Banijay Group N.V. (BNJ) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Banijay Group Half Year 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to Louise Racine, Head of Investor Relations. Please go ahead.

Good morning, and welcome to Banijay Group's H1 2026 Results Webcast. This is Louise Racine, Head of Investor Relations. Before we start, let me draw your attention to the disclaimer on Slide 2. I also want to remind you that this presentation is now available on the company's website, and a recording of this call will be accessible in the coming days. Your speakers today are Francois Riahi, our CEO; and Sophie Kurinckx-Leclerc, our CFO. First, Francois will present our key financial and business highlights. Sophie will then cover the results in more detail before Francois provides some concluding remarks. We will then open the call for questions. Before we get started, a quick comment on the perimeter and comparison basis used in these results. The completion of Tipico in April adds just over 2 months of Tipico earnings to our revenue and adjusted EBITDA reported figures. To give you the clearest view of our underlying performance, we are also providing pro forma variations that include a full 6 months of Tipico. For further information regarding pro forma performance, you can find in appendices 2025 pro forma figures on Banijay Gaming on a quarterly basis. Pro forma evolution at constant exchange rates also includes the restatement of 2025 contribution of Bet-at-Home and H2O. Over to you, Francois.

Thank you, Louise, and good morning, everyone. Before we begin, I'd like to highlight that 2026 is a particularly busy and transformational year for the group. We are reporting, as Louise just reminded, our first set of results, including Tipico this quarter. And next quarter, we will introduce All3Media into the perimeter, making another important step in the group's evolution. At the same time, H1 2026 includes only a partial contribution from the FIFA World Cup and also includes the impact of tax increases in France and in Austria compared to H1 2025 as well as some one-off effects linked to the typical transaction, adding a further layer of complexity when assessing performance. Given these moving pieces, our objective today is to present the results as clearly and transparently as possible, helping you understand the underlying performance of the business beyond the changes in scope and one-off timing effects. Saying that, our H1 results were solid with pro forma revenue growth of 4.5% and pro forma adjusted EBITDA stable year-on-year and up 5% excluding the betting tax increases in France and Austria. The 2026 FIFA World Cup was a landmark event and a fantastic showcase for our group across Sports Betting & Gaming and Live, and I will spend some more time on what made it so special for us later in my presentation. The first half was also a period of major strategic progress with important M&A milestones and acceleration on live and on the digitalization of our entertainment business. Thanks to the solid first half and the momentum across our businesses, we are very confident in achieving our guidance for the full year, and we expect adjusted EBITDA growth to accelerate in the second half. Indeed, H1 was a very active period for M&A execution. Our acquisition of Tipico closed at the end of April. The integration is on track and will accelerate after the FIFA World Cup as we wanted to make sure our teams were really focused on underlying business during these key events, and this was a success. We have just appointed a CEO for our Sports Betting & Gaming activity to lead this integration. Antoine Jouteau brings a strong track record in leading digital companies and integrating them. The combination of Banijay Entertainment with All3Media closed earlier this month, even if it is not yet included in our H1 figures, creating a global media and entertainment powerhouse. And in Sports Betting & Gaming, at the beginning of July, we announced the acquisition of JOA, the second largest casino operator in France, which we expect to close in the second half of the year. As a newly announced deal, I will give you a bit more color on JOA shortly. Finally, regarding The Independents, we have decided not to exercise the call option to increase our shareholding in The Independents, we are reprioritizing the integration of All3Media and Tipico and the execution of its strategic road map while remaining a supportive minority shareholder of this very good company. So in 2026, we'll have closed 3 major transactions to translate our strategy in action, which is not today. The first half -- sorry, looking at H1 key figures now. Revenue was just under EUR 2.6 billion, almost up 17% on a reported basis and 4.5% pro forma typical as double-digit growth in Sports Betting & Gaming was partially offset by a small expected decrease in Entertainment and Live that will reverse in the second half. Adjusted EBITDA came in at just over EUR 500 million, up 18.5% reported and stable on a pro forma basis and up 5%, excluding the betting tax increases in France and Austria. Adjusted net income was EUR 141 million down 3.7% on a reported basis and up almost 33%, excluding exceptional LTIP expense, which is mainly noncash in the context of Tipico acquisition that we presented last time. Adjusted free cash flow generation reached just over EUR 410 million, resulting in a cash conversion of 82% on a reported basis and 81% on a pro forma basis, just above guidance. Pro forma of Tipico and after the closing of All3Media for which we already received the cash proceeds in early July, leverage stands at 3.6x, and we expect it to decrease to around 3.4x by the end of the year as planned and to around 2x by the end of 2029. Let's move to business highlights now, starting with Sports Betting & Gaming. Of course, a big event for our business this year was the 2026 FIFA World Cup, the largest in history. 