iHeartMedia, Inc.

Good day, everyone. My name is Kellyanne. I'll be your conference operator for today. At this time, I'd like to welcome everyone to the iHeartMedia Q4 2022 earnings call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. At this time, I'd like to turn the conference over to Mr. Mike McGinnis, Head of Investor Relations. Please go ahead, sir.

Good afternoon, everyone, and thank you for taking the time to join us for our fourth quarter 2022 earnings call. Joining me for today's discussion are Bob Pittman, our chairman and CEO, and Rich Bressler, our president, COO, and CFO. At the conclusion of our prepared remarks, management will take your questions. In addition to our press release, we have an earnings presentation available on our website that you can use to follow along with our remarks. Please note that this call may include forward-looking statements regarding our financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings. Additionally, during this call, we will refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release investor presentation, and our SEC filings, which are available in the investor relations section of our website. And now I'll turn the call over to Bob.

Thanks, Mike, and good afternoon, everybody. We're pleased to report another quarter of solid operating results for iHeart in consumer usage, revenue, and earnings growth. Even in this continuing challenging and uncertain economic environment, We're continuing our transformation of this company. Before I take you through the fourth quarter highlights, I want to take a step back and talk about the year we've just had. As a reminder, 2022 began strong for us and was poised to be robust for iHeart. However, as we're all aware, a number of macroeconomic factors led to increased volatility and uncertainty, which moderated our 2022 results. Despite these headwinds, we continued to innovate and find new ways to engage with our consumers and advertising partners. We remained committed to evolving our business and we maintained our focus on expense management. And our financials reflect these commitments. The fourth quarter was our best quarter for revenue and adjusted EBITDA ever. And on a full year basis in 2022, we generated the highest revenue and second highest adjusted EBITDA and free cash flow year in iHeart's history. We continue to make strong progress in our transformation of iHeart into a true multi-platform audio company driven by innovation, supported by data and technology, and powered by the largest sales force in audio, executing our unique multi-platform go-to-market strategy of any seller, anywhere, can sell anything. iHeart's relationship with the consumer has never been stronger, and consumers are now spending 30% of their daily media time with audio, and yet audio only captures 9% of total advertising spend. Not only do we believe that the allocation of advertising revenue to audio will increase, but because our broadcast radio assets alone reach 90% of consumers in the United States each month, which, by the way, is now more than twice the reach of the largest TV network, four times the reach of the largest ad-enabled streaming music audio service, and two and a half times the reach of the next largest broadcast radio company, we also expect to continue to take an increasing share of audio advertising spend, driven in part by our large and well-trained sales force. While our digital assets continue to grow, the most traditional of our platforms, our broadcast radio assets, are importantly performing much better than they did during previous advertising downturns. To put this in perspective, in 2020, our multi-platform group revenues declined 28%, but they were up 4% for the full year in 2022. And in 2020, at the beginning of the pandemic, digital accounted for 12% of the company's revenues, and today it's over 25%. And we expect that percentage to continue to grow significantly over the long term, even as broadcast radio grows as well. Broadcast radio, with its unparalleled reach, will also continue to power the development of new platforms and opportunities for us, like our high-growth digital assets. This includes the iHeartRadio app, our podcast business, our new Metaverse platform, and our leading positions on all major social media platforms with our nearly 300 million followers, which is seven times larger than the next largest audio company, and which includes our most recent successful expansion into TikTok, where our follower count grew 300% in 2022 to 27 million TikTok users with twice as many user engagements as the next largest audio company. We remain committed to meeting our listeners wherever they are with the products and services they expect and to effectively monetizing those relationships, which is reflected in the diversity of our products and platforms, as well as our early adoption of new technologies like AI, which we began rolling out in 2020 to enhance our music programming and scheduling. By providing real-time evaluation of listener sentiment and predicting audience engagement and reactions, We give our programmers a unique advantage and are able to deliver the best experience possible to our listeners. Stations where we rolled out this proprietary system saw a 15% increase year-over-year in the average quarter-hour