared to the prior quarter, which marks the first quarter with a positive year-over-year result since 2013. This improvement was primarily a result of subscriptions graduating from the introductory price to either a full price for an intermediate step-up price in the quarter, as well as the continued benefit from price increases on our more tenured full price subscriptions. ARPU related solely to domestic new subscriptions increased approximately one and a half percentage points versus the prior year and nearly five percentage points versus the prior quarter. We continue to expect to demonstrate pricing power throughout 2021 as the impact from subscriptions graduating from discounted promotions and the price increase on tenure digital subscriptions continues to provide a tailwind to digital news ARPU throughout the year. Print subscription revenues increased more than 1% as home delivery revenues benefitted from the first quarter price increase, which more than offset declines in the subscription volume. Total daily circulation declined 4.5% in the quarter compared with prior year, while Sunday circulation declined approximately 1%, which represents a significant improvement in the recent trend, following the steep declines experienced as a result of the widespread business closures and the decrease in commuting and travel as a result of the pandemic. As compared with 2019, print subscription revenues declined 5.5% as single copy and international bulk sale copy declined, while revenue from domestic home delivery subscriptions was flat. Total advertising revenues increased more than 66% in the quarter as digital advertising grew nearly 80%, while print advertising increased by 48%, largely as a result of the impact of the comparison to weak advertising revenues in the second quarter of 2020 caused by reduced advertising spending during the COVID-19 pandemic. Digital advertising was also improving by our proprietary first party targeted ad products, and expanded audio products portfolio. Versus 2019, digital advertising grew 22% as a result of higher direct-sold advertising, including traditional display and audio. Second quarter digital advertising revenue exceeded the guidance we gave in early May, largely as a result of better-than-expected performance from larger technology and financial services advertisers spending heavily on our targeted and audio products. Meanwhile, print advertising increased 48% as compared to 2020, primarily driven by growth in the luxury, media, technology, and entertainment categories. Despite this impressive level of year-on-year growth, print advertising revenue lagged to 2019 by 33%. Other revenues increased nearly 9% compared to the prior year to $47 million dollars, primarily as a result of an increase in Wirecutter affiliate referral revenue. It's worth noting that midway through the second quarter, we began printing The Wall Street Journal, Barron's and The New York Post out of our College Point production facility, significantly increasing utilization of the company's only-owned printing plant. Adjusted operating costs were higher in the quarter by approximately 15% as compared with 2020 and 6.5% higher than 2019. Cost of revenue increased approximately 9% as a result of growth in the number of Newsroom, Games, Cooking and Audio employees. Other costs associated with audio content, a higher incentive compensation accrual, and higher subscriber servicing and digital content delivery costs. This was partially offset by lower print production and distribution expenses. Sales and marketing costs increased approximately 35%, driven primarily by higher media expenses, which has been reduced dramatically last year in life of the historically strong organic subscription demand experience in the early months of the COVID-19 pandemic. When compared to 2019, sales and marketing costs decreased 14% as a result of lower advertising sales cost, partially attributable to a workforce reduction that we enacted in the second quarter of 2020 as well as lower media expenses. Media expenses in 2021 was 14% lower than in 2019. It's worth noting that third quarter 2020 media expenses were also significantly favorable compared to 2019, which will make for another difficult comparison in the third quarter of 2021. Product development costs increased by approximately 28%, largely due to growth in the number of engineers employed and a higher incentive compensation accrual than we had recorded in the second quarter of 2020. I'll again reiterate that we plan to continue adding headcount in this area over the foreseeable future, as we expect to continue leaning into investments in product development, as well as in our core news and standalone products to drive growth. General and administrative costs increased by 6% and when you control for severance and multi-employer pension withdrawal obligation costs, G&A costs would have increased by 19%, largely due to increased headcount and supported employee growth in other areas, higher outside services and a higher incentive compensation accruals. Our second quarter cost growth came in at the low end of the guidance we issued on our first quarter call in early May, largely as a result of slower than expected hiring for our growth initiatives and a tight labor market. We had one special item in the quarter, and nearly $4 million charge resulting from the early termination of one of our tenant's leases in our headquarters building, as we add space to accommodate growing headcount to support our growth initiatives. Our effective tax rate for the second quarter was approximately 25%. As we stated previously, we expect our tax rate to be approximately 27% on every dollar of marginal income record with significant variability around quarterly effective rates. Moving to the balance sheet, our cash and marketable securities balance ended the quarter at $947 million, an increase of $56 million compared with the first quarter of 2021. Company remains debt free with a $250 million revolving line of credit available. Now let me conclude with our outlook for the third quarter of 2021. Total subscription revenues are expected to increase approximately 13% to 15% compared with the third quarter of 2020 with Digital-only subscription revenue expected to increase approximately 25% to 30%. Overall, advertising revenues are expected to increase approximately 30% to 35% compared to third quarter of 2020 and digital advertising revenues are expected to increase approximately 40% to 45%. Other revenues are expected to increase approximately 5%, while operating costs and adjusted operating costs are expected to increase approximately 18% to 20% compared with the third quarter of 2020 as we continue investments each of the drivers of digital subscription growth and confidence another quarter of low spending last year as a result of actions taken during the first year of the pandemic. And with that, we'd be happy to open it up to questions.

