Prosieben Sat 1 Media

Good morning, ladies and gentlemen. Welcome to the Q2 and H1 2021 results call of ProSiebenSat1 Media SE. This conference is being recorded. Today's call is hosted by Mr. Dirk Voigtlander. Please go ahead, sir.

Good morning, ladies and gentlemen, and welcome to the conference call on the occasion of ProSiebenSat1 Group's financial results for the second quarter of 2021. As in previous quarters, today's conference call will be hosted by Rainer Bourgeon, Chairman of the Executive Board, and Ralf Gierig, Deputy CFO of ProSiebenSat.1. In the presentation, which can be downloaded on our website, Rainer and Ralf will provide a review of the financial and operational highlights of the second quarter. Rainer will then comment on our outlook, which we already increased in the context of preliminary results published on July 19, 2021. The presentation will be followed by a Q&A session. With these opening remarks, I now hand over to Rainer.

Good morning also from my side and welcome to our analyst and investor call on our second quarter and half year 2021 results. ProSiebenSat.1 is on a growth path. After a good start into financial year 2021, we now recorded a very positive second quarter. We are seeing a strong recovery within our portfolio compared to the pandemic impacted previous year. Especially the advertising market has recovered even better than expected. Next to the revenues and adjusted EBITDA, also key performance indicators such as profitability, cash flow and net debt are developing in a positive and sustainable way. We are very pleased with the development of our company and seeing our strategy paying off. Our digital focus, our diversification and our synergistic setup have again been proving their value to the entire group. Today, We will start with a short overview of what shaped our second quarter in the first six months of the year before covering our group financials for the respective periods. We then give you an update on our operational highlights and we will close this presentation with a look at our group strategy and the outlook regarding the full year. The ProSieben.Eins business has been recovering strongly in the second quarter of 2021. First, Our diversification strategy based on three strong segments continues to pay off. We posted a dynamic revenue growth of 48% to 1 billion 48 million euros versus the previous year quarter. In our last 12 months, Q2 2021 group revenues are on a record level of 4 billion 399 million euros. Second, as the advertising market environment normalizes, our entertainment advertising revenues recovered significantly and grew by a strong plus of 55% to 542 million euros. With this, we are already on pre-pandemic level of Q2 2019. Third, in commerce and ventures, we achieved an organic revenue growth of 18% with a broad-based recovery of most businesses. Our dating segment again benefited from the first-time consolidation of the meet group and the growing live video business. Part of it is our product VPath, which we will talk later about. Fourth, Following this dynamic revenue increase, our group's adjusted EBITDA improved significantly and grew more than sevenfold to €166 million. Our adjusted net income increased by €114 million in the second quarter. At the same time, our cash flow and net debt improved significantly and sustainably too, also thanks to our consistent management based on these indicators. Thus, we were only slightly above the upper end of our financial leverage target range of 1.5 times and 2.5 times. Fifth, consequently, and considering a solid economic environment in the German-speaking markets, we have again increased our financial targets for the full year 2021. Also here, I will provide you with more detail later. Slide four provides an overview of the current market environment in Germany. Both the COVID-19 and the macro indicators reveal a strong recovery which has been accelerating in the second quarter of this year. With the increasing progress of full vaccinations to about 50% of the German population, the COVID-19 infection rate has declined significantly in Germany. And just as confidence is growing daily in the private sector, macro indices are also increasing again. EFO business expectations among German companies, as well as the market purchasing managers index, are highlighting the growing optimism regarding the health of the German economy. This image of optimism and a healthy business can also be applied to our business at ProSiebenSat.Eins, On to slide number five. This slide provides you with a good overview on our strong development across our portfolio, leading to a substantial revenue growth of 48%. Thanks to our diversification strategy, we recorded the highest second quarter revenues in the history of ProSiebenSat.1. In the entertainment segment, besides our advertising business, also our content production business, has recovered from the COVID-19 effects, while our crisis-resilient distribution business continued to grow. In the dating segment, we benefited from the first-time consolidation of the Meet Group, especially its dynamically increasing live video business. On a performer basis, we grew by 5% in the second quarter. Also, in our commerce and venture segment, the COVID-19 impacted businesses have started their recovery, which led to a double-digit organic revenue increase in the overall segment. On a reported basis, we are thus almost compensating for the deconsolidation of InstaMedical after its disposal last December. In other words, all signs are set for growth, And herewith, I hand over to our deputy CFO, Ralf Gehrig, for our Q2 and half-year group financials.

