Nielsen Holdings plc (NLSN) Q2 2021 Earnings Call Transcript

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Nielsen Holdings plc (NLSN)
Q2 2021 Earnings Call
Jul 29, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2021 Nielsen Holdings plc Earnings Conference Call. [Operator Instructions]

And now I would like to welcome Ms. Sara Gubins, Senior Vice President, Head of Investor Relations and Treasury. Ma'am, please go ahead.

Sara Gubins -- Senior Vice President, Investor Relations and Treasury

Good morning, everyone. Thank you for joining us to discuss Nielsen's second quarter 2021 financial performance. I'm joined by our CEO, David Kenny; and our CFO, Linda Zukauckas. Our COO, Karthik Rao, will also be on for the Q&A portion of the call. A slide presentation that we'll use on this call is available under the Events section of our Investor Relations website. Before we begin, I'd like to remind all of you that our remarks and responses to your questions today may contain forward-looking statements, including those relating to our business plans and 2021 guidance and the impact of COVID-19. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, July 29, and we are under no obligation to update. Our actual results in future periods may differ materially from those currently expected because of a number of risks and uncertainties, including those identified in our disclosure filings and materials such as our 10-K, 10-Q and 8-K reports and in subsequent reports filed with the SEC, which are available on our website. We assume no obligation to update any forward-looking statements except as required by law. On today's today, we will also refer to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available in the earnings press release, which is available at the Investor Relations section of our website at nielsen.com.

And now to start the call, I'd like to turn it over to our CEO, David Kenny.

David Kenny -- Chief Executive Officer

Good morning. Thank you for joining our second quarter earnings call. Our second quarter results demonstrate Nielsen's continued strategic and operational transformation in an evolving global media ecosystem. These results also show that we are executing as planned on the growth strategy we laid out at our Investor Day in December. Let me remind you of the three overarching messages and compelling opportunity for Nielsen. First, we are focused on driving new growth from new solutions across all of our end markets globally. Across the board, we are delivering on the key elements of our product road map. Second, our cultural transformation is progressing well. Our associates around the globe have rallied around a growth-driven mindset, and we're benefiting from their energy, enthusiasm and clarity of focus. This means focusing on accelerating revenue growth and advancing our product evolution to match the rapid changes in audience behavior and the media ecosystem. And third, we have a compelling and strengthening financial model with 80% recurring revenue, expanding margins and increasing free cash flow conversion. I'll provide a high-level look at our second quarter results before turning to the business highlights. I'll then hand the call over to Linda for a more detailed review of our results. We are building on our consistent track record of success, and we are pursuing opportunities to further improve. Year-over-year revenue grew 6.2% on an organic basis. We are seeing the benefit of a COVID recovery in some markets, although it remains uneven globally. Our teams are doing a great job serving clients around the world, even in markets that remain challenged. Our adjusted EBITDA margins of 43% expanded 256 basis points on solid revenue growth and strong cost discipline. Our adjusted EPS of $0.43 and increased from $0.35 in the prior year.

And free cash flow was $190 million, up from $86 million in the second quarter of 2020 on a comparable basis. Following strong first half performance and reflecting our confidence in the 2021 outlook, we are raising the low end of our ranges for revenue and adjusted EBITDA and also raising our EBITDA margin, adjusted EPS and free cash flow guidance ranges. Turning to the business. I'd like to start with a high-level discussion on the value we bring to the media industry. There is no question that audiences are changing how they consume media. And platforms, networks, studios, advertisers and agencies are all transforming to meet and drive these changes. In the second quarter alone, our clients were involved in big mergers, big product launches, a robust advertising upfront and global expansion. Nielsen's three essential solutions, audience Measurement, Audience Outcomes and Gracenote Content Services, were used by our clients to make decisions and negotiate with a common fact base as they navigate a changing media industry. We are growing especially well with our largest global partners with a scalable, digital-first approach. And we are seeing our clients increasingly invest across these three essential solutions, which will accelerate our growth over time. Finally,I'd remind you that Nielsen's mission is to power a better media future for all people. And this includes our strong commitment to our ESG priorities and performance. In June, we released an interim responsibility update, which highlights the important work we have done around the six key areas of our ESG strategy. The Board and I firmly believe these efforts are essential to the overall success of our organization. Now let me share some specifics for each of our three solutions. Starting with Audience Measurement, which posted 4% year-over-year organic growth. We are making significant progress on the building blocks that are foundational to Nielsen ONE, our cross-media currency solution.

Industry engagement is critical to the success of Nielsen ONE, and we are partnering closely with media buyers and sellers in its development. We've launched a series of cross-functional working committees and recently met with the Executive Steering Committee, which consists of senior industry leaders. We received good feedback on our progress against coverage, comparability and resiliency. Our work with the industry includes the ANA, the Association of National Advertisers, and the WFA, the World Federation of Advertisers. Nielsen ONE aligns with their objectives for a cross-media measurement solution that best addresses the needs of advertisers. We are also supporting the ANA's Alliance for Inclusive and Multicultural Marketing, or AIMM, to help their members measure their investments in Black, Hispanic and Asian-owned media. We continue to be encouraged by renewals and expanded scope with both multichannel and digital pure-play clients as well as advertisers and agencies. Clients are renewing with larger contracts as they add more services. These are largely multiyear commitments with annual price escalators. Q2 advertiser and agency growth examples would include the extension of our Digital Ad Ratings agreement with Toyota and Dentsu's expanded relationship to include streaming measurement. On the publisher side, nine of the top 10 TV network groups are now using our streaming measurement solutions. And just this week, Google cited Nielsen metrics on their earnings call to demonstrate the incremental reach for advertisers on their platform. We also recently partnered with DAZN, a global streaming sports platform, on an audience measurement tool ahead of the Italian football season. Our local video and audio business continues to strengthen. We recently renewed and expanded our agreement with Entravision, which includes a comprehensive suite of measurement services, including local TV ratings covering their 22-market footprint and Nielsen Audio for all radio stations in 14 markets. We also renewed a multiyear deal with iHeartMedia across all of their markets.

