Q3 2023 Getty Images Holdings Inc Earnings Call
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Good afternoon, and welcome to Getty images. This culture of 2023 earnings call.
Today's call is being recorded.
We have allocated one hour for prepared remarks and Q&A.
At this time I would like to technical or the cheap Stephen Kennedy Vice President of Investor Relations and Fisheries I'd give you images. Thank you you may begin.
Good afternoon and.
And welcome to Getty images third quarter 2023 earnings call.
Joining me on today's call I, Greg Peters, Chief Executive Officer.
And Jen Leighton Chief Financial Officer.
Before we begin we would like to remind you that this call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These statements are subject to various risks uncertainties and assumptions.
Which could cause our actual results to differ materially from these statements.
These risks uncertainties and assumptions are highlighted in the forward looking statements section of today's press release and in our filings with the SEC.
Links to these filings in today's press release can be found on our Investor Relations website at investors Dot Getty images dot com.
During our call today, we will also reference certain non-GAAP financial information, including adjusted EBITDA adjusted EBITDA margin.
Adjusted EBITDA less capex.
Free cash flow and currency neutral growth rates.
We use non-GAAP measures and some of our financial discussions as we believe they assist investors in understanding the core operating results management uses to evaluate the business.
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.
After our prepared remarks, we will open the call for your questions.
With that I will hand, the call over to our Chief Executive Officer, Greg Peters.
Thanks, Steven and thanks to everyone for joining our third quarter 2023 earnings call.
I will start my remarks by addressing the recent court ruling with respect to claims by warrant holders how long are these back.
We disagree with the ruling.
We believe Getty images acted in line with our obligations under the warrant agreement and with Federal Securities laws.
We are appealing the portion of the judgment in favor of the plaintiffs.
Proceed with the appeal, we are securing a surety bonds totaling 111% of the damages award.
Limiting any impact to our day to day operations.
We expect to begin amortizing the annual cost of the surety bond in Q4.
Okay.
Ken will take you through the company's.
Third quarter financial results, but as usual I will touch on the performance.
At a high level.
Third quarter 2023 reported revenue was 229 3 million.
Representing a year on year decline.
0.5% on a reported basis and a currency neutral decline of one 3%.
Our adjusted EBITDA finished at $80 3 million for the quarter.
This reflects a reported year on year increase of three 4% on a currency neutral increase two 5% with EBITDA benefiting from disciplined actions taken and maintained since earlier this year to manage costs in the current environment.
Well it was good to see the settlement of the Writers' strike.
The actor strike continue to equate to significantly reduced content production and PR activities across our media and entertainment passengers for the entirety of Q3.
While difficult to predict how quickly that business can ramp up following last week's settlement. The actor strike, we expect to see an adverse impact related to the strike or at least the end of this year.
With increased global uncertainty, we saw the U S dollar strengthened relative to our expectations and we continue to see weakness across our geographic and customer markets.
As a result, our reported results lagged our estimates.
And we expect the strong dollar.
Persist through the fourth quarter.
We're also facing a tougher Q4 compare.
The unique timing the 2022 men's World Cup and the 2022 U S elections.
As a result of these factors Jan will take you through updates to our full year guidance.
As a company, we've previously seen and navigated similar challenges over our almost 30 year history.
We remain focused on our customers on our execution and on investing in the long term, but being cost discipline in the short term in light of our near term environment.
So with that as a backdrop I'd like to highlight some of the progress we've made within the quarter.
In partnership with Nvidia, we launched our generative AI service at the end of the quarter.
The service is truly unique and addresses fundamental customer needs.
Our model is trained solely with Getty images best in class content.
Dressing the legal risk that is pervasive in many other models, they're trained with third party intellectual property scraped from the web.
We also believe this equates to higher quality output as a cake is only as good as its ingredients.
With generative AI by Getty images users can be confident that the content, they generate and safe to use in commercial settings and will not include any trademark brand.
Characters more identifiable people.
It also does not produce deep fakes or emulate the style and specific artists, which we believe is valued by our editorial and creative customers respectively.
We are rewarding our contributors with an ongoing share them each and every dollar we earn from services.
Last but certainly not least the service and all of the top let's come with Getty images uncapped.
Indemnification.
In terms of the economics customers painted generate versus download, which better aligns to our cost and recognize the value of ideation.
Initial customer feedback and engagement with the service has been really positive and we have already introduced new features and services such as being able to prompt in over 70 languages.
Gains with a limited set of customers to custom trained models and their IP and brand needs.
