Continued focus on operational improvements and product performance
Second quarter highlights
> Total reported Group net sales of SEK 4,485m (4,591) and total operating income before associated company income (ACI) and items affecting comparability (IAC) of SEK -70m (-273)
> 2.6% organic sales growth for core operations (Nordics, Netherlands and Viaplay Select), with sales of SEK 4,292m (4,282) and operating income before ACI and IAC of SEK -72m (82)
> Total reported operating income of SEK 7m (-6,551) including ACI of SEK 28m (2) and IAC1 of SEK 48m (-6,279)
> Net income of SEK -120m (-5,886) and Earnings per share of SEK -0.03 (-75.24)
> Group free cash flow of SEK 606m (263), and financial net cash position of SEK 372m (net debt of 1,879)
> Prolongation of Formula 1 rights in the Netherlands and Nordics
> Prolongation of UEFA League rights in key markets, including addition of Champions League rights in Sweden
Financial summary
Full | |||||
Q2 | Q2 | H1 | H1 | year | |
(SEKm) | 2024 | 2023 | 2024 | 2023 | 2023 |
Total net sales | 4,485 | 4,591 | 9,241 | 9,128 | 18,567 |
Core operations, net sales | 4,292 | 4,282 | 8,751 | 8,560 | 17,332 |
Organic sales growth for core operations | 2.6% | 12.6% | 4.1% | 19.5% | 10.6% |
Reported sales growth for core operations | 0.2% | 16.5% | 2.2% | 23.2% | 13.5% |
Operating income before ACI and IAC | -70 | -273 | -387 | -564 | -1,115 |
Core operations operating income before ACI and IAC | -72 | 82 | -341 | 184 | 89 |
Associated company income (ACI) | 28 | 2 | 60 | 12 | 63 |
Items affecting comparability (IAC)1 | 48 | -6,279 | -140 | -6,323 | -9,224 |
Operating income | 7 | -6,551 | -467 | -6,875 | -10,276 |
Net income for the period | -120 | -5,886 | 485 | -6,174 | -9,747 |
Basic earnings per share (SEK) | -0.03 | -75.24 | 0.13 | -78.93 | -124.61 |
1) Items affecting comparability comprised capital gain on divestment of Viaplay UK business; redundancy costs; and unrealised non-cash currency effects related to previous content provisions. Please see page 23 regarding items affecting comparability.
Alternative performance measures used in this report are explained and reconciled on pages 20-25.
A word from our President & CEO
Our focused work to retransform Viaplay Group is progressing, with substantial changes being made across the business, and many more to come. We are launching new, improved and more relevant products, talking to our partners about how best to monetise our content, and reducing costs in all areas. These changes are necessary for us to deliver competitive products to our customers and partners, and to achieve our long-term goals of delivering profitable growth, generating positive cash flow and creating shareholder value. Our guidance for 2024 is unchanged.
During the quarter, we announced new long-term partnerships with Formula 1 and UEFA that will drive increased viewing and further commercial opportunities. Viaplay Group's platform will remain home to Formula 1 in the Netherlands and all five Nordic countries until 2029, and we have secured top-class European club football for our viewers in four Nordic countries for the next three seasons, including the return of the UEFA Champions League in Sweden. Both deals reflect our commitment to competing for the long term in our core markets, and to offering unique premium content that appeals to scale audiences.
Our films and series content is also performing better, with the top titles including Norwegian original crime series 'Wisting', Swedish soap opera 'The Beach Hotel', and the new season of popular reality format 'Paradise Hotel Denmark'.
Looking ahead, we have new seasons of the Danish Superliga and Premier League kicking off this summer, and Formula 1 arriving at World Champion Max Verstappen's home circuit in the Netherlands in August. At the same time, we will premiere new seasons of proven local productions like 'Paradise Hotel Sweden', 'Charter Fever' in Norway and 'Expedition Robinson' in Denmark.
Our content is both our biggest revenue driver and our largest cost. Fully monetising our unique offering is a key priority, and new products such as the Viaplay HVOD tier, which we rolled out in June in Denmark with further markets to come, should play an important role moving forward. Updating and reframing our B2B distribution deals is also critical given how popular and relevant we see our content is for viewers and customers, and in order to establish a fair commercial balance. Our priority is to build value, not just volume. This is also why we have raised our prices across almost all markets, given the great value for money that our products provide.
At the same time, we are accelerating our actions to prevent the value leakage caused by account sharing and piracy. We are working directly with our subscribers, and closely with our B2B distribution partners, to minimise out of home account sharing by limiting the number of concurrent streams possible on Viaplay, so that we can all convert more account sharers into paying subscribers. The early signs look good and we do expect our customers to play fair in this regard so that they can continue to enjoy our strong line-up of sports, movies and series. Together with our industry peers, we also launched an anti-piracy campaign in Sweden, with more countries to follow.
Our organic revenue growth of 3% for our core operations was driven by the 7% growth in linear channel subscription sales as we raised our prices to reflect the strength of our content offering. The 1% decline in Viaplay sales reflected lower subscriber volumes but higher prices, with more work to be done with our customer offering and partnership agreements moving forward. The 5% growth in our advertising revenues was driven by growth in digital and radio, which more than offset falling sales in weak but gradually improving linear TV markets. And sublicensing revenues were up due to the sale of content to third parties, in order to reduce the loss on legacy original content.
The operating loss of SEK -72m for our core operations is in line with our full year outlook and reflected higher sports costs and lower SG&A costs. The weakness of the Swedish krona also continued to exert a negative effect on our profitability. We closed the quarter with a financial net cash position of SEK 372m and generated positive free cash flow of SEK 606m in Q2, both of which are in line with our plan.
The exit from our non-core international markets is ongoing, and we completed the sale of the Viaplay UK operation in Q2, having exited the Baltic markets in Q1.
We have made good progress so far, but much remains to be done for us to retransform back into the successful, competitive, profitable, cash flow positive and shareholder value creating company that we were.
Jørgen Madsen Lindemann
President & CEO
Shareholder information
Financial calendar
Publication of Q3 Interim report 22 October 2024
Contact
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investors@viaplaygroup.com or +44 7768 440 414
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This information is information that Viaplay Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 18 July 2024.
Viaplay Group AB (publ) is the Nordic region's leading entertainment provider. Our Viaplay streaming service is available in every Nordic country, as well as in the Netherlands and Poland, and our Viaplay Select branded content concept has been added to partner platforms around the world. We also operate TV channels across most of our markets, as well as radio stations in Norway and Sweden. Our talented people come to work every day with a shared passion and clear mission to entertain millions of people with our unique offering of locally relevant storytelling, which spans premium live sports, films, series and music. Our purpose is to grow our business profitably and responsibly, and deliver sustainable value for all our stakeholders. Viaplay Group is listed on Nasdaq Stockholm ('VPLAY B').
This interim report contains statements concerning, among other things, Viaplay Group's financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent Viaplay Group's future expectations. Viaplay Group believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions; however, forward-looking statements involve inherent risks and uncertainties, and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. Such important factors include but may not be limited to Viaplay Group's market position; growth in the streaming industry; and the effects of competition and other economic, business, competitive and/or regulatory factors affecting the business of Viaplay Group, its group companies and the streaming industry in general. Forward-looking statements apply only as of the date they were made and, other than as required by applicable law, Viaplay Group undertakes no obligation to update any of them in the light of new information or future events.
