Q2 2021 Nielsen Holdings PLC Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the second quarter of 2021 Nielsen Holdings Plc earnings Conference call.
At this time, all fnb's listen only mode.
After todays presentation, there will be a question and answer session.
Ask the question during the session you will need the press star 1 year of telephone.
If you require any sort of assistance. Please press star zero. Thank you and now I would like to welcome Lisa.
Sara Gubins senior Vice President.
<unk> head of Investor Relations, and especially ma'am. Please go ahead.
Good morning, everyone. Thank you for joining us to discuss Nielsen in second quarter 2021 financial performance.
And by our CEO, David Kenny and our CFO when does the package.
Our CLO Karthik rau, well also be honest.
For the Q&A portion of the call.
The slide presentation that we'll use on this call is available under the events section of our Investor Relations website.
Before we begin I'd like to remind all of you that our remarks of responses to your questions. Today may contain forward looking statements, including those relating to our business plans in 2021 guidance and the impact.
Pact of COVID-19.
Forward looking statements inherently involve risks and uncertainties and only reflect our view as of today July 29, and we are under no obligation to update our actual results in future periods may differ materially from those currently expected because of the number of risks and uncertainties, including those identified in our disclosure.
And materials, such as our 10-K 10-Q, and 8-K reports and in subsequent reports filed with the SEC, which are available on our website.
We assume no obligation to update any forward looking statements, except as required by law.
On today's call. We will also refer to certain non-GAAP financial measures reconciliations of these non-GAAP.
File all the measures to the most comparable GAAP measures are available in the earnings press release, which is available at the Investor Relations section of our website at Nielsen Dot com.
And now to start the call I'd like to turn it over to our CEO David Kenny.
Good morning, Thank you for joining our second quarter earnings call our second quarter.
GAAP financial to demonstrate Nielsen's continued strategic and operational transformation in an evolving global media ecosystem.
These results also show that we are executing as planned on the growth strategy, we laid out at our Investor Day in December let me remind you of the 3 overarching messages.
<unk> and compelling opportunity for Nielsen.
First we are focused on driving new growth from new solutions across all of our end markets globally.
Across the board, we are delivering on the key elements of our product roadmap.
Our cultural transformation is progressing well.
Associates.
It's around the globe have rallied around of growth driven mindset, and we're benefiting from the energy enthusiasm and clarity of focus this means focusing on accelerating revenue growth and advancing our product evolution to match the rapid changes in audience behavior and the media ecosystem.
And third we have a compelling and strengthening financial model with 80% recurring revenue expanding margins and increasing free cash flow conversion.
I'll provide a high level look at our second quarter results before turning to the business highlights I'll, then hand, the call over to Linda.
For a more detailed review of our results were.
We are building on our consistent track record of success and we are pursuing opportunities to further improve.
Year over year revenue grew 6.2% on an organic basis we.
We are seeing the benefit of of Covid recovery in some markets, although it remains.
Uneven globally.
Our teams are doing a great job serving clients around the world even in markets that remain challenged.
The adjusted EBITDA margins of 43% expanded 256 basis points on solid revenue growth and strong cost discipline are of.
Adjusted EPS.
Maine, where the 3.
Increased from 35 cents in the prior year and free cash flow was $190 million up from 86 million in the second quarter of 2020 on a comparable basis.
Following strong first half performance and reflecting our confidence in the 2021outlook.
We are raising the low end of our ranges for revenue and adjusted EBITDA and also raising our EBITDA margin adjusted EPS and free cash flow guidance ranges.
Turning to the business I'd like to start with a high level of discussion on the value we bring to the media industry.
There is no question.
That audiences are changing how they consume media and platforms and networks and studios advertisers and agencies are all transforming to meet and drive these changes.
In the second quarter alone our clients were involved in big mergers big product launches of robust advertising upfront and.
The global expansion.
Nielsen's 3 essential solutions audience measurement audience outcome and Gracenote content services were used by our clients to make decisions and negotiate with the common fact base as they navigate a changing media industry.
We are growing, especially well with our largest global.
<unk> partners with a scalable digital first approach and we are seeing our clients increasingly invest across these 3 of essential solutions, which will accelerate our growth over time.
Finally, I'd remind you that Nielsen's mission is to power a better media future for all people.
And this includes our strong commitment to our ESG priorities and performance in June we released an interim responsibility update which highlights the important work we have done around the 6 key areas of our ESG strategy.
The board and I firmly believe these efforts are essential to the overall success.
Of our organization.
Now, let me share some specifics for each of our 3 solutions.
Starting with the audience measurement, which posted 4% year over year organic growth, we are making significant progress on the building blocks that are foundational to Nielsen 1 our cross media currency.
Excess solution.
Industry engagement is critical to the success of Nielsen 1 and we are partnering closely with media buyers and sellers in its development. We've launched a series of cross functional working committees and recently met with the executive Steering Committee, which consists of senior industry leaders.
We received good feedback on our progress against coverage comparability and resiliency.
Our work with the industry includes the a N a the association of National advertisers and the W of Fe The World Federation of advertisers Nielsen 1 aligns with their objectives for a cross media measurement solution the best.
Currencies as the needs of advertisers.
We are also supporting the Andas alliance for inclusive and multi cultural marketing or aim to help their members measure of their investments in black Hispanic and Asian owned media.
We continue to be encouraged by renewals and expanded scope with both multi.