Alongside our amazing pre shot offering and custom content. We're excited to offer a complimentary new service that helps our customers elevate their creativity saving them time saving them money.
Does not explain the legal risks.
We continued to drive increases in our annual subscriber count primarily through I stock and on spot.
We grew our annual subscribers by more than 80% and more than 35000 of those subscribers were from our targeted growth markets outside of North America and Western Europe.
We renewed our agreement at the authorized photographic agency with the rugby World Cup to deliver an industry, leading service in the creation and distribution of a world class sports content.
Any images is the official photographer or photograph and partner to over 120, the world's leading sports governing body.
And clubs, who come to us for our industry, leading expertise in that operation.
Winning photographic talent, an unrivaled global distribution platform.
Also in the quarter, we were pleased to partner with BBC studios launching platform accelerating our archival supply chain.
Platform gives our customers the opportunity to search PVC archive content online and opens up access to more than 57000 newly digitized program.
The platform is a significant breakthrough in making the BBC archival content more accessible for our customers around the world and a key progress starting with our within our overall video strategy.
While it is a constant I would be remiss, if I did not call out the efforts of our world class team of partners, who risked and sacrifice to cover events around the globe.
Whether these are events and atrocities and the middle East Crane, the drama in the U S capital and courts.
The extreme weather events or natural disasters.
Humanitarian wildlife crisis in.
The list goes on and I'm extremely proud of the work and the important role it plays to engage and inform the public.
And with that I'll hand over to Jim to take you through the more detailed financials.
As Craig highlighted during the third quarter, we continued to see pressure on our topline Portland increased FX volatility, but overall stability in our adjusted EBITDA margin and strength across our underlying operating metrics.
I'll start by talking about some of our Kpis note as always today's press release contains information on all seven of our Kpis, which are reported I think the trailing 12 months or LTM period, ending September 30th 'twenty to 'twenty three with comparison to the LTM period ended September 30.
2020 two.
Total purchasing customers were 826000 compared to 837000 in the comparable period.
A slight pullback at least see some drop off in our Ala carte purchase or volume I think we'll see.
And you had to shift.
Sure.
Our revenue per participant customer remains strong at.
At approximately $1100 per customer.
We delivered another quarter of impressive growth and annual subscribers, adding 95000 to reach 260000.
An increase of approximately 88% over the corresponding period in 2022 yield primarily by our e-commerce subscription, including or I've got annual and our ice class class subscription.
This marks our fourth consecutive quarter of annual subscriber growth in excess of 50%.
We continue to execute well against our geographic expansion effort with approximately 35000, new annual subscriber and Eric whereas market across Latam.
Paas enemy.
Sure.
We also continue to see growth in our core market, which includes the U S, Canada, France, Germany, U K, Japan, and Australia, where we added approximately 60000 new annual subscriber.
Annual subscriber growth continues to expand our mix of revenue from subscription products.
Greg.
Five 9% in the third quarter up from 51, 8%, So two and up from 49, 4% as of Q3 2022.
Our revenue retention rate for annual subscribers with 94, 5% compared to 103% in the 2022 LTM period.
The decline was primarily driven by lower revenue retention rate and some of our smaller e-commerce subscriber and a reduction in Ala carte revenue from customers that previously exceeded their subscription downloads cap.
Hey, download volume was up approximately 1% at 95 million.
Our video attachment rate continues to grow ending the quarter at 13, 7%.
So 12, 7% in Q3 2012 call.
We continue to see opportunity to drive video adoption across our customer base.
That's to see this metric continue to tick up.
Turning to our financial performance with revenue result, reflecting adverse impacts from the Hollywood strike ongoing macro economic pressures and a still challenging agency business.
Revenue results were also impacted by a more muted year on year benefit from FX than we expected due to a strengthening U S dollar with respect to the euro and the crown and the second half of the quarter.
Assuming rates hold relatively steady to where we see them today, we now expect a more limited foreign currency tailwind in the fourth quarter than previously anticipated.
Total revenue was down 45% year on year on a reported basis and one point, where you put them on a currency neutral basis.
Included in these results are certain impacts the timing of revenue recognition, which contributed approximately 440 basis points to the year on year revenue growth in the quarter.
With positive momentum in our subscription deadhead annual subscription revenue increased 12, 6% on a reported basis and 11, 8% unacceptable.
Driven by further gains across our premium access and e-commerce subscription offering.
Creative revenue was $145 2 million flat year on year and down 8% unexplained in itself.
Creative results reflect pressures.
