Good afternoon, ladies and gentlemen, and welcome to the Emerald Holding Second Quarter 2020 Earnings Conference Call. During today's call, all parties will be in a listen-only mode. Following the prepared remarks, the conference will be opened for questions and instructions to follow at that time. As a reminder, this conference is being recorded.

I would now like to turn the call over to Mr. David Doft, Chief Financial Officer. Please go ahead, sir..

Thank you, operator, and good afternoon, everyone. We appreciate your participation today in our second quarter 2020 earnings call. I'm very pleased to have Brian Field, Emerald's Interim President and Chief Executive Officer with me here today.

As a reminder, a replay of this call will be available on the Investors section of the Company's website through 11:59 P.M. Eastern time on August 17, 2020.

Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about future expectations, beliefs, estimates, plans and prospects.

Such statements 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. Such risks and other factors are set forth in the Company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings.

We do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S.

GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release. Now, I'll turn the call over to Brian..

Thank you, David. This afternoon, I will provide an update on the current state of our business, as well as the significant progress that we have achieved implementing our strategic initiatives, despite the significant challenges that we continue to face, due to the ongoing impact of COVID-19.

David will review our second quarter results, and we will then open the call to your questions. On today's call, there are six main points, I hope you take away.

First, we remain confident in the quality and importance of our industry leading events, and have received consistent feedback from our customers through the pandemic, as they wish to return to our live events as soon as they are able, given the importance of our marketplaces to their businesses.

Second, we have made significant progress implementing our strategic initiatives, which we believe will drive improved execution and accountability across the company.

Third, we are well underway in the process of building a centralized customer data hub, which will allow us to have a deeper understanding of our customers' interests and behaviors across the landscape of our products and services. This will open the door to both cross selling, as well as new product development led by customer insights and data.

Fourth, we continue to reduce our expense structure through the second quarter, which positions Emerald to conserve capital over the near-term, and is expected to improve our profitability over the longer-term as the environment begins to normalize.

Fifth, we have adapted to the current environment by delivering successful webinars and virtual trade shows, which open new revenue streams for Emerald, as well as the ability to engage with our customers year-round.

And lastly, we raised $400 million through the issuance of convertible preferred stock, the final portion of which is scheduled to close later this month. We believe this capital raise provides us with liquidity and flexibility to make the right decisions for the business during uncertain time.

While we remain confident that the exhibition industry will return to its former health and vitality over time, we simply do not know how long that will take. This equity raise provides the capital bridge to when the events industry returns to a more normal state.

Turning to our trade shows, we have cancelled or rescheduled nearly all of our shows that were to stage through the third quarter and several beyond that, given the rapid spread of COVID-19 across the country. In total, we have cancelled 60 events that accounted for approximately $197 million of 2019 revenues.

We have also postponed 14 events to the second-half of this year, which accounted for approximately $8 million of 2019 revenues. We will continue to watch the environment very closely, especially given the recent surge of COVID-19 cases across much of the country.

And we'll make decisions that are in the best interest of our customers and employees, as their health and safety are a paramount importance to us. As you think about our shows, Atlanta, Denver, Las Vegas, New York City and Orlando, are the cities which are most relevant to our event schedule.

As David will touch on in more detail, we continue to make claims against our event cancellation insurance policy, which includes coverage for communicable diseases.

We have submitted $89.1 million in claims for canceled events, previously scheduled to take place in the first-half of the year, and are very pleased to report that we have already received $48.2 million in interim pre-payments through July.

While we work to finalize those claims, we are also processing the next wave of insurance submissions over the coming weeks. While we have not been able to stage shows through the second quarter, this has allowed our team to accelerate the implementation of our strategic initiatives.

And I couldn't be more encouraged with the success that we're achieving. When I first joined Emerald, a little over a year ago, it was clear to me that the company's challenges were largely the result of poor execution, a lack of accountability and a siloed organizational structure, all of which we have aggressively addressed.

