Emerald Holding (EEX) 6 Nov 232023 Q3 Earnings call transcript

Good morning, and welcome to the Emerald Holding, Inc.

Third Quarter 2023 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded.

Before we begin, let me remind everyone that this call will include certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. future statements estimates, XXXX about statements. about particular, and are remarks company's the projected include expectations, plans beliefs, prospects. In forward-looking These results for statements differ materially risks, those indicated variety that Such by cause from to such implied other statements. could to and factors of results actual or subject are uncertainties a periodic subsequent factors XX-K and Form other and in filings. risks on set forth the XX-Q reports and company's Such are most recently filed Form update The company such any to not does forward-looking undertake duty statements.

GAAP will management be call, be today's non-GAAP for the of found in measures, measure or substitute results performance. can during as reconciliation in Additionally, the isolation of not company's believes it discuss information GAAP. these earnings useful company's accordance which a to considered with release. in measures should The comparable evaluating in this can U.S. non-GAAP The be prepared most presentation additional the

and will turn section President go As company's on Executive being over this Chief of p.m. Eastern to XXXX. I'd recorded, is November Investors Herve Mr. to please the conference replay and Officer. on Time XX, call ahead. a now conference of through Sir, available XX:XX like a this the website reminder, Sedky, the be

performance centricity, XXX-day with then be portfolio and overview then an and provide everyone. good year-to-date Well, on discuss financials. Starting on of thank you, our give engagement detail live our our customer strategy, Kevin, of It's with David great pillars, you CFO, more Doft, growth third results. optimization. events. our will focus and morning, review I'll our a of to quarter all our to today start with

in by pricing. attendees revenue to see continue significant We and both growth in exhibitors, and driven profitability increases year-over-year

edition. trade attendees at diversified improvements continues chains. We've the as beginning implemented prebooking from as scaled most year well on-site already our just and tailwinds, some year's to which in for travel international to selling means exhibitor highly supply shows, our we're including benefit restrictions to return this of Emerald space with a shows As removal of next post-COVID platform, customers'

we us trends in count us Our view great revenue our us increases to pursue rate. On-site we in prebook and a market In free growth believe project data approximately generation renewals. we to a rather enable also forward with deliver flow continued which exhibitor granular This above the where sales gives our our is business chasing EBITDA confidence visibility of deal X year should than our environment, of margins XXXX, sales our within achieve force gives business, new cash our plan and believe a industry's historical highly valuable pacing for to and this years. up of along high up leverage, operating frees feature out. next our run XX%

changes to business in to more show business trade resilient our market also due dynamics is mix. Our broader

value exposure less -- have the who bring business tangible mark-to-marketing shows a owners orders. from budgets. Trade our on comes growth compared and and We of in are form reliant resilience strength exhibitors provide greater players. we maximize the to industry unique long-term to they that value from to themselves standard customers, the our measurable to business resilient secular of get areas The to and purchase budgets we're looking their ROI other marketing

objective events big the view that and them, more investment A metrics, exhibitors this They trade rather at #X in set make X selling least of and they nearly in which year. is a and the show shows even part shows For trade know of ongoing them goals result attendees. The our we to tools deliver proposition will the customers have understand our help cost. than has been know for believe our U.S. themselves. experience participate their small surpass show by an we better value our both half developing value-add ROI businesses is an achieve transparent are of that as to and year, even trade and efforts the to clarify per they

quarter to now third our results. Moving

a Con, kind will in collaboration as detail, the event as its was event, quarter at of July, compared which during that attendance shifting in some our year. In more a million David $X of fan Emerald the pleased hosted to the edition approximately the the with quarter, revenue of financials previously due the with the National upfront we announced, inaugural out the first and to headline, Association. speak execution in events third we prior with the While required even We're NBA $XX.X hosted to investments. of Basketball million our timing launch revenue $XX.X of million quarter

beverage market a category new Cocina expect and food to we did business the The on wholesalers, Sabrosa and trends. types the Sabrosa launches that Latin underserved future event industry identified inaugural and that in we're U.S. markets in supported by in long-term build being consumer our the Irving, with another partnership restaurants. have despite event show We is national growth Texas, show a years. In large serving retailers with of high trade NBA focusing Latin industry. trade fast-growing of successful on as September, not We and addition had the Cocina of focused the show on food an launch a indicative

