Sto SE & Co. KGaA

Ladies and gentlemen, welcome to the STRER Q3 Figures 2025 conference call. I am Sandra, the Chorus Call Operator. I would like to remind you that all participants have been listened only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. 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, sir.

Dear ladies and gentlemen, dear investors and analysts, welcome to our Q3 call. Let's jump straight into the presentation and give you a brief overview of the developments in the first nine months of fiscal year 2025 and introduce you to some of our news and topics from the last three months. Henning will then comment on the developments and effects of our Q3 figures in more detail. This will be followed by remarks on what we expect for the fourth quarter and the year 2025. As always, we are looking forward to your questions after our presentation. With that, let us start the call with a short overview of our nine-month 2025 developments. Before we look at the main KPIs, a brief introductory remark. After a very solid first quarter with revenue growth of around 5% at group level, Second quarter of 2025 with revenue declining slightly against a very strong prior year figures due to the UEFA European Championships 2024 in Germany. Our third quarter development is a continuation of the previous quarter's development in an environment characterized by political and economic uncertainty. The developments in the first nine months of the year should be viewed and interpreted against this environment. Overall, revenues in the period January to September rose by around 1% to 1.47 billion euro. Organic growth for the period was minus 0.4%. Adjusted EBITDA came in at around 414 million euro compared to 420 million euro in the same period, 2024. Compared with the previous year's figure, EBIT adjusted declined by around 9% due to an increase in DNA compared with the prior year period. Net income adjusted declined on a comparable scale by 10% to €86 million. Nine months 2024 was €96 million. Pre-cash flow adjusted for the reporting period was €19.1 million. nine months 2024 78.3 million euro mainly due to higher working capital requirements especially in out of home as well as in dialogue and statista henning will come back on this detail in his comments in line with our communicative capex strategy which includes a more focused expansion of our digital out of home network and to further optimize the utilization of our digital out of outdoor advertising media CapEx remained on a comparably low level, slightly higher compared to the nine months period in 2024. In total, CapEx was 67 million euro compared to 62 million euro, including the investments in our new flagship screen, the whale, with 342 square meter, the largest screen in Germany in Hamburg main station. Let's have a look at the market dynamics for the first nine months. Major digital platforms continue to perform strongly. Meta has reported 22% growth, while Alphabet, including YouTube, is up 14%, with YouTube alone contributing 13%. These figures underscore the sustained strengths of digital advertising on a global scale. Turning to the German market, the picture is more nuanced. As always, please keep in mind that the Nielsen numbers in the middle of this chart show gross rate card developments and the net revenue, including all discounts, is on average six to seven points lower. The overall advertising market in Germany has remained flat, showing 0% growth again. Traditional media continue to face headwinds. TV advertising is down 4%. while print and radio have seen modest gains on a gross level of 2% and 1%, respectively. Desktop and mobile advertising grew on a gross level by 2%, indicating a slow but steady digital shift. However, out-of-home advertising, or out-of-home, stands out with a 10% increase, demonstrating its resilience and relevance in the two-day media mix. Now let's look at Stoer's performance. Our digital out-of-home segment has grown by 10%, in line with the broader out-of-home market. More importantly, our programmatic digital out-of-home offering has outpaced the market, delivering 13% growth. This reflects the increasing demand for data-driven automated ad solutions and validates our strategic investments in this area. When we combine digital out of home and traditional out of home, Stoer's core business has achieved a solid five percent growth, outperforming many local peers and traditional channels. As Foh mentioned, it is important to note that the figures for the German market are based on gross numbers, which tend to be, as said, inflated by approximately six to seven percentage points compared to net revenues. Our reporting is based on net numbers, ensuring transparency and comparability. If we isolate the same exercise for Q3, the following picture emerges. The major US players were able to slightly accelerate their growth in the third quarter. However, developments in the German advertising market reflect weaker consumer sentiment and the weak macroeconomic environment. The overall advertising market remains at its low level of minus 2% compared to the same period in Q3. Print category declined slightly compared to the previous quarter, and TV marked the low point of this year so far with minus 6% on