Welcome to the Emerald Holding First Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Erica Bartsch, EVP of Strategy and Communications at Emerald.

Good morning. Welcome to the Emerald first quarter 2025 Earnings Call. Before we begin, let me remind everyone that this call will include certain statements that constitute forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. This includes remarks about future expectations, beliefs, estimates, plans, and prospects. In particular, the company's statements about projected results for 2025 are forward-looking statements. Such statements are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those indicated or implied by such statements. For a discussion of these risks, uncertainties, and other factors, please refer to the company's SEC filings, including its most recently filed periodic reports on Form 10-K and Form 10-Q, as well as the company's earnings release, all of which can be found on the company's Investor Relations website. The company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, management will discuss non-GAAP measures, which it believes can be useful in evaluating the company's performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. The reconciliation of these non-GAAP measures to their most comparable GAAP measures can be found in the company's earnings release, which is available on the company's Investor Relations website. As a reminder, this conference is being recorded, and a replay of this call will be available on the company's Investor Relations website through 11:59 p.m. Eastern Time on May 8, 2025. I would now like to turn the call over to Mr. Herve Sedky, President and Chief Executive Officer. Please go ahead.

Thank you, Erica. Good morning, everyone, and thank you very much for joining us today. I'll begin the call with an overview of our first quarter results and key strategic initiatives. Then I'll turn things over to our CFO, David Doft, for a more detailed review of the financials. We began 2025 with strong momentum. Our first quarter performance reflects meaningful progress in executing our strategy with strong traction across key initiatives that deliver value for our customers and for our shareholders. We reported double-digit growth in revenue and adjusted EBITDA, building on the strong portfolio optimization initiatives we accelerated in 2024. Emerald's refined portfolio now spans an increasingly broad range of high-growth sectors, reducing reliance on slower growth verticals and enhancing resilience across market cycles. Our success this quarter was supported by some of the standout events across our portfolio that reflect the breadth and depth of our industry reach. These include Kbiz, a cornerstone in the design and construction vertical, the Prosper Show, a leading in e-commerce seller engagement, and the International Pizza Expo, a critical event in the food service space. Positive feedback from attendees consistently reinforced the high quality and value that these events deliver, affirming their role as key opportunities for industry leaders to connect, to engage, and transact. Given our performance in the first quarter and current sales pacing, we remain on track to achieve our full year 2025 guidance while remaining vigilant in monitoring external factors that could influence our trajectory from here. Building on this momentum, we're seeing increasing rebook rates for Q1 2026, clearly reflecting the trust our customers place in our platforms and the ongoing ROI delivered by our events. Early commitments not only enhances our forward visibility, but also underscores the resilience of our business model. Even as we…

Thank you, Herve, and good morning. Turning to our results for the first quarter, which is our seasonally largest quarter of the year. Total revenue was $147.7 million compared to $133.4 million in the prior year quarter. Organic revenue in the first quarter increased 5.6% year-over-year to $139.2 million, driven by strong growth in organic revenues from our connections business, which improved 6.6% versus the prior year. First quarter adjusted EBITDA, excluding insurance proceeds, was $53.6 million compared to $39.8 million in the prior year period, an increase of 34.7%. The increase is attributed to continued cost management and operational efficiencies in the quarter and the benefit of the InsureTech Insights acquisition and its London event. This equates to an adjusted EBITDA margin of approximately 36.3% for the quarter. Turning to expenses, on a reported basis, SG&A was $54.1 million versus $55.5 million in the prior year quarter. The year-over-year decline is largely due to lower compensation and travel expenses in both our content and commerce businesses, offset by incremental expenses from acquisitions. In the first quarter, we generated $10.8 million in free cash flow, excluding event cancellation insurance, as compared to $3.8 million in the prior year period due to the higher adjusted EBITDA in the quarter. Underlying free cash flow was even stronger than reported, as some one-time fees related to our January refinancing were expensed through the P&L in the quarter, reducing reported free cash flow by $5.5 million. Additionally, because of the timing of the InsureTech Insights acquisition and its London event, cash for the event was collected prior to the close of the deal, while the associated revenue was recognized post-close. The cash value was received by Emerald through a working capital adjustment in the purchase price, rather than through typical deferred revenue. Had we…

[Operator Instructions] And your first question comes from the line of Barton Crockett with Rosenblatt. Please go ahead.

