Q2 2023 Getty Images Holdings Inc Earnings Call
Speaker 1: entertaining music
Speaker 2: Good afternoon and welcome to Getty Images, second quarter, 2023 earnings conference call. Today's call is being recorded.
Speaker 2: We have allocated one hour for prepare remarks and Q&A.
Speaker 2: At this time, I would like to turn the conference over to Stephen Canner, vice president of the Restor Relations and Treasury at Gidea Images. Thank you, you may begin.
Speaker 3: Good afternoon and welcome to Getty Images 2nd quarter 2023 earnings call.
Speaker 3: Joining me on today's call are Craig Peters, Chief Executive Officer, and Jen Layden, Chief Financial Officer. So…
Speaker 3: As noted in today's press release, the financial results for the second quarter ended June 30th, 2023, and related comparisons to prior periods included in this release are preliminary. The financial results are preliminary.
Speaker 3: The company expects to file a form 12B25 for the Securities and Exchange Commission to disclose that it will not be able to file its form 10Q by its due date of August 14, 2023, and may not file within the five day extension period allowed by the form.
Speaker 3: The delay in filing the TENQ is due to the company's independent auditors requiring additional time for additional audit processes in response to a comment arising from an inspection of the audit work papers of the company's 2022 financial statement.
Speaker 3: As of this date, we are not aware of Nor has our independent auditor advised us of any material misstatement to the 2022 financial statements.
Speaker 3: We would like to remind you that this call will include forward-looking statements within the meaning of the private security litigation reform act of 1995.
Speaker 3: These statements are subject to various risks, uncertainties and assumptions, which could cause our actual results to differ materially from these statements.
Speaker 3: These risks, uncertainties and assumptions are highlighted in the forward looking statement section of today's press release.
Speaker 3: Links to these filings and today's press release can be found on our investor relations website at investors.gettyimages.com.
Speaker 3: During our call today, we will also reference certain non- GAAP financial information, including adjusted EBITDA.
Speaker 3: Adjust it even to margin.
Speaker 3: Adjust it even though it's less capex.
Speaker 3: free cash flow and currency neutral growth rates. We use non- GAAP measures in some of our financial discussions as we believe they assist investors in understanding the core operating results that management uses to evaluate the business.
Speaker 3: Reconciliations of GAAP to non-GAAP measures, as well as the description, limitations, and rationale for using each measure can be found in our filings with the SEC.
Speaker 3: After our prepare remarks, we will open the call for your questions.
Speaker 3: With that, I will hand the call over to our Chief Executive Officer, Craig Peters.
Speaker 3: Thanks, Steven, and thanks to everyone for joining our Getty Images second quarter, 2023 earnings call.
Speaker 3: I will start by addressing the quarters business performance and progress at a high level before Gen takes you through the full second quarter financial results.
Speaker 3: The second quarter of 2023 reported revenue was $225.7 million.
Speaker 3: representing a year-on-year decline of 3.3% on a reported basis and a currency neutral decline of 2%.
Speaker 2: Our adjusted EBITDA finished at $66.5 million for the quarter.
Speaker 3: with EBITDA more heavily impacted by legal costs associated with previously disclosed litigation. While we continue to see increased utilization of our content and increased customer commitment overall, these numbers are not what we wanted to finish the quarter. Macroeconomic conditions are pressuring our agency business. The writer and actor strikes have also impacted our entertainment business and our media and production customers.
Speaker 3: While these factors are largely outside of our control, we are not happy with our performance and are committed to elevating our sales execution in the face of challenging market conditions.
Speaker 3: We were pleased to add US soccer as a new partner in a multi-year agreement and renew our agreements with Major League Baseball and the Try To Back at Film Festival.
Speaker 3: It has also been great to see the stellar execution of our world-class editorial team on the ground in Australia and New Zealand, covering the FIFA World Cup. As the competition's authorized photographic agency, it's a designation, Getty Images has held since 2009.