Let me walk through some recent product milestones for Nielsen ONE using coverage, comparability and resiliency as a framework. Starting with coverage, which we are expanding significantly. The addition of Roku as a data provider brings the aggregate number of devices measured close to 100 million, in combination with DIRECTV, DISH and VIZIO. And we've doubled the number of connected TV partners over the past year to most recently include Samsung TV Plus. When combined with our existing coverage of major platforms, such Hulu, Amazon and YouTube, this will bring our big data coverage of video digital ad spend in the United States to approximately 90%. We continue to hit milestones on streaming measurement also. We are expanding our base of streaming meters with approximately 14,000 installed meters as of July and broadened our coverage to include the top 15 streaming platforms. Outside the U.S., our streaming meters are now live in six markets, and we will continue to add markets over the next several quarters. Next, comparability. In June, we launched The Gauge, a new monthly analytic tool that provides the industry with a simple view of time spent that is comparable across streaming, traditional cable, broadcast channels and gaming. We were, of course, pleased that Netflix's co-CEO, Reed Hastings, publicly acknowledged that Nielsen is uniquely positioned to help scorekeep in the dynamic media landscape and that Netflix used The Gauge to demonstrate their runway for growth in their Q2 earnings update. There is a lot of great work and progress behind the scenes on driving comparability across TV and digital. Deduplication is a critical component, and we have recently completed a key step in this area, developing a methodology for cross-device deduplication within households. Another key milestone this year will be the integration of big data sources into Nielsen's national television measurement calibrated by our panel. These integrations are on schedule, and we're on track to have impact data by year-end that clients can use during 2022 for analytic purposes.

We are also on track toward sub-minute measurement in our television panel, which will be enabled by innovation in our watermark and signature technologies. The work to make our existing metered panel sub-minute capable is near completion and expected to roll out in Q4 of this year. And finally, we remain in active discussions with the MRC, ANA, WFA, clients and other industry organizations as we build toward evolving the currency. The last point is resiliency. As the privacy landscape continues to evolve, with third-party cookie deprecation being the most notable change, we have taken proactive steps that provide us with the flexibility to adapt, enabling us to understand the audience and audience demographics in a privacy-focused way. Earlier this week, we unveiled our cookieless approach for audience and outcomes measurement, eliminating our reliance on digital identifiers. This new approach is enabled by our Nielsen identity spine, which allows us to deduplicate across linear and digital platforms as a part of Nielsen ONE. A full, privacy-focused redesign has already been completed for the two largest digital platforms. And we continue to enhance coverage of the identity spine, recently adding new data partners such as Toluna, DDEX, FullContact, Cint and ID5, and this builds on existing data relationships with Newstar, Narrative, Throtle and TrueData. I want to reiterate that all of our big data sets are validated by our robust panel, which represents an important truth set and statistically representative view of the audience in the U.S. and in key markets around the world. As discussed on our first quarter call, during COVID, CDC and state guidelines prevented us from entering panelist homes either to sign up new panelists or maintaining existing home, and this presented an operational challenge. I'm happy to say that we have now restored full maintenance protocols and have been improving panel size and quality every week during the second quarter. We are closely engaged with the MRC, and they are up to speed on our progress. We remain committed to the MRC audit and accreditation process.

Turning to Outcomes & Content, which grew 12.6% year-over-year on an organic basis in Q2. Audience Outcomes growth is driven by geographic expansion, expanding to new verticals beyond CPG and helping media companies better sell on the outcomes they deliver. Let me start with geographic expansion. We are expanding the global reach of our campaign outcomes measurement tool with the addition of Vietnam, India, Portugal, the Philippines and Switzerland, among others. We expect to be in over 40 markets by the end of the year. And earlier this month, we acquired TVTY, a leading TV attribution provider based in France, which expands our capabilities and data partnerships in Europe as well as the U.S. This tuck-in acquisition aligns with our strategy to deliver cross-media outcomes as a complement to Audience Measurement. In terms of new verticals and capabilities, we are seeing continued traction, growing our client base across a broad range of industries. We have an impressive roster of new wins in the U.S. and around the world, including industry giants such as Samsung, Microsoft and Anheuser-Busch. We recently expanded our capabilities in the important automotive vertical through a new partnership with IHS Markit to integrate their Polk Automotive data. Initially available for addressable audience activation, we'll expand the use cases across audience and outcomes measurement solutions over the next year. We have expanded our norms database designed to establish syndicated standards for campaign outcomes measurement across platforms which we launched last fall to now include nondurable retail and pharma in the U.S. Finally, we have made significant progress with many of our media publishers, adding outcomes metrics on top of Audience Measurement as they evolve the way they sell advertising. A timely example this week during the Tokyo Olympics. Our outcomes and Sports teams jointly worked with the International Olympic Committee to create a new solution measuring the return on sponsorship investment for some of the IOC's top partners.

