Q1 2024 Shutterstock Inc Earnings Call

May 2, 2024

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star One again I would now like to turn the call over to Chris Xu Investor Relations and corporate <unk>.

<unk>. Please go ahead.

Thanks, Alex.

Good morning, everyone and thank you for joining us for <unk> first quarter 2020.

Joining us today.

Shutterstock CEO Jared.

CFO.

Please note.

The information Youll hear during our discussion today will consist of forward looking statements, including without limitation, the long term effects of investments in our business the.

The future success and financial impact of new and existing products.

Our ability to consummate an acquisition and integrate the businesses, we've acquired EMEA player into our existing operations.

Our future growth margins and profitability, our long term strategy and our performance targets, including 2020 for guidance and long range financial targets.

Actual results were trends could differ materially from our forecast from.

Thank you for standing by my name is Alex and I will be a conference operator today at this time I would like to welcome everyone to the Q1 'twenty 'twenty four Shutterstock 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.

For more information please refer to today's press release, and the presentation material referencing our long range financial targets, which we have posted to our IR website.

Please also refer to the reports we file with the SEC from time to time, including the risk factors.

Risk factors discussed in our most recently filed Form 10-K.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star One again I would now like to turn the call over to Chris Xu Investor Relations and corporate development. Please go ahead.

Discussions of important risk factors that could cause actual results to differ materially from any forward looking statements. We may make on this call.

We'll be discussing certain non-GAAP financial measures today, including adjusted EBITDA and adjusted EBITDA margin.

Adjusted net income adjusted net income per diluted share revenue growth, including by distribution channel on a constant currency basis billings and free cash flow.

Chris Suh: Thanks, Alex.

Chris Suh: Good morning, everyone and thank you for joining us for centers first quarter 2012.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the tables included with today's press release and in our 10-Q.

Chris Suh: Joining us today.

Chris Suh: Shutterstock CEO Jared Shutterstock CFO.

No.

Now I'd like to turn the call over to Paul Hennessy, Chief Executive Officer.

Chris Suh: Information shared during our discussion today will consist of forward looking statements, including without limitation.

Thank you Chris Good morning, everyone and thank you for joining us today.

Chris Suh: Long term effects of our investments in R&D.

Chris Suh: The future success and financial impact of new clinics.

Our last earnings call I laid out the long term targets for Shutterstock 2027, with our commitment of reaching $1 2 billion of revenue and $350 million of EBITDA in 2027.

Chris Suh: Listing product.

Chris Suh: Our ability to consummate an acquisition and integrate the businesses we have acquired EMEA.

Chris Suh: Operations.

Chris Suh: Our future growth margins and profitability.

And now after another successful quarter and a great acquisition, we expect to accelerate our path to reaching that goal.

Chris Suh: Our long term strategy and our performance targets, including 2020 for guidance and long range financial targets.

Chris Suh: Actual results were trends could differ materially from our forecast.

Our business performed ahead of expectations this quarter and I'm pleased to report that we signed a definitive agreement to acquire <unk>, a leading provider of digital creative assets and templates.

Chris Suh: For more information please refer to today's press release, and the presentation materials referencing long range financial targets, which we have posted to our IR website.

As I'll explain in further detail later.

Chris Suh: Please also refer to the reports we file with the SEC from time to time.

This acquisition delivers to Shutterstock and exciting tri sector, a new product that fills a critical gap faster growing audiences and new content types.

Chris Suh: This factor.

Chris Suh: Risk factors discussed in our <unk>.

Chris Suh: Most recently filed Form 10-K.

Chris Suh: A discussion of important risk factors that could cause actual results to differ materially from any forward looking statements. We may make on this call.

So, let's first turn to this quarter's results.

<unk> delivered a strong first quarter with revenue of $214 million and EBITDA of $56 million meaningfully exceeding our expectations.

Chris Suh: Well be discussing certain non-GAAP financial measures today, including adjusted EBITDA adjusted EBITDA margin.

Chris Suh: Adjusted net income adjusted net income per diluted share revenue growth, including by distribution channel on a constant currency basis billings and free cash flow.

The composition of our business continues to evolve with rapid growth in our data distribution and services business, while our content business works to get back to growth.

Chris Suh: Reconciliations of these non-GAAP measures the most directly comparable GAAP measures can be found in the tables included with today's press release and in our 10-Q.

Im excited to provide greater line of sight into our data distribution and services business, but first let's take a moment to talk about what we're seeing in our content business.

Chris Suh: Hugh.

Chris Suh: I would now like to turn the call over to Paul Hennessy, Chief Executive Officer.

As a reminder, our content business includes a range of different asset types and global distribution channels.

Paul J. Hennessy: Thank you Chris Good morning, everyone and thank you for joining us today.

Our result in content in the first quarter were aligned to our expectations and characterized by the same trends we've been experiencing for the past year demand from larger customers is growing and resilient while demand from small and medium sized customers who purchase from us online is muted.

Paul J. Hennessy: On our last earnings call I laid out the long term targets for Shutterstock 2027, with a commitment of reaching $1 2 billion of revenue and $350 million of EBITDA in 2027.

Paul J. Hennessy: And now after another successful quarter and a great acquisition, we expect to accelerate our path to reaching that goal or.

While we have not experienced an end to end recovery. Thus far we are seeing leaned, leading indicators that are extremely encouraging and indicate a return to growth in the back half of the year, even before adding on <unk> exciting products.

Paul J. Hennessy: Our business performed ahead of expectations this quarter and I'm pleased to report that we signed a definitive agreement to acquire in bottle, a leading provider of digital creative assets and templates.

These indicators include continued strength in top of funnel activity with total traffic up 18% year on year.

Paul J. Hennessy: As I'll explain in further detail later.

Paul J. Hennessy: This acquisition delivers the shutterstock and exciting tri sector.

Paul J. Hennessy: The new product that fills a critical gap faster growing audiences and new content types.

Proof that our efforts to drive <unk> growth and additional investments in paid marketing are paying off.

Paul J. Hennessy: But let's first turn to this quarter's results.

This strong top of funnel as well as product experimentation translated into better customer acquisition in Q1.

Paul J. Hennessy: <unk> delivered a strong first quarter with revenue of $214 million and EBITDA of $56 million meaningfully exceeding our expectations.

And removing our free trial offering earlier this year, we eliminated low to no intent shoppers from our business.

Paul J. Hennessy: The composition of our business continues to evolve with rapid growth in our data distribution and services business, while our content business works to get back to growth.

As a result, new and win back customer orders grew 4% year on year.

Paul J. Hennessy: I'm excited to provide greater line of sight into our data distribution and services business, but first let's take a moment to talk about what we're seeing in our content business.

And serving higher intent customers has already begun to show and other health metrics of the business. For example, we're seeing more active customers who download showcasing their engagement.