50% more teams, 63% more matches and 10 more days of competition than in 2022, creating a significantly expanded tournament stage for the first time across 3 host countries. We've heard a lot of superlatives about the World Cup, but this time, they are real. Compared with the 2022 World Cup and on a combined basis, including Betclic, Tipico and Admiral, the number of active players during the competition rose by 75% compared to the last World Cup, turnover doubled and gross revenue was up 88%. So this is in 3.5 years. Only the contribution of the group stage is meaningfully reflected in H1 results as the Knockout rounds started on 28th June and therefore, only contributed a few days in the quarter. As a result, a much larger share of the World Cup impact, including the normalization of sports margins that comes with the big games will be more visible in Q3. Now the World Cup is over, and I can tell you that we are very happy with our performance during the World Cup, both commercially and financially. Beyond the World Cup, Sports Betting & Gaming commercial momentum was exceptional throughout the half. Unique active players grew 22% and revenue grew across all our brands. Now I'd like to spend a few moments on our acquisition of JOA, which is a very exciting development for Banijay Gaming and another important step in our strategy to build a diversified European gaming leader. JOA is the second largest casino operator in France by the number of casinos with a nationwide network of venues that combine gaming with restaurants, bars and leisure experiences. It generated around EUR 430 million of gross revenue in 2025. Following the acquisition of Tipico, the addition of JOA further strengthens our omnichannel capabilities, combining our digital expertise with one of France's largest land-based gaming networks. So Tipico was the start of our omnichannel strategic development. And a few months after, we are now omnichannel in Germany, Austria and with JOA, we will be also soon in France. Of course, we will leverage on our new know-how in retail operations in Germany and Austria when it comes to JOA integration. Banijay Gaming will acquire 100% of JOA at an enterprise value of EUR 465 million, financed through a mix of cash and debt, with closing expected in the second half of the year, subject to customary consultations and regulatory approvals. Additionally, it will create opportunities to connect JOA's revenues and customer base with Betclic's digital betting and poker platform and extend the omnichannel ecosystem we are creating between our digital platforms and our physical destinations. And I can tell you that both Betclic and JOA teams are excited about this combination. Let's move now to Entertainment and Live, where we continue to make progress across our key growth drivers in the first half. A particular highlight this semester was the strong momentum in sports and live events, while we also continue to expand our digital footprint and scale our franchises worldwide. Actually, sport was a major focus this half and set both live and digital. In the first quarter, Balich Wonder Studio delivered the Milano Cortina Winter Olympics opening ceremony watched by 2.5 billion people. In the second quarter, it delivered 3 FIFA World Cup opening ceremonies staged in 3 countries in less than 48 hours and watched by more than 1.2 billion viewers. Similar to sports betting, the World Cup was not finished for our live business at the end of Q2 and will continue to benefit from it in Q3 through the production of key events associated with the tournament, including the Independence Day celebrations on 4th July and the FIFA World Cup closing ceremony in New York on 19 July. This World Cup momentum also provided the ideal platform to launch Balich Wonder Studio North America, a very important development for the group. With new hubs in New York, Los Angeles and Mexico City, we are strengthening our footprint in one of the world's largest markets for sports, culture and live entertainment and probably the market where the connection between sports and entertainment is the strongest. I can also tell you that our partners at RedBird have been extremely supportive in helping us launch and build awareness around this business in the U.S., which is a first concrete demonstration of the strength of this partnership when it comes to development in the U.S. On digital, we launched Players Network, Banijay Entertainment's new digital sports brand with the first flagship series fronted by Jamie Vardy released around the World Cup, expanding us into social-first talent-led sports entertainment. We also continue to scale our franchisees globally, both through new local adaptations and digital expansion. LUMINISCENCE sold more than 0.5 million tickets in the first half and is now live in 8 countries, while The Black Mirror Experience is now open in 3 cities, Montreal, Madrid and New York and Sao Paulo is going to open soon as well, and we are working on other locations. In entertainment, we continue to grow our brands through new adaptations such as Physical 100 on Netflix sports again, and through digital initiatives, including a new representation partnership with Chef Mike Reid. And as already mentioned, you'll see more about production in the second half of the year, and Sophie will come back to this later. And of course, there is much more to come with All3Media and Banijay Entertainment combination. On the 9th of July, we completed the merger, creating the world's largest independent production company and All3Media will be integrated into our results from the third quarter. The combination significantly strengthens our capabilities across content production in English language, live experiences, digital and new media while expanding our footprint across 25 territories. We see very good opportunities for commercial synergies. We are fully on track to achieve around EUR 50 million of cost synergies within 1 year of closing, which is what we announced when we told you about the deal. While this is a challenging target, we are very confident in our ability to deliver it and the teams already started at a very high pace. And as part of this operation, as announced, the exceptional dividend of EUR 0.93 per share is confirmed and will be distributed in mid-August. That's all from me for now. Over to you, Sophie.