a gross level. The out-of-home category reports zero growth. However, if we take into account the discounts, it can continue to expand both the category's market share and its share against the largest advertising category, TV, a trend you've seen in the last quarters. Let me briefly show you two examples which exemplary describe the mechanism as well as the efficiency of out-of-home. In the surrounding of cold season, Danone implemented an eye-catching digital out-of-home campaign for Actimel at train stations, specifically during rush hours when large numbers of people gather and the risk of infection is particularly high. The aim was to highlight the relevance of Actimel as a support for the immune system at exactly the right moment and in the right place. The results speak for themselves. Purchase intent for Actimel increased significantly to 38%. Equally impressive is the recommendation rate with an index of 238. Aided advertising recall reached 55% during the survey period, and Actimel clearly moved to the top of mind of the target group. The market research shows that the combination of relevant content, precise time targeting and placement at the point of infection ensures a significant uplift along the entire marketing funnel, from advertising recall to purchase intent. San Pellegrino Lemonade is the second out-of-home campaign we want to highlight. San Pellegrino focused on out-of-home advertising to increase the visibility and awareness of its lemonade products. The communication focused on the natural ingredients of the original lemonade and the full flavor of the zero variety. With its first ever relevant out-of-home campaign in Germany, San Pellegrino has significantly strengthened brand perception and awareness in the lemonade segment. The strong creative implementation, clear communication and high visibility in public spaces formed an excellent basis for further growth and the sustainable establishment of the brand in the German lemonade market. These two examples clearly show that outdoor advertising enhanced with special targeting features not only increases reach, but also reinforces the advertising message, significantly increasing purchase intent and recommendation rates. These features not only convince already established customers and out-of-home fans, but also rapidly win over new customers. As a result, we now have two new important customers in our top 10 digital out-of-home ranking, Lint and Unilever. Continuous development of our digital out-of-home products is part of our DNA, but also an important driver of success. With the impact booster, we've taken another step forward in our development. The data is clear. Digital out-of-home advertising is a true game changer and a powerful impact booster within the media mix. When we combine TV with digital out-of-home, the effectiveness of the campaigns increases significantly. For example, with just two TV contacts, adding one digital out-of-home contact raises advertising recall from 69% to 76%. Similarly, with four TV contacts, supplementing with two digital out-of-home contacts lifts recall from 80% to an impressive 90%. The impact indices IX110 and IX113 underscore this uplift, demonstrating that the synergy between TV and digital out-of-home delivers higher return on media investment than TV standalone. In essence, TV alone cannot achieve the same level of impact as the combination of TV and digital out-of-home. For analysts and investors, this means that integrating digital out of home into the media strategy is not just an option, but a necessity for maximizing campaign effectiveness and driving measurable results. With Social Pulse, we have another example for innovation. It turns public video into an open stage for social impulses, curated by brands and then live by authentic community dialogue. Through a seamless one-stop-shop process, Social Pulse enables brands to translate the dynamic energy of social media into the physical world. Community-oriented brand messages can now reach target groups even outside the traditional social media bubble. The impact is clear. Social Pulse bridges the gap between digital engagement and real-world presence. It empowers brands to amplify their relevance foster genuine community interaction and extend their reach far beyond online platforms. Public video city urban represents significantly forward in urban advertising with over 1190 full motion video screens installed across 21 major cities in Germany. We offer brands a unique and highly visible stage for their messages right in the heart of urban life. These eye-catching screens are strategically placed near points of interest, ensuring that advertising messages are not only seen, but also contextually relevant. The use of striking passepartouts maximizes visibility, making each campaign stand out in the bustling city environment. Public Video City Urban is an excellent example for merging advertising and real-world context, delivering maximum impact and engagement. 