Sto SE & Co. KGaA

The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Schmalzel. Please go ahead.

Dear ladies and gentlemen, dear analysts, welcome back, as we've lost spoken only one and a half months ago, to our Q1 2025 call. As has been common practice for many quarters now, I would like to start our presentation with an overview of our key figures, followed by important strategic topics we saw in Q1. Henning will then guide you through the financials for the first quarter. Afterwards, we will be happy to answer any questions you may have. On the main KPI for the quarter, total revenues were up by 5% reported or by 3.8% on an organic basis. from 453 to 475 million euro. The most important message here is once again that we outperformed the advertising market as a whole in our core business and confirmed or exceeded the long-term trend with the growth figures for digital out-of-home and programmatic digital out-of-home. This was achieved against the backdrop of a generally rather moderate overall economic environment and a lot of uncertainty in the market. As Henning explained in the prelims and as we will see for Q1, we have real operating leverage in our core out-of-home business. This manifests in EBITDA growing faster than revenue, EBIT growing almost twice as fast as EBITDA, and net income growing three times as fast as EBITDA or six times compared to revenue growth. In total, adjusted EBITDA was up from €108 million to €117 million or 8%. EBIT adjusted improved from €35 million to €40 million or 15%. Net income adjusted increased twice as strong compared to EBIT adjusted from €12 million to €16 million or 30%. In contrast to these developments, free cash flow adjusted followed the typical seasonality, especially higher working capital contributions due to a stronger liability decrease as well as higher IFRS 6 lease repayments led to a free cash flow adjusted of minus 35 million compared to minus 24 million Euro in Q1 2024. At 18 million Euro, CapEx in Q1 2025 was 8% below the previous year's figure of around 19 million Euro and reflects the continued back to normal and the objective to further optimize and improve the fill rate of our digital out-of-home portfolio. Let's have a look at the Nielsen numbers in the middle of the chart first. And please keep in mind that those show gross rate call developments and the net revenue is on average six to seven points lower. On a like-for-like and gross basis, the out-of-home category is outperforming all other media, except for radio, which is due to its relevance, neglectable quite significantly. Out-of-home continues winning roughly half a percentage point share per year over the German legacy ad market. Translating the gross Nielsen numbers into net revenue, in Q1 2025, not only the ad market in total was negative by around 7% to 8%. Net TV development should be also in that range, although RTL and ProSieben haven't published their net numbers yet. In contrast, our total out-of-home business, digital out-of-home and out-of-home, was up 15%. Digital out-of-home alone delivered 27% growth, and programmatic digital out-of-home grew 36%. With that, we have outperformed TV and the ad market on a net basis by roughly 22 points with a total out-of-home business. Digital out-of-home is 34 and programmatic digital out-of-home more than 40 points better. That said, digital out-of-home also continues to outperform the average growth rate of global platforms like Google, YouTube, or Meta with a picture we see consistently in the last six to overall ad market dynamics looks like. And the underlying trend lost meanwhile for more than 10 years, with the exception of the COVID lockdown. Our out of home media business has consistently outperformed the legacy media market. And within out of home media, we have been outperforming the rest of our peers. And the growing share of digital out of home has accelerated the structural development. The higher the share of digital out of home within our business, the stronger the performance especially against TV, print, radio, or German online players. Of course, the total ad spend defines what's achievable for us, but the structural momentum is stronger than temporary headwinds from the macro environment. Out of Home was historically rather a niche and complimentary medium, but it always had some kind of exceptional strong position on the KPI location within the media landscape. For many customers, Location is an inevitable core function of the marketing playbook, and they are extremely stable in their revenue flows, also throughout macro cycles. A proof point here is the net revenue retention of our top 100 out-of-home media customers over the last 10 years. They represent roughly 40% of our core business. Even including the pandemic, the net revenue retention over the years is well above 100%, and the customer churn is below 1%. Our strong position regarding the KPI location has a substantial impact on our long-term core customers. Let's then have a look at the revenue development across our broader customer base over the years to better understand the underlying logics here. We have again excluded the services in non-German businesses of blow-up and in Poland and made a customer cohort analysis for out-of-home, digital out-of-home in combination for all customers. you see a sticky and ever-increasing business base already in the years until the pandemic. The lockdowns, especially in 2020 and 2021, have been exceptional, but afterwards you see the same historic trends with even more momentum. Let's look at exactly this momentum since the end of the pandemic. Digitization and the growing share of digital out-of-home has added massive opportunities and improved our gameplay. Advertisers can start with smaller tickets and the entry barrier is low, which means more new business potential. They can buy programmatically and in combination with online, which means more natural integration with all digital media supporting a low churn. Besides the location component, the incremental targeting opportunities open up new potential for more audience-oriented advertisers, which means we're stepping out of the niche into a mainstream proposition. And you see the results in the development of our customer cohorts for digital out-of-home only. Existing customers spend more money year-over-year with a net revenue retention well above 100%, and we constantly add new customers which show the same development. This might be rather SARS benchmarks, but it shows the resilient and recurring structure of our top-line development year-over-year and the structural impact of digital out-of-home on the total core business. Digital out of home is already a massive step up versus out of home. Programmatic digital out of home carries even more potential. It's about informed decision making and campaign optimization on ROI versus general traffic pattern and location demographics. It's about highly targeted and relevant ad delivery at most opportune moments versus limited targeting options. and it's about significant flexibility and responsiveness to market condition versus pre-boxing of ad space. More digital inventory, better software and constantly improving audience data delivers a constant flow of innovation case studies. Just some recent examples from Q1. Danone was increasing their Actimel purchase intention by 38% and reached spontaneous ad recall of 60% on digital screens with a targeting strategy around rush hours, flu seasonality, and current local infection trends. Lauriane was executing a drive-to-store push in six major cities with dynamic creatives. From a single ad template, 133 customized digital out-of-home ads were automatically created and played out in the immediate vicinity of drugstores. The campaign had significant reach and a positive impact on product sell-outs in the targeted drugstores. Shop Apotheke was using our TD Boost solution and data cooperation with all eyes on screens. The digital out-of-home campaign was only played out in zip code areas with low TD penetration, and the blended campaign saw a net reach uplift of 15 points versus allocating the budget on TD only. And to put that into context, excluding the service and just comparing digital out-of-home versus classic out-of-home, the share of digital out-of-home roughly doubled over the last five years. And within digital out-of-home, programmatic was clearly the growth engine and has added more new business opportunities for our sales teams. Or in other words, over 80% of our growth is digital, over two-thirds of the digital growth is programmatic. Software as well as data quality will be the key growth drivers going forward to monetize our digital out-of-home ad inventory in the we clearly benefited from the simple fact that we had invested rather early back in 2014 in an own SSP setup to make our digital out-of-home eyeballs available to online and cross-channel DSPs and therefore bringing our volume to their demand. Today and in the coming years, we see similar beneficial trends around our proprietary DMP setup, which we established already seven years ago, fueled originally by online data only. The DMP provides finely detailed location-specific information for the pre-qualification of inventories based on the advertiser's goals. It's the central technology for collecting, analyzing and using data from various sources to specifically activate our ad inventory. We also see by far more engagement of advertisers in optimizing their digital out-of-home creative and getting the maximum out of the inventory and available tracking data. Our AI-based creative analyzer is a fast and convenient tool. More and more agencies and clients upload the creative via the common power platform. The advertising copy is analyzed based on fundamental learnings from post-campaign tracking of thousands of copies in our database, and the system immediately sends the results via email back to the client with concrete recommendations how to improve visibility, conversion, and ROI of the ad. One important aspect for us, all of this is a long-term development and on an annual basis or rolling 12-month basis, you see the consistent and recurring logics since the end of the pandemic. Our core business has become a double-digit growth profile. Individual quarters will always have deviations, macro influence, volatility in the ad market, very different prior year comps. You see this on this slide for the last four years. Quarters with more than 20% segment growth were no indicator that our business suddenly goes completely through the roof. 4% growth were no indicator for the end of the growth story. It's an ongoing structural development which we focus on. The quarters are and will be no perfect string of firsts.

