Digital Ventures & Commerce - ProSiebenSat.1 Media SE · Structural growth market Attractive rev....

| October 13, 2016 |

The power of television

Capital Markets Day – October 13, 2016

Digital Ventures & CommerceDr. Christian Wegner

| October 13, 2016 || October 13, 2016 |

Agenda

2

Core assets

Portfolio strategy

Achievements

Summary

III

II

IV

I

| October 13, 2016 || October 13, 2016 |

Key achievements of Digital Ventures & Commerce

31) Revenue CAGR 2012-H1 2016 LTM 2) Weighted average revenue CAGR of all single acquisitions, LTM at closing – H1 2016 LTM 3) Ext. EBITDA of assets since acquisition

Rec. EBITDA increase

shows successful M&A3)

Lighthouse M&A dealStylight complements

lifestyle vertical

Cornerstone mass retail

OTC brand

Ne

w d

eals

Strong revenue growth

of acquisitions2)

LTM at entry LTM H1 2016

Pro Forma

Total dynamic revenue

growth since 20121)

+63%CAGR

~2.2x

>50%CAGR

| October 13, 2016 || October 13, 2016 |

Dynamic revenue growth since 2012

4Note: Based on new segment structure; 2012, 2013 as reported for Digital Commerce

External Revenues

599

465

321

108

20132012 H1 2016 LTM20152014

222

[in EUR m]

CAGR

+63%

| October 13, 2016 || October 13, 2016 |

Jun 05 +19%

Company ClosingRec. EBITDA

margin developmentExt. revenues (CAGR) since closing1)

Weighted average

Nov 15

May 13

Jan 14/Aug 12

Aug 15

May 13

Sep 12

Jul 14

Apr 15

Apr 15

+80%

+23%

+24%2)

+32%

+27%

+37%

+58%

+130%

+111%

>50%

All our acquired assets have substantially improved after closing …

51) CAGR LTM at closing – H1 2016 LTM 2) Average of weg.de and tropo, merger in progress

| October 13, 2016 || October 13, 2016 |

… and have shown strong value creation

61) Excludes internally transferred assets from EPIC to P7S1 (Valmano, Discavo) and transactions closed after H1 2016

2) Entry LTM figures partly based on local GAAP and management reports. LTM entry EBITDAs incl. air-time cost. For companies without monthly reporting

prior to closing, figures based on full year of acquisition year; H1 2016 LTM EBITDAs excl. airtime cost; EBITDA partly entity based

Ext. revenue growth of assets

since acquisition2)

Ext. EBITDA increase of assets

since acquisition2)

H1 2016 LTMLTM at entry

~1.8x

H1 2016 LTMLTM at entry

~2.2x

Active majority portfolio1)

Online Price Comparison

Lifestyle Commerce

Online Travel

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We will further enhance growth by our future Value Creation Playbook

7

Idle TV advertising Digital transformation

Omnichannel sales Operational excellence, data & synergies

ValueCreation Playbook

Create and capture growth

opportunities driven by digital

transformation

Leverage competence centers

(brand, marketing, data, internet

operations) and shared services

(technology lab, data pool, HR)