Speaker 3: On the AI front, we continue to play to the long-term, and I'm pleased with the progress we are making in partnership with NVIDIA to build and launch a high-quality, commercially viable, fully indemnified, creator-responsible generative AI service that can sit alongside our other highly differentiated industry-leading services.
Speaker 3: We are now in limited alpha and expect a launch later this quarter.
Speaker 3: We're also excited to expand the deployment of our natural language search to better surface our pre-shot content in response to customer needs.
Speaker 3: Our pre-shot content continues to offer a compelling customer value as it's free to search.
Speaker 3: Substantially more time efficient and provides for a unique level of creativity, authenticity, and quality.
Speaker 3: Using natural language processing, we now return a much broader set of high-quality results, even against the most complex search strings. For those that are browser to see this in action, I would encourage you to go to iStock.com and search
Speaker 3: Colorful umbrellas seen from below hanging over a street. And wait to see the results. Then try the same at other content providers.
Speaker 3: When asked about what keeps me up at night, my answer is always the same, execution. It is entirely within our control. It is a more difficult environment and our execution needs to match it head on. My colleagues and I are committed to elevating our performance throughout the second half and we remain focused on building for the longterm through differentiated and high quality offerings required by our customers and through the preservation of our extremely unique assets.
Speaker 3: With that, I'll hand the call over to Jen who will take you through the more detailed financials. As Craig mentioned, our second quarter results were disappointing, with revenue impacted by ongoing macroeconomic pressures, challenges in our agency business, and adverse impact from the Actors and Writers Strike.
Speaker 3: and with adjusted EBITDA also impacted by ongoing litigation costs. I'll begin by reviewing some of the key operating metrics, or KPIs.
Speaker 3: Note, today's press release contains information on all seven of our KPI. All KPI metrics are as of the trailing 12 months, or LTM period, ended June 30, 2023, with comparisons to the LTM period ended June 30, 2022.
Speaker 3: As a reminder, beginning with our Q3 2022 results, we made two go forward changes to our customer data reporting. I'll highlight the impact of these changes on total active annual subscribers and on total purchasing customers, which are the KPIs more meaningfully impacted by those changes.
Speaker 3: We will anniversary these changes in the third quarter and will have likes for life comparisons thereafter.
Speaker 4: Total purchasing customers were 830,000 compared to 840,000 in the comparable 12 month period, through in large part to the changes to previously discussed customer data reporting.
Speaker 4: Absent the reporting changes, total purchasing customers would have been 839,000. On a sequential basis, total purchasing customers remain steady from Q1 levels.
Speaker 4: We delivered another quarter of significant growth in active annual subscribers, adding 93,000 to reach 182,000, or growth of approximately 104% over the car's funding period in 2022. Apps and the customer data reporting changes noted a moment.
Speaker 4: The strength and annual subscribers was driven by e-commerce offerings, including growth of our smaller i-stock annual sub, and the newer un-slash plus subscription, as well as steady growth in our premium access subscription.
Speaker 4: Notably, we replaced the substantial progress in our efforts to expand our geographic footprint in various markets, leveraging our e-commerce subscription offering to attract over 23,000 new annual subscribers across our growth markets in Latin, APEC, and D'Amea.
Speaker 4: Our growing next-of-revenue from subscription products exceeded 50% for the third, straight quarter and grew to 51.8% up from 50.7% in Q1 and from 48.2% as of Q2 2022. Our revenue retention rate for our annual subscriber customers was a healthy 98.5% compared to 101.9% in the LTM period and at June 30th 2022. The slight decline in our revenue retention rate.
Speaker 4: was primarily driven by lower revenue retention rates on some of our smaller e-commerce subscription customers. Paid download volume was by 1.1% to 94 million year-over-year, speaking to the continued customer value being delivered through our offerings.
And last, our video attachment rates rose to 14% from 12% in Q2. 2020 -two.
While we continue to see steady growth in this metric, it remains a key growth opportunity for us as we continue to focus on executing across increased customer awareness of our video offering, improved search and site prominence for our video content, and upselling a video into subscription.
continue to see steady growth in this metric, it remains a key growth opportunity for us as we continue to focus on executing across increased customer awareness of our video offering, improved search, and site prominence for our video content, and upselling a video into subscription. Turning to our financial performance.