Paul J. Hennessy: As a reminder, our content business includes a range of different asset types and global distribution channels.

One key recent new product launch is a generative AI subscription customers now have the ability to purchase credits to generate and download AI images directly within our ecosystem through an API. This product leverages the best available models in the market, including Google's imaging open AI solid three.

Paul J. Hennessy: Our result in content in the first quarter were aligned to our expectations and characterized by the same trends we've been experiencing for the past year demand from larger customers is growing and resilient while demand from small and medium sized customers who purchase from us online is muted.

And Amazon has tightened and we can direct generations to a specific model based on our customers' use case in.

Paul J. Hennessy: While we have not experienced an end to end recovery. Thus far we are seeing leaves leading indicators that are extremely encouraging and indicate a return to growth in the back half of the year, even before adding on <unk> exciting products.

In the coming quarters, we plan to offer the full suite of generative asset types, including image video audio and three D generative capabilities.

Paul J. Hennessy: These indicators include continued strength in top of funnel activity with total traffic up 18% year on year.

Lastly, we're making strong progress in bringing our generative <unk> capabilities to market in partnership with Nvidia.

Moving to data distribution and services, our revenue was up 90% in the quarter and made it made up almost 20% of total revenues constituting a larger part of our overall business and well on our way to achieving our targets for Shutterstock 2027.

Paul J. Hennessy: Proof that our efforts to drive <unk> growth and additional investments in paid marketing are paying off.

Paul J. Hennessy: This strong top of funnel as well as product experimentation translated into better customer acquisition in Q1.

Paul J. Hennessy: And removing our free trial offering earlier this year, we eliminated low to no intent shoppers from our business.

Within data it is now abundantly clear that emerging legislation and regulation in the EU and U S will drive demand for Shutterstock ethically sourced licensed <unk> datasets.

Paul J. Hennessy: As a result, new and win back customer orders grew 4% year on year.

Paul J. Hennessy: And serving higher intent customers has already begun to show and other health metrics of the business. For example, we're seeing more active customers who download showcasing their engagement.

There is real momentum towards accepting the reality the copyrighted data content contained better metadata and that retraining a model built on scrape data can ultimately be very costly with additional CPU costs and carries with it potential legal and brand issues.

Paul J. Hennessy: One key recent new product launch is a generative AI subscription customers now have the ability to purchase credits to generate and download AI images directly within our ecosystem through an API. This product leverages the best available models in the market, including Google's imaging open AI solid three.

Shutterstock is uniquely positioned to benefit from this trend towards leveraging ethically sourced license data set for training AI.

With our trust framework solidly in place we are now and continue to be the go to destination for massive scale AI and ml multimodal model training data.

Paul J. Hennessy: And Amazon has tightened and we can direct generations to a specific model based on our customers' use case in.

Paul J. Hennessy: In the coming quarters, we plan to offer the full suite of generative asset types, including image video audio and three degenerative capabilities.

We uniquely have a size and scale in video audio and three D that nobody else can match.

Paul J. Hennessy: Lastly, we're making strong progress in bringing our generative <unk> capabilities to market in partnership with Nvidia.

Now that many of the world's largest technology platforms have done the diligence and selected Shutterstock. We're benefiting from demand from companies that are following the course charted by these leaders and AI.

Paul J. Hennessy: Moving to data distribution and services, our revenue was up 90% in the quarter and made a made up almost 20% of total revenues constituting a larger part of our overall business and well on our way to achieving our targets for Shutterstock 2027.

On the supply side to match the demand we're seeing for data we are focused on growing our base of contributors and the depth and breadth and size of our library.

Our contributor base has increased by over 40% to $3 4 million in the past year alone.

Paul J. Hennessy: Within data it is now abundantly clear that emerging legislation and regulation in the EU and U S will drive demand for Shutterstock ethically sourced licensed both datasets.

And our library of growth is accelerating growing 34% to almost 900 million assets in the last 12 months.

We have never seen contributors and data grow this fast and we believe that the flywheel is spinning faster.

Paul J. Hennessy: There is real momentum towards accepting the reality the copyrighted data content contained better metadata and that retraining a model built on scrape data can ultimately be very costly with additional CPU costs and carries with it potential legal and brand issues.

Within distribution are testing the use cases are now behind us and we have proven that the giffy platform is poised for flight. We are aggressively hiring sales professionals and believe we believe we are well positioned to grow both <unk> advertising business and to monetize it API connections to third parties.

Paul J. Hennessy: Shutterstock is uniquely positioned to benefit from this trend towards leveraging ethically sourced license dataset for training AI.

The business has been winning deals most recently with Anheuser Busch, Sony Pepsico and Universal Studios and we are seeing <unk> increased meaningfully from early test insertion orders, averaging $50000 to newer customers coming in at scale with 200 to $400000.

Paul J. Hennessy: With our trust frameworks solidly in place we are now and continue to be the go to destination for massive scale AI and ml multimodal model training data.

Paul J. Hennessy: We uniquely have a size and scale in video audio and <unk> that nobody else can match.

Paul J. Hennessy: Now that many of the world's largest technology platforms have done the diligence and selected Shutterstock. We're benefiting from demand from companies that are following the course charted by these leaders in AI.

Insertion orders.

Available inventory for sale also continues to grow with media served on Giffy growing at 19% this quarter.

Lastly, within services, we continue to see growing demand for our cutting edge global creative and production Studios solutions.

Paul J. Hennessy: On the supply side to match the demand we're seeing for data we are focused on growing our base of contributors and the depth and breadth and size of our library.

Many of the worlds largest marketers are leveraging our full suite of services from creative strategy to post production and beyond <unk>.

Paul J. Hennessy: Our contributor base has increased by over 40% to $3 4 million in the past year alone.

As proof of our quality, we have recently been selected by a leading global consumer products company as the preferred vendor for all U S based commercial production.

Paul J. Hennessy: And our library of growth is accelerating growing 34% to almost 900 million asset in the last 12 months.

Paul J. Hennessy: We have never seen contributors and data grow this fast and we believe that the flywheel is spinning faster.

Much of our recent demand is driven by our immersive products production solution, which leverages XR and three D and enable the most creative flexible cost effective and environment Bentley sustainable approach around and it's all made possible through the powerful combination of studios and our turbo squid.

Paul J. Hennessy: Within distribution, our test and use cases are now behind us and we have proven that the giffy platform is poised for flight. We are aggressively hiring sales professionals and believe we believe we are well positioned to grow both <unk> advertising business and to monetize its API connections to third parties.

<unk> assets.

Switching gears, let's turn to <unk> as I mentioned at the top of the call. The <unk> acquisition delivers a new product that fills a critical gap expands into faster growth audiences and further diversifies into new content types I'll address each one of these in turn.