Combine retail, digital

commerce, home shopping

and direct sales

Accelerate growth & reduce

marketing cost

| October 13, 2016 || October 13, 2016 |

Agenda

8

Core assets

Portfolio strategy

Achievements

Summary

III

II

IV

I

| October 13, 2016 || October 13, 2016 |

Our strategy at a glance

9

Through Digital Ventures & Commerce we

leverage our idle TV ad inventory to build up

profitable consumer businesses to become less

dependent from our traditional TV ad salesIdle TV

advertising

is our unique

competitive

advantage

| October 13, 2016 || October 13, 2016 |

Our investment approach for Digital Ventures & Commerce …

10

Buy & build approach

We focus on businesses/verticals with high EBITDA, defensible market models and

structural market growth

Our DNA is the combination of operational excellence, TV-driven growth

and private equity-like dealmaking

Dynamic organic growth plus value creation through M&A

Accelerate growth and reduce marketing costs

Generation of structural growth opportunities

E.g. marketing excellence, data pool and technology

E.g. data generation for our ad sales

TV advertising

Digital transformation & omnichannel commerce

Portfolio synergies

Strategic value to our core business

| October 13, 2016 || October 13, 2016 |

… following clear investment criteria for our portfolio

11

Criteria fit High Medium Low

Selection criteria for verticalsOnline

Travel

Online Price

Comparison

Online

Dating

Lifestyle

Commerce

Structural growth market

Attractive rev. and EBITDA margin potential

Protected from tech disruption

Entry barriers for global giants

Highly TV responsive

Asset-light business model potential

Digital transformation potential

Omnichannel sales potential

Data synergies

Sales Platforms for products of our customers

Additional ad sales potential

Attractive

market financials

Robust

business model

Strong

TV synergies

Non-TV synergies

Manageable risk

exposure

| October 13, 2016 || October 13, 2016 |

Balanced portfolio with our Top3 assets contributing 40% of revenues

121) Pro-forma revenues Including recent Parship Elite Group, Windstar and Stylight acquisition as well as remaining consolidation effects fromacquisition of Verivox and Etraveli

15%

Lifestyle Commerce

Online Dating

13%Online Price Comparison

13%

Online Travel

24%

35%

Pro forma ext. revenues H1 2016 LTM1)

~40% of revenues

Top 3 assets

Total: EUR 863m

| October 13, 2016 || October 13, 2016 |

Market share of

global giants

Our market leading assets face low competition from global giants

131) Pro-forma revenues incl. Parship Elite Group, Windstar and Stylight acquisition as well as remaining consolidation effects from acquisition of Verivox and etraveli 2) H1 2016 LTM-2018 3) 7Travel is #5 OTA and Etraveli #4 Flight centric OTA in Europe 4) Stylight is #1 Online Fashion Lead Gen aggregator in EU, Flaconi is #2 in Online Beauty and Care market in GER, Windstar is #8 in OTC retail market

Our core assets

Online TravelOnline Price Comparison

VenturesLifestyle

CommerceOnline Dating

Ext. revenues

H1 2016 LTM1) EUR 303m EUR 109m EUR 133mEUR 208mEUR 111m

Targeted

revenue CAGR2) +5-15% +10-20% +5%+20-30%+5-15%

Market

Position of core

assets

Top 5in EU3)

#2 in GER

#1 in GER

Top 10 in GER4)

#1in GER/A/CH

Mediumin EU

Lowin GER

n/ain GER/AT/CH

Intl. digital

gold standard n/a

Lowin GER/AT/CH

Lowin GER

| October 13, 2016 || October 13, 2016 |

We develop our portfolio based on our portfolio matrix

141) CAGR 2015-2018E

Scale to profit/partner Accelerate growth

OptimizeSell

Revenue

growth1)

Mid-term margin

potential

>10%

<10%

<20% >20%

| October 13, 2016 || October 13, 2016 |

Portfolio Strategy

Achievements

Summary

II

IV

I

Agenda

15

Core AssetsIII

TravelOnline

ComparisonDating

Lifestyle

CommerceVenturesA B C D E

| October 13, 2016 || October 13, 2016 |

7Travel has become the #5 Online Travel Agency in the European market

161) Excluding pure meta players, based on total transaction volume; Source: PhocusWright

#1

#2

#3

#4

#5

Key players in Online Travel in Europe1)

7Travel became #5 in the European Online

Travel industry in only three years

Structural market growth in European Online

Travel with >10% CAGR (2011-2015) and positive

outlook

7Travel is the only European Online Travel

player growing profitable

C D EA B Core Assets – Travel

| October 13, 2016 || October 13, 2016 |

Embrace strong Meta development

with superior consumer offering

Continue profitable

international expansion

Further improve data driven and

operational excellence

1.

2.

3.

Etraveli (Flight OTA)1) is our core Travel asset …

171) Core business

Growth strategies

Active in

46countries


| October 13, 2016 || October 13, 2016 |

Operational excellence

Better monetization

Faster development and lower cost

Superior analytics

… significantly outgrowing all travel market segments

181) Etraveli internal study on year-on-year development of searches for Meta partners based on PhocusWright Study

Total transaction value growth in Europe Etraveli key strengths

Online travel

market

Total Travel

market

OTA market Flight Meta Etraveli

+45% CAGRCAGR (2014 – 2016E)

Our key strengths enable us to become the best global flight OTA embracing the strong Meta development

1)

>2x

>2x


| October 13, 2016 || October 13, 2016 |

Low cost entry to a new country by …

… translating the website

… adapting air content & pricing

… configure a number of set ups for the specific country

1.

