Executive Summary / Key Takeaways

• Emerald Holding ($EEX) is executing a strategic transformation, shifting from a decentralized model to a unified platform focused on high-growth B2B sectors through aggressive portfolio optimization (pruning unprofitable events and acquiring accretive assets).
• The company delivered strong Q1 2025 results, with revenue increasing 10.7% year-over-year to $147.7 million and Adjusted EBITDA rising 31.4% to $53.6 million, demonstrating improved operational efficiency and the initial benefits of strategic initiatives.
• Recent significant acquisitions, including Insurtech Insights and This is Beyond, are strategically expanding Emerald's presence in resilient, high-margin verticals like insurance technology and luxury travel, contributing to an improved portfolio mix and expected future growth.
• Emerald maintains a solid financial position post-debt refinancing, with ample liquidity ($386.8 million total liquidity as of March 31, 2025) and improved debt terms, supporting continued investment, M&A, and capital returns, including a re-initiated quarterly dividend.
• Management remains on track to achieve its full-year 2025 guidance of $450 million - $460 million in revenue and $120 million - $125 million in Adjusted EBITDA, implying significant margin expansion, driven by organic growth, acquisition contributions, and cost management, while acknowledging potential macro and tariff-related headwinds.

Reshaping the Core: Strategic Evolution and Competitive Positioning

Emerald Holding, Inc. ($EEX) operates at the heart of the business-to-business (B2B) interaction landscape, primarily through organizing market-leading trade shows and live events across the United States, with a growing international footprint. Its business model extends beyond physical gatherings to integrate media content, industry insights, digital tools, data-focused solutions, and e-commerce platforms, aiming to provide year-round value and engagement for its customers. Historically structured as a decentralized collection of brands, Emerald has undergone a significant strategic evolution, consolidating onto a unified, scalable platform. This shift is guided by three core pillars: customer centricity, 365-day engagement, and aggressive portfolio optimization.

The B2B events industry is notably fragmented, with the top five players, including Emerald, comprising only about 8% of the wider U.S. market. This fragmentation presents both opportunities for consolidation and intense competition from existing operators and new entrants. Key direct competitors include global players like Informa PLC (INF) and RELX Group (RELX) (through Reed Exhibitions), as well as digital content providers like Clarivate Plc (CLVT). While these larger rivals often possess greater scale and broader international reach, Emerald strategically positions itself by focusing on market-leading positions within specific industry verticals and leveraging its integrated platform and specialized digital tools.

Emerald's competitive advantages, or moats, are increasingly tied to its digital platforms and the network effects within its focused U.S. events. The company's proprietary digital tools, such as the Elastic Suite for B2B commerce and the Bulletin platform, complement its live events, providing year-round channels for customer acquisition and development. Elastic Suite, for instance, is designed to streamline wholesale buying processes, offering efficiencies that can translate to lower operating costs per transaction for users. The company is actively developing these platforms, including expanding Elastic into new industries like kitchen and bath and integrating Bulletin into event experiences like New York Now.

Beyond existing platforms, Emerald is investing in technological innovation through its Xcelerator unit, focused on launching new event concepts, and by testing applications of artificial intelligence (AI). AI is being explored across marketing, content, procurement, and legal functions to enhance efficiency, personalize messaging, improve conversion rates, and attract leads. While specific, quantifiable performance metrics for these AI applications are not yet detailed, the strategic intent is to leverage technology to drive operational improvements and deepen customer engagement.

Compared to larger, more diversified competitors like Informa and RELX, Emerald's smaller scale can result in higher operating costs per event. However, its focus on niche market leadership and the efficiency offered by its specialized digital platforms help mitigate some of this disadvantage. While competitors like RELX and Clarivate may possess more advanced data analytics capabilities or faster data processing speeds in certain areas, Emerald's strength lies in integrating its digital tools directly with its event experiences to provide a more tailored and ROI-focused value proposition for its specific industry verticals. The investment in an international sales division also aims to address a historical underweight in international penetration relative to peers, seeking to diversify revenue sources and tap into markets less impacted by current trade dynamics.

The strategic shift towards a unified platform and the focus on portfolio optimization are direct responses to market dynamics, including the impact of the COVID-19 pandemic, which highlighted the need for resilience and diversification, and the ongoing digital transformation affecting marketing spend. By enhancing its digital capabilities and strategically curating its event portfolio, Emerald seeks to reinforce the value proposition of face-to-face events, which management contends remain critical for business outcomes, relationship building, and ROI in an era of digital fatigue and diminishing returns from traditional online advertising.