The channel and digital pure play clients as well as advertisers and agencies clients are renewing with larger contracts as they add more services.
These are largely multi year commitments with annual price escalators.
Due to Advertiser and agency growth. Examples would include the extension of our digital AD ratings agreement with Toyota.
The address and.
And dentsu has expanded relationship to include streaming measurement.
On the publisher side 9 of the top 10 television network groups are now using our streaming measurement solutions and.
And just this week Google site at Nielsen metrics on their earnings call to demonstrate the incremental reach for advertisers.
Oh doctors on their platform.
We also recently partnered with does own a global streaming sports platform on an audience measurement tool ahead of the Italian football season.
Our local video and audio business continues to strength, then we recently renewed and expanded our agreement with Entravision, which includes a comprehensive.
Titers of suite of measurement services, including local TV ratings, covering their 22 market footprint and Nielsen audio for all radio stations in 14 markets.
We also renewed a multiyear deal with I hurt media across all of their markets.
Let me walk through some recent product milestones.
Hence the Nielsen 1 using coverage comparability and resiliency as the framework starting with coverage, which we are expanding significantly.
The addition of Roku as the data provider brings the aggregate number of devices measured.
Most of $100 million in combination with Directv dish.
The stones Vizio and we've doubled the number of connected TV partners over the past year to most recently include Samsung TV plus.
When combined with our existing coverage of major platforms, such as Hulu, Amazon and Youtube. This will bring our big data coverage of video digital AD spend in the United.
Cash and to approximately 90 per cent.
We continue to hit milestones on streaming measurement also we are expanding our base of streaming meters with approximately 14000 installed meters as of July.
And broadened our coverage to include the top 15 streaming platforms.
Outside the U S. Our streaming meters are now live in 6 markets and we will continue to add markets over the next several quarters.
Next comparability.
In June we launched the gauge of new monthly analytic tool that provides the industry with a simple view of time spent that is comparable.
The state across streaming traditional cable broadcast channels and gaming.
We were of course pleased that Netflix is co CEO Reed Hastings publicly acknowledged that Nielsen is uniquely positioned to help score keep in the dynamic media landscape and the Netflix use the gauge to demonstrate their runway.
Wafer growth in their Q2 earnings update.
There was a lot of great work in progress behind the scenes on driving comparability across TV and digital.
Do you duplication is of critical component and we have recently completed a key step in this area developing a methodology for cross device do you duplication.
Bowl and households.
Another key milestone this year will be the integration of big data sources into Nielsen's National TV measurement cash.
Calibrated by our panel these.
These integrations are on schedule and we're on track to have impact data by year end the clients can use during 'twenty 'twenty 2 for analytic purposes.
With them. We are also on track towards sub minute measurement and our TV panel, which will be enabled by innovation and our watermark and signature technologies. The work to make our existing metered panel sub minute capable is near completion and expected to rollout in Q4 of this year.
And finally, we.
We remain in active discussions with the M. R. C. A N E W of Fe clients and other industry organizations as we build towards evolving the currency.
The last point is resiliency.
As the privacy landscape continues to evolve with third party cookie deprecation being the most notable.
Change, we have taken proactive steps that provide us with the flexibility to adapt.
Enabling us to understand the audience and audience demographics in a privacy focused way.
Earlier this week, we unveiled our cookie less approach for audience and outcomes measurement, eliminating our reliance.
Digital identifiers.
This new approach is enabled by our Nielsen identity spine, which allows us to deduplicate across linear and digital platforms as a part of Nielsen 1.
A full privacy focus redesign has already been completed for the 2 largest digital platforms.
<unk>.
And we continue to enhance coverage of the identity spine recently, adding new data partners such as to Luna BD ex full contact center and I D..5 and this builds on existing data relationships with Neustar narrative throttle and true data.
I want to reiterate that all.
On the big datasets are validated by our robust panel, which represents an important truth set and statistically representative view of the audience in the U S and in key markets around the world.
As discussed on our first quarter call during Covid CDC and state guidelines prevented.
All of our from entering panelist homes, either to sign up new panelists or maintain existing homes and this presented an operational challenge I'm.
I'm happy to say that we have now restored full maintenance protocols and have been improving panel size and quality every week during the second quarter. We are closely engaged with the.
<unk> C and they are up to speed on our progress we remain committed to the MRC audit and accreditation process.
Turning to outcomes and content, which grew 12.6 per cent year over year on an organic basis in Q2.
Audience out kind of growth is driven by geographic.
The expansion expanding to new verticals beyond C. P G and helping media companies better sell on the outcomes they deliver.
Let me start with geographic expansion, we are extending the global reach of our campaign outcomes measurement tool with the addition of Vietnam, India, Portugal, the Philippines.
And Switzerland, among others, we expect to be in over 40 markets by the end of the year.
And earlier this month, we acquired T V T Y a leading television attribution provider based in France, which expands our capabilities in data partnerships in Europe as well as the U S.
This.
<unk> acquisition aligns with our strategy to deliver cross media outcomes as a complement to audience measurement.
In terms of new verticals and capabilities. We are seeing continued traction growing our client base across a broad range of industries. We have an impressive roster of new wins in the U S and around the world including.
The industry Giants, such as Samsung, Microsoft and Anheuser Busch.
We recently expanded our capabilities in the important automotive vertical through a new partnership with IHS markit to integrate their Polk automotive data initially available for addressable audience activation will expand the use cases.