As we execute upon our strategic initiatives, we are trying transforming the company and how we operate, building the foundation for future growth and improved profitability. One example of our progress can be seen in our approach to our marketing function, which like many functions Emerald, was previously handled individually at the brand level.

As a result, we could not scale the benefits or best practices that clearly exists across portfolios, nor it could we leverage customer insights and data across shows and products.

To solve this, we have reorganized our brand marketing and marketing operations functions into central teams to deliver more impactful marketing plans, utilizing common processes, technology and data, while allowing us to deliver more quantifiable value out of our marketing spend with 25% less staff.

We have also commenced the reorganization of our sales teams in the pod structures focused on their specific end markets. These new structures include specific roles for lead development, account management and customer success.

This structure moves us away from generalist selling to a structure designed to improve sales velocity on the front end of the process, with greater up-selling, product utilization, deeper customer satisfaction, and higher retention on the back end with our customer success roles.

Central to both these initiatives is an improved deeper understanding of our customers their behaviors, and designing ways to provide them value and engage with them year-round. This is delivered through a holistic view of our customers' data footprint across our products, and tying that into a cohesive sales and marketing technology stack.

I'm very excited that the first phase of our unified technology initiative, we're calling Smart Tech, will be completed this August, with the goal of being fully functional in the first quarter of next year.

This will allow us to have all of our customer data information in one centralized customer data hub, allowing us to have a deep understanding of our customers interests and behaviors, what events they attend, what they do with those events, who they interact with, the content they read online, the webinars they view, among many other touch points.

We believe, this will provide us with a greater insight to what our customers care about, their intent, so to speak, which will allow us to be more targeted in how we market and sell solutions to them, and more effectively engage them year-round.

As we continue to augment this customer data, it should drive continued product and service innovation informed by deep customer insight. Another area we are very excited by, one that has also grown out of the pandemic is the acceleration of our digital solutions, including content rich webinars and virtual events.

Through the second quarter, we have hosted more than 140 webinars and built an internal library of over 300 podcasts, which offer valuable content for our customers. We also hosted a small number of successful virtual trade shows, with several more scheduled in the second-half of the year.

These virtual shows have many of the same features found at our live events, including keynote speakers, awards and virtual booths, allowing our exhibitors to load their products and host virtual meetings with buyers.

While the feedback we've received from our customers is enthusiastic, they also note that they do not replace the value found in face-to-face in traditional, in-person shows and are outspoken in their desire to return to live events once the medium is safe.

That said, we believe that there is an emergent hybrid model, whereby virtual shows will complement live events over the year. While we project a modest revenue opportunity in the $5 million to $10 million range at a strong contribution margin.

In the near-term, the more important value of these events is our ability to engage with our exhibitors year-round, and to provide them commercial solutions, particularly in today's environment. These platforms also serve as meaningful new customer acquisition vehicles as well.

Over this past quarter, our webinar and virtual event products have generated over 50,000 new customer prospects. Our team will continue to innovate in the digital space as well as explore new products and services, as we continue to expand the value that we provide to our customers.

Another key to our success was our recent capital raise, which provides management with the flexibility and confidence that we can weather a prolonged downturn in the events industry. While it is unclear when large U.S.

trade shows might return to a more normalized level of business, our top considerations are the health and safety of our customers, and ensuring that we continue to provide value during this challenging time.

Our capital raise provides us with liquidity to make the right decisions for our customers, while continuing to invest in the company and take advantage of opportunities that may present themselves as a result of the dislocation caused by the pandemic.

Before turning the call over to David, I would also like to highlight the additions of Linda Clarizio and David Levin to our Board of Directors. Both Linda and David are accomplished executives with deep experience in the event sector and digital media ecosystem. Notably, Linda previously served as the President of U.S.

