Stroeer SE & Co KgaA
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Dear ladies and gentlemen, thank you for joining our today's call on our Q1 2023 results. Let me start the call with a short overview of the key figures of Q1 2023 and then go straight into more strategic topics. Henning will then take over and present the financials of the first quarter in more detail before I give you a short outlook what we expect for Q2. After our presentation, we will be available for Q&A.
In Q1, we delivered a very solid quarter, especially against the backdrop of a German advertising market that contracted by more than 5%. Overall, developments are fully in line with our expectations published versus prelims in March. Net growth in the mid-single-digit percentage range and a significant outperformance compared to the overall advertising market. Reported growth revenues in Q1 2023 in total were up by 6% from EUR 385 million to EUR 410 million. Organic revenue growth was even higher with 7.3% compared with reported revenue growth. Adjusted EBITDA increased by 3% from EUR 95 million to EUR 97 million. At the same time, Dialog as well as Asam and Statista contributed to the overall positive development. Our further KPIs will be discussed by Henning in the finance section later on. 6% growth for the group, 4% growth for the core out-of-home segment and 17% growth for digital out-of-home as expected, strong numbers against the German ad market according to Nielsen.
Out-of-Home Media outperformed the German advertising market, minus 5.4% by around 9 percentage points and significantly outperformed TV, minus 9.8 percentage points, by around 13%. As a consequence, we see an increasing market share of out-of-home in the German advertising market, which reached an all-time high of 8.6% in March 2023. We expect this number to grow further in the upcoming years. Also, there's the planned digitization of our out-of-home infrastructure.
The next chart clearly shows these developments. In the years leading up to the corona pandemic, the German out-of-home media market has grown steadily and outperformed the overall advertising market on a sustained basis. In the corona pandemic, the curfews and lockdowns hit our industry hard. However, our business picked up almost immediately after the harsh measures were eased, and our digital out-of-home business, in particular, developed in a textbook V-shape. Since then, we were able to maintain a high growth pace and outperform the overall market, especially in 2022 and as described earlier as well in the beginning of 2023. Our digital out-of-home business was the main contributor to this successful performance. We have continuously expanded the business and accelerated its buildup in 2022.
Despite the aforementioned corona crisis and lockdowns, we were able to increase digital out-of-home sales double-digit percentage points in the period of 2019 to 2022. In the meanwhile, we are achieving our digital out-of-home network reach in the largest German cities, that is on par with TV broadcasters. Our revenue growth of around 17% in the first quarter of 2023 speaks for itself.
Let me talk briefly about 2 drivers that I believe are critical to the success of our digital out-of-home business: programmatic and the unique carbon footprint of our premium digital out-of-home assets. We are developing technology in close collaboration between our proprietary tech specs and best-in-class partners in the industry. As a result, integration of proven online solutions into the world of digital out-of-home is one of the major unique propositions of Out-of-Home Plus inside the Ströer group. As have shown in the very beginning, TV as the largest sector of classic advertising is in a sustainable decline of audience and market share. Audiences are using other media, and advertisers are facing very volatile and pressure patterned by geographical breakdowns. Public video that is granular regularly targeting can improve classical TV plans and be used on a convergent media -- as a convergent media channel.
The complete digital out-of-home inventory is available via Google DV360 as of now and available in the most common demand site platforms. MaxScreen Retargeting allows the combination of campaigns in digital out-of-home with campaigns in the mobile media world. Whilst digital out-of-home quickly reaches audience and makes them aware of that, mobile allows immediate conversion.
Finally, our public video planner system allows granular planning of campaigns and audiences, and it's a great practical tool to improve daily tactical executions. Our sustainable portfolio and especially with the accelerated expansion of our digital out-of-home portfolio, we have developed Ströer into the most sustainable national media sales hub and the expansion of our digital communications infrastructure goes hand-in-hand with our sustainability strategy, where we target a net zero base on SBTi path. We have reduced the emission of greenhouse gases by using 100% green electricity in Germany. Digital out-of-home plays a very decisive role in this. Thus, digital out-of-home is preferred the most energy- and resource-efficient medium, with 5 grams CO2 per 1,000 contacts.
By contrast, other traditional advertising media have a carbon footprint of up to 10,000 gram per 1,000 contacts. This means that every advertiser will be able to improve their own carbon footprint by giving a higher weighting to out-of-home, especially digital out-of-home and the advertising portfolio.
