Viaplay Group AB (publ)

Good morning, everyone, and welcome to today's Q4 2025 results conference call. At this time, all participants are in a listen-only mode. My name is Matthew Hooper, and I will be your host today. Joining me here on the call are our CEO, Juergen Madsen Lindemann, and our CFO, Johan Johansson. Welcome, gentlemen. As usual, our presentation will be followed by a Q&A session. and you can find our results materials, including a presentation deck and detailed fact sheet on the investor relations section of our website. We will not follow the slides, but the presentation deck and fact sheet do provide useful information for you. Please be advised that today's conference is being recorded. If you want to ask questions and you are following the webcast, please post your questions in the ask a question box at any time and I will read them out. If you prefer to ask your questions directly, You are, of course, welcome to do so by using your phone keypad. But more about that later when we get to the Q&A session. I will now hand the call over to Juergen to walk you through the Q4 results. Over to you, Juergen.

Thank you, Matthew, and good morning, everyone. So Q4 was another important quarter for us as we made further progress in our strategic transformation. We have met or exceeded the targets that we set out for the performer combined results of Viaplay and the Alente Group for the full year. We completed the acquisition of the remaining 50% of Alente Group in mid-November. This is a company that we know well as an owner, partner, and operator. Back in July last year, we announced that we would buy the remaining 50% of Alente for 1.1 billion SEK. Alente then paid out 500 million SEK of dividends to Tilenor and 500 million SEC to us. So we ended up paying 600 million SEC to Telenor and Q4 to complete the 100% consolidation. We are now in the process of integrating the business and we expect full runway cash synergies of 300 to 400 million from 2027, which will further support our transformational journey, our profitability and cash flows. We have reconfirmed our intention to deliver double-digit EBITDA margins in 28 compared to the 5.3% that was delivered for 25 on a performer basis. This still requires a lot of work in collaboration with partners to agree mutual beneficial B2B distribution terms and prolong content agreements on commercial market terms. We have already negotiated and extended a number of our agreements with content partners and with B2B distribution partners that include Viaplay and our TV channels in their customer offerings. As mentioned, we continue to work with our partners to rethink these relationships so that they work well for both parties moving forward. On the content side, which represent 80% of our OPEX, we have received great and important support from our key partners in order to drive our transformation and to build our future continued partnerships. We have prolonged agreements where we have been able to agree mutual beneficial commercial terms, and in some instances we have exited or replaced the legacy agreement where this has not been possible. The work we have done with our content partners to enhance our product offering resulted in 2% organic growth for our streaming business. Our D2C subscriber base has continued to grow quarter on quarter, driven by our premium sports offerings, while our B2B base has remained largely stable quarter on quarter. As we continue to prioritize value over volume, upper levels were up for both our D2C and B2B bases, again reflecting the growing share of our premium sports offering. Our Q4 programming slate was more attractive and relevant than ever, when English Premier League football, Formula One motor racing, darts, and winter sport continue to drive viewer engagement. Our content cooperation in Norway with TV2 has resulted in growth for our Plus package. Thanks to the support from our partners and within the existing contract terms, we have also now just become the first broadcaster in the world to show all 552 games from the English Football League Championship each year, and we are further extending our coverage of Formula One races, weekends, and winter sports in 2026. On the non-sport side, local storytelling has combined with international formats and new releases to support not only Viaplay, but also our free TV channels, which have grown their audience shares in each market in 25 versus 2024. The latest series of local versions of proven relative formats, such as Paradise Hotel, Expedition Robinson, have again led the way, together with Crime Thursday and Efterlust and Svenska Fall in Sweden, Shard of Fever in Norway, and popular acquired TV franchise shows across our markets. The work we have done to transform our advertising business also paid off in Q4. Our digital advertising sales were up 38% as we continued to push both our HWAT and AWAT products. Linear advertising markets remain under pressure, and we are working hard to maintain our market shares. Total advertising sales were stable year on year in Q4, We increased our listening share in our Norwegian radio business, and we're broadly flat in our Swedish radio business. We have just been awarded a prolongation of our national radio license reading from 2026 for eight years, which is the same license as we have today. The sales of our linear channels to telcos and other distributors were up slightly, and this reflects the investments that we continue to make in this product, as well as the renegotiation of legacy agreements that I mentioned earlier. We have either prolonged disagreements on true commercial terms, or we have exited and replaced them where that is not possible. The 37 decline in our sub-licensing and other sales is a major reason that our total sales were down 2% on an organic basis in Q4. We have referred before to the exception of high sub-licensing sales that we had last year when we made a number of one-off scripted content sales and sub-licensing deals in Q4. This year's sales are at more normalized level, and we have been consistent quarter on quarter this year. Looking forward into 2026, we have today guided for stable group sales when excluding currency effects, with accelerated growth in streaming sales expected to offset the continued decline in Atlantis DTH sales. Our profits in Q4 were impacted by the consolidations of Atlantis profit for half of the quarter, and by adverse currency effects. On an underlying basis, when excluding these effects, our profit would have been slightly down year-on-year and reflect the closing down of the non-core businesses last summer. We reduced the optics for our core operations by 2% before currency effects, which was in line with the 2% organic sales decline for our corporations. We have today guided for between 1 to 1.4 billion of EBITDA in 2026. The range reflects a number of moving parts, including some synergies from a lens of group integration, which we expect to be full run rate from 2027. We will provide more information about this once integration is finalized. To conclude then, we have delivered the guidance for 2025, and we are now a group with almost 22 billion of annual sales and over 1 billion of EVA. Our products are stronger than ever. with more relevant content than ever, and we are consistently working to enhance, exit, or replace the legacy agreements and partnership while maintaining as lean and SG&A cost-based as possible. We have totally focused on relevance and resilience with commercial partnership and competitive products so that we can secure our position and future. There's still much for us to do to deliver the double-digit EVA margins in 28 that we're aiming for, and we are clear about what needs to happen for that objective to be achieved. That is it for my comments, and I will now hand over to Jorgen for his comments on our financial performance and position before we take your questions.