Paul J. Hennessy: The business has been winning deals most recently with Anheuser Busch, Sony Pepsico and Universal Studios and we are seeing <unk> increased meaningfully from early test insertion orders, averaging $50000 to newer customers coming in at scale with 200 to $400000.

The <unk> acquisition fills a critical gap in Shutterstock product offering with the addition of an bottle elements to our portfolio.

Paul J. Hennessy: Insertion orders.

Paul J. Hennessy: Available inventory for sale also continues to grow with media served on Giffy growing at 19% this quarter.

Element serves as a one stop shop for fresh diverse and curated content that cut across content types, such as video audio graphics bonds code and web themes templates and markups at.

Paul J. Hennessy: Lastly, within services, we continue to see growing demand for our cutting edge global creative and production Studios solutions.

At $16 50 per month for unlimited consumption elements offers a highly compelling value proposition catering to the needs of creative that fits perfectly between the packs that we have today for episodic users and the high priced meat premium subscribers, we offer the entire Shutterstock library.

Paul J. Hennessy: Many of the worlds largest marketers are leveraging our full suite of services from creative strategy to post production and beyond <unk>.

Paul J. Hennessy: As proof of our quality, we have recently been selected by a leading global consumer products company as the preferred vendor for all U S based commercial production.

Second this acquisition expands shutterstock reach within faster growing attractive audiences, such as freelancers, influencers small agencies and hobbyists all of whom find great value in elements content depth and breath and unlimited consumption offering.

Paul J. Hennessy: Much of our recent demand is driven by our immersive products production solution, which leverages XR and three D and enable the most creative flexible cost effective and environment Bentley sustainable approach around and it's all made possible through the powerful combination of studios and our turbo squid.

And lastly, and vital further diversifies shutterstock revenue into a broader range of content types with more than 80% of elements content downloads attributable to video audio graphics and markups.

Paul J. Hennessy: <unk> assets.

Paul J. Hennessy: Switching gears, let's turn to <unk> as I mentioned at the top of the call. The <unk> acquisition delivers a new product that fills a critical gap expands into faster growth audiences and further diversifies into new content types I'll address each one of these in turn.

We are expanding our offerings to meet this need for multi asset consumption.

Which helps us sustain a more durable content business with faster growth potential within veto shutter Sox revenue from video audio <unk> and other content types will increase from 35% to 45% as a percent of total content revenue.

Paul J. Hennessy: The <unk> acquisition fills a critical gap in Shutterstock product offering with the addition of an bottle elements to our portfolio.

Paul J. Hennessy: Element serves as a one stop shop for fresh diverse and curated content that cuts across content types, such as video audio graphics bonds code and web themes templates and markups at.

The acquisition adds an extremely talented contributor community who have brought a diverse library of 6 million videos 1 million audio clips 500000 design templates 300000, <unk> models, 200000 graphics and funds and 10 million images.

Paul J. Hennessy: At $16 50 per month for unlimited consumption elements offers a highly compelling value proposition catering to the needs of creative that fits perfectly between the packs that we have today for episodic users and the high priced meat premium subscribers, we offer the entire Shutterstock library.

All of which have tremendous potential value for both our creative content customers.

And our data customers.

<unk> will immediately have a meaningful impact on the composition of Shutterstock revenue base Shutterstock subscriber count will more than double to 1.15 million subscribers.

Paul J. Hennessy: Second this acquisition expand shutterstock reach within faster growing attractive audiences, such as freelancers, influencers small agencies and hobbyists all of whom find great value in elements content depth and breath and unlimited consumption offering.

And subscription revenue as a percent of total content revenue will increase from 48% to 55%.

Paul J. Hennessy: And lastly in vital further diversifies shutter Sox revenue into a broader range of content types with more than 80% of elements content downloads attributable to video audio graphics and markups.

In Bartow has successfully built a product that appeals to a highly retentive user base.

56% of element subscriber base, our annual subscribers, who pay upfront and have higher retention rates than monthly subscribers.

Paul J. Hennessy: We are expanding our offerings to meet this need for multi asset consumption.

Beyond excited about this pending transaction and we expect to close in Q3 2024, when we will officially welcome the talented <unk> team to Shutterstock.

Paul J. Hennessy: Which helps us sustain a more durable content business with faster growth potential within veto shutter Sox revenue from video audio <unk> and other content types will increase from 35% to 45% as a percent of total content revenue.

In conclusion, our mission as ever remains the same to empower the world to tell their stories by bridging the gap between idea and execution and to connect customers to the content they need.

Paul J. Hennessy: The acquisition adds an extremely talented contributor community who have brought a diverse library of 6 million videos 1 million audio clips 500000 design templates 300003 D models, 200000 graphics and funds and 10 million images.

Our execution against Shutterstock 2027 is ahead of schedule and we feel extremely well positioned to deliver on our long term targets.

I'll now turn the call over to Jared who will walk through our Q1 results and updated full year guidance for 2024.

Paul J. Hennessy: All of which have tremendous potential value for both our creative content customers.

Sure.

Thank you Paul and good morning, everyone revenue was $214 3 million for the first quarter exceeding our expectations.

Paul J. Hennessy: And our data customers.

Paul J. Hennessy: <unk> will immediately have a meaningful impact on the composition of Shutterstock revenue base Shutterstock subscriber count will more than double to 1.15 million subscribers.

<unk> revenue was down 10% in line with our expectations.

As Paul discussed we feel good about the progress we are seeing and expect to get back to growth. This year consistent with our commentary last quarter.

Paul J. Hennessy: And subscription revenue as a percent of total content revenue will increase from 48% to 55%.

Data distribution and services was up 90% in the first quarter to $40 million driven by exceptionally strong growth in our data offering.

Paul J. Hennessy: In Bartow has successfully built a product that appeals to a highly retentive user base.

The rapidly changing regulatory backdrop around AI combined with the credibility and scale, we now have as a resulting in a clear demand acceleration.

Paul J. Hennessy: 56% of element subscriber base, our annual subscribers, who pay upfront and have higher retention rates than monthly subscribers.

We anticipate providing additional forward looking growth indicators and data distribution and services in the second quarter.

Paul J. Hennessy: Beyond excited about this pending transaction and we expect to close in Q3 2024, when we will officially welcome the talented <unk> team to Shutterstock.

As I review the P&L. Please note that the line items are net of related depreciation and amortization stock compensation and other expense items necessary to reconcile to adjusted EBITDA.

Paul J. Hennessy: In conclusion, our mission as ever remains the same to empower the world to tell their stories by bridging the gap between idea and execution and to connect customers to the content they need.

In the first quarter, we stepped on the gas with respect to sales and marketing at 25% of revenue compared to 22% in the first quarter of 2023.

Paul J. Hennessy: Our execution against Shutterstock 2027 is ahead of schedule and we feel extremely well positioned to deliver on our long term targets.

We made planned growth investments in branding spend and customer marketing across our businesses in the quarter and we expect the pace of marketing spend to continue throughout the year.

