Nielsen N.V. Ordinary Shares

Thank you very much for your patience. The call will begin shortly. If you'd like to ask a question at the end of the presentation, please press star 1 on your telephone keypad. Thank you for your patience. Thank you. Thank you. Thank you. Ladies and gentlemen, good morning and a warm welcome to the Q1 2021 Nielsen Holding PLC Earnings Conference call. My name is Louisa and I'll be co-operating this call. If you'd like to ask a question at the end of the presentation, please press star 1 on your telephone keypad. I will now hand over to one of your hosts, Sarah Gubbins, Senior Vice President, Head of Investor Relations, Treasury at Nielsen. Sarah, you may begin.

Good morning, everyone. Thank you for joining us to discuss Nielsen's first quarter 2021 financial performance. I'm joined by our CEO, David Kenney, and our CFO, Linda Dukakis. Our COO, Karthik Rao, will also be on for the Q&A portion of the call. A slide presentation that we'll use on this call is available under the events section of our investor relations website. Before we begin, I'd like to remind all of you that our remarks and responses to your questions today may contain forward-looking statements, including those relating to our business plans and 2021 guidance and the impact of COVID-19. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, May 6th, and we are under no obligation to update. Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties, including those identified in our disclosure filings and materials, such as our 10-K, 10-Q, and 8-K reports, and in subsequent reports filed with the SEC, which are available on our website. We assume no obligation to update any forward-looking statements except as required by law. On today's call, we will also refer to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available in the earnings press release, which is available at the investor relations section of our website at Nielsen.com. For Q&A, as always, we ask you to limit yourself to one question so that we can accommodate everyone. Feel free to join the queue again, and if time remains, we will call on you. And now to start the call, I'd like to turn it over to our CEO, David Kenney.