Tuck in as the audience and outcomes measurement solutions over the next year.
We have expanded our norms database designed to establish syndicated standards for campaign outcomes measurement across the platform, which we launched last fall to now include non durable retail and pharma in the U S.
Finally.
It's a quite significant progress with many of our media publishers, adding outcomes metrics on top of audience measurement as day of all the way they sell advertising of timely example of this week during the Tokyo Olympics, our outcomes and sports teams jointly work with the International Olympic Committee to create a new solution.
We have many of the return on sponsorship investment for some of the Ioc's top partner.
This is the first in the sports market and is a good example of expanding outcomes into sponsorships.
We are evolving our core multi touch attribution product from digital exclusive to digital first.
With the addition of linear TV and over the top and we are expanding our channel coverage, which helps the pinpoint the optimal spend across the entire media mix.
Now, including the coverage of radio print and social Influencers.
And finally, turning to Gracenote content services, which is.
Measure of growing through geographic expansion and additional solutions beyond the core metadata business.
We continue to see a very high renewal rate of Gracenote services.
For example, we recently renewed a multiyear agreement with Verizon with a focus around streaming video services.
During.
All of the quarter, we expanded gracenote with major clients into the Netherlands, Austria, Switzerland, and most recently Poland.
We are also developing new solutions to add more value off the gracenote platform.
Earlier this year, we launched inclusion of analytics empowering smarter decision making around.
Inclusive of content investments and helping to drive towards a more diverse and equitable future.
And we've seen strong interest for this service across the media agency and advertiser clients.
We also recently signed long term deals with 2 connected TV manufacturers to use Gracenote I D as a part of their.
The advanced advertising platforms.
Let me sum up we reported another strong quarter due to solid execution and a cultural shift to a growth mindset.
We are making continued progress on our product roadmap and we are driving growth across our 3 of central solutions.
We are adding new clients and new markets, while also bringing more services and incremental value to our existing clients.
We have increased confidence in our ability to deliver on our full year outlook, which is reflected in our updated guidance provided today.
Let me now turn the call over to Linda to review the financials.
Yeah.
Thank you David and good morning, everyone similar to last quarter. My remarks today focus on our results as if the connect cell and related $2.3 billion debt Paydown that we completed earlier in the year took place at the beginning of 'twenty 'twenty. This approach helps with prior year.
Angela Harrison and it's consistent with how we handled Investor day in December and our 2021 guidance, you'll find comparable prior period comparisons in the appendix of today's slide presentation.
Before I get into the results I would just like to remind you that a year ago. This time, we faced our most.
Our of compacted quarter from of Covid perspective, and we had recently announce our large scale optimization plan. All of this is a relevant backdrop to these strong Q2 results I am pleased to now review with you I'll start with slide 7 which summarizes our second quarter revenue performance.
Revenue for Q2 was 861 million up 4.5% year over year on a constant currency basis or up 6.2% organic constant currency, which adjusts for exits related to the 'twenty 'twenty optimization plan and the sale of our advanced video advertising.
The to Roku earlier this year on a reported basis revenue grew 6.2%, which includes an FX benefit of 170 basis points revenue growth accelerated in both the U S and in international markets, we're continuing to see recovery from.
But it'll be the related pressures and strong execution by our teams around the world. Despite an uneven global recovery for.
For some perspective, despite the loss in the current year of revenues associated with business exits that were part of the 2020 optimization plan Q2, 'twenty 1 of revenue with.
It was higher than Q2.19 revenue the.
Same is true for the first quarter and we believe surpassing pre pandemic revenue levels demonstrates that we are driving fundamental growth. In addition to recovering from COVID-19 impacts from 'twenty 'twenty, our solutions are resonating with clients across.
Our end markets around the world.
Audience measurement grew 3.3% constant currency and 4% on an organic basis growth remained solid across the board and especially strong in digital measurement as expected pressure in our local business has subsided with local posting per.
Of growth for the first time in 10 quarters.
As we discussed previously our local business was down in the mid single digits. During the last 2 years due to pressure on multiyear contract renewals as we went through our local transformation and that work was completed in late 2019.
Part of the cycle through those contracts and expect local to be roughly flat for the year.
Outcomes and content grew 7.9% constant currency with organic revenue up 12, 6%, we saw improving trends and short cycle revenue and strong growth in our sports business.
Both of which were hard hit in Q2 'twenty due to Covid. We also continued to drive solid growth in content and the right side of the page shows revenue for the past 5 quarters as well as constant currency and organic revenue growth rates as you can see the growth trend continued to improve nicely.
In the second quarter.
Turning now to slide 8 of adjusted EBITDA was 370 million up 11, 8% year over year on a reported basis or up 11, 1% on a constant currency basis, adjusted EBITDA margins of 43% expanded 200.
The 16 basis points reported at 256 basis points of constant currency on.
On the right side of the page, we show adjusted EBITDA and margins over the last 5 quarters as if the sale of connect took place at the beginning of 'twenty 'twenty. There are several drivers to our margins.
The first operating leverage from top line growth was strong.
Second we took swift actions in late Q1, 'twenty and reduced temporary costs by approximately 100 million. These temporary costs began to return in Q2, 'twenty, 1, though at a lesser pace than initially.
Italy expected, but will continue to ramp as the year of progresses.
