Q2 2025 Emerald Holding Inc Earnings Call
Thank you for standing by. My name is Kari and I will be your conference operator today.
At this time, I would like to welcome everyone to the Emerald Holding, Inc. second quarter 2025 earnings call.
All lines have been placed on mute to prevent any background noise. After the speaker's 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 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.
Thank you. I would now like to turn the call over to Erica. Bart AVP EVP of strategy and Communications at Emerald please go ahead.
Good morning and welcome to the Emerald Holding second quarter 2025 earnings conference call. Before we begin, let me remind everyone that this call will include certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Are subject to a variety of risks. Uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements.
For discussion of these risks, uncertainty is another factor. Please refer to the company's FEC filings, including its most recently filed periodic reports on Form 10-K and Form 10-Q, as well as the company's earnings release. All.
Can be found on the company's investor relations website. The company does not undertake any duty to update such for looking statements.
Additionally during today's call management will discuss non-gaap measures which it believes can be useful in evaluating the company's performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with us. Gaap, the reconciliation of these non-gaap measures to their most comparable. Gaap measures can be found in the company's earnings release, which is available on the company's investor relations website. As a reminder, this conference is being recorded and a replay of this call will be available on the company's investor relations website through 11:59 p.m. eastern time on August 11th 2025.
I would now like to turn the call over to Mr. Aref Fedi, President and Chief Executive Officer. Please go ahead.
Thank you, Erica. Good morning, everyone, and thank you all for joining us today. I'll begin the call with an overview of our second quarter performance and a review of our strategic initiatives. I'll then turn things over to David Doft, our CFO, who will take us through our financials. The second quarter reflected strong disciplined execution across the portfolio with results in line with the expectations that we laid out earlier this year. We delivered solid year-over-year growth in revenue and adjusted EBITDA, supported by the strength of our platform and the recent acquisitions. As we contemplated in our budgeting and guidance, reported organic growth was muted due to the event mix in the quarter. However, on a pro forma basis, assuming the recently completed acquisitions were part of the portfolio in the second quarter of 2024, organic growth would have been approximately 5% this quarter.
This is a more accurate reflection of the performance of our business as its constituted, our go forward basis with the inclusion of these acquisitions.
This offers a clearer view of the performance of the current Emerald platform and the positive underlying momentum across the portfolio.
Taken together our results year to date reinforced Emerald's position as a scaled insights driven. B2B platform and gives us confidence to reaffirm our 4-year Outlook.
The momentum we're seeing is a direct result of the delivery actions that we've taken to reshape and strengthen our portfolio over the past 18 months, we've exited underperforming assets, that were not going to recover postco, realigned, our cost structure and completed, targeted Acquisitions that strengthen our position in high growth verticals. As a result, Emerald has sharpened, its focus and further, strengthened, its performance-driven approach with a portfolio, built for durability, and growth across Market Cycles.
This transformation is not only taking hold, but it's driving meaningful performance improvements across the business. We're also seeing encouraging rebooking trends for the first half of 2026, a clear signal of customer confidence in the breadth and value of our portfolio.
Our solid rebook rates underscore the commercial strength of our events from qualified lead generation to business outcomes. That support long-term customer Roi
Exhibitors.
Continue to reinvest because our events Drive meaningful impact. From enabling Discovery, in-person engagement and sales pipeline acceleration. Early, rebooking activity. Highlights, the resilience of our model and affirms that in-person engagement. Remains a critical. Go to market Channel across sectors with strong performance, in both established and high growth segments.
User to economic es and flows.
Our strategic focus is also contributing to measured progress internationally, as a reminder: international exhibitors account for approximately 10% of total revenue with limited exposure to any single region, while moderately dragging overall growth. We've already secured 99% of our 4-year international revenue target, signaling sustained interest from global partners seeking access to U.S. buyers, and giving us confidence to deliver on our 4-year targets. We're seeing pockets of encouraging activity in markets like Italy, Germany, and Brazil, which are helping to offset continued softness in regions like China and Canada. Much of this early progress reflects the foundation laid by our expanded global agent network, now nearly 100 agents across more than 50 countries. This is a long-term investment we expect will yield more measurable results over time.