Our first question comes from Vasily Karasyov from Cannonball Research. Please go ahead. Hello Vasily, is your line open?

Oh yes, sorry, I am having minor technical differences. Meredith, I wanted to ask you this, compared to how you felt about your net adds guidance for the full year on the last quarter call, are you feeling more confident or less confident, and if so why, and if it's unchanged or the level of your confidence, what would change that?

Thanks for that Vasily. I would say it's unchanged. So, I'll reiterate what I said in the prepared remarks, which is our outlook at this point is that we continue to believe we'll finish in terms of net additions broadly in the range of 2019. And I shared in the prepared remarks that we have seen improvement since March in terms of net additions, so that gives us confidence. I'd say we believe we are continuing to improve our control of the levers of the model even while the new cycle continues to have effect, so there's plenty of runway that we believe can help us keep optimizing for conversion, our ability to use our meter in more sophisticated ways, in more dynamic ways is getting better. We've got lots of engagement around live experiences and newsletters that are superior to 2019 and we think there's opportunity there to apply our customer journey and access model, a little bit more deliberately. And as I said in the prepared remarks, we have had been testing our bundle and those tests are quite promising, and so all of that gives us the confidence that we're on track for what we've suggested so far, but it remains hard to predict precisely.

Thank you very much.

The next question comes from Craig Huber from Huber Research Partners. Please go ahead.

Yes, hi, good morning. Meredith, can you talk a little bit about the use of the dollar-a-week promotion for 52-weeks? It seems like you guys have been more aggressive with that week in and week out here, versus what maybe you were doing a year and two years ago, can you talk about that? And also be curious also to hear further about churn. How are you feeling about that and it's versus to two years ago you mentioned well just talk about that?

Yes. Good morning and happy to answer both of those and Roland should weigh in with anything I miss. On the dollar-a-week we are continuing to use it aggressively as a way to bring subscribers in and you can regard our use of it as real confidence in being able to step people up to enrollment and full prices that's at the one year mark, so the fact that we continue to use it is a signal that it's really working and worked two and a half, three years into now having sort of tested it and gone through a couple of full cycles now of stepping people up. So we use it because it works and I think you can assume we're going to continue to use that. We like what we see there. On churn, I'll address it in two ways, and I'll repeat some of what I said in the prepared remarks. And as far as using step-up pricing and bringing people up at the one year mark to enrollment full prices we like what we see there, so from a churn perspective you can regard the fact that we're continuing to use that strategy as comfort with what we're seeing more broadly on churn. I'd say, we think our churn is healthy. We're comfortable with where it is. We talked in the last quarter about the fact that we've seen a bit of an uptick in churn because of the size of the new groups that we brought in. They were retaining slightly less well than prior cohorts. This quarter, we're stable to that on domestic churn which we feel good about and I think it is healthy. We saw international pick up a bit this quarter and I'd say that is from what we can tell that based on our strategy of more aggressive promotional pricing in non-core markets, but I'd say it's all sort of taken together in a range of comfortable, healthy, sort of in line with our expectations. And I've mentioned this in the prepared remarks, but I'll say it again. We are putting a lot of work and energy now and more to come into subscriber engagement, and really better delineating to the value in the subscribed state and versus the registered state or the anonymous state, we think all of that has the potential to help us on the retention side.

Then my follow up, Meredith if I could, how many people are you expecting to raise prices on the digital subscriptions this calendar year please? Thank you.

Roland, I may ask you to quantify that.

Sure. Yes, so over the course of the whole year we expect about a little more than a million and a half subs transitioning to higher prices from the dollar-a-week, and then about 500,000 on the tenured subs receiving a price increase, some of which have already received that price increase in Q1 and Q2 obviously.