And third just over a year ago, we did of restructuring our optimization plan. So the incremental year over year of benefit of this plan is more pronounced in the first half of this year versus the second half.
Adjusted EPS.
It was 43 cents in the second quarter as compared to 35 cents in Q2, 'twenty. This was driven by higher EBITDA and lower depreciation and amortization offset in part by higher taxes, our effective tax rate was 29% in the second quarter. This includes 2 million.
And discrete items, which we add back for adjusted net income, resulting in a normalized second quarter tax rate of approximately 27, 4%.
Free cash flow was really strong at $190 million, which compares to $86 million in Q2, 'twenty on a pro forma basis.
Key drivers of the year over year improvement include higher EBITDA improved working capital in part due to strong collections and lower interest payments. These improvements were partially offset by higher tax payments, which is timing related within 2021.
And now I'll discuss our.
Updated 2021 guidance on slide 10 today.
Today, we are increasing our full year guidance to reflect our solid Q2 results and our confidence in the balance of the year. We are raising the low end of our revenue and adjusted EBITDA guidance ranges and raising our margin adjusted EPS.
And free cash flow guidance, let me take you through each of these items for revenue we narrowed the range and we are now guiding 4 to 4.5% organic constant currency growth. We've similarly raise the low end of the range for constant currency revenue growth, where we are now guiding 2 and a half.
The 3 per cent for.
For adjusted EBITDA, We are now guiding $1.475 billion to 1.490 billion with margins of 42.3% to 42.6%. This compares to 2020 adjusted EBITDA margins of 42%.
As if the sale of connect took place at the beginning of 2020.
As we discussed last quarter, our 2021 EBITDA guidance reflects an approximately 60 million benefit of the optimization plan this year and the underlying efficiency of the business, partially offset by the return of Covid temporary cost.
It made last year as well as incremental growth investments. The return of temporary cost is more heavily weighted in the balance of the year. We also began to implement the optimization plan in Q3 'twenty as a result, the second half faces a more challenging comparison and we continue.
<unk> cut the forecast margin compression in the second half of the year, we are raising and tightening our adjusted EPS guidance to $1.54 to $1.61 versus the comparable dollar 45 and 2020. This higher adjusted EPS range is driven by the tighter adjusted EBITDA guidance range.
All of our depreciation and amortization, which is offset in part by a slightly higher share count.
And finally, we are raising and tightening our free cash flow guidance to a range of $620 million to $650 million on solid EBITDA performance lower interest payments and strong.
And little actions as a reminder, adjusted EBITDA adjusted EPS and free cash flow guidance ranges do not include the impact of onetime separation related costs, which Nielsen has absorbed under the connect sell agreement today, we are lowering our expectation for these cash costs by 20 million.
Strong and now expect a range of $200 million to $220 million for the full year with $164 million paid in the first half of the year. The vast majority of these costs are included in discontinued operations and this is the last year of any meaningful separation related cash costs.
We ended Q2 with 3.62 times net debt leverage on a pro forma basis, well on our path toward our medium term net debt leverage target of 3 to 3 and a half times given the progress we are lowering our year end leverage guidance range to $3.5 to 3.7 times.
To wrap up we are pleased with our second quarter results. The street of key underlying drivers reinforces the confidence that we have and our ability to execute on nielsen's growth story and deliver our full year guidance and longer term goals.
And now I'll turn the call back to Sara for the.
Q&A session.
Thanks, Linda with that let's turn to Q&A operator can you open up the line. Please.
Thank you presenters we will now begin the question and answer session and as a reminder, if you wish to ask a question simply press Star then the number of 1 on your telephone keypad.
Your first question is from the line of Andrew Stein of Mountain from J J P. Morgan. Your line is now open.
Hi, I wanted to follow up on your point, David You said were on track with the product Road map. So you know obviously I think that to the December of 'twenty 'twenty product Road map, which as you know laid out year.
The first of all I just want to make sure. The key day of cross media a currency launches still fourth quarter of 'twenty true. Although if you could just go over the second half of 'twenty, 1 on terms of which pieces to the <unk>.
Sort of road map will be introduced in the second half of this year.
Thank you Andrew and we're tracking that daily as you can imagine.
Part of the reason Karthik from the call. If he is driving the product roadmap from going to turn it over to him.
The sort of key things that our clients in the market or expecting to see in the remainder of this year and reiterate the great progress has been made so far.
Thereby use David Hi.
Hi, Andrew just a couple of things of course.
And 1 of the foundational me about cross media measurement and the 3 biggest components of which are obviously coverage as the.
William C and comparability those of the sort of 3 core pillars that get us ultimately to what we are going to deliver.
In 2022, and as a reminder, we we launched all of our digital solutions already under a completely new backbone that is completely of resilient for all of the changes in the privacy environment that was an important component of the identity of spine the powers that.
<unk> is another component of that and going.
Going into the second half of the your ease a little bit more focused on expanding coverage, which is all of the CTV cover the expansions that we're launching with all the players David called them out.
So those are important the start to launch in Q3 and going into of the rest of the year.
Is all of the work we're doing around granularity.
And addressable, which is the which is burdened by the launch of our analytic capability, where we're putting out the national capability the national linear capability with big data. So you can imagine all of the flexibility and granularity that starts to add and ultimately.
Your pushes us into next year, where there's a whole whole host of other things, including the deduplication methodology, which is ultimately the core of where all of this comes together the duplicating across every every component of.