Thank you, Rainer. Good morning, ladies and gentlemen, and a warm welcome also from my side. Let me start my part of the presentation with the Q2 and H1 2021 revenue overview for the group and our three segments. ProSiebenSat-1 Group recorded a very strong recovery in the second quarter of 2021 compared to the COVID-19 impacted previous year quarter. Rainer already mentioned the record level for LTM Q2 Group revenues. As such, we also recorded the highest second quarter revenue figure in the Group's history with a revenue growth of 48% to 1 billion 48 million euros. The main driver of this development was a dynamic increase of the group's advertising revenues, which have recovered even more strongly than expected from the impact of the COVID-19 pandemic. At the same time, other business areas have contributed to the strong revenue growth, which once again underlines the strengths of the group's diversification strategy. In addition, The first-time consolidation of the meat group contributed here. On this basis, H121 group revenues grew by 22% to €1,986,000,000. This set entertainment segment revenues increased by €261,000,000 to €736,000,000 in Q2 2021. Advertising in the German-speaking region and globally is representing the largest growth driver with revenues of 542 million euros. Due to the strong development in the second quarter, the entertainment segment also recorded very solid revenues of 1 billion 346 million euros in H1 2021. While the non-advertising-based distribution business continued to be a steady revenue growth driver with an increase by 9% in Q2 2021 as well as in H1 2021, the content business recovered significantly from previous COVID-19 impacts. Program production and program sales revenues more than doubled compared to the previous year and increased by 64 million euros to 124 million euros in Q2 2021. As such, content revenues were already above pre-corona levels. Also in the first six months of 2021, program production and program sales recorded a significant increase of 82 million euros or 56%, to 227 million euros. The strong revenue performance of the dating segment from 58 million euros in Q2 2020 to 139 million euros in Q2 2021 and from 117 million euros in H1 2020 to 280 million euros in H1 2021 can be attributed to the first time consolidation of the meet group in September 2020. On a pro forma basis, i.e. taking into account the Mead Group's currency-adjusted revenues for Q2 2020 and H1 2020, revenues have grown strongly by 5% and 19% respectively, with the Mead Group recording particularly high user numbers already at the start of the pandemic last year. Organic revenue growth of the commerce and venture segment, reflecting the disposal of Winston Medical in the beauty and lifestyle vertical in December 2020, increased by 18% to 172 million euros in the second quarter of 2021 and by 13% to 360 million euros in the first half of 2021. As a reminder, WinStar Medical contributed €29 million to segment revenues in Q2 2020 and €61 million to segment revenues in the first half of 2020. Overall, segment revenue growth was again driven by the online duty provider Flaconi. In addition, the consumer advice vertical started to recover after the COVID-19 related impact on its business. Lastly, the advertising business in this segment grew very satisfactorily by 42% and 15% in Q2 and H1 2021, respectively, driven by seven ventures and continuing growth of markguro and wetter.com. Please turn to page 8. The group's adjusted EBITDA mirrors the before-mentioned dynamic revenue performance. On a quarterly basis, it has increased more than sevenfold and now amounts to 166 million euros. Especially the entertainment segment, with its high-margin advertising business, had a significant positive effect on the group's earnings. For the six-month period ended June 2021, this translates into an adjusted EBITDA growth for the group of 71%, from 180 million euros to 308 million euros. This said, the entertainment segment achieved an adjusted EBITDA of €142 million in Q2 2021, after only €3 million in the prior year's quarter. As already mentioned, this can mainly be attributed to the advertising business, which recovered strongly from the negative effects of the COVID-19 pandemic in Q2 2021. In addition, revenue growth in the content and distribution businesses had a positive impact on earnings. H1 2021 entertainment segment adjusted EBITDA also grew strongly by 65% to €239 million from €145 million in last year's six months. However, this was partially counterbalanced by increased programming spend in Q2 and H1 2021. Q2 programming expenses of 262 million euros exceeded the prior year's level by 30 million euros and were also about 30 million euros above the level of Q2 2019. In comparison, H1 2021 programming expenses grew by 4% or €18 million to €489 million. The dating segment also recorded a significant increase in earnings. Adjusted EBITDA grew by 81% to €28 million in Q2 2021 and by 95% to €61 million in H1, benefiting from the first-time consolidation of the meet group. Whilst Q2 2021 was impacted mainly by the deconsolidation of WinStar Medical, adjusted EBITDA of the Commerce and Ventures segment shows very solid growth in the first half of 2021 and recorded an increase by more than 30% despite the deconsolidation effect related to WinStar Medical. Please also note that we again expect the lion's share of the segment's profits to be generated in the fourth quarter. Last but not least, the reconciliation result for the first half year 2021 came in stable at minus 11 million euros. Please now turn to page 9. Given the strong increase in adjusted EBITDA, reported EBITDA also multiplied by 7 times to 151 million euros in Q2 2021 after 21 million euros in Q2 2020. EBIT improved to 83 million euros in Q2 2021 compared to minus 35 million euros in the previous year, benefiting mainly from the improvement of the adjusted EBITDA. The substantial improvement in reported net income is both attributable to better operating profitability as well as a capital gain related to seven ventures participation in About You, which went public in June 2021. Displacement and the value appreciation of the remaining shares resulted in a gain of 60 million euros, recognized in other financial results. Besides that, other net positive valuation effects in the amount of 17 million euros support the reported net income in Q2 2021. Please note that all valuation effects have been adjusted accordingly. Despite this, adjusted net income also grew significantly in the second quarter of 2021, increasing to 63 million euros versus minus 52 million euros in Q2 2020. This positive swing by 114 million euros primarily reflects the positive development of adjusted EBITDA and improvement of the adjusted financial result, which improved by 15 million euros on a year-on-year basis. For the first half year, all earnings metrics just mentioned improved accordingly, as can be seen on this slide. As such, adjusted net income, for example, posed a strong growth of 93 million euros from 7 million euros to 100 million euros. Last but not least, the group's adjusted operating free cash flow increased more than sixfold and amounted to 87 million euros in the second quarter of 2021. The high increase follows the growth of adjusted EBITDA, but is partly mitigated by the offsetting revenue-driven development of working capital compared to the prior year quarter and the postponement of investments from the first quarter of 2021. In the first half of 2021, adjusted operating free cash flow also increased significantly to 169 million euros. This positive development was mainly due to the group's high earnings growth in the second quarter. Let us now have a look how this translated into a change in financial leverage and net debt on page 10. Thanks to strong cash generation, the Group's net debt at the end of the second quarter amounted to €2,156,000,000 and hence could be reduced by about €200 million compared to the end of Q2 last year, despite the dividend payment of €111 million in June 2021. As a result of the net debt reduction, as well as a meaningful increase of Group-adjusted EBITDA in the last 12 months, Financial leverage has clearly improved, now showing a ratio of 2.6 times at the end of Q2 2021, improving from 3.6 times in Q2 2020. Since we expect the lion's share of the free cash flow to be generated in the fourth quarter, net financial debt is expected to reflect this accordingly. Under consideration of our new adjusted EBITDA target for full year 2021, which Rainer will reflect on in the outlook section in a few minutes, we also expect the financial leverage to improve further. At this point in time, we expect the year-end financial leverage to be at the upper end of our target range of 1.5 times to 2.5 times net debt to adjusted EBITDA. Before, we had expected year-end financial leverage to be slightly above or at the upper end of the target range. With this, I hand back to Rainer.

