Good morning, ladies and gentlemen. Welcome to our Q2 and H1 2026 results conference call of ProSiebenSat.1 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 ProSiebenSat.1's 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. 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. Thank you. Thank you all for joining this call. I will take you through some slides and hand over to Bob for the financial highlights. I would like to underline immediately that our transformation is delivering results, and 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 Joyn performance and also other activities performance. Our EBITDA grew significantly by EUR 152 million in the first half of 2026 versus the first half of 2025. That's clearly mainly driven by cost discipline and a focus on savings and efficiency. Our debt was fully under control. At the June end, the debt level was EUR 1,467,000,000.
In terms of ratio and leverage, it was 3.2 x EBITDA, exactly in the middle of our range target that is between 3 and 3.5 x. Lastly, we will talk that later, our outlook for the full-year result remains unchanged. I will take you through the main milestone we achieved in the first half of 2026. We deliver on our target of simplifying the portfolio structure. Bob will tell you more about that, clearly, we achieved several disposals. The group now is simpler. As you know, we have segmented the group into two main areas, the entertainment and the commerce and dating. That it's also granting a simplification of the management work, and it's also giving more accountability to the organization. We have set new performance indicators. 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 executive board tech, AI, and digital kind of expertise exactly where we are targeting to. 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. We are fully equipped for the future months and the full year performance. In terms of managing our debt, we have repaid a part of our bridge financing as foreseen by our agreement with the financing banks.
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 countries in the first half of 2026. That will give not only savings larger than expected, but also better experience and better performance versus our USA content providers. All in all, for pillar, 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 financials, 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. 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 EUR 768 million in the second quarter and approximately EUR 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 Studio71 US in the second quarter, which affected our group advertising revenue reporting line.
Organically, taking into account the portfolio and the currency effects, so 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. Despite this decline in revenues, our group revenue EBITDA increased significantly by EUR 102 million in the second quarter and by EUR 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 EUR 91 million in Q2 and by EUR 117 million in the first half of the year. The prior year number, remember, was impacted by reorganization costs in the amount of EUR 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 EUR 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 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. 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. 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 Joyn'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 U.K. during the first quarter. Other revenues delivered strong growth, supported, among other factors, by the continued expansion of Joyn subscription business. 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 EUR 81 million in the second quarter and EUR 115 million 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 EUR 132 million in the second quarter and by EUR 182 million in the first half. Programming expenses also went down significantly. As part of ProSiebenSat.1's strategic shift towards becoming a multi-platform provider in response to changing user behavior and the composition of our programming assets, ProSiebenSat.1 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 EUR 195 million, representing a year-on-year decrease of EUR 60 million. For the first six months, programming expenses declined by EUR 93 million to EUR 404 million. In the first half of 2026, approximately EUR 65 million-EUR 75 million, and thus the majority of this decline was attributable to the change in the amortization methodology, which I mentioned earlier. Lastly, the impacts 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 EUR 269 million, and by 14% in the first half, reaching EUR 591 million. However, once again, on an organic basis, revenues increased by 3% in Q2 and by 5% in H1, benefiting 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 aforementioned 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. This is due to portfolio effects following the sale of FLOYT and CamperDays 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. This is why we always refer to organic growth versus the absolute change from year to year. Following up on that, the significant decline in advertising and other revenues was largely related to portfolio changes, as I mentioned, including the sale of Studio71 US as well as disposal of wetter.com, esome and Kairion. All of these have contributed to revenues in the prior year reporting period to various degrees.
Turning 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 U.S., but as well as intense competition overall globally in the entire online dating market. Social dating revenues remain significantly below prior year levels. Moving to profitability segment, EBITDA in Q2 was slightly negative at - EUR 2 million. 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 EUR 27 million to EUR 8 million.
Earnings development should be viewed in the context of company sales, with the previous year's figures being particularly influenced by the EUR 34 million loss on the sale of Verivox. Now gives you a relatively good comprehensive look at our performances by segment. Now continue to look at our net financial debt and our debt maturity profile. Looking at the slide with the strap line regarding financial leverage, we'll see that our net financial debt amounted to EUR 1.467 million as of June 30th, 2026. This represents a reduction of EUR 73 million 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. It's worth stressing again that our financial leverage ratio was at 3.2x at the end of the second quarter and well within our target range of 3x-3.5x, 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. As a reminder, our financing package includes a term loan with a nominal amount of EUR 1.4 billion and a bridge facility with a nominal amount of EUR 225 million, as well as a revolving credit facility of EUR 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 EUR 200 million to EUR 1.4 billion. Is thus fully drawn down.
In January 26th, 2026, the bridge facility with a nominal value of EUR 300 million was fully drawn. The drawdowns, totaling EUR 500 million, were used for the repayment of promissory notes as described below. Furthermore, promissory notes in the amount of EUR 147 million 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 wetter.com and Studio71 US. We have reduced our bridge facility by approximately EUR 75 million, and therefore, the outstanding balance on the bridge facility amounts to EUR 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, ProSiebenSat.1's repaid promissory notes amounted to EUR 647 million in January 2026.
