STGW - NASDAQ

Good morning from Stagwell's Global Headquarters at One World Trade Center in New York City. And welcome to Stagwell Inc's Earnings Webcast for Q4 and Full Year 2023. My name is Ben Allanson, and I lead the Investor Relations function here at Stagwell. With me today are Mark Penn, Stagwell's Chairman and Chief Executive Officer; and Frank Lanuto, the Chief Financial Officer. Mark will provide a business update and Frank will share a financial review. After the prepared remarks, we will open the floor for Q&A. You're welcome to submit questions through the chat function. Before we begin, I'd like to remind you that the following remarks include forward-looking statements and non-GAAP financial data. Forward-looking statements about the company, including those related to earnings guidance, are subject to uncertainties and risk factors addressed in our earnings release, slide presentation, and the company's SEC filings. Please refer to our website stagwellglobal.com/investors for an investor presentation and additional resources. This morning's press release and slide deck provide definitions, explanations, and reconciliations of non-GAAP financial data. With that, I'd like to turn the call over to our Chairman and CEO, Mark Penn.

Thank you, Ben, and thank you to everyone joining us for our fourth quarter and full-year earnings call. With 2023 behind us, we're ready to return in 2024, a political year to the organic growth that Stagwell showed year after year since its inception, while we strongly execute our strategy to transform marketing through the right combination of technology and talent. 2023 saw a combination of unique factors weigh on the marketing services industry. Persistent worries about a potential recession, rising interest rates, and geopolitical risk resulted in significant restructuring actions, particularly at tech companies as well as meaningful cuts across marketing budgets, add to that a banking crisis and strikes within autos and entertainment industries. Despite all this, Stagwell grew market share with some of our largest customers, continued to win significant new business, and delivered another year of strong adjusted EBITDA generation by taking prudent cost management steps. We also made significant moves with a lasting positive impact on our business. In the first quarter, we successfully completed a secondary offering, which helped to boost our liquidity. The equity research analyst community has taken note of increased interest in Stagwell after this offering, and we now have eight covering analysts. In the second quarter, we moved to simplify our capital structure and removed an overhang by buying out AlpInvest. This transaction and other buybacks completed throughout the year successfully reduced our share count by 12%. In the fourth quarter, we completed the sale of ConcentricLife to Accenture for $245 million, representing a sale at 18 times EBITDA and approximately 4 to 5 times our initial investment. This sale of a company that I had never been asked about by investors or analysts is representative of the Company's underlying value and produced a taxable gain of about $175 million this year. We've already replaced the revenue and EBITDA given up by the transaction, while only using a fraction of the proceeds. We believe that modest portfolio turnover at multiples higher than those we pay for acquisitions is a vital part of our operations moving forward. As I previously mentioned, we expect to close another profitable disposition later this year. We also moved to strengthen our services, grow our geographic footprint, and invest in innovation to keep us at the forefront of digital marketing. We acquired leaders in digital technology and emerging platforms, Left Field Labs and Movers and Shakers. We made our first acquisition in Ireland in the company of Huskies. Recently, we welcomed the digital-first creative collective Sidekick, and our first French creative agency, What's Next Partners. We grew the Stagwell Marketing Cloud's capabilities and commercialization path through unique partnerships with tech leaders. We created a partnership with Google to co-build Gen AI solutions and get placement out of our AI-enabled products in their cloud store. And we created a partnership with MNTN, the leader in performance TV to give access to our SMC influencer and content products to MNTN clients as well as help clients in our Media business with performance marketing strategy. On the third quarter call, I said we were seeing positive signs of a turnaround in our business and expected a recovery over the next two quarters. We saw this unfold partially in the fourth quarter as we returned to sequential net revenue growth. In the quarter, Stagwell posted $655 million of revenue and $551 million of net revenue as we started to see the challenges that have impacted our business abate. For the full year, revenue was $2.53 billion and net revenue was $2.15 billion. Our Performance Media and Data capability continued to post good results in the fourth quarter, growing net revenue by 1% and 5% for the year. Strong performance among our media and buying and strategy brands is leading the group. Those brands posted 7% year-over-year growth in the fourth quarter, their best quarterly growth figure in the last two years. This strength is offset somewhat by macro-driven challenges in some of our owned media businesses. Importantly, our digital transformation businesses showed meaningful signs of a rebound. Excluding advocacy, digital transformation declined 3% year-over-year in the fourth quarter, a significant improvement sequentially after posting a 17% decline ex-advocacy in the third quarter. We once again grew the size of our relationships with our biggest and most important customers, something we did consistently through 2023. In Q4, our top 100 customers, representing approximately 48% of net revenue, grew 13% year-over-year. Our international businesses also continued their momentum with growth of 3% in the quarter, led by 19% growth in the UK. We posted a very strong quarter of net new business wins over $65 million. For the last 12 months, we have delivered more than $270 million of net new business at an all-time LTM high. In the fourth quarter, we continued to focus on effectively managing our cost structure so that we're well-positioned for 2024. On staffing, we took actions in the fourth quarter that resulted in an incremental annualized savings of $16 million. For the full year, we took $98 million of actions, we are seeing the results of the new business gain and cost reductions in a strong January. We also continued our efforts to consolidate our real estate footprint and back office functions, resulting in $4 million of real estate savings and more than $4 million of savings through our Shared Services program. I'm delighted to report that as of the end of 2023, we've principally achieved ahead of schedule the $30 million of synergies that we promised. We are now focused on achieving the $35 million of incremental efficiencies that we announced earlier this year. As a result, we produced another strong quarter of profitability, delivering $95 million of adjusted EBITDA, representing a 17% margin. We did this even while continuing to meaningfully invest in the Stagwell Marketing Cloud. For the full year, we delivered $360 million of adjusted EBITDA, representing a 17% margin. We invested approximately $20 million out of operating funds on development of new