This is also due to structural reasons. Out-of-home is a mass medium brand channel with many recipients. So it always has a better carbon footprint than ban-to-run media usage. Going forward, we anticipate additional impetus to the structural growth of our out-of-home media as customers are attaching even greater importance to life cycle assessments in the context of marketing and advertising strategies.
Alongside traditional campaign performance indicators, such as reach and cost per 1,000 contacts, we expect the carbon footprint to become an increasingly significant measure for advertising customers. Consequently, we predict that advertising companies will aim to continually improve their carbon emissions. This will clearly create additional growth for Ströer's core business, out-of-home advertising, particularly digital out-of-home.
Let me now hand over to Henning for his comments on our Q1 results.
Thank you, Udo, and good morning, everybody. As already mentioned, our group revenue developed in line with our guidance and increased by 6% from EUR 385 million to EUR 410 million in Q1. Just like in previous quarters, organic growth was slightly higher compared to reported revenue growth due to the disposal of our Turkish online marketing business, SEM, which was still included in the prior year comps. As explained already, adjusted EBITDA increased by 3% from EUR 95 million to EUR 97 million. Adjustments stood at minus EUR 2.8 million, so some EUR 500,000 lower compared with the prior year period. Accordingly, reported EBITDA came in at EUR 94 million.
Depreciation and amortization for the quarter increased from EUR 71 million to EUR 76 million or 7% due to the accelerated ramp-up of our digital portfolio over the last couple of quarters. Taking this into account, EBIT decreased by EUR 2 million from EUR 20 million to EUR 18 million. The financial result came in at minus EUR 14 million. The change is due to 2 main effects. Firstly, a net interest expense in a narrower sense, which reflect the higher interest rate level in the past quarter compared with Q1 '22 and, on the other hand, in a broader sense, the effects of IFRS 16. Here, we have an implication if we, for instance, change the parameters of an existing lease contract where we then have to apply the now-higher interest rates for the value-in-use calculation. This effect amounted to roughly EUR 3 million higher interest rate expenses for the quarter and, at the same time, a reverse impact on the corresponding depreciation, which is declining by more or less the same amount.
Taking the described effects into account, EBT was at EUR 5 million compared to EUR 14 million in the previous year's quarter. And accordingly, tax expenses are down to EUR 1.3 million, which corresponds to a tax rate of 27.5%. All in all, reported net income stands at EUR 3 million in Q1 '23. Adjustments to be considered in the quarter are down from EUR 8 million to EUR 5 million, which leads to a net adjusted income of EUR 9 million, so EUR 10 million lower compared with Q1 '22.
Moving on to the cash flow development. Altogether, we see a quite positive operating cash flow despite a continued challenging business context. Thus, operating cash flow increased from EUR 32 million to EUR 53 million. Let's have a short look into the different effects that contributed to this development. Cash out from working capital declined significantly from EUR 39 million to EUR 7 million due to the tighter net working capital management as well as some normalization following a quite substantial outflow in Q4. Tax payments increased from EUR 5 million to EUR 15 million, especially due to the catch-up effects in total of EUR 7 million from the deferral of '22 tax payments aligned with the tax authorities and following energy crisis mitigation measures implemented by the German government last year.
In addition, the position others declined to minus EUR 8 million due to a lower adjustments on noncash items like changes in provisions and accruals. So all in, operating cash flow stood at EUR 53 million, as mentioned before. Following the record high investments into the accelerated expansion of our digital portfolio last year, the expansion and thus CapEx is returning to a lower normalized level. In total, we invested around EUR 31 million, not only in digital out-of-home but also in sustainable growth at Asam and Statista. All in, free cash flow before M&A increased significantly from minus EUR 2 million in Q1 '22 to EUR 21 million in Q1 '23. IFRS 16 repayments declined from EUR 42 million to EUR 36 million as lower office rents had to be considered as well as some phasing effects compared to Q1 '22. This led to a free cash flow adjusted of minus EUR 15 million after minus EUR 44 million in the prior year period.
Net debt year-on-year was up by EUR 93 million from EUR 653 million to EUR 746 million in Q1 '23. This increase includes returns to Ströer shareholders either via dividends or via our share buyback program of more than EUR 117 million over the last 12 months. In a sequential view, the bank leverage ratio increased only slightly by 8 basis points from 2.2 to 2.28x.
Let me now talk you through the performance of the individual segments, starting with out-of-home media.
