Prosiebensat1 Media U/Adr

Good morning ladies and gentlemen. Welcome to our Q2 and H1 2026 results conference call of ProSiebenSat1 Media SE. This conference is being recorded. Today's call is hosted by Ms. Birte Stein. Please go ahead.

Good morning ladies and gentlemen. Welcome to ProSiebenSat1 Investor and Analyst Q2 and H1 2026 results conference call. Today's call will be hosted by our CEO Marco Giordani and our CFO Bob Rajan. Marco will start with a performance overview and key transformation milestones. Bob will then provide you with a deeper dive into our financial performance. Going forward Marco will take over again and present the operational performance and share the outlook for the current financial year which we have confirmed today. Following the presentation, we will open the floor for a Q&A session. I now hand over to Marco.

Thank you and thank you all for joining this call. I will take you through, let's say, some slides and then hand over to Bob for the financial highlights. First of all, I would like to underline immediately that our transformation is delivering results and then you will see the details in the P&L. Revenue in the first half was in line with the expectation. Digital and smart revenue grew by almost 6% and that's clearly a combination of joint performance and also other activities performance. Our IBDA grew significantly by 152 million euros in the first half 2026 versus first half 2025. That's clearly mainly driven by cost discipline and focus on savings and efficiency. Our debt was fully under control. At the June end, the debt level was €1,467,000,000. And in terms of ratio and leverage, it was 3.2%. Thank you very much. We deliver on our target of simplifying the portfolio structure. Bob will tell you more about that, but clearly we achieve several disposal. The group now is simpler. As you know, we have segmented the group into main area, the entertainment and the commerce and dating. It's also, let's say, granting a simplification of the management work and it's also giving more accountability to the organization. We have set new performance indicator. The main industrial one is the total video reach. We will talk about that later on. As you can remember, we have a large executive board to Luca Poloni. Clearly that is taking to the board, to the executive board, tech, AI, and digital kind of expertise exactly where we are targeting to. So we are now set for the future with all the capability and all the know-how in the executive board. You probably remember that we also changed the organization. Now we have an organization set for where we want to go in terms of future. that has been live since March 2026 and clearly we had some spot empty at that time that now has been covered so we are fully equipped for the future month and the full year let's say performance. In terms of managing our debt we have let's say repaid a part of our bridge financing as foreseen by our Agreement with the with the financing banks and lastly clearly we are going on and probably also increase the speed on getting synergies out of the larger group we are part of we are going to have the same streaming platform within the six country in first half 2026 that will give not only savings larger than expected but also better Better experience and better performance versus our content providers. All in all, four, let's say, pillars. Certainly, we are now faster in executing things. Cost discipline is our main priority and is also shown by our results, given the fact that our profit clearly increased a lot due to that. We have a simplified governance structure and organization that is allowing us and all the team to be more focused on the strategic priority. Let me now hand over to Bob for a detailed look at our financial and I will be back after him.

