Promotora de Informaciones, S.A. (PRS) Earnings Call Transcript

Good morning. I'm Mariola Riaño, Director of Investor Relations at PRISA. Welcome to the presentation of our results for the first half of 2026. To provide a detailed review of the results published yesterday after market close, today's presentation will be led by Joseph Oughourlian, Head of PRISA; Pilar Gil, Vice Chair of PRISA and CEO of PRISA Media; Alberto Blanco, CEO of Santillana; and Javier Ruiz, CFO for PRISA. [Operator Instructions] I now hand over to our Chair, Joseph.

Thank you, Mariola. Welcome, everyone, to our presentation for the results of the first half of 2026. It's a pleasure to share with you PRISA's performance and its progress over these first 6 months of the year. Before we examine the period's key figures in detail, I'd like to highlight briefly some of the most significant milestones and developments that have shaped the group trajectory during the half year and that reinforce both our positioning and our growth prospects. Let me first begin by highlighting the solid performance recorded in the first half. Group revenue grew by 26%, EBITDA by 70%, translating into a 4 percentage point improvement in the EBITDA margin. These results underscore the strength of our businesses and the successful execution of our strategy, allowing us to move forward with confidence while remaining fully aligned with the targets set for the year as a whole. This performance was driven by the strong business performance and the timing of revenue recognition in Brazil. On one hand, the subscription models continue to perform solidly, gaining increasing relevance at both Santillana and PRISA Media. And on the other, the healthy trend in advertising investment contributed positively to PRISA Media's results. In addition, performance over the half year benefited from the recognition of revenue associated with the 2025 PNLD Ensino Médio order in Brazil, the greater part of which of the total amount awarded in 2025 was booked in 2026. Another particularly noteworthy aspect has been the improvement in our cash generation. Operating cash flow rose by EUR 13 million and total cash flow grew by 10%, underscoring our business' ability to convert operating results into cash and strengthen our financial position. Finally, we're maintaining firm financial discipline and continuing to make progress in our deleveraging process. Specifically, the net debt-to-EBITDA ratio improved from 4.26x in June 2025 to 3.78x in June 2026. These advances reinforce the strength of our balance sheet and give us greater flexibility to keep investing in growth and in value creation for our shareholders. These results are the outcome of the consistent implementation of our strategy and of the measures taken in recent years to strengthen the group's foundations and accelerate its transformation. Now this first slide provides a snapshot of our key first half figures. Revenue reached EUR 513 million, up 26% year-on-year. This performance was supported, among other factors, by the continued strengthening of our subscription model, a key pillar of our strategy that enables us to build a sustainable and recurring revenue base. At Santillana, subscriptions grew by 19%, reaching EUR 4 million, driven by the growth of the new Richmond Pro and Sumun initiatives. Meanwhile, EL PAÍS continues to consolidate its leadership among Spanish language news outlets with 482,000 total subscribers, up 30% on a year ago. These advances reflect the strength of our brands and content as well as our ability to keep expanding our subscription base and building loyalty, progressively increasing the weight of recurring revenues. This solid revenue performance has also translated into a significant improvement in results and profitability. EBITDA reached EUR 86 million, up 70% and the EBITDA margin widened by 4 percentage points to 17%, reflecting the operating leverage of our businesses and efficient cost management. At the same time, as I mentioned before, we continue to strengthen our cash generation capacity and remain firmly committed to deleveraging. Liquidity also remains solid, standing at EUR 209 million. I'll not go into further detail at this point as our CFO, will cover the company's year-to-date financial performance later in the presentation. I would simply like to emphasize that debt remains a significant challenge for the company and financial discipline is and will continue to be an absolute priority. Taken together, these results confirm that we're making successful progress on our 2026-2029 strategic plan, combining growth, profitability, cash generation and financial discipline to create sustainable long-term value. Let's now look into detail at the results for the first half of this year. And with that context, I now hand over to Pilar, who will detail PRISA Media's performance during the half year.