Media at Nielsen, and David formerly served as the CEO of UBM, where I had the pleasure of working with him for several years. Their industry knowledge and expertise is going to be of great value, as we continue to strive to unleash the vast potential that exists within Emerald today. I am looking forward to working with each of them.

Now, let me turn the call over to David..

Thank you, Brian, and good afternoon. For the second quarter, we reported revenues of $7 million, which compares to $103 million in the year ago quarter.

The decrease was primarily due to the cancellation of 20 events due to COVID-19, most notably all our summer market, HD Expo, RetailX and the Couture Collection Show, and the postponement of eight events to the second-half of the year.

Our adjusted EBITDA for the second quarter was $33.2 million, as compared to $36.5 million in the same period last year, adjusted for shows scheduling differences, including the event postponements due to COVID-19.

The decrease in adjusted EBITDA of $3.3 million was mainly due to the COVID-19-related event cancellations, representing prior year second quarter adjusted EBITDA of $56.3 million. This was partially offset by the recognition of $48.2 million in other income related to event cancellation insurance claim proceeds.

Second quarter 2020 adjusted EBITDA also reflected the combined effect of lower organic revenues, offset by the continued cost savings measures that we are implementing, and which I will discuss further in a moment. One item to note is the accounting treatment of our convertible preferred offering on net income.

The 7% coupon will accrete quarterly and there will be net income appropriated to preferred holders. You can see a very minor amount in our financial results for the second quarter, as there were two days of accretion from the first tranche of the offering that Onex participated in. This will become more pronounced in the third quarter.

Pro forma for the offering Onex’s ownership is 85.3% of the company on an as converted basis. Free cash flow for the second quarter was a use of $32 million, which includes $27 million of customer refunds for canceled events.

The underlying business trends reflected approximately $27 million of cash outflows for expenses, including payroll and severance, offset by $12 million of cash collected for future events in media, as well as $15 million of insurance proceeds.

At June 30, we have a refund liability of $45 million for canceled shows, which we expect will largely be paid out in the third quarter. Additionally, we have an incremental $30 million of customer pre-payment on hand for all future events, including many that are scheduled to stage in 2021.

As Brian touched on, we have had seven canceled events approved for reimbursement by our event cancellation insurance carrier, and have received $48 million of prepayment against the expected full claim value of $66 million for those events.

We have submitted an incremental $23 million of claims that are pending for events through June 30, and another $6 million for events in the third quarter. We are further preparing another approximately $40 million of insurance claims for canceled shows, which we expect to submit in the coming weeks.

Upon submission of those claims, we expect to have approximately $87 million of claim value pending.

Given our success at cost avoidance for canceled events, we anticipate that even if we have to cancel all events for the remainder of 2020, the amount of our event cancellation insurance claims for 2020 will fall within the $191 million limit of our primary event cancellation insurance policy, as well as the separate $6 million limit specific to our 2020 Summer Surf Expo event.

At quarter end, we had $218.6 million of cash on hand, which reflects proceeds from Onex's initial purchase of convertible preferred stock. We also have full access to our $150 million revolver, as we paid down to $100 million that was drawn on at the peak in the quarter.

Post quarter end, we have received a further $9.7 million from our rights offering, and $33 million in proceeds in the form of pre-payments against our insurance claims.

Over the next couple of weeks, we expect to close the Onex backstop on our rights offering, which will bring in an incremental $126 million, which completes the $400 million convertible preferred stock financing. That would leave us with approximately $380 million of cash on our balance sheet.

As a proxy for cash, we would expect insurance proceeds to more than offset through remaining cash refunds for exhibitor deposits. We finished the second quarter with net debt of $309.5 million, representing a net leverage ratio of 2.3 times, our TTM consolidated EBITDA of $136.9 million per the terms of our credit agreement.

As a reminder, our credit agreement has a springing total net leverage covenant of no more than 5.5 times, which kicks-in, if borrowings under our credit facility exceed 35% of our revolver capacity of $150 million.