Paul J. Hennessy: I'll now turn the call over to Jared who will walk through our Q1 results and updated full year guidance for 2024.

Paul J. Hennessy: Sure.

Jared: Thank you Paul and good morning, everyone revenue was $214 3 million for the first quarter exceeding our expectations.

Product development was 7% of revenue compared to 6% in the first quarter of 2023, reflecting continued investment in our product offerings and ongoing integration of our acquisitions.

Jared: <unk> revenue was down 10% in line with our expectations as Paul discussed we feel good about the progress we are seeing and expect to get back to growth. This year consistent with our commentary last quarter.

We saw solid operating leverage in the quarter, particularly in G&A expenses.

G&A expenses were 10% of revenue compared to 12% in the first quarter of 2023.

Jared: Data distribution and services was up 90% in the first quarter to $40 million.

This is the third consecutive quarter with G&A leverage and Shutterstock is well set up to drive adjusted EBITDA as our business scales.

Paul J. Hennessy: Driven by exceptionally strong growth in our data offering.

Paul J. Hennessy: The rapidly changing regulatory backdrop around AI.

Adjusted EBITDA was strong at $56 million with margins of 26, 1%.

Paul J. Hennessy: And bind with the credibility and scale. We now have is resulting in a clear demand acceleration.

Margins were impacted this quarter by the addition of Giffy and backward as compared to the prior year.

Paul J. Hennessy: We anticipate providing additional forward looking growth indicators and data distribution and services in the second quarter.

The heightened pace of marketing spend in the first quarter as well as $2 million of one time costs associated with the acquisitions of backward and in Novato.

Paul J. Hennessy: As I review the P&L. Please note that the line items are net of related depreciation and amortization stock compensation and other expense items necessary to reconcile to adjusted EBITDA.

Turning to our balance sheet, we had $72 million of cash at the end of the first quarter in.

Paul J. Hennessy: In the first quarter, we stepped on the gas with respect to sales and marketing at 25% of revenue compared to 22% in the first quarter of 2023.

In the quarter, we paid our annual performance bonus and closed on our acquisition of backward for $20 million in cash.

At the time of this report cash balances were back up to $90 million and cash flow generation remains strong.

Paul J. Hennessy: We made planned growth investments in branding spend and customer marketing across our businesses in the quarter and we expect the pace of marketing spend to continue throughout the year.

In terms of capital return, we paid out $11 million of dividends in the first quarter we.

We just increased dividends by another 10% in January to <unk> 30 per share. This is our fourth consecutive year of double digit.

Paul J. Hennessy: Product development was 7% of revenue compared to 6% in the first quarter of 2023, reflecting continued investment in our product offerings and ongoing integration of our acquisitions.

Dividend increases.

As is typical in the first quarter, we also paid $8 million to buy back stock from employees in respect of the taxes on the vesting of their equity awards further reducing share count.

Paul J. Hennessy: We saw solid operating leverage in the quarter, particularly in G&A expenses.

Paul J. Hennessy: G&A expenses were 10% of revenue compared to 12% in the first quarter of 2023.

I'd like to spend a few minutes, providing additional details on the novato before turning to guidance.

Paul J. Hennessy: This is the third consecutive quarter with G&A leverage and Shutterstock is well set up to drive adjusted EBITDA as our business scales.

We believe the <unk> acquisition is an incredibly positive strategic move for Shutterstock consistent with our M&A strategy and historical track record.

Paul J. Hennessy: Adjusted EBITDA was strong at 56 million with margins of 26, 1%.

Paul J. Hennessy: Margins were impacted this quarter by the addition of Giffy and backward as compared to the prior year.

We've acquired a world class content business at an attractive purchase price that is both growing and highly profitable.

Paul J. Hennessy: The heightened pace of marketing spend in the first quarter as well as $2 million of one time costs associated with the acquisitions of backward and in Novato.

As Paul discussed the strategic merits speak for themselves, including product line extension into unlimited multi asset subs audience expansion into faster growing audiences and increased exposure to strategic content types like video and audio.

Paul J. Hennessy: Turning to our balance sheet, we had $72 million of cash at the end of the first quarter in.

Paul J. Hennessy: In the quarter, we paid our annual performance bonus and closed on our acquisition of backward for $20 million in cash.

We're also adding an extremely talented and valuable management team and in Novato.

Paul J. Hennessy: At the time of this report cash balances were back up to $90 million and cash flow generation remains strong.

In connection with the acquisition, we received a commitment for an unsecured $375 million credit facility provided by Bofa Wells Fargo, and citizens consisting of $125 million term loan and a $250 million revolver.

Paul J. Hennessy: In terms of capital return, we paid out $11 million of dividends in the first quarter we.

Paul J. Hennessy: We just increased dividends by another 10% in January to <unk> 30 per share. This is our fourth consecutive year of double digit.

The cost of capital is low and the current rate environment and priced at six 7%.

Paul J. Hennessy: Dividend increases.

Paul J. Hennessy: As is typical in the first quarter, we also paid $8 million to buy back stock from employees in respect of the taxes on the vesting of their equity awards further reducing share count.

Access to low cost and flexible capital is a testament to the robust cash flow generating business, we have built and our future business prospects.

We expect to have approximately $275 million drawn on the facility post the expected acquisition closed in the third quarter.

Paul J. Hennessy: I'd like to spend a few minutes, providing additional details on our novato before turning to guidance.

Paul J. Hennessy: We believe the <unk> acquisition is an incredibly positive strategic move for Shutterstock consistent with our M&A strategy and historical track record.

Expected leverage will be extremely low with net debt to pro forma combined adjusted EBITDA of just 0.7 times.

Paul J. Hennessy: We've acquired a world class content business at an attractive purchase price that is both growing and highly profitable.

Post close we expect to have $100 million of unused revolver capacity to invest in the growth of our business acquire additional companies and returning capital to shareholders.

Paul J. Hennessy: As Paul discussed the strategic merits speak for themselves, including product line extension into unlimited multi asset subs.

In line with our prior deals this transaction is structured as a straightforward 100% cash purchase with no earn outs or other contingencies, allowing us to quickly integrate and focus on our plans for growth.

Paul J. Hennessy: <unk> expansion into faster growing audiences and increased exposure to strategic content types like video and audio.

Paul J. Hennessy: We're also adding an extremely talented and valuable management team and in Novato.

From a financial perspective in Novato is growth accretive to our content business growing revenues in line with the industry average of 5% to 7%.

Paul J. Hennessy: In connection with the acquisition, we received a commitment for an unsecured $375 million credit facility provided by Bofa Citi Wells Fargo, and citizens consisting of $125 million term loan and a $250 million revolver.

Consistent revenue growth is paired with strong profitability of 20% adjusted EBITDA margins, which we believe can go higher as the business scales over time.

