Nielsen (NLSN) 9 May 212021 Q1 Earnings call transcript

Ladies and gentlemen, good morning, and a warm welcome to the Q1 2021 Nielsen Holdings plc Earnings Conference Call. My name is Lisa, and I'll be operating this call. [Operator Instructions]. I will now hand over to one of your hosts, Sara Gubins, Senior Vice President, Head of Investor Relations, Treasury at Nielsen. Sara, you may begin.

everyone. morning, Good joining financial for discuss first Nielsen's Thank us XXXX performance. quarter you to by Kenny; I'm Linda CEO, our joined David Zukauckas. and CFO, our

Q&A our on this Our on is available A will Rao, Events call website. presentation portion section the the of slide use COO, call. Relations of we'll also that under the Investor Karthik for be

including our questions all remarks and our plans we Before today contain guidance impact you may of and begin, to I'd of like that those forward-looking XXXX and COVID-XX. statements, to business to your relating remind the responses

and Forward-looking May reflect statements inherently under involve risks we and view and no today, uncertainties of to update. only as are obligation our X,

subsequent Investor to earnings today's most are also like turn we it to to website measures certain call, available comparable at financial Reconciliations forward-looking press the reports of which update assume and our results to I'd call, any David of nielsen.com. X-K non-GAAP Relations differ Kenny. are XX-K, as those periods may including our the on in filings currently financial and identified available section of now no materially in our available actual our SEC, expected over On XX-Q materials, filed at future GAAP the [Operator Instructions]. We and a start statements, measures. our in risks by required such website. release, in as which measures And refer with disclosure law. these uncertainties, non-GAAP those the Our will number and CEO, to except from because obligation to of the reports is

quarter, call and quarter XXXX. joining our us solid delivered Good saw strong momentum execution morning. Thank the off a first in today. from earnings building We you for you first

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organization, varies greatly and as Across gradually begin Our our teams of perseverance this market have the still employees all years restrictions our pay off. see so of to rallied. by From over are well. perspective, prevalent. hard and we some last executing couple starting a spending It ease, are is to open see and the is the pandemic up to pandemic economies although macro rewarding work

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Sandra in Before appointed want Diversity as Sims-Williams to Chief I March, note sum Officer. I up, that we

I as make crucial the Nielsen, previously media recall You remains since Sandra that that personal inclusion for a wisdom in sale may held marks our partner Diversity, a on success close, the leadership first progress. New our her Nielsen am Board. the and ecosystem. we are I will for Connect Nielsen this has leadership, top behind work the January been quarter the for focused team confident priority this a is experience our us, the me, To XXXX, and of to the diverse and to it equity truly accelerate great business. only with business, joining and New a Nielsen as role and singularly

technology progress efficiency significant throughout and data scale the made drives which our organization. have and modernizing We science,

we from the solutions driving and driven are across end growth from our new a benefiting growth cultural are all We markets, transformation of mindset. by

on compelling key are focused across a model financial have improvement and We metrics. driving

excited quarter about execution and solid our reflects teams globally, strong ahead. by opportunities Our we the first the are

We targets. review have financials. XXXX to the Linda our now and confidence medium-term turn I'll on ability to plan call our over deliver the to in our

morning, David, you, Thank and good everyone.

well proceeds We $X.X We lowering $X.X net approximately sheet moment and the billion XXXX The I want resulting X. Connect other million. I XXXX. to in of transaction billion $XXX to pay paydown. due liability on XXXX billion of closed by loan bonds our the the term and off sales and by our on Connect of and Before results, QX balance sale our as March debt spend also $X.X of used a XXXX on debt strengthened sale as discuss pension

the subject transaction and and on the sale in the related change these the proceeds sale accounting Although to finalize later preliminary are as gain we liabilities, year.

the XXXX. discontinued consistent it's December with the and year as how billion took This our and comparisons handle XXXX guidance. approach and $X.X helps Day beginning of at paydown this results debt we focus operation if presented. for periods is in sale a place with prior Connect of our reported Nielsen, Investor quarter, result will the the represents Connect forma today pro all New for the My remarks a which as effective As sale, on