Thank you, Ralf. ProSiebenSat.1's group continues to consequently drive forward its sustainable strategy and is developing more and more into a digital group. Our operational progress is also reflected in the group's financial performance, as Ralf Gierig just explained. Let's now take a closer look at our three segments. On slide 12, you can see that the TV advertising market in Germany has recovered from the pandemic rapidly and stronger than any other medium. TV clearly continues to be the number one in the media mix, attracting almost twice as much advertising budget as the number two in the news and ranking, which is print media. Altogether, TV advertising spending grew by 10% to 7.4 billion euros in the first six months of the year. Main driver was, of course, the second quarter with a significant rise of 27%. The next slide shows the distribution of TV advertising spending across the industry sectors. With the ease of the COVID lockdown measures in Germany, almost all industry raised their advertising spending in the second quarter in order to benefit from the people's returning desire to buy. Unsurprisingly, the industries that were in particular hit by the lockdown are showing the biggest plus here. Besides the automotive sector, which grew its Q2 spending by 189%, these are, for example, the beverage and food industries. But also, the number one industry in ad spending, cosmetics and toiletries, continues to recognize the importance of TV advertising and appreciates the reach that only the medium TV can offer. As you can see, other important sectors, such as services, are still behind their previous year spending, which represents further catch-up potential for us. How has this favorable market situation translated into our entertainment advertising revenues? On to slide number 14. In the entertainment segment, we have experienced a massive catch-up effect in our second quarter advertising revenues, recording a significant increase of 57% in the German-speaking countries. The strong Q2 development clearly compensated for our advertising revenue development in the first quarter of this year, which was still impacted by the economic effects of the pandemic. In the first half year of 2021, our entertainment advertising revenues grew in total by 14%. And this positive trend also continued in July, mainly driven by a high demand from the food, farmer, and service industries. With this performance, we continue to lead the German TV advertising market with a gross advertising revenue share of 37.6% in the first half of the year with regard to the last 12 months. At the same time, we also continue to be the number one on the German TV audience market. In our target group of 14 to 49-year-olds, our station family recorded an audience share of 26.2% with regard to the last 12 months. Thus, this also puts us in the pole position in terms of viewers. This leading position of ProSiebenSat.1 is even more remarkable as the public TV stations were at the same time broadcasting the UEFA European Soccer Championship, the major event for viewers and advertising customers in our country. We are also raising our focus on sports in order to further strengthen our number one position in the market. Let's move on to slide 16. The strong advertising demand and our leading market positions prove that our customers appreciate our content. Our focus is clear. We invest in local, live and relevant content and thus strengthen our reach on our linear and digital platforms. Next to big entertainment shows such as Germany's Next Top Model by Heidi Klum, sports play an integral part in this strategy as just discussed. After broadcasting the successful Formula E races and the UEFA Under-21 Championship, our sports team is now completely focused on the German Bundesliga. The first match of the second division was two weeks ago and saw a market share of 16% in our target group. Now, we are all looking forward to the first match of the first division, which will be on August the 13th. With all this, we managed to increase our local content share by 16% in Q2 alone and are now further increasing local slots in our channel grids. Based on this attractive content, we continue to expand our advertising innovations in order to improve monetization. For example, our new license-based total video solution C-Flight makes the different media qualities of TV and digital for the first time directly comparable. And our joint venture D-Force now provides for the first time a solution for programmatic addressable TV spots in the German-speaking advertising market. The growth of our distribution revenues of 9% in the second quarter is another proof of how successful our focus on unique local and live content is. Slide 17 illustrates how TV is getting more and more digital. Today, we reach 61 million linear TV devices, of which 12 million TV devices can be reached via the hybrid broadcast broadband technology HWB-TV. 11 million unique users can be addressed via our TV websites, apps, and join. With the numbers of digital devices increasing, we are also more and more able to better target advertising campaigns to specific customer groups. For our advertising clients, we are working on campaigns to play automatically in the exact moment on the right device, ensuring that the brand's message finds its targeted viewer as many times as desired. In other words, we are creating convergent video advertising