So far on my remarks, and with that, over to Henning. Thank you, Christian, and a very good morning, everybody. Let us start the final section with a quick look onto the Q1-25 P&L, where Christian already touched upon the key items. In total, we delivered a good set of results for the first quarter and met our internal expectations for the group. While out-of-home media slightly exceeded our forecast and compensated for some weaker than anticipated business development at Assam. Overall, as was already the case for financial year 24, the momentum increases the further south we look in the group income state. Revenue growth for the quarter was 5%. This includes around 120 basis points support, mainly from the acquisition of RBL Media. The corresponding activities are included since November last year. Excluding this effect, organic growth came in at 3.8%. Every year adjusted amounted to €117 million, €9 million, or 8% higher compared with Q1-24. The exceptional items for the quarter were minus €2.5 million, and that's roughly half of the amount reported in the prior year period. Exceptional items essentially comprise three components, 0.9 million for software implementation, 0.8 million for various smaller restructuring measures, and expenses related to our stock option program. Accordingly, reported EBITDA was up by more than 10%, from 104 to 115 million euro. Depreciation amortization increased by 6% to 81 million euro. With that, reported EBIT for the quarter came in at 34 million euro, some 7 million euro higher compared with Q1-24. The financial result improved to minus 15 million euro after minus 18 million euro in the prior year period. Roughly two-thirds of this effect are attributable to a positive currency effect from intragroup debt denominated in U.S. dollar as Statista, but the remainder results from lower interest rates more than offsetting the cost for additional 18 million euro net debt. Earnings before taxes, therefore, more than doubled to 18 million euro compared to 9 million euro in Q1 of the prior year. The tax rate was basically unchanged with around 30% in the reporting period, and with that, the tax result follows the development of EBT. All in all, reported net income for the quarter came in at close to €13 million after €6 million in Q1-24. Adjustments were down by €3 million, mainly because of lower pre-tax accessional items, as described before. Again, slightly increased amortizations resulting from purchase price allocations following the acquisition of RBL. Whereas part of the first-time consolidation, we recognized goodwill of €35 million and depreciable assets of €69 million. Accordingly, net income adjusted to €16 million after €12 million in the prior year period, or in percentage terms, an improvement of 30%. Let us now switch over to the cash flow. As you are familiar with the seasonality patterns of our business, you know that usually Q1 cash flow development is not a relevant indicator for the full year. In particular, when it comes to the development of networking capital, that somewhat is a reflection of the productivity of a quarter. Our Q4 usually accounts for close to 30% of annual sales, while Q1 only accounts for around 22%. Absolute sales levels in the first quarter are usually more than 100 million lower than in the preceding Q4. While earnings, as we have just seen, continue to improve and cash out for interest, other items and investments were lower than in last year's Q1. This was more than upset by the just-mentioned seasonal change in working capital, as well as IRPR 16 lease repayments, which increased also due to the acquisition of RBL and some phasing effects. So altogether, free cash flow adjusted was minus 35 million euro after minus 24 million euro last year. Compared to our calendarized forecast, Our Q1 cash flow was no better than anticipated, and we continue to expect clearly improving cash flow generation for the full year, and in particular the second half of the current fiscal year. Let me come to the net debt development in the sequential view from the end of Q4-24 to the end of Q1-25. Net debt was up by roughly 27 million euros, including the adjusted free cash flow for the first quarter of minus 35 million, and M&A expenses of 1 million euros. The remaining difference in the reconciliation of around 9 million euros relates to a reduction of previous customer overpayments, representing a cash outflow with no effect on net debt. Net debt year over year was up by 81 million euros to 864 million, including our dividend payment last year, as well as the acquisition of RBL, representing in total a cash outflow of more than 210 million euros. With that, our leverage ratio improved slightly compared to prior year due to higher earnings to now 2.18 times versus 2.24 in Q1-24. Let us now take a look at the performance of the individual operating segments in the past quarter, starting with our core segment, out-of-home media. Out-of-home media was able to meet and even slightly exceed the expectations placed on it for the quarter. Sales growth amounted to more than 15%, and this against a strong prior year base. Last year's Q1 equally delivered growth of more than 15%. Organic growth in Q1 was around 13% against a comp basis of 17% last year, thereby showing only slight moderation in a now, compared to the beginning of last year, much more challenging market context. Thus, our performance is characterized by rising sustainable outperformance against the market. In total, segment revenue was €210 million. Looking across the different revenue streams, all of them supported growth. Out-of-home group classic grew by more than 8%. Business development was supported by the acquisition of RBL and a positive effect from ad spend for the federal elections. Excluding these effects, the underlying development was broadly flat. As in the previous quarters, digital out-of-home was again the main growth contributor. In total, digital out-of-home was up from 64 to 81 million euro, or 27% respectively. Within the digital out-of-home sub-segment, programmatic digital out-of-home grew even stronger, with 36%. Also, out-of-home services contributed with double-digit growth to the segment development, and revenue was up to 13 million euro in Q125. Consequently, the EBITDA margin for the quarter was slightly up to 41.1% and EBITDA adjusted came in at 86 million euro or 18% higher compared to the prior year period. EBIT adjusted even improved by more than 50% in Q1. Q1 revenue for digital and dialogue media increased by 1% to 206 million euro. Digital media thereby grew by 2%. Within digital media, sales from our own assets, such as programmatic public video and owned internet content, such as the online, grew or were flat, respectively, and more than compensated for a decline in ad sales for operated assets. Our dialogue business came in with revenues of €108 million and with that basically on the same level as in Q124. In detail, the two dialogue activities, call center and direct marketing, showed different sales dynamics in the first quarter. Our call center's activities grew by double digits, compensating for a sales decline in door-to-door business, which are currently facing a little higher churn in the field force. In total, the segment EBITDA adjusted came in at 28 million euro after 31 million euro in Q1 24. Digital media and our contact centers contributed broadly stable earnings, earnings that our door-to-door activities followed the mentioned sales declines. Last but not least, some comments on our data as a service and e-commerce segment with Statista and ASA. Revenue developments continue to show a differentiated picture in the first quarter. As expected, data as a service, Statista, continued to show positive revenue developments. Sales in Q1 rose from 40 to 42 million euro, or 5% respectively. While the outbound sales of platform access grew double-digit, our business performance in the U.S. moderated due to macroeconomic headwinds. Assam's business development was still impaired by declining trading and wholesale distribution to China in the amount of roughly 3 million euro in the period under revenue. Excluding that, sales were broadly stable in a now more challenging consumer environment. EBITDA adjusted for the segment with 11 million euro or 1 million euro lower when compared with the prior year period. A good earnings and margin improvement in Statista could not fully compensate for earnings decline at Assam. With that, let me hand you back over to Christian for the outlook and some closing remarks.

