ViacomCBS Reports Q1 2021 Earnings Results

• Drove Robust Global Streaming Revenue Growth, up 65% Year-Over-Year, Fueled by Strong Increases in Users and Product Monetization
  • Added 6M Global Streaming Subscribers to Reach 36M Total Streaming Subscribers in the Quarter, and Increased Global Pluto TV MAUs by 6M to Reach Nearly 50M Global MAUs
  • Delivered 69% Year-Over-Year Growth in Streaming Subscription Revenue, Driven by the Significant Momentum of Paramount+
  • Generated 62% Year-Over-Year Growth in Streaming Advertising Revenue, Reflecting the Continued Domestic Growth and International Expansion of Pluto TV
• Increased Advertising Revenue 21% Year-Over-Year and Affiliate Revenue 5% Year-Over-Year, Both Exclude Streaming Revenue
• Achieved Strong Total Company Growth in Revenue, Operating Income, Adjusted OIBDA, as well as Reported and Adjusted Diluted Earnings Per Share

ViacomCBS Inc. (NASDAQ:VIAC, VIACA))) today reported financial results for the quarter ended March 31, 2021.

STATEMENT FROM BOB BAKISH, PRESIDENT & CEO

"In Q1, we accelerated our expansion in streaming with the launch of Paramount+ further enhancing ViacomCBS' ecosystem of premium, pay and free services. The strong consumer response we have seen is evident in today's numbers – we have grown global streaming revenue 65 percent year-over-year and we added 6M global streaming subscribers, driven by Paramount+, to reach 36M streaming subscribers globally. In addition, we now have almost 50M global Pluto TV MAUs. Our early momentum in streaming is a testament to the breadth and relevance of our differentiated offerings, as well as our opportunities for growth through Paramount+, as we continue to ramp the availability of live sports, original series and blockbuster movies over the course of the year. ViacomCBS also achieved another strong quarter of results in our advertising and affiliate businesses, which continue to demonstrate the extraordinary power of our company to reach audiences and deliver for our partners globally."

Q1 2021 RESULTS*

OVERVIEW OF Q1 REVENUE

REVENUE BY TYPE

• Advertising revenue, which excludes streaming revenue, grew 21% year-over-year, driven by CBS' broadcasts of Super Bowl LV and NCAA Tournament games, which were partially offset by lower linear impressions.
• Affiliate revenue, which excludes streaming revenue, increased 5% year-over-year, reflecting higher reverse compensation and retransmission fees, as well as expanded distribution, partially offset by a decline in cable subscribers.
• Streaming revenue rose 65% year-over-year:
  • Streaming advertising revenue grew 62% year-over-year, driven by advertising on Pluto TV, Paramount+ and other digital video platforms.
  • Streaming subscription revenue grew 69% year-over-year, reflecting 63% growth in global streaming subscribers.

GLOBAL STREAMING HIGHLIGHTS

• Global streaming subscribers rose to 36M in Q1, adding 6M subscribers.
  • Subscriber additions in the quarter were led by Paramount+.
    • On Paramount+, the biggest drivers of sign-ups were live sports and specials, including the Super Bowl, NCAA Tournament, UEFA Champions League, Oprah with Meghan and Harry and The Grammy Awards, as well as kids' content, including programming from the SpongeBob universe and iCarly, and original programming, including The Stand and Star Trek: Discovery.
    • Original programming, content from cable brands and Paramount movies drove almost half of Paramount+ subscriber engagement.
    • Globally, Nickelodeon programming was a significant driver of sign-ups and engagement on Paramount+.
  • SHOWTIME OTT delivered its best quarter ever in sign-ups, streams and hours watched, driven by originals, including Your Honor and Shameless, as well as theatricals.
• Global Pluto TV MAUs rose to nearly 50M, adding 6M global MAUs in the quarter.
  • Pluto TV MAUs grew both domestically and internationally.
  • Pluto TV international expansion continued, launching in France in Q1.