Of of media delivery that takes place so that's what we're building towards the.
<unk> is completely on track from all of the inputs as well as what clients start to see periodically going into the rest of the year end and into early next year.
Okay, and just just to be clear.
In terms of the Guy had gone to the spy and the obviously there are several identity solutions in the industry.
This great growth there.
The Nielsen 1 need to be the solo identical to the solution or is it okay to be Oh, we got to the solution as long as your video measurement solution.
Yeah, So Andrew the key around all of the identity solutions that exist are what the enable and power.
Our.
As of the key is to make sure. It works for measurement of use cases, that's what we're focused on and interoperability with all the other identity solutions in the marketplace. So when David talked about all of the integrations, we have it's about enabling an interoperable world where identity is obviously.
But the challenge so it is a team sport, but the version that we're building and have continued to build is largely around use cases of measurement and use cases of the measurement is foundational you can think about it at the duplicating where many different versions of exposure are difficult. When you when you have to put.
Put them together into the duplicated reach of frequency. That's the use case that we're solving for primarily and so interoperability and deduplication, that's what we're about.
And that makes us a little bit different than the other solutions, but.
But we're making really good progress on that.
Got it.
I guess, 1 other piece to that.
Youre still on track for fourth quarter of 'twenty, 2 launch of our cross currency measurement.
Absolutely the the full rollout where ultimately it comes together Nielsen 1.
He is completely on track and then once once the data get put out there it gives everybody buyers sellers.
Because of the stem all of what they need to start to make all of the adjustments because.
It's going to be very exciting.
And what we also want to do is make sure all of the components launches of the building blocks as David caused them continue to come out of the people start to get familiar with each of the components ultimately leading up to the de duplication.
And the across everything for ads and content.
In 2022.
Thank you very much.
Your next question is from the line of Toni Kaplan from Morgan Stanley. Your line is now open.
Hey, this is Greg on for Tony Thanks for taking my question 1.
The talk about your Cookie was measurement you noted 60 per cent resiliency of you called out if you do the partners on the call here. So 1 of the 1 do you need to improve the resiliency number I don't know if there's any targets or goals in regards to that and do you have any new data partners or is it.
All of the technology front.
And then related Google recently.
The latest shifts so hoping maybe you could talk about what are you hearing from clients in terms of willingness to make the shift and also timing. Thanks.
Yeah, Thanks, Greg I would say on the on the client side.
Sophisticated clients know that privacy is still a good thing yeah of Google delayed to give people time.
But.
I think it's important for us to keep moving.
And get get forward, because we know this will happen and of course, you know Apple has of what it's doing around made in that isn't delayed. So we you know we think it's important we continue to lead we are big believers in privacy policy and we believe that we have solutia.
<unk> that allow.
For the audience to be served well and respect her privacy at the same time and that's the.
We went ahead of.
With our launch in our curriculum solutions for measurement and for attribution.
What what I would say on the 50% that's really has mortgage.
Which of the publishers have already been solved force that we obviously started with the biggest ones and they're there. We now have the solution and in our release, we talked about the solution for the authenticated for those who are smaller who may not have as much first party data, we're getting there with some added.
Techniques they use the probabilistic models and machine learning. So we believe the methodology works. It's tested it's now a matter of sort of integrating the the long tail of publishers to make sure we're covering the whole market.
Got it thanks, so much.
Your next question is from the line of Dan Salmon from BMO. Your line is now open.
Hey, good morning, everyone.
For better for worse, the probably the most popular investor question of late has been about maybe some of the negative headlines related to the Covid measurement issues. So maybe David could you expand on that just a little more.
We've had.
The V a call to remove MRC accreditation, what do you think the likelihood of that is.
What would be the potential financial impact of the worst case scenario because it does sound like the.
The idea is acknowledging that everyone would continue to use the ratings. So just maybe a little bit more color on that would be helpful.
And then maybe on the brighter.
Syed.
Mentioned, both Netflix and Google highlighting your streaming data on the earnings calls and Google in particular of letting it for Youtube more.
How impactful is that to your business does your sales team start to feel that.
Because it feels like that's the.
The element that isn't being recognized.
So as much as the secular leaders.
Promoting your products 40 of these days, so I'd love to hear more from that as well.
Well those are 2 very different questions. So let me yes.
I mean, that's not the answer book because I think they are book salad on the.
On the first part I mean, I like carpet go into the the details on Covid recovery.
We had to do some things differently during COVID-19.
And of course, Covid is not done, but we did get to the point, where it was safety of the vacuum homes, both for recruiting and replacement and we are operating.
At a very strong pace and we've actually increased investment to make sure that.
We have the panel of the way it needs to be it.
It's the it's a fair complaint that the people would want that instantly.
So I don't love the tactics that I I would agree that it is important that we rebuild the panel.
The and on the like Karthik described how the second part of that though to be clear the accreditation.
Very important we think it really builds trust in the industry.
But it is a vote of confidence it's not.
Required to use of the product and it's not in our contract. So you know we're not required to maintain accreditation. We certainly have it as a goal and we think the MRC.
The really important partner to to set the standards and we're going to continue to work with them. So I'm not I'm not going to like the perfect answer the rest of he's been kind of in the front with the MRC discussions.
Just to reinforce what he said, we we continue to work with the MRC.