I was -- I guess a couple of things I was interested in. One, I was wanting to drill down a little bit more on the comment you made there at the end about your guidance assuming some of the kind of trade war potential impacts. I think, as I recall, I think you guys were talking last quarter about assuming a reduction in international visitation that was somewhat at odds with the early trending, which was not showing that. I was just wondering if you could give us an update in terms of, are you seeing international attendance fall off? And how is that kind of consistent with or different than what's embedded in your guidance?

Yeah, to answer that question directly, Barton, and thank you for the question. As we said, we're reiterating our guidance based on what we're seeing. We're watching things very closely. As I mentioned, and as you know, our platform offers a really strong ROI. And in these times, customers are looking for alternatives that -- where they can increase their sales, where they can meet their customers, they can get more leads. And so, our platform, ours and the industry's platform is really efficient and effective for that. So, the diversity of our portfolio, the strength of the platform, and what we offer our customers allow us -- and what we're seeing in terms of the pacing that we're seeing for balance of year and into next year allows us to remain confident. Having said that, we have to watch things very closely because things are constantly changing and it's -- we have a responsibility to stay on top of what's going on from a trade war perspective and other factors that can impact our business.

And one thing to be clear about, right, our initial budget and guidance did imply international revenues -- revenues from international exhibitors to be down, right? So, we had that in our initial plan as a buffer against the unknowns that began to emerge as we moved through January and February of this year. We had our revenue from China and Canada to be down. That's in our -- in the forecast that we had and that we continue to have. And at the same time, as we mentioned in the script, there are countries that on a relative basis are better positioned post the noise around tariffs and we are seeing increased sales from those countries. Now, they're smaller as a percent versus China and Canada, which are two largest country exposures, but it helps offset some of the impact and is one of the things that allows us to continue to pace towards our plan for the year.

But I guess what I was wondering is, are you actually seeing the declines that you expected from China and Canada and Canadian exhibitors?

Yes, we are. We are seeing the declines we expected from Canada and from China. And that's the reality both in terms of exhibitors and visitors. We are seeing that impact. But as I mentioned in my opening remarks, the international team is hunting where tariffs are less of an issue. And so, we are increasing attendance as well as sales from countries like Turkey, UAE, and Brazil as three notable examples.

I think the other thing to reinforce, while we've talked about it as a long-term opportunity because of our underweight international relative to others, and it is, at times like this, it's a bit of a benefit, right? And the reality is that the vast, vast majority of our portfolio are domestic trade shows and the vast, vast majority of our exhibitors are domestic exhibitors and the vast, vast majority of our attendees are domestic attendees. And so, we're talking about, about 10% of exhibitors, and it's equivalent of broader attendees at our shows as a percent. And so, the volatility there has had smaller impact on us than it might be on other companies that have more exposure to the international markets.

And then another thing I was just kind of curious about, with the EBITDA just put up in the first quarter, but retaining guidance, that would have the first quarter as a percentage of full-year EBITDA above 40%, I believe, and that would be higher than it has been for the past couple of years as a percent of the year. Is there anything that has just seasonally made the first quarter bigger as a percent of the year in the mix of shows, maybe the acquisition of InsureTech, or would that suggest maybe you're pacing a little better than your guidance this early part of the year?