Before ending the presentation, let me just have some comments on the outlook for Q2 and the current trading momentum. The developments we expect for Q2 have all to be seen in the light of the strong cons of Q2 2024, prior year developments driven i.e. by the UEFA Euro 2024. So for example, out of home media, was up by 21% same quarter last year. Furthermore, there is still unchanged uncertainty in the market that leads to an ad market dynamics, which should be definitely softer than the Q1 environment. Against this background, we expect revenue growth in our core business for the period April to June up to 5%. As the quarter hasn't ended yet, and as June is quite a decisive month for the quarter, we are quite constructive for our expectations. This growth will again be driven by continuous and sustainable strong momentum in programmatic digital out-of-home and digital out-of-home overall. For digital and dialogue, we see stable revenue developments for Q2. Stars in e-commerce should be up single-digit, driven by Statista. Going forward, second half of the year will accelerate significantly as high and low double-digit. And as we highlighted in the first part of the presentation, individual quarters might be above or below our current momentum. We are running against tougher comps in the first half of the year. We are running against softer comps in the second half of the year. We have the volatility in Q1 and Q2, but our long-term CAGR expectation for the core business is double-digit. With that, full-year guidance for 2025 remains unchanged. Let me now close the presentation with a short look into our financial calendar for 2025. The next event will be our AGM on June 4. The half-year figures will be presented on August 13, and Q3 figures will be published on November 11. As always, updates, reports, and roadshow presentations can be found on our investor relations website. Thank you, everyone. We are now happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to move yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and 1 at this time. The first question is from Jonin Christopher, HSBC. Please go ahead.