It's 4 during and even now that leads up typically 2 and accreditation process.
<unk>, which is largely an audit of every single process that that goes into managing the panels.
Ultimately what gets produced from from the panels into into our products.
So what our plan.
<unk> is completely on track in terms of all of the all the corrections we needed to make coming out of Covid.
Even the Covid is not over.
Managed to get back into field basically completely.
And and checking for all of the home and cotton flags.
We were unable to do.
During the peak of Covid, So all of.
Our execution there to get the panel back up to where it needs to be is completely on track.
Yeah as David said, we don't we don't love.
Getting the add of push but it looked like we work with clients as well too.
Okay and tell them exactly.
What we're doing.
So we're completely committed in our plan.
Are going exactly as we planned.
As well as working with the MRC.
Because they bring a lot of value to the process of reinforcing confidence in what we produce.
And then the second question the digital players.
The other promoting the Nielsen product as much as they are clearly using them.
And they're using them to understand their market share to understand their competitiveness to be able to respond and make their products better and I. You know I was really pleased to see a couple of them use them in their earnings calls because it means they're pretty core.
Of the way they operate their businesses and I think that's a really nice validation and of course as I said those digital first players are driving a lot of our growth.
In this post Covid period, and we will continue to drive our growth.
Given the nature of the relationship so I feel really good about.
That more broadly I would say on the demand side of the people who buy advertising the people who invest in content.
I think there's a lot more credibility that Nielsen really does measure of the total audience. I think there was you know of.
The narrative of when I got here that maybe we were more of broadcast and linear focused and I think it's.
Really clear where audience focus and we're following the audience wherever she goes and the.
It is going to streaming and a lot of a lot of ways and a lot of categories. So listen it's early it's early days, but I think this is the kind of validation leading up to Nielsen, 1 and leading up to moving the whole market towards an integrated view of the total.
The audience across both streaming and linear on on the same basis and already it's being used for decisions and 4 book to manage their product strategies.
Great. That's very helpful. Thank you both.
Your next question is from the line of.
George from from Goldman Sachs. Your line is now open.
Thanks, Good morning, you deliberate accelerating organic constant currency revenue growth across both audience measurement and outcomes and the content <unk>, how do you envision organic constant currency revenue growth progressing these businesses in the second half of the year and what.
The initiatives remain outstanding that you have to work on in order to deliver on your organic growth targets not just over the second half, but also over the medium term.
Yes, Linda why don't you start you you and your team has spent a lot of time.
Getting behind that question and of Karthik or I could add some color beyond that we'll come back.
Yeah sure so I'm thinking sort of the question George.
I I would just start by saying that we feel good about the Q2 result of as you noted they are really strong results you know as we think about the second half of the year, we do still continue to expect solid.
Solid revenue growth.
I will point out the the first half of the year was a bit stronger than our expectations and you see that in the guidance revisions that we've provided today.
You know the subscription portion of our business, which is about 80 per cent of the total doesn't.
Doesn't have as much variability because we've we've got a lot of visibility into that business, but on the outcome side of the business, there's definitely more variability and we saw that last year and and now this year with the impact of Covid.
We're benefiting though from an improving.
The AD markets from a COVID-19 recovery, but we're optimistic but you know we're of the opinion that this pandemic is not behind us and its in the unpredictable environment. So we've incorporated a you know a bit of risk at the low end around the the speed.
Feed or the pace of the global recovery you heard earlier from from Karthik and David that we're doing well on our product roadmap and execution on that is important for the second half we do have our initiatives and growth investments that we're making which are more.
Second half weighted average.
And the some of those will take a little bit of time to ramp but overall, we think you know the second half will be in line with of course of the way that we've guided today.
And you know I I I think that we on the overall basis are our feeling.
I'm very optimistic about the second half and in our performance as is reflected in the guidance revision.
And I was looking at.
I'm very confident in the medium term forecast that we laid out in December at Investor Day.
These things are happening.
More of that not everything in the macro environment. The same I think COVID-19 continues to pop up around the world, but I think we're you know we're getting much more agile at managing that I'm really proud of the teams for doing that.
I think we already covered the Nielsen 1 roadmap, which of course is super important that sort.
The heavy subscription business it might have perfect spend a minute on some of the product innovations that are coming in continent outcomes. Because those are as you saw of driving even more growth and we're really excited about of all 3 legs of the Nielsen revenue fuel.
Thanks, David.
David just calling out on outcomes.
What.
Are you really trying to accomplish the Oregon, just laying out the strategy.
The components. There 1 is vertical expansion I think you've all heard of stock multiple times about going outside of consumer packaged goods, because that's where 90% of marketing dollars get spent.
$8 anyway.
So of expanding coverage you saw what we book.
Doing in the automotive space you.
You saw mentioned about retail non verbal retail and pharma that that that.
That trend will continue and expand.
Then it's about making it even more relevant to both sides of the coin not just the buyers, but also of the sellers. So that sellers can really tell the story of their inventory.
What can be not just from a volume perspective, which is reach but also from a value perspective cause outcomes.
So.
Everything we've mentioned there about how we're being used our operating capabilities are being used and will continue to be used by by sellers as well as an important component and then global expansion.
It is a really important.
The tour important because.
Again, everything we're doing and outcomes is about telling the story about the value of marketing and that's relevant everywhere almost the same way and so expanding into more markets going again into 2022 and on the Gracenote side just it it's about a couple of things 1 is.