Importantly, as more trade deals get signed and bring certainty to more industries, our belief is that these important customer segments should bounce back and continue to grow, beginning next year.
In a landscape shaped by shifting trade policy rapid technological change in Rising uncertainty, the value of trusted high impact connection channels is only growing. That's why we remain confident in the resilience and relevance of Live Events. In-person experiences, consistently outperform, digital in brand recall in Roi particularly in complex or high consideration. Environments, this Advantage becomes even more pronounced during periods of uncertainty when businesses prioritize channels that drive. Measurable impacts and build real trusts. As Mark Cuban recently noted on his ex feed the explosion of AI. Generated content is creating a million vanilla effects, a growing skepticism of what's real
Versus what's synthetic. In his words, this will drive people back to authenticity and heightened demand for face-to-face, interactions that build credibility, connection and Lasting value. We couldn't agree more. This conviction ultimately shapes how we operate and where we invest for long-term value, our approach, remain laser focused on 3 core, pillars of customer centricity 365 day engagement and portfolio optimization. We've made great progress in our portfolio. Optimization efforts where we're pursuing targeted acquisitions.
That diversify our offerings.
And expanding our presence in resilient sectors with attractive long-term growth opportunities that have a demonstrated track record of delivering impactful, in-person B2B experiences notably our Acquisitions of this is beyond and insurtech, insights are already advancing our strategic priorities and contributing to growth.
In June, Insurtech Insights held its U.S. edition drawing, showcasing strong industry participation that reinforces our position in a high-growth vertical. Similarly, this goes beyond flagship events. We are Africa and L Miami delivered exceptional experiences in Q2, convening a highly curated global community of luxury travel leaders. Their focus on premium, purpose-driven experiences aligns with evolving B2B customer expectations and further strengthens Emerald's position in the high-growth global luxury travel market.
These early performance indicators underscore the strength of our portfolio optimization strategy and our discipline approach to integration and value creation, leaving the energized for what's ahead.
So in closing, our second quarter performance illustrates the strength and resilience of the emerald platform, our ability to deliver as plans integrate value, enhancing Acquisitions and navigate external challenges. Reflects both the commitment of our team and the trust of our customers. We remain confident in our capacity to drive meaningful long-term value for shareholders, while continuing to deliver exceptional experiences for our customers. And with that I'll hand things over to David for a deeper. Look at our financials, David
Thank you, everybody, and good morning.
Turning to our results for the second quarter, total revenue was $105.5 million compared to $86 million in the prior year quarter.
4% year-over-year, driven by growth in our connections business, offset by event mix in the quarter and softness in content.
Specifically, we had 3 events that staged in Q2 2025, but were held in a different quarter in 20124 and 2 events that occurred in Q2 2024, but are scheduled for a different quarter in 2025.
As everybody noted, this does not tell the full story. We believe the most accurate view of our organic growth is on a pro forma basis reflecting the portfolio as it actually exists today.
Assuming the recently completed Acquisitions were part of the portfolio in Q2 of 2024, our second quarter organic growth would have been approximately plus 5% year-over-year.
Which 24.4 million in the second quarter compared to 15.3 million in the prior year, period and increase of 59.5%. The increase was primarily driven by higher operating income from our events and continued management of underlying costs.
This also equates to an adjusted EBITDA margin of approximately 23.1% for the quarter, compared to 17.8% in Q2 2024.
LPM adjusted method, excluding insurance proceeds, is $123.1 million.
Turning to expenses on a reported basis sgna was 47.1 Million versus 39.5 million. In the prior year quarter, the year-over-year increase is largely due to incremental expenses from Acquisitions in our connections business and higher stock-based. Compensation offset by lower salary expenses, in both the content and commerce businesses.
We generated 13.8 million in free cash flow in the second quarter as compared to 7.1 million. In the prior year period due to higher adjusted Ava in the quarter.
As was the case in the first quarter, underlying free cash flow in Q2 was stronger than reported. Primarily due to the timing of recent acquisitions specifically, with the business Beyond acquisition closing shortly before its major events. Most event-related cash, was collected prior to the transaction and flowed to Emerald through a purchase. Price adjustment, rather than through standard receivables. As a result, those inflows are not reflected in reported free cash flow, uh, uh and cash from operations, uh, minus capex. This mirrors, the dynamic we noted last quarter with insurtech insights and it's important contacts when evaluating the free cash flow conversion and strength of our cash generation.