Paul J. Hennessy: The cost of capital is low and the current rate environment and priced at six 7%.

<unk> adds meaningful revenue scale and profitability to shutterstock, adding 20% of revenues and 15% to adjusted EBITDA on a full year basis.

Paul J. Hennessy: Access to low cost and flexible capital is a testament to the robust cash flow generating business, we have built and our future business prospects.

For the full year, we are raising our 2020 for revenue guidance to five 5% to 7% revenue growth based on our strong performance in the first quarter combined with the <unk> acquisition, which is expected to close in Q3.

Paul J. Hennessy: We expect to have approximately $275 million drawn on the facility post the expected acquisition close in the third quarter.

Paul J. Hennessy: Expected leverage will be extremely low with net debt to pro forma combined adjusted EBITDA of just 0.7 times.

Data distribution and services is experiencing powerful growth and momentum and content is poised to improve consistently.

Paul J. Hennessy: Post close we expect to have $100 million of unused revolver capacity to invest in the growth of our business acquire additional companies and returning capital to shareholders.

Year on year throughout the course of the year with key data points, indicating a turnaround.

Adjusted EBITDA guidance increases to $245 million to $248 million based on the revenue raise and including $6 million of one time deal and integration costs, we expect to incur.

Paul J. Hennessy: In line with our prior deals this transaction is structured as a straightforward 100% cash purchase with no earn outs or other contingencies, allowing us to quickly integrate and focus on our plans for growth.

With our 2024 guidance updated for the <unk> acquisition.

Paul J. Hennessy: From a financial perspective in Novato is growth accretive to our content business growing revenues in line with the industry average of 5% to 7%.

And that we are pacing well ahead of where we expected we are pacing well ahead of where we expected against our Shutterstock 2027 long range targets of $1 2 billion of revenue and $350 million of EBITDA.

Paul J. Hennessy: Consistent revenue growth is paired with strong profitability of 20% adjusted EBITDA margins, which we believe can go higher as the business scales over time.

We expect to formally update our long range targets with our fourth quarter results.

Paul J. Hennessy: <unk> adds meaningful revenue scale and profitability to shutterstock, adding 20% of revenues and 15% to adjusted EBITDA on a full year basis.

In closing we are extremely pleased with the quarter and the amazing demand we are seeing in data distribution and services.

We believe our turnaround in content is underway and we are thrilled to get the <unk> deal signed.

Paul J. Hennessy: For the full year, we are raising our 2020 for revenue guidance to five 5% to 7% revenue growth based on our strong performance in the first quarter combined with the <unk> acquisition, which is expected to close in Q3.

And <unk>.

An exciting strategic roadmap lies ahead and shutterstock is extremely well positioned to execute on it.

And with that operator, we'll open the line for questions.

Thank you we will now begin the question and answer session.

Paul J. Hennessy: Data distribution and services is experiencing powerful growth and momentum and content is poised to improve consistently year on year throughout the course of the year with key data points, indicating a turnaround.

And I would like to ask a question. Please press star one on your telephone keypad raise your hand and join the queue.

If you would like to withdraw your question simply press Star. One again, if you are called upon to ask your question in a listening via loud speaker on your device.

Paul J. Hennessy: Adjusted EBITDA guidance increases to $245 million to $248 million based on the revenue raise and including $6 million of one time deal and integration costs, we expect to incur.

Go ahead, Sir and ensure that your phone is not on mute when asking your question again press star one to join the queue and your first question comes from the line of Bernie Mcternan with Needham and company. Please go ahead.

Paul J. Hennessy: With our 2024 guidance updated for the <unk> acquisition.

Great. Good morning, Thanks for taking the questions maybe just to Scott would love to just get insights in terms of how we should be thinking about the guidance change for the addition of <unk> versus organic changes to the guidance.

Paul J. Hennessy: And that we are pacing well ahead of where we expected we are pacing well ahead of where we expected against our Shutterstock 2027 long range targets of $1 2 billion of revenue and $350 million of EBITDA.

Sure Bernie and were very pleased in the first quarter out of the gate to be able to meaningfully raise our guidance for the year.

Paul J. Hennessy: We expect to formally update our long range targets with our fourth quarter results.

Paul J. Hennessy: In closing we are extremely pleased with the quarter and the amazing demand we are seeing in data distribution and services.

We.

Meaningfully outperformed our first quarter expectations that we had internally for our business, we outperformed those expectations in the aggregate and in particular, our data distribution and services business significantly outperformed our expectations were effectively rolling that outperformance.

Paul J. Hennessy: We believe our turnaround in content is underway and we are thrilled to get the <unk> deal signed.

Paul J. Hennessy: And <unk>.

Paul J. Hennessy: An exciting strategic roadmap lies ahead and shutterstock is extremely well positioned to execute on it and.

Speaker Change: And with that operator, we'll open the line for questions.

The guidance. We're also rolling in the acquisition of in Novato, assuming that the business is going to contribute about 20% to our revenues for the full year and 15% to our EBITDA for the full year, assuming the transaction closes in the third quarter.

Speaker Change: Thank you we will now begin the question and answer session.

Speaker Change: And I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

So that's the detail I can provide for you and I think we are thrilled to be able to roll in both the deal contribution.

Speaker Change: If you would like to withdraw your question simply press Star one again.

Speaker Change: If you are called upon to ask your question in a listening via loud speaker on your device lease pick up your handset and ensure that your phone is not on mute when asking your question.

Well as the meaningful outperformance in the first quarter.

That's great. Thanks, Sharon and then on the on the DDS business is $60 million still the right number to think about for computer vision. There were some rumors that an apple deal was signed.

Speaker Change: Again press star one to join the queue and your first question comes from the line of Bernie Mcternan with Needham and company. Please go ahead.

Early in the quarter, so I'm not sure how much you can give on specifics.

The Apple deal, but maybe just framing in terms of the 60 million that you referred to prior.

Bernard Jerome McTernan: Great. Good morning, Thanks for taking the questions maybe just the scar would love to just get insights in terms of how we should be thinking about the guidance change for the addition of <unk> versus organic changes to the guidance.

So we're not able to comment on specific customers and we don't have a track record of doing matter or talking about their specific contribution in the quarter. What we can say is the data distribution and services as a whole is is outperforming.

Bernard Jerome McTernan: Sure Bernie and were very pleased in the first quarter out of the gate to be able to meaningfully raise our guidance for the year.

And so that 60 million that we referenced with respect to data your assumption should be that that is going up.

Bernard Jerome McTernan: We.

Bernard Jerome McTernan: Meaningfully outperformed our first quarter expectations that we had internally for our business, we outperformed those expectations in the aggregate and in particular, our data distribution and services business significantly outperformed our expectations, we are effectively rolling that outperformance.

And as we think about our 2027 plan what we've baked in is 20% plus growth for data distribution and services as a whole and 20% growth for each of the components of data distribution and services.