This is a first in the sports market and is a good example of expanding outcomes into sponsorships. We are evolving our core Multi-Touch Attribution product from digital exclusive to digital first with the addition of linear television and over the top. And we are expanding our channel coverage, which helps pinpoint the optimal spend across the entire media mix, now including the coverage of radio, print and social influencers. And finally, turning to Gracenote Content Services, which is also growing through geographic expansion and additional solutions beyond the core metadata business. We continue to see a very high renewal rate of Gracenote services. For example, we recently renewed our multiyear agreement with Verizon with a focus around streaming video services. During the second quarter, we expanded Gracenote with major clients into the Netherlands, Austria, Switzerland and, most recently, Poland. We are also developing new solutions to add more value off the Gracenote platform. Earlier this year, we launched Inclusion Analytics, empowering smarter decision-making around inclusive content investments and helping to drive toward a more diverse and equitable future. And we've seen on interest for this service across media, agency and advertiser clients. We also recently signed long-term deals with two connected TV manufacturers to use Gracenote ID as a part of their advanced advertising platforms. Let me sum up. We reported another strong quarter due to solid execution and a cultural shift to a growth mindset. We are making continued progress on our product road map, and we are driving growth across our three essential solutions. We are adding new clients and new markets while also bringing more services and incremental value to our existing clients. We have increased confidence in our ability to deliver on our full year outlook, which is reflected in our updated guidance provided today.

Let me now turn the call over to Linda to review the financials.

Linda Zukauckas -- Chief Financial Officer

Thank you, David, and good morning, everyone. Similar to last quarter, my remarks today focus on our results as if the Connect sale and related $2.3 billion debt paydown that we completed earlier in the year took place at the beginning of 2020. This approach helps with prior year comparisons and is consistent with how we handled Investor Day in December and our 2021 guidance. You'll find comparable prior period comparisons in the appendix of today's slide presentation. Before I get into the results, I would just like to remind you that a year ago this time, we faced our most impacted quarter from a COVID perspective, and we had recently announced our large-scale optimization plan. All of this is a relevant backdrop to these strong Q2 results I am pleased to now review with you. I'll start with slide seven, which summarizes our second quarter revenue performance.. Revenue for Q2 was $861 million, up 4.5% year-over-year on a constant currency basis or up 6.2% organic constant currency, which adjusts for exits related to the 2020 optimization plan and the sale of our Advanced Video Advertising business to Roku earlier this year. On a reported basis, revenue grew 6.2%, which includes an FX benefit of 170 basis points. Revenue growth accelerated in both the U.S. and in international markets. We're continuing to see recovery from COVID-related pressures and strong execution by our teams around the world despite an uneven global recovery. For some perspective, despite the loss in the current year of revenue associated with business exits that were part of the 2020 optimization plan, Q2 '21 revenue was higher than Q2 '19 revenue. The same was true for the first quarter, and we believe surpassing prepandemic revenue levels demonstrates that we are driving fundamental growth in addition to recovering from COVID impacts in 2020. Our solutions are resonating with clients across our end markets around the world. Audience Measurement grew 3.3% constant currency and 4% on an organic base. Growth remains solid across the board and especially strong in digital measurement.

As expected, pressure in our local business has subsided with local posting positive growth for the first time in 10 quarters. As we discussed previously, our local business was down in the mid-single digits during the last two years due to pressure on multiyear contract renewals as we went through our local transformation. And that work was completed in late 2019. We cycled through those contracts and expect local to be roughly flat for the year. Outcomes & Content grew 7.9% constant currency with organic revenue up 12.6%. We saw improving trends in short-cycle revenue and strong growth in our Sports business, both of which were hard hit in Q2 '20 due to COVID. We also continued to drive solid growth in Content. The right side of the page shows revenue for the past five quarters as well as constant currency and organic revenue growth rates. As you can see, the growth trend continued to improve nicely in the second quarter. Turning now to slide eight. Adjusted EBITDA was $370 million, up 11.8% year-over-year on a reported basis or up 11.1% on a constant currency basis. Adjusted EBITDA margins of 43% expanded 216 basis points reported or 256 basis points constant currency. On the right side of the page, we show adjusted EBITDA and margins over the last five quarters as if the sale of Connect took place at the beginning of 2020. There are several drivers to our margins. First, operating leverage from top line growth was strong. Second, we took swift actions in late Q1 '20 and reduced temporary costs by approximately $100 million. These temporary costs began to return in Q2 '21, though at a lesser pace than initially expected but will continue to ramp as the year progresses. And third, just over a year ago, we did a restructuring or optimization plan. So the incremental year-over-year benefit of this plan is more pronounced in the first half of this year versus the second half. Adjusted EPS was $0.43 in the second quarter as compared to $0.35 in Q2 '20. This was driven by higher EBITDA and lower depreciation and amortization, offset in part by higher taxes.