products across all available platforms. Furthermore, addressable TV allows us to target specific groups by socio-demographic criteria. We are able to further drive this digitization of TV advertising because we combine our own inventory and tech with a comprehensive data offensive. This allows us to analyze how our content is used and further optimize our customers' advertising experience on this basis. This is another step in developing ProSiebenSat.1 more and more into a digital group. On to our dating business on slide 18. In the past calls and discussions, we have already talked a lot about the various synergy options linking our dating with our entertainment business. and Parship Meat Group's expertise in live video streaming. Today, let's take a look at the technology that enables our live video product VPaaS. Of course, we are using this video platform as a service solution for our own offerings, but we also make it available to third-party companies. And this is growing into a considerable business for Parship Meat. Eight brands are currently using or about to launch VPaaS. These include some of the world-leading dating apps, but also from outside the dating industry. And we continue to receive broad interest for this product. What is important? With VPaaS, we are not only offering our partners a live video solution, but also a whole package including moderation, talent management, performance variety, as well as a gifting model for monetization. The successful commercialization of VPaaS supports the positive development of our social dating business. In total, on a performer basis, our dating segment with Parsha Meet Group grew revenues by 22% and adjusted EBITDA by 27% in Q2 last 12 months, 2021. This shows again how Parsha Meat Group supports the diversification of our business. As you know, our dating business emerged from our commerce and ventures portfolio. We will discuss the second important component of our diversification strategy in more detail on the next slide. As in our entertainment segment, we saw strong signs of a recovery in the commerce and ventures segment driven by the rebound of COVID-19 impacted businesses. For example, our car rental comparison business Silver Tours increased its booking by 68% compared to the previous year. And the segment's advertising business recorded an increase of 42% in revenues. In total, our commerce and ventures revenues thus grew by 18% in Q2 2021 on an organic basis. With regard to our investment unit, you can see on slide 20 how we further expanded our investment portfolio in the last month via our investment vehicles 7 Accelerators, 7 Ventures and 7 Grows. Whether it is smart watches provider Explorer or the sports and well-being platform Urban Sports Club, What they all have in common is a highly digital business model combined with a strong ability to grow their business via TV advertising. With our Media for Equity and Media for Revenue deals, we offer those growth companies advertising time combined with the high reach and strong impact of the medium TV in order to increase brand awareness and ultimately enterprise value. The growth case of About You shows how much added value our investment activities can create. Since 2016, we have been invested via Seven Ventures, supporting About You on its path to become one of the fastest growing fashion platforms in Europe. Via a media for equity deal, we helped raise the company's brand awareness using the entertainment and media power of ProSiebenSat.Eins. In addition to targeted advertising campaigns on our group's high-reach channels and platforms, we developed several successful branded entertainment formats for About You, such as weekly TV shows, and established an own annual award ceremony for social media personalities with the About You Awards. Now, after About You's successful IPO, We remain invested with about 1.4% and also continue our media partnership. Before we get to our financial outlook, let's take a look again on our group strategy on slide 22. We have been systematically digitizing and diversifying our business for years in order to make ProSiebenSat.1 less dependent on the volatility of the media business. Today, We have a highly digital business model that differentiates us from poor media players. ProSiebenSat.1 is based on three strong segments. The entertainment segment follows a platform-independent approach responding to the changing viewers' habits, and we create even better monetization with our convergent advertising innovations. Within our dating segment, We are building an ecosystem across social entertainment, online dating, and matchmaking. In this context, Parship Meet Group offers great synergy potential, whether within the company or with the entertainment segment. And in the commerce and venture segment, we bundle our investment businesses from seed financing to strategic long-term investments and build up brands with our high reach and our advertising opportunities on our platforms. To sum it up, ProSiebenSat1 has a very diversified and yet synergistic group profile. Our strategy is clear. We want to continuously combine entertainment, dating and our business with digital consumer brands and in particular use our entertainment strengths to drive our digital growth businesses forward. This way, we further leverage synergies within the group expand our diversification, and thus develop more and more into