Segment, which was down double digits year on year as well as impacts from the Hollywood strike with production houses largely dormant in the quarter.
[noise] creative revenue from annual subscription products grew 16, 9% year on year and 16% on a currency neutral basis.
Led by premium access our largest subscription product.
Within our e-commerce business, our successful customer acquisition efforts drove growth in our annual I've talked subscription product at this point.
So you put that on a reported basis and 14, 2% currency neutral.
We also saw eight 1% year on year or eight 3% currency neutral growth in our classroom content subscription, which provides customers with cost effective customized exclusive and project specific content.
Editorial revenue was 79 9 million a decrease of 2.3% year on year and three 3% on a currency neutral basis.
The decline was driven by archive and entertainment, which were negatively impacted by the Hollywood strike as well as a challenging year on year from here into 2022, and then that's just Queen Elizabeth sooner O N U S midterm elections.
However, we did see gains in sport, which benefited from excellent extraordinary coverage of the 2023 you saw women's World Cup.
Geographically, we saw year on year currency neutral growth three 8% in India, while the Americas, and APAC were down three 7% and three 9% respectively.
Revenue less cost of revenue as a percentage of revenue remains a consistent metric for us with Q3 at 73, 4% compared with 72.2% Q2 2022.
Total SG&A expense was 97 point range.
That's a $5 7 million year on year with our expense rate increased to 42, 4% of our revenue up from 39, 7% last year.
The higher year on year expense was due to higher southpaw, primarily $9 2 million of stock based compensation related to the vesting of employee equity award compared with 2.8 million at the end.
When he bathtub in Q3 of 2020.
Excluding stock based compensation SG&A decreased year on year, 28% to $88 1 million in the quarter.
As a percentage of revenue SG&A, excluding stock based comp was 38, 4% of revenue.
Roughly flat to 38, 5% of revenue in the prior year period.
The 0.8% year on year decline in spend is largely a result of the proactive cost actions executed earlier this year, which remain in place.
The larger of these cost actions are cross marketing reduction and a hiring freeze.
We anticipate maintaining these actions at least through to the end of the year.
Adjusted EBITDA was $80 3 million up 3.4 put that year over year and up two 5% on a currency neutral basis.
Our adjusted EBITDA margin was 35% an increase of 130 basis points from 33, 7% in Q3 2022.
This expansion in EBITDA margin is a testament to our fiscal discipline.
We maintain cost actions earlier this year at the spur indication of top line headwind.
Capex was $12 4 million a decrease of $3 3 million from Q3 of last year.
Prior year Capex included costs for our London office relocation.
Acquisition of imagery related to the Q4 2022 launch of our unsurpassed subscription.
Driving some of that year on year.
Capex as a percentage of revenue was five 4% versus six 8% in the prior year.
Adjusted EBITDA less Capex was $67 9 million compared to $62 million in Q3 last year.
Adjusted EBITDA less Capex margin was 29, 6% up from 26, 9% Q3 22.
Great Paas flow was $12 8 million down from $33 2 million in Q3 2022.
The decrease in free cash flow, primarily reflects the impact of our year to date financial performance and working capital changes related to the timing of receivable and payable.
Free cash flow it's David.
Interest expense of $38 3 million okay great.
Increase of $2 6 million over the prior year.
Cash taxes for the quarter was $7 6 million an increase from $4 7 million Q3, 2022.
Our ending cash balance on September 30 was $113 5 million down 7.8 million okay.
<unk> 2023, and an increase of 41 7 million from our ending cash balance in Q3 of 2022.
As of September 30th we had total outstanding debt of 1.383 billion, which included 300 million of 975% senior notes.
$639 6 million U S term loan with an applicable interest rate of 999% and $443 6 million of Euro term loan converted using exchange rates as of September 30th 2023, with an applicable interest rate of nine.
Perfect.
Year to date, we have applied $47 $8 million for debt paydown, including a voluntary $20 million payment in the third quarter.
We ended the quarter with a net leverage of four two times down from four four times at year end 2022.
We'll continue to remain disciplined in deploying our capital to what we believe is its highest and best use with a continued emphasis on our balance sheet optimization and further deleveraging.
Based on the foreign exchange rate and applicable interest rate on our debt balance as of September 30th.
Taking into account 355 million of interest rate swap agreement.
Our 2020 three cash interest expense is expected to be about $122 5 million.
Now turning to our guidance.
Based on our expectation that the fourth quarter will continue to see topline and FX pressures, we are lowering our 2023 guidance as follows.