Turning first quarter. to the

pleased XXXX effects performance. both markets. summarizes Slide the solid As first U.S. reported also growth some pressures grew which XXX of year-over-year which optimization an million, currency solid COVID in to return revenue QX, shows with our revenue highlighted, first a X to as the continue and to growth declined trends as past for an the organic, growth as of rate. results, the and to the especially we uneven see still X, up of Content. David basis, pleased with nice short-cycle start Revenue saw revenue up following improving lessen organic currency basis sports our but strong organic to we dislocation. grew some solid a and points. and benefit and we digital well X.X% improve related international are X.X% The X.X% see which the quarter year. X.X%, X.X% the revenue in revenue to were plan. constant in basis. to Measurement FX COVID We did currency, see We constant live Content which QX constant the or see continued in did organic start On reflects revenue X.X% pleased COVID due with impact performance The basis was QX on The quarterly continue as up for Audience X.X%. a includes for page well across currency though was $XXX exits on adjusts I'll local and strength in constant of revenue Outcomes trends out We're subsiding. in board quarter. Growth measurement. ongoing to quarters side in play revenue right

As quarters. improved QX growth the you the of COVID over trend following the can impact last see, in nicely few

Revenue up margin costs on basis Turning of first up down XX.X% was on basis XXXX adjusted expansion $XX of on or currency XXX to Adjusted margins EBITDA up year-over-year, now the quarter million EBITDA currency $XXX were reported a to constant resulting basis and constant Slide in points of was basis. million, XX% and compared $XX X. a year-over-year a million XX%.

of side quarters the and the show on adjusted right Nielsen New the margins a we EBITDA over last On page, basis. X

in As a meaningfully and QX costs temporary by million. costs actions this swift return as late continue took second we year These ramp to last quarter reminder, and the in approximately year more temporary progresses. $XXX cut will

restructuring second depreciation 'XX. higher driven $X.XX This and was We also began QX was and by taxes. the versus or offset $X.XX part of the more so in year half EPS last the as amortization, in half. third Adjusted to lower slightly compared by EBITDA to higher implement year-over-year first pronounced benefit plan year, this a optimization incremental quarter in in the is

which was deferred Our to XX%. tax discrete rate a is approximately absence This Nielsen effective discrete million a revalued income, resulting as New the adjusted quarter included quarter, our rate of of net tax reflect in back liability Connect. normalized tax $XX to tax net profile first first item in item, we the in the XX.X% added

the driven. of in We the $XX higher which continue to $XXX improvement the XX% in estimated lower drivers tax Free items. of cash full year-over-year CapEx, XXXX. timing was prior an QX year, EBITDA, largely excluding to XX% discrete Key and costs for compares flow onetime million expect year to include was which million, rate

and our cash to And updated I'll forma And guidance rounded discontinued here flow. be discontinued have our the you of operations operations treatment XX. And Slide Nielsen year. elements Slide the Slide flat now XX We by in then basis adjusted Today, guidance XXXX for to Connect the operation. include Slide we on discuss results. adjusted impacts out XXXX EPS amount on for continue Connect to updated so EPS strong quarterly XXXX finalized, first P&L we New With a the CapEx quarter raising appendix XX, we expect pro are free we see a on on relatively XX, the recast can providing on XXXX. continuing our as of quarter are following XXXX

results forma adjusted compares XX%. guidance in of EBITDA range in by $X.XXX to margins our increasing XX.XX% range, of are which We to with which a XXXX XX.X% billion, $X.XXX range margins $XX million, pro stand-alone the billion to

this lower million be our of of another costs, approximately this EBITDA to XXXX, partially the debt range debt our EBITDA now of from in $XX As Adjusted contemplated. efficiency the year $X.XX of of the driven adjusted higher $XXX for growth XXXX expected investment. in and of by up the we This plus the temporary $X.XX is discussed last $XX than last initially to quarter, year forecast due adjusted million underlying prior the year offset benefit reflects of incremental range the guidance compares well plan This to million, EPS guidance optimization cuts cost million New $X.XX to forma as pro the EPS paydown COVID made business, $XX by higher return as the range Nielsen. range. $X.XX, is approximately mostly