a digital group. The revenue split on the slide underlines that we are no longer a pure media company, as our entertainment advertising revenues in our core German-speaking markets are now only representing 45% of our total group revenues. And we will continue to further boost our other revenue streams beyond advertising. Slide 23 clearly points out that this strategy is paying off. Despite a more meaningful negative impact of the COVID-19 pandemic on the entertainment segment and some other parts of the group, with revenues of the last 12 months of 4.4 billion euros, we have already exceeded the pre-crisis level of financial year 2019 by more than 250 million euros. This means a revenue CAGR of about 4%, which is also close to the development in the decade prior to the Corona crisis. In terms of adjusted EBITDA, the total of the last 12 months of 834 million euros has still been 38 million euros below the level of financial year 2019. This, however, also reflects the adjusted EBITDA decline by 46 million euros in the entertainment segment in Q1 2021, which was still burdened by the COVID-19-related lockdown in Germany and its negative impact on our advertising business. We are therefore optimistic that the profitability of the group will further improve in the future, even under consideration of continuing investments in our businesses. The chart on this slide also shows that the last 12 months provide a very solid foundation for our increased financial targets for full year 2021. This leads me to slide 24 and our financial outlook for full year 2021. As already announced on July 19th and following our strong revenue and adjusted EBITDA growth in the second quarter, we again increased our full year outlook compared to the outlook published on May 12th on the occasion of the quarterly statement for the first quarter 2021. In total, we are now targeting for full year 2021 without further portfolio changes, revenues of 4.4 billion euros at the lower end and revenues of 4.5 billion euros at the upper end of the target range. The revenue growth would thus be in a range between 9 and 11 percent compared to the previous year. The range of the revenue target figures continues to depend particularly on the development of advertising revenues in the region of Germany, Austria and Switzerland in the context of the further course of the COVID-19 pandemic. we now assume a growth of 3% in advertising revenues for the lower end of the revenue target range and an increase of 7% for the upper end. Based on these revenue assumptions, we now anticipate a group-adjusted EBITDA without further portfolio changes of around 820 million euros for the full year of 2021 with a variance of plus minus 20 million euros. This corresponds for the midpoint to a year-on-year increase of 16%. Reaching a midpoint of the now-targeted adjusted EBITDA target range as well as after a very positive cash flow development in the first half of the year 2021, we now assume that the adjusted operating free cash flow for the full year should improve in an at least mid-double-digit million-euro range compared to the previous year. In this context, we also assume lower than originally expected leverage ratio at the end of the year. Thanks to the consistent management and the associated improvement of relevant key earnings figures, as Ralf already mentioned, we now anticipate to be able to achieve a leverage ratio at the upper end of our midterm target corridor between 1.5 and 2.5 times already for the year-end 2021. depending on business performance and not including any portfolio changes. The increase of the revenue and adjusted EBITDA target ranges also has a positive effect on our other most important financial performance indicators. We continue to expect that our adjusted net income for the full year should be above the previous year's figure of 221 million euros. Accordingly, the dividend payment to the shareholders of the group would also increase as it is based on this key figure. And we continue to target a ProSiebenSat.1 return on capital employed of more than 10%. In the midterm, we expect the ProSiebenSat.1 return on capital employed to exceed 15%. I hope I could show you today that we are following a clear path towards sustainable and profitable growth in all segments. First, we have a unique, highly digital business model. With this, ProSiebenSat.1 is so much more than a pure media company. By combining entertainment, dating, and commerce and ventures, we deliver above average growth rates. As I showed you earlier, Last 12 months, Q2 2021 group revenues already exceed our full year 2019 revenues, an outstanding performance compared to most pure media companies. Second, all our segments are set for further expansion. We continue to realize meaningful synergies using our entertainment and advertising strengths as a springboard to support our portfolio assets. Our thus diversified revenue and earnings profile further secures the resilience of our business. And third, our focus remains on the important performance indicators of operating profitability and cash generation, the reduction of our net financial debt, and the increase of our pro-7.1 return on capital employed figure to over 15%. We will thus create significant value for all our stakeholders and accelerate our developments towards becoming a digital company. Thank you very much, and we are now looking forward to your questions.