At June 30, we had no borrowings under our revolver, and do not expect to draw on our revolver in the near-term, given our recent capital raise. Turning to expenses, our cost structure is made up with the direct costs needed to execute events, and the SG&A or overhead needed to run the company and manage our portfolio of assets.

Direct costs are largely variable, typically 70%, however, with enough advance notice, almost all direct costs can be avoided, which you can fully see in our results this quarter. To-date, we've avoided over $62 million of direct costs for events that we have had to cancel.

And we are carefully managing commitments for those yet to stage, in order to maximize our ability to avoid further costs, given the current circumstances. When you think about our business model, we have a very flexible expense structure, which we're in the process reviewing from the ground-up to understand every line item.

As part of this, we have closed three of our 14 offices and we will continue to evaluate our real estate footprint as appropriate. Our rent expense is now less than $3 million annually.

We have also been aggressively reducing our operating expenses, having furloughed or permanently reduced approximately 20% of our staff, and consolidated functions like our marketing and sales groups, which Brian touched on.

This has contributed to a significant decline in our monthly expense run rate from approximately $10 million at the beginning of the year to $7 million at June 30. That said, we're spending money on important initiatives to ensure we are cultivating the business, such as the technology initiative that Brian earlier outlined.

We are also beginning to accrue sales commissions and bonuses as insurance proceeds come in. Overall, we're driving a culture of accountability as it relates to expensive and spending.

As part of this, we've established a procurement department this quarter, whose mandate is to further drive efficiencies, use the company scale to better drive terms and pricing from our vendors, and ensure we maximize value for the dollars we spent. We will remain very focused as we streamline our operations.

Given the success that we have achieved reducing our expense base and raising capital, we feel we have a long runway to continue to invest in the business, further execute our strategic initiatives and determine when the environment is sufficiently normalized, to begin staging shows.

We believe we're in a good position as we exited the second quarter. With that, I'll now turn the call back to Brian for his concluding remarks..

Thank you, David.

While the environment remained extremely challenging for the exhibition industry globally through the second quarter, I'm pleased with the progress that we have achieved positioning Emerald for the future, highlighted by our capital raise which will provide important financial flexibility to make the right decisions for our business and our portfolio of industry leading shows.

This flexibility will allow our team to continue to implement our strategic initiatives, designed to improve all aspects of the customer experience at our events, while also investing in new digital offerings.

These digital offerings will allow us to engage with our customers to be round, by opening new high return revenue streams that have not existed before. Lastly, we have reduced our cost structure by more than $15 million year-to-date, and we see opportunities to reduce costs further.

When events begin to stage once again, we expect Emerald will be a more profitable company with a foundation to drive organic growth. To conclude, I would like to thank all of our employees for their tireless work and dedication during such a challenging time. We remain committed to the health and safety of our staff and customers.

Thank you again for your time today. Operator, please open the call for questions..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first questions come from the line of Jeff Meuler of Baird. Please proceed with your questions..

Good afternoon, Brian and David. Thanks for taking the question. Can you just help me understand direct cost, it looks like they were kind of a negative or a net benefit in the quarter? So, I don't know if there was some refund.

Or just can you just help me understand what drove that? And then looking out over the next few quarters if you're not in the scenario that you may not be staging any shows, would you continue to expect direct costs to run around zero?.

Thanks, Jeff. Good afternoon. So, direct costs in the quarter, you're right. It's a small credit. And we had a lot of success aggressively, avoiding costs that were tied to the events in the quarter.

We also were very successful because of the conditions around COVID, to get out of contracts and cancellation fees that we might otherwise be subject to, if it were not for, say the force majeure or of the COVID situation, where venues were forced to be shut by local governments.

And so, that helped us have the direct cost line be almost entirely variable versus having a little bit of fixed. When we talk about the 70% variable, we're generally looking at the other 30% of around contracts that are a little harder to get out of, but with enough time or under certain circumstances we can. And 2Q is a great example of that.