Bernard Jerome McTernan: The guidance. We're also rolling in the acquisition of in Novato, assuming that the business is going to contribute about 20% to our revenues for the full year and 15% to our EBITDA for the full year, assuming the transaction closes in the third quarter.

If the first quarter's indication that growth target is looking conservative we feel really really good about how each of these components is performing and the first quarter was a phenomenal start out of the gate for Shutterstock.

Understood and then just just lastly for me.

Bernard Jerome McTernan: So that's the detail I can provide for you and I think we are thrilled to be able to roll in both the deal contribution.

<unk> expenses, how should we expect those to pace throughout the year I know meadows covering a portion of those at least for part of the year and then a portion of those expenses to it sounds like you guys are going out and hiring a sales force as well so.

Bernard Jerome McTernan: Well as the meaningful outperformance in the first quarter.

Speaker Change: That's great. Thanks shared and then on the on the DDS business is $60 million still the right number to think about for computer vision. There were some rumors that an apple deal was signed.

Just how we should expect maybe just give your profitability to be trending throughout the year.

Sure Bernie So the first thing I would call out is although we are getting reimbursed for many of the cash expenses all of the typical salary and bonus expenses associated with the employee population is hitting our EBITDA.

Speaker Change: Early in the quarter, so I'm not sure how much you can give on specific for the Apple deal, but maybe just framing in terms of the 60 million that you referred to prior.

Speaker Change: So we're not able to comment on specific customers and we don't have a track record of doing matter or talking about their specific contribution in the quarter. What we can say is the data distribution and services as a whole is is outperforming.

We are aggressively hiring for Giffy, we're hiring sales professionals and business development professionals, we're seeing a clear market demand and need and we need more feet on the street to be able to satisfy that demand thats out. There. So we're we're thrilled to be able to making those investments right now.

Speaker Change: And so that 60 million that we referenced with respect to data your assumption should be that that is going up.

Speaker Change: And as we think about our 2027 plan what we've baked in is 20% plus growth for data distribution and services as a whole and 20% growth for each of the components of data distribution and services.

The good news is.

The revenue grows over the course of the year, that's actually going to be a tailwind to our profitability of the business is making losses today. The revenue is growing quickly and we expect to more quickly cover those expenses such that the revenue growth is going to exceed any expenses that we put on from the hiring of the sales force.

Speaker Change: If the first quarter's indication that growth target is looking conservative we feel really really good about how each of these components is performing and the first quarter was a phenomenal start out of the gate for Shutterstock.

And so good fee growth is actually going to allow us to sequentially improve profits in the business and profits for Shutterstock overall over the course of the year.

Speaker Change: Understood and then just just lastly for me.

Understood. Thanks Derek.

Speaker Change: <unk> expenses, how should we expect those to pace throughout the year I know meadows covering a portion of those at least for part of the year and then a portion of those expenses to it sounds like you guys are going out and hiring a sales force as well so.

Your next question comes from the line of Andrew Boone.

Please go ahead.

Thank you for taking my question. This is Matt on for Andrew maybe just back on the data shows business can you just give us any color on just the pipeline there and then as it relates to adding on <unk>.

Speaker Change: How we should expect maybe just give your profitability to be trending throughout the year.

Speaker Change: Sure Bernie So the first thing I would call out is although we are getting reimbursed for many of the cash expenses all of the typical salary and bonus expenses associated with the employee population is hitting our EBITDA.

Does do actually to your data sales business as Ed and Diversifies our data corpus.

Yes.

Bernard Jerome McTernan: We are aggressively hiring for Giffy, we're hiring sales professionals and business development professionals, we're seeing a clear market demand and need and we need more feet on the street to be able to satisfy that demand. That's out there. So we're we're thrilled to be able to making those investments right now.

I'll take that one and I think the.

We don't give a lot of the specifics around.

The particulars around the data business around the pipeline, what's on the comm and what's not I think we've been trying to give much greater line of sight to the to the entire DDS business. That's why we broke that out but what I can tell you is.

Bernard Jerome McTernan: The good news is.

Bernard Jerome McTernan: The revenue grows over the course of the year, that's actually going to be a tailwind to our profitability of the business is making losses today. The revenue is growing quickly and we expect to more quickly cover those expenses such that the revenue growth is going to exceed any expenses that we put on from the hiring of the sales force.

We're seeing a lot of demand.

I referenced the the.

The change in regulatory environment. Some of the early signs that we're seeing and that's all goodness for shutterstock uniquely positioned.

<unk> source content.

Bernard Jerome McTernan: And so give fee growth is actually going to allow us to sequentially improve profits in the business and profits for shutterstock overall over the course of the year.

And customers of all sizes are coming for that content.

You saw the growth in the DDA DDS business and a lot of that is related to data. So what I would just say is we are we are very bullish.

Speaker Change: Understood. Thanks Derek.

Speaker Change: Your next question comes from the line of Andrew Boone.

On that on the DDS side of the house on the <unk> question.

Andrew M. Boone: Please go ahead.

Andrew M. Boone: Thank you for taking my question. This is Matt on for Andrew maybe just back on the data shows business can you just give us any color on just the pipeline there and then as it relates to adding on Nevada what is this.

More content I talked about the growth in content in our in our core business more content diversified content specific content that we maybe not I don't have.

Is all great opportunities to grow our data business and there is interest from data partners in wide variety of content.

Andrew M. Boone: Do actually to your data sales business as Ed and Diversifies, our data corpus.

Andrew M. Boone: Yes.

Speaker Change: I'll take that one and I think the.

And as much as we can give them. So we're seeing real change in that in that market where.

Speaker Change: We don't give a lot of the specifics around.

Speaker Change: The particulars around the data business around the pipeline, what's on the comm and what's not I think we've been trying to give much greater line of sight to the to the entire DDS business. That's why we broke that out but what I can tell you is.

We were wondering if people would be demanding all product types and we're actually seeing a level of insatiable desire for a diversity of content types.

With all sorts of levels of specificity, increasing so we're bullish.

Speaker Change: We're seeing a lot of demand.

Speaker Change: I referenced the the.

And then maybe one more if I could just you talked about the <unk> acquisition.

Speaker Change: The change in regulatory environment. Some of the early signs that we're seeing and that's all goodness for shutterstock uniquely positioned.

Acquisition doubling your subscriber base can you just talk about what opportunities are there just for cross sell thank you.

Speaker Change: <unk> source content and customers of all sizes are coming for that content.

Yes, I think it's all the things you would normally suspecting and an acquisition like that when we've got more subscribers that are more retentive, that's great for the business to the extent that we have content that is not currently offered to involve customers that becomes upside levels of retention, we've talked kind of clearly about.

Speaker Change: You saw the growth in the DDA DDS business and a lot of that is related to data. So what I would just say is we are we are very bullish.