Yes, morning, everyone. Thanks for taking my questions. A couple from my side, please. First, starting with Statista. What is your view on sort of the expectations we should have for the rest of the year? I'm looking at consensus expectations of roughly mid-teens growth for the entirety of the year, now Q1 with roughly 5% being somewhat below that. Is there anything you can share on, you know, your expectations for the, I don't want to call it seasonality, but really the sort of uptake to be expected or not at Statista? That would be the first question. Second, I'm curious, is there anything you can share with respect to the conversations you've had about the, I know you don't want to call it the sales process out of home, but you know what I'm talking about, just to see if there is anything to be shared, maybe any of your own timeline even, that would be interesting. And third question with respect to the non-out-of-home media business. So I'm just curious, have you noticed that there's volume declines coming in from Google, maybe on lower search volume, either, for example, at the online or some of the other third-party media that you're seeing? I'd be curious to see or hear what you have to share on that. Thanks.

Thank you, Christoph. Let me start with your question on Statista. You talk about like the MIG teams, which is also, I would say, our target if you look into our internal forecast. We originally also foresaw that like that will be an acceleration and growth in the second half, but it's currently a little bit challenging, as I indicated in my speech, is the environment in the United States. We see a little bit of macro has-beens, as I indicated, so that is, I would say, put some more, let's say, risk to our original forecast. We need to see how that continues. But regarding the underlying development, we are rather quite happy with the performance as we see it at the moment.

On your third question, regarding Google traffic, I would say on the news portals that we have, but that we also see in the market, we don't see any impact on search volume or organic traffic at the moment from google so nothing like a trend that could be i don't know linked back to ai stuff or any fundamental changes you always have some kind of normal volatility based on how they they are working on their algorithm in general but there is nothing that we've seen especially in the last two or three months i would say rather the opposite i think Especially the first quarter was traffic-wise really strong for T-Online, especially versus Q1 last year. At the same time, what we have seen is more volatility in the last two or three quarters on any more specific content beyond news and general interest. So that's where also a couple of our third-party publishers have been suffering. So automotive, I think, was one area that just saw less traffic volume coming in. But I think it's a bit too early to say if there is any underlying trend. But I think any kind of bigger shifts one would expect are not visible yet. And I would say the business dynamics there is more driven by advertisers' demand than by over-proportionate changes in traffic structures. That's at least what we've seen in Q1 and what we see at the moment. So I don't think that the Q2 trend would be any different. And I think on your second question, a potential sale of our core business, I think we can only repeat what we said during the prelims. I mean, there was some leakage about what we do in general regarding looking at leveraging the inner value of our company total. As we said, we get some additional inbound requests of investors that are generally interested. We are working with those on potential questions to make sure that interested parties have a good understanding of our business. But there is no process, agenda, timing or anything like that. So we are always open. for opportunities, but we ourselves are not setting any pressure or expectations or timings. I think, as you see, the market environment is in general a little bit tricky, so doing something in such a phase is probably not something you have normally on your top priority list.

Understood. Maybe one follow-up on the last point. Just to confirm, it's kind of a legal question. So I understand if you ad hoc the leak that we've had a couple of months ago, am I right thinking that you would also have to put up an ad hoc at the moment where you are no longer talking to any party? Is that correct?

No. No, no. We don't have to go ad hoc for that because obviously when you go ad hoc, then it means that you're relatively close to do a transaction. So over time, this is actually fading out. So legally, we are not obliged to. Only if we would be really close to a transaction now, we have to go ad hoc again. But as Christian said, there's nothing to add to our last statement. It's obviously that there are several players in the market who see the value of our core business significantly above the valuation of the whole group. And this is actually obliging the management to evaluate options, how to unlock the full potential on the valuation side of our portfolio of assets. And we are in conversation, and that's it. At the moment, there is something new we are going to inform the market.

That's clear. Thanks a lot. Appreciate it. Thank you.

Next question comes from the line of Craig Abbott . Please go ahead.

Yes, hi. Good morning. To follow up from my side, please. Just getting back to the system first, you mentioned twice that you've seen some headwinds in the US. You alluded to economic conditions, but I would like to know if this may be more a reflection of research budgets in the US obviously coming under pressure from the administration. If maybe that's more of a structural issue there. And just to follow up, just to complete that question, please, on Statista, could you update us on what the US share of Statista's business is currently? And then I'll ask my second question. Thank you.