REPORTING SEGMENTS

TV ENTERTAINMENT

• In Q1, CBS was the most-watched network in Prime, Daytime and Late Night and claimed the quarter's top broadcast program, top 3 dramas, top 5 comedies and top news magazine.
• Revenue grew 19% mainly driven by CBS' broadcasts of tentpole sporting events and subscriber growth at Paramount+, partially offset by the timing of licensing.
  • Advertising revenue, which excludes streaming revenue, increased 40% year-over-year, reflecting CBS' broadcasts of Super Bowl LV and NCAA Tournament games, partially offset by lower linear impressions.
  • Affiliate revenue, which excludes streaming revenue, grew 11% year-over-year, driven by growth in reverse compensation and retransmission fees.
  • Streaming revenue rose 58%, primarily due to subscriber growth at Paramount+ and Super Bowl LV digital advertising.
  • Licensing and other revenue decreased 17% due to a lower volume of licensing principally from COVID-related production delays.
• Adjusted OIBDA decreased 22% year-over-year, reflecting the company's investments in Paramount+.

CABLE NETWORKS

• In Q1, ViacomCBS owned the most top 30 cable networks among P2+ and P18-49 and more top 30 kids' series than any other cable family; Showtime had the top 2 scripted shows on premium cable.
• Revenue increased 14% year-over-year, driven by growth in licensing, as well as higher streaming advertising and streaming subscription revenue.
  • Advertising revenue, which excludes streaming revenue, decreased 7% year-over-year, largely because of a decline in domestic advertising, partially offset by higher international advertising.
  • Affiliate revenue, which excludes streaming revenue, grew 3% year-over-year, reflecting expanded distribution and contractual rate increases, partially offset by linear subscriber declines.
  • Streaming revenue grew 70% year-over-year, fueled by advertising revenue growth from Pluto TV and other digital video platforms, as well as growth in subscribers for subscription streaming services, including SHOWTIME OTT, BET+ and Noggin.
  • Licensing and other revenue increased 82% year-over-year, driven by the licensing of programming to Paramount+ and third parties.
• Adjusted OIBDA increased 49% year-over-year as a result of the increase in revenue. Expenses increased 1% due to higher participations, which were substantially offset by lower advertising expenses from the broadcast of fewer original programs, and savings from restructuring activities.

FILMED ENTERTAINMENT

• Revenue grew 23% year-over-year, reflecting growth in licensing revenues partially offset by a decline in theatrical revenue.
  • Theatrical revenue was immaterial in the quarter as a result of the closure or reduction in capacity of movie theaters in response to COVID-19.
  • Licensing and other revenue increased 55% year-over-year because of higher revenue from the licensing of programming to Paramount+ and third parties, as well as revenue from the licensing of Miramax titles.
• Adjusted OIBDA increased $177 million primarily due to higher licensing revenue, compared to the prior-year period, which included higher distribution costs associated with theatrical releases during the first quarter of 2020.

BALANCE SHEET & LIQUIDITY

• In Q1, ViacomCBS generated $1.7B of operating cash flow from continuing operations and $1.6B of free cash flow†.
• As of March 31, 2021, the company had $5.5B of cash on its balance sheet and a committed $3.5B revolving credit facility that remains undrawn.
• In March, ViacomCBS completed the early redemption of senior notes maturing in 2022 and 2023 for a total $2.0B.
• In March, the company also raised $2.7B of capital through an offering of Class B common stock and mandatory convertible preferred stock.

† Non-GAAP measures are detailed in the Supplemental Disclosures at the end of this release.

ABOUT VIACOMCBS

ViacomCBS (NASDAQ:VIAC, VIACA))) is a leading global media and entertainment company that creates premium content and experiences for audiences worldwide. Driven by iconic consumer brands, its portfolio includes CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount+, Pluto TV and Simon & Schuster, among others. The company delivers the largest share of the U.S. television audience and boasts one of the industry's most important and extensive libraries of TV and film titles. In addition to offering innovative streaming services and digital video products, ViacomCBS provides powerful capabilities in production, distribution and advertising solutions for partners on five continents.

For more information about ViacomCBS, please visit www.viacomcbs.com and follow @ViacomCBS on social platforms.