Based on initial results and assessments we decide to

further invest in certain countries by …

… localizing communications, sales channels, payment,

air content, pricing, add on products, etc.

2.

Etraveli can expand internationally at low cost and risk

19

Geographic expansion through a proven low cost/low risk model in two steps

Etraveli is

profitablein all geographical

segments from

the first

month


| October 13, 2016 || October 13, 2016 |

[TTV/month in EUR m]

Etraveli’s TTV1) development by region

Increasing international footprint will drive future growth

201) Total Transaction Volume 2) Business outside Nordics 3) Rest of Europe 4) Rest of World

Region Position Ambition

ROE3)

ROW4)

#1 #1

Top 3/4

Top 5

Top 2

Top 3

Top 5

Top 20 Top 5

Top 3

+22%

+88%

+73%

+75%

+110%

YoY growth 2016 vs. 2015

2016E

150

2015

108

2014

74

ROE

UK & Irland

GER/AT/CH

Nordics

ROW

>20%ptsincrease of

international

share 2014

vs. 20162)


| October 13, 2016 || October 13, 2016 |

Verticals

Verivox is our core Online Price Comparison asset with multiple verticals

211) Fixed line and DSLNote: OTA = Online Travel Agency

Portfolio

synergies

that we

leverage

Energy TelCo1) InsuranceFinancial

Services OTA Car Rental New

We integrate existing portfolio products into Verivox to push existing and build new verticals

Depending on success, we focus on either one brand or a dual brand strategy

Dual

brand

strategy

C D EA B Core Assets – Online Comparison

| October 13, 2016 || October 13, 2016 |

Verivox will keep #1 position in Energy & gain shares in all other verticals

1) Source: Internal estimate based on company research, Bundesnetzagentur, OC&C, Roland Berger 2) incl. Preis24 3) CAGR LTM at closing – H1 2016 LTM, closing August 2015 4) Net return on net TV costNote: OCP = Online Comparison Portals

0-25%

25-50%

50-75%

75-100%

OCP market shares per vertical1)

TelCo Insurance

Financial

ServicesEnergy

22

CRM-based cross-/up-selling

to existing customer base

strengthens margins

Leading position in Energy

supports further market share

gains in other verticals#1

New verticals such as Travel

boost customer base and fuel

further growth

2)

Strong impact of TV, proven by

ROI of >140%4)

+32% revenue

growth since

acquisition3)


| October 13, 2016 || October 13, 2016 |

UK market is the most developed OCP

market in Europe – still growing with double-

digit growth rates

OCP revenues per household 2015

Compared to UK, substantial upside potential of German OCP market

231) Source: Internal estimate based on company research, Bundesnetzagentur, OC&C, Roland Berger 2) Source: Greenhill; Note: OCP = Online Comparison Portals

# of market

players with

>EUR 80m

revenues: 2 # of market

players with

>EUR 80m

revenues: 4

34

15

x2.3 German market with potential to more than

double in size in upcoming years as

buying/switching behaviors change

Verivox in strong position to profit from

market growth in current market setup

[in EUR]


2)

1)

| October 13, 2016 || October 13, 2016 |

Online Dating market overview1)

Parship as lighthouse investment in attractive matchmaking segment …

241) Germany 2) Based on revenues Sources: P7S1 consumer survey; P7S1 market model based on Singleboersenvergleich study

Price HighLow

Relationship

Sex/ Affair

Intention of

members

Dating & apps

Market revenues 2015 in EUR m

Adult DatingEUR

40m

EUR

59m

Matchmaking EUR

79m

Key players in Matchmaking segment1)

#1

#3

>80%share2)

Continuous leadership in

Matchmaking since 2006

#2

C D EA B Core Assets – Online Dating

| October 13, 2016 || October 13, 2016 |

… with meaningful recurring EBITDA margin potential

251) % EBITDA of revenue, Parship Elite Group 2016 figure; Mötesplatsen 2014 figure; Match.com (segment, not Group) 2015 figure; 2) Entity rec. EBITDA margin potential 3) German-speaking countries penetration 4) Matchmaking users among US adult single internet users; Source: P7S1 Consumer Survey

Purely digital, subscription-based

and asset-light business model

High renewal rate indicates high

customer satisfaction

High synergy potential with P7S1

38%

27%21%

25%

14%

High upside potential for market penetration

Margin

potential of

25-30%2)

Market with exceptional margins1)

Paid Online

Matchmaking4)