technology, an investment I consider proportionate and critical to our future. Our approach to the use of capital remains the same. This year we invested in growth through buybacks, acquisitions, and internal tech development. And we did see expanded media working capital requirements that we're working to reduce. Overall deferred acquisition costs are a fraction of the past and were reduced by $60 million this year and are projected to be only about $40 million in total by 2025. We believe leverage will be close to two by the end of the year, but our principal goal is seen through the vision of the company and achieving above-average industry growth. This year, we expect to deliver organic net revenue growth of 5% to 7%. We expect adjusted EBITDA to grow 11% to 25% year-over-year, delivering adjusted EBITDA of $400 million to $450 million. We also expect to convert approximately 50% of our EBITDA free cash flow this year. It's important to realize that Stagwell started at zero, just eight years ago, and the same energy we put in then is at work today in molding this company to be the next great company in marketing, going from global full-service to platform self-service. That means we have at play critical strategic initiatives to generate above-industry average growth to widen our margin. First and foremost is to grow our market share -- to grow our share of market by expanding our global and technology footprints. This has been evident in our new acquisitions and the steady stream of awards, our agencies whose creative work with the Super Bowl far exceeds our relative size, with five national in-game spots and more than a dozen other client campaigns for the NFL, ETrade, Paramount, United Airlines, Diageo, Budweiser and more. As a result, Stagwell's agencies have been invited to more RFPs with bigger accounts. Inspiration days with Fortune 100 companies that ask, what else can Stagwell do are becoming nearly a weekly event. Last year we saw a 20% increase in pitches that we were invited to, totaling almost $1.2 billion. We expect to see similar growth in 2024. Our record-breaking new business wins lay a strong foundation for us to return to growth this year. In the fourth quarter, our digital transformation revenue from technology customers grew by 30%. This resulted from a combination of increased spend from existing customers and the acquisition of Left Field Labs. TMT client are calling our agencies to transform their operations and customer touch points. Stagwell is helping Qualcomm for example to enable the future of AI for developers and across everyday devices, while next month RealClearPolitics will roll out a new AI overlay to their historical polling database that will help user search results in new and engaging ways. As we continue to receive new mandates with major wins at Samsung and Shopify, as well as notable account expansions with Amazon and Google. Our international expansion efforts are paying off as we saw 13% international growth in 2023. We'll continue to diversify the Company's geographic footprint, which is critical to expanding our global client remit. We expect to enter 10 new markets in 2024, bringing our non-affiliate footprint to 44 countries. In EMEA net revenue grew 70% last year and this year we are expanding further, launching the European headquarters in London at the Blue Fin Building and appointing James Townsend as our first EMEA CEO. Our advocacy businesses in 2023, a non-election year shrunk 22%, but posted 16% growth versus 2021, the last off-cycle year. While the presidential election gets the most focus, we expect fiercely contested, multi-hundred million dollar down ballot races. We view this as an encouraging sign that political spend records are going to be shattered in 2024, with more than $12 billion at stake. Second, we are rolling out more products from the Stagwell Marketing Cloud team. The group grew 31% in 2023. Harris Quest, our AI-enabled research suite, signed its 150th enterprise customer in 2023. On Monday, we unveiled our new product Unlock Surveys, potentially the most significant research panel launched in nearly a decade. And as opening day approaches, we are excited to share that around our immersive platform for stadiums has just been incorporated into Major League Baseball's native ballpark app and approved for use by all Major League baseball teams and stadiums. This is a major milestone for this emerging technology from Stagwell. Third, we're embarking upon an aggressive AI data and media strategy. We are building solutions that help our agencies and clients transform with the three E's of AI, Enable them across operations, Efficiency in marketing, and Engagement with consumers. We have built private GPT environments for our agencies and clients to utilize advanced AI without putting their data into the public domain. We'll continue building on this approach, and we've already signed a large domestic office supply retailer into our platform. On the data side, we'll develop an identity solution, the Stagwell ID Graph, which encompasses information on hundreds of millions of people globally. Built to top our existing data lake, this solution will make consumer information available to fine-tune all our performance marketing campaigns across all our agencies. We expect to acquire or build the last mile of the media chain so that our offerings will go from planning, targeting, and audience creation down to placement and media supply. We will move more from fee-for-service pricing to performance pricing. This should result in margin expansion over time and guaranteed ROI for clients as our Media business continues to grow in client scale and size. Remember that more than 1 in 10 Stagwell employees are engineers and that we're well-positioned to apply AI to meet client needs as they remake their websites, apps, and customer interfaces to incorporate AI. We are also applying AI to our own processes with products like profit that write news releases, Harris Quest AI that analyzes focus groups and smart assets that help sort out content directed to where it's likely to be most effective. Fourth, we will continue to streamline operations, both the back office and in our offerings. We are significantly offshoring our finance and other services and applying AI to tasks like reading and inputting the hundreds of thousands of media bills we receive each year. In addition to launching our own survey research panel, we will also consolidate production of scaled content to a central operation, reducing outside production bills by an estimated $20 million to $30 million over the next 18 months. All the major agencies within our group are partnering on this and we expect it to be operational by mid-year. In conclusion, I want to reiterate our excitement and confidence in 2024. We believe we're set up for a return to profitable organic net revenue growth in 2024, in line with the guidance I outlined earlier. Thanks to a multitude of factors, the abatement of the headwinds that weighed on the industry in 2023, combined with outstanding new business trends, continued momentum in our Marketing Cloud Products, and what we expect to be a record-breaking political cycle, as well as our prudent steps to manage costs, strengthen our services and expand geographically. We expect to return to outperforming legacy competitors in 2024. Now, I'll hand things over to Frank Lanuto, our Chief Financial Officer, to walk you through some of our financial results in more detail.