So, the InsureTech deal surely helped. It did add a show, but between InsureTech and This Is Beyond, we are adding shows throughout the year. I think in this quarter in particular, relative to last year, we also benefited from $3 million of shows coming in from the second quarter. That stays second quarter last year, then in 1Q this year, you could see that in the organic growth reconciliation. And obviously, as you know, our overhead is consistent throughout the year. So, more shows and more contribution margin from events in a quarter will flow through basically all of that to the bottom line because our underlying SG&A is set up to manage the portfolio throughout the year, irrespective of the timing of revenue recognition for the quarter. So, that helped as well, but we've also been managing our costs tightly through the environment through last year, as you know, which was slightly disappointing to us in the revenue outcome at the end, and we've maintained that through this year. That has allowed us to have a very strong flow through of the revenue growth to the bottom line in the first quarter. But I want to be clear. The first quarter came in as we expected, and tracking to the guidance range that we talked about, and albeit to the higher end of the guidance range, but we've built in, as we've said now a couple of times, we've built in a buffer and expectation around the environment that captures the entire guidance range. And so, it's one of the things that allows us to say definitively that we are on track to our guidance for the year.

Your next question comes from the line of Allen Klee with Maxim Group. Please go ahead.

Just on something you just said somewhat recently on one of the benefits of the first quarter was InsureTech. A couple of things on InsureTech. Did it show up in EBITDA in the first quarter? And then they typically have three conferences, I think, and if there was one in March, there's one in June. When is the third one, and is it reasonable to assume that the next two are similar size to the one that just happened? Thank you.

So, InsureTech won an event, took place in the quarter. In the press releases, you can see in the reconciliation of organic revenue growth, we had a $5 million benefit in the quarter from acquisitions. That's largely InsureTech. I think there's a couple of very small things that kind of rolled from last year, but that is the main event, an M&A in the quarter. There are two other events. June is New York, and in the fourth quarter, there's an event in Hong Kong. The London event and the New York event are similar in size. The Hong Kong event is a much newer event and is still in kind of the scaling mode and is meaningfully smaller than London and New York. In terms of EBITDA, yes, it was in EBITDA. What I was, so we recognize the revenue, we recognize the expenses, and we got the EBITDA benefit for the period that we own the event. But in the script, and I'll just repeat it because it's an important topic. In the script, I was trying to highlight the impact on free cash flow. And the way acquisition accounting works is, for the revenue that still needs to be delivered in the future, if contracts are signed and deposits are made, those deposits go towards the future revenue. They come to us in what's called a working capital adjustment. And so we true up the purchase price for the ongoing needs and deferred revenue of the business so that everyone is equal. And because the deal closed so soon before the event, the vast majority of the cash collections happened before we closed the deal. So it doesn't flow through cash flow from operations for Emerald. But we still have the cash because the cash was given to us at the close of the deal as part of a adjustment to purchase price. And so it shows up in cash flow from investing. And so it throws off just in the first year of acquisition, it throws off the free cash flow calculation as it stands on the financial statements, cash flow from operations minus CapEx, because it's not in cash flow from operations, it's in cash flow from investing. But on a pro forma basis, we had owned it the whole period. And in 2026, when we will own it for the whole period, we would have had the full benefit of that. So we're trying to get some incremental insight on the real underlying cash generating power of the business.

And then This Is Beyond, I think they do around seven events globally, are all seven of them -- how many of them are you going to be capturing in 2025? And is there -- you mentioned two in May, but how does that spread out? And they're kind of similar sizes.

So we will capture all of them in 2025. There are two in the second quarter, there's one in the third quarter, and there are four in the fourth quarter. The two largest events, one is in the second quarter and one is in the third quarter.

And then is there any commentary just on how to think about difference in seasonality for the quarters going forward?

Sure. Ultimately, there are a lot of moving parts, both with acquisitions and with the new movements in the schedule. Sometime an event is in April one year, it's March the next year, so it shifts quarters. That's the $3 million scheduling change in the quarter that you can see in the organic revenue growth reconciliation. Ultimately, our first quarter, if you just look at our guidance, it's about a third, give or take, of the year. Q2 and Q3 are our smallest quarters. They're also, if you look at the overall portfolio mix, they're also where some of our weaker performers are relative to the strong performers, and so they also have a lower growth profile in those quarters. And right now, we're looking at Q2 at about a quarter of the revenue for the year and Q3 at about 20% of the revenue for the year. And then the remaining revenues in Q4, and then Q4 again has a strong mix of the portfolio, and we would expect improved growth again. That looks more like Q1, frankly, than we would see in Q2 and Q3 that don't have much growth profile at all at this point based on the mix of events in the quarters. But then you get back to the full year, which again, tracking to our guidance range and implying the growth that we're talking about there.