Adjusting for these acquisition related timing effects total free cash flow would have been 17 million higher. Also our year-to-date free. Cash flow is similarly impacted by the acquisition of insurtech. Insights in the first quarter of this year to the tune of 3.5 million. And from 5.5 million of fees related to our January 2025 refinancing of our debt, that flows through the financials in total, these items impacted reported year-to-date free cash flow by 26 million.
Turning to the balance sheet, we had $156.4 million in cash as of June 30th versus $276.8 million as of March 31st. This is after funding the This Is Beyond transaction, which closed in the quarter.
Our total liquidity is 266.4 million including full availability on our 110 million dollar credit facility.
as of June 30th, our net debt to Covenant, even though ratio is 2.56 times, well, within our sub 3 times Financial policy Target,
Our strong balance sheet and cash flow. Give us flexibility to invest in strategic growth and deliver long-term value as a business. We remain focused on disciplined Capital deployment, across m&a or organic growth, debt reduction and shareholder returns. In the second quarter, we repurchase approximately 1.6 million shares for 6.9 million at an average price of 4 dollars in 24 cents per share under our buyback program.
Program underscoring management in the board's conviction in Emerald's long-term value at quarter end, we had 20.8 million remaining available under the existing repurchase authorization.
In addition, the board declared a quarterly dividend of 1 and a half cents per share, demonstrating our continued commitment to shareholder returns alongside prudent, balance Capital deployment.
Finally, we remain on track for and are reaffirming our full year 2025 guidance of a range of 4005050 million to 400660 million in revenue and 120 million to 125 million in adjusted debit done.
With third quarters are both our smallest and we expect Q3 reported organic growth to be our weakest this year. Followed by stronger reported organic growth in the fourth quarter.
Given the added dynamic of the continued construction at the Las Vegas Convention Center, impacting our largest Q3 event organic growth, we expect growth in that quarter to fall below what we reported in the second quarter, consistent with our original expectations for this year.
Q1 and Q4 remain our largest and strongest growth quarters. This seasonality is fully in line with our expectations and supports the full-year targets we set at the beginning of the year and targets that we are reiterating today.
Our Outlook also factors in potential tariff impacts while the precise effect remains uncertain due to evolving us trade policy. Our overall exposure is relatively limited. We remain proactive targeting growth in underpenetrated markets, while preserving the agility to adapt to changing macro conditions.
With that, we will now open the call up for questions, operator.
At this time, I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Your first question comes from Barton Crockett with rosenblat.
Hi, thanks for taking the question. Good morning.
Good morning. Um,
So yeah, so I guess 1 of the things I was wondering about is uh the commentary you just gave on the the third quarter, kind of trajectory, um, you say that, um, organic growth will be below what you had in the second quarter, but there wasn't much growth in the second quarter. Are you actually saying that the third quarter looks like? It'll be down year-over-year.
and um,
uh, you know, any way to kind of size that in terms of just bigger than a Bread Basket type of thing,
Sure. Uh, thank you um, uh, Barton. Uh, good morning. The um, that's exactly what we're saying. Uh, the reality is is, uh, you know, every quarter, we have different events around different industries, that stage and they have different characteristics of. That's why we target the year. Uh, in terms of overall portfolio performance and that continues to track. Uh, the third quarter is is by far, our smallest, quarter of the year. Uh, and uh, we are impacted as we've talked about for a long time. Now, by construction at the Las Vegas Convention Center, uh, that is impacting, the largest show that's in our third quarter. Uh, and so, uh, we do expect that that will pull organic growth down, uh, into uh, the negative region. Uh, but, uh, that's in line with how we've seen the year progressed, uh, and we do expect the fourth quarter based on the mix of events.
Uh, in the quarter, uh, to be a nicely positive, uh, organic growth quarter, more consistent, uh, with overall first half performance. Uh, and that should lead to the full year, uh, performance that we're guiding to, and that we've guided to from the beginning of the year.