We expect revenue of 900 million to $910 million down 2.8% to one 8% year over year and on a currency neutral basis down two 3% to one 2%.
Assuming current FX rates hold the revenue guidance includes an overall FX headwind of about $5 4 million in the full year 2023. This includes the $8 5 million negative impact year to date and an estimated tailwind of approximately $3 1 million in the fourth.
Quarter of 2023.
We expect adjusted EBITDA of 287 million to 295 million down five 8% to three 4% year over year on a reported basis.
And down five 4% to 2.9% well that's fair.
And that's all basis.
Included in the adjusted EBITDA expectation is an approximate $1.6 million adverse impact from FX.
This includes the coupon 9 million year to date in Paas and an estimated tailwind of approximately $1 3 million in the fourth quarter of 'twenty two 'twenty three.
In addition, the revised adjusted EBITDA guidance reflects the changed how we are classifying legal fees associated with the warrant litigation.
The $6 4 million in legal fees incurred year to date through Q3.
And the $1.1 million incurred in the fourth quarter of 2022 were previously reported within SG&A.
These expenses are now included in loss on litigation, which is the below the line item and is excluded from adjusted EBITDA.
As I just mentioned and this guidance assumes continued macroeconomic pressure.
Adverse impacts from the Hollywood right and pressures on our agency business through Q4.
It also assumes cost related to other ongoing litigation and increased cost are tied to operating as a public company.
We believe that the proactive approach, we have taken to control costs and our ability to stay nimble, while focusing on improved execution will best position the company to deliver on the updated guidance and the current economic environment.
With that operator, please open the call for questions.
Thank you ma'am, ladies unchanged really people not be conduction a question and answer session.
If you touch off the Christian space, starting with one on your telephone keypad.
A confirmation tone will indicate that demand is in the question queue.
He may play still choose to leave the question queue.
Our first question comes from Ron Josey of Sushi Pease go ahead.
Great. Thanks for taking the questions, maybe one for Craig and one one for Jen Craig on the on the Hollywood strikes now, they're close to being done and understood. The impact continue here into <unk> help us understand a little bit more how this might play out into 'twenty four as things normalize going forward I think that'd be helpful. And then Jen on on the cost side with gross.
<unk> is expanding in the quarter and 35% EBITDA margins talk to us about the outperformance maybe in gross margins in and whether this can continue going forward. Thank you.
Great. Thanks, Ron and I appreciate you, making time for the call and appreciate the questions.
On the strike first let me start off by saying I think it was the impacts have been a bit more severe than even Jan and I and the management team.
Projected in our last call. So we've seen a softer part of the business within entertainment and media and production side of things didn't even we forecast.
That.
It's a good starting point for context, especially as we look into Q4, we're not expecting any significant reversal of that in Q4.
We do expect that we will start to see the reversal of that in Q1.
Likely still some ramp.
As production has come back online.
So we probably won't be at full kind of full back to business across those those elements.
The business until probably Q2, so that's our best current view based on the conversations that our teams are having.
Cross the industry. So I guess, what we're saying is is it was a little bit more impactful in a full Q3 than what we projected at the end of Q2.
Or we're seeing at the end of Q2 Q4, we expect that to continue.
Expect improvements over Q1, but not fully back to 2% to 100% until Q2.
Yeah and on the margin side gross margin you're right a slight tick up you know to the 73 per cent range, we've seen that that number before as you know, we're we're pretty consistently around 72% that can swing up or down nearly entirely due.
So to the product mix in the quarter them, but you know as we think about what what we would expect to see that land bad I would I would still think that'd be in the 72% range similar on the EBITDA side, 35% of.
That is higher you know, we we definitely have a history of north of 30%, 35% is a touch higher.
And then certainly what we've been trending too, but as we spoke to in the prepared remarks, we did have a significant amount a very proactive cost measures that we took pretty early on in Q2 are.
At the very first sign.
What we thought was going to be some top line pressure. So we're seeing the benefits of that margin, but again as we think about what.
We would expect to see that stabilize that I would you know anchor ourselves down to that 32% give or take range is what we'd expect to see normally.
Okay. Thank you correct. Thank you John.
Thank you.
Our next question comes from Danny Hudson of J P. Morgan. Please go ahead.
Hey, Thanks for the questions I just have two can you maybe talk about what you've been seeing from your news media customers. Since you started the middle East conflict and then for the second last quarter. You mentioned you saw corporate customer deal timeline shift and slightly reduced inbound can you maybe speak to what you saw from those customers and three Q. Thanks.