And so This Is Beyond, are you planning to fund that from cash on the balance sheet completely?

Yes. Yes, we are.

And for InsureTech, I don't know if the queue came out. I didn't see it before the call.

The queue should come out in the next 24 hours or so. So just dotting some I's and pressing some T's, but that'll come out shortly and all the information will be disclosed in there.

And just one last question. This was a great, very good quarter. So congrats. One of the things you mentioned of the performance was continued expense discipline. Can you talk about how you're thinking about that going forward?

Yeah, let me take that. Hi, Allen. It's Herve. I think, and we've talked about this in the past, Emerald has traditionally been more of a federation of different businesses. And what we have done is we have consolidated it onto what we're calling the Emerald platform. And so what that has allowed us to do is to really find efficiencies across the entire business. So that's one key area of focus. The second key area of focus is we're testing with some applications of artificial intelligence to allow us to be more effective and efficient. And so we've launched some applications, particularly in our content business and for our marketing teams that allow them to operate with more efficiency. And lastly, we've talked also in the past about the addition of a procurement function that has allowed us to really benefit significantly from really looking at all of our contracts across the entire business and really increasing the Emerald buying power by buying centrally for Emerald as a company as a whole, as opposed to where in the past, various events and various businesses were doing work on their own and we had multiple contracts with sometimes the same vendor. And so that is an area that we continue to focus on. We have been able to achieve some good savings from the procurement work and we're actually adding some, we've just added an additional resource because we believe there is incremental opportunity in the business. So those are the three kind of key areas that we focused on.

And just to reinforce one thing that we've talked about for a long time, right? We believe this business is scalable at higher incremental margins. And part of our plan is, as you know, to show meaningful steps forward in EBITDA margins this year, next year, the year after by leveraging the investment we've made in the core platform, in the overhead of the business that we believe that we can manage more events effectively with the platform and have the underlying overhead grow at a much lower rate than revenue overall. And so, part of Q1 is seeing that play out. It'll average out a little bit over the course of the year, of course, based on the seasonality of the business quarter to quarter. But it is one of the things that is driving forth behind our view of at least a couple of 100 basis points of margin improvement this year.

Maybe just one other follow-up. Since you mentioned AI, do you have any early data points or anecdotes of the benefits you might've gotten from starting with it?

No, we don't. I don't have any specific data points, but what we have is we basically have a number of, we've implemented a number of applications. And I mentioned one, which is really around the marketing and the content business, but there are others across the business. Even our legal function is using some AI. We've got a number of different areas that are, I wouldn't even say testing because it's further than testing. They're now -- in market, it started with a test and we've realized some efficiencies. And so, we've rolled them out more aggressively across all of our marketing people and many of our content people, our legal teams. And so, we have somewhere like five or seven different applications that are in market today. In terms of specific measurable outcomes, we don't have any to report as of yet.

That concludes our Q&A session. I will now turn the conference back over to Herve for closing remarks.

Thank you very much. So, in closing, I want to thank you all for your time and participation. And as I said, I'm pleased with the first quarter performance and current sales spacing for the balance of the year and early 2026 to remain on track to achieve our full year '25 guidance. But I am mindful of navigating the macroeconomic pressures that we've talked about. Having said this, I'm excited as we look ahead to continue to realize the benefits of our strategy, of our investments, to deliver greater value to our customers, to find a greater opportunity for our people and expect double-digit revenue growth for our shareholders. So, with that, I want to thank you and say goodbye.

This concludes today's conference call. You may now disconnect.