Okay. Now, the Vegas stuff, is that, um, done after this year? Do you expect it to be not a factor next year?
That's correct. Um, the Las Vegas Convention Center, uh, is uh, scheduled to be completed. And we believe they're on schedule by uh the end of uh, of this year. And so um, we expect that as we get into 2026
Uh, that we will come back to a, a more normal, um, pattern.
Okay. Now um the performance the the contributions from the Acquisitions were
pretty meaningful this quarter and it looks like it sounds like they're growing uh like gangbusters but um, even with the disruption of Acquisitions, um,
But do we see much more contribution from these guys over the balance of this calendar year, or was the second quarter really the bulk of what we're going to see from this beyond an insurtech?
No, the, um, both, uh, businesses have events in the second half of the year. Uh, This Is Beyond has four more events this year: one in September and then three in the fourth quarter. Uh, and then Sure Tech has one smaller event in the fourth quarter. So the bulk of InsurTech's year is done from a revenue standpoint outside of their Hong Kong event. Uh, but This Is Beyond still has quite a bit to go.
Okay. All right. And then, in terms of the... um,
You know, some of the the back and forth about, uh, impacts of the macro. Um, you know, I was wondering if you could just, uh, just give us uh, the sense kind of in aggregate is
how much of a headwind do you feel right now from just the macro environment, is it, uh, a small kind of headwind, is it a big headwind that you're just overcoming or, you know, just just
Kind of, uh, qualitatively, how do you feel about?
Take the macro kind of impacts are at this point for you guys.
Well, I think the most important, uh, thing to to say, is that we went into this year expecting, uh, an impact and therefore, we were prudent in our budgeting process. And, uh, as I said in, in the script, we've already secured 99% of our full year International Revenue. So, we, you know, we are tracking very, very well to, uh, the assumptions, uh, that we made. I would characterize the impact, as, um, as small overall given that International is is is a small part is a, you know, as a smaller part of the total uh revenue. And as I mentioned, while we're seeing headwinds in, in China, for sure. And in Canada, um, we're very pleased that there are some other countries that I named where we're seeing the opposite effect. They're really taking advantage of um of entering the US market and uh and therefore they're exceeding our
Expectations. So when you, uh, pull it together, uh, the impact is is is, uh, relatively small.
I think the only thing I'd add to that is uh, while small, there is an impact and as we cycle it, and as we said in the script as we cycle it, and as we
Uh, as there's more clarity, uh, in uh, the specific country by country. Um, we we do think it becomes more of a contributor again, uh, in 2026. And so, what is a moderate drag on organic growth this year? Uh, we think could be a contributor next year, especially given, uh, our aggressive investment in rolling out. Our our agent Network around the world, uh, which gives us more reach and the more countries and emeralds has ever had before.
Okay. All right, that's great. Thank you, guys.
Thank you.
Your next question comes from Alan. Clay with Maxim group.
Hi Alan.
Yes. Hi. Um,
when when you in the press release, you talked about the reacquisition impact on the quarter 1 1, I wasn't familiar with GRC world. I assume it's smaller could could you just comment on what that is?
Oh, yeah. GRC, uh, is global risk and compliance. We actually acquired that last summer in the summer of 24, uh, but it was not in the first half 2024 numbers. So, uh, in order to run the appropriate Pro for, we had to include it in both.
And it is small.
Got it, okay? And then if I read,
I think I read that you it's in your number saying that acquisition's added 24 million in 2 q. And I think last quarter you said you expected. This is beyond an insurer Tech to add 40 million in revenue for the full year. So is it correct saying you know, the difference between those 2 is what you expect in the second half?
That would be the math.
I'm sorry what? Yes, that's correct. That's right. Oh, we're confirming your um assumption. I need to confirm the new online or something it's usually um okay and then you said that you're seeing positive first, half 26, rebooking rates. Um is there any commentaries and say in terms of just overall of how much of Revenue you feel? You have booked for 25 and 26 or any any commentary of interest in general.