Thank you, ladies and gentlemen. If you would like to ask a question at this time, please press star followed by the digit 1 on your telephone keypad. Please ensure that the mute function on your telephone is switched off. to allow your signal to reach our equipment? And that's star one to ask a question. And we take the first question from Julian Rock with Barclays. Please go ahead.

Yes. Good morning, everybody. My first question is on advertising trends in Q2. Rainer, you said that the positive performance continued in July. So could you quantify that? And I suppose you must have some Start of visibility on August, if not September. That's my first question. The second one is, can we get Q2 smart advertising under the new definition, i.e. without Mark Guru and Veta, but with Studio 71 Germany, so either in million euros or the annual growth rate? That is my second question. And then the last one on join, can we get some users or subscribers metrics for Q2? I know Agoff has a cookies problem, but you must have some internal measurement. And also, have you had any discussion with Discovery? They've launched Discovery Plus in Germany, so they have two SVOD offers, which creates a bit of a conflict of interest. Thank you.

Thanks, Julian. I start with the first one. First of all, entertainment, DACH, so Germany, Austria, Switzerland, advertising revenues in July have increased by about 40% on this mainly driven by the high demand from the food farmer and services industry. So that shows that the trend which we have seen in the second quarter also works on to the third quarter. So please have in mind for August, and that's only a trend, as you know, because we are at the beginning of August. Last year, August was already a good month, you know, because there the pandemic was the first time a little bit better. We believe that August, which, as I said, you know, didn't even decline last year, should increase, in our opinion, with a high single digit number versus prior year. And when you then look on July and August and compare that to the 2019 level, you should expect both to grow by a low double-digit number. And I think that shows you how good our positioning currently in the German market is, how successful our strategy with local content and so on is. And that's what I also have to say. The third quarter is mainly a September quarter because half of the sales in the quarter will come out of September. And always was the case like that. And that's the reason why September will be relevant too. We don't have a good visibility, but when I look on the discussions, when I see how performance overall is, I don't have a feeling that this is weakening. And that's, by the way, the reason why we increased our guidance for the year-end. So when you calculate it, that means that especially in the second half, we should be pretty similar to that what we reached last year in the second half, which is strong with all the recovery effects which we had, which we don't have this year because we already had a very strong second quarter. As you have seen, it's a record quarter. Therefore, it shows how strong our entertainment business is. Ralf, you want to answer the second one?