Portfolio Transformation and Financial Performance

Emerald's strategic pivot is most evident in its recent portfolio management actions. In 2024, the company undertook an aggressive portfolio optimization effort, including the pruning of 20 smaller, unprofitable events that collectively represented $20 million in historic run rate revenue. This decisive action, while impacting 2024 results, was aimed at improving the long-term organic growth and margin trajectory by removing underperforming assets and focusing resources on events with stronger growth potential.

Complementing this pruning, Emerald has actively pursued strategic acquisitions designed to enhance its portfolio mix and expand its presence in high-growth, resilient sectors. In March 2025, the company acquired Insurtech Insights, a premier organizer of insurance technology conferences across the US, Europe, and Asia. This acquisition provides Emerald a significant foothold in the rapidly evolving insurtech industry. Following shortly after, on May 2, 2025, Emerald completed the acquisition of This is Beyond Limited, a London-based organizer of luxury travel and entertainment travel B2B events. This transaction aligns with Emerald's strategy to deepen its presence in high-margin luxury verticals. Combined, Insurtech Insights and This is Beyond are expected to contribute approximately $40 million in revenue and $15 million in Adjusted EBITDA in 2025, immediately enhancing the company's growth profile and margin structure. These acquisitions represent a deliberate shift in portfolio mix, increasing exposure to luxury and technology sectors while reducing reliance on slower-growth areas like gift and home events.

These strategic actions are beginning to yield tangible financial results. For the first quarter ended March 31, 2025, Emerald reported total revenues of $147.7 million, a significant 10.7% increase compared to $133.4 million in the prior-year quarter. This growth was primarily driven by a 5.6% increase in Organic revenue, with the core Connections segment showing particularly strong organic growth of 6.6%. The increase in Connections revenue was fueled by a 5.0% rise in recurring revenues from existing events and $1.9 million from a new event launch, supplemented by contributions from recent acquisitions and scheduling adjustments, partially offset by discontinued events.

Profitability saw an even more substantial improvement. Adjusted EBITDA for Q1 2025 increased by 31.4% to $53.6 million, up from $40.8 million in Q1 2024. This resulted in an Adjusted EBITDA margin of approximately 36.3% for the quarter, reflecting continued cost management, operational efficiencies, and the accretive impact of the Insurtech Insights acquisition. The increase in Adjusted EBITDA flowed through to net income, which rose to $15.3 million in Q1 2025 from $11.0 million in the comparable prior-year period, despite higher interest expense related to refinancing fees and a higher provision for income taxes.

While the Connections segment demonstrated robust performance, the smaller All Other category (Content and Commerce) saw a 6.0% revenue decrease in Q1 2025 to $9.4 million, primarily due to a 10.6% decline in Content revenues driven by softness in print and digital advertising. However, the All Other category's Adjusted EBITDA improved to $0.7 million from $0.2 million, benefiting from lower selling, general, and administrative expenses in both the Content and Commerce businesses. Corporate-level expenses also saw a decrease in SG&A, contributing to overall profitability gains.

Liquidity, Capital Allocation, and Outlook

Emerald maintains a healthy liquidity position, bolstered by its cash flow generation and recent debt refinancing. As of March 31, 2025, the company held $276.8 million in cash and cash equivalents, with total liquidity standing at $386.8 million, including full availability on its $110 million revolving credit facility.

A key financial milestone was the successful refinancing completed on January 30, 2025. Emerald replaced its existing term loan with a new $515 million senior secured term loan facility maturing in 2032 and extended its revolving credit facility maturity to 2030. This refinancing not only extended maturities but also achieved a significant reduction in interest rate spreads, tightening to SOFR plus 375 basis points from the previous SOFR plus 500 basis points. While Q1 2025 interest expense included $6.4 million in one-time third-party fees related to this transaction, the lower effective interest rate on the outstanding debt post-refinancing is expected to provide ongoing financial flexibility.

The company's cash flow generation remains a core strength. Net cash provided by operating activities increased to $12.6 million in Q1 2025 from $7.3 million in Q1 2024, driven by higher net income and favorable working capital changes. Free Cash Flow also saw a notable increase, reaching $10.8 million in Q1 2025 compared to $4.8 million in the prior year. Management highlighted that underlying free cash flow was even stronger, impacted by the one-time refinancing fees and the timing of cash collections related to the Insurtech acquisition, which were received via a working capital adjustment rather than through operating cash flow.

