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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Dear ladies and gentlemen, welcome to the Q1 2019 Quarterly Results Call of Ströer.
Yes. Thank you, and good morning, everybody. We kick it off now with Chart #1.Dear ladies and gentlemen, thank you for joining our Q1 results call today. Together with my co-CEO, Christian Schmalzl, I will present our quarterly results and business updates for the first quarter of 2019. First, I recommend in our main KPIs and our Out-of-Home plus strategy. Christian will then dive deeper and talk about key initiatives and also present the details of our financial performance and the outlook for 2019.The results of the first quarter prove the robustness of our business segment strategy and our strong position in the German media market. Q1 2019 was another strong quarter, especially when taking into account the effects of our recently announced deposals with a total effect for Q1 of EUR 10 million in sales and EUR 1 million in EBITDA; EUR 50 million in sales and EUR 5 million in EBITDA for the full year 2019. Our reported revenues grew by 14%, from EUR 329 million to EUR 374 million. This remarkable development is based on organic growth of 7.2%, ahead of our original mid-single-digit expectations as well as on scope effect. The adjusted EBITDA, including the effects from deposals increased by 9%, from $108 million to EUR 118 million. Our adjusted EBIT also showed a positive development and increased by approximately 7%, from EUR 45 million to EUR 48 million. Our adjusted net income increased by 8%, from EUR 32 million to EUR 34 million, just in line with the adjusted EBITDA. Operating cash flow in Q1 2019 reflects the good business development and was up by 19%, from EUR 74 million to EUR 88 million. The net investments of around EUR 20 million are fully in line with our CapEx plan. However, slightly below prior year quarter due to phasing effects. On a full year basis, we expect, as in the past, CapEx of around 7% to 8% of sales. Net debt for the quarter is EUR 1,546 million. Also it is a step upward due to the IFRS 16 effects, [ this thing ] approved our financial discipline and is approximately EUR 50 million below previous year's quarter.Driven by the increasing digitalization of out-of-home advertising, the structured upward trend for out-of-home will continue in the coming years with growth rates of approximately 5% year-on-year. From today's perspective, we expect the structured growth for another 10 years as the digitization of the relevant size of our existing out-of-home infrastructure will take up this period. The background to this are the long-term municipality contracts for the infrastructure, on average 15 years and long-term approval procedures. The current estimates of Zenith and IPG report expressed in the latest report are fully in line with our previous expectations and at the same time indicates the continuation of the success story of out-of-home media, which has already lasted for more than 15 years. In order to ensure further progress at the upper end of the expected structure market growth, Ströer is the first national out-of-home player that developed a new growth strategy with Out-of-Home plus in order to increase sales growth as well as company profitability through better and more direct customer access based on our higher relevance as a key trading partner through a significant higher share of wallet.As part of the Out-of-Home plus strategy, Ströer supports its core business out-of-home with online and direct media. Ströer is developing from a seller to a member of the marketing team for its national key accounts and can directly achieve better deals for its out-of-home portfolio. We are also expanding our portfolio for local customers of various local and mostly digital marketing products with the aim of increasing the share of wallet of local customers to 50% plus [ X ]. This will enable Ströer to become not only a member of the marketing team but also a one-stop shop in order to sell its out-of-home products more successfully locally. Ströer achieved an upturn monetization of its large and still growing local sales force, which already contributes approximately 60% to Ströer's total turnover.Out-of-Home plus has enabled Ströer, due to the expanded product portfolio, to be the only company worldwide to establish a comprehensive national sales organization for local advertising and marketing products with end results for future growth above the structured market growth. Ströer is optimally positioned for the past -- current age also in local markets. And a lot of this, of Ströer's historical key numbers, also clearly shows our Out-of-Home plus combined with ongoing digitalization has accelerated Ströer's sustainable growth in recent years. We therefore expect to outperform with our growth rate both the market as a whole and our direct national peers, Lamar, OUTFRONT and APG|SGA. Based on our exceptionally strong market position in Germany, Europe's biggest media market and further increased customer relevance through an ongoing successful implementation of our Out-of-Home plus strategy.The overall ad market had shown a negative growth in Q1 2019 versus previous year and is forecasted by Nielsen to grow slowly during the next quarters. Out-of-home has shown a great performance of 8.6% growth in Q1 and the expected ongoing positive momentum throughout the year. We strongly believe that our focus on out-of-home in Europe's largest media market, Germany, in combination with best clients' access is the best strategy to maximize our shareholder return.On the supply side, the national focus enables the top management to concentrate on executional excellence on all levels and to minimize management dilution effect. On the demand side, this strategy strengthens our position as described before. Throughout our advertising clients that we have direct access to more than 40,000 large, medium and small enterprises in Germany. It can also better manage the effectiveness of our strong and large sales force and there are our state-of-the-art support sales system and they can expand and develop every local business context further into a broader set of services and so it systematically expand our customer relationship.Against the backdrop of the increase of our shareholding in Statista to 100%, we are publishing for the first time some key figures of this exceptional successful business managed by an outstanding team of bright entrepreneurs. Besides our very strong market position, as clear market leader in the German out-of-home market with an even stronger position in the digital out-of-home segment, we expect Statista to be one of the key value drivers in our portfolio for our shareholders in upcoming years. Ströer acquired Statista at the end of 2015 with EUR 9 million turnover based on a double digit 10x turnover multiple. Almost 4 years later, Statista is clearly ahead of its own 2015 growth targets and achieved since then outstanding strategic and commercial results. Key points of the Statista success story: subscription-based data marketplace with low churn; highly profitable with mid-double-digit organic growth; a global blue-chip customer base across all key industries; and no direct competition.Statista is currently operating in 40 countries. In 2019, the U.S.A. will become the biggest figure market followed by Germany, U.K. and Asia. Statista offers a permanent growing amount of data across all relevant industries. Statista customers have access to more than 1 million statistics and facts from more than 22,000 sources. Thereof 50% exclusive data compiled by Statista and only available to Statista clients, 35% from exclusively available sources and 15% from public sources. With that, Statista covers for now some 80,000 topics on Statista.com, more than 8.5 million visits per month proved the unique relevance and quality of the Statista service. Statista has no direct competition. Since we acquired Statista in 2015, sales development was constantly very strong, showing a CAGR of more than 50% year-on-year. For 2019, we expect sales of more than EUR 60 million growing to around EUR 200 million in 2023. A CAGR of 35% from 2015 until 2019 to around 1.7 million registered users is another proof point of the ongoing unique Statista success story.In developed markets, we expect EBITDA margins in the mid-30s. Already today, we generate more than 60% of our sales outside of Germany. Markets such as Americas and Asia are important drivers for the internalization of our business. The depicted slide gives you an impression of what we mean when we talk about blue-chip customer base. For each also globally relevant industries, we have the leading players in our portfolio. Brands like Google, Amazon, Microsoft, Alibaba, Netflix, Accenture, Shell or Daimler, and also major institutions and Ivy-league type of universities like Stanford, INSEAD and Oxford.With that, let me hand over to Christian, who will take you through our business updates.
