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Hello, and welcome to TF1 Q1 2024 Results Conference Call. My name is Allen. I will be your coordinator for today's event. [Operator Instructions] I will now hand you to your host, Pierre-Alain Gerard, VP, Finance, Strategy and Procurement to begin today's conference. Thank you.
Thank you. Good evening, everyone, and thank you for joining us for our Q1 results presentation. During today's call, I will present the business highlights of our two operating segments, provide a more detailed breakdown of our financial results and lastly, discuss our outlook. We will then open the floor for questions. For those of you who are joining us by the phone, note that we are displaying a presentation, which you can follow through the webcast. You can also find a presentation on our corporate website. With that, let's turn to Slide 4 to go over the quarterly highlights. First of all, we would like to share with you the key highlights of the first quarter. Let's look first at our audience results. TF1 Group reinforced its audience leadership with increases in all segments. In Q1 2024, the audience of TF1 Group's channel stood at 34.5% for women below 50, up 1.3 points and 31.4% for the 25, 49-year old, up 1.5 points. TF1+ the new streaming platform launched on the January 8 in 2024 is a leader in terms of reach and attracted 35 million viewers in March, a new record. Next, our financial performance. Group advertising revenue was up 6.6% year-on-year, driven by a strong performance in linear and streaming. TF1+ got off to a very good start. Its advertising revenue grew by 43.5% to EUR 29 million in the first quarter of 2024, reflecting the attractiveness of the platform. At the end of March 2024, linear advertising revenue was up 4.4% year-on-year, not cannibalized by streaming. Current operating profit from activities amounted to EUR 37.3 million, close to Q1 2023 figure, down EUR 2.6 million. Current operating margin from activities was 7.3% compared to 8.3% in the first quarter of 2023. Net profit attributable to the group was EUR 29.7 million, up 5.7% year-on-year. The group benefits from a solid financial position. Net cash stood at EUR 564 million at the end of March 2024, up EUR 59 million versus the end of December 2023. Now let's turn to a detailed activity review of Q1 2024 for our Media and Newen Studio businesses. In the first quarter of 2024, the group maintained an rivaled reach, attracting 55% of French people every day, way above any media, such as YouTube and Netflix, for instance. The group gained significant share across all audiences and achieved the fastest growth in the French audio-visual sector. Audience shares up 1 point in the 4-plus target compared to the first quarter of 2023, up 1.3 points in the women video 50 target and up 1.5 points in the individuals aged between 25 and 49. The TF1's channel stands well ahead in the sector and broke several records during the first quarter. In the women below 50 targets, its audience share was 23.5%, up 0.9 points, further widening the gap with its main competitor 10.6 points. Among individuals aged between 25 and 49, its audience share was 21%, up 1.3 points, 8.6 points more than its nearest competitor. Moving on to Slide 7. In Q1 2024, we had a solid lineup, performing well in both linear and streaming. The TF1 channel recorded 29 of the 30 highest ratings among women below 50 and 20 of the 30 highest ratings among individuals aged between 25 and 49 with the returns of its major franchises and new French dramas. During the first quarter of 2024, TFI increased its audience share on commercial targets on all main daily audience touch points, the afternoon slot with the relaunch of Plus belle la vie, access with our two daily soaps and prime time with a strong lineup with these examples shown on the slide.This premium lineup also performed very well in streaming and reached record audiences. For example, we added up to 1.3 million streamers for Koh-Lanta representing the best BVOD audience ever for an entertainment show and up to 0.9 million streamers for the French drama Rivière Perdue. With Plus belle la vie, we illustrate on the right-hand side of the slide, our multichannel and streaming strategy. 3 million viewers on average, 55% on TF1, 20% of streaming, 22% on TFX. Now let's discuss on Slide 8, our non-linear activity results. TF1 had a successful -- TF1+ had a successful launch with a sharp rise in advertising revenue, up 44% to EUR 29 million. TF1+ is a leader in terms of reach with 33 million streamers per month on average in the first quarter compared with 28 streamers per month for MYTF1 in 2023. This number grew from month-to-month during the first quarter to reach 35 million viewers in March, a new record. The platform recorded 285 million streamed hours, up 13% according to Médiamétrie, which includes environments where TF1+ is not yet distributed, dragging the average down. Our internal data show a 79% increase in consumption on TF1+ only. This performance was notably driven by TF1+ distinctive attributes, strong brand awareness, accessibility, visibility, attractive content and a user-friendly interface. Awareness, we implemented the second wave of marketing campaigns, including billboard and TV slots after the initial strong results in January. As a reminder, after our first billboard campaign, aided awareness reached 73%. Second pillar, accessibility. As already explained at the full year results, 2023 full year results, we have developed new long-term partnerships with all telcos and connected TV suppliers to accelerate accessibility for TF1+. TF1+ is now accessible on almost all environments. 