Thank you, Mark. Good morning, everyone, and thank you for joining us to discuss our fourth-quarter and full-year results. As a reminder, if you would like to ask a question after the prepared remarks conclude, please feel free to submit them through the chat function. Our 2023 results were significantly impacted by the combination of prevailing macroeconomic conditions, multiple industry-specific events, and the cyclic off-election year impact on our advocacy businesses. When comparing our net revenues to the most recent non-election year in 2021, our net revenues on a like-for-like basis increased 5% for the full year. When we discussed our Q3 results a few months ago, Mark had called for a bottom, in line with this in the fourth quarter, there were indications that the macroeconomic and industry-specific challenges experienced throughout the year were beginning to abate. For the quarter, we reported revenue of $655 million, a decline of 8% as compared to the same period in the prior year. Net revenue excluding pass-through costs declined 6% for the same period to $551 million, but importantly increased sequentially from $535 million in Q3. We've also observed additional positive trends developing over the year. Throughout '23, we saw our largest customers invest in their relationship with our agencies. Our top 100 customers in 2023 grew to 48% of total net revenue. For the full year, this group of customers increased our year-over-year net revenues by 7%. This growth was more pronounced among our top 10 customers, which drove 11% increase in our year-over-year net revenue. These companies are among the most recognized brands in the world, leaders in technology, business services, consumer, and transportation. The growth resulted from both increased spending on existing projects as well as the addition of several new assignments. Examining the revenue by capability, the fourth quarter marked a turning point for both our digital transformation and consumer insights businesses after bottoming in the third quarter. While headwinds have not completely dissipated for either capability, the year-over-year decline in net revenue was significantly smaller in the fourth quarter than it had been in the prior quarters during the year. In Q4, digital transformation delivered $133 million in net revenue, a decline of 9% year-over-year. For the full year, net revenue was $529 million, representing a year-over-year decline of 15%. Excluding advocacy, which is in an off election cycle year, the capability declined a much smaller 3% for fourth quarter. This is a significant improvement compared to the 17% decline in revenue in the third quarter. The sequential ex-advocacy improvement was driven by technology customers, which began putting dollars to work with our digital transformation agencies. This gives us optimism that digital transformation will return to growth in 2024. Consumer Insights and Strategy reported $52 million in net revenue in the fourth quarter, a decline of 3% year-over-year. For the full year, net revenue declined 4% to $199 million. The Writers and Actors' Guild Strike had a residual impact on this capability running over into the fourth quarter, but we were still able to post sequential improvement overall for the quarter. The decline of 3% in the fourth quarter is a meaningful improvement over the 9% decline in Q3, providing more optimism that the trend is reversing. Outside of the Media and Entertainment verticals, the capability performed well in '23, posting 6% growth, led by gains in automotive, consumer products, and transportation. Performance Media and Data reported $75 million in net revenue for the quarter, an increase of 1% over the prior period. The non-recurrence of a large automotive media placement weighed on the growth during the quarter. Despite that, the full year's net revenue increased 5% to $285 million. Creativity and Communications delivered $235 million in net revenue in the fourth quarter, a decline of 6% over the prior period. Excluding advocacy, the net revenue decline was 5% for the full year. Excuse me, for the full year Creativity and Communications, posted $936 million in net revenue, a decline of 3%. Excluding Advocacy, the decline was only 2%. The capability was impacted by several factors in a quarter, including the after-effects of strikes on our auto customers and macroeconomic uncertainty weighing on some of our retail and technology customers. Stagwell Marketing Cloud Group delivered $55 million in net revenue in the fourth quarter, representing a 6% decrease over the prior comparable period. $45 million of this net revenue came from our Advanced Media Platforms group, and approximately $10 million was derived from our Software Platform products. For the full year, SMCG delivered $198 million in net revenue, representing a 31% increase over 2022. The suite of software products continues to be a key strategic investment priority for us. For the full year, we increased our investment in this product group by $20 million over the