Thank you. Good morning, everyone. This is Pilar Gil speaking. It's a pleasure to be here today to share with you all Prisma Media's first half 2026 results. The set of results demonstrate the strength of our brands, the effectiveness of our strategy and our continued ability to deliver profitable growth while advancing our digital transformation. During the first half of 2026, we delivered solid revenue growth, significant EBITDA expansion and continued progress across all the key drivers of long-term value creation, advertising, subscriptions, audience growth and engagement. As regards to advertising remains our largest revenue stream and continues to outperform the markets in which we operate. During the first half of the year, advertising revenue grew by 6% with positive performance in both offline advertising up 5% and digital advertising at 8%. The positive advertising performance achieved during the first half reflects the success of our commercial transformation recently implemented. By adopting a more integrated approach and leveraging the full scale of our media ecosystem, we continue to gain market share across all our core markets. In Spain, PRISA Media grew by 3.5% in an advertising market that grew 1.6%, raising its share to 21%, mainly driven by the excellent performance of radio and digital press. In Colombia, advertising revenue rose by 21.3% compared with market growth of 12.5%, lifting our share to 41%. In Chile, our advertising revenue grew by 2.5% compared with 1.4% for the market, raising our share to 28%. And at the same time, Mexico maintained a positive trend with growth of 1.4% on the same period of the previous year. This strong underlying trend was further supported by major audience and commercial opportunities, including EL PAÍS 0th anniversary celebration and the Football World Cup, which helped accelerate growth during the semester. Regarding subscriptions, EL PAÍS continues to strengthen its position as the leading Spanish language subscription news brand. Subscriber growth remains robust, demonstrating both the quality of our journalism and the increasing willingness of audiences to pay for trusted information. At the end of June, EL PAÍS reached more than 482,000 total subscribers, up 13% on a year ago. Audience engagement also continues to expand. We reached 147 million monthly unique users, increased our registered user base and continue growing our video and social media communities. In radio, we maintained our leadership positions across key markets with an audience of 25 million daily listeners globally. These achievements reinforce one of PRISA Media's greatest strengths, the deep and trusted relationship we have with audiences across Spain and Latin America. Turning to our financial performance. Revenue reached EUR 219 million, representing 6% growth year-on-year. Growth was driven by strong advertising performance, as explained before, continued expansion in subscription revenues and the increasing contribution of diversification activities where the full consolidation of Radio Mexico during the period was completed, strengthening our position in one of the region's most attractive media markets and creating additional opportunities for operational synergies and future growth. As a result of our strategic execution, international revenues now represent 20% of total revenues, while digital revenues account for 30% of the business. Both indicators continue to move in the direction we have outlined to the market. More diversified, more international and increasingly digital media company. At the same time, we continue to maintain a strict cost discipline. The efficiency measures implemented over recent years, together with process optimization and organizational integration have allowed us to offset inflationary pressures while supporting continued investment in growth initiatives. The combination of revenue growth and operational efficiency translated into a particularly strong profitability performance. EBITDA reached EUR 20 million, growing 41% year-on-year, while our EBITDA margin improved by 2 percentage points to 9.2%. Overall, these results confirm that our strategy is delivering. We are strengthening our B2C position, expanding our audiences, accelerating digital growth, increasing profitability and building a more diversified business capable of creating sustainable value over the long term. With that, I will now hand over to Alberto to review the performance of Santillana.

Thank you, Pilar. Good morning, everyone. I'm Alberto Blanco, CEO of Santillana. Before turning to the results in detail, I would like to focus on one of the indicators that best reflect our strategy is evolving and the transformation we are driving across all our markets, subscriptions to learning systems. During the first half of 2026, we surpassed 4 million subscriptions, representing growth of 19% on the same period of the previous year. This is a highly significant advance that continues to confirm the strength of our organic growth model and the strong reception of our value propositions among schools, teachers, students and families. Particularly noteworthy is the contribution of the new Sumun and Richmond Pro projects, which accounts for close to 239,000 subscriptions as well as the excellent performance of our supplemental and English language systems, which grew by 32% compared to the first half of 2025. Performance has been positive both in our Southern campaigns countries where subscriptions rose by 15% at the start of the Northern campaigns, which recorded a growth of 32% compared to the first half of 2025. As a result of this performance, learning systems now account for 62% of private market sales, 5 