93% of set-top boxes, 95% of connected TV manufacturers and 100% of mobile apps. Then visibility. We show here an example of where we stand with telcos. First visibility is effective on 13 million set-top boxes at the end of March, and the rest will be rolled out throughout 2024. And also, as you have seen in the press, we have wholesale contracts with connected TV and OEMs. So we are on track with our road map. Then the lineup. It brings together more than 15,000 hours of content available at any time, very much in line with market standards and with rights extended to up to 48 months. We are continuously improving the platform to meet the best standards of user experience, editorialization and recommendation features.Now turning to Newen Studio on Page 9. At Newen Studio revenue was similar to the first quarter 2023 figure at EUR 59 million, down 3%. The first quarter was marked by the launch of Plus belle la vie, encore plus belle for TF1+ as well as the delivery of Cuckoo for Channel 5 and continued positive momentum in cinema with the film Chasse Gardée released in theaters in late 2023 and distributed by TF1 Studios, 1.9 million tickets sold and the remake also of the movie Le Salaire de la Peur, The Wages of Fear for Netflix. The second season of the prestigious production Marie-Antoinette was shot in the first quarter and is planned to be delivered in H2 for Canal+. Newen Studio current operating profit from activities stands in positive territory, slightly below EUR 1 million up year-on-year. Let's move to a more detailed breakdown of our financial results for the first quarter of 2024. You will find the details of our consolidated financial statements, management report and financial statement appendix on our website. On Page 11, the group's consolidated revenue amounted to EUR 512 million in the first quarter of 2024, up 6.7% year-on-year, driven by growth in advertising revenue. Advertising revenue in the Media segment amounted to EUR 363 million in the first quarter of 2024, up 6.6%, driven by the return of most advertising sectors in linear and the launch of the new streaming platform, TF1+. Advertising revenue generated by TF1+ grew by 43.5% to EUR 29 million in the first quarter of 2024, reflecting the attractiveness of the platform. Newen Studio posted a total revenue of EUR 59 million, down 3%, but close to Q1 2023 in absolute terms. On Page 12, the group's current operating profit from activities amounted to EUR 37 million in the first quarter of 2024 close to Q1 2023 and above the company compared consensus. The group's current operating margin from activities was 7.3% compared to 8.3% in the first quarter of 2023. The group's programming costs were EUR 217 million, up EUR 17 million due to premium programs on linear channels and streaming with a stronger advertising within a stronger advertising market and in the context of TF1+ launch. Current operating profit from activities in the Media segment came to EUR 37 million. This includes specific costs related to TF1+ launch in the first quarter. As mentioned earlier, Newen Studio current operating profit was back in positive territory and totaled EUR 0.7 million up year-on-year. On the income statement on Page 13, I've already commented on the consolidated revenue and current operating profit from activities. Looking further down, operating profit after other operating income and expense stood at EUR 34 million, including EUR 2.5 of non-recurring expenses related to the group's digital acceleration plan. Net profit attributable to the group was EUR 29.7 million, up 5.7% year-on-year, notably benefiting from a cash income. Now let's look at the change in net cash position. Net cash stood at EUR 564 million at end March 2024 compared with EUR 505 million at the end of December 2023, which represents an increase of EUR 55 million. Free cash flow amounted to EUR 28 million before change in working cap and EUR 61 million after changes in working capital, reflecting operating cash flow of EUR 92 million, up EUR 4 million year-on-year. Net CapEx roughly stable and lower amount of lease obligations, positive operating working capital requirements, notably due to positive cash collection at the ad sales house. Acquisitions at disposal for EUR 4 million, notably linked to small acquisition in Germany, Dog Haus for Newen announced last year -- at the beginning of this year, sorry. So overall, net cash position of EUR 564 million. Let's now have a look at our outlook and targets for the rest of the year. On Page 16, some strong franchises are set to return in the second quarter, such as Secret Story, Mask Singer and HPI, which are serialized programs with strong linear and non-linear potential. A key event in 2024 will be the EURO 2024 tournament, which TF1 will broadcast starting in June, providing premium content with great appeal for advertisers. In digital, the group will also have pioneering features to TF1+ in the second quarter, such as SYNCHRO, a recommendation engine designed to make it easier to select streaming content for co-viewing. TF1+ will also take the advantage of the EURO to broadcast -- to launch sorry, a new AI enhanced version of TOP CHRONO, providing custom post-match highlights.At its very promising -- after its very promising start in France, where it has achieved high visitor numbers and usage figures, TF1+ will expand into new markets moving into Belgium and Luxembourg from June. TF1+ will be rolled out across other territories in the following months and aims to become the leading free streaming platform for French speakers worldwide.In this context, on Page 17, we are maintaining the guidance we provided when reporting for our full year results. Keep growing digital, building on the promising launch of TF1+, maintain a broadly stable margin -- current operating margin from activities, continue to generate solid cash flow, enabling the group to aim for a growing dividend policy over the next few years. So in a nutshell, growth in advertising revenue, successful launch of TF1+ and guidance maintained. I'm now ready to take your questions.