I, I think it's premature to give a a 26 number. Um, but uh, needless to say we, uh,
We're willing to express confidence because it, it surely uh, up nice enough to allow us to to give a comment that it's trending. Well and so um, you know,
given that our events are about uh returning on investment to our customers, the fact that they're rebooking at higher rates,
Uh is a is a really good sign and and that's what we're indicating. Um, in terms of 2025, you know, at at this point, you know, we're we're 90% is closed on the year, uh, of where we're tracking and so, you know, there's still a little bit more to go and obviously, um, largely fourth quarter weighted and what still needs to be booked. But um, we're feeling pretty good about, uh, the trajectory to the range that we've given.
Added to the quarter. I said I
I think I heard a number. That's probably too high.
So uh, in the in the quarter, the uh I'm just going to hold for the exact.
So I don't miss date it myself.
Um,
17 million.
17.
Correct. Correct. Oh wow. So you did like 13 million of you but uh but I I'm sorry a free cash flow really would have been more like 30
Correct. So, so just to to be to be clear, right? So next year, when we own these businesses, for the full year, we will have the benefit of
Uh, the collections for the events, we stage ahead of that event. This, this year, those collections happen, prior to the acquisition.
Right? So, we acquired those collections. They came to us as an offset to purchase price, so we still got the money.
But it doesn't show up in cash flow from operations in 2025, but in 2026, uh, you should see a much higher conversion of, uh, adjusted ebit dot to free cash flow because we will own the entire period, uh, of marketing, those events and the collection of the cash for those events.
That that's helpful. That's great. I mean, it was, um, in 1 of your smaller quarters to have that much free. Cash flow generation is great. Um, proforma, uh, so then just 1 other thing on the Las Vegas construction. Do do you have events in the fourth quarter that, um,
That are also going to be at the Los. Los Vegas um, Center that that will be affected in the fourth quarter, but maybe that'll
Show better for for fourth quarter of 26.
Yes, we do. We have 1 events um, in the fourth quarter that has the same, we'll have the same impact or similar impact
The fourth quarter overall though is a larger quarter, we run more events with more Revenue so on a percent basis it doesn't swing the numbers as much.
um,
that makes sense over, okay.
Um, and then last part of you mentioned, how you were trying to use AI internally for uh certain things any um update comment on that.
Yeah, we're, uh, absolutely, we're leveraging AI to enhance our employee productivity to we have a number of initiatives around, uh, cost reduction some customer engagement, um, initiatives. And we also have a revenue, uh, components where, um, we we have a, a dedicated, uh, efforts towards. Um,
Unlocking, uh, revenue from AI across our our portfolio and and we'll talk about that more. Uh, as that uh, strategies, uh, is, uh, is developed. But, uh, right now, uh, we have early pilots in finance, in marketing, in customer service and in Contents production that are already starting to yield some measurable efficiency gains and their uh streamlining some of our workflows and um and we, you know, we're confident that over time. Uh we'll continue to um to both find ways to save money, be more efficient, allow our teams to uh to to do more with with less.
Uh, and that's before the uh, Revenue initiative that I uh, that I mentioned.
That's great. Uh, my last question is I have written in my notes from the first quarter earnings call that you said something like
I forget why but for some reason you thought you might be tracked and tell me if I'm wrong. You were tracking maybe towards the higher end of your 25 guidelines. If if you did say that then, is that something that you would repeat now?
um, I I I think what we said is, uh, that our guidance range was
Uh based on a a range of possibilities 1 of which is the range of tariff impact on the year.
And deliver to the high-end but uh um, you know, we give a range because that's our guidance.
Got it now, you thank you. You guys are really well positioned in this environment, um, just in general. So congratulations.
Thank you very much Alan.
There are no further questions at this time. I will now turn the call back over to Emerald. CEO Harvey sedki for closing remarks
Well, thank you very much. So to to wrap things up our second quarter uh show just how strong and resilient the uh Emerald platform really is we stuck to our plan. We made smart uh, Acquisitions that added value and handled outside challenges with confidence.
It all comes down to the dedication of our team and the trust of our customers. Uh so we're feeling good about where we're headed and confidence. Uh, we can keep creating long-term value for shareholders while giving our team and customers great experiences. And so with that, I thank you for joining us today. Have a great day and goodbye
conclude today's conference, you may now disconnect