Thank you, Udo.So ultimately, our sales capabilities are key to make sure that we benefit from the changing competitive environment in the national and local ad market. That's why we follow a twofold sales approach since roughly 6 years. Clients' individual key account management for larger corporates and agencies and highly-scalable, well-structured local sales force to maximize market penetration of thousands of SMBs. The right balance of national sales in the Ströer sales group and regional and local sales in the Ströer SMB Group gives us a broad scope of clients and a strong volume position right after the 2 private TV groups, however, significantly ahead of print players like Axel Springer, Gruner, Burda, The Radio Group, RMS or other private or national TV channels. You may notice that the distance between Ströer and the TV channels became smaller in Q1. Since the integration of the value-add business of Direct Media, we get even better access to board level of many clients, which helps unlocking further growth potentials.As already outlined by Udo, we see 4 key growth drivers as the core of our Out-of-Home plus strategy. First of all, the digitization of our existing infrastructure. We will install more than 500 new premium screens in the year 2019 on top of our existing 5,000 screens indoor and roadside. And the momentum in Q1 gives us confidence to achieve that target. This will increase our market share in the strongly growing digital out-of-home market parallel to our footprint in the point of sale signage segment, with currently more than 77,000 screens in our portfolio. Our higher share of digital inventory means more flexibility for our clients, better impact for their campaigns and ultimately better yielding and monetization of our infrastructure and advertising concession. Secondly, we continue to strengthen our local sales force. We have hired another 45 people in Q1 and will increase our total headcount of regional consultants, local hunters, sales representatives as well as inbound sales and local call center agents and other 175 FTEs for the full year 2019, driving our total sales power locally beyond 1,000 people.A third and more and more interesting growth element is to further use our online ex tech and know-how to increase programmatic revenues for digital out-of-home, especially indoor public video. Q4 showed strong momentum, which continues also in Q1. Again, more than 20% of our national ad revenues on public video came via programmatic screens and DSPs like Active Agent, The Trade Desk, Adform, MediaMath or Splicky. We constantly develop new targeting features through integration of data and the most important learning is, we have almost no cannibalization effects on public video revenues that come from traditional bookings. We think that besides national agency business, national direct client business and regional and local direct sales, tech sales or programmatic becomes a more and more relevant monetization level. The know-how from our content and online business helps us staying ahead of pure out-of-home players that just start connecting with the tech part of digital media business. We're still working on that topic since almost 5 years now.Finally, the fourth growth and value driver, the integrated approach of out-of-home content and Direct Media in servicing big accounts. We started with the top 30 clients and 22 out of them are meanwhile using us across all product categories and even if it will require more work and marketing investments in the future, we clearly see that, that will get into a more consultative role for advertisers and also tap into the current weakness of agencies. Ultimately, we want to increase our overall share of wallet and therefore incrementally push out-of-home, especially when more and more clients challenge their current focus on TV and how to better optimize their video advertising investments. It's interesting to see some trends amongst our top customers in Q1, which might also give indications for coming developments. Many key accounts that reduce TV advertising increased parallel their out-of-home share. And even if TV, like in the case of Amazon, is benefiting from increasing spending, out-of-home is growing even faster.So let me summarize our business update for 2019 on the basis of the indications from the first quarter. We do have an extremely strong and once again, improved position in the structurally growing segment Out-of-Home in Germany. We are already leading in the digitization of Out-of-Home in Germany and will improve and leverage that even more throughout the year. We further execute our rollout plan for constantly growing regional and local sales forces. We do see a huge further potential for integrated offerings, combining our core medium out-of-home with online content and direct to further drive out-of-home momentum. And we continuously invest in our infrastructure and tech capabilities to keep and extend our market leadership role. And programmatic digital out-of-home revenues are currently one of the hottest topics in the ad market.Before I will run through our financials of Q1 2019, allow me one remark. This year we'll be straightforward as we will have only the 1 number data set including IFRS 16 and IFRS 11 as well as no Turkish operations anymore. Revenues grew strongly by 14% or in absolute terms, from EUR 329 million to EUR 374 million, building on the positive momentum of previous years and taking into account acquired entities in direct and out-of-home media, compensating effects from disposals in digital out-of-home and content. Organically, we grew a remarkable 7.2% in a continued demanding market context. Adjusted EBITDA increased by 9% from EUR 108 million to EUR 118 million in line with the strong business development. Exceptional items are slightly lower compared to previous year's period, taking the effect from the disposal of our recently announced divestments into account, exceptionals would have been significantly lower. Depreciation and amortization was up by EUR 6 million to EUR 84 million mainly due to our larger scope in consolidation. Tax expenses increased slightly in absolute terms. This increase is primarily attributable to the sustained improvement in operating activities and as a result, to the further increase in the tax base, which led to a tax result of minus EUR 3.4 million. Adjusted net income of our core KPI was up by 8% from EUR 32 million to EUR 34 million in line with operational performance.The depicted free cash flow statement represents reported figures based on IFRS accounting rules, including IFRS 16. Our adjusted free cash flow in Q1 2019 developed nicely and is at EUR 19 million, well above prior year's quarter results. This is due to an improved operational performance as well as due to phasing effects in CapEx and working capital compared to the same quarter