prior year. International delivered 17% of our consolidated net revenue for '23 and grew 13% for the full year, led by particularly strong growth of 17% in EMEA and 5% in Asia-Pacific. Management has taken decisive actions in response to the persistent pressure on revenue during the year. In the fourth quarter, we took additional steps to align our staffing costs with trending revenue, eliminating $16 million of annualized salaries and bringing out full-year annualized actions to $98 million. Our headcount exiting the year was 4% lower than at the beginning of the year. Our actions have resulted in a reduction in the staff cost ratio to 64.3% in Q4 from 67% at the end of the first quarter, an improvement of 270 basis points. And we continue to monitor our staff cost carefully, as we transition to increasing revenues in 2024. General and administrative costs accounted for 18% of net revenue in the fourth quarter. This is an improvement of 60 basis points versus the first quarter as we took steps to lower discretionary spending. Noteworthy specifics include real estate consolidation, which has been a significant priority for us since the merger. In 2023, we realized an additional $4 million of annualized savings, bringing the total annualized savings from real estate actions to more than $7 million since the merger. The implementation of our global ERP and HR systems is now nearly complete. Our focus is now shifting to consolidating our agency's finance organizations to our Shared Services Platform. Based on actions taken throughout '23, more than $4 million of annualized savings have been realized through this initiative, and the HR team has taken further steps to reduce costs by consolidating resources where appropriate. In recruiting, the implementation of a new global applicant tracking system has reduced recruiting costs by more than $2.5 million year-over-year. The totality of our actions has led to Q4 adjusted EBITDA of $95 million or 17% margin on net revenue. For the full year, adjusted EBITDA was $360 million, also at a margin of 17%. As I mentioned previously, we continued to make strategic investments in the Stagwell Marketing Cloud. Excluding the incremental $20 million of investment in 2023, our full-year adjusted EBITDA margin would have been approximately 130 basis points higher, or approximately 18%. During the quarter, we also sold ConcentricLife, which was no longer a core strategic asset in our portfolio. Gross proceeds from the transaction were $245 million. Adjusting for transaction costs, we received approximately $230 million in cash, resulting in a taxable gain of $175 million. The amount reported in our year-end financial statements is lower than the taxable gain as a result of the approximately $100 million of non-cash goodwill relieved from the balance sheet in connection with the sale. As a result of our collective actions in the fourth quarter, we generated a consolidated net income of $46 million as compared to a net loss of $43 million in the prior year. For the full year, the consolidated net came to $42 million versus $50 million in 2022. And moving to the balance sheet, we continue to take actions to improve the strength of the long-term balance sheet. Starting with deferred acquisition consideration, we reduced obligations by approximately $60 million from year-end 2022 to $101 million at the end of '23. Excluding the impact of our recently announced acquisitions, the year-end DAC balance would have been $97 million. In line with what we communicated previously. We are now on track to reduce our DAC applications to approximately $40 million by the end of 2024. We've also acquired 3.3 million shares during the quarter at an average price of $5.21 per share, for approximately $17 million. This brings our total buyback activity year-to-date, inclusive of the AlpInvest transaction announced on our first quarter call to approximately $209 million, representing approximately 33 million shares at an average price of $6.30. Our existing buyback authorization as of year-end has $139 million in remaining availability. CapEx in capitalized software for the quarter was $11 million, bringing our full-year CapEx in capitalized software to $42 million, which is in line with our guidelines. As a result, we ended the quarter and year with cash of $120 million and drawings under our revolver to $59 million. Our leverage ratio at year-end was 2.9 times. And finally moving to 2024 guidance as highlighted by Mark in his remarks, we are guiding to full year 2024 as follows: Organic net revenue growth is expected to be between 5% to 7%. Organic net revenue, excluding advocacy growth is expected to be 4% to 5%. Adjusted EBITDA is expected to be between $400 million to $450 million. We expect to deliver approximately 50% free cash flow conversion and adjusted earnings per share is expected to be between $0.75 and $0.88. That concludes our prepared remarks for this morning. I will now turn the call back over to Ben Allanson to open the Q&A portion of the call.