Got it thanks, Danny again.
Again, thanks for making the time for the call on the news media side of things with respect to the middle East.
It's a it's a critical story.
For our clients to be covering them, we are very grateful not only for the staff that we have in our in that market are covering the crisis, but also for.
For our partners that are investing in risking.
Their staff in those markets, what I would call out specifically, our Asian friends press and and the dollar was two critical partners to our coverage there.
So it isn't it is something that is consuming a lot of cycles in the media there for it it is something where we're seeing a lot of our imagery be utilize to narrate that story.
And provide visibility into that story.
And but I wouldn't expect it to have a financial benefit.
Benefit.
Within the company.
Really it's a shift in the new cycle into that consumption and that consumption actually.
From our perspective.
To be quite costly to maintain the coverage.
In order to support it so you know operating in and in war zones is not something that is.
It is without cost so.
I think you know getty's, playing its normal and important role within bringing visibility into those events, we don't take that lightly in any way shape or form and we're very proud of our staff and we're proud of our partners.
To take on that coverage.
On the comp side of things in terms of the corporate segment I would say that we saw a continuation.
What we saw in and spoke to in Q2.
And there were certain parts of the corporate market. We mentioned technology. We've mentioned some of the things like the crypto space where that softness.
<unk> carried over and continues.
But I I don't think he got it got worse I did mentioned you know on the media Entertainment and production side of things that was probably it was worse in Q3 than than what we projected and certainly what we saw in Q2, but in the corporate we're continuing to still see that kind of conservatism.
And continuing to see that kind of concentrated within certain submarkets admit more I am hopeful that we start to see that loosen up a bit.
But at this point in time, we didn't see anything really different from Q2 to Q3 in those in those areas.
Okay.
Thanks.
You got it.
Our next question comes from Mark off the benchmark company keeps COVID-19 hit.
Hi, good evening, Craig or John.
Craig just curious what the pipeline is developing for you Jen AI products and if you could make a.
Tangible in any way in terms of revenue.
Rough timeline I would certainly be helpful.
John just a question on revenue year over year revenue impact from high.
Stop high stock subscription conversion too far.
But from all parts and just trying to get a sense of the volatility that was in the quarter and then net of bad if.
If you look at your last 12 months subscription retention declined about 400 bps quarter over quarter or roughly 95%.
So I'm just curious what might be driving that is that a premium access.
King revenue declining in absolute dollars or what might be driving that thanks.
Yeah, Okay I'll throw at a journal on the ice stock item I'll handle the Rev retention I'll, just reiterate some agenda meet remarks or upfront, which a lot of that is our push into smaller subscriptions, which do have a a naturally lower rate of revenue retention, but we've also seen some of our our media.
Clients in the premium access side of things not moved into overage on their deals so.
So typically our deals are not unlimited they carry caps with them and as the media industry continues to struggle.
Not only due to the strike, but also due to the macro add landscape we've.
We've seen some some pullback on those as Jen mentioned in her remarks.
On the Gen AI side of things I'm, not going to be able to mark give you any specifics at this time, what I can tell you is what we said in the prepared remarks, which is we're seeing really good engagement with the customers. We're hearing really good feedback I spent a good chunk of the quarter actually engaged with with our customers in fact today Omnicom put up.
Our press release of their own about how they were engaged with us in the early stages of the development process and and moving in now into the commercial side of things, but it's one that we are selling a service that is fully indemnified and legally clear so it.
It is one that goes through the hoops that you would expect.
In terms of the corporate contracting side of things, whether it's legal or sourcing et cetera to make sure that these these technologies ours is cleaning and as advertised.
So we're still working through our pipelines, but the good news is those pipelines are growing I still would set the expectation that we you know we don't expect any material revenues in this calendar year and we'll start to probably try to give you a better visibility of how that's progressing.
In 2024, but I would still expect it to be a fairly limited amount of revenue to the company overall in 2024.
Don do you want to take that back.
Yeah, Yeah, and the subscriptions piece I think I think Craig you touched on their revenue retention, but more broadly.
You know that Bruce and annual subscribers is actually it is something we feel really good about we mentioned in the prepared remarks, it's a fourth straight quarter, where we've seen the year on year growth and that counts being north of 50% and now lets face value. That's a great metric, but when you pull that apart you know at least 50 per se.
In the quarter of the new annual subscribers that we've taken on a new customers to Getty images.