In addition to some of the adverse revenue impacts from macro agency and the US Hollywood Strikes, previously mentioned.
Our Q2 results were also impacted by foreign currency headwinds from a stronger U.S. dollar.
Primarily with respect to the hero and the pound.
These headwinds drove differences between reported and currency neutral performance, although more moderate than the prior few quarters.
Assuming rates hold relatively steady to where we see them today, we expect foreign currency to turn to a slight tailwind in the back half of 2023.
Total revenue was down 3.3% year on year on a reported basis and 2% on a currency neutral basis.
While we have commented on some of our revenue headwinds this quarter, I'd be remiss to not also highlight continued positive momentum across our subscription business, our new customer acquisition growth, the 10th consecutive quarter of growth in our corporate sector,
and healthy performance across our KPIs. Our annual subscription revenue as a percentage of total revenue, we rose to 51.8% in Q2, up from 48.2% in Q2 of 2022.
This equates to year-on-year growth of 4% on a reported basis and 5.5% on a currency neutral basis, driven by further gains across our premium access and e-commerce offerings.
Creative revenue was 141.3 million, down 3.7% year on year, and 2.3% on a current sea neutral basis.
Our agency business, which fits entirely within creative, was found double digits since quarter due to macro conditions and a softer ad market, and is the primary driver of the decline in creatives.
Annual subscription products within Creative grew 6.5% year on year and 8% on a current signature troll basis.
Within our ECOHMRS business, we had strong gains in our annual Istock subscription offering, which grew by 16.9% on a reported basis, and 15.7% for insinutrials.
The games were driven by the success of our customer acquisition efforts across core and growth markets, coupled with some contributions from upsizing our existing monthly or all-acquired customers into annual offerings.
Custom content, which leverage is getting into the global network of contributors to create cost effective, customized, and exclusive content to meet specific customer needs through 8.4% year on year, or 10.8% currency neutral.
Q2 editorial revenue was $80.3 million, down 3.2% year on year, and 2% on a currency newsroom basis.
driven by results across our sports, news, and archive verticals.
The largest decline was in sport, where we have seen reduced activity in the crypto and NFT space, as well as challenging year-on-year compares due to one-off events in 2022.
Breaking down our performance across our major geographies, we posted here on your currency neutral growth of 4.5% in Apex and 0.3% in Amia, while the Americas were down 4.5%.
Revenue less or cost of revenue as a percentage of revenue remained consistent and strong at 71.9% in Q2 compared with 72.1% in Q2 of 2022, with a slight decrease driven primarily by variations in products next.
Total SGA expense of 107.7 million was up 12.2 million, this quarter, with our expense rate increasing to 47.7% of our revenue up from 40.9% last year.
The higher year on your expense, what primarily due to higher legal expenses types were previously disclosed and ongoing litigation, largely expected to be concentrated in the first pass of the year, and also due to higher staff costs, which they, if year, included 11.9 million of stock-based compensation.
related to the vesting of employee restricted stock unit and earn absurres compared to 1.4 million of equity-based comp in Q2 of 2022 prior to our return to the public markets. Excluding stock-based compensation at GNA was 42.5% of revenue compared to 40.3% in the prior year.
Further excluding the litigation expense, which totaled $7 million in a quarter or 310 basis points of revenue, S-GNA would have declined in both dollars and as a percentage of revenue from the prior year. That as a result of proactive cost management measures.
This plan included a hiring reduction and optimization of our marketing deployment. With total marketing spend down 4.2 million and dropping as a percentage of revenue to 4.7% from 6.4% in Q2 of 2022. We anticipate maintaining these plans through to the end of the year. On a current financial basis, adjusted EBITDA was down 8.9%.
within SGA expense.
Excluding the litigation costs, we would have delivered 80 basis points of margin expansion.
CapEx was $13.9 million, down from $14.1 million in the prior year period.
CapEx has a percentage of revenue with 6.2% versus 6.1% in the prior year.