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, as usual, with a review of the Q3-25 P&L. In total and against a continuously challenging market context with impaired visibility, the performance of the group in Q3 was characterized by sequential moderation compared to development of the first six months. Compared to Q2, however, organic growth was not the accelerating further. Revenue for the quarter was down by minus 1%. This includes 120 basis points to port from non-organic effects, such as the acquisition of RBL media. Excluding this effect, organic growth came in at minus 2.1%, or 0.2 percentage points better than in the second quarter. EPTA adjusted amounted to 147 million euro, compared to 156 million euro in Q3 24. The exceptional items for the quarter were minus 3.1 million euro, €0.5 million lower as in Q3-24. The exceptional items essentially comprise three components. €1.6 million for restructuring measures, especially at the dialogue business, €1.2 million for ERP transformation, and €0.2 million transactional exchange rate effects, mainly as the US dollar developed against us as a statistic in Q3-25. Accordingly, reported EBITDA was €144 million after €153 million last year. Depreciation and amortization increased from 81 to 84 million euro or by 4%, broadly in line with the development in the preceding quarters. With that, reported EBIT for the quarter came in at 60 million euro, some 12 million euro lower compared with Q3-24. The financial results slightly improved against the same period, 24, to now 17.6 million euro. For the first nine months, the financial result has improved by around 6 million euro, excluding some non-cash effects, mainly from U.S. dollar-dominated internal financing and statistics. The underlying improvement is a little less. Nevertheless, lower rates are still, to some extent, compensated for by around 100 million higher average net debt year over year. Earnings before tax decreased to 43 million euro after 54 million euro in Q3 of the prior year. The tax rate was basically unchanged with about 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 30 million euro after 38 million euro in Q3 24. Adjustments were slightly up by €0.8 million as the increased PPA adjustments due to RBL acquisition exceeded the lower EBITDA adjustments. Accordingly, net income adjusted was €34 million after €41 million in the prior year. Let us now switch over to the cash flow. Our cash flow in the third quarter this year compares against a strong development in the same period in prior year. Last year, almost every line item presented considerable improvements on the back of strong growth supported by the effects of major sports events. Looking at the working capital, the first thing we should remember is that out-of-home media is structurally a negative working capital business. Strong sales growth throughout the first nine months last year also implied good working capital improvements. This year now, with the business basically turning in flat sales in Q2 and Q3, this effect is unwinding. More than two-thirds of the delta of €35 million comparing the working capital outflow of the first nine months year over year is attributable to the out-of-home media segment. The remainder stems primarily from the expansion of our dialogue business and from Statista, where deteriorating inbound subscription sales year over year led to lower deferred income. Based on our outlook for Q4, we think that regarding working capital, the worst is behind us, and we shall see some stabilization going forward. EBITDA and working capital developments explain the development of Q3 operating cash flow for the most part. On top in Q3, we saw 6 million euro higher investments year over year, resulting from the out-of-home segment. For Q4, we are currently expecting an increase of more or less the same amount. Let me come to the net debt development. In the sequential view, from the end of the second quarter to the end of the third quarter 25, net debt was down by roughly 11 million euro. including the adjusted free cash flow for the third quarter of plus €21 million and cash out for minority dividends of minus €8 million. The remainder of around minus €2 million mainly relates to the net effect of higher debt for accrued interest and lower debt for financial liabilities recognized from profit transfer agreements at companies with minority interest. Net debt year over year was up by €150 million to €945 million, including the accumulated free cash flow over the last 12 months of €99 million, cash out for the acquisition of RBL Media amounting to €106 million, cash out for dividend payments of minus 128 million euro, and cash out of minus 13 million for minority dividends. The remaining difference of minus 2 million euro is among others due to an increase of overpayments from customers, plus 2 million euro, and a decrease of accrued interest expenses, minus 3 million euro. With that, our leverage ratio in the third quarter amounted to 2.53 times after 2.1 times at the end of prior year's Q3. Sequentially, from Q2 to Q3, the leverage ratio was broadly stable. 