Great, thank you, guys.

The next question comes from Kannan Venkateshwar from Barclays. Please go ahead.

Thank you. I guess firstly on the operating leverage side, I think 2020 and that so far in 2021 you've seen a reasonable amount of operating leverage, and I don't think we've seen that before 2020. And part of it is just the cadence of costs, so I think it's been pushed out a little more than what you guys may have anticipated. So I just wanted to understand that trend a little bit better. Why are costs coming in lower than what you guys have been guiding to for the past few quarters? Is it just a timing issue? Is it conservativeness and should we expect this operating leverage to continue? And then in terms of mix of subscribers, I think Meredith, correct me if I'm wrong, if I am reading this commentary correctly, your churn commentary seems to indicate that domestic churn is stable versus first quarter, but sequentially international churn is higher. And if I remember correctly, more than 50% of your subs come from outside the U.S. and in gross additions, more than 50% comes from outside the U.S. So if you could just talk about that mix and how that's shifted over the last couple of quarters or even during the COVID period, and how you expect that to evolve? That will probably give us a better sense for what to expect on the subscriber front. I have one followup later?

Yes, I'm happy to start with the churn question and then Roland, I may ask you to take the operating leverage question. But on churn, it is not half of our starts or new net additions coming from international, so it's a lower number than that and -- but you did get the first part of what you're asking right that domestic churn is stable. And as I said in the prepared remarks that it ticked up a bit internationally and we believe that's a result of the more aggressive promotional pricing we're using in non-core markets, which is still I'd say experimental for us and I think we've got a lot of room to improve there. Roland, I don't know if you'd add anything to that.

No, I think that's exactly right. I'll take the operating leverage question at this point then. So Kannan, overall, like really nothing has changed in our outlook in terms of operating leverage from when we last spoke. So looking longer term we said we'd get some this year and we'd expect that to drop some more profit over time, so we do not really have a different outlook on that. But as far as this year, I think there's two things going on. One is, it's a very tight labor market and we've not been able to hire at the pace we assumed we could. So that's what's driving some of our costs coming in below our guidance and our expectations and therefore that's dropping to the short term bottom line. The other factor is advertising revenue, which is performing better than we expected this year, that's a complete short term benefit, not necessarily a longer term benefit. So those two things have come together I think to provide a little more bottom line than we expected this year, so it came a little faster, but I wouldn't read into that that it is really changing our longer term trajectory from anything else we've discussed in the past.

Got it. And one follow up for Meredith maybe. Meredith, we've seen some of these headlines around your interest in the Athletic. There's a lot of cash sitting on the balance sheet, I mean there's close to $1 billion sitting on the balance sheet right now, if you could just maybe talk a bit more about, you know your strategic goals with respect to use of that cash and how you think about M&A to add on to your capabilities?

Yes, I'm happy to do that. I would say, in general, our preference is to use the strong balance sheet that we have to invest into our strategy and to maximize the value of our products and we are always open to how we might do that. And we've got somewhat of a track record of doing it, you know, albeit with relatively modest in size acquisitions, but you know we acquired Wirecutter five years ago and we've now talked in a few of these calls about beginning to experiment with Wirecutter in the bundle, and this fall we'll do that. We acquired Audm, so relatively small scale, but important audio, subscription audio app which gives us a place to experiment with subscription audio. Last year we acquired Serial Productions, which we continue to be very, very excited about. That's added to the value we provide on the audio storytelling side. So we are absolutely open to using the balance sheet and frankly prefer to use the balance sheet to accelerate our strategy, and we will continually evaluate opportunities to do that.

Thank you.

The next question comes from Thomas Yeh from Morgan Stanley. Please go ahead.

Hi, good morning, thanks. Realizing it's a little bit early, can you share your views on how you're thinking about 2022 relative to 2021? Given your comments on the new cohort churn that you're working through this year, is it right to assume that dynamic might turn more favorable or more normalized next year as you move through some of the lower quality new joins that have happened last year? And then more on the bundling opportunity that you spoke about, can you give us some color on what to expect on that rollout? Is the expectation that that expands the subscriber base or do you think that it comes through an higher ARPU, any help sizing that would be helpful?