Thank you. [Operator Instructions] We will take our first question from Julien Roch, Barclays.
First question is, can you give us some color on Q2 advertising trends? That's the first question. Number two, I might have missed it. You gave in the presentation the streaming hours for TF1+ at EUR 285 million. Could we get the total hours across whole platform, including linear? And then number three, you generated some more cash flow again. So you are even more under-geared than before. Any things you are intending to do with the cash or not? Thank you.
Regarding Q2, as you know, Julien, we are not guiding on revenue what I can tell you for the year. If you take the various sources that you have, you see that people are expecting advertising revenue for the TV market between 2.5% and 5%. I think [EREP] gave a forecast at around 3% for the year. So, no reason we won't follow this trend. For Q2, I think the overall market is more dynamic than in 2023. As you know, it's more favorable. Regarding the total hours for TF1 Group, it's 4.75 billion hours for the group. Regarding the cash flow, the net cash position benefited from a positive working cap inflow, which is not unusual at this stage of the year. If you look at last year, we benefited, as you know, from the cash collection from the football World Cup in Qatar, but the amount was positive as well, but slightly distorted last year. Look, regarding cash flow, it's a matter that is regularly discussed with the Board. We think that having a net cash position is important to us to navigate through potential volatile cycles on the advertising market. For this year, the Board has decided to increase our dividend policy by 10% as you've seen, and to aim for a growing dividend policy in the coming year.
We will take our next question from Jerome Bodin, ODDO BHF.
Just two quick follow-up on Julien questions. So, first of all, on the advertising trend, could you maybe give a bit of color on the trend for TF1+? Is it accelerating, decelerating compared to Q1? That's my first question. Second question on the costs. Do you plan to still always for TF1+, do you [indiscernible] a marketing campaign and billboard campaign. Do you plan to continue all over the year? Or is it just a Q1 effect? And maybe just third question, a quick follow-up on the working cap. So is it fair to assume a decline for the rest of the year? Thank you.
On the advertising trend for TF1+, we're not gaining on it. As you know that we stand with TF1+ on the EUR 2 billion market, which is growing by 10% or 15% per year. We had last year a 5% market share, and our aim is to double this market share in the midterm. This translates into a dynamic growth over the period. Regarding costs. First, everything is planned in our guidance or encompassed in our guidance. We will have another campaign for TF1+. But it's already taken into account in our guidance of a broadly stable margin. And we're not guiding on your third question regarding working capital. This is a focus for the house, having a sustainable free cash flow generation. But as you know, last year was impacted -- well, positively impacted by the cash collection on the Qatar World Cup, which improved our free cash flow generation for the year. So -- which is not predictable this year.
We will take our next question from Christophe Cherblanc Bernstein.
The first one was on TF1+. The number of streamers is up 23%. The number of hours is up 13%, and the ad revenues are up 44%. So, what's the bridge? Meaning what's the breakdown between the increase in ad load and pricing? And still on TF1+, you mentioned the 13% total hours, if I'm correct. And then the 79% jump in, let's say, pure TF1 environment. Do you expect to close the gap or the gap to narrow at some stage? And what is the progress on distribution for TF1+? That's the first question or two first questions, sorry. And the third question is on Newen. A few months ago or, let's say, a few years ago, we were expecting some impact of the [smart decree], the expected investment by SVOD platform. And so far, we have not seen much at Newen level. So at what stage do you expect a ramp-up in revenues coming from those decrease?