cash We guidance million. million million raising our a are by range of to to free flow $XXX $XX $XXX

the the The costs. this This of any $XXX these under and last $XXX million Nielsen meaningful majority separation-related operations. the As incurred a adjusted be approximately ranges onetime separation-related to do year, in to in These cash costs, which cash discontinued EPS free $XXX are forecast agreement. costs of Connect bears reminder, adjusted include included year are million guidance impact costs cash million not with vast of EBITDA, flow QX. sale is

of X.X% playing the in Outcomes the Audience X.X% X%. with to commentary currency And provide of see to we now both forecast for we organic and balance and exits. of Content. improvements Measurement growth, to business Organic growth significant revenue continue we how and forecast revenue, some constant year And For growth impact market on I'll X% out. the adjusts

continue of first impacts in we significant be year We that to faster of half than to beginning began of more COVID half. the second in second expect quarter the growth the revenue Recall XXXX. see the in to

our ramp expect benefit growth we to the of addition, In year as initiatives the progresses.

the expect expansion strong in QX. margin year-over-year half expansion of continue We the margin in driven the by first to year,

As the are temporary in to I beginning last plan this margins impacts second in costs which noted And returning earlier, the we quarter began the third optimization year, quarter. implement year. of

margin to more continue contraction comparison, year-over-year the As challenging second a a half half in expect second result, year. we of the faces the and

that off session. And Moody's outlook This and to basis. our hit since Nielsen ended in Beyond are to to with New negative quarter results pleased sale, New has ability Nielsen leverage positive us Nielsen with below and for line up, year leverage wrap with execute leverage now S&P the confident from first debt our we Xx full growth guidance these Connect we results outlook, its negative. time on QX our debt deliver Sara the turn our results target. net to to revised on remain first pleased We net well were updated net on Q&A X.XXx Xx and following To it I'll been is our and CreditWatch we progressing X.Xx debt the a in XXXX. back the And took we're today. story the

Thanks, the Operator, Q&A. can up that, Linda. With to let's you please? line, turn open

Instructions]. [Operator

comes Our Salmon first from from question Dan BMO.

and I'll one David. keep it question try it quick to to for keep

half, update already, there more to want coming the And sub-minute addressable a number A checked hear you Any were of from things, those measurement, the measurement and I like Audience in the on Day first of Investor was solutions that deck that that start. the ads your half slide. TV identity measurement, enthusiasm? up it coverage. slides on, map more looks on including items you've path on favorite connected few boxes to second road my to the of of timing, would One Measurement views on either David. TV love always-on product

the they confident all we've data about been to encouraging, that of be Thank couldn't map And the say, accountable. Dan. confident I be been, as published to the December. the progress we It's little a progress comparable. more that makes as have a road Yes. was science think, team on as today. transparent I'm It's see power in you, the it data I to and real platform I made.

feel that amount thing is I good engagement. really other the The industry about of

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industry like move engaged So delivering, I I is in more the wants we're feel this think and importantly, direction. but to

from Tim comes Our next question from Macquarie. Nollen

networks its tools evolving market and in for for your TV, Nielsen's the sales us terms linear for question advertising on that the are upon background well. And as digital how combined measurement It of bit, not us or upfront, are your A looks but anything, the perspective actually. growth fronts question just on the Nielsen of that A if David digital side. on new I doing. wonder the and give David, could connected the TV draws is broader use a year, And industry little you right this now. role

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so as you It's things Tim. there many completely really XXXX basis we an about unusual you, that 'XX. interesting 'XX upfront, for because the know were that use right, that were can't Thank for year a

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us course, strong in was their ability to very So presentation their yesterday. Roku and partnership mentioned with front of measurement. the provide on the third-party new side, Google Nielsen

advertisers and we're would in And getting full so solve encouraging what coverage they we've that which And to before are I help ever me than want, the is metrics. more to comparable is that. is been say, what places