Good morning, Julian. I'm taking your digital and smart question. In the second quarter, the growth was roughly 50%, so very solid growth. in line with all other advertising-driven KPIs and also showing that we are making the necessary progress on that front as well. Does this answer your question?

There is one on join that uses a subscriber matrix.

I take the join question. So first of all, GDPR numbers are not available currently because this is the case. But I would say when I look at our internal numbers, this is a trend like we have seen that also in the first quarter. So that means approximately between 3.5 and 4 million subscribers. Not paying subscribers, that's what I'm not talking about. This is a low number. You know that our business model is based on AVOD. and we only have a small subscriber base included into it and that also will be our business model further on because we totally believe that AVOD is our future for JOIN. We don't see, by the way, a conflict with Discovery and their product as nobody sees also conflict in us providing our content on several platforms and that's a normal situation so we have this platform 50-50 joint venture join and that's totally okay for us if Discovery comes into our market with their own offer as we have also offers in that market with our TVCs or when distribution customers ask us only to provide our content into it that works pretty well because 50% of the usage of Join is also linear TV, and that's the reason why Join is an aggregation platform compared to a poor content platform somewhere else or in our distribution deals. So at the end of the day, there is no problem for us, and we have a partnership which works well. But again, overall, it's more or less that we share tech and that's also the point for everybody else in that market. I already said that in an interview. I'm only asking the question if RTL would be interested to get on our platform, for sure. We would offer that because for us, as more content is on, as better it is, like all the public broadcasters are on join with all their stuff, including their media takes and so on, and that's very helpful. So similar trend for JOIN as you have seen it in the first quarter.

Okay. Wunderbar.

Danke.

Thanks.

Thank you. And we take our next question from Annick Maas with Exxon BNP Paribas. Please go ahead.

Good morning. My first question is on the dating segment. If you could comment on the organic trends you are seeing in Q3. My second question is on sea flight, and it might be slightly early, but have you seen that, you know, due to the easier booking and, I guess, streamlined measurement, some clients of yours have raised their budgets with you on the back of the sea flight initiative? And then, finally, if you could isolate how much revenues you make from VPAS, that would be amazing. Thank you.

I start with VPaaS. We won't provide numbers there because that's too early and as you know when we are doing an IPO then we have to think about what will be our segment reporting and therefore we haven't made our decision here and that's the reason why I'm not providing numbers here. But as we said in our speech, it's a very interesting business model because it's not only in the dating It also can be in other sectors that we provide customers with this B2B product. C-Flight, very good takeoff, very early in the process, but we have big customers of ours who are very interested in that first bookings in. Good numbers, and that really convinced us that the strategy which we are running here in getting more and more digital products and to offer these kind of products and also based on measurements and more reliability what you deliver is the right way forward. Also one of the reasons why we always say that we are changing the company to a more digital company compared to a pure media company where we see lots of others. So our orientation is for advertising more or less what Google, Facebook, and all the others can do.

Sorry. And dating, yeah, it's too early for a trend in the first quarter, in the third quarter. Sorry. Okay, thank you. But what we can say is when you look on the comparable numbers in the second quarter, please have in mind, especially for the meat group, that with the pandemic, the data, the growth and usage was increasing a lot. And that's the reason why our organic figures doesn't look so strong, especially in the second quarter. But we are totally in line you know, with growth and all the other expectations which we wanted to reach. And lots of the analysts have forecasted it very well.

And that's clearly what we also look in. So we are very happy with the business. We are very happy with the trends.

And we totally believe, you know, that also VPaaS is an opportunity going forward to be, yeah, also more successful than other areas where, Several of our competitors don't have these kind of products.

Okay, thank you very much.

Thank you. And as a reminder, ladies and gentlemen, to ask a question, please press star 1 on your telephone keypad. And we are taking our next question from Sarah Simon with Berenberg. Please go ahead.

Yeah, hi. I've got a couple of questions. First one was, Do you have any numbers for total minutes consumption across the various platforms? I had a quick look. I couldn't find that number. And if you could tell us how that compares, say, year on year in Q2. Second one was, you know, historically, free-to-air broadcasters have said that sports was not something they could do profitably. but we're seeing more and more that broadcasters are now starting to buy sports rights, again, recognizing that the live and the sport is what still brings in big audiences. Do you think, I mean, recognizing the operational benefit of having that, but do you think that financially things have changed such that you can make money from live sports like the Bundesliga? And final question would be on exceptionals, which still stay kind of quite high. What do you think is a normalized level of exceptionals that we should factor in kind of every year?