of the previous year. Tax payments of EUR 11 million are according to our plan. Previous year's figures are comparably low, and for the full year, we expect the normalized [cash tax out] ratio of 20% to 25%. The buildup of our working capital was with EUR 8 million, somewhat better than previous year and in line with our own expectations. The investments before M&A in the amount of EUR 20 million are affected by phasing effects and will increase in the next 3 quarters. Our banking leverage ratio improved from 1.6 in the first quarter 2018 to 1.4 in Q1 2019.Our strong performance was again fueled by all segments. We saw organic revenue growth for out-of-home media of 4.6%, digital out-of-home and content of plus 8% and Direct Media grew double digit with 11.6%. In absolute terms, out-of-home media revenue grew by 7% from EUR 134 million to EUR 143 million especially supported by local and regional sales initiatives. Adjusted EBITDA of out-of-home media increased by 2% to EUR 63 million. The EBITDA margin stands at 43.8%. It is affected by shifts in the product mix such as increasing relevance of a low-margin UAM Group as well as the more cost-intensive expansion of local and regional sales forces. Revenue growth of digital out-of-home and content was mainly triggered by a strong performance of our public video business as well as Statista. However, this was partially offset by portfolio changes like twiago or Ströer Mobile Performance in the segment. All in all, reported revenue grew to EUR 125 million from EUR 123 million in the previous year's quarter.Adjusted EBITDA of digital out-of-home and content increased by 25% from EUR 35 million to EUR 44 million, with an outstanding margin improvements of around 7 percentage points to 35.2%. As already said in the previous presentation, we focus our management attention on profitable growth opportunities. Reported revenue in the Direct Media segment leapfrogged from EUR 77 million to EUR 113 million, or 47%, a remarkable organic growth of 12% over the entire segment portfolio, reflects the underlying positive sentiment in the beginning of 2019. The adjusted EBITDA of the segment was at prior year level due to consolidation-driven onetime integration costs.Let us now get to our guidance for 2019 and Q2. Unchanged to what we discussed in our preliminary presentation at the beginning of the year, we expect the positive sales and earnings strength in the mid-single-digit percentage range for the financial year 2019. For the second year -- for the second quarter of the year as well as for the first 6 months, we expect organic revenue growth of around 7%, and that's for at the very top end of our annual guidance.With that, let me close our presentation with a reference to our AGM on June 19, 2019. And thank you, everyone. We are now happy to take your questions.
The first question is from Katherine Tait with Goldman Sachs.
Just a question on Statista for me. Obviously talking -- I mean you demonstrate here again some very strong growth today and some pretty strong targets, looking out to 2023. I'm just wondering if you could break down how you sort of anticipate getting to those sort of targets. How -- what proportion, for example, is going to come from additional uses versus pricing? And maybe just on that pricing point, can you perhaps give us a bit more color on what proportion of that 1.7 million registered users are paying users on a served subscription and where do you think pricing can go? I know that you've talked about not really having any direct competition. But certainly, the sort of -- the things that I've seen in terms of your pricing competitor, for example, eMarketer would suggest that, that's still quite a big discount from where you are to where they are at the moment. So any color around that would be very helpful.
Yes. Thank you for the question. I mean Statista is still in the very beginning of its development, and so the app was quite low, exactly what you said. If you compare to eMarketer, we think there's a big uplift. And if you look on the -- on our customer base today, the strategy of Statista was always to enter the market a bit fairly quite low price and to gain market share first and that's exactly what Statista achieved. So it's a remarkable development if you look at the customer base. From all key industries, it has actually already 8 from the top 10 global companies, and -- so some of them were shown in the presentation. So that's why we see [ MVB] actually higher the prices every year, around 10% on average. So -- but it's a mix on price increase and also increase of scope for the different customers. So overall, we expect 50% of the growth to come from existing customers and almost 50% on new customers. Paying customers is about 15,000 right now, 15,000 globally but it's all company customers, as there's no private customers. Everything is corporate. So -- I mean Statista is growing more or less on an unchanged growth rate for the last year. That's why it's quite an easy thing to forecast actual development for the next 3, 4, 5, 6 years and because, like what I said, Statista's at a very early stage. U.S. will become the biggest market this year. But as you might have seen in the presentation, we are currently opening offices in Tokyo, in [ Incheon ], in Los Angeles, so it's a really global business. And in -- but in many of the markets, we are still in the beginning. And the strategy of Statista I think really paid off as we go in the market of low prices so there's no -- 0 competition today. So it's by far the biggest Data as a Service business globally and somehow also developing the Data as a Service strategy very successfully. So that's -- we are more than happy with the development, and that's why we said that we believe that Statista for our shareholders would be one of the key value drivers for the upcoming years. But today it reflected almost 0 in the stock price, but this -- I think it's definitely going to change.
The next question is from Craig Abbott from Kepler Cheuvreux.
First one maybe just a follow-up a little a bit on Statista. I just wondered if you could give us at least in terms of dimension a little bit. How much of that significant earnings uplift you saw in the -- this out-of-home and content media division in the first quarter was attributable to the pull-up in the profitability at Statista? Or was this maybe just simply due to deconsolidation effects to a large extent? And secondly, looking at out-of-home, Q1 margin down 360 basis points. You mentioned there's still a little bit of scope effect with united -- UAM Media, but I -- and expansion of local sales but that looks like a big number in terms of the year-on-year absolute increase from the cost side. I just wondered if you can maybe explain that a little bit more and the outlook for the out-of-home margin and for the coming quarters.