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how of reflective together coming the that's one think is industry industry. I as

question next from Tong from Sachs. Our Goldman George comes

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Our Andrew JPMorgan. next from comes question from Steinerman

you your emphasizing to you're Obviously, want if top Nielsen ONE on to to to in partnership. partners do do is, what do Roku be? it more newest terms data now Andrew. know to needed are need I wants My its of VIZIO, to partnerships of partners. has I question you data those DISH get know and the measurement. all want meter just And DIRECTV, where streaming It's Roku

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from Kaplan question Toni comes from Our Stanley. Morgan next

Congrats on the strong quarter. margins this

to wanted a ask Just on question guide. EBITDA the

But You than raise. the strong was more EBITDA raised accounts it like $XX for it by seems so about the million. XQ that that

expecting that positive I is, there expecting my persist? But quarter some last there weren't to investments making guess the by in Or you're ramp. quarter? why to that be under guess you I expenses raise that know question I you're are So extra are to -- expecting you're won't trends more? now not make

Linda for asking thought Toni, this I question thanks into actually for others you the the thanks of call. put exact Linda, for a the lot a question. put And I so question. can think on

if you Toni So thinking. give our could

we question. which we guide, first I would of that as If we bit lot a and as about we're million, lot think of the Connect And mindful it And say strength we that because $XX us COVID did ahead the are a just of confident revenue of And you but give to range that. be the our things with of parts. did of the given quarter. all of a the step note. year. for have of of makes yet, thinking last bit the bit the really quarter all A the EBITDA are analysis. The analyze we that we elements divestiture our And by little that confidence strength little well, through Thanks there was in is, to there a Sure. we of EBITDA time thought but the expectations, of of balance raise with foremost, Yes. and back noise guidance, definitely a the little what the for not change. year, though spend complicated moving some about

which So the ramp. the last to significantly revenue the ramp costs saw if perspective. see because this, that costs, our the also really starting was of last of point balance year also, up to Then quarter out. time you're year, Toni, those the those to about that out return think impacts QX that see I COVID a we temporary start will would this we to we going will it's from and year current more were in quarter in growth initiatives of are we going this investments take in the

us the as the impacts, margin we the start And plan year, of so that when first optimization you lap second benefits But the obviously, optimization to well the half the about all of think of will plan very we the expansion of half which we in plan year. the last noted. optimization second get to the into served quarter in the addition implemented you in that, with

unevenness a we as But the bit of reflected to revenue think the for in what year. stepping it we back guidance. So in it's about balance relation it of quite all expense our the throughout line makes expected from with in and all,

made just, reflected anticipated, the really had and year what of strength it's as our and the we on balance of So really quarter it's of consideration we sense. the the what

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will all that plays so that guidance. considered in balance in noise the some And the of year, our be out

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process that quarter. through analyzed was how handle guidance the to really we the that we for as went thought So

Our next question Sanford comes from Todd Bernstein. Juenger from

going last comment. was the I if this David, David. another I break, you to on direct Linda's but obviously as I well maybe comments welcome should want to

around have what evolve shape to to could of So the of I take think help with you my for me. trying hoping I'm your wants whoever looks digital-first know time. relationships sort partners, of that what the mind of it, your we was business TV-centric of will pure-play for commercial type sort still history historical customers, like. traditional digital customers decades wrap what you mean that. is, And over I with We

know with You what have a master sort agreements, with a said, of looks certainty that of escalators, we you've contents, as guaranteed and service sort price of like. around multiyear, lot

is side, rather Is have -- something customers. in there. and -- the so flex you just On model will You towards? trying much that more in impressions there relationship that growth those Do would work the their to even that think in some mature. how you variable evolving you quarter, commercial those that's that you're of revenue? you're evolve, There's to the as nature that renewals with mentioned just of relations commercial relationships growth hybrid? I'm sort digital with digital sort the wondering

that I you, question to -- lot of I Nielsen because will clients movement Thank that Listen, take on whole Yes. ONE is on a time Todd. the our spend topic. with audience, be telling and that audience going a is everybody a engaged that hybrid. believe on platform she's platform streaming industry whether or broadcast is to more the we the the a I of