Thank you, Frank. If you have any questions, please do submit them via the chat button at the top of the screen. We're going to start today with a question from Steve Cahill. Steve has asked here we've seen core creatives slow at some of your peers. Was that part of the Q4 trend that resulted in growth in EBITDA coming a little bit below expectations?

I think that a lot of our core creative tends to be a little bit more project-oriented, so I think that it can ebb and flow more easily than some of the others. I was generally satisfied with the performance of the core creative, given the overall marketplace. And I think that you look then at a lot of stuff pushed into this year because I think we had a really strong Super Bowl presence.

Next question from Mark

I think we're seeing big tech ease up. I think that we really saw this dramatic cutback at the beginning of last year that extended through the year. I think in the fourth quarter -- as I said, I thought it would take about two quarters to see recovery. I think we've had one tech company really where we've expanded almost 50% to 100% without even a pitch. Some of the companies that had cut back and gone into zero, so I'm not going to say that they are back to full spend, but I think that they have considerably started to ease up, and we saw that start happening in the fourth quarter, and I expect that to continue into the first quarter. Look, I think that the work that they're going to need to get AI working and coordinated with their own consumers is going to be huge here. I think you see it in companies introducing AI products and then having to pull back how much work is really going to be required in the digital transformation world, end of that, I think it's just a matter of time before those floodgates get open. I don't think they're open yet. I'd be surprised if they didn't open up by mid-year.

Maybe playing off that. A question from Jason Kreyer over at Craig-Hallum. Can you just walk through some of the digital transformation trends we're seeing today and how that perhaps plays into guidance for the new year?

AI, AI and AI. Look, I think that this is going from the year of efficiency, where I think the tech companies manage to recover their bottom line very strongly by cutting back what they're doing into what is a year of competition. I think nobody owns the cloud anymore. I think nobody owns AI. I think the two biggest things out there now are going to see really active competition. And that means the big tech companies are going to have to invest in both their own products and in the marketing of those products and in winning over consumers.

Great. Maybe on the AI question. Jeff Van Sinderen at B. Riley, can you speak more about your AI initiatives for 2024 and where you expect to gain the most traction? Maybe touch a little bit of margin contribution, how that might shift?