Total of discovery is even more exciting just given the proliferation of platforms and the new innovations in which content is being delivered to consumer so.
It's a combination of market expansion as well as capability expansion such as the advanced discovery.
And then the ultimate Angie.
Angle.
The World is the expanded use of the Gracenote I D.
Because in the world where content content is proliferating. The so many platforms. The grateful that he becomes the unifier to figure out exactly where that content is going and how it's being licensed it had been used the way. It was the content being used the way. It was it was expected to so there's a whole bunch of components.
Points, there that are very exciting for us many of those in in the second half as well as going into 2022.
Very helpful color. Thank you.
Your next question is from the line of Ashish some rather from RBC. Your line is now open.
This is Josh filling in for Ashish can you talk more about the pick up the short cycle work shows the major League sports, Brazil any visibility on the pipeline of prestige here ex.
She said I think of your question was about 4 of its right. So no.
We don't we don't give the line item detail, but I would say the sports business.
Business returned nicely I mentioned the work of the IRC. There was obviously a lot of work around.
Olympic sponsorship.
As leagues, they've been returning around the world certainly those leagues have gotten smarter about how they demonstrate the value of sponsorships and advertising.
And we've been really helpful to them.
So.
I think sports continues to strengthen and.
Certainly we expect that to continue to be of strong business for months and years to come.
Great. Thank you maybe if could you just touch on quickly any impact you're seeing from the delta there yet perhaps internationally.
Yeah, I would say you know we're not we're not seeing anything that would be unexpected I think it's been a it's been a bigger challenge just operationally. Our first priority is always going to be to keep our people and our panelists safe and healthy. So we're we're adapting quite actually operationally to every market in 1.
Ex.
Of course, you mean, the vaccination rates beyond Delta of Iran. Rifaximin for east generally are very quite of bit around the world. So we are certainly adapting to local conditions.
Great. Thank you.
Your next question is from the line of the car.
From Huber research your line.
Line is now open.
Yeah. David This is sort of a big picture question on on your I T backbone, but a lot of come.
Commentary in the at least in the release about.
Cloud based solutions.
And the speed to market or do you feel are the.
The I T, but backbone is where you needed to be or the it's still a work in progress.
And but it is helping you.
Provide more custom quick solutions to the the customer base.
So I'm I'm, well known for never being satisfied inside of Nielsen.
You raised the place where I think we're always going to continue to innovate and improve on the tech backbone and take advantage of the latest technologies because I think that is important and technology as the science continues to evolve what I will say is you know the.
The foundation is there.
The work that needed to be done from when I first got here till now to get us on a single platform to be able to be.
Of the cloud base, which really means that more of yourself, where it can be composed of both the the ability to get things done in days and weeks not months and years.
Is.
It gets better every day, so I think it's a very solid.
So the condition I think the fact that it is a single platform makes it much easier to continue to innovate on book.
It's gonna be a never ending process to make sure that Nielsen is at the front edge of the technology curve going forward flip side I would say, that's really helping up of talent because people are finding.
<unk> that they can do really leading edge things here and Theyre pretty excited about that so as we've been bringing new people in this year.
This has been a really interesting draw they love our CTO They love the the tech team and they love the project.
Great. Thank you.
Yeah.
Your next question is from the line of Tim Nolan from Macquarie. Your line is now open.
Hi, David I Hope you don't mind, if I come back to the accreditation question.
With the VIP it sounds like if you've got your panel rebuilt.
And you're rolling out streaming meters. Then is this issue really.
He put to bed of.
Sure.
And I should say it doesn't actually have any impact on your Nielsen, 1 rollout whether negative or actually even positive if you're getting the meters out of the nanometers. The panel retailers any any kind of.
Further color on the status of that and how it affects Nielsen 1 if at all.
Actually yes.
If it helps the card they can add.
I don't want to say of put to bed because obviously, the the VEB doesn't kill the put to bed.
And they're either their basic argument is.
You can be back operationally, but they want the panel.
In every geography to.
To be fully representative and there is still recruiting work to be done I would say the maintenance work that the maintenance backlog has been clear so we're back to those procedures, but.
Of course they want.
High standards and they're they ask the MRC to make.
Sure in the accreditation process that happens every year.
They pay extra close attention given that so much change so.
We're going to continue to invest we're going to continue to improve and we're going to continue to be transparent. So that everyone can have confidence and trust in the fidelity of of what we're producing.
That.
Set.
What I would also say is this changing market that were trying to measure with Nielsen..1 is more sophisticated it is a combination of ACR data, which is why deals like roku, who are so important why the CTV integrations are so important.
And did you need that per.
The screening there's still a lot of cable data in and there is an increasing number of homes that are broadband only so us making sure. We're measuring all of it is key and I think it's certainly telling the market that the Nielsen 1 solution is going to be needed and need it as quickly as we can get it out there so yeah I.
Creates demand as people like knowledge of the changing market and I think you know we need to continue to strengthen all aspects of our data, including our panel and be transparent about that.
Part of it I don't know if you want to add anything.
I think the only thing I'll add David is the.
The the.
I do think importance of the panel and the.
Major source.
<unk>.
Continues to be reinforced I'd say that that's a good message from the market to us and 1 that we want to reinforce even even on this call. So it is a differentiator.
But it also means that it's of critical components of everything.
In pudding.
