Emerald Reports Flat Q3 and Decreases FY Guidance

By: Jacob Cohen Donnelly

Emerald, the organizer of events like Advertising Week New York and Outdoor Retailer, announced its Q3 2024 financial results on October 30th, with flat revenue due to discontinued events, weakness in its content business and overall organic decline, offset by growth from acquisitions and scheduling differences.

• Revenue: $72.6 million, up $100,000 from last year.
• Net loss: $11.1 million, down from a net income of $10.7 million last year
• Adjusted EBITDA: $12.5 million, up from $10.8 million last year.

The discontinued events were a major driver of the weaker revenue quarter and guidance decrease. On an earnings call, Hervé Sedky, Emerald’s President and Chief Executive Officer, explained the decision to shut down 20 events totaling $20 million in historic run rate. He said, “$17 million of this total is for events that will not stage in 2024, but did stage in 2023. And $3 million is for events that did stage in 2024, but we have decided not to stage in 2025.”

In aggregate, these events were not growing and had negative margin at the EBITDA level. As a result, we expect these actions to positively impact growth and margin in 2025.

After these cuts, it decreased its expected FY 2024 guidance:

• Revenue: “At least $400 million,” down from $415 million to $425 million
• Adjusted EBITDA: “At least $100 million,” down from $110 million and $115 million

The content business, accounting for 5% of the company’s revenue, remains a drag on the business with the advertising market remaining a challenge. On the earnings call, Sedky said:

Even with such a small exposure, we’re experiencing a low to mid single digit million dollar shortfall versus expectations for the full year 2024, which had called for growth this year. As a result, we now anticipate that 2024 content revenue will decline on a year-over-year basis.

Our content portfolio remains an important component of our operations due to the leverage it gives us in event marketing and the proprietary data assets it generates. This business is additive to our strategy around personalization and enhances lead generation for our event customers throughout the year.

As growth in other much larger parts of Emerald continues, content is naturally an increasingly smaller component of our overall revenue, which means that variances here should have a limited impact on our overall performance in the future.

We see content becoming an increasingly smaller component. Over the last few years (below chart), all other revenue (this is more than just content) has become a smaller part of the business from 13.3% in 2022 to 10.7% in 2024 YTD. Nevertheless, Emerald, as a whole, has seen strong growth since the volatile pandemic era that rocked many events businesses.

If it meets its guidance, revenue will grow from $325 million in 2022 to $400 million in 2024, with adjusted EBITDA excluding insurance growing from $91 million to $100 million.

Strong 2025 expected

Looking to 2025, the team feels confident about the first half of the year, but didn’t offer thoughts on the second half. According to Sedky:

In fact, our pacing into 2025 is stronger and more broad-based than at this point last year and it reinforces our view that growth should improve in the new year. Currently, we expect solid revenue growth in 2025 with a return to margin expansion aided by an improved mix of business by our portfolio optimization efforts.

He went on to explain that, “There are more events outperforming in their pacing for next year than there were at this point last year.”

In the investor presentation, Emerald shared statistics to reinforce that 2025 will be a strong year, including:

• Deloitte: 64% of CMOs plan to increase their investments in in-person events.
• Harvard Business Review: 60% of executives report that in-person events lead to significant knowledge transfer and long-term partnerships.
• PwC: 17.6% 2021-2026 CAGR projected for B2B trade show market size.

From Emerald’s perspective, there is little reason to expect a slowdown in its events products going into 2025. With it cutting the $20 million in underperforming events, its margins should improve going into the new year.

Moving forward, it remains on the market to acquire new events or related assets in existing or new verticals. Over the last 3.5 years, it completed 9 acquisitions but has been quiet in 2024.