It's really positive for us over the long term as Craig noted, we do see a step back in our revenue retention rate as a result of some of these subscribers being on those smaller e-commerce subscription, but when they look at you know a broader metric, which is just revenue her purchasing customer that remains fairly consistently.
North of 1100 dollar so you know overall.
Overall it is a good metric for us and and you know we're excited to see where that continues to go.
Mark I think one of the things that we haven't talked about that we're actually field.
Feel pretty good about in the business, we know that there's a lot of impacts strike in currency and items, but we're seeing paid download growth within the business, we're seeing customer accounts and volumes hold up quite well.
Being good solid renewals across across the mix and you know I think what we're seeing when we look in and watch what we're seeing elsewhere in the marketplace of which you cover some of those.
And we're not seeing the same levels of decline.
Across our licensing business and our creative business is actually holding up quite well as Jen mentioned, our revenues are down more in the editorial side of things for the reasons, we referenced earlier, but we are seeing really good durable kind of customer commitment into the business at Cross Creek.
We're seeing that across our e-commerce business.
<unk> up on a relative basis quite well. So those are some areas that we feel good about where I can point to that you know some strength and hopefully we will get to add back some things in the coming quarters as the markets normalize a bit.
So that's all helpful. Maybe I could squeeze one last one here.
The agency business.
Just curious how that pace on a quarter over quarter basis.
Revenue growth in <unk>.
Starting to see that sort of baseline.
Concentration Theres, obviously come down I'm just curious if.
It was kind of seen trough there. Thanks.
We were in Q3, we didn't we did not see the trough as Jen mentioned, we will continue to be down double digits in that that segment of the business I would say it was a little bit more uneven and so there is some good news in there and the combined with some bad news, but.
But so I hope that some of the activities that we're taking on in an engagement with those agency clients around things like generative AI.
We are going to bode well I'm going out into the future, but in Q3, we were we were down kind of consistent to where we were in in Q2.
And but hopefully again that we'll see some some benefits of that going forward.
Got it alright, thanks very much appreciate it.
Hum.
Thank you ladies unchanged and interest reminding you cannot ask Christian you're welcome Tristan I didn't want to pay for itself in the question queue.
Unexpressed She comes from Tim Nolan of Macquarie. Please go ahead.
Hi, Thanks very much.
I ask us for some follow up on the warrant situation. Please I'm just if you could help explain a bit more what the.
Financial impact to you is if it's $88 million or so of damages you have $60 million of insurance I guess against that then do we need to worry about that net difference there as a.
Potential payout that you're going to have to make and if you could explain how the surety bond works. Please you mentioned amortization of it I should give the terms or just how that works in general they're very helpful. Thanks.
Our past adjourn on the bond side of things I'll do my best to cover off on on the initial parts of the judgment and the exposure with respect to the warrant. So first off I'll reiterate we disagree with the ruling and we have every intent to appeal.
We think the facts are in our favor.
And we think we did everything right under the warranty under the warrant agreement as well as with the Securities law. So.
That's first of all I think that you know this is not something that we view is settled.
With respect to the the war and I think you largely got it right Tim.
Insurance up to that 60, there's.
Underneath that it's covered legal costs plus a judgment.
There will be an inflator on the judgment as we appeal if it were to ultimately come to that.
So that's why we're taking a bond that's greater than ultimately the judgment itself.
In order to cover that.
And and so yeah, I mean, the exposure if if we were in fact to lose on appeal and exhaust our options and continuing to take this forward you would basically be looking at those net doesn't that amount.
Right. So around 30 around 30, or 40, 60 tenants around $30 million yourself difference.
Tammy you, probably you probably haven't had a chance yet to come through the filings you have about what you'll see on there is we theft or loss on litigation of about $112 5 million and the net.
Against that is there an insurance recovery of almost 60 million. So in that loss on litigation is gonna be damages, our interests pre and post judgment and then legal fees.
And then as we obtained the bond.
Well will start to amortize the cost of that bond kind of from the time, we placed a bomb through to higher along the balances in place to that same last summer they get shouldn't account.
Okay, and the cost of that bond is roughly in between the one and 2% range.
Yeah, it's hovering around the 1% range.
Okay. Okay, I think I've got the principals there thanks very much.
Right.
Thanks, Tim.
Yeah.
Thank you, ladies and gentlemen that was the final question.
Great well. Thank you all for making time very much appreciated I appreciate the questions and look forward to the next call. Thank you.
Thank you.
Thank you, ladies and gentlemen that concludes todays event.
Thank you for joining us and you may now disconnect your lines.
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