percentage points more than the year ago. We are, therefore, continuing to make progress toward our goal of building an increasingly recurring and sustainable revenue based in our greater capacity to generate long-term value. Let us now analyze how our business performed in the various markets where we operate. In the private market, revenue reached EUR 177 million, representing growth of 2% at constant exchange rates, practically in line in [ terms ] with the first half of 2025. Business performance continues to reflect the progressive transformation of our model towards subscription-based learning systems. Subscription sales rose by 7%, driven mainly by the increase in the number of subscriptions. Meanwhile, traditional textbook or didactic sales fell by 12% or by 4% at constant exchange rates, in line with our expectations and their ongoing transformation to our learning systems. This trend in the deductive business was also affected by a smaller private campaign in Argentina since the institutional sale recorded in 2025 had an impact on private demand in 2026 as well as by lower volume of small institutional sales in other markets. With regard of profitability, it's important to note that during the first half of 2026, an institutional sale to the Argentina government was recorded at levels similar to those of 2025 [indiscernible] thought of a lower margin. This factor essentially explains the period EBITDA performance, which came in at EUR 44 million compared with EUR 51 million in the same half of the 2025. Turning to the public market in Brazil. The results shows outstanding performance. Revenue amounted to EUR 130 million compared with the EUR 21 million recorded in the first half of 2025, more than 5x the previous year sales level, thanks to the impact of the 2025 PNLD Ensino Médio order. It's worth recalling once again that this order achieved a market share of close to 50%, a historical achievement that reflects the strength of our educational offering and our leadership in the Brazilian public market. As you know, around 77% of the order remained pending recognition in 2025 due to administrative and logistical delays outside Santillana's control. During the first half, the order has been invoiced almost in its entirety, generating an extraordinarily positive contribution to the results of the Brazilian public business. In addition, public sales to state and municipalities continue to perform favorably, both in revenue and profitability terms, in line with our expectations. As a result of all this, EBITDA in the Brazilian public business improved by EUR 35 million on the same period of the previous year, moving from a negative contribution in 2025 to generating EUR 32 million of EBITDA in the first half. Finally, Santillana's Corporate Center recorded a negative EBITDA of EUR 7 million, an improvement of 10% on the first half of 2025, mainly owing by the higher efficiency and higher cost control. Having looked at our business performance, let us now examinate how these dynamics translate into Santillana's consolidated results. The first half results in a very positive performance and reflect both on the strength of our learning system business and the excellent performance of the public business in Brazil. Revenue reached by EUR 295 million, representing growth of 46% on the first half of the 2025 or 48% at constant exchange rates. This performance was driven by three main factors: first, the continued growth of learning systems in the private market; second, the recognition during 2026 of the greater part of the 2025 PNLD Ensino Médio order; and third, the favorable performance on other public sales to states and municipalities in Brazil. In addition, during the first half, we completed the sale and leaseback of the Peru offices, which generated a capital gain of close to EUR 2 million recorded under our other income. In EBITDA terms, we reached EUR 69 million, up to 70% in the first half of 2025 and up to 76% at constant exchange rates. This growth mainly reflects the expansion of the subscription models and the contribution of the Brazilian public business, which offset both the lower margin on the institutional sale to the Argentina government and the increase in expenses associated with the development of the new projects. As a result, the EBITDA margin stood at 23.5% compared with the 20.2% recorded in the same period of the previous year, an improvement of 3 percentage points. This performance was also supported by the sustained effort on operating efficiency and cost control, a priority we continue to maintain across all our business. As for the currency effect, its impact was limited over the half year. Both revenue and EBITDA recorded a negative effect of approximately EUR 2.3 million, explained mainly by the trend in Argentina peso. Beyond these figures, the results demonstrate that we continue to make good progress in executing our strategy. We are continuing to expand our recurring revenue base, reinforcing our leadership in learning systems, driving new offerings such as Sumun and Richmond Pro and leveraging a strong competitive position we have achieved in the Brazilian public market. In short, the results achieved in this first 6 months of the year reinforce our confidence in the strategy we are executing and in our ability to keep raising value sustainability. We continue to take firm steps to meet the targets we have set for 2026 and for the years ahead, consolidating our leadership in Latin America educational transformation. Having reviewed the performance of the two business, I will now hand over to Javier, the Group Chief Financial Officer, who will provide further information on the group's financial results.