and year. marketing place the these where of of hear and on variety importance XXXX. to across also value live budgets panel industries. and hosted since in highlighted was weeks our the the XXth It level delivered York, the that their meetings the Officer we Just and At largest Melia validating Delta the its ROI types events value their levels June of of USA; continued marketing they face-to-face Chief the other attendee in the prioritizing about edition inherent from executive acquiring of we events in few leaders each CEO second a history. was Marketing on Advertising I iteration It of New the event, was in of a business ago, by Week joined

the Live primarily seeing Events remains strong, business the we're in within sector. our some technology content softness While business,

revenues a given approximately in year. reminder, Content of a XX% As our business our represents

sector. our technology Our spending ad and and in synergies long-term ad the our in will business sector companies has is quarter tech shows. effects third this by in strongly the content quarter the exposed of This to fourth our trade impact said, impacted felt year, more Content many the the well. That as believe cycle, spend we as a which our core between pullback serving noted

our trends Our industry. in media have strong We last go-to especially over remain the the in the given respective and events news own we as allow cross-sell engagement months. for for advertise we put about business each to longer-range optimistic and prospects as leadership XX team and that assets year-round maintain Emerald's with place customers serve the us new to content, source

We also expect to in stabilize the see XXXX. advertising environment

spends as will single-digit headwinds we low expect are our near-term impact ad moment. a discuss as detail presenting a the in in guidance in some full to which percentage XXXX result, more David year risk However, a

with value dollars Looking and should in put add-on dollars our we're XXX-day delivering from with X optimization. value focused more the pillars of customers, services, work focused on revenue them customers form a our receive ahead, and centricity, platform. marketing ultimately -- centricity, we remain and actual greater higher of help on of this engagement marketing insights, customer portfolio Emerald's deploy creation, for data across picture to In the clear and investment to incentivizes They Emerald they the they stickiness derive return to on customer. improves customer

which engagement the for cycle customer buyers about a gives the engagement providing points Our multiple through and platform is second conferences, shows, selling. to entry XXX-day content e-commerce year-round pillar, sellers platform, webinars, digital and media our trade

Our Over our we points growth. as new Emerald includes X acquisitions X NBA Xcelerator units, launches and Sabrosa, contribute through I both event third new discussed, pillar which event optimization, of to revenue annual is launches. percentage Con Cocina expect portfolio to which time, and such

to every ahead as to customers to abilities and that line. To softness get beyond, compounding side, and where grow the parts and and value our benefits to into We're opportunities excited that, return our that we On the investments the turn to our our generation evaluate flow the look with cash fragmented within to highly some conclude, let a efficiencies we'll they greater call expand track pool continue despite near-term over data me to large XXXX line year finish to industry. acquisitions our our in to technology free CFO. in of margins content continue David active recent This of revenues, ability XXXX shows demonstrate to Emerald business. smaller working and a to in potential with we generally bring especially the operational that attendance includes and deliver our expectations scale Doft, realize continue our to our the acquisition continue results and some greater pipeline we're to of systems hard shows. With

good top Herve, Starting you, morning. and the Thank line. with

continued Our of third adjustments, quarter of primarily million other $XX.X This services and our XX.X% reflects in our acquisitions. content decline quarter. despite disaggregated growth revenue, which is Organic the quarter the versus our was of million events the growth XX.X%. revenue. Year-to-date, organic $XX.X revenue business, compared XXXX. to into strength revenue marketing acquisitions driven third the increase takes the was prior by and in was from and increase reflected the The business line year in million our an revenue or account $XX.X impact in organic is $XX.X scheduling of million,

seasonally quarters show second As busy and third reminder, the are following calendar. a slower the trade QX

largest QX remaining performance the Our and shifted dynamics acquisitions historical to have slightly QX with second compared our quarter our made have largest. our seasonality

year, third of remaining insurance the have settlement due last proceeds we quarter. And claim. last During the event remaining that proceeds an our event Recall the at also payment we insurance this COVID-related point, no from $X.X cancellation in received received quarter, cancellation million third to outstanding. claims of substantial additional a we

million Third these proceeds, million. including EBITDA, excluding adjusted was $X.X proceeds, the $XX.X or quarter