Adjusted EBITDA less CapEx was $52.5 million compared to $59.9 million in Q2 of last year.
Adjusted EBITDA less CAPEX margin with 23.3% in Q2, down from 25.7% in Q2 of 2022.
Free cash flow was $27.9 million, up from $16.8 million in Q2 of 2022.
The increase in free cash flow primarily reflects working capital changes related to the timing of receivables.
Free cash flow is stated met of cash interest expense, 23.2 million EQ2, an increase of 2.9 million over the prior year.
Cash taxes for the quarter came in at $11.8 million, a decrease from $14.7 million in Q2 of 2022. Our ending cash balance on June 30th was $121.3 million, up $4.5 million from Q1 of 2023.
and a decrease of 92.5 million from our ending cash balance in Q2 of 2022.
That year over year change in our cash balance reflects total debt paydown of 330.4 million on our USD term. Inclusive of a $22.6 million repayment in the second quarter of this year. We ended the quarter with a net leverage of 4.4 time.
representing nearly a half a turn of leverage reduction in a one year period.???
As of June 30th, we had total debt outstanding of $1.418 billion, which included $300 million of 9.75% senior notes, $662.2 million USD term loan with an applicable interest rate of 9.84%.
456.1 million of Euro term loan converted using exchange rates as of June 30th, 2023 with an applicable interest rate of 8.625%.
Year to date, we have applied 45.2 million or over 100% of our free cash flow toward debt paydown. Demonstrating our ongoing commitment to further deliver to the balance sheet. Based on the foreign exchange rates and applicable interest rates on our debt balance as of June 30th, and taking into account the 355 million of interest rates swap agreement. And last week's $20 million debt repayment, our 2023 cash interest expense is expected to be about 122 million.
Now turning to our guidance for 2023. Based on our performance through the first half of this year.
ongoing macroeconomic and agency sector pressures, expected impacts from the US Hollywood strikes, and litigation costs, we are revising our guidance.
We expect revenue of 920 million to 935 million, down 0.7% to up 0.9% year on year, and on a currency neutral basis, down 0.7% to up 1%.
Assuming current FX rates hold, embedded in this guidance, does an expectation that FX will have an overall neutral impact on foliar revenue.
This includes the $10.7 million negative impact from the first half of 2023, turning to an estimated tailwind of approximately 10.5 million in the second half of 2023. This includes approximately $3 million of benefit in the third quarter.
We expect adjusted even of 292 million to 303 million down 3.8% to 0.3% year on year, on a reported basis, and on a current senior school basis. Included in the adjusted EBITDA expectation is a relatively neutral impact from FX for the full year.
Please note, built into this guidance are costs related to ongoing litigation and costs to operating as a public company. This includes the litigation cost, which for this year, we expect to largely be concentrated in the first half of 2023. I'll turn it back over to Craig for some closing comments before we begin our Q&A. Thanks, Jen. For over 28 years, Our futuresGetty-?IES Campus pet empoweree Decide to improve their own emancipation response. Create. Create.
We are laser focused on execution and believe we have the strategies and team in place to navigate through the current uncertainty, capture exciting growth opportunities, and drive long-term shareholder value. With that operator, please open the call for questions. And at this time, we will be conducting a question in the next session. If you would like to ask the question, please press the star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
You may press star 2 if you would like to remove your question from the queue. Participants use the speaker equipment and may be necessary to pick up your handset before pressing the star keys. And our first question, come from the line.
Ron Josey with Citi Bank. Please proceed with your question. Hi, this is Jake on for Ron. Thanks for the question. So first, really given the agency sector pressures with the comment of revenues down double digits,
Could you talk to us more about the mix shift to corporate because you're clearly seeing traction in ramping subscriptions. Maybe you could remind us of the the sent mix corporate and agency. And then just second, on the writer's strike.
Could you talk to us what your like how you how customers in the media space are responding and And then how you're factoring in
There's that slowdown into your guidance given clearly there's some uncertainty around how long it'll last. Thanks so much.
