Q3 2020 interim report January-September

Q3 highlights

• Viaplay paying subscribers up 97k in Q3 and up 31% (662k) YoY to 2,813k following high intake, low churn, and contribution from partnerships. FY20 subscriber target recently raised to 3 million. Viaplay sales up 18% to represent 34% of total Group sales
• 9% organic sales growth. Sales of SEK 2,828m (3,383) with last year including SEK 736m of Viasat Consumer sales
• 19% increase in operating income before associated company and IAC when excluding last year’s SEK 117m contribution from Viasat Consumer. Reported operating income before associated company income and IAC of SEK 176m (265)
• Associated company income of SEK 80m (0) included NENT Group’s 50% share in Allente’s net income. Allente PPA not finalised in quarter so no amortisation charges made
• Operating income before IAC of SEK 256m (265)
• Net income from total operations of SEK 188m (233) and EPS of SEK 2.79 (3.46)
• Adjusted net income from continuing operations of SEK 219m (206) and adjusted EPS of SEK 3.25 (3.06)

Financial overview

President & CEO’s comments

With the global pandemic continuing to have a massive impact on our daily lives, we are very proud to have played a part in providing a much needed break from the many challenges that we all face. Our content has found its way to more Nordic households than ever before, and this is evident in our very strong results. We have turned a double digit organic sales decline in Q2 into 9% growth in Q3, and our healthy underlying profitability is being driven by the growth in our subscription business, and supported by the savings that we have made. We raised our Viaplay subscriber target again during the quarter, and continue to see significant increases in viewing.

Viaplay revenues were up 18% and reflected 31% YoY subscriber growth, as we ended the quarter with over 2.8m paying Viaplay subscribers. Our originals have continued to drive subscriber intake and usage levels, with Partisan and season 2 of Love Me setting new and impressive viewing records. Streamed minutes on Viaplay were up 33% YoY, with sports up 47%.

Due to this positive momentum, we have once again raised our FY20 Viaplay subscriber target, and expect to end the year with approximately 3 million paying Viaplay subscribers, up over 30% YoY with the addition of more than 700k new subscribers.

The underlying performance in Other subscription revenues continued to be healthy and prices are back to normal following the return of live sports. Reported sales were down 35% and reflected the deconsolidation of the Viasat Consumer business.

Advertising sales were down 9%, significantly less than in Q2 as predicted, with demand levels gradually returning.

Revenues for the continuing studios businesses were down 47% and reflected lower demand levels due to the pandemic. Our studios will now be focused primarily on producing originals for Viaplay. The process of selling the discontinued businesses is proceeding according to plan.

Our EBIT before associates and IAC was up 19% when excluding the contribution from the now deconsolidated Viasat Consumer business. The savings that we have made combined with the strong growth in Viaplay and Other subscriptions to more than offset the cost impact of key sports events moving from Q2 to Q3 this year due to COVID-19.

Allente, our joint venture with Telenor, contributed SEK 86m of profits. The focus is now on delivering at least SEK 650m of cost synergies, as well as the continued selling of Viaplay to its subscriber base.

Viaplay Iceland has also continued to perform well and we now preparing to launch Viaplay in the Baltics in Q1 next year. We will provide more information about our planned international expansion of Viaplay at our upcoming Capital Markets Day, which will be held virtually on 10 November.

With the Brexit transitional period expiring at the end of this year, we have decided to move our streaming registrations and TV broadcast licenses to Sweden. We do not expect any significant financial impact from this historic change, but we are of course very happy with this move as it ensures the continued availability of our content across the Nordic region and beyond. We have now established a stable, long term regulatory foundation from which we will embark on our ambitious and exciting international expansion.

COVID-19 is affecting us all in many ways, both personally and professionally. The performance of our people, platforms and products are immensely impressive. We will undoubtably come out of this crisis stronger than ever, ready to capture the full potential of our existing and future streaming operations.

Anders Jensen
President & CEO

Conference call

NENT Group will host a conference call today at 09.00 Stockholm local time, 08.00 London local time and 03.00 New York local time. To participate in the conference call, please dial:

The access pin code for the call is 4394725.

To listen to the conference call online and for further information, please visit www.nentgroup.com

Contact us:

press@nentgroup.com (or Nicholas Smith, Acting Head of External Communications; +46 73 699 26 95)
investors@nentgroup.com (or Stefan Lycke, Head of Investor Relations; +46 73 699 27 14)

Notes to editors

Nordic Entertainment Group AB (publ) (NENT Group) is the Nordic region’s leading entertainment provider. We entertain millions of people every day with our streaming services, TV channels and radio stations, and our production companies create content that is experienced around the world. We make life more entertaining by telling stories, touching lives and expanding worlds – from live sports, movies and series to music and original shows. Headquartered in Stockholm, NENT Group is listed on Nasdaq Stockholm (‘NENT A’ and ‘NENT B’). This information is information that Nordic Entertainment Group AB (publ) (NENT Group) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 22 October 2020.