EBITDA third an proceeds, $XX.X proceeds excluding For of XX% same was quarter of when the million, adjusted excluding year, $X.X period received insurance EBITDA, the XXXX. $XXX.X of year. in the million same million $XXX increase over Year-to-date, quarter million or the last negative insurance is last adjusted

the cash quarter. to $X.X million quarter insurance was excluding compared proceeds, flow, Third free prior $X.X outflow an in year million of

expenses. Turning to

as we million expenses. was third the operating of prior quarter Third million efficiency in insurance XXXX of quarter. have quarter, through that added settlement efforts acquisitions. we're cost $X year $XX.X related even SG&A the the the in $XX.X achieved included SG&A reflecting Even businesses so, we efficacy of quarter with in million Note pleased our the versus leverage

we dividend after September convertible preferred our funding sheet, XX, the had balance on stock. XXXX, $XXX.X cash June million million $XXX.X of versus million the in for as as As XX of $X.X

strength and $XXX.X our our million liquidity flow our credit authorization in and $XXX capital We'll extension on We and own and to million, in XX, remaining to our buybacks. On our business, opportunistic leverage allocation generation previous $XX total between sheet the support the our cash invest availability opportunistically acquisitions, Our grow on balance is authorized debt $X program including Board expansion share balance note, on XXXX. the to investments facility. share the to believe ability buyback business. Friday, continue of that versus program our December million million the of managing full

trailing XX, on September our leverage X.XXx EBITDA of agreement of we based agreement credit million net our leading of debt definition of the million. defined to XX-month in had as our ratio, As $XXX credit $XX.X a net of consolidated

convertible the now were X, pay quarterly to the PIK. pay required stock to kind. July in July to preferred has of cash X, to the our we As right company dividend or in of quarter-by-quarter Prior choose

minimizing before, we deferred on price, -- our to convertible as-converted of compared the for XX, stock XXXX, excuse to on the and million, Friday's payment to me, conversion $XXX.X of call, noted an shares our as-converted our leads the quarter tax see and market $XX worth The million value of of as pay preferred XX, guidance discussed, was as-converted full as issuance approximately of an share basis. shares on basis again an to Board X.X have year based we convertible preferred the presentation the by count carefully share shares an $X.X of shares. With This can modest estimate, on for risk the an the means million, debt, overview $X.X analysis closing billion. In avoided a in in our this the common estimated in XXX.X going be additional dilution thereby original which common XX.X this approximately our a factoring for asset given decision earnings of will quarter, as technology consider shares be our capital spend a cash, earnings the total a enterprise consideration represented of a paid our be we sector pullback respect in largely Herve in dividend to allocation resulting for to preferred directors event net at fourth capital million on sheet some September found independent XXX.X would our from million on September as weakness XX quarter we as announced independent in basis. of our September an on of total our payment business, our Slide deck, structure, million. Based $X.X of customers' million members Adding the As on price option million price, contingent of the authorized outstanding cash. current on deferral forward. Notably, is to Board second common convertible $X.X XX December in equates the content planned $X.XX launch into acquisitions, XXXX. in approved ad well our new cap billion management's in third prior an balance

we for $XXX between in As and a year to million now come million. expect the result, full $XXX revenue

over core strength the still XX% between business, increase XX% an reflects Given our guidance of trade year. show this and of last

and We to million in expect overall adjusted $XXX $XX in range continued the margin million, also strength reflecting now of improvements business. our EBITDA

runway COVID. Thank And as work number of XX% we time. margins back Our This between our believe very prior way for excluding XX% your for XX% EBITDA we to the adjusted open we'll EBITDA, to an EBITDA XXXX approximately plus guidance increase questions. we implies we XX%, the proceeds. have of to adjusted an saw that, adjusted you this represents and and much improve with now margin guidance line insurance over