Yes, . Good morning, Thomas and both good questions. I'll start and Roland can add as he sees fit. I'll just say on 2022 we are certainly not in a position to give any kind of a projection, but what I will say is, we have been, we've got a strategy, that strategy is working. We are deeply confident in it, and you can assume that we're going to continue to build on that strategy. This has been a year where we are comparing against sort of once in a lifetime, thus far, new cycle from the prior year and a lot of our work has been to really build resilience in our engagement and in the model, even recognizing that there are going to be continued fluctuations in the new cycle. And what you're hearing us talk about today, what you've heard us talk about in the last quarter, is how we're doing that, and bit-by-bit, month-over-month, quarter-over-quarter we get more confident in how we do that. So that's, the work and I think, you can take that as much as we can say about the next year more broadly and it relates to the bundle. We just really believe that we've got a big market opportunity. We expect there will be something in the order of at least 100 million people who will pay for English-language journalism through digital subscription. We've penetrated that market now. We've got 8 million. We just crossed 8 million subscriptions, so that's a relatively modest percentage of that market and we really believe that we can meaningfully increase that percentage over time. And I'll say, I've said this in prior calls, we will do that on the strength of our individual products and we're going to keep investing into our individual products. Obviously, our News product is and will continue to be the main driver of audience engagement, at least we expect it will and certainly that has been the pattern thus far, but to your broader question, we do think and our tests are showing that the bundle presents an opportunity to widen the circle of interest in the time to bring more people into a relationship with The New York Times, our tests have shown and also our track record .

It seems Meredith is having some technical issues and Jason if you want to move on to the next question and…

Yes. Our next question comes from Doug Arthur from Huber Research. Please go ahead.

Yes, thanks. Harlan, can you hear me?

Yes we can hear.

Okay, I don't know if Meredith is back or not. I kind of want, I think she mentioned better engagement trends towards the end of the second quarter. So I'm kind of interested in how that's carry into the third quarter. Obviously, you've got the Delta variant story of concern that six months ago wasn't as big a concern and I'm sort of interested as to whether the traffic numbers to the site and engagement have accelerated in the third quarter and does that have implications for net adds? That’s sort of the first question.

Yes. Hi, Doug and so, I mean, what I can say well, while Meredith is getting her text straightened out, I mean, we wouldn't comment exactly on a short term trend, but we do see the News, the News is getting more interesting as I think you've witnessed and what we're seeing, though, is that the engagement while below 2020, still remains ahead of 2019 and 2019 was our best year for engagement, so it's better than anything we've seen prior to that. We will see how this new cycle plays out. We just know it does change over time, it seems that, it seems at from our consumer reader perspective that it is getting a little hotter, but that's -- it just to see how that will play out.

Okay and then just one follow up. I mean, you talked, you threw out some numbers on subscriptions for Cooking and Audm and Games, et cetera. I mean, that group was up over 40% in the year-over-year in the second quarter. What what's the pricing of power potential in the non-news subscription area?

Yes, I mean, we've -- Meredith are you back? Okay.

I'm back. So sorry. So tired of doing this from a home office. Carry on.

Did you hear the question?

I did not hear the question on…

Cycling power for our Cooking and Games products.

Yes, good question. I'd say broadly, as each of those products close in on, they're both getting close to a million subscriptions, I think we've got very big ambitions for both of them and I don't rule out pricing power as part of that. I would say we are still in early days with both products. They are both proven products market fit. But I think the number of people for whom they can be relevant and the value they provide in people's daily lives, is still our focus. So I would say sure, I don't rule out pricing power over time, but at this point, we are focused on scaling, daily habitual use for both of those products scaling subscriptions and the role they can play in a bundle. And I'm assuming my Wi-Fi is okay and you can hear me Doug.

Yes, that's right. Thank you very much.

The next question comes from Alexia Quadrani from J.P. Morgan. Please go ahead.

Hi, thank you. Just a clarification question and then a follow up. When you mentioned that the sub growth was improving each month, month-to-month, I think from since from the lows of March, for where you were in March, just that, is that inclusive to July or is that just through the second quarter? And then my second question really is on digital advertising role, and I think you mentioned that you're seeing better than expected growth in digital advertising, but it was you know is a short term phenomenon for what you can see if I understood you correctly. And I'm just curious of what would give you the confidence in inching toward a maybe having better visibility or better confidence in longer term digital advertising growth. I mean, it sounds like you're gaining some share of wallet. It sounds like you've seen bounce back from financial services. It just doesn't sound like it's just easy comps here?

Yes, I'm happy that, Roland, do you want to start?

I can start on the Ad question.