Thank you, Francois. So let's start with group revenue. Reported revenue reached just under EUR 2.6 billion, up 16.9% on a reported basis versus the first half year of last year, including a contribution from Tipico for the 2 months since closing. On a pro forma basis, with the full 6 months of Tipico in both years, group revenue grew 4.5%. This growth was fueled by Sports Betting & Gaming, up 10.5%, while Entertainment and Live declined slightly at minus 2.2%, reflecting the anticipated phasing in content production in Q4 this year. Moving to group adjusted EBITDA. Reported adjusted EBITDA reached EUR 503 million, up 18.5% on a reported basis. On a pro forma basis, adjusted EBITDA was flat at 0.1%. This reflects the betting tax increase in France and Austria from July 2025 in France and in Austria, April 2025 for Sportsbook activity and from January 2026 for gaming activity. Excluding this impact of tax increase, pro forma adjusted EBITDA grew by 5%. The reported adjusted EBITDA margin improved slightly to 19.5% despite the betting tax headwind, reflecting the positive contribution of Tipico, higher distribution and content and continued efficiency. Moving to adjusted net income next. Excluding the exceptional LTIP charge of EUR 54 million that we flagged at our strategic update in March, which is vastly noncash and related to the Tipico transaction, adjusted net income stood at almost EUR 200 million, up 32.9%. Beyond this exceptional charge, main factors were a higher cost of net debt, reflecting the financing of the Tipico acquisition with debt raised since January 2026, higher D&A also linked to the Tipico integration and conversely, lower income tax expense following the implementation of the IP box tax regime in Sports Betting & Gaming. Moving to results by business now, starting with Sports Betting & Gaming. Reported revenue was almost -- was up almost 55%, reflecting the consolidation of Tipico since the end of April. Including 6 months of Tipico on a pro forma basis, revenue grew 10.5%, fueled by record player engagement with unique active players up 22% and record engagement for World Cup that benefited to all products. By product, Sportsbook revenue were up 8.6%, reflecting the specific sports margin in the middle of the World Cup, while games, poker and turf revenues grew over 18%, reflecting our diversification strategy. Looking at earnings now. Sports Betting & Gaming adjusted EBITDA stood at EUR 294 million, up 32.5% on a reported basis with a margin of 24.3%. This reflects the betting tax increase and the effect related to sports margin during the World Cup. Pro forma, the acquisition of Tipico and excluding the betting tax increase in France and Austria, adjusted EBITDA grew by 5.4% with a pro forma margin of 28.2%. Adjusted free cash flow conversion remained very high at almost 89%. The change in working capital was positive, driven by cutoff effects on betting tax and pending bets in the context of the strong volumes in June related to the World Cup. And income tax paid was lower, reflecting the positive impact of IP box tax regime. And if you remind well, a favorable base effect related to a one-off tax catch-up in 2025. CapEx and lease expense increased slightly related to the integration of Tipico. Moving now to Entertainment and Live, where revenues were down 2.2% at constant exchange rates and current scope. Looking at revenue by activity, the 11.9% decrease in content production was expected and reflects phasing on scripted shows deliveries, further weighting on Q4 this year. For instance, The Buccaneers, a scripted show produced in the U.K. was delivered in Q2 last year and will be partly delivered at the end of the year in 2026, which reflects the seasonality. Distribution revenues were up 10.5%, benefiting from a format sale in the first quarter and the opening of initial licensing windows for several finish stakes. The standout performance was once again live. with revenues up almost 50%, driven by the Milano Cortina Winter Olympics opening ceremony in the first quarter, the 3 FIFA World Cup opening ceremonies in the second quarter and the continued momentum of LUMINISCENCE. Adjusted EBITDA was up 2.5% as reported, 3.4% at constant exchange rates and current scope to just under EUR 213 million with the margin improving by almost 1 point to 15.5%. This improvement of this margin was driven by distribution and continued cost efficiency. The change in CapEx reflects the high comparison basis in the first half of 2025. Adjusted free cash flow conversion stood at 72.5%. The change in working capital reflects cutoff effects, including phasing in payments related to the significant live shows produced during the first half 2026, which we expect to normalize throughout the year. From a cash flow perspective, group adjusted free cash flow reached just over EUR 411 million with cash conversion of 82% on a reported basis and 81%, including 6 months contribution of Tipico, just above our full year guidance of circa 80%. The adjusted operating free cash flow conversion is 66%, in line with our midterm guidance. The group's net debt stands at EUR 5.5 billion at the end of June following completion of the Tipico acquisition. Following the closing of the combination in Entertainment and Live, which means including All3Media debts, the cash proceeds we received early July and exceptional dividends to be distributed, net debt amounts to EUR 5.8 billion, representing a leverage of 3.6x. We expect leverage, as mentioned during our strategic update to decrease to around 3.4x by the end of the year, driven by cash generation in the second half. We maintain a strong liquidity position with EUR 713 million of cash at the end of June 2026. Post combination with All3Media, including the cash received at the beginning of July in relation to this transaction and including the payment of the exceptional dividend of approximately EUR 400 million, the cash position exceeds EUR 1 billion. At the end of June 2026, the group's revolving credit facility amounts to EUR 350 million, reflecting the additional EUR 70 million RCF in Sports Betting & Gaming, including in the new financing package. The past undrawn amounts to EUR 312 million. That's all for me. I will now hand back to Francois for some concluding remarks.