Craig, let me maybe start with your second question. I think just in general, I think Q1 is -- especially in the out-of-home sector, I think it's around 20% of the revenues, less than 20% of the annual EBITDA and I think just below 15% of the net profit in that segment. So I think it just gives indication sometimes and I think the variance that you see in the margin in that quarter is rather facing that anything substantial. You're right, just the incremental costs of local salespeople in Q1 would make the difference, but as we've explained last year through some of the challenges we had last year around tobacco clients, we used especially the time since mid of last year to hire faster more local people for local sales. And that cost have been built up in the second half of 2018 and now fully kicking in. And I think the margin effect, the potential margin effect from UAM in Q1 was a little bit more than EUR 1 million. So if I combine the 2 aspects, then I think that's probably in total as something like EUR 2.5 million. If you add that and look at a slightly changed product mix, which can differ again in Q2 and Q3 and Q4, then you see that, I guess, overall, we are pretty much operating on the same margin in the out-of-home segment.And on your first question around Statista and the margin effect in the content segment, the positive one. I think yes, the -- that -- there's probably 2 things that drive it. The first one is that -- the crucial one, it's the development of digital out-of-home especially as the incremental cost of sales for national accounts is almost 0 and all those programmatic revenue streams coming in at extremely good margin. And secondly, yes, the disposal of probably growing businesses, but not so profitable ones also have an effect, I think. The impact on Statista on the margin and especially profit development there is close to 0, so it doesn't move the needle yet.
And the point here is, really, what Christian also described in his speech, that digital out-of-home is developing very, very, very good. And the first time now we see income from programmatic buying. What sounds very dramatic but the point is programmatic buying is the part of the online business. Programmatic buying means we get cash from digital budgets and not from the out-of-home sector. And this is -- this was something which we're waiting for a long time because if you get budgets for digital out-of-home as part of the out-of-home sector, then you're actually on a subsector from a top sector. But programmatic comes directly from 10x bigger -- or not 10, probably it's a much bigger online budget. And this part is a very, very promising time in the first 3 months here that we have significant demand from programmatic for digital out-of-home, and that's why we believe that if you look on the growth, then definitely, on a total shareholder return then digital out-of-home will be together Statista, the key growth -- key value drivers in the upcoming 2 or 3 years. Clearly dominated by digital out-of-home because our market share here is difficult to say but it's around 90% in Germany and this is -- if you talk to the customers, this is clearly one of the hottest topics in the market for the upcoming years now. And there's a lot driving the margins here because the contracts you have here are typically first-user contracts, long-term contracts. We have very good margins in digital out-of-home. That's also why we renamed the segment to make it more clear that the content part of the business here, it's more for the support for our digital out-of-home for many different reasons because we believe very much in quality of content on additional screens but different in most of our competitors. And we use it more as a pure, let's say, digital billboard. We believe that high-quality content is actually attracting more and more viewers, more views. And I think we do the right thing here. And by the way, the -- I think the programmatic turnover -- and by far, we don't have, for instance, Google is still not connected as a -- as the demand-side platform, so the 20% growth only on programmatic is only collected from a couple of smaller DSPs. And so this is also on the very first beginning here. But this is exactly which -- the thing we are working out for over -- almost 10 years. 10 years ago, we signed the first contract for digital displays. 5 years ago, we entered the online space to get closer to the whole technical development. And this year, the first time when we actually are getting substantial demand for this item.
The next question is from Julien Roch from Barclays.
I'll start with the questions on M&A and FX and then I'll move to digital. So my first question is on M&A. You said minus EUR 50 million for disposals, but how much for acquisition in terms of full year '19? And the second question is on FX. If spots stay the same, what's going to be the impact on revenue for full year '19?
What remains the same? Sorry, Julien, I didn't get the...
If spot -- If the exchange rate remained the same for the rest of the year, what's the FX impact for full year '19?
FX impact should be, probably, more or less 0.
Actually, FX impact is 0 because we disposed the Turkish business so not much on the FX effect. M&A, we already cleared and said we don't see any substantial M&A for the next -- for the 1, 2 or 3 years because we see the value drivers especially on organic growth. What Christian described on the 4 different growth drivers and the disposal was a part of our Out-of-Home plus strategy, so that it streamed on our portfolio, that's an ongoing process. So -- and that's why it was a bit close now to the first quarter revised. So if you add the disposals and in fact, we were not -- we were around EUR 384 million for Q1, so clearly ahead of the street and EUR 119 million EBITDA. But we deducted that already, obviously because it -- and that's why we are around EUR 374 million. The effect in Q1 was EUR 10 million on turnover, EUR 1 million EBITDA for the full year. Actually, results EUR 50 million turnover and EUR 5 million EBITDA.
No, I understand there's no more M&A, but then what's the impact of what you bought in 2018 on 2019 revenue for the full year?
Nothing new. This -- the large acquisitions [ were provided a while ago], so everything is factored in.
I think the biggest impact was really in Q1 because the 2 large call center businesses that we had acquired were D+S and DV-COM. And that was I think in March last year. That's actually where we have the upside -- the increments upside in January, February this year and from March onwards.
Nothing is coming anymore.
Pretty much on stable portfolio if you deduct businesses, as Udo said before from Conexus, Foodist and Ströer Mobile Performance.
Okay. Switching to digital, what percentage of your outdoor revenue is digital? And what percentage of your inventory is digital in Germany? So I guess, if you put together the out-of-home media division plus video less international.
It's display-wise, so that's -- I mean that's the easiest way, we currently have 5,000 out of 230-something-thousand sites, so we talk about 2 -- slightly more than 2%, if you talk just about the number of sites, which are digital. If you look at revenues, I think Q1 was for the first time slightly above 20% revenues. If you -- as you described it, if I take the German -- the Ströer German Out-of-Home business and I deduct the Polish operations and anything that is outside of Germany Out-of-Home.
And in that 20%, did you add back video? Or is it just the out-of-home division?
