The Guardian had another big year of digital business last year, further brightening the paper’s long-term outlook.

The paper says its digital revenue will hit $117 million in its current fiscal year, which ends on March 31. That’s up a quarter from $92 million the year before. That’s an excellent performance.

Even better, the paper says its overall revenue, including print, will be up more than 5 percent from last year, which would put it at about $345 million. In the newspaper world, that’s what counts as torrid growth. It helps that print, which still accounts for two-thirds of Guardian revenue, was down less than 4 percent, according to my estimates.

We don’t know quite how big a deal this is yet, though, because The Guardian is rather selectively leaking its numbers. The top line (revenue) matters a great deal, but not as much as the bottom line (profit). How much did that revenue cost?

We know The Guardian has been expanding in the U.S. and Australia. To a certain extent, the paper can scale its existing journalism, but it costs real money to staff up and build out new editions in foreign countries. I’d bet The Guardian’s new revenue is profitable. The question is how profitable is it?

Because the paper still loses gob-smacking amounts of money. In the 2012-2013 fiscal year it lost $51 million, down from $73 million the year before. Even if the paper somehow managed to keep costs flat in 2013-2014, it still would post a $34 million loss and have a profit margin of negative 10 percent, by my calculations.

The Guardian’s finances look to be moving in the right direction, but how does it compare to its closest global competitor, The New York Times?

The Guardian’s digital revenue is now growing faster than the NYT’s (25 percent to 11 percent), though it’s off a much lower base. At $312 million last year, the Times still has more than two-and-a-half times The Guardian’s digital revenue:

The NYT’s digital business grew by $30 million last year, while The Guardian’s grew by $26 million. But the Times’s digital growth is slowing, while The Guardian’s has picked up speed in the last two years:

The big problem for the Times is that its digital ads went into reverse in the second year of its metered paywall. As a result, the paper’s digital ad revenue is exactly where it was in 2010—$163 million a year.

That’s still significantly more than The Guardian’s. It’s hard to imagine the Guardian will be able to maintain 25 percent growth rates much longer, but if it were to, it would overtake the NYT’s digital ads by 2015.

Of course, the Times could console itself with its digital-subscription revenue, which by 2015 will probably be near $200 million a year, but digital ads are critical to its medium-to-long-term health.

The Times needs to study very closely how The Guardian is growing digital ads. Was it through sharply higher unique visitors and clicks? Did they manage to increase rates somehow? Are the country-focused international editions moving the needle, as they say? Perhaps the NYT needs a dating site? For now, The Guardian simply reports that “the key drivers (are) a rise in online advertising and recruitment and a rise in online apps and mobile websites, as well as the continuing popularity of dating site Guardian Soulmates.” Its annual report won’t be published until mid-summer.

The Guardian is ruling out a metered paywall now, but it knows it needs to get money directly from readers one way or another, and it’s making noise about a membership model. “We know that over time we will have to monetise our direct readers,” CEO Andrew Miller tells the Financial Times, which itself is perhaps the preeminent digital success story of all newspapers, as I wrote the other day.

I still think The Guardian is leaving money on the table, though. You can set a meter as high as you want, and even then you could simply ask for money, rather than require it. The Guardian could at 30 pageviews in one month, say, trigger a request to pay for its online offerings or to become a Guardian member or whatever it wants to call asking for money. More people would spring for it than you might guess.

What the NYT and FT don’t have, though, and what The Guardian does, is a $1.5 billion to $1.9 billion trust set up solely to ensure its survival in perpetuity. That’s allowed The Guardian to preserve most of the power of its newsroom despite losses well into the hundreds of millions of dollars since 2008. It allows the paper to eschew readers’ money too.

Assuming a minimum level of competence by its investment managers, the trust can maintain a baseline of strength at The Guardian. Actually expanding would take maintaining the kind of rapid digital growth The Guardian has posted the last two years, at least for a few years.

The law of large numbers means maintaining that rate of growth is unlikely to continue for long, and, again, we need to see the P&L statement, which is ultimately what matters. But the fact that it’s even possible to think about future expansion is a sign of how much the paper’s outlook has improved.

And good thing, too. We need a strong Guardian.

If you'd like to get email from CJR writers and editors, add your email address to our newsletter roll and we'll be in touch.

 

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.