Our effective tax rate was 29% in the second quarter. This includes $2 million in discrete items, which we add back for adjusted net income, resulting in a normalized second quarter tax rate of approximately 27.4%. Free cash flow was really strong at $190 million, which compares to $86 million in Q2 '20 on a pro forma basis. Key drivers of the year-over-year improvement include higher EBITDA, improved working capital, in part due to strong collections, and lower interest payments. These improvements were partially offset by higher tax payments, which is timing related within 2021. And now I'll discuss our updated 2021 guidance on slide 10. Today, we are increasing our full year guidance to reflect our solid Q2 results and our confidence in the balance of the year. We are raising the low end of our revenue and adjusted EBITDA guidance ranges and raising our margin, adjusted EPS and free cash flow guidance. Let me take you through each of these items. For revenue, we narrowed the range, and we are now guiding 4% to 4.5% organic constant currency growth. We've similarly raised the low end of the range for constant currency revenue growth, where we are now guiding 2.5% to 3%. For adjusted EBITDA, we are now $1.475 billion to $1.490 billion, with margins of 42.3% to 42.6%. This compares to 2020 adjusted EBITDA margins of 42% as if the sale of Connect took place at the beginning of 2020. As we discussed last quarter, our 2021 EBITDA guidance reflects an approximately $60 million benefit of the optimization plan this year and the underlying efficiency of the business, partially offset by the return of COVID temporary cost cuts made last year as well as incremental growth investments. The return of temporary costs is more heavily weighted in the balance of the year. We also began to implement the optimization plan in Q3 '20. As a result, the second half faces a more challenging comparison, and we continue to forecast margin compression in the second half of the year.

We are raising and tightening our adjusted EPS guidance to $1.54 to $1.61 versus a comparable $1.45 in 2020. This higher adjusted EPS range is driven by the tighter adjusted EBITDA guidance range and lower depreciation and amortization, which is offset in part by a slightly higher share count. And finally, we are raising and tightening our free cash flow guidance to a range of $620 million to $650 million on solid EBITDA performance, lower interest payments and strong collections. As a reminder, adjusted EBITDA, adjusted EPS and free cash flow guidance ranges do not include the impact of onetime separation-related costs, which Nielsen has absorbed under the Connect sale agreement. Today, we are lowering our expectation for these cash costs by $20 million and now expect a range of $200 million to $220 million for the full year with $164 million paid in the first half of the year. The vast majority of these costs are included in discontinued operations, and this is the last year of any meaningful separation-related cash costs. We ended Q2 with 3.62 times net debt leverage on a pro forma basis, well on our path toward our medium-term net debt leverage target of three to 3.5 times. Given this progress, we are lowering our year-end leverage guidance range to 3.5 to 3.7 times. To wrap up, we are pleased with our second quarter results. The strength of key underlying drivers reinforces the confidence that we have in our ability to execute on Nielsen's growth story and deliver our full year guidance and longer-term goals.

And now I'll turn the call back to Sara for the Q&A session.

Sara Gubins -- Senior Vice President, Investor Relations and Treasury

Thanks, Linda. With that, let's turn to Q&A. Operator, can you open up the line, please?

Questions and Answers:

Operator

[Operator Instructions] Your first question is from the line of Andrew Steinerman from JPMorgan. Your line is now open.

Andrew Steinerman -- JPMorgan -- Analyst

Hi all. I wanted to follow up on your point, David. You said we're on track with the product road map. So obviously, I think back to the December 2020 product road map, which is laid out year-by-year. First of all, I just want to make sure that the key date of cross-media currency launch is still fourth quarter of '22. And if you could, just go over the second half of '21 on term of which pieces to the product road map will be introduce in the second half of this year.

David Kenny -- Chief Executive Officer

Yes, and we're tracking that daily, as you can imagine. Part of the reason Karthik is on the call is he's driving the product road map, so I'm going to turn it over to him to lay out the sort of key things that our clients and the market are expecting to see in the remainder of this year and reiterate the great progress that has been made so far. Karthik?

Karthik Rao -- Chief Operating Officer

Thanks, David. Just a couple of things first. Nielsen ONE is foundationally about cross-media measurement and the three biggest components of which are obviously coverage, resiliency and comparability. Those are the sort of three core pillars that get us ultimately to what we are going to deliver in 2022. And as a reminder, we launched all of our digital solutions already under a completely new backbone that is completely resilient for all the changes in the privacy environment. That was an important component. The identity spine that powers that is another component of that. And going into the second half of the year, it's a little bit more focused on expanding coverage, which is all of the CTV coverage expansions that we're launching with all the players. David called them out. So those are important. They'll start to launch in Q3. And going into the rest of the year is all of the work we're doing around granularity and [Indecipherable], which is the -- which is emboldened by the launch of our analytic capability where we're putting out the national capability -- the national linear capability with big data. So you can imagine all of the flexibility and granularity that starts to add and ultimately pushes us into next year where there's a whole host of other things, including the deduplication methodology, which is ultimately the core of where all this comes together, deduplicating across every component of media delivery that takes place. So that's what we're building toward. The road map is completely on track from all of the inputs as well as what clients start to see periodically going into the rest of the year and into early next year.

Andrew Steinerman -- JPMorgan -- Analyst

Okay. And just to be clear, in terms of your identity spine, obviously there are several identity solutions in the industry. Does Nielsen ONE need to be the solo identity solution? Or is it OK to be a identity solution as long as your the measurement solution?

Karthik Rao -- Chief Operating Officer

Yes. So Andrew, the key around all of the identity solutions that exist are what they enable and power. For us, the key is to make sure it works for measurement use cases, that's what we're focused on, and interoperability with all the other identity solutions in the marketplace. So when David talked about all of the integrations we have, it's about enabling an interoperable world where identity is obviously a big challenge. So it is a team sport, but the version that we're building and have continued to build is largely around use cases of measurement. And use cases of measurement is -- foundationally, you can think about it as deduplicating where many different versions of exposure are difficult when you have to put them together into deduplicated reach of frequency. That's the use case that we're solving for primarily. And so interoperability and deduplication, that's what we're about, and that makes us a little bit different than the other solutions. But we're making really good progress on that.