Yes.

So I mean, right now we're real happy with the results and a lot of it is in the market coming back, but as I mentioned I think the advent of the first party targeted products, like that's a real breakthrough for us and that is selling briskly. I think that's a competitive advantage within the publisher set. So we do think we're grabbing a little bit more market share there and the same thing with expanding, our portfolio of audio products. So, given those two things, as long as the market is good, we think we'll continue to have some good digital ad results. We don't kid ourselves that we still know that the platforms are taking most of the dollars and most of the growth. So when I said short term, I don't really mean a quarter, I just mean kind of as far as the eye could see and not to think about it as a big driver for years to come, but as long as the market is healthy, we should be able to grab a good part or portion of that.

Yes, I'll just, I'll add a beat and I think we said this in the last call. We did a lot of work on our ad business over the last couple of years, and particularly last year to improve the profile of it, so that it as it does grow its better growth and I do think that last. But to Roland’s point, we also understand the limitations of the fact that that we're playing in a market that is largely made by very, very large digital platforms. So it is certainly a better business and we expect it will continue to be a better business, but one for which our expectations are tempered. On your first question Alexia, I was pointing specifically in my prepared remarks to the quarter that we've just completed. But if you consider the fact that we've told you we've just crossed another mile marker with 8 million subscriptions that gives you some signal as to how we're feeling now.

Thank you.

The next question comes from John Janedis from Wolfe Research. Please go ahead.

Great, thanks. Meredith, can you compare the domestic and international subs, meaning do they engage on similar stories? And specific to international, with the lower ARPU, what does subscriber acquisition cost and lifetime value of the sub look like compared to the U.S. and longer term do they take into the 20% plus range as a percent of the total?

Yes, good questions. Generally, I would say on international, you can regard our work there as a sort of very long-term strategy. It's why we are comfortable with the more aggressive promotional pricing, particularly in markets that have not been core, so markets that go beyond Canada and UK, Australia. So as we sort of reach out and promote more aggressively beyond core markets, we see ourselves as playing a really long game here. And I would say domestic is generally ahead of international and particularly when you get to non-core markets, internationally, in terms of all the ways we would sort of measure the health of the base, because we we've been doing it longer, but we're very comfortable with sort of where we are internationally and where it fits into our strategy. On your question about subscriber acquisition cost, I would just point to across the board, so domestically and internationally we still bring in the lion's share of our starts organically. That is true domestically. It is also true internationally. And so, if you sort of process that for the whole, it's possible that I'm not even sure I could give an accurate answer except to say that most of our starts do still come from the product engine and not through paid marketing.

Okay, maybe I'm rounding here, I think in the past you've talked about that kind of 50-ish percent plus range, has that moved around much over time?

And what are you referring to? Sorry.

The shift -- starts organically versus paid?

Oh, it's higher than that. It's substantial. It's higher than that. Majority of our starts across the board, come in organically. Just to characterize it the overwhelming majority come in organically.

Okay, all right, thanks. And then from a retention perspective, good to hear on the churn side or for the subs graduating from the promotional pricing, is the proportion of subs increasing to interim compared to full pricing what you expected or are you finding more of a skew to the lower end to retain the subs?

Roland, I'll let you take that one.

Yes, sure. No, we've got a model that does the predicting for 80% of it and actually it's skewed slightly towards going to full price from going to the step up, slightly more than 50% and that's been pretty stable the last couple of quarters.

Okay, maybe I'll sneak in one more then Roland, thank you. Can you talk more about your ARPU expectations going forward? It sounds like you're expected to accelerate from here and I know there are puts and takes, but are there any kind of guardrails on magnitude?

Well, some of that depends on how many starts come in on the dollar-a-week. So the more starts that come into the dollar-a-week that will have a huge effect on the ARPU, but our expectation is that you'll see positive year-over-year ARPU for the next couple of quarters. It would take a very, very large influx then from dollar-a-week, new dollar-a-week promotion substitute to make that not come true. I wouldn't expect the sequentials to be improving, but the year-over-year.

Okay, great, thank you.

This concludes our question-and-answer session. I'd like to turn the conference back over to Harlan Toplitzky for any closing remarks.

Thanks, Jason. Before I sign off, I want to note that in a few limited instances, Meredith's remarks may not have been audible. As is our practice, we've posted her prepared remarks, our total prepared remarks on our website @ investors.nytco.com and thank you for joining us this morning. We look forward to talking to you again next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.