Thank you, Alberto. Good morning, everyone. I'm Javier Ruiz, Chief Financial Officer of PRISA. I would now like to take you through the operating and financial performance behind our results, explaining how revenue and EBITDA developed during the first half of 2026. Revenue grew by 26% to reach EUR 513 million, while EBITDA rose by 70% to EUR 86 million. As a result, the group's EBITDA margin stood at 16.8% compared with 12.5% in the first half of 2025, an improvement of more than 4%. Looking at revenue in detail, the EUR 107 million increase was driven principally by Santillana, which contributed an additional EUR 96 million, thanks to the excellent performance of the Brazilian public market, EUR 88 million and the positive trend in the private and global corporate businesses, EUR 8 million, as Alberto has just described. PRISA Media added EUR 11 million in revenue, supported by higher advertising activity, EUR 7 million, growth in EL PAÍS subscription revenue, EUR 2 million and the development of other initiatives such as incorporation of Grupo Radiopolis into the scope of consolidation from April 2026, which offset lower audiovisual activity. As a result of this growth, the weight of the international businesses continue to increase and now accounts for 66% of group revenue, up from 58% in the same period of the previous year. Digital revenue, meanwhile accounts for 34% of the total compared with 40% in the first half of 2025. This variation reflects the greater weight of Brazilian public business sales arising from the PNLD Ensino Médio order and not any slowdown in digital activities. As for EBITDA, it reached EUR 86 million compared with the EUR 51 million posted in the first half of 2025, an increase of EUR 35 million. The improvement in EBITDA is explained primarily by Santillana's performance, which contributed an additional EUR 31 million compared with the first half of 2025. This growth mainly reflects the improvement in the Brazilian public business, EUR 34 million. Likewise, PRISA Media contributed an additional EUR 6 million of EBITDA. This performance reflects the business stronger operating results, EUR 2 million, the lower impact of severance costs arising from the reorganization carried out in 2025, which represents savings of EUR 2 million and the incorporation of Grupo Radiopolis into the scope of consolidation with an additional contribution of close to EUR 2 million. Finally, the exchange rate effect had a negative impact of EUR 2 million, mainly owing to the devaluation of the Argentine peso. In short, revenue and EBITDA growth with EBITDA margin increasing more than 4% above the level recorded in the first half of 2025. Now let's review the consolidated P&L. Having reviewed revenue and the EBITDA performance, let us now turn to costs and the remaining lines of the income statement. Operating expenses reached EUR 427 million, an increase of 20% on the first half of 2025, reflecting the group's higher level of activity. This trend is driven principally by the growth of Santillana public business in Brazil, the development of the learning systems and new projects, the higher costs associated with the [ tender ] in Argentina, the impact of inflation, particularly on personnel expenses and the incorporation of Grupo Radiopolis consolidated since April 2026. At the same time, both business units continue to advance their operating efficiency and cost control initiatives, covering both variable and structural costs and contributing to improvement in profitability. In addition, the severance costs recorded in the period were lower than those of the first half of 2025 when the reorganization of PRISA Media was carried out. As a result of the strong revenue growth and improvement in operating efficiency, the EBITDA margin stood at 16.8% compared with 12.5% a year earlier, EBIT meanwhile stood at EUR 52 million compared with EUR 19 million in the first half of 2025, representing growth of 173%. Operating performance during the half year was therefore very positive. Let us now analyze the financial items and the impact on the net result. The net financial result stood at minus EUR 44 million compared with minus EUR 37 million in the first half of 2025. This is explained principally by the positive nonrecurring accounting impact recorded last year as a result of the debt refinancing, which represents a difference of approximately EUR 11 million in the year-on-year comparison as well as by a higher inflation adjustment in Argentina. These effects are partly offset by the reduction in financial interest, which fell by 3%, [ thanks ] in part to the decline in Euribor as well as by the favorable exchange rate effect and the positive valuation of the interest rate hedges. Separately, tax expense increased mainly as a result of the improved results of Santillana in Brazil and the contribution of Grupo Radiopolis in Mexico. Overall, the net result improved by 49% in the first half of 2025. Next, let us analyze the group's cash generation. In the first half of 2026, PRISA recorded a significant improvement in cash generation, driven principally by the business' solid operating performance. Operating cash flow improved by EUR 13 million, moving from a cash outflow of EUR 7 million in the first half of 2025 to positive cash generation of EUR 6 million in 2026. This mainly reflects the strong growth in EBITDA, excluding severance costs, which rose by EUR 33 million, supported by the healthy performance of both businesses. This improvement was achieved despite more [ tied ] up in working capital, higher investment aimed at driving digital transformation and business development and higher tax payments, mainly in Argentina and Brazil, in line with the improvement in operating results. In addition to the operating improvement, cash generation benefited from lower interest payments, which fell by EUR 6 million, owing both to the decline in Euribor and the fact