Look, I think ultimately the most traction will be in developing AI applications for our clients. I think you have to look at every website and say, is it doing the best job that it can do, given AI. Look at some of the things we're doing, where people are going to say something like, well, I want to hold an office party or I want to hold an earnings call, tell me all the things I need. So rather than having to go specify everything, AI is going to figure that out for you. It's going to transform the shopping and communication experience that people have. I think that is going to be the biggest area and our biggest area of weakness over this year, which has been the digital transformation. I mean -- by the way, digital transformation industry saw weakness across the board in a lot of the players here. I think that's going to fill up with these kinds of assignments. Obviously, we're incorporating it in our products, profit, Quest AI, and obviously, we are looking to simplify our own internal procedures, even down to like the reading of all the hundreds of thousands of builds that come in using AI. So it is at all levels. But I think the biggest thing is that, out there virtually every company is going to get organized now to figure out how is it going to apply AI, particularly to the last mile, how you communicate with your consumer.

Great. Just pivoting to advocacy for a second. A question about advocacy spend, last week a TV broadcast talked about the Trump campaign using funds for legal fees versus advertising. Do you see 2024 political ad spend at risk versus prior cycles?

No. I think that if anything, you can be sure, this is going to be an all-out slugfest of the highest possible dimensions and proportions. The closer the country is, and this is a very close country, the more political spending goes to infinity, because that very last vote determines the fate of the nation, literally. So I think all indications are and our early indications are that this is going to be the strongest political cycle in history.

Maybe a question for Frank here just a little bit. How should we think about Q1 seasonality relative to a year ago as baited to the guidance?

I think the overall pattern remains the same. I think the actions, though, that we have taken, particularly on the cost side, put us in a better position than perhaps last year, entering the first, which is generally the softest quarter of the year.

And maybe on the cost as well, Laura Martin at Needham says, great year-over-year cost-cutting in Q4. How much more cost-cutting do you think you can achieve in 2024?

I think we'll see more cost-cutting. Mark talked about the $35 million initiative that we have out there. So we're pursuing that. I mentioned in my script that we nearly completed the rollout of the ERP systems and the big platform systems. Now we're going to start to move the organizations onto the Shared Service Platform, which we expect to realize incremental savings from. So I think there is room for more savings here.

But I don't think you have to look at savings just in terms of kind of standard cutbacks. I think you look at the kind of inventive things that we're doing to save. The application of AI internally, the creation of a new central production group that will greatly reduce internal production costs, the creation of a new survey panel. We spend $50 million on outside survey. So the ability to in-house and produce more of those basic costs of goods is really going to, I think, be very much behind the next phase of cost reduction, as well as the kind of offshoring that we're doing for simplified tasks. If people aren't in the office, they might as well be in the office a long, long way to lower cost jurisdiction. So I think that we're going to apply all of those things to continue to drive costs down and what I believe is the cost-declining industry.

A couple more questions just to wrap it up. First, from an investor. Can management comment on any other non-core assets that might be for sale and what would be an approximate range of value for these assets?

I think we're looking at a sale that I thought might take place by the end of the year, that I think is going to be later in the year, probably something about a half or a little bit more than half the size of the last disposition. I have one or two others, I do think that we're going to continue to look at our portfolio and say, look at those things that are non-core and somewhere between $100 million and $200 million a year, say, maybe we can better invest at a lower multiple in the areas that are core to us, and also take advantage of the fact that we have an incredible platform and we've grown some amazing companies over time here that have spectacular values that aren't fully realized in the marketplace yet.

Great. And final question, and this is on guidance. We've had it from a few people from Barton over at Rosenblatt and from Steve at Wells Fargo. Can we just talk a little bit about some of your learnings from the guidance process last year and tell us what makes this year's guidance sufficiently de-risked in your view?

Well, look, I think we heard you. I think that, first, many of the moves that occurred in the marketplace were unprecedented. We've been doing this for eight years or so. And outside the pandemic, we haven't had a situation, as we did, where say, three major clients cut back $50 million of fees so quickly as you saw the year of efficiency come in. I think, second, we have really cut costs significantly during the year and have significant additional goals for cutting costs. And I think we were coming off of that a really strong, heady 2022 that had really high levels of labor. And also, this is a political year in what we expect to be a political year. And we have hedged the budgets here to really try to be prudent in the kind of projections that we're making. And finally, as I mentioned. We're informed by being able to take a peek at the numbers coming into check.

That's the end of the Q&A session from us. Thank you, Mark. Thank you, Frank. And we hope you'll join us on the Q1 call coming up later this year.