Out-of-home showed a strong revenue performance, especially against the backdrop of an overall challenging German media market, which was going down by minus 5.4%. And when considering the second stage of the tobacco ban, and total revenue increased by 3.5% from EUR 152 million to EUR 157 million. When taking out sales from tobacco advertising, growth even amounted to 5.6%. Main contributor for the strong revenue development was our digital out-of-home business, which continued to grow double digit by 17% to EUR 49 million, and which stands now for 31% of out-of-home revenues. EBITDA adjusted was flat with EUR 59 million as we had to compensate for higher costs as discussed before.
First quarter sales of the Digital & Dialogue segment returned to the growth path again. And total revenue increased by 6% from EUR 170 million to EUR 180 million. In Digital, sales declined by 4%, reflecting the disposal of our Turkish subsidiary SEM in summer last year. Organic sales in Digital were broadly flat. Against challenging comps, especially in the current online advertising environment, Digital altogether had a solid start into the year from a sales perspective. At the same time, traffic on T-Online was still subdued to the high prior year base as well as several Google core updates impacting traffic. We expect stabilization against easing comps going forward.
On the Dialog side, the business delivered remarkable 16% growth, driven by our successful direct sales activities for telecommunication products and thus more than compared that it's a sales decline in Digital. Given the higher operating leverage of Digital from our owned assets such as T-Online, however, earnings declined by EUR 4 million to EUR 33 million.
Finally, let us have a look into our Data as a Service and E-Commerce segment with Statista and Asam. Revenue increased again with close to 24% and achieved a new Q1 record high with EUR 88 million sales. In the last couple of quarters, Statista prepared its sales organization for the next level and further optimize structures, including the implementation of Salesforce, which enables us to serve customers even more efficiently and closely. On the organizational side, Statista has also further focused a sales team with the development of a hunter-and-farmer structure, which will help to provide our customers with optimal support in every phase of the customer life cycle. With this setup, we will be well prepared for further profitable growth.
Against the backdrop also of quite a bit internal optimization, revenue increased by 13% from EUR 34 million to EUR 39 million. With great excitement, we follow the dynamic developments in the field of generative AI and especially in its most prominent representative ChatGPT. Here, we see great opportunities and potential for our product, especially in the area of improving customer experience and usability of the platform. In addition, we see great chances for a more efficient, automated and thus cost-efficient collection and preparation of data records.
Asam's revenue were up by 34% to above EUR 49 million, driven by significant revenue growth across all different sales channels. As for the valuation of high-growth assets, such as Asam and Statista, profitability is getting more important. We have also applied more focus on the trajectory of the bottom line. EBITDA adjusted for the segment was strongly up to more than EUR 12 million, reaching a margin of 14% and demonstrating the profitability potential from the scaling of both assets.
Let me now hand you back over to Udo for a brief outlook on what we expect for our second quarter and our financial calendar.
Thank you, Henning. Based on our current trading as well as what we see in our order books, we expect organic revenue growth for the second quarter as well as the EBITDA development to be broadly in line with what we have seen in Q1. In parallel, we expect to further substantially outperform the German ad market. For the second half of the year, we should be able to benefit from easing comps, assuming no further macro deterioration. Finally, we see our structural growth drivers unchanged on track: digitization of our out-of-home infrastructure, sustainably growing SME business backbone, client access via Plus businesses and value growth of noncore assets.
Let me now close the presentation with looking out -- at our financial calendar for 2023. Our AGM will take place on July 5, and the invitation, including our dividend proposal, which has to pass the final stages in the statutory committees, will be published in the next days. Our H1 figures will be published on August 9. And in November, on the 9, we will update you on the Q3 performance. As always, further dates can be found in our financial calendar on our IR website.
Thank you, everyone. We are now happy to take your questions.
[Operator Instructions] The first question comes from the line of Chris Johnen from HSBC.
A couple. First, on the lack of a full year guidance. I was hoping that we got a bit more color on how you see the year. So if I'm not mistaken, business gotten -- basically better over the last couple of quarters, essentially on a monthly basis. So I'm kind of curious to pick your brain as to why you decided to just focus on Q2, although that is clearly appreciated. Yes, just some color on how you see the year? I'm aware of the uncertainties, but just to pick your brain, even if just with relation to the current state of the consensus estimates.
Second question on Statista. I mean the growth has decelerated a little bit. I'm aware that the comp in Q1 was super high. So that point is already taken. But I'm just curious, consensus expects 21% growth for the full year. And again, I would just want to hear your thoughts as to what do you think of that estimate and where the part of the business is going. I also didn't fully understand the impact. You said there was a bit of a revenue backdrop in Q1 on the back of some internal changes. I didn't fully catch that. So color on Statista would be great.