Emerald's strong balance sheet and cash flow support its capital allocation strategy, which balances investments in the business, M&A, managing debt leverage (targeting below 3.0x net debt to EBITDA), and returning capital to shareholders. The company re-initiated a regular quarterly dividend at $0.015 per share and continues its share repurchase program, buying back $8.8 million of common stock in Q1 2025. These actions underscore management's confidence in the business's long-term value and ability to generate sustainable free cash flow, with a target payout ratio of up to 25% of free cash flow for the dividend.

Looking ahead, management is confident in its trajectory and has reiterated its full-year 2025 guidance. The company expects revenue in the range of $450 million to $460 million and Adjusted EBITDA between $120 million and $125 million. This outlook implies a significant improvement in Adjusted EBITDA margin to approximately 27% for the full year, reflecting the benefits of portfolio optimization, acquisition contributions, and continued cost discipline. The guidance is supported by strong sales pacing data, particularly for the first half of 2025, and increasing rebook rates for early 2026 events.

The 2025 outlook incorporates management's assessment of potential external factors, including the impact of tariffs on international exhibitors from countries like China and Canada, although Emerald's limited international exposure (approx. 10% of revenue) provides some insulation. The company is actively seeking to diversify international revenue sources through its expanded sales network. The guidance also accounts for the temporary drag from ongoing construction at the Las Vegas Convention Center, an issue expected to resolve by the end of 2025. Longer term, Emerald targets mid-to-high single-digit organic revenue growth, aiming for double-digit total revenue growth through accretive M&A and contributions from its Xcelerator launch initiatives, with an ultimate goal of achieving a 35% Adjusted EBITDA margin.

Risks and Challenges

Despite the positive momentum and strategic progress, Emerald faces several risks and challenges. Macroeconomic pressures, including shifting consumer sentiment, inflationary conditions, and potentially high interest rates, could impact exhibitor and attendee willingness or ability to travel and invest in events. Inflationary pressures could also increase labor, venue, and other operating costs, which may not be fully offset by price increases.

The company's event cancellation insurance policies no longer cover losses due to communicable disease outbreaks, leaving it exposed to potential financial and liquidity impacts from future pandemics or similar health crises. Geopolitical factors and trade policies, particularly tariffs, continue to pose a risk to international participation, although Emerald's limited exposure and efforts to diversify its international base help mitigate this.

Operational challenges include the temporary disruption caused by ongoing construction at the Las Vegas Convention Center affecting certain key events. The small Content business remains volatile due to a challenging advertising market, making its performance less predictable. Competition from both traditional rivals and digital alternatives, including shifts in marketing budgets to online initiatives and the rise of virtual event technologies, necessitates continuous innovation and demonstration of the superior ROI of in-person events.

Emerald's strategy to mitigate these risks centers on its diversified portfolio across resilient sectors, active cost management, leveraging its scalable platform for operational efficiencies, investing in digital tools and AI to enhance customer value and internal processes, and strategically managing its capital structure to maintain financial flexibility. The focus on high-quality, market-leading events with proven ROI is intended to reinforce their "must-attend" status, making them more resilient to economic and competitive pressures.

Conclusion

Emerald Holding is undergoing a significant transformation, strategically reshaping its portfolio and operations to capitalize on opportunities in high-growth B2B sectors. The aggressive pruning of unprofitable events in 2024, coupled with targeted acquisitions in resilient verticals like insurance technology and luxury travel, is fundamentally improving the company's business mix and positioning it for enhanced growth and profitability. The strong financial performance in Q1 2025, marked by double-digit revenue growth and substantial Adjusted EBITDA expansion, provides early validation of this strategy's effectiveness.

Supported by a solid balance sheet post-refinancing, ample liquidity, and a commitment to returning capital through dividends and buybacks, Emerald appears well-equipped to pursue its growth objectives, both organically and through further accretive M&A. While macroeconomic headwinds, tariff impacts, and operational challenges like the LVCC construction persist, management's proactive monitoring and strategic initiatives, including investments in digital platforms and AI, aim to build a more resilient and efficient business. The reiterated 2025 guidance, implying meaningful margin expansion, underscores confidence in the path forward. For investors, Emerald's story is one of strategic revitalization, leveraging a core events business with complementary digital tools to drive sustainable value creation in a dynamic market landscape.