Andrew Steinerman -- JPMorgan -- Analyst

Got it. And I ask one other piece to that. And you're still on track for fourth quarter '22 launch for the cross-currency measurement?

Karthik Rao -- Chief Operating Officer

Absolutely. The full rollout where it ultimately comes together, Nielsen ONE is completely on track. And then once the data gets put out there, it gives everybody, buyers, sellers in the ecosystem, all what they need to start to make all the adjustments because it's going to be very exciting. And what we also want to do is make sure all of the component launches, the building blocks, as David called them, continue to come out so people start to get familiar with each of the components, ultimately leading up to the deduplication across everything for ads and content in 2022.

Andrew Steinerman -- JPMorgan -- Analyst

Thank you very much, Karthik

Operator

Your next question is from the line of Toni Kaplan from Morgan Stanley. Your line is now open.

Greg Parrish -- Morgan Stanley -- Analyst

Hi. It's Greg on for Toni. I wanted to talk about your cookieless measurement. You noted 50% resiliency. You called out a few new data partners on the call here. So wondering, one, do you need to improve your resiliency number? I don't know if there are any targets or goals in regards to that. And does that mean new data partners? Or is it on the technology front? And then related, Google recently delayed its shifts. So hoping maybe you could talk about what you're hearing from clients in terms of willingness to make the shift and also timing.

David Kenny -- Chief Executive Officer

Yes. Thanks, Greg. I would say on the client side, sophisticated clients know that privacy is still a good thing. Yes, Google delayed to give people time, but I think it's important for us to keep moving and get it forward because we know this will happen. And of course, Apple has what it's doing around made, and that isn't delayed. So we think it's important. We continue to lead. We are big believers in privacy policy, and we believe that we have solutions that allow for the audience to be served well and respect their privacy at the same time. And that's the reason when I had -- with our launch and our cookieless solutions for measurement and for attribution. What I would say on the 50%, that really -- has more to do with which of the publishers have already been solved for. So we obviously started with the biggest ones, and they're there. We now have this solution. And in our release, we talked about the solution for the unauthenticated. For those who are smaller, who may not have as much first-party data, we're getting there with some added techniques that use the probabilistic models and machine learning. So we believe the methodology works. It's tested. It's now a matter of sort of integrating the long tail of publishers to make sure we're covering the whole market.

Greg Parrish -- Morgan Stanley -- Analyst

Got it. Thanks so much.

Operator

Your next question is from the line of Dan Salmon from BMO. Your line is now open.

Dan Salmon -- BMO -- Analyst

Hey good morning everyone. For better or for worse, probably the most popular investor question of late has been about maybe some of the negative headlines related to the COVID measurement issues. So maybe, David, could you expand on that just a little more? We've had the VAB call to remove MRC accreditation. What do you think the likelihood of that is? What would be the potential financial impact of a worst-case scenario? Because it does sound like the idea is acknowledging that everyone would continue to use the ratings. So just maybe a little bit more color on that would be helpful. And then maybe on the brighter side, you mentioned both Netflix and Google highlighting your streaming data on their earnings calls and then Google in particular highlighting it for YouTube more. How impactful is that to your business? Does your sales team start to feel that? Because it feels like that's an element that isn't being recognized as much as the secular leaders promoting your products for you these days. I'd love to hear more on that as well.

David Kenny -- Chief Executive Officer

Well, those are two very different questions. So let me -- let's answer both because I think they're both valid. On the first part, I'm going to let Karthik go into the details on COVID recovery. We had to do some things differently during COVID. And of course, COVID is not done. But we did get to the point where it was safe to be back in homes, both recruiting and replacement. And we're operating at a very strong pace, and we've actually increased investment to make sure that we have the panels the way it needs to be. It's a fair complaint that people would want that instantly. So I don't love the tactics, but I would agree that it is important that we resolve the panel. The -- and I'm going to let Karthik describe how. The second part of that though, to be clear, the accreditation is very important. We think it really builds trust in the industry. But it's a vote of confidence. It's not required to use the product, and it's not in our contract. So we're not required to maintain accreditation. We certainly have it as a goal. And we think the MRC is a really important partner to set standards, and we're going to continue to work with them. I'm now going to let Karthik answer the rest. He's been kind of in the front with the MRC discussion.

Karthik Rao -- Chief Operating Officer

Yes. Thanks, David. Just to reinforce what he said, we continue to work with the MRC before, during and even now that leads up typically to an accreditation process, which is largely an audit of every single process that goes into managing the panels and ultimately what gets produced from the panels into our products. So our plan is completely on track in terms of all the corrections we needed to make coming out of COVID. Even though COVID is not over, we've managed to get back into field basically completely, going and checking for all of the homes in [Indecipherable] flag that we were unable to do during the peak of COVID. So our execution there to get the panel back up to where it needs to be is completely on track. And yes, as David said, we don't love getting the added push. But look, like we work with clients as well to showcase and tell them exactly what we're doing. And so we're completely committed, and our plans are going exactly as we planned as well as working with the MRC because they bring a lot of value to the process of reinforcing confidence in what we produce.

