Analyst Krish Sankar sees News+ revenue growing from $0.5 billion in 2020 to $2.2 billion in 2023.
From a note to clients that landed on my desktop Tuesday:
Apple's News+ product is a key pillar in growing subscription services, and we forecast the overall News platform can grow from $1.0B revs in FY20 to reach $2.2B by FY23 (31% CAGR) with 19M paid subs and share gains in advertising. We believe upcoming IDFA / pro- privacy changes in iOS can help accelerate Apple's ad network sales growth to a 36% CAGR.
News+ Position within the Publishing Industry is Modest, but Accelerating We believe Apple's News app and the News+ paid subscription service (News platform) are well positioned to not only benefit from incremental subscriber additions but also accelerating advertising revenue growth from an improving advertising platform and potential share gains from its pro-privacy stance. We think the adtech industry's transition away from the IDFA for mobile devices could be a disruptive event by leveling the playing field for ad networks within the iOS ecosystem. We estimate News platform revs can reach $1.6B in FY21 and contributing EPS of ~$0.04 (2% of Services profits).
Apple News Platform to reach $2.2B revs by FY23 Launching just over 2 years ago, News+ is the subscription service for the News app (free news content aggregator) that Apple offers in Australia, Canada, the UK, and US. We estimate News+ had ~11M paid subscribers in FY20 generating revs of $550M based on the $9.99/mo service fee. As end users consume more news and media content digitally, our model assumes News+ can add 2-4M paid subs / year reaching 19M by FY23, and representing $1.14B in subscription revs. We anticipate the News platform can reach $2.2B in total revs by FY23 when including $1.02B of digital ad revs (47% of News platform total) from ad impressions served alongside publisher content.
Maintains Outperform rating and $153 price target.
My take: It's good to be the default app.