VIAC-IR

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This communication contains both historical and forward-looking statements, including statements related to our future results and performance. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These forward-looking statements reflect our current expectations concerning future results and events; generally can be identified by the use of statements that include phrases such as "believe," "expect," "anticipate," "intend," "plan," "foresee," "likely," "will," "may," "could," "estimate" or other similar words or phrases; and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: changes in consumer behavior, as well as evolving technologies, distribution platforms and packaging; the impact on our advertising revenues of changes in consumers' content viewership, deficiencies in audience measurement and advertising market conditions; our ability to maintain attractive brands and our reputation, and to offer popular programming and other content; increased costs for programming, films and other rights; competition for content, audiences, advertising and distribution; the potential for loss of carriage or other reduction in or the impact of negotiations for the distribution of our content; losses due to asset impairment charges for goodwill, intangible assets, FCC licenses and programming; the risks and costs associated with the integration of the CBS Corporation and Viacom Inc. businesses and investments in new businesses, products, services and technologies, including our streaming initiatives; evolving business continuity, cybersecurity, privacy and data protection and similar risks; content infringement; the impact of COVID-19 (and other widespread health emergencies or pandemics) and measures taken in response thereto; domestic and global political, economic and/or regulatory factors affecting our businesses generally; liabilities related to discontinued operations and former businesses; the loss of key talent and strikes and other union activity; potential conflicts of interest arising from our ownership structure with a controlling stockholder; and other factors described in our news releases and filings with the Securities and Exchange Commission, including but not limited to our most recent Annual Report on Form 10-K and reports on Form 10-Q and Form 8-K. There may be additional risks, uncertainties and factors that we do not currently view as material or that are not necessarily known. The forward-looking statements included in this communication are made only as of the date of this communication, and we do not undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES

(Unaudited; in millions, except per share amounts)

Results for the quarters ended March 31, 2021 and 2020 included certain items identified as affecting comparability. Adjusted operating income before depreciation and amortization ("Adjusted OIBDA"), adjusted earnings from continuing operations before income taxes, adjusted provision for income taxes, adjusted net earnings from continuing operations attributable to ViacomCBS, and adjusted diluted EPS from continuing operations (together, the "adjusted measures") exclude the impact of these items and are measures of performance not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We use these measures to, among other things, evaluate our operating performance. These measures are among the primary measures used by management for planning and forecasting of future periods, and they are important indicators of our operational strength and business performance. In addition, we use Adjusted OIBDA to, among other things, value prospective acquisitions. We believe these measures are relevant and useful for investors because they allow investors to view performance in a manner similar to the method used by our management; provide a clearer perspective on our underlying performance; and make it easier for investors, analysts and peers to compare our operating performance to other companies in our industry and to compare our year-over-year results.

Because the adjusted measures are measures of performance not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income, earnings from continuing operations before income taxes, provision for income taxes, net earnings from continuing operations attributable to ViacomCBS or diluted EPS from continuing operations, as applicable, as indicators of operating performance. These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies.

The following tables reconcile the adjusted measures to their most directly comparable financial measures in accordance with GAAP.

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL MEASURES (Continued)

(Unaudited; in millions, except per share amounts)

Free Cash Flow

Free cash flow is a non-GAAP financial measure. Free cash flow reflects our net cash flow provided by operating activities from continuing operations less capital expenditures. Our calculation of free cash flow includes capital expenditures because investment in capital expenditures is a use of cash that is directly related to our operations. Our net cash flow provided by operating activities from continuing operations is the most directly comparable GAAP financial measure.

Management believes free cash flow provides investors with an important perspective on the cash available to us to service debt, make strategic acquisitions and investments, maintain our capital assets, satisfy our tax obligations, and fund ongoing operations and working capital needs. As a result, free cash flow is a significant measure of our ability to generate long-term value. It is useful for investors to know whether this ability is being enhanced or degraded as a result of our operating performance. We believe the presentation of free cash flow is relevant and useful for investors because it allows investors to evaluate the cash generated from our underlying operations in a manner similar to the method used by management. Free cash flow is among several components of incentive compensation targets for certain management personnel. In addition, free cash flow is a primary measure used externally by our investors, analysts and industry peers for purposes of valuation and comparison of our operating performance to other companies in our industry.

As free cash flow is not a measure calculated in accordance with GAAP, free cash flow should not be considered in isolation of, or as a substitute for, either net cash flow provided by operating activities from continuing operations as a measure of liquidity or net earnings as a measure of operating performance. Free cash flow, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, free cash flow as a measure of liquidity has certain limitations, does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs.

The following table presents a reconciliation of our net cash flow provided by operating activities from continuing operations to free cash flow.

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