Speaker Change: On that on the DDS side of the house on the <unk> question.

We believe that this could fit very very nicely into our small and medium sized custom.

Speaker Change: More content I talked about the growth in content in our in our core business more content diversified content specific content that we maybe not I don't have.

Customer offering sitting in between packs and larger subscriptions.

There is there is a lot to like in this acquisition and I, just say and you combine that with a great company, that's really well run by a great leadership team with a talented set of employees.

Speaker Change: Is all great opportunities to grow our business and there is interest from data partners in wide variety of content.

We really like the combination of Shutterstock and <unk>.

Speaker Change: And as much as we can give them. So we're seeing real change in that in that market where.

Thank you so much.

Speaker Change: We were wondering if people would be demanding all product types and we're actually seeing a level of insatiable desire for a diversity of content types.

Thank you.

Your next question comes from the line of Agnieszka Mastella. Please go ahead.

Hi, and thank you for taking my question.

Speaker Change: With all sorts of levels of specificity, increasing so we're bullish.

Okay.

One is a follow up in your new guidance.

Just wanted to clarify.

Speaker Change: And then maybe one more if I could just you talked about the <unk> acquisition.

That guidance that didn't bother will be added to your revenues and EBITDA from the start of Q3.

Speaker Change: Acquisition doubling your subscriber base can you just talk about what opportunities are there just for cross sell thank you.

And secondly on your content business.

If you could maybe talk a little bit more about the trends within the quarter is there any month on month improvement already and the trends that you're seeing in April. Thank you.

Speaker Change: Yes, I think it's all the things you would normally suspecting and an acquisition like that when we've got more subscribers that are more retentive, that's great for the business to the extent that we have content that is not currently offered to <unk> customers that becomes upside levels of retention, we've talked kind of clearly about.

Sure. So thank you so much for your question I'll take the first part and then we'll talk a little bit about trends in April. So I think it's probably unlikely the acquisition is going to close in July. So I think to your point the back part of Q3 is more likely with respect to the acquisition.

Speaker Change: We believe that this could fit very very nicely into our small and medium size.

Speaker Change: Customer offering sitting in between packs and larger subscriptions.

We feel really good about this deal I think as we mentioned, we're really excited to be able to offer this to our customers and to include this into our into our overall business.

Speaker Change: There is there is a lot to like in this acquisition and I, just say and you combine that with a great company, that's really well run by a great leadership team with a talented set of employees.

And regarding if I heard if I heard the question properly.

What are we seeing on the content business in the in the April timeframe.

Speaker Change: We really like the combination of Shutterstock and <unk>.

You heard in my in my prepared remarks that there.

Speaker Change: Thank you so much.

There are some really positive trends in our small and medium business and it starts with the idea of.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Agnieszka Mastella. Please go ahead.

Amazingly, if you charge customers rather than give away our very valuable content, they actually pay and not only do they pay but they download and come back and so we're very encouraged and then I gave more insight into our level of encouragement by saying that we expect our business to kind of returned to growth in the back half of <unk>.

Agnieszka Mastella: Hi, and thank you for taking my question.

Speaker Change: Couple.

Agnieszka Mastella: The first one is a follow up in your new guidance.

Agnieszka Mastella: Just wanted to clarify the assumed in that guidance that didn't bother will be added to.

Agnieszka Mastella: Revenues and EBITDA from the start of Q3.

Agnieszka Mastella: And secondly on your content business.

The year, we're seeing we're seeing good signs on the content business and while while we won't call. This turnaround complete we're very encouraged and all of that is reflected in.

Agnieszka Mastella: And if you could maybe talk a little bit more about the trends within the quarter is there any month on month improvement already.

Speaker Change: And I think in April thank you.

Agnieszka Mastella: Yes.

An increase in our overall guidance.

Speaker Change: Sure. So thank you so much for your question I'll take the first part and then we'll talk a little bit about trends in April. So I think it's probably unlikely the acquisition is going to close in July So I think to your point the.

One other point I would add on that is you should fully expect the year over year growth in content to improve.

Over the course of the year, each and every quarter both in terms of year over year growth percentage, but also in terms of sequential revenue contribution.

Speaker Change: The back part of Q3 is more likely with respect to the acquisition.

Speaker Change: We feel really good about this deal I think as we mentioned, we're really excited to be able to offer this to our customers and to include this into our into our overall business.

And I think that's really.

That's really important to note we feel we feel quite good about that.

And.

I think April is April is looking good. So we're excited about what we're seeing and I think Paul's point on the way we've extracted ourselves from the free trial is spot on this was the right strategic move for Shutterstock and is going to create a more durable longer term faster growing content business for us.

Speaker Change: And regarding if I heard if I heard the question properly.

Speaker Change: What are we seeing on the content business in the in the April timeframe.

Speaker Change: You heard in my in my prepared remarks that.

Speaker Change: There are some really positive trends in our small and medium business and it starts with the idea of.

Yes.

That's fantastic. Thank you.

Your next question comes from the line of Nipping Bansal with Bank of America. Please go ahead.

Speaker Change: Amazingly, if you charge customers rather than give away our very valuable content, they actually pay and not only do they pay but they download and come back and so we're very encouraged and ni.

Thank you for taking my question.

As the pace of building <unk> applications accelerated across verticals can you throw some light on that you are seeing the demand for your data beyond <unk>.

And how is your go to market strategy evolved in the last few months to monetize this huge opportunity.

Sure. So let me just give a little bit of a perspective of some of the demand that we're seeing and by the way what I would call out as we're seeing demand increases from both new customers as well as existing customers existing customers are asking us for more.

So greater scale in existing content types.

They're asking us for.

Specific types of metadata as well as our <unk>.

Specific types of content, so we're increasingly being asked for.

Sort of specialized types of content for those customers.

There is a common misperception that visual media content as only needed for companies that are training image generators or video generators as outputs.

Is the case that multimodal model is broadly speaking require visual media trading data in order to create inputs as well as generate outputs and I think that's something that's not well understood. The perception is that if the output is chat based that visual media is not needed as a training input.

That is incorrect visual media is a critical component of training chat based output models or large language models. So we're seeing demand across the spectrum.

For the various model types, particularly as things go multimodal more broadly defined.

In terms of.

The way the pipeline and distribution are trending up.

Paul any thoughts.

I mean, we're not giving a lot a lot of insight into that into that that you haven't already covered Jared.

And I mentioned on the.

Prior question.

We're seeing lots of lots of strong demand across channels.

Thank you one more on the GPU business.

What are some of the challenges that you are bringing in is getting up this business.

And by when do you think we can start to see like a more meaningful impact from <unk> on your topline.

Yes, the challenge of of restarting any business from a cold start is all of the things you would you would expect is reaching back out and telling our story to the.

Tens of thousands of interested advertisers getting in front of them getting in front of their budgets.