Hi, Craig. Thanks for your questions. By the way, we have an anniversary today, the two of us. Yeah, it's our joint 50th quarterly results presentation. Really? Yeah. So anyways, we have two veterans here, of course, apart from Udo. But I think on your question around US, I think there is in general, and you could see that I think also in the published number based on feedback we get also from our sales teams of Statista, more conservative approach in spending money at the moment from companies. I think they're just a bit unsure what all the tariff means and like long-term learnings around macro means for the US business, so I don't see that there is a bigger structural topic or anything like that, it's really the market momentum at the moment and I think it's also more like the uncertainty in itself than really underlying problems. That's why we think we'll see what the next couple of weeks and months are. I think it has already got a little bit better as people understand that maybe ultimately it's also for the current president about the results. But I think it's more like a temporary uncertainty in the market based on what we see at the moment. So nothing has been cancelled, but we see that the The lead times for selling things in the US takes longer, things get a little bit postponed. That's a little bit where the logics come. And I think the US business in total is close to 40%, around 40%. So it is an important market for us. And it's also an important part of the growth going forward, because I think we are in a position there, have built good teams. We have a new CEO in place since a couple of months. She's really doing excellent work there. We're happy with that. That's why indeed the US is an important building block of our Statista growth story.

Okay, thank you. And here's the 50 more joint quarterly calls.

I hope not, to be honest.

Yeah, we'll see. Yeah, and just a second question, please. Getting back to the four-year guidance, I understand, you know, H2 last year, you have more favorable comps, I think, what, three-something percent. growth in Q3, Q4. So things will get easier then. And your Q2 outlook was encouraging considering the very high comp from the Euro Cup last year. But nevertheless, I just wonder what makes you so confident that you'll really see that kind of growth in the second half of the year. Usually you don't have that much forward visibility. Yeah, if you could just maybe add a bit more color there. Thanks.

What's the... What's the key fact why we are confident? I think the key fact is that our quarterly revenues in Q1 and Q2 at the moment follow exactly our internal plan, which was made already at the end of last year. And to be honest, we have not foreseen that the ad market, and I mean, I can still speculate only about the ultimate net numbers, especially for in the total pot in the first half of the year will be probably around, our guess at the moment, minus 8% or so. So we've been making our plan on the basis of having at least a flattish ad market this year. So against strong comms and against the significantly weaker ad market that we had expected, we are pretty much spot on with our current H1 performance. And that's why we think what we've communicated is absolutely realistic because we don't think going forward that kind of difference between where's the ad market versus what we have expecting gets worse than in the first half of the year. And I think that's what we tried to communicate in the overall presentation. Yes, of course, macro environment, ad market development, has an impact on what's achievable for us. But we just see almost quarter by quarter that kind of structural resilience of our business, the fact that the tailwind through digital out of home is so much stronger versus all the temporary headwind from the macro environment that I would say we feel more and more comfortable with what we do.

Greg, maybe you see on the second view that we published some new data today, especially about the resilience of our revenue intake. Because the first view is always that advertising is cyclical and stuff, but if you look on the net revenue retention, it's above 100% of our top 100 clients. I think this is really, really strong numbers and churned below 1%. So these are actually numbers from the SaaS business. And this over the last 10 years. So you see that the projection is quite reliable, what we have, because our customers are constantly investing more in digital auto form. And we see that momentum is actually definitely building up. And that's why we are a bit... let's say, independent from what you would guess to see as a cyclical development. Okay. Okay. Thank you. Also, maybe have a look on the cohorts of our customer cohorts. Also quite interesting. And if you combine that, the net revenue retention numbers and the customer cohorts, you get first time a very strong impact on how sustainable our revenues are. Okay. Okay.

Thank you very much.

Next question comes from the line of Annick Maas, Bernstein. Please go ahead.

Morning. So my first question is on the margin of dialogue and digital. You made some comments around it, but I'm just thinking, you know, the online bit was doing well. Dialogue business was doing okay, and yet margin went down, but then you have also this argumentation that you are offshoring your call centers. Can you just go a bit more into the detail what happened with the margin there and how you think about it for the rest of the year? The second one is on Azzam International. I thought we are now past the comp of Azzam International, so just mechanically it should do better. Can you just give us an indication of where we are, what share Azzam International is doing now out of the mix? And then the last one is, I guess, a follow-up on the previous one, just on the advertising revenues for the full year. You have some multi-year contracts. You have some contracts that are negotiated at the start of the year. So how much of your out-of-home budgets do you have already more or less logged in for the full year? Thank you.

Well, Anik, on the question of the margin and dialogue, as I said in the speech, I mean, basically I talked about a good sales performance in the call centers. That was also driven, as you indicated, out of better outshoring. The margin in the quota was not really following through at this point because there's also some, let's say, a cost for setting up more outsourcing capacity. But we are quite confident that going forward we'll see at least, I would say, a sales development that is more in line with earnings. Most of the decline in earnings in that segment was essentially coming from rangers or door-to-door activities, which can always be a little bit volatile from one quarter to another. As you know, here we're working with external independent sales organizations, and those folks at the moment has a little bit higher churn when it comes to their workforces. And we are working with the measure plan on that, and we expect that to improve going forward. So we are keeping our forecast for range and also the call centers and we're quite constructive also for the business going forward.