The credit comes down to some negotiations around certain contracts where we were able to benefit from some things that we booked as expenses in 1Q, but ultimately, we're able to get out of the contracts through negotiation, and so we reversed some of those expenses for the credit in 2Q..

Okay. And then hate to make you go through the accounting.

But I guess, what is the pro forma interest expense now between the term loan and the convertible preferred, once that all closes? And if you could maybe just give us a little bit more detail on what you hit on in the prepared remarks about the 7% coupon accreting quarterly? And how that will flow through the P&L?.

Of course. So, to be clear, the convertible preferred is a piece of equity, not debt. So, nothing from that security flows through interest expense. So interest expense will entirely be tied to our term loan or any potential borrowings under the revolver. But as I said on the prepared remarks, we don't expect any anytime soon.

We have floating rate on the term loan that is LIBOR plus 275. So right now we're paying about 3%, give or take as an annual rate on our borrowings.

The coupon related to the convertible preferred stock, which essentially is a dividend is actually booked below net income, and so that net income would then have an additional expense after it, before it gets down to net income available to common shareholders.

And so what you would do is take the quarterly accretion for the coupon, and it would be an expense below net income.

You would also take the portion of net income allocated on an as converted basis to the assumed number of shares tied to the preferred shares, issued number of common shares tied to preferred shares, and you would allocate that percent of net income to the preferred shares would also be expense before net income to common shares..

Okay. And then maybe just one on kind of like show planning. Just as you kind of obviously mentioned, the COVID spread and there's more geographies and there's more I guess travel restrictions, including in some states where you typically host shows.

So, I guess just what's the update on how you're thinking about planning out the calendar, how far in advance you're canceling, or where you have shows on the calendar? Just, I guess, how you're assessing the probability of those actually occurring or planning business operations around that. Thanks..

Yes, thanks. Jeff, Brian here. So it really, as you pointed out, the way that states are approaching this is on a very state by state, sometimes even city by city basis. And so in some cases, there are cases, for example, in Chicago, for example, that have very stringent types of expectations around when they might be available and open for business.

In some cases, it's very kind of flexible and changes almost from day to day. And so what we're doing is looking at the show schedule and trying to take a reasoned and balanced approach at this, A, because our customers, by and large are kind of urgently hoping to be able to do business as soon as possible.

And while we have to take that into account on one hand, we also have to take into account the safety and the health of those customers, as well as our staff that might be brought to bear to actually stage the shows. So, we're looking out really over the next few months to see where there's still a viable show that can take place safely.

And working with the local venue management as to how we might be able to design that. We actually created a preparedness, prevention and response plan that takes into account many of these things, everything from communication to local restrictions to the PPE that might be necessary in any given show.

And so, we're overlaying that upon every single show still on the schedule from here to end of the year and even beyond. And we have to make a call as we get closer and closer. One thing that David mentioned is that there are certain levers in the cost base that are kind of big milestones.

And when we see that there is a significant cost that's about to come due that becomes a real focal point for us as to whether or not we can meaningfully stage that show with those other conditions, also being accounted for. So, we're trying to take a very holistic and balanced approach to this.

And as I'm sure you can appreciate, the landscape is continuously shifting too..

Yes. Okay, thank you..

Thank you. Our next questions come from the line of Ryan Leonard of Barclays. Please proceed with your question..

Yes. Hi, guys. Thanks for the time. So, looking at the calendar on your website, I guess it looks like almost most if not all shows have been canceled for 3Q. So I just want to confirm that.

And I guess if that is the case, is the $7 million revenue number kind of the right number based on publications and maybe some of the virtual events you are talking about in an event where everything gets canceled?.

Sure. So, it's correct most events through the end of September have been canceled, but not all. And we even had some that have been canceled beyond September, at this point based on our understanding of round availability of venues, related different circumstances in different municipalities.