You know that we've accounted for 285 million hours for the first quarter. But this is a Médiamétrie figure. Médiamétrie as I said, is also taking into account environments where TF1+ is not available right now. So we are comparing -- not comparing purely TF1+ versus MYTF1. If we take and we've put it in the slide for this reason, if we take pure data that we can measure in-house, there is a strong increase in terms of consumption of our stream within TFI and this percentage year-on-year is plus 79%. So, because TF1+ is not yet rolled out everywhere Canal+, for example, SFR in the first quarter was not rolled out. This is the case right now as we speak, but not in the figures that you have in the first quarter. So, this is dragging down the average. But the consumption that we can measure on TF1+ is way higher. On the visibility, we said that at the end of March in our full year presentation, we will reach 30% of first visibility and target of 55% at the end of the year. You're perfectly right. What I can tell you, if we do the math quickly, we've shown on our slide on first visibility that we have a first visibility agreement with all telcos, which is important. And as we speak at the end of March, we had the first visibility on 13 million boxes in France, which is on a total installed base of around EUR 22 million, not every box is technically addressable for this. You add the number of technically compatible OTT TV, you see that we have a good proportion of first visibility agreements, and we have signed with all the telcos and the rolling out is going to take place throughout the year. So, we are definitely on track on this one. And regarding Newen, you're right. But as you have seen in 2022, Netflix spent EUR 17 billion worldwide for content, 13 million only in 2023. And it's expected to come back to higher levels, but it's not only dependent on the smart decree. It's the economics of the overall platforms. The fundamentals of the market are good. The demand is there.
And just a quick add up house cleaning question. The financial income was pretty high on the numbers. So, it is EUR 8 million or EUR 6 million net, which compares to cash 6 million. So that's something we should expect as a normal run rate for every quarter? Or is there any one-off there?
No particular one-off, but the level of cash that we have on the balance sheet is varying a lot throughout the year. So, reasoning with an average is better than reasoning with the end of period cash position. So, every quarter won't be completely comparable. The average level of cash that we have on the balance sheet will vary from quarter-to-quarter.
[Operator Instructions] We'll take our next question from Conor O'Shea, Kepler Cheuvreux.
Three quick questions as well. Firstly, in the media unit non-advertising growth, I think it was 14% in Q1. I think you put that down to music and interactive. I'm just wondering what we should expect in the following quarters. Were there any one-offs driving growth in the first quarter in that line? Secondly, just on the advertising trends. I mean, understanding that you're not giving specific guidance. But I wonder if you could just give us a sense of year-to-date which sectors are spending more. And whether you're seeing any impact so far from the launch of Amazon Prime, I think was on April 10. And then the final question, just on Newen. Just what we could -- I think there's a strong pipe in the second half of the year, but is there anything coming up before that for around Q2 that could drive a return to growth?
On the media and advertising revenue, you're perfectly right. Interactive revenue contributed positively -- and thanks to the lineup that we had during the first quarter. This is one point. Then we have on our music business, we have a show that starting in France called Molière, which is also a driver to the growth of non-advertising revenue, plus another technical effect in our production TF1 Production division, where we had revenue from [indiscernible] to BBC, which was, yes, another part of this growth. Regarding the advertising trends and the sector, what I can tell you that most sectors were back in Q1, especially the car, the food industry, but I can also mention travel, pharmacy, cleaning, fashion, leisure, energy and drinks. So pretty much everybody. Amazon Prime, yes, they launched we are following that. We don't see any major effect at this stage. You know that their reach is rather limited at this stage. And regarding Newen the curve of the year is probably following the same shape as last year, but it depends. Some deliveries are slipping from one quarter to another. It's not always easy to predict. But on the -- you know that the quarterly basis is not always meaningful for Newen activities.
So on non-advertising media revenue, we should expect growth, maybe not as dramatic, but with growth for the following quarters as things stand today?
It's always hard to predict with the interactive revenues. On the show that I mentioned, I think it's not necessarily replicable on a further quarter, but we are I think very specific on this line.
[Operator Instructions] There are no further questions on the line. So, I will now hand you back to your host for closing or additional remarks.
Thank you. Once again, thank you very much for joining us tonight. Maybe just to summarize pretty solid Q1 results with the growth in advertising revenue, successful launch for TF1+ and which enable us to maintain our guidance for the year. Thank you very much.
Thank you for joining today's call.