It's the public video, so everything we have on as revenues on our indoor screens, what we call public video, as well as digital roadside screens out there on the street. [ It's good to ] describe it. Actually, you put all of your out-of-home inventory into 1 box in 1 country and then see what displays are digital and what displays are traditional or analog and then look at the mix. And as I said, numbers is like 2% or 2.2% versus 98% and revenues, 20% versus 80%.
Okay. Great. And then you said that 20% of these 2 is done programmatically? Or programmatic grew 20%?
20% of the national public video revenues are programmatic.
Okay. And are you selling campaigns that now combined digital outdoor and digital display? And if yes, what percentage of your overall digital advertising revenue is? So I guess, that would be German Out-of-Home video and then digital display.
The first question is easy, 90% or slightly more than 90% of that programmatic digital out-of-home is sold standalone without including online video. I think online video helps in general to get better connections and fix the technical challenges with DSPs, but they prefer to buy product-by-product and not a mixture or combination of that, even if you sometimes plan it in combinations for customers. But 90% is really they explicitly book that public video product in isolation programmatically. And the second one, just to double check, could you just explain what you meant with that? Not sure if I understood it correctly.
No, no. I was -- I mean you answered, so 20% of national digital is programmatic, and out of that, 90% is standalone and 10% is combined with digital display. That was my question, to know whether people were buying campaign combined or whether they're buying standalone to see really what the synergies were between your digital display and your outdoor digital.
Yes. So interesting enough, I think the synergy is more the marketing side. As you go to clients and show them video advertising opportunities across many screens and because they have a very digital view on everything, suddenly with that approach, you get -- you move public video or digital out-of-home more and more into that online context, and you get more attention on that. But ultimately, after that, the customer then buys it piece by piece.
The next question is from Marcus Diebel with JPMorgan.
It's Marcus. So one question left from me. Christian, could you talk a little bit more again about the trends of national advertisers in regards to the outdoor business? I asked that on a previous conference call as well. Just wanted to know whether the strong momentum that we're clearly seeing now in the outdoor division is also very much reflected by nationals? Or is it really more driven by you obviously being much more exposed to smaller clients and the growth coming potentially more from the SMEs. Just wanted to see what the trends really are that led, again, to a very strong set of results in outdoor. Maybe if you can comment on both nationals and local customers?
Yes. I think for -- in the first quarter, and I would assume that, that would be my best guess for the full year as well, roughly 1/3 of our growth comes from the national ad market and 2/3 come from regional and local sales. So I think -- that in mind, I think you get in the combination of digital out-of-home and traditional out-of-home something like 5% to 7% growth out of the national ad market. So probably a little bit lower number on the traditional out-of-home. But in general, we see that, of course, digital out-of-home is growing for -- in the national customer base as it's quite a nice and interesting complementary medium to overcompensate coverage weaknesses of television, so that's very close to the big TV budgets. I think that's also one of the slides that we had in the presentation that explains it. That's, I think, where we benefit. We also see that the megatrend that more and more business in general moves from -- also from traditional retail to digital or e-commerce, you see that more and more brands lose a little bit the real touch with their customers, so we see also more national customers again booking very specific out-of-home locations as signage medium just to have strong presence for a longer period of time in public space. And we see that a higher localization of media spendings nationally when you see that the big campaign media like TV are showing some weaknesses then very often, clients try to switch into maybe more regional approaches, and that's where regionally targetable media like out-of-home also benefits. That's why I would say, as I said before, the strongest growth momentum clearly comes from regional and local. But nevertheless, also national business is growing nicely. And there is digital out-of-home complementary to TV. It's regionally targeted out-of-home campaigns, and it's, in part, premium sites in signage strategies.
The next question is from Patrick Wellington from Morgan Stanley.
Two questions. The first one is on Statista. You recently bought the minorities in Statista, so that will have established a benchmark valuation for the business. So could you tell us what that benchmark valuation was? And then the second question is on your growth rate. You're talking about growing 7% for the first half, which is higher than the mid-single-digit percentage range in the full year guidance. So are you anticipating a slowdown in the second half? Or is that just innate caution at this stage?
Yes. Thank you. So valuation -- it was a rather complex deal, but the valuation was 10x turnover when we entered Statista. And the...
But the deal done recently?
Sorry, I said, the recent deal was also a part of the initial deal, so you can't separate really multiples on -- overall, it's 10x EBITDA, they're on the right side. And this is also in line what we see with the similar businesses are -- similar business is difficult because it's, what I said, the biggest data-as-a-service business. But if you look on software-as-a-service for example or if you look at the multiples when LinkedIn was sold by a global subscription-based business, similar margins and growth. So 10x turnover, this is, from our point of view, a fair valuation for Statista.
So if you took that transaction in its totality, both the initial and the final elements, what's the implied valuation in monetary terms of Statista?
The implied valuation today?
The implied valuation -- as you say, it's a complicated deal, which has been running for a number of years, but if you took that deal in its totality, what is the implied valuation for Statista?
The implied valuation today, we will see it unchanged at 10x turnover. So the implied valuation is, from our point of view, at EUR 600 million right now. But again, on the last deal, there was -- originally, we agreed on some caps, so the last deal doesn't reflect the valuation, so the entry deal reflects the valuation. But implied valuation with what we see today and this is also in line with, let's say, some preliminary offers we get from time to time, so there's quite some demand on this asset in this range, let's say, from 8 to 11x turnover, in this range.
So you're saying you've had some preliminary offers of around EUR 600 million for Statista?