Instructions]. [Operator

first coming Crockett Rosenblatt. from today from question is Barton Our

guidance, was curious was cash you which other free were I talking Great. guys on Okay. flow. one thing about about

cash think capital I or here? about million so formally been update working free that any you a I the $XX that And if wondering XXXX. of in revision just benefits saying with had you was guidance saw excluding flow there's

Sure. Thanks, Barton.

guidance prior working prior million capital. was Our over $XX

$XX the Now and we're between $XX I at million think risk million EBITDA, something for looking moderate with now on XXXX.

you But of about spoken you've have obviously, in next can that your -- bit to talked this hiccup into bit I was about visibility for you detail expectation you more And Okay. double-digit XXXX? And then what I know your of little you could as had we've talk model. growth a little XXXX. what a a year? expectation guidance But an if wondering advantage underlies for growth double-digit here.

Yes.

Given that question. thanks -- the Barton, this is for Herve,

XXXX. sold meet forecast seeing continued a events that's for strong And but a increase not sell have Given strong number that internal visibility details a brands number. have to what HX events, we're they particularly need we're into company XX-plus year-on-year. And very the to double-digit of large brands, percent are of we get the and the the seeing pacing, we're majority QX very the visibility going into our of the to and that large of into where

was a detail specifically derived little there is it That's just that XXXX. on said so think know is something right. line, results or the which an that And other could thought that which about really guys. that, I we things with marketing exposure advertising what All into that is I know revenue said were you and last Okay. hadn't revenue I encouraging. bit services, which million year. -- deferred X you the of then you it's $XX continued you other was within much here, And was more event from? And

the last $XX year is seems and it that Given here variance might other only was line that like million, notable portion. $XX a event be million that,

I you little So more was bit wondering us detail if could well? around a give as that

pushed got launch new low millions that revenue. were event in was the it expecting the that a So single-digit out, of we

on why that in hopes emphasizing content for the improvement we business it's year. we're high So which is impact, amount had a of more side. The the in content the nearly smaller in business

$XX And you're hit year more about particularly as million our that was the so other line. Ultimately, range in and marketing progressed, or to which our to hard for the forecast forecast led the was a took year, talking pretty we technology the our in than services the meaningfully close million what budget revenue for to were get the this our year. sector, budget $XX in and unable change

is Next coming question today Group. from Klee Allen Maxim from

question. a Just definitional

I you Could into all other went design, other trade commerce other and from tech shows, now, like services. marketing changed it's segments events, services what tell of software Your creative subscription where? and us think and and

our clear, at there's evolving segments some language around that. we're XX-Q Though likely not Just and to in have year-end, the be changed. them

You're we've of our a revenues that disclosed looking sell. at greater the long the disaggregated by on time revenue product to we for color source section give

also So our subscription trade before. we revenue conferences, only that And or media marketing including it's our from and show The in then trade other subscription But changed trade elastic, smaller P&Ls events that events, products full have is software services largely many which are services of pure other is subscription brands. The events and hold generally not disclosed. content marketing segment and and products, other disclosure, are is that piece a for type we shows the smaller business. shows, education but much have. the other

Okay.

that there? For to anything trying there there you proactively results media improve you're do content, to is could are any -- the --

business. made changes media our about show our ago, a we some from where separated we've And trade -- our year hired business we've Absolutely. in content

the areas, of and So Sales, creating those of that media leadership done also and Head all business. an were hires a content up of really QX, across first of unit, but and year. this someone I hired was Marketing to believe, stand-alone Head of number step entire the Editor-in-Chief the head a We've

our from to at convert media so other the advertising-driven I less lead-generating but spend sectors And talked you at business here we'll the model business. advertising sectors shows would and to if and and optimistic we're the be sector, media to that softness the look actually goal continue just progress. trade an to the is more hitting of transition, are And support have and that goals our on are that other that we're to also are make meeting beginning while reliant operate that many to transform model. And like content because -- the in we we we there about that for business, have properties that sectors are the tech in. entire and mention