And then a question on the margins in the segment. So the DaaS and E-Commerce segment. Yes, just again to hear your thoughts. I mean, obviously, a big step-up in margin this quarter. Is this the sort of new normal? I mean Asam growth was sort of exceptional, but I cannot really pinpoint this to anything. So I'm just trying to understand whether the developments here are a reflection of a more one-off-ish type development or whether this is indeed sustainable?
Christopher, it's Christian. Yes, full year guidance, interesting topic. I mean, as you say, I think, in general, our business is performing very well. So even the circumstances are difficult. We've seen that in Q1. We see roughly the same development currently for the second quarter as well. And at least at the moment, we also don't see any changing momentum for the rest of the year as far as the pre-bookings and the overall order book is concerned. So I think without the last 2 or 3 years and the experiences we've made with pandemic, with inflation, with suddenly a war, I think, in general, I think what we see in the first half of the year would be the minimum of an annual guidance going forward, but we've been surprised in the last 2 or 3 years, constantly with external stuff that was just out of our original expectation. And I think that is the only reason why, for the moment, we decided to, on the one hand, guide more quarter-by-quarter but give you also a general outlook, what the business performance looks like for the rest of the year without any bigger macro impact.
But we just want to be a little bit more cautious, not because of the stuff that we can control but because of all the external effects. But in general, I think we are very happy with the business. And I think Henning mentioned it in his part if you look at the momentum of our business in 2022, it almost got a little bit softer month by month because of the constantly growing pressure from the macro environment, which means this year, the comps from prior year becomes a little bit softer month-over-month. That's why, as I think we've lined out in our outlook statement, we expect a little bit more momentum potential for the second half of the year, if there are no bigger changes. But being a little bit more cautious in times where the macro environment is still unclear is the reason for not giving a very precise full year guidance.
On your Statista question. Yes, on the one hand, as you said, I think the consensus is around or above 20% that I guess -- that's not wrong. At the same time, Q1 was a little bit softer. The key reason for that is that already, I think, mid of last year, we changed a couple of our sales structures just in line with the company getting bigger and bigger. I think that's meanwhile, 1,300, 1,400 employees. Specific markets like the U.S. become really big, and we've historically worked with one sales structure. So one team per market approaching more or less all customers, no matter if it's a new customer, no matter if it's an existing customer. So we have changed that into a farmer-hunter model. We've also kicked off 2 sales hub for large global corporates in London and the U.S. And as always, when a sales organization needs to deal with a little bit of internal optimization restructuring, you sometimes lose a little bit of momentum. And that's what we see in Q1, but nothing that is not reflected in our internal plans. And it's just a necessary step to get to the EUR 250 million revenue or sales that we are planning for 2025, 2026. So, I think it's just driven by internal aspects.
But in general, we also don't see that Statista faces a lot of macro headwind at the moment. So we're very happy with the development. And that's leading to your last question as well. The margins step-up that you've seen in Q1, in general, in the segment, so reflecting both profitability improvement of Statista and Asam, that's something that is also a result of what we've been working on in the last, I would say, 6 to 9 months on both assets. So in Statista, being a bit smarter in investing into topics that are relevant for the long-term growth and, at the same time, regarding Asam around activities outside of Germany and our marketing spend. So maybe the step-up in Q1 was -- an extraordinary one.
But in general, what you will see over the coming quarters and for the full year is significant margin improvement in that segment. So I think after Q2, we can -- yes, be more -- we can be a little bit more specific on that one, what you can expect for the full year, but that's -- it's definitely not a onetime effect. It's something which is the outcome of, in general, margin improvement projects we've been working on the -- in the last 6 to 9 months.
I don't know if it became clear, but we feel completely comfortable with the projected growth for Asam for this -- 20% and so this -- for Statista, and so this is a -- fully on track to the company, this is the one-off in the third quarter.
The next question comes from Annick Maas from Societe General.
So my first question is also on AsamBeauty. Now the growth has been good, but if I remember well, in Q1 '21, you had suggested that over the next years, actually up to 2026, you would multiply AsamBeauty revenues. So I guess my first question, is that guidance still holding? And -- or I guess, it potentially is not, and therefore, you are focusing on margin.
So my second question would be, why are you now prioritizing margin growth for AsamBeauty as opposed to revenue growth?