The $7 million is in the quarter our media business plus a little bit of revenue from webinars. The business as you see in the organic growth line, the media business is down about 30%.

It is certainly taking a hit from the COVID environment, especially the publications that specifically the issues that surround an event that tend to have their peak of revenue surrounding an event. So, if the event is not happening, a lot of that sponsorship dollars, aren't there.

We're not guiding any aspect of 2020, so I'm not going tell you whether that's what the next quarter and next quarter will look like. But given the percent change year-over-year within that, you could look at our historical numbers and make an assumption off of that..

Got it. And then one nitpicky modeling one.

So, I guess what is the right share count to think about with everything fully converted? I think I come out around $185 million, but I'm not sure if it'll take till fourth quarter to really flow through the numbers?.

So, $185.1 [ph] million is the as converted share count, if all of the preferred shares convert on day one of the offering. You're right in terms of the weighted average shares outstanding in our share count will not fall even out.

But keep in mind, the preferred shares don't show up in the weighted average shares outstanding, if they're not converted to the common, only the common shares are there. So, you're not going to see much of an impact. Where you will see the impact is in the accretion line, as I indicated below net income and before net income to common shareholders.

The other thing to keep in mind is that the amount of shares that the convertible preferred stock converts into the amount of common shares does go up by the amount of the accretion, right. So, you have to run an interior model around the 7% coupon to see the changing nature of what the as converted number of shares would be at any point in time..

Okay, got it. And then I guess a bigger picture one if I could. As exhibitors or attendees potentially go, assuming this coronavirus impact last, if they skip two consecutive events.

I guess based on either your experience or data that you track or clients that you talk to, what are the odds they come back? I'm just trying to think if there's really -- if a lot of this lasts into 2021, how exhibitors and attendees will think about events if they haven't gone and two versions of it, or two years?.

That's a good question.

Actually, this is very much one of the reasons why we're looking at the virtual event and the virtual offerings, the digital offerings as real companions to the shows, because there are going to be those customers, both exhibitors and attendees, who, for whatever reason, can't make that next addition to the show, or maybe even the additions following that.

And that could be reasons, for example, for our corporate travel restrictions, or maybe they're just scared, right, and they don't want to get on a plane, they don't want to go to a large gathering.

And so one of the things that we've done to help satisfy those customers, who perhaps wants to but are afraid, is to look at our virtual offerings as those companion elements to the show. So, now they're not going to be as robust certainly, as a live event.

They're not going to have the wide variety of discovery and that sort of serendipitous encountering new colleagues and new products that they might see on a typical live event show floor.

But they'll still have the ability to interact, browse new products online, schedule appointments, find some learning as well, some of those key elements of a live show that isn't necessarily the full live show itself.

So, of course, no one knows having never gone through this before, if they're going to come back the third, fourth, fifth nth time, but this is certainly one of the pieces of the plan that we have in place to ensure that there's as much continuity, customer continuity as possible, while we're going through this time..

Got it. Thank you..

[Operator Instructions] Our next questions come from the line of Seth Weber of RBC Capital Markets. Please proceed with your question..

Hey, guys, good afternoon. I hope you're doing well. I wanted to just stick on that, the emerging hybrid model point for a second. I think you said something like $5 million to $10 of revenue near-term.

Do you have a bench, an idea what you think that could represent over, say the next three to five years as a percentage of your revenue? So, I assume it's a pretty attractive margin. Thanks..

Sure. Thanks, Seth. So, you're right, it is a fairly attractive margin to execute those shows, even at smaller sizes when they're online. And we do think it's something that could actually scale quite meaningfully.

Right now, is very much in the kind of innovation/experimentation phase, and not just for us or other event providers, frankly, for our customers. And a lot of them are willing to take a chance and try it out. And a lot of them want to wait and see how the first one goes for others, before they try it out.