David Kenny -- Chief Executive Officer

And on the second question, the digital players, I don't know if they're promoting the Nielsen products as much as they are clearly using them. And they're using them to understand their market share, to understand their competitiveness, to be able to respond and make their products better. And I was really pleased to see a couple of them use them in their earnings calls because it means they're pretty core to the way they operate their businesses. And I think that's a really nice validation. And of course, as I said, those digital-first players are driving a lot of our growth in this post-COVID period and will continue to drive our growth given the nature of the relationship. So I feel really good about that. More broadly, I would say, on the demand side, the people who buy advertising, the people who invest in content, I think there's a lot more credibility that Nielsen really does measure the total audience. I think there was a narrative when I got here that maybe we were more broadcast than linear focused. And I think it's really clear we're audience focused, and we're following the audience wherever she goes and is going to streaming in a lot of ways in a lot of categories. So listen, it's early days, but I think this is the kind of validation leading up to Nielsen ONE and leading us to moving the whole market toward an integrated view of the total audience across both streaming and linear on the same basis. And already, it's being used for decisions and for folks to manage their product strategies.

Dan Salmon -- BMO -- Analyst

Great. That's very helpful. Thank you both.

Operator

Your next question is from the line of George Tong from Goldman Sachs. Your line is now open.

George Tong -- Goldman Sachs -- Analyst

Thanks. Good morning. You delivered accelerating organic constant currency revenue growth across both Audience Measurement and Outcomes & Content in 2Q. How do you envision organic constant currency revenue growth progressing in these businesses in the second half of the year? And what initiatives remain outstanding that you have to work on in order to deliver on your organic growth targets not just over the second half but also in the medium term?

David Kenny -- Chief Executive Officer

Yes. So Linda, why don't you start? You and your team have spent a lot of time getting behind that question. And Karthik or I could add some color beyond that. We'll come back.

Linda Zukauckas -- Chief Financial Officer

Yes. Sure. So thanks for the question, George. I would just start by saying that we feel good about the Q2 results. As you noted, they are really strong results. As we think about the second half of the year, we do still continue to expect solid revenue growth. I will point out that the first half of the year was a bit stronger than our expectations, and you see that in the guidance revisions that we've provided today. The subscription portion of our business, which is about 80% of the total, doesn't have as much variability because we've got a lot of visibility into that business. But on the outcome side of the business, there's definitely more variability, and we saw that last year and now this year with the impact of COVID. We're benefiting, though, from an improving ad market from a COVID recovery perspective, and we're optimistic. But we're of the opinion that this pandemic is not behind us and it's an unpredictable environment. So we've incorporated a bit of risk at the low end around the speed or the pace of the global recovery. You heard earlier from Karthik and David that we're doing well on our product road map, and execution on that is important for the second half. We do have our initiatives and growth investments that we're making, which are more second half weighted, and some of those will take a little bit of time to ramp. But overall, we think the second half will be in line with, of course, the way that we've guided today. And I think that we, on an overall basis, are feeling very optimistic about the second half and our performance as reflected in the guidance revision.

David Kenny -- Chief Executive Officer

And I -- listen, and I -- we remain very confident in the medium-term forecast that we laid out in December at Investor Day. These things are happening as predicted. Not everything in the macro environment is the same thing, I think, as COVID continues to pop up around the world. But I think we're getting much more agile at managing that. I'm really proud of the teams for doing that. We -- I think we already covered the Nielsen ONE road map, which, of course, is super important. That's a heavy subscription business. I'd like to have Karthik spend a minute on some of the product innovations that are coming in Content and outcomes because those are, as you saw, driving even more growth. And we're really excited about all three legs of the Nielsen revenue fuel. Karthik?

Karthik Rao -- Chief Operating Officer

Thanks, David. Thanks, David. Just calling out on outcomes, what are we really trying to accomplish there? Again, just going out to the strategy, three components there. One is vertical expansion. I think you've heard us talk multiple times about going outside of consumer packaged goods because that's where 90% of marketing dollars get spent, or ad dollars anyway. So expanding coverage. You saw what we're doing in the automotive space. You saw mentions about retail, nondurable retail and pharma. That trading will continue to expand. Then it's about making it even more relevant to both sides of the coin, not just the buyers but also the sellers so that sellers can really tell the story of their inventory not just from a volume perspective, which is reach, but also from a value perspective, which is outcomes. And so everything we've mentioned there about how we're being used, our outcome capabilities are being used and will continue to be used by sellers as well is an important component. And then global expansion is a really important component because, again, everything we're doing in outcomes is about telling the story about the value of marketing, and that's relevant everywhere almost the same way. And so expanding into more markets going again into 2022. And on the Gracenote side, just -- it's about a couple of things. One is the world of discovery is even more exciting just given the proliferation of platforms and the new innovations in which content is being delivered to consumers. So it's a combination of market expansion as well as capability expansion such as advanced discovery. And then the ultimate angle there for us is the expanded use of the Gracenote ID. Because in a world where content is proliferating to so many platforms, the Gracenote ID becomes a unifier to figure out exactly where that content is going and how it's being licensed. Is it being used the way it was -- is the content being used the way it was expected to? So there's a whole bunch of components there that are very exciting for us, many of those in the second half as well as going into 2022.

George Tong -- Goldman Sachs -- Analyst

Very helpful color. Thank you.

Operator

Your next question is from the line of Ashish Sabadra from RBC. Your line is now open.

John -- RBC -- Analyst

This is John [Phonetic] filling in Ashish. Can you talk more about the pickup in short-cycle work that shows that major league sports resume? Any visibility on the pipeline for the rest of the year? Thanks.