And then my second bigger question, I guess, is on the out-of-home market. Do you have an idea of how much the out-of-home market has grown net to just make a comparison in between your performance and the market actually in Q1?
I mean with Asam, I think it's -- the point is clear that on the M&A side, clearly, profitability plays a much bigger role than 18 months ago everywhere. Valuations are more based on profitability. So that's why we clearly focus on profitability because we always said when the business is around EUR 200 million, what ballpark we expect for this year, we -- our target was always to go in a process. And -- but, by the way the business was growing above 30%. So I mean, we -- luckily, we could show very strong growth and with a massively improved profitability and because the last year was also deteriorated by all the problems with China and the delivery problems, logistic problems, cost explosion, on the pre-product side, et cetera, et cetera. So we are confidential -- confident that -- we show strong revenue growth in Asam this year and a strong improvement of profitability.
And from the date perspective, we think Q4 could be a good window to start the centralization process, so -- but clearly, there's a different appetite now. Whatever, 2 years ago, even 18 months ago, -- very low profitability. So you've got a high valuation, but this is clearly changed, and that -- we need to take that into account.
And on your second question, I mean there are no public numbers out for the net development of the market. And I think what we've given you on Slide 4 is our net numbers and the gross numbers from the market. So our estimate for the out-of-home market in the first quarter on a net basis is around about 1 to 1.5 percentage points of growth.
Just to put that number into context, yes, I think on -- in gross terms, the out-of-home market is 7% plus. We think that converts net into maybe 1.5%, max 2% based on us analyzing the market, if you -- just as a reference, the TV market in gross numbers is down 10%. If you look at Nielsen, I think what RTL has so far announced is for the pure TV spendings, net-wise, minus 17%. So I would say in the current environment, there is gap between 5% and 7% in the gross versus the net numbers. I think for out-of-home, it's a little bit on the lower end given that, I think, the discount development there is a different one than, for instance, in television.
And don't forget, I think we are actually the out-of-home markets. So we have 65%, 70% market share, and we have almost 100% of the digital out-of-home market, which -- the -- when we grow 17% in digital out-of-home. Then you can understand how much better we are developing than our competitors. In reality, we are in a duopoly with Decaux with us, and the others are really, really tiny companies in the meanwhile. So we are, in reality, in the market.
Okay. And just on -- so on the AsamBeauty consolidation in Q4, so -- have you prepared the company? Are you talking to someone? Is that meaning in Q4, we will see a sale? Or does that mean in Q4, you start getting ready and start to scan the market, I guess?
Exactly. This is the second option. It will be the -- we have -- we are very confident that we see a very positive year. And we just got approval last week to get access to the large biggest department store chain for next year. So we already can see -- have a high transparency of a positive development for Asam in this year next year. And that's why we think on the back of a successful 2023, Q4 could be a good -- on the macro side, everything stays like it is. From today's perspective, we think Q4 could be a good window to start the process.
The next question comes from Craig Abbott from Kepler Cheuvreux.
I just wanted to come back on your optimism on the -- how you could maybe use ChatGPT and -- to your advantage, I would say, in Statista. You went through that really quickly. And I didn't really quite understand. If you could maybe elaborate a little bit on that.
Okay, Craig. Well, I think if you just look maybe at it from a defensive side first, the most important point is that all, I would say, 55%, maybe a little bit more of the Statista content and the data is proprietary. So we are doing the surveys, and so it's behind the paywall, and it's not accessible by anyone else.
Secondly, there is another 30%, 35% coming from other sources from research partners that also have that content behind the paywall. So in general, what you see at the moment is that those generative AI solutions will need to work on something. And the most important point is the core product is not available for anyone else than us. That's the most important topic. And I think, especially in times when generative AI can create a lot of stuff, the question, what kind of numbers are true? And what is really double-checked? And where can you be sure that the quality is really first class? Is something that is more important than ever.
So we also think that there Statista is, meanwhile, almost a feel for really reliable data and data journalism. So that said, if we look at the 2 challenges in general of the business we are currently working on and we always thought so far, we have good solutions we just see that ChatGPT or any other generative AI solutions can deliver even more is 2 things. The first one is creating smart visualization of the data. That's what at the moment is predominantly done by people, so data journalists that create the diagrams and everything is still the data, in a way, package and visualize it in a way that you can easily consume it and get the insight out of the data as smart as possible. That's one aspect. So we need a lot of people for that.