Thanks So let me start with the first one You know across all platforms we had approximately a high single digit decline that has to do with the situation with the huge sport right European Championship, which we didn't show and For sure, you know, that was very negative on our performance. We expected that, by the way, so this was also no surprise. And on the other side, we got so many advertisers getting into it because they also expected it to be on that level. SportsRide overall is something, in our opinion, when you play this game, as we said, regional, live sports, all this kind of stuff is good. you shouldn't overpay. And I said last year when we bought the Bundesliga rights, you know, that we didn't overpay. You can see that because I don't have a provision for contingent losses. So at the end of the day, it shows you we are able to monetize it. But these kind of sport rights differentiate you too. And you could see that especially our distribution business is growing with a high single-digit number. And therefore, you need some formats which nobody else has, is not able to show, because that really differentiates you. And then people are ready to pay for it. And when you are running an AVOD business, then HD and other stuff are also relevant, upgrades to get more money. And that's also very helpful if you have rights where you need, besides an SD connection, also a higher value connection, even UHD, because then you can see the ball and it's not a pixel picture. And that all helps you in the negotiation in the distribution business. That's very helpful to differentiate. And when you then have... Children haven't seen the Bundesliga start of, and this time it's the 13th of August, it's Borussia Mönchengladbach against Bayern Munich. So that's one of the best matches for the whole season. If you can't see it, you know, you will have a problem. But, you know, we have other formats like Germany's Next Top Model, similar situation and so on. And that's how our business model works. It's, you know, for these kind of services like Germany's Next Top Model, it's the windowing you know that this show is shown at 8.15 in the evening up to 11 o'clock. Your children are not allowed to watch it, but they can see the replay on join directly after the show in the morning. So before they go to school, they have the allowance. Their parents really don't know sometimes due to the fact that this is not a pay model. It's a little bit of advertising around it or in the middle of it. And that's how we try to change our business model in that direction. And therefore, sports plays an important role, not for every price. You could see that. But only one other example, you know, we also go to theoretical minor sports, right, in the past, like NFL. Nobody would say it's a minor sport, right? But, you know, for Germans, several years ago, it was. And then we developed the sport, right, with our smaller channels, like 7Max. up to the point that you can see then the whole season on ProSieben several years later because you train the customers that this is interesting, that this is live, and that's how we do it. Same for the German or the European Championship for the U21. Also a small ride in price, but a great ride on TV when the Germans win. At the end of the day, you have to play this game of buying rights and going in a direction. Some rights are more or less also good for advertisers. Take our Formula E rights, especially for the car manufacturer. That's a very important right because they advertise in that space. You have so many different manufacturers in that series too. That's what we also do. We learn together. And we get it up, and then we develop it, and our partners are also very happy about it. So we think spot rights, to come back to your original question, can be profitable, but you shouldn't overpay. And that's our target. We always calculate stuff, and we are not ready to overpay. Exceptionals, that's something for you, Alf, I think.

Morning, Sarah. Happy to take your question. I mean, we have recorded 15 million... so far and the number can be maybe difficult to forecast obviously because exceptionals are exceptionals. Let's say 30 million or so just to guide you at this point in time.

And do you think that's a realistic number for future years as well?

Yeah, well obviously exceptionals are difficult to plan. They have to be recorded if and when The reason for an exceptional item is there. But for modeling purposes, I think it's probably a good assumption.

Okay. And please have in mind, you know, when you look on 8 million out of this exceptional comes out of Parship meat. And, you know, the possible IPO and the valuation. Because that's, especially for the ways of these people, honestly a positive message, not a negative one. Yes, it's an increase on cost. On the other side, it's an increase in valuation, which shows that there is more value based on the current situation. If you're convincing your auditor that this has more value, at the end, it's not a negative message in that case.

Great. Thanks.

Thank you. Thank you. As we have no further questions, I would like to turn the call back over to our hosts for any additional or closing remarks. Thank you.

Okay. Thank you, operators. Ladies and gentlemen, this was the last question for today's call. As always, my colleagues in the investor relations team and myself will be available for any follow-up questions shortly. Thank you and goodbye.

And that will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.