David Kenny -- Chief Executive Officer

Ashish, I think your question was about sports, right? So we don't give line item detail, but I would say that the Sports business returned nicely, and I mentioned the work with the IOC. There was obviously a lot of work around Olympic sponsorship. But as leagues have been returning around the world, certainly those leagues have gotten smarter about how they demonstrate the value of sponsorships and advertising, and we've been really helpful to them. So I think Sports continues to strengthen. And certainly, we expect that to continue to be a strong business for months and years to come.

John -- RBC -- Analyst

Great. Maybe you can just touch on quickly. Any impact you're seeing from the Delta variant perhaps internationally?

David Kenny -- Chief Executive Officer

Yes. I would say we're not seeing anything that would be unexpected. I think it's been a bigger challenge just operationally. Our first priority is always going to be to keep our people and our panelists safe and healthy. So we're adapting quite agilely operationally to every market and what it predicts. Of course, vaccination rates beyond Delta variant where vaccination varies generally -- vary quite a bit around the world. So we are certainly adapting to local conditions.

John -- RBC -- Analyst

Great. Thank you.

Operator

Your next question is from the line of Doug Arthur from Huber Research. Your line is now open.

Doug Arthur -- Huber Research -- Analyst

Yes, David, this is sort of a big-picture question on your IT backbone, but a lot of commentary in the -- at least in the release about cloud-based solutions and the speed to market. Are -- do you feel the IT backbone is where you need it to be? Or it's still a work in progress and -- but it's helping you provide more custom quick solutions to the customer base?

David Kenny -- Chief Executive Officer

So I'm well known for never being satisfied inside of Nielsen. So you raised a place where I -- I think we're always going to continue to innovate and improve on the tech backbone and take advantage of the latest technologies because I think that is important. And technology as a science continues to evolve. What I will say is the foundation is there. The work that needed to be done from when I first got here until now to get us on a single platform to be able to be cloud based, which really means that more of your software can be composable, the ability to get things done in days and weeks, not months and years, is -- it gets better every day. So I think it's a very solid foundation. I think the fact that it is a single platform makes it much easier to continue to innovate on. But it's going to be a never-ending process to make sure that Nielsen is at the front edge of the technology curve going forward. Flip side is, I would say that's really helping us with talent because people are finding that they can do really leading-edge things here, and they're pretty excited about that. So as we've been bringing new people in this year, this has been a really interesting job. They love our CTO, they love the tech team and they love the project.

Doug Arthur -- Huber Research -- Analyst

Great. Thank you.

Operator

Your next question is from the line of Tim Nollen from Macquarie. Your line is now open.

Tim Nollen -- Macquarie -- Analyst

Hi. David, I hope you don't mind if I come back to the accreditation question with the VAB. It sounds like if you've got your panel rebuilt and you're rolling out streaming meters, then is this issue really actually put to bed? Or -- and I should say, does it actually have any impact on your Nielsen ONE rollout, whether negative or actually even positive, with your data meters out, the nanometers, the panel rebuilds. And any kind of further color on the status of that and how it affects the Nielsen ONE if at all?

David Kenny -- Chief Executive Officer

Yes. I'll start. And if helpful, Karthik can add. I don't want to say it's put to bed because obviously, the VAB doesn't feel it's put to bed. And their basic argument is you can be back operationally, but they want the panel in every geography to be fully representative. And there is still recruiting work to be done. I would say the maintenance work, the maintenance backlog has been cleared, so we're back to those procedures. But of course, they want high standards, and they're -- they ask the MRC to make sure in their accreditation process that happens every year that they pay extra close attention given there's so much change. So we're going to continue to invest, we're going to continue to improve and we're going to continue to be transparent so that everyone can have confidence and trust in the fidelity of what we're producing. That said, what I would also say is this changing market that we're trying to measure with Nielsen ONE is more sophisticated. It has a combination of ACR data, which is why it feels like Roku were so important, why the CTV integrations are so important and that the -- you need that for streaming. There's still a lot of cable data, and there's an increasing number of homes that are broadband only. So us making sure we're measuring all of it is key. And I think it's certainly telling the market that the Nielsen ONE solution is going to be needed and needed as quickly as we can get it out there. So yes, I do think it creates demand as people acknowledge the changing market. And I think we need to continue to strengthen all aspects of our data, including our panel, and be transparent about that. Karthik, I don't know if you want to add anything.

Karthik Rao -- Chief Operating Officer

I think the only thing I'll add, David, is that the importance of the panel as a major source continues to be reinforced. I'd say that's a good message from the market to us and one that we want to reinforce even on this call. So it is a differentiator, but it also means that it's a critical component of everything we're building. And so we're going to continue to invest there, especially in a world of fragmentation. Because ultimately, the panel is a major source. It helps us with identity. It helps us with deduplication. And so we're going to continue to invest there. And there's definitely work to be done, but we feel pretty good about all the progress we're making not just in general with the meters and the rollouts, which is on track, but also, I'd say, a little bit of correction from COVID and what we needed to do there to get it back to what it used to be and what it should be.

Tim Nollen -- Macquarie -- Analyst

Okay, very helpful. Thanks David. Thanks Karthik.

Operator

Your next question is from the line of Matthew Thornton from Truist Securities. Your line is now open.