Sure, thanks Jake. I'll start in the agenda. Feel free to chime in with anything. So as Jen noted, the corporate segment has been one that it had been delivering growth for us. Ten kin, second of quarters in a row. That growth, we haven't disclosed, but it obviously doesn't fully offset for the more recent.
agency declines, which we think are largely driven by macro pressures, but historically it has more than offset for kind of the segment declines that have persisted in agency over recent time periods. We would say that we've seen a more challenged corporate environment.
in the quarter. We've seen some, you know, deal timelines shift out. You know, we've seen, you know, slightly reduced inbound, but it's a very durable segment. It's one that continues to grow, and it's one that continues to be in subscription.
which gives us a lot of forward visibility on it. So, in the short term, it's kind of net decline relative to the creative shift into the corporate market and away from the agency market over the long haul. It has been a net positive to the business and we expect that to continue to be a net positive.
are basically putting put on hold. So those could be movies, those could be television shows, those could be other theatrical productions, those could be award shows, those could be red carpet events and such. So those have kind of had an impact over Q2. We explain.
year. So obviously we're hopeful that the parties are able to come together and resolve that on a more immediate basis but right now the guidance is reflective of a continuation that strike through the year end.
Jen, anything that you would add?
No, I think that's right. I think we took a conservative view to guidance as Craig noted, and we are assuming that strike goes through your end. And we just saw in the past few days, big events like the MUs have already been pushed out by several months. So that's the approach we've taken. I think Jake, on your...
Next shift question, agency corporate. You've probably heard us speak to agency being roughly 20% of our revenue in recent history. We're seeing that dip below 20%. So while we have exposure there, certainly, you know, it is by far not the largest piece of our business.
Thanks a lot. That's helpful. Our next question comes from the line of Mark Zajowiec with the Benchmark Company. Please proceed with your question.
Thank you. I pray you high level question and then Janet just follow up on the description business. In terms of
Craig, you talked about execution as a priority. And I'm curious that obviously starts with the bar that's set, I'm curious if you're current.
guidance for flex sort of a, you know, worst-case scenario at the low end, which I think helps fulfill that execution priority. And then, Jen, on the subscription business, is this wondering if you could perhaps share what?
or quantify what the mix of subscription is within creative and editorial separately and then you're obviously seeing some strong
but you're not seeing it on the revenue side and your AR-PS is down 40%. So, subscription grows 100% AR-PS down.
40%, to us means that premium access isn't quite scaling, perhaps as fast as you'd like. So if you could maybe touch on what sort of, maybe turn that around as well, thank you. Thanks for the question, Barb. So I'll take the first and then can let John respond to the ARPS and subscription question. So I would say that we've taken a conservative view to the second half with respect to guidance. We would certainly hope from an execution standpoint that we beat the bottom end of that. I think, again, my view is there are opportunities out there. They take a little bit longer in this environment.
that customers are satisfied with our solution. We're seeing increased downloads, so our downloads in the quarter were up 1% year over year. So we're seeing signs that there are opportunities there. We just need to up our game and execute better over the second half in order to hopefully step over.
of things in the RPS and really the commerce elements to that.
Yeah, hi, Mara, how are you? So in terms of the mix of subs, creative and editorial, both are north of 50% in annual subscription on the subscription side, and you're probably looking more specifically at our active annual subscriber metrics. So continued.
New customers coming onto subscriptions, we're seeing a lot of growth in some of those smaller e-commerce subscriptions. So that could be both new customers, that could be customers who were previously consuming a la carte or monthly on iStock that were getting into those smaller annual subscription products. Importantly, you know, we're also starting to really make some traction in some of our growth markets, specifically MedAIM, APAC, and Nia, we're driving actually new subscriptions in those markets. And you might remember we've talked about geographic expansion being one of our key growth levers. We're excited to see that we're tapping into those markets and we're doing it.
with annual subscription. So, you know, we're really happy with this metric and the growth that we're seeing. You mentioned PA. PA continues to be, you know, well over a third of our revenue or not seeing any deterioration there. We continue to see growth in PA, which is our largest subscription.
largely in our enterprise customers, larger customers, we still have growth there as well. And we have opportunity to continue to expand premium access as well. And I would just add, Mark, that as you look at our average revenue per subscriber, historically our larger customers have been kind of more converted into subscription. And so therefore the opportunity to continue to add subscribers has been
That is where we are getting the positive shift in terms of commitment, but it does bring the average revenue per subscriber down, but that is not due to loss of subscribers on the premium access or on the larger side. It is more about the opportunity to get more commitment, higher spend per customer in aggregate through those subscriptions as Jen outlined. Thanks Craig, Jen, appreciate it. Our next question comes from the line of...
