Viaplay Group AB (publ)

Good morning, everyone, and welcome to today's Q22026 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, Jürgen Lindemann, and our CFO, Johan Johansson. Welcome, gentlemen. Our presentation will be followed by a Q&A session on the telephone dial-in line, and you can find our results materials, including the presentation deck, and detailed fact sheet on the Investor Relations section of our website. As usual, the deck is for your information and our remarks and commentary will not follow it slide by slide. Please be advised that today's conference call is being recorded. I will now hand the call over to Jürgen to walk through the results. So over to you, Jürgen.

Thank you, Matthew, and good morning, everyone. So we made further progress along our transformation path in Q2, and the Alente integration is proceeding according to plan. The combination of the Viaplay and Alente groups has created a larger group with more customers, more content monetization potential, and more cash flow generating capacity to deliver our strategic transformation and goals. The combined sales of 10.8 billion for our core operations for the first half of this year is almost 25% higher than what we reported on a standalone basis for first half last year. Our combined first half EBDA before ACIs and IACs of 560 million compares with a loss of 50 million in first half last year. Integration of the Alenta Group is running according to plan, and we have now taken the majority of the costs relating to the restructuring. The resulting cash-cost synergies are as expected. They are starting to come through and will be at their full year one rate level from the start of next year's plant. There will also be sales synergies which our teams are exploring fully and carefully in areas such as consumer acquisition and retention, marketing and promotion, product packaging and development, content utilization and monetization, and how we make the most of our tech stacks and CRM activities. More broadly, we are making progress with our strategic transformation. On the sales side, our streaming subscription sales were up 7% year-on-year on an organic basis, with both our D2C and B2B sales growing. The total wire-based prescriber pay was stable year-on-year and down quarter-on-quarter as usual due to the seasonally quieter summer sales period. Both D2C and B2B upper levels were up year-on-year and quarter-on-quarter, due to the growth in the number of premium sports subscribers, as well as the continued focus on value over volume in the extension of our agreement with key distribution partners. More G2C and B2B customers are choosing our sports offering because we have much high-quality, wide-ranging, and year-round offering of the very best sports content. And we have more coverage of major sports this year than ever before. This course will feature citing combination of the English Premier League football season and the Danish Superliga, the Ice Hockey World Championship, the final rounds of the UEFA Club Championships, Formula One Motor Racing, and called from the three or four majors, the Masters, the PGA Championship, and the US Open. Our non-streaming revenues comprise the Alente DTH business as well as our own linear pay-to-read channels faced to third-party networks. The number of linear platforms and channel subscribers is in long-term structural decline due to the shifting consumer preference to streaming services, but scheduled appointment viewing still has a large and loyal following. The vast majority of the Alenza subscribers already have Wireplay bundled with their subscription, so they have the best of the scheduled, live and on-demand viewing worlds in their existing subscriptions. The Alenza DTH subscriber base continues to decline in Q2, but Alenza also has also added new content to make the product even stronger and raise prices, which partially offset volume declines. In total, then, our non-streaming subscription sales were down 3% on an organic basis. Our total advertising sales were up slightly on an organic basis, which again reflected the combination of strong digital sales through our AWOD and HWOD offerings and growing radio advertising sales, which were offset by the ongoing structural decline in linear TV advertising. Our content offerings remain very attractive, and we will invest further in our offerings. We successfully launched several new local productions, of course, on markets during Q2. In Norway, Helvets Uke premiered and has become one of the strongest-performing local titles ever on the platform. We also launched Scarecrow's Fever, a spin-off from one of the most successful franchises in Norway, Shadow Fever. In Denmark, we introduced the Danish version of Shadow Fever, while Mida på Michelin restaurants also stood out as a strong local launch. Our international slate was further strengthened by the premiere of the international hit Sandokan, which has been particularly well received by subscribers who engaged with Outlander earlier this year. Our movie offerings also continued to differentiate the service during the quarter. Standout titles included in the material list starring Dakota Johnson, Chris Evans, and Pedro Pascal, as well as our Swedish original movie, The Anarchism in December, based on the best-selling novel by Martina Haag. Finally, the other sales line comprises our sports sublicensing business, where we sublicense our sports rights to third-party broadcasters and streamers in our core markets, and our scripted content sales business, where we set our portfolio for written scripted content to broadcasters and streamers around the world. Sales were down 15% year-on-year on an organic basis, as reflected the lower volume of scripted content sales in particular. Overall, our corporation sales were up 0.7% year-on-year on an organic basis. When excluding the positive currency effects, our corporation costs were up 2% on a performer basis. The primary operating cost driver is content, which accounts for three-quarters of our total cost base. The largest part of this is sports content, where our costs have continued to rise due to the inflation built into our multi-year legacy agreements. As we prolong these agreements on competitive market terms or find alternatives, the inflation will be less in the second half of the year and also increase less next year. We offset some of this increase by reallocating capital to more profitable areas and with SG&A savings, including some synergies from the Atlantic Group integration. The ongoing transformation, discipline, capital allocation, sales and cost management, and the negotiation and extension of key content and distribution partnership agreements on commercial and competitive terms, all this securing of alternative options are the major drivers of our longer-term ambition to deliver a double-digit EBITDA margin in 2028, compared to the 5.3% that we delivered last year on a performer basis. Our Q2 EBA was up year-on-year when compared to the performer number, including Atlantic Group's result last year, and then this included an approximate 110 million currency tailwind due to the strengthening of the Swedish Krona reporting currency. The recently announced sale of the Dutch operations will focus us operationally on the Nordic markets, where we have the greatest scale advantages and synergy potential, and we will also provide cash to reduce our net debt and strengthen our financial profile. We remain totally focused on rebuilding as relevant and resilient a Nordic business as possible, one that both entertains and creates sustainable value for our customers, our people, our partners and our owners. We are doing this by crafting competitive products and commercial partnerships to stand the test of time and enable us to achieve our transformation objectives. We still have a lot to do to deliver our short and long-term goals, where we are making progress and remain fully focused on making this transformation happen. This is it for my comments for now, and I will now hand the call over to you, Johan, for your comments on our financial performance and position before we take questions.