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, against a continuously challenging market context, turned in broadly stable sales. Compared to the second quarter, where growth was around 1%, not a big change, and in line with our outlook for the third quarter. At the same time, though, prior year comps were much easier for Q3, but also the market deteriorated further, in particular if we exclude online and considering industry-wide higher discounts. So all in all, in Q3, we continued to gain share from legacy media outlets and a declining ad market. With that, sales for the quarter came in at €236 million, including a contribution of €5 million from RBL. Our classic business grew slightly from 131 to 132 million euro, while digital out-of-home sales declined slightly by 0.6 million euro. Digital out-of-home continues to account for more than 40% of outdoor advertising sales if we exclude the services. For the cumulative period, digital out-of-home grew significantly by more than 10%, while classic outdoor advertising showed solid growth of 1.4% in the first nine months. EBITDA adjusted for the quarter was down by 1 million euro and includes tight cost control established via a comprehensive cost and hiring freeze in place since late July. Q3 revenue for digital and dialogue media amounted to 206 million euro after 212 million euro in the prior year period. Digital media came in at 103 million euro compared to 112 million euro in Q3 24. Within digital media, sales from our owned assets such as programmatic public video and owned internet content, including T-Online, were almost stable. Revenues from selling ads on third-party assets, however, declined. Dialogue media showed a sales increase of 3.4% from 100 million to 103 million. However, the two dialogue activities, call center and direct marketing, showed still different sales dynamics in the quarter. Our call center activities grew by as much as 12%, and thus more than overcompensated for the sales decline in the door-to-door business, where Q3 revenue was still down, all by showing some stabilization compared to a very challenging first half. In total, the segment EBITDA adjusted for the third quarter came in at 32 million euros. Let me take a moment to explain a few topics about our last acquisition in the call center space. Effective from the beginning of October, we will consolidate the activities of Amevida. Amevida is an established provider in the field of dialogue marketing with a strong focus on sales and sales-related services. We acquired the business in the course of insolvency proceedings for an eligible purchase price. As part of the integration, the acquired business will in future be operated largely from our existing overhead infrastructure. On top of that, we optimize the existing portfolio of locations and renegotiate existing lease contracts. so that altogether we will be able to operate Amavida profitably from day one without incurring any relevant one-off costs. For the full year 26, we shall have more than 1,300 additional FTEs, generating more than €60 million in revenue with an expected mid-single-digit €1 million contribution to EBITDA. In terms of customer structure with that acquisition, we will strengthen our position helping mostly already existing clients in their sales process. As opposed to a few service-related business, this will offer a higher margin potential going forward. Finally, some comments on our data as a service and e-commerce segment with Statista and Assam. Q3 revenue was stable for the segment. Thereby, a decline in Statista was compensated by moderate growth at Assam. Statista's revenue development in the third quarter was slightly up on a currency-adjusted basis. While we are making encouraging progress on the API integration with clients, we are still facing considerable pressure on the inbound platform sales. This is now amplified by impaired visibility on Google following the reduction of Statista content available without paywall restriction and changed user search behavior in the context of AI search. The focus remains on driving demand through efficient and intelligent integration via our API interface. We have already developed a seamless connection between a large number of customer-owned databases and Statista via MCP servers. Bluechip Statista clients move to our new solution Connect, such as leading payment and e-commerce players. Statista will further develop its existing customer base and new clients forward towards these new solutions. Feedback so far is positive, and we are working on a comprehensive pipeline of upcoming integrations. At the same time, we are also intensely working on improving our internal efficiency in producing our stats content. Based on the adoption of comprehensive AI tooling, we will adjust our staff by around 80 employees. For this measure, we will recognize around 3 million euro restructuring costs qualifying as adjustments in Q4. From this measure alone, we shall see PEX improving recurrently by around 4 million euros. Let us now have a look at how Azam performed in Q3. Total revenues for the quarter came in at €46 million or €1 million higher when compared with the same period in 2024. This development was mainly driven by good growth in our business with drugstore retailers, more than offsetting declining online and TV sales. Looking at the cumulative period from January to September, the development altogether still reflects weak consumer sentiment and we do not expect this to change in Q4. Q3 earnings for the segment came in at 10 million euro. And with that, let me hand you over back to Christian for the outlook and some closing remarks.