So it's on sector is food that are a impacted. big which largely things tech really track. the and construction, the and But -- design so and the like forth sector is one

In lead could you offerings, that XXXX? think generation terms happen in do of

We very instance, launched, the I this just all us absolutely significant different we've really a amount to newsletter allows a do. database with hundreds people short of business. And sectors. businesses small signing start which for it, of for in thousands up of built a building time, for across of

So sure. don't We time. few see progress the but for see it continued see the the that next course some will years, we -- 'XX we business take of -- in we it will some over of evolution

I horizontally operating and that an a at it to And other of began with think content product it's probably I given do future. But content database, is, got time space, substantial launching media new dedicated it. and other to from to higher and editors the in this bigger a with leads. year, business up something to that in to side, us a newsroom unit. set sales continue what created Allen, things companies to in not unit. we had a and events as a as ad all middle by are force as we're there's wasn't our you almost separating got we the because We teams Yes, we sales Herve by a before, sectors, agencies but reporters one you that the sector, much what's there through do it of all ideal the Emerald monetize product to that the XXX,XXX consolidated players went a indicated, can the up central well-aware tech stunning weren't change side in for for by indicated, think the maybe massive going to leverage as weakness across of of the cuts refine exposed only the to that the you're opportunity get is stand advertising lot to new change independently, but new into weeks, media We a in of was focus keep and to budget in against have the level mind not or leverage. Herve of important on the done and within consistent few more so ever products a It's more much on our that approach level example. And then in that subscribers then pretty but

it was transformation while and so that mean results disappointing that and about the prospects of business, really And could business, beyond. of the year successful year very in that what XXXX 'XX excited in a in a of and actually the financial we're it's

of -- and how over terms that provide about software the verticals in you thinking to expanding time? your an new that update you're on to of profitability Could business plans shifting

Absolutely.

shared grew what per billion our We are we through customer past. year-on-year. the So our the value by trends $X gross similar have in an going see month of We to average platforms. XX% base still in merchandise

customer XXX%. Our is rate net retention revenue at

that have seeing signing some we're new in today we retention, the new sectors good not to the signings, are we're around recent were works going of that the announce not will of give that other to day with customers. ones made sectors, But the details into and the while penetrate progress today. in with is from to I very our we're others So we around -- some really that. expansion And metrics -- say very acquisition strong

talked being business, show last thinking the your wondering XX% comment been. around to you where exhibitors and I'm feel potentially increase future? where what and on about and a to could has gone pricing are -- just in and the and opportunity In you're around it pricing the I attendance of you think at the you how -- opportunity just trade the had -- what you about give quarter, Great. amount of up

So the that our last quarter and numbers versus and period. so we attendance changed the gave for expectations were the generally on hasn't year, pre-pandemic revenues

on related event expectations. So those with numbers consistent the is side. are to And the guidance the our volatility content the side, not

that it doesn't So spoke about change progression that before. we

see we we a improvements dedicated that pricing, creating in our us that very overall a pricing pricing about We yield. about year-over-year and significant talked optimize allows centralized We've science continue of to XX% to now have focus on overall here. XXXX. kind to function think bit that value a before brings forward. pushing increases and surely yield. yield to to little right X%, strong as We in But in go moderate We're expect pricing

price becomes And more we a when more we of overall think it. customers, that do value we our where value you so function it to how about credit of so delivered get optimizing against for yield, have

those want in are the to with and they buying that value against products Some and services have could go doing and the prices customers services overall on aggregate, increases, down. that to value. products They're areas have may areas up us. going assigning do we is business not yield terms with some price price may because But business us and

a out relative strides, a and bit admittedly we being made to that of the little strong some so us it's but get done really forward we've in of optimizing in products what mid-single-digit before, that And opportunity surely think was for services. catch-up, annually our yield going 'XX,

that the one for comments shared how that guys like a that and whole was appreciate trade what by I guess and from impressed almost size and get of from do valuable of number kitchen the participant than Advertising of show appliances CES. I and the I I the for it. kitchen during I in Week the And -- on, panel Week and was bath-type didn't you -- really industries, every -- was the bath what was attending which know Herve events I by so greater then Advertising that can day e-mails the know was

last the just if round my could So about you to try what you're pushing more customers doing benefits question engaged, get could as little kind year all you touching them and you're it? that every talk and related is single to -- from the to potential of a to actually be -- do

Sure.