Matthew Thornton -- Truist Securities -- Analyst

Hey good morning everybody. I -- just two quick ones, one more of a clarification and one is more of a housekeeping. Maybe on the clarification, maybe this is for David, you talked about local -- or in the release at least, it talks about your local pressures subsiding there a little bit. You guys are actually -- you're obviously in market with an improved offering there. So just to be clear, I guess, is this -- is it more of a market conditions improving there? Or is this a function of you guys being in market with an improved offer and that's allowing you to stabilize market share or even take market share or have better pricing power or what have you? So I'm just looking for some clarification there. And then just separately on the housekeeping front, maybe for Linda, the TVTY acquisition, I'm assuming very small. I'm just curious if you can kind of quantify any revenue from that acquisition this year. Thanks, guys.

David Kenny -- Chief Executive Officer

Yes. So on local, I would say it's -- a lot of it's improved product, improved delivery, improved competitiveness. And I think -- I believe in where the road map is going and the way that Nielsen ONE principles will apply to local. That really mattered in both the Audio and the video business, the TV business. So I think it's that. Our business is subscription, so it doesn't tend to go up and down with what's going on in the end markets. I would just say we're more competitive. I do think the end markets are strengthening some. Audio is particularly performing well as people get back into their cars. So it's -- it helps to have a good end market, but I would say most of what's happening in our results is product driven. And Linda, I'll let you take the other question.

Linda Zukauckas -- Chief Financial Officer

Yes. And the other thing I would just add, Matt, on local is we were coming off of a couple of years of elevated investment as well. And so I think we're seeing the benefits of that investment in our local platform. So that also is a contributing factor. On TVTY, no revenue color to really offer. It's a relatively small acquisition from a financial perspective, but it is important to us strategically with improving our -- or aligned with our strategy to deliver cross-media outcomes as a complement to Audience Measurement. So no financial data, though, that we're sharing relative to that acquisition, but really excited to have TVTY on board.

Operator

Your last question is from Richard Kramer from Arete Research. Your line is now open.

Richard Kramer -- Arete Research -- Analyst

Thanks very much. David, many of the data providers that you cited as existing or even new partners seem to be resolving IDs based on household IP addresses. And -- but there seems to be a trend now that these are likely to get blocked at source by the likes of Apple, Google, Comcast and others. Are you assuming that, that happens in your plans? And do you think your ID solutions will be robust if those household IP addresses are not available? And then a quick one for Linda. We couldn't help noticing that removing some of the "other items" from adjusted EBITDA, which is about $38 million this year versus $2 million last year, would have taken margins down quite a bit. Can you tell us what those items were? And maybe also, since you highlighted international as a particularly interesting growth area certainly at the Analyst Day, can you give us a sort of breakdown geographically of total sales between U.S. and international? Thanks.

David Kenny -- Chief Executive Officer

Sure. Quickly on the first part, our ID solution is not dependent on IP coming from everybody. There's data we get in a number of ways. So we -- we're watching the IP address issue, but it doesn't really affect our road map and our ability to measure what's going on with the audience. So I think we're fine and quite resilient regardless of how that sorts out. Increasingly, I think that's why a lot of people are partnering with us, is strategically our ability to pull the data and then validate it with real examples of real people in the panel is unique, competitive and durable. So our methods are going to sustain. I'll let Linda answer the accounting question. Linda?

Linda Zukauckas -- Chief Financial Officer

Yes. Thanks. So on the onetime items, obviously heavily concentrated last year. From a Connect perspective, we do carve those out. And in the current year, those tend to be in discontinued operations. There is a little bit of a tail on those costs. Aside from that, there's a fair number of moving parts, and we can circle back up with you in order to give you a double click on that. But it's -- the typical items are just the mix between last year versus this year is a little bit more complicated. With regard to a breakdown on international versus domestic, we don't do that breakdown regularly. But if I use 2020 as a barometer, international exposure was about 17%. And I would remind you that Gracenote is a very global business. And so a meaningful portion of our international exposure is because of the global nature of that business. But we're very optimistic about international as a growth opportunity for us. So as we make our annual disclosures on the mix of domestic versus international, I would expect to see some proportion of that trend up, but it's on a much smaller base. So it will take time before you see that mix shift coming through in our numbers.

Richard Kramer -- Arete Research -- Analyst

Okay. Thank you.

Operator

There are no further questions. I'm sorry, sir. As there are no further questions, I will hand it over back to Mr. David Kenny.

David Kenny -- Chief Executive Officer

Yes. Thank you very much. I want to thank everybody for joining this morning. Nielsen has a clear strategy, a great team. And each and every quarter, we further prove our ability to execute as planned. I am really confident in our path ahead and believe we are well positioned to deliver growth for our clients and enhance value for our shareholders. Thanks again. See you next quarter. Bye.

Operator

[Operator Closing Remarks]

Duration: 62 minutes

Call participants:

Sara Gubins -- Senior Vice President, Investor Relations and Treasury

David Kenny -- Chief Executive Officer

Linda Zukauckas -- Chief Financial Officer

Karthik Rao -- Chief Operating Officer

Andrew Steinerman -- JPMorgan -- Analyst

Greg Parrish -- Morgan Stanley -- Analyst

Dan Salmon -- BMO -- Analyst

George Tong -- Goldman Sachs -- Analyst

John -- RBC -- Analyst

Doug Arthur -- Huber Research -- Analyst

Tim Nollen -- Macquarie -- Analyst

Matthew Thornton -- Truist Securities -- Analyst

Richard Kramer -- Arete Research -- Analyst

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