Thank you, Sophie. Given our visibility at this time of the year in Entertainment and Live about the schedule of deliveries over the second half and the results of the World Cup 2026 that we already have, we confidently reaffirm our 2026 guidance of mid-single-digit adjusted EBITDA growth on both a stand-alone basis and pro forma of the Tipico Group and All3Media transactions. Excluding the impact of the tax increases in Sports Betting & Gaming, which reflects the great performance of the business, this would be even higher at mid- to high single digits. And as Sophie reminded adjusted free cash flow conversion of circa 80%. In conclusion, this was a solid first half for the year with outstanding player engagement in Sports Betting & Gaming, strong momentum in Live and content production and distribution activity set to normalize by the end of the year, we are very confident about that with, of course, more business opportunities to come from the combination with All3Media in the next months. This semester, we have made significant progress on M&A. Tipico has closed and is integrating well. Our combination with All3Media is complete and integration has already started too. JOA is expected to close in the second half. In just a few months, we have transformed the group and accelerated on diversification by geographies, products, and we are now better positioned strategically. We are also expecting to implement synergies, very significant synergies from the typical and All3Media deals in the second half of the year and of course, in the following months and look forward to updating you on this. In a nutshell, H1 was busy. H2 will be busy as well. Busy is good, but the summer break is welcome. That's all from me. Thank you for your attention, and back to you, Louise.

Thank you, Francois. It's now time for questions. So please state your name and company. Thank you.

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Ricardo Chinchilla from Deutsche Bank.