On make the CES comment, that I comment. didn't

person was an the to stage performance have it not interesting but compared think I that. our did CES, I comment. on

what get that data attending to shows. year-round amount our looking sold. the we're incredible we get they bought to is content a buy, lead-generating seeing business, to at that. And leads ultimately, the is events, then what XXX-day the actually back not through of of the will both take to platform of I sell, through terms are what they're more on of marketplace. us through loop where the evolving events more into they most then we get the at also of customers and for are are large what content what doing events, pillars business their them now In trade only engagement, leads, basis. as will on we we're doing gives engine year the sellers and getting And who incredible our But we as leverage our looking in, -- being new business. discover but and the compares a looking mentioned, they're XXX-day this as well of they're people leads they're engagement and this interested content an what events what looking that That goes of now growth that key one matchmaking, to a can that And are also through where as what's unique have then close can with people

last quarter announced Product, that And to hired, to And help new allow as that think or us sit think us to on top this so in will this products clients. Head the and to of Emerald you continue we and build products more data platform, this customer our as we've services a build top. richness to design will on data X, value add hub of of really continue I

in David one clients. and the philosophy value another of strategy for will the last and exciting our that entire been that couple developments So to of around pricing the And as pricing building therefore, produce is value. course of investing all over years mentioned, we've

to we the value of in how recapture we that monetize to want that basis doing. And is, customers, we our been the essence, we've deliver So as work value. that

question coming from Paribas. is Kassab Next BNP today Sami from

Two please. questions, may, if I

about The pricing talked first one, value. to you

You mid-single-digit annual from pricing. talked about contribution

and If can add volume we of new can midterm top company, much see show how you And in may the on characteristic growth the how much pricing? growth from the cost labor see may next inflation of labor launches a it you labor mid-single-digit on please? And from take cost contribution comment discuss outlook, you secondly, recruit pressure whether benefit industry? easing and in margins you the difficult profit lower how whether the be may you inflation U.S. people to And into perhaps year?

Very good questions.

each the take and try questions. me of let one So

half the yields in roughly speaking our coming So our growth our and growth. growth terms volume midterm terms, from general our and be and pricing in half we in see growth very of and to

So construct that's how at the looking our plan. growth we're of

those of organic a about on in you've the discussed activities. provide X% revenue our last us it others that of growth are that today very much and expect between we definitely some good that launches, terms course has X% labor And heard from -- to number from has growth we've over the to launches somewhere of the in events past. recruiting. revenue and In cost launch years of launched that X% of we growth. And better question environment X late The your that will organic than to terms of continue X% been with the been of

And for couple easier so it find we of recruit reasons. a to

industry we've exciting the objectives market help proposition join and where achieve us it Emerald improved, the to general goals the also and the think in that we value people positioned has to and but have. I makes for in

us. benefited easing market last and of And value versus result, as labor, a year. our the of combination to the certainly a cost we're has So going proposition see of easing particularly some

further our reached floor management to comments. closing turn over back have questions like We and session. answers your I'd of to end for or the

we good. pillars strategy on for maniacally X our value Well, remain of And all creation. in Very focused growth the joining. through thank you conclusion,

and So those customer portfolio engagement centricity, are XXX-day optimization.

ability We continue to deliver sales us resulting over would great grow increase I year. And in growth are work our us top our thank gives like revenue leverage. our of year, amazing take our and incredible business and morning. into of operating to that, next you I this in looking continue much strong with at doing our thank such people this help joining business. And our line double-digit mentioned, who -- EBITDA Emerald versus year-over-year prior adjusted Goodbye. evolve performance to XX% all for platform all opportunity strong the call to forward, our a growth see I of to very XXXX pacing year-to-date and of to deal with as data confidence XX%

does teleconference. Thank conclude you. That today's

may You a your thank at time, today. and lines you participation day. your wonderful We for have this disconnect