Before we carpenter with JP Morgan, please proceed with your question. Thank you. I had one for you Craig and one for Jen. Maybe Craig, could you expand on the video partnership that's in limited testing, anything around the different ways you're thinking about commercializing the product in the different ways that monetize?
And then, Jen, for you, just on the Hollywood striking back again, you wait a frame, you know, how big the entertainment vertical is for you. And if that impact felt mostly editorial or is it also creative? Thank you.
Yeah, Corey, I'm happy to pick up the first and hand it to Jen on the second. So, with respect to NVIDIA, I've kind of mentioned, you know, we're taking a very long-term view to AI. And this is a product that we have been working on with NVIDIA for quite some time now. It is one that when we bring it to market, it's going to be commercially viable. So, what do I mean by commercially viable? It's built to the rightness, so you won't run into any issues in terms of using the resulting outputs.
on a commercial basis. It's creator responsible. In essence, we will be making sure there's payment back to the creators that gave us the content that it's trained on. It will be indemnified for our customers, which means our customers can use it knowing that Getty Images is actually bearing the risk of the content that's produced and it'll be incredibly high quality.
And getting to that solution takes a lot of time work, takes a lot of partnership within video. In terms of the commercialization of that, I think I mentioned it at the outset, well, I can't go into the specific terms of our agreement with within video, it's a partnership. And we will share in the resulting revenues that we generate. Get images will be the predominant go-to-market path through our Salesforce.
and will generate revenue. Now it's not gonna generate a ton of revenue out of the gate, but it's one that we think of the long haul, is incredibly well positioned to compete in the space, and over the long haul, will generate material revenues back into this business. And we think that's the right structure for the relationship and the right structure for the business overall over the long term as generative AI continues to be something that we think has significant opportunities over the long term. And then Jen, if you wanna pick up on the entertainment side of things and the impacts there. Yeah, so for entertainment, you know, as you know, the editorial, the better sort of our...
and entertainment for customers on subscription. So hard to quantify a specific piece of the revenue at any given point that we can attribute to entertainment but suffice it to say that entertainment, you know, typically is an equal parts, sport, entertainment, and news. When we think about that one third of revenue, but again, you have to temper that with over 50%.
of our revenue setting into locked-in subscriptions, right? Which means if entertainment downloads shift down, you might see, you know, that same amount of revenue just shifting into different content. That said, as we talked about, we have conservatively assumed that that strike goes all the way through to the end of the year. That impact's not just that entertainment piece of our business, but also our media clients.
So as we see film, production, broadcast start to slow down, that has an impact on media clients, which doesn't necessarily fit in totality in that entertainment space. Yeah, and I would just add, Corey, that as you look at the numbers, it impacts both editorial and creative.
So an example would be the evening talk shows, so the late night talk shows. They will consume a lot of the creative content as they're telling jokes and setting things up. And so that's an example where you can see how creative content will actually flow through.
then creative, but it does impact both parts of the business. Thank you, Luz. Our next question comes from Alino, Tim Nolden with Miquari. Keep with me, Richard. Hi, thanks. I wonder if you could just give us a little bit more color on the delay in the 10Q filing. If that's possible to do, I know you said it's at this point not looking material, but if you could just give us any indication on what it is related to. In addition, you mentioned that most of the litigation costs are first half already, so any updates you could give us at least on the timing of that situation. Thanks. Yes. Hi, Tim. So on the delay of the filing, as you just heard us.
talk about the prepared remarks also disclosed in our earnings release. The delay of the queue is due to our independent auditors requiring some additional time to do additional audit processes. That is all in response to a comment arising from a PCAOB inspection, which was of the audit work papers of our 2022 financial statements. So importantly, as of today, we are going to be discussing the
we're not aware of nor have our independent auditors advises of any material misstatement to the 2022 financial statement. So what I can add to that is that our teams are working closely with our independent auditors to provide any and all assistance and information that's going to help them complete their work as judiciously as possible.