And on the other hand, for the growing database, you need more and more know-how on the customer side there because they are looking for something specifically -- specifically in the database and need to get there, and that requires time. So solutions like the ones from ChatGPT have -- mean a fast track for both things. So a lot of the work that is currently manually done by data journalists will be sooner or later be also possible to handle it via, for instance, ChatGPT. We've been already testing it. And I think the latest beta version that is out there in the market can already read and create visualized data.
And secondly, if you are a user, the kind of the result that you want to get out of the database is accessible by far faster. So you need -- you don't need to go through the different sections to find the right data. You simply ask. The system is doing the work for you and giving you the answer. That's why we think those 2 aspects can be real accelerator for both consumption but potentially also profitability of the product.
Okay. That's very interesting, very helpful. My second and final question is just more general. You gave us, in response to an earlier question, your general thoughts on the underlying business development based on today's knowledge of the rest of the year and in terms of revenues and earnings. But also from a free cash flow perspective, Henning, you talked us through some of the effects in Q1. Thank you for that. But just in generally, your directional thinking on the free cash flow generation potential for the full year.
Yes. Craig, happy to take that one. I mean it's basically unchanged to what we shared with you on the occasion of our prelim publication. I think, first of all, in the first quarter, you will see we have a good operating cash flow, maybe a bit exaggerated by a shift in working capital. We will -- we also talk about that we will have lower CapEx this year, which should compensate for higher tax expenses. So in general, I think we are set for an improvement in free cash flow vis-à-vis '22. So that is unchanged.
The next question comes from Julien Roch from Barclays.
Second question of AI, which is the topic of the day, of the week, of the month. So a very clear answer on Statista. But on Dialog, if you see the stock performance of Teleperformance, which has been very poor, it seems that the market has a negative view of the impact of generative AI on call centers. So can you give us your view on why the market is right or the market is wrong? That's the first question.
Second question, you gave us a timing for Asam where you're going to start to look for selling it in Q4. Any update on Statista?
And then the third question is the gap between net outdoor growth and net TV growth is widening. So you're outperforming TV more and more. Any pointers on why that is?
And let me take the last question. If you look at the pandemic -- actually, the pandemic interrupted the structural development. So there was also high on TV and clearly also low and outdoor in times of lockdown. But now actually, the market is catching up to what we see since the years and what we always said, there is a structural decline because eyeballs are actually going away from print and free-to-air TV. And this is a bit later always reflected in the turnover because the market is a little bit tight up in deals between agencies and the media companies, especially the big TV companies.
So for a long time, this can overcompensate the structural media usage changes. But sooner or later, this will take place, and this exactly what you see now, and we expect it also to accelerate in the upcoming quarters. I mean, in general, you see that we outperformed the TV by 13%, overall market by 8%, and don't forget the situation. What we have now is minus 5% for the overall market. So since I'm in the business, and this is now 30 years, it only happened once in 2008. So in 30 years, it's the second time that the market is going down by 5%. So we are in an extraordinary situation. And we are quite happy, I have to say, that everything, what we predicted before, that we see the structural growth, that we see that digital out-of-home and out-of-home is constantly growing now with 8.6% of the market. So when I started the business, the market share of out-of-home was 2.7% in Germany. So it's constantly growing.
And we said a couple of times, we believe that the market share of out-of-home will become clearly double digit and beyond that, in Germany and also in Europe and worldwide. And this is clearly driven right now 17%. Let's not forget, digital out-of-home is the fastest media segment globally right now. Nothing is growing faster than digital out-of-home. And that's -- these are the reasons why the gap is widening. As more digital inventory we have, as stronger we can outperform the market and as more, let's say, the eyeballs are moving away from print and TV, as more difficult it becomes. And this is clearly a generation issue because the older people are still watching TV, but younger people don't watch TV anymore. And this is now, let's say, a long-term, really structural development. But for the next 10 years, we will see a very, very similar situation.
On your first question, Julien, I mean I cannot comment on Teleperformance or anything like that, but I mean we're somehow expecting the question. So a couple of numbers when you just look at our Dialog business. I mean we are not a global [ BPO ] company. We focus only on Germany and German language. And we have a special setup that we do not only offer services via contact centers but also field sales and have all kind of direct consumer contact opportunities in our portfolio. So that said, currently, 60% of the segment of the Dialog subsegment come from direct sales or door-to-door sales, 40% from contact centers roughly. And 84%, 85% of the contact center business is either sales, outbound, inbound sales or cross and upselling stuff.