Great, thank you very much Marco and good morning to everyone on the call. Marco already alluded to some of these comments, but let's take a little bit of a closer look at the results for the second quarter and the first half of the year. So if we look at the overall results, as Marco stated, we operated in a challenging market and economic environment during the first six months of the year. As you'll see, group revenues amounted to €768 million in the second quarter and approximately €1.5 billion in the first half of the year. While this was, for the most part, in line with our expectations, it represented a year-on-year decline of 9% in both the second quarter and the first half of the year. As we've repeatedly said, the main reason for this was a drop in revenues in the TV advertising business where overall spending has simply fallen. As you know, there is a close correlation between the macroeconomic environment and the company's advertising spending, and the industry is facing structural changes and challenges. In addition, if we all remember, in the first half of this year, we had two large sporting events, notably the Winter Olympics in February and the FIFA World Cup, which just ended a couple of weeks ago. Portfolio changes have been made since the beginning of this year, and this also impacted our revenue development directly. One particular visible example on this is the sale of Studio 71 US in the second quarter, which affected our group advertising revenue reporting line. Organically, taking into account the portfolio and the currency effects, on a like-for-like basis, our revenues declined only by 2% compared with prior year, both in the first half and in the second quarter. And despite this decline in revenues, our group EBITDA increased significantly by €102 million in the second quarter and by €152 million in the first half. This improvement has brought EBITDA back into positive territory following negative results in both Q2 and the first half of 2025. As we've indicated, the development for this EBITDA improvement was primarily driven by a substantial reduction in costs with a large focus on programming expenses. In particular, these were decreased in comparison to prior year. I'll come back to the development of programming expenses in a moment. If you'll also note, personal expenses were also significantly lower in the previous year, declining by €91 million in Q2 and by €117 million in the first half of the year. The prior year number, remember, was impacted by reorganization costs in the amount of €68 million that were recognized from an accounting basis in the second quarter of 2025. The strong improvement in EBITDA has also led to a significantly better EBIT performance. Supported by lower depreciation and amortization expenses and partly resulting from company disposals, EBIT returned to a positive level after losses in both the second quarter and the first half of the previous year. The positive free cash flow before M&A of €27 million in the second quarter of 2026 reflects positive EBITDA development as well as lower programming and other capex, primarily driven by timing and project phasing effects. That's an overall picture of our general financial performance and now let's look at the individual segments. If we move to the next slide with regards to the focusing on the entertainment segment, and remember entertainment is our core business, the entertainment segment revenues were down by 4% in the second quarter and by 6% in the first half of the year. This decline was entirely organic and was primarily driven by weaker advertising revenues. As you'll see, our entertainment advising Advertising revenues decreased by 8% in the second quarter and by 9% in the first half of the year. This once again reflects this industry-wide reduction in TV advertising spending, with advertisers remaining cautious in our current environment. The reduction is driven by both cyclical and structural factors. As you know, the advertising market traditionally reacts early to economic developments. At the same time, we continue to see advertising budgets shift from traditional television towards digital media, and I'll say something about our digital performance in a minute or so. But also remember taking into account from the overall perspective is the sporting events which I mentioned earlier. This definitely impacted viewing patterns and advertising demand during this most recent reporting period. So while the TV advertising revenues declined, our digital and smart advertising businesses continued to grow. Revenues increased by 3% in the second quarter and by 6% in the first half primarily due to the continued growth of JOIN's AVOD business, supported by revenue contributions from external platforms as well as our podcast activities. Looking at the other revenue streams on this slide, we can see that distribution revenues grew by mid-single-digit percentage rates in both the second quarter and the first half of the year, further strengthening the resilience of this revenue stream. Content revenue increased in the second quarter but remained below the prior year level for H1 due to low production activity in the UK during the first quarter. Other revenues delivered strong growth, supported among other factors by the continued expansion of joint subscription business. So that's been a snapshot on our top line. Let's now take a turn and look at the profitability. Despite this decline that I earlier mentioned in our high margin advertising revenues, the profitability of our entertainment business improved substantially. EBITDA increased to €81 million in the second quarter. and a hundred and fifteen million euros in the first half compared with negative EBITDA in the respective prior year periods. Improvement was primarily driven by significant reduction in costs. Total costs fell by 132 million euros in the second quarter and by 182 million euros in the first half. Programming expenses also went down significantly. As part of ProSiebenSat1's strategic shift towards becoming a multi-platform provider and response to changing user