So digital is closer to that really which be with are the model now also. all means linear model one there model. the historical players, we've And had should the players

been in successful think for been that value. -- on places. to pricing, important there some really multiyear I the comparable certainly so And digital is relationships, we we've have players with on And working and the

else the compete pricing as well. pricing, they're that So be with needs going the to at to from everybody same then Nielsen

escalators to multiyear so it's And tied value.

client, every and their scale. also look we volume at with course, Of

And with level business. I be put with digital -- to the exposure future subscription the sellers industry some as serve on we mind, having terms. really take resiliency think our with same we're better certainly -- But platform the do meaning you same, having the needs. I flip standard standard the I think about going coverage, pricing all buyers as So the we same contracts, what that similar arguments have it's to on a would Perhaps. keep very -- field make much here, comparability, say in playing serve particularly, we a all But we do players. terms, side growth about, having as off the upside? the you industry some does And I hear the full and it of the to is leave

Instructions]. [Operator

Meuler Our Jeff Baird. next question comes from from

on price several memory somewhere last does that methodology. Measurement get This of how point, incorrect, Yes. there's digital to a one Nielsen toward ad everybody me to X% of correct if guess Audience And and like I for that follow-up gap like correct? this And does revenue video just think digital X% but and parity premium foggy remain? an equated spend I'm old, it's potential march sound might and was you it at one the spend. wide years the opportunity one around and ad be parity, -- think TV but a the I is

to and scheduled closing. here. would ratings premium the say And Jeff. it's where Thank one because be the looking would you, to you. multiple our That Yes. value video. we our And matter, at buyers here. I look Thank our particular, we're sellers in factors value at

and moving that in you a different But something I is a ONE So very linear signal video, streaming to think if be whether I we're a Nielsen a in think or a that's far space on getting to as that more really range, certainly search a play. video comparable the tight are search, for we all signal.

Our next question comes from Matthew Thornton from Truist Securities.

the either more important that not how bit that to on the little you're assets. material into your impact question exchange Nielsen is? of Maybe Roku then talk this a always about EBITDA maybe deal and because I about the ONE adoption question is, the importantly, measurement talk advanced April revenue the And in on, having a Roku data little or can closed the or just net the video for feeds bit platform. is the that How a kind back that data -- guess, you for on year? And

more to sense data the the to drives it it for but where importance really up Nielsen ONE. because Just of trying the it's impact importantly, or kind does P&L, on strategic the -- because more adoption the beef

sold we directly them which your think pretty is after I the you but making Karthik place, let to personally now -- answer time He financial question understand spent help going financial I'm strategic execute. what lot will a in in of of we we to answer it getting value full get question. the because and of financials. understand The is let that Linda this I'll actually Karthik, minimal, Listen, to the sure strategy way

So Karthik?

The component just of answer really it is drive David. data both, critical Roku's addressable it's helps us in Yes. adoption. of nature rate short impact partnership The is that is the their Looks measure because the is and Thanks, to sweet the important is better. Thanks, growth not about is tremendous. always-on David. and impressive which a like space

foundationally doing with about clients. importantly, in partner but validate adoption us, everything great Nielsen more a more of more to we're ONE, is So their which

capabilities yes. love Over this the Nielsen you, But is of simple also the because it data to as and so It adoption answer relationship set all Linda. drives ONE tools well. we for users. about across And is the

the was than financials look, more was say, this guidance now. revenue, -- strategic it And Great. Okay. financial. perspective, I Yes. From would was a the is in effectively

small sale. overall, revenue. But to an revenue on guidance range impact the of from a morning. and organic the not we that impact consider our Financially, be impact this it there's just shared we in much So that no

Our Arete Richard next question from from Kramer comes Research.