I have 3, if possible. The first one is on the World Cup monetization and outlook. You indicated that a limited portion of the FIFA World Cup now -- phase was reflected in the first half results. Can you quantify how the third quarter trading has evolved since the end of the tournament, particularly in terms of player retention, Sportsbook turnover and post-event activity levels versus the World Cup cohort of 2022? The second question is related to the acquisition of JOA. Could you please elaborate on the multiple paid for the transaction? And any color that you could give on the mix of debt and equity financing that you are targeting, even if it's just anecdotal understanding that the transaction is yet to close. And lastly, if you could mention the -- or provide some color on the competitive environment in France, Germany and Austria and Poland with regards to gaming. Our marketing intensity and customer acquisition costs trending differently post the typical acquisition? And have you seen any response from competitors following the creation of your larger now Banijay gaming platform?

I will take the two last ones and the first one for Sophie, but I start in reverse. So competition in the different countries, of course, is always fierce, especially for World Cup because all everybody wants to capture new players. We have, in France, the increase in tax is weighing on competition because you really need to have a large market share to be able to sustain this. But all in all, we are very happy with what we did during the World Cup compared to the market. And we have been very present in all our markets on the World Cup. There was no specific response from competitors. No, of course, all our competitor made very good efforts to capture clients, but we believe we had a very good performance on this in all our markets. On the acquisition of JOA, the multiple paid is in line with the sector. And the mix of has not been decided yet. We still have a few weeks or months to work on this. On the World Cup, so I leave the floor to Sophie, just to say during the first phase of the World Cup, you have more unbalanced gains. And also the big teams, especially France, Germany performed very well. You had Mbappe is scoring 2 goals of every game, Messi is scoring also every game. So typically what the players want to bet on. So the first half of the World Cup was very positive for the players, and this is what we have in our figures. The second half was more reversing the trend and normalizing the results.

So I think that Francois has almost everything -- what I can add is that, yes, in the second part of the World Cup that occurred during Q3. So the sports results were more favorable for Betclic and Tipico. We are very, very happy with the results of this World Cup, as mentioned to you with a growth of the UAP by more than 75% that we doubled our bets and that the GGR increased by 88%. What is important to know is that around 50% of the new players remain active during the following quarter, which is also very good for the business in the next few months.

And the next questions come from the line of Annick Mass from Bernstein.

So my first question is going back to the JOA acquisition. I guess it is a physical acquisition and not only online, which is slightly deviating from what you've done in the past. So my question is really, going forward, shall we expect more of this, more of casino operators in the markets in which you are present to create a wider omnichannel strategy? Or was this a one-off explained by an attractive opportunity? The second one was on M&A in content and production. I guess you have a big debt at the moment. But on the other hand side, you know how to structure deals in ITV Studios is coming on the market without TV bids attached to it. So is that something that you could be looking at again? And then you started saying that synergies are going to impact in the second half. Can we maybe get a little bit of more of the phasing of how these synergies are going to come through in the second half?

So JOA acquisition, in fact, 2 or 3 years ago, we were really focusing only on online. And we looked at the different geographies. And especially when we discussed with Tipico, looking at Tipico, we understood the value of having also a retail network. I think also that artificial intelligence is increasing this value because the brick-and-mortar is not as easy as to replicate. And so of course, online remains our main focus, will remain our main focus. But JOA was an opportunity to create an omnichannel situation in France, which is one of our largest market. And we have it in Germany. We have it in Austria, and it was an opportunity to create it in France. We cannot create it in France through physical sports betting because there's -- it's a monopoly of France individual. So JOA was a very -- probably the best opportunity we could think of. So -- and JOA was looking for a home, and they were very interested in joining our strategy as we are building as a European leader. So it was a good fit. Now our focus, of course, remains largely on online. But when online can be supported by retail, by physical, we believe it's a good match. On your second question on ITV studio, it's easy to answer because it's not the right time neither for us or for them. They are in a transaction which is going to last for a long time. And we are -- we have a lot of on our plate to integrate. So it's not something which is really in the cards today. On the synergies Sophie, I don't know if you have some color on that.

So on the synergies, what we announced during our call previously is that we expect from Tipico and Admiral integration into the gaming business an amount on a full year basis of EUR 100 million of synergies. We -- as now the workup is over, we are -- well, the teams in Banijay Gaming are focusing really on the implementation of the synergies. So we will start to have the first impact in H2, but then on a full year basis, more in 2027. On the All3Media completion combination, we expect cost synergies to be around EUR 50 million on a full year basis, and we expect to implement them within 12 months. Just for you to know, of course, as we completed this deal early July, the teams in Entertainment business have already started to implement them, and we will have the first impact in H2 also, but the full impact will be done within 12 months.