Parship Elite

Group

subscriber

penetration3)

#1Online dating service in German-

speaking countries focused on

attractive matchmaking segment


| October 13, 2016 || October 13, 2016 |

Why Tinder is not a threat but a catalyst for Parship’s business

26Source: P7S1 Consumer Survey

While younger customers with lower income use

Tinder for first online dating experience …

27%36%

32%27%

41% 37%

2015

35-44

45+

2011

18-34

… they switch to Parship with rising income & interest

in long-term relationships

[in % share of subscribers by age group]

65% are

older than

29 years

60% are

younger than

29 years

Users’

household

income per

month

63% above

EUR 2,000

62% below

EUR 2,000

Age of

users


| October 13, 2016 || October 13, 2016 |

We build up a highly synergetic Lifestyle Commerce Ecosystem …

27

Fashion Health,

Wellbeing & OTC

Beauty &

Accessories

Food & Functional

nutrition

TV channels, advertising, infomercials

Engagement platforms (7NXT)

Physical goods (Windstar, Teatox)

Lead Generation (Stylight)

Commerce platforms (Flaconi, Vitafy)

Pro

du

cts

Pla

tfo

rms

TV

C D EA B Core Assets – Lifestyle Commerce

| October 13, 2016 || October 13, 2016 |

… by leveraging TV power & digital platforms for high-margin products

281) e.g. fitness studios, perfumeries, pharmacies

Lifestyle

products with

high margins

TV power

to build brands

Omnichannel distribution

E-commerce

Home-

shopping

Retail

Special retail/

drug storesDirect sales

Other1)

Lead Gen &

Engagement platforms


| October 13, 2016 || October 13, 2016 |

How our Lifestyle Commerce Ecosystem works

29Note: CLV = Customer Lifetime Value

A full-fledged product and service portfolio locks the user in our Ecosystem and maximizes CLV

… based on our

physical products

Engagement

platform

Digital sales

platform

Physical

productLead Gen

… our 7NXTengagement

platforms …

… which include

nutrition

recommendations ...

… Stylight health and

beauty content leads

users to …

TV

TV formats and ads

create awareness …


ILLUSTRATIVE

| October 13, 2016 || October 13, 2016 |

Lifestyle verticals we focus on

30

Ecosystem levers

TV fit

Synergies with TV content

Difficult to disrupt

Intervertical synergies

Omnichannel sales potential

High margin products

Strong defensive, non-cyclical properties

FashionBeauty &

Accessories

Health,

Wellbeing & OTC

Food & Functional

nutrition

Strategic benefit for ad sales clients(e.g. data, sales platforms)


| October 13, 2016 || October 13, 2016 |

Fashion Health,

Wellbeing & OTC

Beauty &

Accessories

Food & Functional

nutrition

Where we stand with our Lifestyle Commerce Ecosystem

311) Minority shareholdings

Lifestyle Commerce verticals

7NXT

TV reach

Lead Gen platforms

Engagement

platforms

Omnichannel

sales approach

Physical goods

TV

Pla

tfo

rms

Pro

du

cts

1)

1)

7NXT

1)

Deep dive see

next slides

1)

Selected examples of TV formats

Lifestyle Commerce

Ecosystem


| October 13, 2016 || October 13, 2016 |

Stylight is #1 in the Lead Gen fashion market …

321) Based on monthly visits per local domain (GER); Sources: 7Commerce; Fashionunited; Google Play; OC&C analysis

Use Stylight traffic & content for lead

generation for own sales platforms &

sales of own products

Gather further user data from new

verticals to offer better products to SOM

customer

Attack print budget through highly

targeted niche content of Stylight21

Key players in fashion Lead Gen1)

#1

#2

#3

#4

Our goal is to continue and further

expand market leadership


| October 13, 2016 || October 13, 2016 |

… expanding to new segments and through internationalization

33

…

Potential new verticals Existing verticals

Expand through internationalization Expand through building new verticals

Launched in 15 countries already

Next to come: Ireland

Fashion is core vertical, Home & Living launched in H1 2016

Next to come: Beauty

New markets & verticals can be entered at low cost through

central operations and strong tech platform


| October 13, 2016 || October 13, 2016 |

Flaconi on its way to become a leading online player for beauty products

1) Online only 2) Incl. highly selectively distributed brands, e.g. Chanel, Estée Launder, Shisaido, LVMH among others 3) SKU = Stock keeping unit

>EUR 40m

Revenues

LTM H1 2016

CAGR >100%

Revenues,

H1 2016 LTM vs.