With the remaining EUR 53 million maturing between 2026 and 2029. At this point, I'd like to end my part of the presentation and hand back over to Marco.
Thank you, Bob. 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. As you know, macros GDP numbers and consumer climate clearly didn't perform as expected. 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 agency 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 the uncertainty on the market is pretty large.
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, Bob also alluded to it, we had too many sports events that affected our audience performance in the first half of 2026. 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. Cost management in terms of grid was really very strong in that period. In terms of audience, I think we were pretty where we would like to be. Clearly the second half are not affected by sports event. There would be much more focus on investment in content.
Just giving a little bit of light of a few entertainment and content milestones. A couple of weeks ago, we recently announced the launch of a targeted channel called Sat.2. 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. 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. We are sure that Sat.2 will expand our linear net reach as far as the channel point of view, but will also help us in the Joyn growth. The channel and the Joyn windows will be targeted to women age 50 plus.
It's an attractive audience of more than 18 million people. 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 formats continue 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. I'm repeating it, we are very happy about the cross-platform performance. Some detailed content examples, one is clearly our flagship of Germany's Next Topmodel 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 Joyn in H1. Very, very strong. 3 million unique users and 4 million followers on social media.
Another great example is The Race. It's a Joyn 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 plans 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.
Moving to Joyn performance in the first half. Joyn continued to grow, with a 7% growth in revenue, both from advertising and subscription. A significant growth in users and viewing time. Just a few numbers and KPIs. We had the +21% versus 2025 in monthly video users, and we have a 26% higher numbers in terms of view time. That's clearly the example of how the platform is growing, and it is successfully reaching the new streaming targeted audience. We also launched podcasts on Joyn as a new feature, and certainly new features will come out with a new platform we will talk about later. Again, another very important event happened a couple of weeks ago was the ZDF partnership. That's the way we see the future.
We are trying to reach agreement with all the traditional media operators in Germany, trying to join forces against platforms and global players. Clearly announced a couple of weeks ago, the new partnership with ZDF that will bring all the ZDF on-demand content to Joyn. Joyn will be clearly an open platform that brings together attractive content for all the audiences. I repeat, partnership is key for the future, and we will open also to others operator, and we will try to offer the largest, let's say, content portfolio to all our viewers without really moving from one platform to the other. That's the main target for the Joyn 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 is an 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 MFE 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 country will have to dedicate in the future. Platform will be a commodity throughout the group, but content will remain the reason for which viewers will look for us.
Joyn will clearly receive a new rollout in the first half next year and the German viewers and user will benefit also for newer feature. Lastly, let's move to flaconi. Bob mentioning it. The performance in terms of financial has been outstanding in the first half 2026. That significantly better perform than the German premium online beauty market. flaconi reached more than EUR 300 million external revenue in the first half 2026. In that numbers, the international shares has been more than 20% with 60% revenue growth from last year. In terms of relevance of flaconi app, the share is more than 40% and the customer satisfaction, it's very high at that record high in the first half 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 2026, we are now expect revenue for the full year in entertainment segment to decrease slightly compared to the previous year. Revenue in commerce and dating segment are expected to offset this development. In terms of group level, we anticipate a slight organic growth for the group revenue. Growth perspective in the German economy remain limited and visibility in the cyclicality sensitive advertising market is low and remain uncertain. We remain focused on cost discipline and working and living in a pretty volatile market. We will be 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 x and 3.5 x, with net financial debt expected to remain stable compared to the 2025 year end. Our path remain clear. Growth through increased profitability. To sum up, we have created greater focus, accountability, and discipline across the group. The progress achieved in the first half of the year shows that our transformation is delivering result. We are building a leaner, more focused, and stronger ProSiebenSat.1 for the long term. Thank you for your attention, I hand over for the Q&A session.
Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one 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 one 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 one 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 one. Our first question today comes from Nizla Naizer of Deutsche Bank. Please go ahead.
Great. Thank you. I guess my question is on flaconi. 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? At some point, is there a steady state growth that we should think about for flaconi? What would the ultimate sort of margin target be for this business going forward? 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 are 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. Given how important Q4 is for broadcasters such as yourselves, is that something to be worried about?
In the conversations you're having, do you feel that Q4 could be a business as usual kind of quarter? Some color there would be great. Thank you.
Thank you for your question. It's Bob. I'll start with the flaconi question, 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 flaconi 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. We have very good high hopes for the continued confidence that they will continue to grow in this direction. Yeah. I'll pass the second question to Marco.
Thank you, Bob. I mean, usually the World Cup effect is enlarging the market. 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, then will 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, it's very hard to be practical and very, let's say, precise on the second half. What I can tell you is that clearly July, still affected by World Cup, was not very different from June. While August is back on being, let's say, better in terms of performance and is a little bit close to April and May performance.
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, let's say, comment I would like to make is that last year, last quarter was decently bad, if you want. In terms of comparison, we are going to have an easier comparison in the last part of the year than we had in the first part of the year. Having said that's just a very mathematical, let's say, comment. As far as the rest, we have to wait and see.
Understood. Thanks, very helpful.
As a reminder, to ask a question, please press star one 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.
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.