But at the same time, we get to work out the kinks going forward. What I'd say is so far so good. We've had some successful events and events that generally people were pleased with, had strong reviews. We know we have some things to work on and we can make them better.

And so, while $5 million to $10 million is what we believe we'll be able to generate this year as we move forward, there's no reason why over the next couple of years we can double or triple that. And could this be 10% of our revenue two to three years from now, I think it could be as part of a hybrid model..

Okay, that's interesting. Thanks. And I was pretty interested in your comments around the customer data hub that you're developing. Can you just talk a little bit more about that? What type of investment are you making in this? And it sounds like kind of first kick off is like first quarter of 2021. But I assume that's pretty early stages.

Or can you just talk about how much runway you feel like you have with the product? How much you expect to invest in it, and just some of the benefits that you think you get out of it? Thanks..

Sure, absolutely. So this isn't a kind of a flip the light switch and suddenly it's on and on the way, this is something that we're actually beginning to roll out this month. And it'll be, at least, this version of it, will be fully in place by the end of the first quarter of next year. This is really a consolidation of all of these different sets.

We had dozens and dozens of pockets of data around Emerald. And one of the things that we saw when we first saw -- certainly when I first came in a little over a year ago now, is that there's tremendous opportunity to bring all of this data together, because individual show teams, we're just looking at what customers told us.

You tell us your wedding photographer and you're a wedding photographer, and that's just exactly how we're going to treat you. We're going to send you, wedding photographer newsletters, whether or not you open them.

And so when we begin to bring together not just the explicitly told to us information from customers as part of a bank registration or signing up for a newsletter, for example, but actually bring in some of the information about the behavioral footprint of a particular customer, what they're doing online, what they're doing at our shows, what tracks they're going, what conference tracks they're going.

Suddenly, a wedding photographer is not just a wedding photographer anymore, because we see this wedding photographer is actually going to conference tracks about starting up her own business for example, selling CRM solutions.

We’ve realized that she's reading increasing amounts of content about drones and photography through the downloads of whitepapers that she's been doing. And suddenly, what used to be just a wedding photographer now is someone, a customer who might be very well primed for our drone show, for example.

And so, if we begin to understand those types of dynamics of what customers are doing, a very kind of our historically myopic view suddenly becomes much more expansive, and allows us to market and sell a whole new set of different opportunities.

So, it's a very exciting opportunity, because it gives us so much more depth around what our customers are doing, and the interactions they're having with our content and things, all of our products basically, and how they interact with each other too..

Okay, that's pretty interesting. And then, if I could just. Clarification on the $15 million costs save year-to-date.

Is that -- are those all permanent cost cuts? Or do you think some of that will come back as the shows come back on? And should we think of that number going higher here in the second-half, assuming the shows to be canceled or postponed? Thanks..

Sure. So, $15 million is about the run rate on an ongoing basis we've taken out. There is some incremental temporary costs we've taken out as well, that will continue to flex depending on how the event landscape looks related to COVID.

So, we have a bunch of levers at our disposal, both around temporary and permanent cost, depending on how things play out. But the $15 million is a pretty good run rate proxy of what we're down. If you're part of the dynamic of, makes a little bit to talk about publicly because we never gave guidance this year.

I can't really talk to what an original budget was, et cetera. But needless to say, we've made very significant progress off the runway cost structure that we had coming into the year..

Okay. And just -- but you're kind of characterizing those as permanent cuts.

So even if shows come back, those costs won't come back?.

There's about $15 million that we expect will not come back, because the underlying cost. What we're not doing is promising, we may not invest in some other things as we look to next year as part of our planning. But there is a hard $15 million that's out of the cost structure on an ongoing basis..

Okay. I appreciate the help guys. Thank you very much..

There are no further questions at this time. I would now like to turn the call back over to management for any closing remarks..

Thank you. I would like to thank you all for joining us today. And we look forward to our next opportunity to share our further growth and continued progress with you. Thank you very much, everyone..

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day..