And then on the litigation, that was your second question. So yes, litigation costs largely concentrated to the first half, specifically in the second quarter. That comment that we're making with respect to those costs being largely concentrated in the first half is not an indication of where we are in that litigation process, but has more to do with the fact that we've got DNL insurance that will start to kick in.
and absorb any balance of ongoing litigation costs there. So that's not a commentary on where we sit with that litigation, it's more about insurance kicking and insurance to cover those costs.
All right, thank you. All right, I would just, I would say that it's highly concentrated to the warrant litigation. And that did move faster than we thought. We actually, it's a good thing that we'll be able to hopefully put this to bed soon, but it's one where the.
case has been moving faster than we would have predicted. And that's a tough thing to actually predict is the pacing of cases through the docket. So much more related to the warrant side of things.
Thanks. Our next question comes from the line of Brett Feldman with Goldman Sachs. I'll proceed with your question. Thanks, too, if you don't mind. Craig, I would appreciate if you could elaborate a little more on the execution opportunities that you see. If we were to get questions from clients around examples, I guess what I'm thinking is to what extent does this relate to just maybe better blocking and tackling around opportunities and processes and initiatives that are already in flight?
versus maybe a little more focused on getting something off the drawing board and into the market so you can benefit from them. And then the second question is, you know, we obviously have heard from the agencies throughout this earning cycle about this slow down and tech spending. Is that specifically what's flowing through to your agency business? You're just stealing that downstream.
Or is there any other exposure or unique pressures you might be feeling that we're not thinking enough about? Thank you. Great, thanks, Brett. On the execute, Brett, first, I would say there are things that we're executing quite well again. So I think Jen mentioned our subscriptions. We're seeing again an increased consumption, the launch of natural language processing, the progress we're making on AI.
the rest of world execution in terms of penetration, their custom content, cost management, as well as our marketing efficiency, and continue to drive new customers, continue to drive more customers in the subscriptions and doing that at lower spend levels. So there's a lot of things that the business is doing well. I think.
You know, my view is really concentrated to the sales front where we need to step up, you know, our outbound activities We need to move agreements along to close on a more expeditious manner and we need to tighten up around that and And and and so that's one of the things that we're really focused in on it's not dependent upon
more long term revenue item. It's about, you know, hand-to-hand combat on the sales side of things.
And in a more difficult environment, you need to work 20% harder to get to the same outcome. And that's what we're doing, and we're starting to see some of those outcomes. I think we talked about some segments where we've got challenge, and in some cases, you have to go through and evaluate what you're getting from those customers, relative to maybe some discount agreements that you've had in place. And
You know, be very candid in the conversations with customers that maybe those discounts aren't warranted at the current spend levels and how do you adjust that and work towards getting back to something that is more reflective of performance. So we need to basically, you know, continue to execute on the sales front.
And I think it's one where, we don't control the external environment. We can't really solve for a writer strike or an actor strike, but we can go in and up our game. On the agency front, I don't think it's just in technology spend. So I think...
What we've seen with a lot of the agencies is that they've been doing okay top line revenue, but they're seeing a lot more growth from the media side of the business, although they've been seeing pullback on the tech media side of things, but they're seeing growth in PR and data and consulting and events and ad tech, and they're not really seeing growth in the creative side of their businesses, which is where our product...
and the marketplace. So hopefully that gives you the color on all the agency side of things.
Thank you. And this concludes the... Mr. Reed, we have reached the end of the question and answer session, and this also concludes today's conference, and you may disconnect your line at this time. Thank you for your participation. Thanks, everybody.