And so we're going to continue to invest there, especially in the world of fragmentation because ultimately the panel of the major source. It helps us with identity. It helps us with the duplication.
And so we're going to continue to invest there and there is definitely work to be done, but we feel pretty good about all of the progress we're.
We're not just in general with the meters and the Rollouts, which is on track, but also I'd say a little bit of a correction from COVID-19.
What we needed to do there to get it back to what it used to be and what it what it should be.
Okay very helpful. Thanks, David Thanks, Scott.
Yes.
Making the question is from the line of Matthew Thornton from true Securities. Your line is not all of them.
Hey, good morning, everybody I used the 2.2 quick ones..1 is more of a clarification and 1 is more of a housekeeping maybe on the clarification. Maybe this is for David you talked about local or in the release of leaves it talks about the local pressure.
The next subsiding there a little bit you guys are actually obviously end market with the improved it improved offering there. So just to be clear I guess is this is this more of a of market conditions.
The improving there or is this a function of you guys being in market with the with an improved offering that's allowing you to stabilize market share of where even or even take market share or have.
Pressures, our pricing power or what have you sort of just looking for some sort of clarification. There and then just secondly on the housekeeping front, maybe for Linda the the.
T V T Y acquisition of I'm, assuming very small, but I'm. Just curious if you can kind of quantify any revenue contribution from from the acquisition. This year. Thanks guys.
Yeah.
The old Bell.
I'm local I would say, it's a lot of it improve product and improve delivery improved competitiveness.
And I think.
I believe in where the roadmap is going in and the way that Nielsen 1 principles will apply the local that really matters.
In both of the audio and.
And the video business the TV business so.
I think it's that our business is subscription so it doesn't tend to go up and down with what's going on in the in the end markets.
I would just say we're more competitive I do think the end markets are strengthening some of them audio is particularly performing well.
Well as of as people get back into their cars. So.
It's yes. It helps to have a good end market, but I would say most of whats happening to our results as the product driven and the.
I'll, let you take the other question.
Yeah, and the other thing I would just add Matt on local is we were coming.
Coming off of a couple of years of elevated investments as well and so I think where we're seeing the benefits of that investment and our local platforms. So that also is a contributing factor on TVT why no no revenue color orange of really offered so it's a relatively small.
Position from a financial perspective, but it is important to us strategically with you know improving are aligned with our strategy to deliver cross media outcomes as a complement to audience measurement.
So no no financial data, though that that where share.
Now relative to that acquisition, but really excited to have them.
<unk> onboard.
Your last question is from the line of Richard Kramer from Arete Research. Your line is now open.
Thanks, very much of David.
Many of the data providers that you cited of existing or even new partners.
Seem to be resolving Ids based on household of IP addresses and the.
There seems to be of trend now that these are likely to get blocked it sourced by the likes of Apple, Google Comcast and others.
Are you assuming that.
Schering's in your plans and do you think your I'd solutions there'll be robust if all of those household IP addresses or are not available and then a quick 1 for Linda.
Couldn't help noticing that removing some of the CT other items from adjusted EBITDA, which is about $38 million this year versus $2 million last year, what would've taken margins down.
Quite a bit can you tell us what those items were and maybe also since you highlighted international as the particularly interesting growth area of certainly at the analyst day can you give us the sort of break down geographically of the total sales between the U S and international Thanks.
Sure.
Quickly on the on.
The first part of.
Our <unk>.
I'd solution is not dependent on coming from everybody. There's day to begin in the number of ways. So we.
No.
We're watching the the IP address the issue, but it doesn't really affect our roadmap and our ability to measure of what's.
Going on to the audience.
So I think we're.
We're finding quite resilient, regardless of how that sorts out and increasingly I think this is why a lot of people are partnering with us as strategically our ability to pull the data and then validate it with real examples of real people and the panel is unique competitive and durable so.
Our methods are going to sustain of.
Linda answer the the accounting questions.
Linda.
Yeah. Thanks.
So on the on the 1 time items, you know obviously heavily concentrated lab.
Last year from our connect perspective, we do carve those out and in the current year those tend to be in discontinued operations. There is a little bit of of tail on those costs, you know oh aside from that there.
A fair number of moving parts and we can circle back up with you in order to to give you a double click on that.
But.
It's the typical items, but just the mix between last year versus this year is a little bit more complicated.
Regard to.
2 of breakdown on international versus domestic we don't do that breakdown regularly but if I use 2020 as you know.
A barometer of international exposure was about 17% and I would remind you that gracenote is of very.
There was a mobile business and so a meaningful portion of our international exposure is because of the global nature of that business, but we're very optimistic about international as a growth opportunity for us so as we make our annual disclosures on.
On the mix of domestic versus international you know, we I would expect to see some proportion of that trend.
But it's on a much smaller base. So it will take time before you see that mix shift coming through in our numbers.
Okay. Thank you.
So I guess there are no further questions.
Right.
I'm sorry was there are there are no further questions I will hand, it over back to Mr. David again, Thank you very much I want to thank everybody for joining this morning Nielsen as a clear strategy a great team and each and every quarter. We further prove our ability to execute as planned.
I'm really confident.
And in our path ahead, and believe we are well positioned to deliver growth for our clients.
And enhance value for our shareholders. Thanks, again and see you next quarter.
And with that this concludes today's conference call. Thank you for attending you may now disconnect.
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