behavior and the composition of our programming assets, ProSiebenSat1 has adjusted its amortization policy for significant parts of its programming assets. As a result, since January 1, 2026, significant parts of the licensing rights have been amortized on a straight-line basis over the respective license term, resulting in a lower amortization expense. In addition, our programming expenses, once again, have benefited from our continued focus on using and monetizing content efficiently across various platforms, particularly in the sporting event-shaped environment that included the Winter Olympics and the FIFA World Cup. Programming expenses in the second quarter amounted to €195 million, representing a year-on-year decrease of €60 million. For the first six months, programming expenses declined by €93 million to €404 million. In the first half of 2026, Approximately 65 to 75 million euros and thus the majority of this decline was attributed to the change in the amortization methodology which I mentioned earlier. Lastly, the impact of last year's restructuring projects have also contributed to the significant increase in earnings. If we move to the next slide to talk about our commerce and dating segment, I'll say a few words about its performance. As you will see, reported revenues declined by 16% in the second quarter, reaching €269 million, and by 14% in the first half, reaching €591 million. However, once again, on an organic basis, revenues increased by 3% in Q2 and by 5% in H1, benefitting from strong growth of Flaconi, which more than offset the decline in some of the other segments, primarily the dating and video revenues. Our key growth driver remained our digital platform and commerce business, with revenues increasing by 13% in the second quarter and 3% in the first half of 2026. Performance was, as we said, primarily driven by the affirmation of continued strong momentum of Flaconi within our beauty and lifestyle vertical. And we'll say a few more words about Flaconi later in this presentation. Revenues of the consumer advice vertical declined, and this is due to portfolio effects following the sale of Floyd and Camper Days this year, and the disposal of Verivox last year. As you will all remember from earlier, we have divested six businesses in the first six months of this year, primarily from the commerce and dating segment, and this is why we always refer to organic growth versus the absolute change from year to year. Just following up on that, significant decline in advertising and other revenues was largely related to portfolio changes, as I mentioned, including the sale of Studio 71 US, as well as DisposalVeter.com, ESOM, and Kyreon. All of these have contributed to revenues in the prior year reporting period to various degrees. If we turn to dating and video, we'll see that the revenues have decreased by 29% in the second quarter and by 27% in the first half. This business continues to operate in a very challenging environment characterized by weak consumer spending, not only in Germany and the United States, but as well as intense competition overall globally in the entire online dating market. In particular, social dating revenues remain significantly below prior year levels. If we move to profitability, segment EBITDA in Q2 was slightly negative at minus €2 million and this was primarily due to deconsolidation effects related to the portfolio changes which had a high single-digit million euro impact. For the first half, however, EBITDA improved substantially, increasing by €27 million to €8 million. The earnings development should be viewed in the context of company sales, with the previous year's figures being particularly influenced by the €34 million loss on the sale of Verovox. That now gives you a relatively good comprehensive look at our performances by segment. I'll now continue to look at our net financial debt and our debt maturity profile. If we look at the slide with the strapline regarding financial leverage, we'll see that our net financial debt amounted to 1.467 million euros as of June 30th, 2026. This represents a reduction of 73 million euros compared to June 30th, 2025. This development reflects our positive free cash flow from operations, which more than offset exceptional cash expenses as well as cash inflows from M&A activity. Marco already indicated this but as we're stressing again that our financial leverage ratio was at 3.2 times at the end of the second quarter and well within our target range of 3 to 3.5 set for the end of 2026. On the right hand side of this slide you will see the details of our current debt maturity portfolio. Just as a reminder our financing package includes a term loan with a nominal amount of 1.4 billion euros and a bridge facility with a nominal amount of €225 million, as well as a revolving credit facility of €400 million that has not been drawn in the first half of the year. In January 2026, the term loan was drawn down by an additional €200 million to €1.4 billion and is thus fully drawn down. Also in January 2026, the bridge facility with a nominal value of €300 million was fully drawn. The drawdowns Total 500 million euros were used for the repayment of permissory notes as described below. Furthermore, permissory notes in the amount of 147 million euros were repaid using cash and cash equivalents. In connection with the proceeds from the disposals that we mentioned earlier, we have used certain amounts of these proceeds to pay down our debts, primarily from the sales of Vector.com and Studio 71 US. We have reduced our bridge facility by approximately 75 million euros. and therefore the outstanding balance on the bridge facility amounted to €225 million. You may recall that MFE's acquisition of the majority of voting rights triggered a change of control last year, entitling the creditors to an early termination. As a result, Pro Zebensat times repaid permissory notes amounted to €647 million in January 2026, with the remaining €53 million maturing between 2026 and 2029. At this point, then, I'd like to end my part of the presentation and hand back over to Marco.