But when they hear the story, it's a very compelling story. So again, we believe that market is coming our way, we're not giving an exact date of when meaningful revenue comes in we're already seeing again.

High interest and an ace ending <unk> those are the trends.

Of a critical advertising model and so again, we feel we feel very good about overcoming any of the hurdles of moving our business from a cold start to two at a bonafide AD platform, but.

Every single month that goes by we're making headway and you heard we're investing in that business with more salespeople because we see the demand.

Given it does the advertising business.

A potential third party partnership with a bigger platform similar to take something thats been clustered can expedite the monetization of this asset.

Yeah I like the way you think I think that's I think that's fought on and were as you might expect we are exploring those opportunities and am interested folks that are talking to us about just that I can't say much more about that but you can imagine.

A large scaled high use platform has interest from a lot of folks.

Okay. Thank you.

Your next question comes from the line of Kieran Kenny with Morgan Stanley. Please go ahead.

Great. Thank you for taking my questions first.

Can you comment on whether the data deal signed in the quarter were all recognized Ratably and then related to that any color you can provide on whether or not the data revenue grew year on year.

And then Paul you talked about the growth in the <unk>.

Contributor base in the library.

Can you talk about some of the trends that are driving both organically and some of the inorganic contribution. Thank you.

So again, we feel we feel very good about overcoming.

Hurdles are moving from a cold start play to a bonafide AD platform, but where.

Thanks, So much for your question Karen I think.

As you think about our data deals we are increasingly structuring these deals such that the revenue is recognized over time.

Every single month goes by.

Headway and you heard we're investing in that business with more salespeople because we see the demand.

We signed a number of deals under that construct.

Given it does that I assume.

Business do you think a potential.

There are different structures that we have for different deals that create an inherent lumpiness in this business and so this business is becoming more visible and the recurring base of revenue and this business is becoming a higher as a percentage of the total revenues in this business, but there will be an inherent in <unk>.

Sure.

The partnership with a bigger platform.

Okay.

So it can expedite amortization.

Uh huh.

Yeah.

Like the way you think I think that's right.

Got it.

As you might expect we're exploring those opportunities.

Sure.

They're talking to us about just that you can't say much more about that but you can imagine.

<unk> in this business and we expect that.

With our data distribution and services business growing 90% year over year.

Our large scaled high use platform has interest from a lot of folks.

This is going to go up and down but we're we're thrilled with the start I mean, we we couldnt be any more excited about the momentum.

Okay. Thank you.

Your next question comes from the line of Kieran Kenny with Morgan Stanley. Please go ahead.

Not just in data, but also in <unk> studios, we really feel like these are three.

Great. Thank you for taking my question first Gary can you comment on whether the data deal signed in the quarter and I was right away and then related to that any color you can provide on whether it's data revenue grew year on year.

Large tam opportunity high growth business segments that we expect to have a long runway for growth overtime.

And <unk>.

Regarding the contributors are content growth the scale.

And then Paul you talked about the growth in the.

Contributor base in our library.

Organic and and otherwise what.

Can you talk about some of the trends that are driving that both organic and some of the inorganic contribution. Thank you.

What I can tell you is as our business evolves from purely serving the needs of advertisers and folks that would have more traditionally used for our content as we opened up the aperture to include.

Thanks, so much.

And I think.

As you think about our data deals.

We are increasingly structured CLO.

Such that the revenue is recognized over time.

Excepting content for data.

We signed a number of deals under that construct.

The market follows that trend and so now we're seeing.

There are different structures that we have for different channels that create an inherent lumpiness in this business and so this business is becoming more visible and the recurring base of revenue and this business is becoming a higher as a percentage of the total revenues in this business, but there will be an inherent in <unk>.

Demand and supply pouring in relating to giving us content across content types and across content use cases. So we think that that that flywheel spins very very nicely for in our favor and is actually spinning faster because as we.

<unk>.

Have more content.

And we expect that.

Erratically helps our conversion rate because we've got more to offer our customers that are have more traditionally is that creates a broader opportunity for our data buyers and so again more of that is.

With our data distribution and services business.

Business growing 90% year over year.

This is going to go up and down but we're we're thrilled with the start I mean.

And I think it is critical to driving our business forward I think I could go further and say and as we identify gaps in any supply that we have we now become well positioned to actually go acquire and fill those gaps meeting the demand side of the equation for our customers. So again.

We couldnt be any more excited at the moment.

Not just in Canada, but also in Jeopardy and studios, we really feel like these are three.

Chris Suh: Large tam opportunity high growth business segments.

Chris Suh: That's a long runway for growth overtime.

Chris Suh: And.

<unk> love to see the content, we're a content company and that scaling content is good helps both sides of our business.

Chris Suh: Regarding the contributors are content growth the scale.

Chris Suh: Organic <unk> and otherwise.

Chris Xu: What I can tell you is as our business evolves from purely serving the needs of.

That's really helpful. Thank you both.

Thanks, Karen.

That concludes our Q&A session I will now turn the conference back over to Paul Hennessy, Keith I guess executive officer for closing remarks.

Speaker Change: Advertisers and folks that we have more traditionally used for our content as we opened up the aperture to include.

Yes, I just want to.

Chris Suh: And for data.

Thank all of our contributors are our employees in all of our customers for.

Chris Suh: The market, followed that that trend and zoning.

Chris Suh:

Chris Suh: Demand and supply pouring in relate.

For helping us deliver an extraordinary Q1 and set us on a path to deliver on our 2027 plan.

Chris Suh: Relating to giving us content across content types and across content use cases, so we think that that flywheel spins very very nicely.

Thank you all for joining our call and this ends our call for today.

Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Chris Suh: And it actually spinning faster because as we have more content that theoretically helps our conversion rate because we've got more for our customers that are have more traditionally is.

Chris Suh: That creates a broader opportunity for our data buyers and so again more of that is.

Chris Suh: And I think it is critical to driving our business forward.

Chris Suh: I think I can go further and say NSE identifying gaps in supply that we have we now make him well positioned to actually go acquire and fill those gaps meeting the demand side of the equation for our customers. So again loved to see the conflict.

Chris Suh: The company and that's scaling content is good helps both sides of our business.

Speaker Change: That's really helpful. Thank you both.

Speaker Change: Thanks, Karen.

Chris Suh: That concludes our Q&A session I will now turn the conference back over to Paul.

Paul: I think they've officer for closing remarks.

Paul J. Hennessy: Yeah, I just want to.

Paul J. Hennessy: Thank all of our contributors.

Paul J. Hennessy: Our our employees in all of our customers.

Paul J. Hennessy: For helping us deliver an extraordinary Q1, and that's on a path to deliver on our 2027 plants.

Speaker Change: Thank you all for joining our call.

Speaker Change: Our call for today.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining us.

Speaker Change: You may now disconnect.