now early costs give the sort space, would companies to with digital a sort for the being A one the or that challenges, other the really of one and might lot spend improved levels separate of measurement of SG&A a measurement? us Linda lot can business a that's the well. and of viewability development of product are R&D we your And and is, be coming you thoughts challenges the impressions the is worst that spend get at some question And better the there. David of measurement. would the Linda address of of up stand-alone next your a what of of for CTV disclosure something product you and big have of issues behind accusations couple CTV over in CTV you newer David, years? traditional the in you aspect your of sort to effort measurement media Is fraud measure some is around alongside ONE ascertaining you, my look way quality of question as dramatic plan we this of or entrants sort that of and to of into fraud separation looking for development Nielsen a some what have or handle and headaches on put from so

important also question. we of is honestly, he Karthik in so this of from big measurement, connected we it I'm a step just the use lot because design who Because to on of just tried anyone actually lot for a challenges the that to is our to and time platform, for this both. of TV to spent platforms, And connected thanks of data do data been panel going have robust there a importance and the TV sample. why are big let to combination validating very think Well, I ever including get with do here measurement. audience robust have

others some also are that there's doing. hand, specific things other the On

viewability. having visibility And doing or of more opposed as viewability what some standard. And totally formed new part interoperable companies making launch were we're around to this of yet sort here to another also is

spaces it's think important. I think we don't be We So in do we with we to think can directly. do others. all have work these

lot Karthik, work. team. make fundamental that we want you on with put the know I others any measurement, that help on work to to connect deeper I if don't our I audience know because will of we're go a for think you and platform

Yes.

we understand player. I'll really it's integrate things directly because one just CTV with to you highlight So the of mentioned the how important

that's think that I ecosystem, across of CTV the the into goes begins. pay steps obviously is value Eventually, where chain, lot when available measurement of will all measurement entire more. so it all a the we

to about good in we'll important and direct with our CTV like the like Those Just just digital. point intermediaries. the digital, lot things old in is attention not into complementary integrations connected fraud. players, being like But more metrics consistent a pay think viewability are I starting

this the it's as this measurement at actually starting the our starting purest form. So That's delivered. point way is evolves way,

So large, there's expands, this where is going these important. But growth all going at to as then an as viewability, ecosystem fraud, be that's players, capabilities are opportunity important a the industry to be area great bolt-ons. more there's

And Linda, question? the other do you take want to

some today the see singularly Look, that and where even Yes. Sure. But media, look disclosures. I is to on put New focused at out from our we'll you'll we Nielsen what And there. thinking expanding improve more what and we are on Investor talked to investments. about shared our growth directionally somewhat about we're we analogy, to at Karthik best Day. Richard, go would versus how sustain look of the be as he And think CapEx back

we strategic obviously, return thought But focused we year, the from process on an to planning really through perspective. Now a is investment. went be last as lot R&D there's process in even the what our going on

Investor more continuing to Karthik of if I to we're the go that Day. back and introduce at some refine But So process. trends shared rigor that just

that at that at looking to more very in growth way For in of and Investor relationship about as that in that about we're current investing we we're kind see between significantly. the sustain. relationship we we Investor as ONE. we think up And platform, are Day investments looking digital. are of to the a a linear which we Nielsen versus a influences out then Day, let's be And interesting investing. XXXX, What's our relationship dialing And versus, made discussed have investing clear at say, single be We'll And think XXXX, is XX-XX at XX-XX directionally as CapEx. our looking more by XXXX. growth XX-XX sustained we of in here convergence relationship is of playing priority

current to And to directionally. And But in investments there. significantly our the our share investment dialing convergence. order where support be you so of to are will directed being feel a in we are continued order that lion's the it suffice clients say, customers are up and that give

continue we'll as As months. it X or in assess, future, days anything to breaking far next the don't the out but in expect XX

we no appears have questions. further It

back over closing hand to Kenny I'll So remarks. the David and team for any

I for our call across I making know Listen, confidence much updating progress time in thank the all plan fact rest delivered your want to continued for continued we you. was joining in plan happy share of of how are all you our And today. we essential quarter. proud the and appreciate next forward really I'm support. Thank of We we so you the look to have the the to that X first the on our year. you solutions.

for joining. Ladies team Thank you much today's very and that for gentlemen, concludes the management call.

a Have lines. your lovely day. disconnect now may You