No, no I didn't say that. I said we were actually approached originally in earlier years if we want to sell it, but we never brought it to this stage. So we have a clear roadmap here that says we start to talk about -- because, in the long run, we don't believe Statista will be a part of the group in the current structure because Statista it's -- was originally a part of Out-of-Home plus strategy. But obviously, the development -- also the value creation is actually, at the end, extending a situation where it really makes sense to have it. So either we're going to have an IPO in 2 or 3 years, or -- for us, the key point is how can we crystallized the value of Statista. So right now it's almost 0 in our share price. And this is obviously -- and we don't believe that we're able to crystallize the revaluation insights of the Ströer stocks. Or we might think about different options. And the clear borderline for us is the valuation of EUR 1.5 billion. So the moment the valuation is exceeding EUR 1.5 billion, actually, we are open to discuss with interested parties or we are going to have an IPO. It's too early to that. Statista is still in the very first beginning, but this is actually our internal strategy, from EUR 1.5 billion onwards, we -- and then Statista will be obviously a very significant part of the group, and we don't believe that it would be possible to have a proper valuation on the outdoor business plus Statista in one company, so that's why we listen to interested parties, but we are not entering in any discussions before this communicated point.
Okay. So I mean you're growing at 50% per annum, you cross over the EUR 150 million mark in about 2021 and on your 10x sales -- actually at EUR 1.5 billion, so it's all going to plan. You'd sell it at some point in 2021. Is that roughly the plan?
Well, 2021, 2022, that is our -- from today's perspective, a likely point where we could think very concentrated how we can crystallize the value for our shareholders, yes.
Right. And do you the focus at all on profitability in the business? You talk about EBITDA margins in the mid-30s in developed markets. I wasn't sure whether that meant in Europe and Americas, which is the vast majority, or whether it's mature markets in the sense you've been in them for a while.
Well, that's a good question. So that means, Germany is, in comparison to other markets, developed. There, we see margins in the mid-30s. Overall, the margins are a bit below 30%, but it's profitable. But we are -- by the way, we don't disclose that in details because, right now, we are actually discussing exactly this topic. It's possible that we accelerate the growth and give less focus to margins because it's a new business, it's a very fast-growing business, and it's clear now that Statista will not be a part of the Ströer group in the current situation in the long run. So this decision taken in connection with the step-up in the shareholding is also influencing now our strategic thoughts, we favor growth in comparison to profitability. Up to now Statista was always growing profitably, but it's quite a remarkable situation because, if you look normally on businesses growing with 50% CAGR, they are these tech companies, they are, by far, in the right territory. But Statista is growing up 50%, and it's making money at the same time.
So sorry, just to pursue this. So at the moment, the business is profitable. Can you give us roughly what the EBITDA margin is at the moment? And then secondly, if you're going to make it fashionably unprofitable in the future, you presumably need to tell us what that's going to be because it's going to be very difficult to unpick the core business from the impact of losses at Statista, if that's going to be case.
No, I don't think we go for losses. So we'll be talking now about a mid-20% EBITDA margin, so that's quite positive. Very aggressive would be to lower this margin to below 10% or something. I don't think it's a -- because obviously, also, we don't want to overheat the business, so that makes also no sense. So we're actually discussing right now with the management, what is the maximum growth rate they can digest, and I don't think it's possible to make losses while growing on a still healthy growth rate.
Great. And then the other question on the -- what appears to be some relative caution or a prediction of a slowdown in the outdoor market.
No, no, no slowdown at all. It's just that we didn't want to raise the guidance now, so we just wanted to stay on the conservative side. We don't see any slowdown. If you look at the first half of the year, we see clearly acceleration between Q2 and Q1, so we are looking on a very promising Q2. And we have no signs that this could change now -- could change in the third or fourth quarter. We don't expect any slowdown because I might as well -- a very, very good question because we exactly discussed that before because, if you look at the numbers, you could think that we are targeting a slowdown in H2, but it's definitely not the case.
The next question is from Christoph Bast, Bankhaus Lampe.
Maybe one for Christian, please. So if I remember correctly, you lost some roughly EUR 8 million from the tobacco industry in Q1 last year. And I think you said at the time, if you had noticed this issue earlier, you would have been able to sell the unsold advertising inventory to someone else. So why is the organic growth in out-of-home then only falls by 6% this year and not falls by 6% organic plus the lost EUR 8 million from last year. And that's my first question. Secondly, in your press release you stated that the good performance in digital out-of-home and content was driven by public video and Statista. However, the quarterly report shows that video was only up 3%. So could you give us the different growth rates between public video and they have called it, online video because it looked like the nonpublic video part of that business must have declined. And last question, could you give us the organic growth number for the Dialog marketing business? And just give us a short explanation for the margin decline here. That's it.
Okay. On your first question, I mean, we didn't want to talk anymore about tobacco because we've done it the full year 2018. But of course, we're happy with any questions. So the reason for not even higher growth rate in Q1 this year is that we've lost another EUR 3.5 million on tobacco. So if you look into, maybe someone has done it, into the detailed number of Nielsen, Philip Morris hasn't advertised at all in Q1, and they had spent something in the range between EUR 3 million and EUR 4 million last year so that came on top -- and the rest was stable versus previous years. So actually, we are running against, at least in the first quarter, weaker tobacco spend, but as we said last year, we are prepared to deliver our quarterly and annual numbers no matter what tobacco clients do. On public video, you're right or on video in general, public video developed very nicely. The online video part was -- I think went backwards by roughly 15% to 20%, but the majority of that was driven by our market channel network Q1 where we just focused less on low or no margin business that comes -- that goes through us to influencers or also YouTube where you get -- as I said, it has more or less no margin, and we concentrate on more profitable project business. So actually, in that case, it's -- I think that's what the combination of revenue development with margin development. We just want to focus on the revenue streams that deliver the right margin levels and then focus on that. And sometimes another 4% or 5% revenue growth on public video on top of what we historically had is by far more worse than losing maybe 10% or 15% of the multi-channel network video business.
So that means public video was up by roughly 20%?
Yes, a little bit more, I think. And organic growth rate in dialogue marketing was double digit, so pretty much -- or pretty precisely 10% in Q1 this year.
The next question is from Patrick Schmidt, Warburg Research.