Your second question on Adam. Adam, technically you're right. As soon as we have completely off the Q1 Chinese business more or less out of the system at least With the volume that came extremely fast in 23, 24, it should get, I don't know, what was your word, mechanically easier. Yes, yes, you're right. Because then I think anything outside the DOC reason should be down share-wise to around 15%, 1.5. And it's widespread across marketplaces, more opportunistic, some smaller dealer deals. So I think it's something where you wouldn't see much volatility. That said, it's getting easier, but it all goes back to the Dock region and the momentum there. And clearly, in the current event environment, it's not that easy for consumer brands. I think Henkel was publishing Their numbers this morning, I think their cosmetics business was going backwards. So you see that that kind of uncertainty in the market at the moment that we also see in the DOH region is clearly something that is not supporting the general development in DOH. I think Azam and Q1 was in the DOH region based on Nielsen numbers still winning market share in all of their categories without an exception. So relative to the market, I think they're doing fine. And yes, Technically, mechanically against comps without a special impact of China, it's getting easier, but it will be ultimately heavily impacted by the overall environment for consumer brands. And on your out-of-home question, I think it's a little bit of a technical question because when you, as what Udo mentioned, you look at the end of every year at the development of customer cohorts and existing customers and what they did you would say the historic logics would be ultimately and at the very end we know pretty much what we get based on what the customers have done in the last years technically in our books like finally contracted for the second half at the moment. In total, we probably have 30, 35%. Why? Because a lot of national advertisers have an annual deal and commitment, but technically they book it quarter over quarter, month over month. And there is like the next, on top of 30, 35, there is the next 60%. contracted in annual deals, but not physically booked. And there is the last five to 10% coming out of a new business pipeline, which we have drilled down quarter by quarter on a very granular level. But part of that is also normal sales work. So what you have ultimately is that you begin at the end of the year with the precise knowledge of what customers have done last year, what their behavior was over the last five to ten years, and what they've contracted, already booked, plus contracted or committed, and you work on that. you reduce like that kind of delta between what's technically in the order book and where do you want to be at the end of the year. If you then make a backwards analysis year over year over year, you see that it follows some kind of logics that is very close to as if customers would have booked a five-year subscription with us.

Okay, thank you very much.

Next question comes from the line of Julien Roch from Barclays. Please go ahead.

Yes. Good morning, everybody. I'm going to be greedy. I'm going to ask four questions. The first one is on free cash flow. Leases were up in Q1. You said it was RBL plus seasonality. So can we have some indication of the IFI 16 leases for the full year was 203 last year. And while we had it, Henning, if you could give us some indication of capex, cash exceptional and cash interest, so four numbers. Second question is what percentage of programmatic advertisers are incremental, i.e. if you did not have programmatic, they would not advertise on your properties. Third question is on macro. Christian, you said that you thought that the first half for traditional media, including outdoor in Germany, would be down 8%. Can we have a split between Q1 and Q2? And then lastly, for Udo, I guess, out of home is amazing. You always say that your business is undervalued, and clearly if it was a business doing double-digit top line, it would be valued far more. So should you sell everything except digital and out of home? I know you have plans for Assam and Statista, but why not sell Dialog? So can you tell us strategically whether you think it's a good idea and kind of timing of the disposal of those three assets? Thank you.

Hi, Julian. Maybe I'd start with the question. I think it was number three, macro context at market split. H1, split H1 in quarters. So again, you know, it's what we see, how we have backwards compared always gross Nielsen numbers with net numbers across media. So I think H, the first quarter should be around 6.5%, 7% negative. And the second quarter probably up to minus 10% roughly. That is our estimate based on what we see. And I would say the kind of indicators for May and then not substantially changing June. So definitely Q2 softer than Q1. And Q1 total ad market on minus 6, 7 leads to minus 10 roughly in Q2. The second question around, well, what is really incremental digital out-of-home revenue via programmatic versus what would we have if there was no programmatic? It's a philosophical question to imagine a world without programmatic, but our guess is that at least one-third of our up to the half of the programmatic volume over the last three to four years was really incremental. Why? Because it has opened up new customers that really came via the trading desk and the online logics. We saw that especially short-term bookings were very often at the end of the quarter triggered with that. and thirdly there's a share of customers that simply replicate their targeting profiles from the online world into digital out of home and all of that wouldn't have happened without programmatic public video that said the more we are going forward the more programmatic is established i think And the people learn that it's not about the way only they buy, but it's about the proposition of the media itself. I think the more you could say that it's an established tool in the plan, it might also come without programmatic, but the other way around, it's so automated, so programmatic, so easy and convenient, so that it ultimately also drives sales. drives the incremental business. But I would say a third of what programmatic does, maybe up to a half, two, three, four years ago, is volume that we wouldn't have today without programmatic sales on.

Julian, on the question of lease liability repayments, we have seen an increase, I think, of around about 8 million in the quarter. I would say roughly one quarter of this is coming from RBL. Up to three, four main is probably some phasing effects. There's always a little bit shift from one quarter to another and the rest. So maybe let's say two, three main is maybe underlying increase from increased guarantees and additional contracts is a rough idea. Then for the cash interest, I mean, we have seen an improvement now in the quarter. I think we expect also an improvement for the full fiscal year, basically coming from now moderating interest rates, probably in the direction of the relative improvement that we have seen in the quarter, maybe a little bit less, right? Because we have to see that given our dividend decision, it's probably fair to say that net debt will rather rise a little bit year over year, so that some of these lower interest effect will be compensated by somewhat higher net debt. I hope that helps.

And then the last question on selling Assam Statista and Dialog to become PurePlay.