Thank you, Bob. And now I will try to take you through some of the main KPI in terms of operation and activity we carried out in the first half of 2026. First of all, looking at the macros, clearly the first part of 2026 didn't help us. As you can imagine and as you know, I mean macros, GDP numbers and consumer climate clearly didn't perform as expected and in that sense we can say that we had a pretty large headwind in the first half of 2026. Having said that, let's say the research houses and the media agencies are still forecasting a pretty strong second half of 2026 as far as the German advertising market is concerned. Clearly, these are just forecasts. Visibility remains very short, and so an uncertainty on the market is pretty large. But having said that, many of the German agencies are still very positive on the second part of 2026. Moving to audience of linear activities, you know that, and Bob also alluded to it, we Two main sports events that affected our audience performance in the first half of 2026. I mean, if you exclude them, at the end of the day, our linear audience has been stable in 2025. Clearly, we use the two periods in which the main sports event was on air, on the public state TV to look at margins, and so cost management in terms of credit was really very strong in that period. But in terms of audience, I think we were pretty Pretty where we would like to be and clearly the second half not affected by sports event will be there will be much more focus on investment in content. Just giving a little bit of a light of a few entertainment and content milestone. A couple of weeks ago we recently announced the launch of a targeted channel called Sat2. That's clearly not only a linear channel, it's a complete experience as far as targeted audience that is not only including linear but also including digital targeted audience. That's part of our strategy to take all our content in a very effective way to our audience and the focus will be clearly on German fiction and factual. cross-platform availability and the key target is a target that clearly advertising investors are looking for and we are sure that Sat2 will expand our linear net reach as far as the channel point of view but also will also help us in the joint growth. The channel and the join windows will be targeted to women aged 50 plus and it's an attractive audience of more than 18 million people and as I said before, we are sure that that will allow us to offer to our advertising investor a better and targeted audience. As far as content is concerned, Clearly, our flagship format continues to deliver strong audience and performance across linear TV and also streaming. Market share performing above channel average and higher than previous season or quarter. And I'm repeating it, we are very happy about the cross-platform performance. Some detailed content example, one is clearly our flagship of German Next Top Model 2026 it's the 21st season in H1 and it remains one of our strongest entertainment brands it was very successful and we had 32 million reach linear plus join in H1 so very very strong 3 million unique user and 4 million followers on social media. Another, let's say, great example is The Race. It's a joint original, so it was mainly designed to serve the streaming people. It's a strong example of how we can combine creator talent and social reach and premium production. We got, in the first half of 2026, 4.2 million total video reach, strong performance on social, and very young targeted group evolving this strategy with over 15 format plan with cross-platform strategy. Looking ahead, our content pipeline for the upcoming months is pretty rich with a strong sports lineup. We will show seven World Championships within the next 18 months. That means more than 2,500 hours of live sports. That's clearly something that was a little bit different from the past, giving to our viewers, to all platforms, a different content experience. That will combine with a balanced mix of successful classics and new programs with great potential. Then moving to joint performance in the first half, JOINT continued to grow with a 7% growth in revenue both from advertising and subscription, significant growth in user and viewing time, just few numbers in KPI. We had the plus 21% versus 2025 in monthly video user and we have a 26% higher numbers in terms of view time. and that's clearly the example of how the platform is growing and it is successfully reaching the new, let's say, streaming targeted audience. We also launched podcast on Join as a new feature and certainly new, let's say, feature will come out with a new platform we will talk about later. Let's say again, another very important event happened a couple of weeks ago was the ZDF partnership. That's the way we see the future. I mean, we are trying to reach agreement with all the traditional media operators in Germany, trying to join forces against platforms and global players. and we clearly announced a couple of weeks ago the new partnership with ZDF that will bring all the ZDF on-demand content to JOIN. JOIN will be clearly an open platform that brings together attractive content for all the audiences. I repeated partnership is key for the future and we will open also to others operators and we will try to offer the largest let's say content and others. That's the main target for the joint people and we see partnership like a win-win situation for viewers, content providers and for all the German media system. I was mentioning before about the new streaming platform. That announcement we have, let's say, published a couple of weeks ago as well. Together with our parent company, we will build a shared streaming platform for all the six countries MFAE is operating in Europe. The technology will be a common foundation that enables greater scalability, efficiency, and innovation. In terms of efficiency, I have to say that The real project and the execution of the project actually granted more savings than expected on paper before starting working on it. At the same time, local brands and local content remain the same. That will be a focus that all the countries will have to dedicate in the future. Platform will be, let's say, a commodity throughout the group, but content will remain the reason for which viewers will look for us. John will clearly receive a new rollout in the first half next year and the German viewers and user will benefit also for a newer feature. Lastly, let's move to Flaconi. Bob mentioned in it the performance in terms of financial has been outstanding in the first half of 2026. Revenue went up by 23%. and that's a significantly better performed than the German premium online beauty market and they reach more than 300 million euros external revenue in the first half of 2026. In that numbers the international shares has been more than 20% with 60% revenue growth from last year. In terms of relevance of Fraconi App, the share is more than 40% and the customer satisfaction is very high, a record high in the first half of 2026, confirming the management capability to pursue growth in that business. Lastly, I would like to confirm the outlook for 2026. We continue to expect a moderate decline in group revenue, adjusted for currency and portfolio effect. However, given the apparent decline in TV advertising market in the first half of 2026, we now expect revenue for the full year in entertainment segment to decrease slightly compared to the previous year. Revenue in commerce and dating segments are expected to offset this development, so In terms of group level, we anticipate a slight organic growth for the group revenue. Growth perspective in the German economy remains limited and visibility in the cyclicality-sensitive advertising market is low and remains uncertain. We remain focused on cost discipline and working and living in a pretty volatile market will be very, very flexible in spending money in the second half of 2026. We expect significant year-on-year EBITDA growth for the full year 2026 supported by consistent cost discipline and further cost reduction and more focused portfolio. Target range for leverage remain unchanged with a range between 3 times and 3.5 times with net financial debt are expected to remain stable compared to the 2025 year end. Our path remains clear, growth through increased profitability. To sum up, we have created focus, accountability, and discipline across the group. The progress achieved in the first half of the year shows that our transformation is delivering results. We are building a leaner, more focused, and stronger proceedings at times for the long term. Thank you for your attention and I'm over for the Q&A session.

Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We will pause for just a moment to allow everyone an opportunity to signal for questions. Once again, to ask a question, please signal by pressing star 1 on your telephone keypad.

It appears that we have no questions at this point of time. Once again, to ask a question, please press star 1.

Our first question today comes from Nysa of Deutsche Bank. Please go ahead.

Great, thank you. I guess my question is on Slakoni. After the strong growth that you've been able to report, could you maybe remind us if this 20% growth could continue in Q3 and Q4? Or at some point, is there a steady state growth that we should think about for Flaconi? And what would the ultimate sort of margin target be for this business going forward? And second, when it comes to advertising, is there Anything specific we need to be mindful of in H2? I guess one of the questions that we're getting also is Q2 advertising was so strong on players that did have the World Cup that there might have been a situation where spending was brought forward from Q4 and given how important Q4 is for broadcasters such as yourselves, is that something to be worried about or in the conversations you're having Do you feel that Q4 could be, like business as usual, kind of quarter? Some colour there would be great. Thank you.

Thank you for your question, Bob. I'll start with the Flaconi question and then the second question I'll pass to Marco. We're very happy, as you can see, with the performance from Flaconi to date and compared to prior year and even in-year. With that growth, we suspect and we believe that the Fulconi growth will continue in the low double-digit ranges from a top-line perspective. That's what we're hoping for. They have a great presence in the market, executing a very good strategy. And so, you know, we have very good high hopes for the continued confidence that they will continue to grow in this direction. I'll pass the second question to Marco.

Thank you, Bob. No, I mean, usually the World Cup effect is enlarging the market. So all in all, we are not expecting the last part of the year being affected by the fact that some investors could have spent money on the World Cup and so will then reduce the investment on the second half. That's what happened traditionally when this big sports event happens. Having said that, the visibility remains very short and so it's very hard to Thank you very much for your time. As far as September, honestly, we don't have visibility and, as I said before, we remain very flexible and being ready to adapt the grid in function of the top-line projection. Having said that, the other comment I would like to make is that last year, last quarter, Thank you very much.

As a reminder, to ask a question, please press star 1 on your telephone keypad.

It appears that there are no further questions. I would now like to turn the call back over to your host for any additional or closing remarks.

So it seems we have no further questions but the investor relations team is available for any follow-up questions of course you might have. Thanks everyone and have a great day.

That will conclude today's conference call. Thank you for your participation. You may now disconnect.