LTM at closing

#2 in Germany

after Douglas1)

Customers

>850k

Brands2)

>240

Key facts

SKUs3) active

>15k

34

Growing internationally at low cost

Two strategic options to accelerate growth

Expanding Flaconi product categories

1.

2.


| October 13, 2016 || October 13, 2016 |

Off

lin

e

Premium brandsLow budget brands

On

lin

e

Competitive environment

Digital capabilities

Flaconi operates in a favorable competitive environment

35

Market characterized by selective

distribution systems limiting threat of

new entrants

Three domestic competitors: Douglas,

parfumdreams and iParfumerie

Two pure play EU competitors:

feelunique, lookfantastic

Scattered local retailers lack skills to

digitalize their business

Focus on rather ‘bringing store online’

than digital pure play

Main competitor Douglas focuses on

brick & mortar stores

Competition in domestic market


| October 13, 2016 || October 13, 2016 |

Windstar is our first cornerstone mass retail OTC brand …

36

Unique provider of care and nutrition

products with focus on key growth

segments (e.g. digestion & rheumatism

OTC products)

>10 new products

yearly

>120 partner

suppliers

Attractive

double-digit

margins

High reliability and cost efficiency leading

to strong supplier network

Low brand awareness so far, leading to

high potential for new customers through

TV media push


| October 13, 2016 || October 13, 2016 |

German retail OTC market1)

+16%

+3%

CAGR (2015-2020E)

… that is outperforming the retail OTC market

371) By revenues; Source: P7S1 market model based on Nielsen Panel / BAH report 2014 2) in Germany

990933

854

2018E2015 2020E

Key players in retail OTC market2)

Our goal is to become #5 in the retail

OTC market

#1

#2

#3

#8

…

[in EUR m]


| October 13, 2016 || October 13, 2016 |

We will significantly push Windstar's brand awareness through TV

38Note: Product performance study with selected set of brands only, incl. the top 3 in terms of brand awareness though; Source: WSM OTC Consumer Study 2014, I-Consult Brand Study 2015

… yet low brand awarenessHigh perceived product efficacy …

Competition

Windstar

46%

0%

20%

40%

60%

16%16%

24%

0%

20%

40%

60%

80%

100% Competition

Windstar

High

upside potential

due to TV

media push


| October 13, 2016 || October 13, 2016 |

Test media fit and learn about

potential new markets

(national and international)

Build up deal funnel for

potential strategic

investments

Monetize idle TV

advertising inventory

and stimulate TV ad market

SevenVentures continues successful M4R/E dealmaking …

39

Equity

Exit participation

Revenue share

Minimum guarantee

What we get from M4R/E deals Rationale

C D EA B Core Assets – Ventures

| October 13, 2016 || October 13, 2016 |

Use M4R/E deals to proof business models, test management skills and evaluate

media impact of assets to reduce investment risk

… and has become a proven funnel for our strategic investments

40Note: Selected examples

Online Travel Online Price Comparison Lifestyle Commerce

Strategic investments started as media investments

C D EA B Core Assets – Ventures

| October 13, 2016 || October 13, 2016 |

Agenda

41

Core assets

Portfolio strategy

Achievements

Summary

III

II

IV

I

| October 13, 2016 || October 13, 2016 |

Summary of our strategy

42

Our strategic priority

Leverage our unique combination

of TV and Commerce capabilities

Expand existing and build new

commerce verticals

Pursue bolt-on M&A of profitable

assets

Our key strategies

Grow Travel into European leader

Expand Online Price Comparison

market share

Extend Dating market leadership

Build Lifestyle Commerce

Ecosystem

Continue “String of Pearls” M&A

strategy

| October 13, 2016 || October 13, 2016 |

[in EUR m]

863

108

New 2018 target

1,172

H1 2016 LTM pro forma2012

Successful growth allows us to set new ambitious 2018 revenue growth target

431) incl. recent acquisitions, e.g. Parship Elite Group; Note: Based on new segment structure; 2012 as reported

Digital Ventures & Commerce CMD target (ext. revenues)

CAGR

+13%

Vast majority of our future growth will be organic

Rec.

EBITDA

margin

target range

of 20-25%

1)

Digital Ventures & Commerce - ProSiebenSat.1 Media SE · Structural growth market Attractive rev....

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