Well, ultimately, I think we try to leverage the full inner value of the company. And I think if you think for a moment about selling Asamen Statista, it's a fair question to see if the dialogue business is part of the core or not. I think the fact that we had interest for private investors in out of home and online in combination, some kind of answer that dialogue business is close to that advertising business, but it's a separate one. I think the key question goes back to what I think Christopher asked and where are we in any kind of process? I think we are open for any kind of inbound interest, but in the current environment, we have no concrete plans. I would not say this is what we do because you immediately trigger expectations from you guys. And I think that is part of the challenge that we have. We already have the challenge that we have to explain a lot around quarterly developments when we feel like the annual momentum is by far more important. And I think we don't want to complain because we are publicly listed. It was a decision and that's what it is. But I think on the long run, yeah, there is an out-of-home business and a online business, which is close to that, which is already a little bit different. And then you have a dialogue business, you have Statista and you have Azam. And I think there are many good reasons why the individual development potential of those businesses could be maybe done in a more interesting way in a separate logic.

So definitely our target to unlock the value of what I already said, but we are not in a hurry. Obviously, circumstances are very relevant at the end for valuations. We have very low debt. We have well-performing businesses. And we actually are evaluating different options. So we repeat a little bit ourselves here. But it is obviously that there is no benefit today. from having the businesses they have in one portfolio. So our shareholders are not benefiting from that. And there are different options to change that. And this is also clearly, like Christian said, connected to opportunities which are linked to macroeconomic situation. So, I mean, the current situation will not stay forever. All this tariff unsecureness will be finished most likely in the next four, five, six months. And interest rates will go down. So all of that will actually accelerate M&A market. So that's what capital markets are expecting. It's also our expectations. Right now, people are waiting until the tariff war is finished. And M&A markets, you also see in real estate now, market is coming back. We definitely believe that. and financing conditions will be much better in the second half of the year than it is today.

Thank you. You're welcome.

Next question is from . And as a reminder, for questions, please press star and 1. Please go ahead, .

Thank you. I have two final questions remaining. Firstly, I just wanted to clarify your commentary on your full-year guidance. You've mentioned the revenue sort of trajectory, but are you saying anything around the margin trajectory or profitability growth for this year? Sort of a wrap-up on that would be great. And lastly, on advertisers' behavior, did you see a direct impact as soon as sort of Liberation Day happened in terms of how your advertisers reacted and did that sort of bounce back to normal? some color on what you're seeing either on out of home and digital would be great. And was there also a difference in maybe the behavior among your local and regional clients versus your national clients where one was more sort of resilient than the other? Some color there and your expectations on how these parties would behave for the rest of the year would be great. Thank you.

Maybe I'll start with your second question. So I think just by nature, short term bullet macro environment has normally no impact on the order book or the order intakes from local and also regional customers. They anyway plan their marketing spend more long term and rather driven by their very individual situation. So there is nothing we've seen. We also haven't seen like that kind of D-Day logics where Liberation Day and people just pull out money. But I think what we've seen just explaining a little bit the kind of emotional roller coaster in the ad market or for our sales organization. We've been coming last year out of a really strong H1. And then suddenly we're moving into a foreigner situation where there was the Trump election where everyone felt like that could be a challenge for Europe and Germany. And the perception was like, hey, I have 100 bucks, 100 go to the U.S. At the same time, we had suddenly the German government almost falling apart with an unclear situation how quickly new elections will be. That led to a really soft momentum overall in Q4. Then suddenly, as soon as that first, I don't know, Trump effect was over and there was a date for the German election, there was again very positive momentum over a couple of weeks. which led to a really good q1 during q1 you could see that people realized that we might have a government the problems won't go made immediately in germany so we will need to see how that all works out and you had that tariff discussions out there so suddenly a very positive momentum in q1 turned into more skepticism at the moment we see like another turning point where we see okay people understand that the kind of Armageddon scenario around tariffs and others is probably it was for a while on the table. It goes more towards solutions and you see more positive momentum going forward, which just improves a little bit the outlook again. So it's this up and down. and it's not individual days it's more like overall sentiment over the months along the stuff that happens around the world and it's more influencing our national advertising market than our local one and i would say as we have one national ad market it influences digital and or the online business and out of home in a similar way with one difference out of home is just higher up on the priority list of advertisers so we say that it gets least less uh impacted if advertisers are really a little bit more conservative on the spending for the next two or three months uh on your question on the four-year guidance uh basically we confirming the guidance as we mapped it out in the

outlook of the annual report, we see somehow, I'd say organic growth was more or less on the level of 2024. And we expect ABDA obviously driven through the performance of out of home. And then like seen in Q1, also the terms of the dynamics, we should see accelerating dynamics, the more south you go in the P&L and also for the free cash flow generation. So unchanged. And I think the guidance that is there is or fairly consistent, I think, with the overall consensus as I look at it at the moment.

Thank you. Very helpful.

The next question comes from the line of Anne Patrice from Ehrenberg. Please go ahead.