Thank you, Jorgen, and good morning, everyone. Our guidance metrics for 2025 were based on the full-year performance of the group, as if the group had been consolidated 100%. from 1st of January, 2025. Jørgen has been through the achievements of our core sales and our core BTA metrics, and we have closed down the remaining non-core operations last summer. A few words on the Q4 numbers specifically. Our reported sales of 4.978 billion included 578 million of Alente Group sales, net of internal eliminations, following the acquisition of the remaining 50% of Alente Group in mid-November. And our reported EBIT before associated company income, an ISE of 158 billion, included 31 million from Alente Group. The Viya Play sales to Alente as a key distribution partner have been eliminated in the sales line, as you can see from the segmental results from our corporations, and there is no elimination on the EBIT line. The non-core operations have no sale and no EBIT in the quarter compared to 198 million of sales and negative 36 million of EBIT in Q4 2024. Currencies continue to affect us as a stronger Swedish krona had negative impact on the around 133 million on the translation of sales in other currencies into our reported currency. Reported core operation costs, however, benefited from a net positive FX tailwind. The total FX impact on the core EBIT was negative by approximately 40 million, which was in line with our previous expectations for the full year FX headwind on the core EBIT of 100 to 150 million. But we came in at approximately 125 million for the full year. When looking at the organic cost development, when excluding Allent and FX, we achieved savings in almost all categories, apart from some key legacy contracts where we have built in inflation. And a substantial reduction in scripted content sales also resulted in a reduction in associated costs. The 642 million of items affecting comparability in the Q4 primarily comprised of non-cash, write-down of legacy, non-support content, as well as transaction costs related to the land acquisition. Net financial items totaled minus 281 million and included 121 million of accelerated interest payment and written off prepaid borrowing costs related to the renegotiation of our banking agreements and the cancellation of the guaranteed facility. further minus six million related to net lease liabilities other financial items totaled minus 57 million and included the minus 20 million of costs related to the renegotiation as well as facilities and effects impacts on revolutions moving on to cash flow we also met the third of the full-year pro forma guidance metrics, which relates to the group rather than to the core operations. We reported 804 million of pro forma adjusted operating free cash flow when compared to the guidance range of 500 to 750 million. This metric excludes acquisition costs, interest, dividends, and extraordinary one-off working capital effects. The 804 million included a positive adjusted free cash flow of 1.169 billion for the corporations and the 365 million dragged from the non-corporations due to the contract contracts that are yet to expire. The 365 million cash drag was lower than the 500 million that we previously expected, and it's a function of timing where we have managed to defer some of the payments into 2028. Our Q4 reported cash flow from operations primarily reflected the 1.533 billion negative change in working capital, which included a previously flagged and extraordinary 2.5 billion negative working capital effect, as well as a positive change in the timing of payments when compared to 2024. Excluding this 2.5 billion one-off effect, the Q4 changes in working capital would have been positive. We also received $300 million of cash dividends from Alente Group prior to the acquisition on top of the $200 million that we received in Q3, which are included in the cash flow from operations. Cash flow from investing activities primarily reflected Alente acquisition, while the cash flow from financing activities primarily reflected the financing, as well as the drawings on the RCF. When looking forward into 2026, it's worth noting that we expect the corporation's working capital swings to be less volatile between quarters due to a range of new commercial agreements with our partners. The anticipated non-core operations cash strike for 2026 has not changed from the 500 million figure that we provided before. CapEx will be at or about the same level for the combined group, which was approximately 150 million in 2025 on a performance basis. Cash tax payments will benefit from the carried forward tax losses that we have, and our annual cash interest costs are now running at approximately 450 million. This is only a slight increase in our total cash financing cost when compared to the cost before Alente deal. The 3 to 400 million of full annual run rate cash synergies that Jörgen mentioned in relation to the integration of Alente will be at full run rate from 2027. We are now in the process of integrating the business and expect the cash cost of that integration to be between 270 and 330 million, which will be reported as an ISC during 2026, with the majority coming in Q1 and Q2. In connection with our length of the transaction, we refinanced the balance sheet in order to improve our debt structure and to reflect the fact that we're now a group with over 1 billion annually VDA. This effectively involved securing a new 1.726 billion term loan to replace the debt that Alente brought to the table, canceling the 7.1 billion guarantee facility, establishing the new 2.5 billion working capital facility, and reducing the size of the RCS from 3.392 to 2.817 billion. The 1.858 billion of bonds and notes is unchanged. We already amortized 100 million on this 1.76 billion loan in Q4. So our total long-term in-depthness excluding the RCS is now at 6 billion. We will make further repayments of 420 million on this loan in both 2026 and 2027, and all the rest of our debt facilities mature in 2028. Our financial net debt, when excluding lists, amounted to 5.246 billion at the end of the quarter and comprised the 6.422 billion of debt and 1.132 billion of cash. 500 million on the RCF was drawn at the end of the quarter. The effective doubling of the EBITDA margin between now and 2028 required a lot of work and collaboration with our partners. to prolong legacy agreements and partnerships on commercial market terms or find alternatives. The strengthening of this profitability profile and the ending of the cash drag from the non-corporations in 2028 will enable us to gradually deliver the balance sheet. Execution and efficiency remain our key focus area. We have clear objectives, so must continue to deliver on sales growth and cost reduction initiatives. must constantly improve our working capital efficiency and must allocate capital with discipline and clear return on investment requirements. We have made a lot of progress and there is still much to do. That concludes my remarks. So now back to you, Matthew.