Good morning. Thank you for joining our first quarter earnings call today. We delivered a solid first quarter, building off the strong momentum and execution you saw from us in 2020. We have the right leadership team in place, a deep bench, and we are building a track record of success. In March, we closed on the sale of Global Connect, and we've now officially embarked on the next new chapter as a new Nielsen. We are uniquely positioned as the essential data, measurement, and analytics provider for the entire media ecosystem with a strong foundation for the future. We are focused on driving new growth from new solutions across all of our end markets, and we are doing this globally. We are undergoing a cultural shift with a growth-driven mindset, and we have a compelling financial model with an improving financial profile. I am really excited about our clarity, focus, and alignment as we move forward with executing on our growth strategy. Linda will review the financials in detail, and I'll provide a high-level look before I review the business highlights. We are very pleased with our first quarter performance. Revenue grew 1.3% year over year on a constant currency basis, or 2.3% organic. Our adjusted EBITDA margins expanded over 600 basis points. Our adjusted EPS of 47 cents increased from 36 cents in the prior year, and free cash flow was $115 million up from the first quarter of 2020. Our teams are executing well. Across the organization, our employees have rallied. It is so rewarding to see all of our hard work and perseverance over the last couple of years begin to pay off. From a macro perspective, we are starting to see some economies and spending gradually open up as pandemic restrictions ease, although this varies greatly by market, and the pandemic is still prevalent. Our colleagues in hard hit areas such as India and Brazil are top of mind right now. We continue to prioritize the safety and wellness of both colleagues as we do with all of our colleagues. I want to once again thank our employees for the resilience and dedication they've shown since the start of the global pandemic. This is a team I'm proud to lead and proud to be a part of. Looking ahead, we remain confident in our ability to deliver on our 2021 growth plan, and we are raising key elements of our 2021 guidance. Now, let me walk you through the progress we are making and driving growth across our three essential solutions. Audience measurement, audience outcomes, and great note content services. Across the board, our product-led strategy has been an important driver of our growth. We are adding new clients and markets while also bringing more services and value to existing clients. Starting with audience measurement, Nielsen One is at the forefront of our strategic priorities. We are committed to providing a single cross-media currency to the media industry in the United States and our markets around the world. Since our launch announcement in December 2020, we've made good progress on the product, our client commitments, and with industry engagement. We have great engagement with advertisers, agencies, platforms, and networks in the Nielsen One committees around both technical implementation and business and currency changes. The currency evolution is important to both media buyers and sellers. We're working with advertising associations, such as the ANA, or Association of National Advertisers, and WFA, the World Federation of Advertisers, on their long-term cross-media initiatives. We are also working across the ecosystem with broadcasters and leading digital players to meet advertiser requirements. And we're focused on ensuring that clients see the value of our innovative solutions both today and in the future. Let me now share some specific audience measurement milestones hit during Q1, starting with client renewals. We are encouraged by renewals in Q1 across both broadcast and digital peer plays with multi-year commitments and price escalators. Our commitment to full coverage, resilient, and comparable cross-media measurement will serve the industry well as it evolves. We launched our identity resolution system in January. As we announced in March, our strategic alliance with Roku substantially expands our footprint of smart TVs and other devices, now nearing 100 million in total. As part of the alliance, our ad and content measurement products will also be integrated into the Roku platform. Last month, we announced the launch of Nielsen Streaming Video Ratings, which provides unique visibility into total viewership and advanced audience demographic insights at the platform level alongside linear TV ratings. Demand has been strong, with seven out of our top ten clients already signed up. Combined with Nielsen SVOD content ratings, which provide ratings at the program level, we now deliver comprehensive streaming performance metrics across program, platform, and streaming category. We are working across our clients to embed Nielsen more easily into their buying and selling workflows. A big first step was relaunching NPower, our measurement portal, as an easier-to-use cloud-based interface. We've also made good progress with always-on digital measurement, which is a significant step towards true, comparable cross-media measurement across digital, linear, and addressable TV. Our recent alliance with Roku will include always-on measurement. There has been some recent press about how the COVID pandemic impacted viewing habits and the resulting ratings. Let me help frame this for you. Without a doubt, the pandemic affected audience behavior. New content production slowed. Sports were sidelined for a while and then had abbreviated and overlapping schedules. Streaming platforms accelerated massively beyond the pre-COVID trends. We were able to perform most of our field work remotely throughout the pandemic, but CDC and state guidelines prevented us from entering panelists' homes, either to sign up new panelists or maintain existing homes. As with any change or disruptive event, such as extreme weather in the past, we recorded our changes with the media rating council or mrc and committed to assessing the full impact of the changes as soon as possible however the pandemic has lasted longer than anyone anticipated we only were able to recently restore full in-home maintenance for the vast majority of communities in recent weeks We have continued to work with the MRC to make sure we had validated data to fully assess any impact. Our panel remains robust and representative, and the integrity of our ratings estimates remains high. I also want to be clear that our panels are foundational to audience measurement. panels combined with big data enable us to provide the media industry with a comprehensive and representative view of consumer media behavior at the person's level with panels as the key truth set. As a part of our broader Nielsen One strategy, we're continuing to invest in and grow our panel and continue to incorporate big data to make our measurement deeper and richer. Let me turn to audience outcomes, where we serve as one of the largest outcomes measurement providers in the media ecosystem globally. We have a broad array of solutions within outcomes and continue to make progress on integrating our portfolio. This simplification will help to improve our go-to-market approach to clients across publishers, platforms, advertisers, and agencies. We continue to grow our business with advertisers across new verticals in the U.S., and globally. Recent wins include Dell, WWE, J&J, Florida Blue, and Hasbro. In April, we launched Nielsen Market Lift, a campaign outcomes measurement tool built on scalable cloud-native platforms. The global launch covers 37 markets, enabling clients around the globe to quickly evaluate the effectiveness and efficiency of marketing campaigns. And we're growing with leading digital players, including Spotify, as we mentioned last quarter. In April, we expanded our relationship with Twitter. a long-standing audience measurement client to help their video advertisers do more robust pre- and post-campaign planning, maximize ad effectiveness, and deliver campaign results with increased speed and agility. Finally, GraceNote content services. GraceNote is the global leader in entertainment metadata, and we are making good progress on our strategy as of the world recognize the increased value of our content solutions. We are developing new solutions to address market needs on a global basis, particularly as content and streaming platforms continue to grow, creating more competition for audiences. For example, we recently launched a new service personalized imagery, which allows linear and streaming TV providers to dynamically display program images that resonate with individual viewers based on their preferences and previous consumption. It's a valuable tool that drives engagement and enables clients to maximize viewership on their platforms. I look forward to sharing additional new GraceNote products later this year. Before I sum up, I want to note that in March, we appointed Sandra Sims Williams as Chief Diversity Officer. You may recall that this is a role I previously held as we worked to make the New Nielsen a truly diverse business. Diversity, equity, and inclusion are crucial to the success of our business, and it remains a top personal priority for me, for the leadership team, and for the Nielsen Board. Sandra's been a great partner since joining Nielsen in January 2020, and I am confident that her leadership, wisdom, and experience will only accelerate our progress. To close, with the Connect sale behind us, this marks our first quarter as the new Nielsen, singularly focused on the media ecosystem. We have made significant progress modernizing our technology and data science, which drives scale and efficiency throughout the organization. We are driving growth from new solutions across all of our end markets, and we are benefiting from the cultural transformation driven by a growth mindset. We have a compelling financial model and our focus on driving improvement across key metrics. Our solid first quarter reflects the strong execution by our teams globally, and we are excited about the opportunities ahead. We have confidence in our ability to deliver on our 2021 plan and our medium-term targets. I'll now turn the call over to Linda to review the financials.