Thank you, Jørgen, and good morning, everyone. As a reminder, the quarterly fact sheet on our website provides the usual relevant historical and backup information. In the report published today, we have provided the performer information for prior period in 2025 to include a land group as if it had been consolidated from the beginning of last year. So this is so that you can see the organic development. The effects are shown as usual in the ATMs at the back of the report. We have focused the commentary in the report on key sales and DBTA numbers for our corporations as we discontinued the loss of our non-corporations last summer. When it comes to cash flow and balance sheet commentary, we have provided group numbers as we still have a cash drag from legacy content agreements that are yet to expire in markets that we have already exited. The year-on-year FX movements had a big impact again this quarter, with approximately 80 million SEK positive impact on the reported core operation sales, as the Norwegian krona in particular strengthened against our Swedish krona reported currency. Reported core operation costs benefited from the net positive FX sale win of approximately 30 million due to the strength of the Swedish krona, against the euro and the dollar, in which we have the vast majority of our costs. The net result of this was an approximate 110 million positive year-on-year FX effect on our core operations EBITDA in Q2. We do still have significant current exposure in the second half of the year, primarily in NOC, so these numbers can still move materially in either direction during the rest of the year. Depreciation and amortization amounted to 152 million for the quarter, and included approximately 100 million of GPA amortization charges, which were flagged previously, and are the result of the consolidation of Alente Group. The 52 million of items affecting comparability in Q2 primarily compromised to 42 million of redundancy and restructuring costs relating to the integration of Alente Group. as well as 10 million of currency cancellation effects. We have previously guided for total integration cost of 270 to 330 million SEK, with the majority being taken as ISE in the first half of this year. So the 203 million of ISE in the first half of the year was well in line with this. We have almost no associated company income or dividends now that we have fully consolidated Alente Group. When looking at our interest costs, please remember that the cost for the 646 million euro of balance sheet bank and TIT facilities that we canceled in November last year were included in other financial items, not the net interest, whereas now almost all of our borrowing costs are included in the net interest. So although the net interest costs were up year-on-year, Other financial items were also significantly down. Moving on to the Group Cash Flow. We reported the minus 52 million working capital development, which primarily reflected the payments that were made for legacy content agreements in markets that we have exited. This non-corporation cash drive, which we talked about previously, is included in the working capital and is expected to amount to approximately 500 million this year. The year-on-year swing in working capital reflects the smoother and more stable setup that we have now. The payment terms in our new commercial arrangement reduce the cash flow volatility between quarters. Previously, there were substantial swings to payment timing differences. Our cash flow from operating activities totaled 145 million in QQ2 and included 115 million of cash interest costs and 78 million of cash tax costs. We invested 32 million of capex in QQ2 and reported a positive free cash flow result of 113 million of which the 76 million from the corporations and minus 63 million from the non-corporations. The 187 million cash flow to financing activities included the quarterly amortization of Alente Group related borrowing, which will total 420 million this year and next year, as well as changes in the usage of the 2.8 billion which we have had to draw on 700 million at the end of the quarter compared to 750 million at the end of Q1. The net change in cash equivalents therefore amounted to minus 74 million in Q2. When looking at the second half of the year, we do expect working capital to be negative in Q3 and positive at the positive effects in first half of the year will reverse and we expect to be positive in Q4. For the year as a whole, when excluding the non-core operations cash drag, we expect the working capital to be broadly neutral and we are constantly working on to improve the working capital profile. We continue to expect capex to be at or about the same 150 million level for the combined group as last year. 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. After the scheduled debt repayment of 105 million of total borrowings excluding the RCS, we are now under 5.8 billion, compared to 5.9 billion at the end of Q1. You can see the usual debt maturity profile chart in the slide pack on the website. Aside from the scheduled repayments this year and next, all of the rest of our debt facility mature in 2020. Our financial net debt, when excluding leases, were largely unchanged at the 5.12 billion at the end of the period. compared to just under 5.2 billion at the end of Q1 and compromised 6.5 billion of borrowings and 1.3 billion of cash. Our net debt to trailing 12 months pro forma EBITDA excluding associated company income and IEC was 4.5 times at the end of Q2 compared to 4.7 times at the end of Q1. The recently announced divestment of a Dutch ration on the cash and debt-free basis will enable us to reduce our net debt once the transaction closes after the various regulatory and other approvals. The further deleveraging of our balance sheet depends on the strengthening of our cash flows through the effective doubling of our EBITDA margin between 2025 and 2028. and the ending of our non-core operations cash drag in 2028. We are making progress and the margin improvement still requires a lot of work, including the work with our suppliers, partners, to move all the agreements onto commercially competitive market terms or find alternatives. We are focused on executing all of the various initiatives we have in place to deliver the transformation plan and make the required efficiency gains, including driving sales growth, and managing our working capital to be as positive as possible, and allocate our investment capital to generate as positive returns as possible. And that concludes my remarks, so now back to you, Matthew.