Yes, hello. Good morning. Thank you for the presentation and all the information already provided. I probably missed just a couple of questions on my side. On the organic growth of the out-of-home, if we exclude the impact from the acquisition, so what would be the growth within the classical out-of-home and digital, or what was the contribution closer to from the acquisition? That's the first question. Second question, how much exactly was programmatic within out-of-home in Q1 2025 and Q1 2024, if that's possible, in Euro millions? And then from there, I have another question on dialogue with digital. So it seems that most of the growth comes from programmatic, but then how much was the T-online up? And then how much were the rest of the websites down? Because it means quite a significant decline. if I'm playing around with the numbers, and why there's divergent trends between your website or the T-Online and the rest of the website portfolio. So what are you doing so special within T-Online, and what is not so good with the other websites? Are they just following the overall market decline, and then there's something outperforming that you're doing special with the T-Online? And then two more questions from my side. um one on the capex if you could provide a bit more breakdown on how much do you spend on the digitalization of your portfolio and then what should we expect going forward on the capex side how much it should be this year and maybe like the midterm trends there was a peak when you were spending more on the digitalization is this over because in terms of the inventories there's still very low share of inventory that is digital So why then the COPX is declining? If you could explain that. And the last quite easy question and very theoretical question. So if you divest the non-core assets, what would you do with the cash proceeds? If you have any ideas already. And then why do you think it takes a bit longer to divest them? Because you've been talking about it for quite some time. Is it that there is no interest or it's because

you expect the price to be offered being much better than people offer now and what do you think will be the right price for these effects thank you let me take the last question maybe first a lot of questions but let me maybe take the last one first we can have some more time to check out the data so as i already said uh And the last set of questions here, it is obviously pending on valuations and circumstances. Look, we are in a very comfortable situation. We have a portfolio of high-quality assets, and we have a very low indebtedness. So there's no reason for us to push a deal forward in a situation what we have now in the first half year of 2025, where we have maximum uncertainty if you compare with the last five or six years after Trump got into office. So that is very simply said the situation. I mean, financing was expensive in the last year. So after Corona, there was a lot of different problems coming up. in the market, in the M&A market and capital markets and the debt market. So we expect all of that coming down step by step because what I already said five minutes ago, the tariff stuff will not last forever. We expect in the last six months the situation to change so significantly. in the debt market as well as in the overall macroeconomic situation, what means uncertainty will come down. And so that is simply the reason why we don't push any deal forward, because why should we do that? I mean, losing hundreds of millions of euros for our investors only to execute a deal in a situation where it makes no sense. And the first quarter in Germany was not one single IPO. I mean, if you push your M&A deal forward, then only if you're really desperate, or if you urgently need money. So we don't need money, but I already said that is on record low all time level for the first quarter. And if we wouldn't have bought RBA last year, the leverage would be under two now. So clearly under our target leverage from a minimum two and a half. So that is the situation. So in case you make a deal, you return the money to the shareholders because what I already said now, the embeddedness is really low. Companies are producing a lot of cash. And that is a situation we're really focusing on. Our key target is here that we see that stock price is not reflecting the value of our assets. That's you saw the leakage so that the offers or let's say the people coming towards us numbers, which were communicated in the press. So significantly for the core business above what we see for the whole group now. And that's why there is communications, but we are completely relaxed and we wait until we get the best possible results for our investors. And we are not nervous on quarters or six months. That is the situation. I hope this answered your question.

Okay, Anna. Then let's take a question more on the number side. Your question, as I understood, was on organic roles in CLASIC. I mean, we reported 8% growth in CLASIC, as I said in the speech. Organic growth out of these 8% is probably in an area of 5 to 6, but that was mostly also supported by business around the federal elections. So the underlying contribution from the acquisition was then like two or three percent of that growth, or two, three, I'd say one quarter to one-third of the growth recognized in classic. On programmatic public video, the absolute amount of sales generated in Q1 in that revenue stream was round about 30 million, 3.0 million euro. And usually if you look at the consolidation position of group sales, that is usually a very good indicator for the programmatic public video sales. The prior number was around 22, 2.2. So 30 against 2.2 is on programmatic public video. Then you had a question on the different dynamics within the digital media business. And I think Christian already had that question and answered it before. We saw actually, I'd say, a better sales trend when it comes to T-Online, which is our owned assets, where we sell actually Internet ads on our own property. And this is, as you know, the general news media platform. And we had some pressure on the business where we rather work with third-party publishers and sell ads on their inventory. And these are basically not general. That's rather more specialist interest, special interest news outlets. And that was a bit tougher and probably also consistent with a tough online ad market development as we mapped out. Also one of our first charts, you see that the online ad market in Germany was also going south a bit. On capex, basically what we said for the full year is that we rather expect slightly increasing capex. So I think now capex being down in Q1 should not be seen necessarily as an indication for the year. We will also still have to apply some capex on the assets of RBL to finalize the buildup of the inventory. So the expectation for the full year will be slight increase in capex. And the notion that we're stopping our, let's say, expansion or investment in digital out-of-home is incorrect, right? So we had a peak of investments, I think, coming out of the pandemic. And since then, I would say we are... applying a more opportunistic expansion approach. And we have tried to find the right balance between building up new inventory and getting utilization on the existing inventory up. And that is, I think the strategy for quite some time. And I think we continue to follow that going forward. And then to be honest, I, that was it, or is there anything we've missed?

There was a lot already. Thank you very much. On the capex, maybe you can provide a bit more split, how much do you spend on digital and how much do you spend on the rest, or how much ?

You know, we're not providing capex split by segment. So we talk about the group capex, and it's fair to assume that I would say more than 50% is out of home. I'd say within out of home, At the moment we're probably rather at 50-50 share in terms of, let's say, main.