So where you have maybe sometimes -- and that's the most complex point of service request from a customer and you convert that into cross and upselling opportunities, and roughly only 15% of the call center business, so 15% out of the 40% of the segment, roughly 6%, 7% of our Dialog business are pure service. So if you look into that -- and I think that is the area where we've standardized request on customer care, customer service, I think that's the area that could be attacked the easiest by artificial intelligence solutions.
So that said, I think -- it's -- we only have voice topics there. We don't do any messaging text solutions. That's where I would say, again, that's the area where AI might get in first. That's what you see with ChatGPT. Texting works almost perfectly. Voice is already a more complex and difficult thing, especially, I would say, for German language, if it's not English. So then just to put it into a context, I think we have nothing that I would see over the next 1 to 3 years that is critical. And if I look at the total market in Germany, only 30% to 35% of the customer service is really outsourced. So I think it can be also a trigger to -- for a couple of customers because of those -- because of that new situation that part of what they do in-house gets handled by AI and parts of what AI cannot do is maybe outsourced as well. That's why I would say, in general, yes, it's clearly as many other business sectors, is something where you have an -- need to have an eye on. It's definitely something where artificial intelligence might help. It already helps today because we are working with support systems, especially on the sales side with AI solutions that is just listening to the calls and then proposing different products, giving keywords the agents should use, which might be supportive to actually cross and upsell something in the context of what AI understands.
That's why I would say mid- to long term, it's something you need to have an eye on. In our situation, short term, I don't think that there is any bigger impact just because of the structure of our business.
And last one on Statista timing?
Well, I think that has not really changed. We always said, we think we want to take the company to around EUR 200 million, EUR 250 million revenue first and also work on profitability topics that come in line with a couple of scale effects throughout the growth, and I think we'll get to roughly such a revenue base, I don't know, around EUR 25 million, and I think unless the business is on that level, it also doesn't make sense to think about a potential disposal. So I think maybe it's worthwhile talking about it in 2 years' time.
That said, you never know what happens. If valuations would get crazy again, I think it would be always worth looking at it. But I think for the moment, it's nothing where we have any hurry. We do our homework. We love to see that the business is performing very well. We love to see as, I think, Q1 indicates that the margins will now increase step by step so that people will not only see a nicely growing business, quite unique business. They will also see what the margin potential will look like over time. So yes, and then we'll take it to a level where we think it's worthwhile talking about value crystallization.
The next question comes from Nizla Naizer from Deutsche Bank.
I have 2 from my end. Firstly, on digital out-of-home, can you give us some color as to which type of customers, like which sectors are most active these days? And are you getting entirely new customers on a national basis who were previously not classic out-of-home clients? Or is the overlap quite significant? Some color there would be great.
And secondly, on digital advertising, I mean, another quarter of declines. When -- by when could we sort of expect a return to growth here? And any portfolio pruning that you think is necessary to sort of stimulate growth in that segment? And within that, perhaps some color on how T-Online, in particular, is performing would be great.
Nizla, maybe we start with the first one, digital out-of-home. I think we see, at the moment, what we've seen throughout the years, almost as Udo described, I think we have growing volumes from existing customers, and we have new clients. What we see is that especially on digital out-of-home, we have a lot of overlaps and more and more overlaps with TV. We just see that pure TV focused clients start -- that maybe have historically combined TV with pre-roll advertising, YouTube and so on, now add also digital out-of-home and grow that. The ones that haven't done it so far start doing it. I think it's coming from all industries but especially from -- the new clients come especially from fast-moving consumer goods and retail. I think the growing categories at the moment is clearly tourism. They're doing a lot, but also, transport is something -- airlines, that has gone up in the last 3 months versus prior year significantly. But it's difficult to say that it's a specific industry. We really see it across the board, I think, as out-of-home and especially digital out-of-home is growing its share in the ad market, it becomes more and more a natural element for almost every advertiser. Yes, that's, I would say, a continuous and ongoing process.
But we see that the most intense discussions that we have also around audience measurement across media tracking and so on is clearly with FMCG clients. I think they still have such a high share in their -- in TV, and they see that they need to work on alternative solutions, and they almost see that beyond global platforms, it's only digital out-of-home that can be a reliable partner to deliver video eyeballs on the long run also structurally. So I think that's where, in general, most of the positive momentum comes from.