Most of my questions have been answered. But I maybe follow up on the dialogue on media segment in terms of the margin development, is there some room for cost synergies in the future? And how should we think about that -- so your margin forecast maybe for the midterm, so maybe next 2 or 3 years? And then add on -- or following up on Statista. In your report, in your subsequent events, you stated that you bought the remaining 18.7% for almost EUR 30 million, so the variation would have amounted to EUR 160 million. Maybe -- and I know that it's not your variation, but I wonder whether there are some earnouts agreements for Statista.
Yes. No, the price was a bit higher than EUR 30 million, but what I already said, you cannot -- the last 18% was capped because we realized that it would become too expensive. So we agreed with the management to cap it on a certain level, independent from what we or they see as the valuation or how much money the business would make. So that's why I already said that the last 18% indeed was already agreed when we bought the majority. It doesn't reflect the profitability or the valuation of the business. And probably one additional remark. The CAGR was 50%, so we don't expect the business to grow 50% year-on-year now in the next 20 years. So on the conservative side, we are calculating with mid-30% organic growth even if it was always growing faster up to now but in this area and mid-30s EBITDA margins in developed markets. So this is -- but because there was a question before, in between 2021 and 2022, we expected $150 million. We said we expect around EUR 200 million sales in 2023.
And on your dialog-related question on margins, I think our midterm plan is to catch to and maybe beyond 15% but getting closer and closer to a 15% margin is currently our key target. And I said we are now -- have all of the companies that we've acquired since 1 year in our group. There's still a lot of integration work going on. And in parallel, we try to better connect it with our other ad sales and key account management business. So I think we are inching closer, that's how I would describe it, but there's a lot of, I think, just basic work to be done simplifying management structures, getting everything on the IT systems, harmonizing key account management, and that's all on the way to get to the 15% as quickly as possible.
All right. But just to be clear on Statista again. So there are no earnout agreements tied to any KPIs in the future. So you're now owning 100%, and there won't be any more payments?
No, I said there's no payments. And to repeat it again, in fact, we bought 100% from the beginning but for technical reasons, we left over and this 18%, which we bought now is a kind of the earnout of the first year. So what I said, it was a complicated deal. It was obviously, with EUR 9 million turnover, we talked about, at the end more than EUR 100 million, and that's why we wanted to have some security conditions in the contract. We were always totally convinced, but it's obviously also risky if you buy a company with EUR 9 million turnover to believe this is going to make 10 years later EUR 200 million. So that's why I said it's a -- there's no further earnout. This was, in fact, the earnout from the original deal.
The next question is from Nizla Naizer, Deutsche Bank.
Just 2 final questions from me. The first is on the out-of-home media segment growth organically compared to the market numbers that you showed us in the presentation. You grew 5%, market grew 8%. Is there a difference -- is there a reason for that difference in growth? And if you add digital out-of-home, for example, would that be more in line? Just some color there would be great. And related to digital out-of-home, how many public video screens do you currently have? And do you plan to expand that? Or is it now more about increasing the fill rate. And my last question is on the content media segment, there was 8% organic growth but reported growth was 1.5%. You mentioned there were 2 companies that contributed to the deconsolidation effects. Could you just tell us what those 2 firms that you sold were? And what would be the absolute deconsolidation impact in Q2 as well in content media? Some color there would be great.
Thank you. I'll take the infrastructure part of the question, so we're going to expand aggressively our infrastructure on digital out-of-home because what I already said in the beginning now that we get the first money from programmatic means from the online budget, this was exactly the signal which we were waiting for a long time because the online budgets are obviously much larger than the out-of-home budget. And so as I said, it's a very important strategic point which we reached this year, and we justified it that the -- first, we keep on rolling out with the same speed. But throughout the year, we -- actually, we will prepare to speed up, and it takes, let's say, 6 to 12 months preparation time, but it's clearly the future is digital, and digital displays all over the customer journey is clearly the key communication channel for the future. So that's why we are rolling out even if we would not see a super high filling ratio right now because you also need to actually develop the product to attract the customers. It's always a bit the chicken and the egg thing, but definitely, we are not focused primarily on -- and by the way, the filling ratio is still quite low in the existing network, so they're below 50%. But our customers also need to see the product, and that's why focus here is clearly on enlarging the number of screens in the upcoming years.
On your first question about the numbers. So the 8% for out-of-home is, first of all, gross numbers reported by Nielsen, and it includes everything that is out-of-home-related, so that includes digital out-of-home as well. So you talk about both traditional and digital out-of-home, and it's gross 8%. And therefore, it's difficult to compare it with net spend. But if you look, I would say that the total market for out-of-home including digital out-of-home, so not us, but the total market is, on a net basis, maybe up by 4%. And as we said before, our net growth is I think 4.5% in traditional and 20% in digital out-of-home, so you combine it and make the math and probably get to 7% or maybe 8%, something like that. And on content, I think, as Udo said, the disposals pretty much hit the content and digital out-of-home segment. So actually what we've lost through the disposals is like EUR 10 million in Q1 revenue-wise in that segment and roughly EUR 1 million in EBITDA. And it will be a comparable number for Q2. So it might be EUR 9 million or it might be EUR 11 million, but something around EUR 10 million revenue.
Just wanted to confirm, in content media, what were the firms that were disposed contributing to that effect?
So the 2 crucial ones are Ströer Mobile Performance, so in-app monetization and app download generation and twiago,, that's native advertising. And one special effect in Q1 is social media interactive, BodyChange. That was already sold, I think, in Q2 last year, but we had still revenues in there in the first quarter 2018.
The next question is from Jean-Baptiste Sergeant.
My question has already been asked.
That's a shame.
The next question is from [ Matthew Monivadit ] .
It's [ Laurence Agio ] from [ DSW ] Asset Management. I just wanted to come back quickly on the Statista, which I heard a lot in this conversation. The addressable market compared with the EUR 200 million you're aiming at in 2023 is what size? I mean can you put your own number on the addressable market in your mind? And then I have a follow-up question.