that in 2025, all interest accrued up to the revenue financing came into effect was paid. Likewise, proceeds from the divestment increased on the previous year, mainly as a result of the sale and leaseback of the Peru property. As a result, cash generation before M&A and refinancing transactions improved by EUR 21 million, representing a 45% improvement on the first half of 2025. The improvement narrows to EUR 3 million when we look at total cash generation, equivalent to a 10% increase, owing to a lower volume of nonrecurring cash flows than in the previous year. Specifically, the first half of 2025 mainly recorded the proceeds from the capital increase amounting to EUR 39 million net of cost as well as payment of EUR 19 million associated with the refinancing agreed in May 2025 and EUR 3 million arising from the ruling related historical DTS transaction. In 2026, meanwhile, the group acquired a stake in the social network of United and arranged interest rate hedges on a notional amount of EUR 200 million. As of the end of June, 73% of the syndicated debt is hedged against the risk of movement in Euribor. We will continue to work actively on implementing hedging strategies aimed at reducing our exposure to interest rate fluctuations. Next, let us look at how net financial debt has evolved. The operating improvement recorded over the past 12 months continues to translate into reduction in the group's leverage. As a result, the net debt-to-EBITDA ratio improved to 3.78x as of June 2026 compared with the 4.26x recorded a year earlier. Net financial debt stood at EUR 779 million at the end of June 2026 compared with the EUR 757 million recorded at the end of 2025. This mainly reflects the first half cash requirements associated with the business as usual seasonality. In year-on-year terms, net financial debt remains practically stable relative to June 2025. Bank debt meanwhile is down by 2% from EUR 720 million to EUR 708 million as of June 2026 and marks further progress in the [indiscernible] deleveraging. Less debt under IFRS 16 has increased relative to June 2025, principally as a result of the renewal and signing of new lease agreements in Latin America. The group also maintains a solid liquidity position of EUR 209 million, comprising both the cash available on the balance sheet and committed undrawn credit lines, providing the financial flexibility the company needs to execute its business strategy. I will now give you an update on sustainability developments over the past few months. Starting with our environmental performance, PRISA has achieved ISO certification for its carbon footprint covering PRISA Media in Spain and Santillana in Brazil. We have also continued to promote climate awareness through initiatives such as for the Planet, a campaign developed together with the United Nations Global Compact to mark World Environment Day. In addition, [indiscernible] LOS40 received the Infinity Award in recognition of its commitment to sustainability. Turning to our social impact. The group once again collaborated with the Emergency Committee in response to the humanitarian crisis in the Middle East and Venezuela, helping to raise EUR 1.4 million for those affected by the earthquakes. Other noteworthy initiatives included the special edition of the Ortega y Gasset Awards held as part of the 50th anniversary [ commemoration ] of EL PAÍS of recognized [indiscernible] in resilience, integrity and rigorous fact-checking. PRISA also supported the designation of the UNGP report democracies under pressure contributing to the public debate on the challenges facing democratic institutions. In education, Santillana brought together more than 50,000 participants at its fourth International Congress on inclusive education and received nearly 1,000 projects for the latest edition of the Sustainable School Award, reflecting the growing commitment of educators and students to inclusion and sustainability. Finally, in terms of governance, we strengthened our responsible AI capabilities through employee training, enhance our cybersecurity framework and obtained Board approval for our new 2025-2029 sustainability plan. We also maintained a strong gender diversity with women representing 54.5% of our Board of Directors. Thank you very much. I now hand the floor back to Joseph.

Thank you, Javier. Sustainability remains a central element in the way PRISA conducts its business and builds long-term value. Allow me to close by highlighting four key messages. First, we continue to reinforce the strength of our business model. Our leading brands, the sustained growth in subscriptions and international diversification continue to strengthen PRISA's ability to generate recurring resilient growth. Second, maintaining firm financial discipline. Cash generation and the reduction of leverage remain strategic priorities and the progress achieved during the half year reinforces our capacity to keep investing in the group's future development. Third, the results achieved in the first half of the year allow us to approach the rest of the year with confidence. Performance of our businesses and the financial results reported today keep us aligned with the targets we've set for 2026. This is revenues above EUR 1 billion, EBITDA margin between 18% and 19% and net debt-to-EBITDA ratio below 3.9x. And finally, we continue to make progress on the execution of our 2026-2029 strategic plan. We're already rolling out concrete initiatives to accelerate digital transformation, improve operating efficiency and seize new growth opportunities across all markets. In short, we started the year strongly and moving forward with determination in building a more digital, more efficient group that is better prepared to generate sustainable long-term value. Thank you very much. And let's now move to the Q&A session.

[Operator Instructions] Our first question comes from the line of David López Sánchez of JB Capital.