I think on your second question on digital, in general, I would say, even -- I think the organic digital development in Q1 is already almost flat. I think we have -- the reported number is a little bit lower because of the disposal we had last year on [ SEM ] that happened, I don't know, April or May. So the good news is second half of last year, we've seen double-digit decline in some months and beyond that. So the business is slowly -- has been coming slowly back to where it was at the beginning of last year. I think there is a turning point somewhere in Q2 for the Digital segment where we see different aspects, on the one hand, softer comps from last year, but at the same time, a couple of the Google updates that Henning mentioned are over now, and traffic has normalized, especially across all publishers in Germany, a little bit more than in the past. We also see that demand is coming back a little bit more than what we've seen in the second half of last year.
And I would say, in general, that's also true for T-Online. So traffic has -- that had a softer dip in the second half of last year is coming back again. We're happy with organic traffic there via search. We see that bookings have stabilized throughout Q1. That's why I would say, including the full year guidance for the group, I think the toughest comps and the most difficult situation from what we see at the moment was a little bit in the first quarter. It gets better throughout Q2, and versus rather softer comps in the second half of the year, I think we'll also see again up to mid-single-digit growth, maybe even more in Q4 for the Digital segment. So I would say, given the overall market environment that we see, we think we are relatively performing quite well, I think, again, because it's -- not for bashing any competitors because -- but it's the -- at the moment, the only local peer that has announced Q1 numbers, RTL TV, TV spend was minus 17%, I think. And the digital advertising spend, they announced was minus 8% or minus 9%, I think, for Q1. So I would say the organic roughly minus 0 that we have looks quite robust in that environment. So we're happy with the momentum we see there.
The last question comes from James Tate from Goldman Sachs.
It's James Tate from Goldman Sachs. I've got 2 questions, please. I think firstly, just following up on your answer on generative AI for Statista, how much of your data is from public sources like government statistics, et cetera? And then you also mentioned that you have proprietary data, including surveys. Could you give some color on what else is proprietary? And then how do you intend to protect from other large language models getting behind the paywall and training of the data that you do have?
And then secondly, your guidance implies a margin compression in Q2. What's really driving that? And do you expect to follow similar trends in H2?
James, let me start with the first question. Well, I think really crawlable public available content, what you've mentioned is, I think, below 10%. And again, for most of the output that we deliver, it's just one element. So the full effect of that is probably less than the share of the total, because sometimes to give someone a proper valuation of market potential, you use that data as a source, but it's only the add-on that you put on top, just to put that on the context. So as I said before, 55% is proprietary. That's really staff service that we create, and it's put behind our paywall, and we decide who has access to that and how you can approach it. So it's not that easy for someone to just do something with it and steal it. And if it's outside our business regulations, and 35% to 40% come from business partners, there like in the ad market from players like Nielsen or also GfK, for instance, that where we have a deal and the data is they get backlinks. If clients look for more detailed and specific information that they would get from a specialist like, for instance, Nielsen, while -- for sending them those backlinks, we get the access to the data for free or for a specific amount of money. And again, I think that kind of generative AI can only work with data they have access to. So I would say that fully fledged database is available to only us or our customers and our customers in the way we allow them to access.
And secondly, I think the -- yes, it's not the pure data. You also need to mix and match the data from different sources to get the kind of full reliable picture that we deliver. That's why at the moment, we are testing it already with APIs and see what you can do with the system, but we also see the difference if you're looking for really specific and reliable information. If you do that on the basis of our database versus what creates the system, if it's just scrolling free content in the Internet, that's massive. And I think ultimately, in the B2B context, people look not just for -- I don't know the...
[Audio Gap]
I think Christian fell out. Let's see if he's coming back. Or is the question answered for you?
Yes, that's helpful. And just on the margin heading into the second half in Q2.
Yes. Maybe, Udo, I'll take that one. What you described, I mean it's correct. We more or less believe that in a relative sense, we can achieve the same development as we have seen it in Q1. And I think it's quite strong that we were able to cover a lot of the cost increases that we've seen on many lines of the P&L, so where we're still able to deliver an earnings improvement, which is good by -- however, at the same time, clearly, this is more of a challenge in like '23 than in a normal year before. But I think there's also some opportunity in the second half once we face a lower comp situation, particularly in the fourth quarter, if you remember, where we had an slight earnings decline.
Sorry, I think I was interrupted on my line.
The question was answered, Christian. I think we -- we're done.
Gentlemen, there are no further questions at this time. I hand back over to Udo Müller for closing comments. Please go ahead, sir.
No, Just thank you very much for attending our call. I hope we could answer your questions, and we are happy to see you back for the Q2 results. Thank you very much, and goodbye.
Goodbye, everybody.