That's actually very difficult because Statista is a market-maker here, so we don't see any natural borders in the upcoming years for further growth, so the EUR 200 million is a -- it's a step in between, so management believes that the business will grow. If you look on -- now we are operating in 40 countries. And as I'd say, the U.S.A. and Germany now are the biggest countries and U.K., but in most of the countries we were absolutely at the beginning. So from today's perspective, we don't see why Statista should not be able to make, whatever, [ EUR 500 billion ] turnover on -- in the upcoming years. So it might change, maybe one day a competitor will come up, even this is very unlikely because Statista now has 10 years of work. So 1 million different statistics, 80,000 different topics, so you need 10 years to build it up. So if somebody would start today, he would need 10 years until he would reach a level he could compete with Statista today. And obviously then, Statista will be 10 years ahead, so that's why we are quite confident that Statista will keep its market position. In a certain way, they are actually developing a new business now Data as a Service, like Salesforce, maybe develop the software-as-a-service market. We believe this is really a future business model. But we can't see any -- from today's perspective, we cannot say the market volume is whatever EUR 1 billion or EUR 2 billion or EUR 1.5 billion, they are making the market, they are creating the market. And from today's perspective, we cannot see the point where it should stop. Maybe it's different in 2 years, but we are still in the -- in day 1, in fact. So that if you look on the overall market in China and the whole -- all Asia, where we're open now, where we're open in Shanghai, we go to different -- a couple of different more offices also in the next 2 years. Nobody knows, maybe we have EUR 100 million turnover from Asia in 3 years. So the first -- we started the sales in Singapore, not Shanghai -- sorry, in Singapore 2 weeks ago after the team got an intensive training in Hamburg, now the team is on the ground since 2 weeks, the results are very promising. And the Shanghai, Tokyo and Seoul are going to follow in the next 18 months.
Udo, it sounds like, to me, that you did a very good acquisition, and it's a very exciting opportunity you've got here, which will make up for the mistakes in the out-of-home acquisition, international. So why on earth are you considering an IPO instead of considering it as a core business for you to grow looking forward and beyond 2023? And furthermore, as I mentioned, under your sales, why IPO? You don't need money to reinforce your position in Germany. You will at least consider a spin-off, which will mean that you keep it as an important investment for yourself.
Well, absolutely. I mean, actually, I didn't want to confuse anybody now because I said Out-of-Home plus and suddenly we talk only about Statista, so that's why I said it's we have 3 options on the table. One is definitely we keep it as a core business in the future, that's -- we already made some jokes here maybe we sell the outdoor business in 3 years and keep Statista, this is only a joke.
You'll never know.
Sorry?
We never know.
We never know. The question is we look at it very agnostic. So our target this year, we need to maximize the value for our shareholders. And if you realize, we can maximize our shareholder value to keep the outdoor business and Statista in the company, we do it. If we realize we maximize our shareholder value by floating Statista and distribute the shares to our shareholders, for example, then we do that. And if we realize we maximize our value by selling something, we sell it. So we don't look at it from an emotional point of view, even this is a family business, we are quite focused here on shareholder value. And was, by the way, also the reason why we decided to say -- to give the market the first time some information about Statista because, up to now, we didn't talk about it because we also wanted to wait until the earnout is now through, which happened now a couple of weeks ago. And that's why we came out now with the first data. But the key question is clearly are we able to crystallize the full valuation of the business, yes or no. And this will be a key part of our decision. But every opportunity is -- every option is on the table, so nothing is fixed here. And indeed, we are very happy with the investment because, I mean, we did -- I did, personally, probably 100 deals in the last 20 years, and I must say, this is, by far, the best one. And the only one where the management always, by far, over-delivered whatever was promised, and that is a good experience because you mostly experience other things. But this was also high risk. I mean, we agreed to pay EUR 100 million, the company was a EUR 9 million turnover, so many people, also in the company, was quite skeptical with that.
And you have a follow-up question from Julien Roch, Barclays.
Follow up on Statista. First of all, you said 3 things, keep your core business, IPO, selling because, at the moment, the market's not giving the right price. I think one way to get there would be to actually give us a number on a quarterly basis. So maybe extend the breakdown of the division so we have the -- at least the revenue ever quarter. About my question is to look at the value of Ströer ex Statista. So currently, mid-20s EBITDA, you think it can go to mid-30s EBITDA. But what is the EBIT or the operating profit, so we can look at the EBIT and net income of Statista?
Hello? Hello?
Yes. Did you hear me?
We were kicked out. Can you repeat please?
So my question -- well, first of all, I would suggest that you now disclose every quarter the revenue in the division because, that way, the market might give you the proper valuation of Statista because it's hard to value the business when we don't have any numbers. But my question was, to look at the value of Ströer ex Statista, you told us that EBITDA margin currently were mid-20s and that it would go to mid-30s, what is the EBITA or the EBIT margin of Statista? So how much of the revenue is in D&A?
Yes. Let me take the first one. I didn't complain here, so we didn't deliver any information up to now about Statista. So obviously, that's the reason why the valuation is not reflected in the stock price, but this was on purpose. So we had different reasons why we didn't say anything about Statista. So generally, besides the current situation, I am personally a bit skeptical because obviously Statista is different to the outdoor business. If 2 businesses like Statista and the outdoor business is one company, if we get the valuation for this which reflects the value of both businesses. But let's see, let's see what's going to happen. But again, this was no complaint because, you are totally right, if we don't publish any numbers then we can't get any valuation. So your second question, I must say that I think I can't answer it now because it was not our intention to go too deep here in Statista numbers because this is a Ströer call, and we talked a lot -- from my case already too much about Statista even this is a Ströer company. So that's -- we can check it and deliver the answer to you after the call.
Okay. Very good, And maybe, as I said, I think you should disclose the revenue now every quarter. So I'm going to ask what was the revenue of Statista in Q1?
Around EUR 14 million, EUR 15 million, something like that.
We haven't received any further questions, so I hand back to you, gentlemen.
Okay. Thank you very much, guys. Have a nice day, and see you and listen back for the Q2 numbers. Have a nice summer.
Bye-bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.