We are now going to proceed with our next question. And the questions come from the line of [ Adrianne Dilla ] from Bank of America.

A couple of questions or one question perhaps. Can you discuss the underlying growth trends that you're seeing in content production? You talked about the phasing of deliveries being skewed to the end of the year. But more generally speaking, are you seeing like same or higher or weaker demand from broadcasters and streamers for content at the minute?

What we see this year is really in line with what we were expecting. So it's same. That's what we were expecting. We -- of course, the trends of the sector, you know them. we have, I would say, broadcasters that are suffering on the revenue side, but we see that they continue to be committed to the programs that are making their audience. Of course, we do more and more with streamers, and we really believe that All3Media is going to enhance this development and always this question on the development on digital media, especially YouTube. So we have very -- it will take time, but we have very good, I would say, experiments, moves, new things that we are doing on YouTube and also a little -- the studio, which is going to help. So again, we have no positive or negative surprise this year in what we think we are going to deliver. And the trend on the next year that it will continue to evolve. But we gave some midterm outlook recently. I would like also to underline that 2 or 3 years ago, we decided to develop live events. I think it was a really good choice. And we clearly see it as a growth driver. And as you have seen in the presentation, we also decided to go stronger on sports, which is also a very good growth driver. So we believe we are on the right trend, and we will continue to enhance them.

Can you just talk also about your appetite for further M&A in the gaming space? I mean it's always a space where lots of deals are happening. There's been a transaction this year involving one of your peers, I would say, around Eastern Europe. So generally speaking, can you talk about your appetite for M&A in that space?

Yes, sure. Of course, today, we just made a big piece. So we are not hungry today. But our appetite in the midterm is real because we believe that consolidation makes sense. And we believe that we are very well positioned for this consolidation. You have in this industry, founders, private equity companies that at a point are always looking for an exit, a liquidity or a combination. And so today, we are focusing on typical integration. But we believe that our new setup is also very attractive for companies that look for a home. And so we keep a real appetite for M&A in this sector, but more in the midterm.

We are now going to proceed with our next question. And the questions come from the line of Conor O'Shea from Kepler Cheuvreux.

Three questions from my side as well. First question, could you have a sense of the like-for-like growth for the -- typical stand-alone in the second quarter or first half? Secondly, could you have a sense of any -- what the calendar is for the live entertainment business in the second half of the year? Any major events that could boost growth? And then last question, I understand that you're not going through with The Independents deal now. I think that was -- part of that was designed to improve share liquidity through an equity issuance. So what's the revised plan in respect to improving liquidity now that, that deal is -- you're not going to exercise the call option?

I take the last question, I'll leave the first for Sophie. On The Independents, yes, we decided not to exercise our call option. Of course, this decision is Independents, if I can say so, from the question around liquidity. Of course, increasing our float and liquidity remains our top priority. But The Independents was just an illustration of it's a long time ago because it was before Tipico, before All3Media, before the special dividend we are distributing. So it's no more relevant to things like that. But both are completely separate topics and to try to increase our float and liquidity is a constant priority for Sophie and myself.

So on the 2 other questions, in terms of calendar of major events and seasonality for the content business. So on Q3, we still expect the impact of significant ceremonies that has been produced by Balich Wonder Studio. I mentioned to you, the ceremony of July 4, the closing ceremony for the World Cup. In the production on the show production – for the show production we are expecting a seasonality as usual in Q4 more. For example, we already mentioned that a scripted show like Buccaneers should be partly delivered in Q4 instead of Q2 last year. So we expect more in Q4. But we already gave a guidance for 2026, and we are very confident to reach this guidance despite this seasonality.

On that, I really want to insist on what I said during the presentation on the opportunity to develop more in the U.S. And now really, we are very well considered and identified in the U.S. as a top company to organize big shows linked to sports, especially. And it's clear that it's a very good market. So it's a very -- I think the World Cup has been a very important milestone for us in the live event. It's not just a one-off. It's also, I think, a trigger for more business.