share of adults 18 to 49. This validates our ability to identify an opportunity, design the strategy, and execute it successfully, and often, as we did here, using new technology. As those who have been following this company for some time know, we're constantly evaluating our cost structure and technology usage, looking for ways to make our operations more efficient. To illustrate this point, back in 2020, before the pandemic began, we announced changes we were making to prepare iHeart for the future. We began to significantly reduce our real estate footprint, reimagine the structure of our sales force and go-to-market strategy, restructured some of our operational organizations, and identified new key ways that new technologies could make us both more efficient and better at our jobs. Specifically, since the beginning of 2020, we've reduced our office space by half, and we have reduced our U.S. workforce by approximately 20%. This clearly illustrates the progress we're making to create a more efficient and effective organization. Over the past three years, we've completed savings programs of approximately $250 million, and on our third quarter 2022 earnings call, we announced a new cost program that will generate $75 million in annualized savings, which we will benefit from in 2023. In light of the ongoing economic uncertainty and in support of our focus on free cash flow generation, We're also reducing our in-year capital expenditures to below 2022 levels. With that backdrop, let me take you through some of the highlights of our performance. In the fourth quarter, consolidated revenues grew 6% compared to the prior year at the high end of the guidance range we provided of up approximately 2% to 6%. We generated adjusted EBITDA of $316 million for the quarter. In the middle of the guidance range, we provided a $305 to $325 million. And our Q4 adjusted EBITDA margins were 28%, a 34 basis point improvement versus prior year. And as I mentioned earlier, our fourth quarter revenue and adjusted EBITDA results were record highs for any quarter in the company's history. Turning to our individual operating segments, in the fourth quarter, our digital audio group revenues increased 10% versus prior year, adjusted EBITDA was flat versus prior year, and adjusted EBITDA margins were 33%. Within the digital audio group are our podcast revenues, which grew 17% versus prior year, and our digital ex-podcast revenues, which grew 7% versus prior year. The macroeconomic conditions are certainly impacting the entire advertising marketplace, and even the podcasting industry is not immune to some effects of the advertising slowdown. For additional context, our podcasting business was also up against some very strong prior year comps. As a reminder, Q4 2021 revenues were up 130% year over year. In January, iHeart was again ranked the number one podcast publisher in the U.S. with more monthly downloads than the next two largest podcast publishers combined, according to PodTrack. The podcasting industry remains the fastest-growing mass-reach medium. According to a recent Edison survey, in 2022, total daily podcast listeners grew by 20%, with podcasting now reaching over 60% of Americans. And marketers are following their customers. with a recent advertiser perception poll revealing that marketers plan to continue to increase their podcasting spending in 2023, even in a slow advertising market. Continuing to look at the podcasting marketplace as a whole, the industry seems to be going through a transition toward more rational behaviors in terms of content expenditures, a trim we've discussed with you before. We've deliberately avoided engaging in uneconomic behavior in podcasting, and we think this new market behavior will have a positive ripple effect across the entire industry, including us. iHeartMedia also has a depth of digital assets beyond just our high-profile iHeartRadio app, our streaming services, and podcasting. We have over 160 million unique visitors a month across a network of 3,000 websites for our national shows, local broadcast stations, our on-air talent influencers and podcast titles. Influencers continue to be hot in the advertising marketplace and our influencers are an important iHeart asset. And in 2022, our top 50 influencers reach two out of three Americans every month. And our iHeart land destinations in the metaverse specifically on Roblox and Fortnite, lead the industry in terms of engagement, with almost 10 million visits and a recent Fall Out Boy concert we hosted on Roblox generated three times the concurrent audience of competing events. Considering the macroeconomic challenges in the current environment, we think our digital and podcasting business has performed well in the fourth quarter, but we also see concrete ways to improve the performance going forward. The Digital Audio Group is a growth engine for us. and comprises a range of growth channels with very attractive margins, and we're constantly looking for adjacent growth opportunities when they look attractive. In that spirit, during Q4, we increased our emphasis through sales initiatives and commission structures on targeting certain incremental revenue streams. In retrospect, we believe those decisions had a negative impact on our revenue growth and margin for the quarter. We've learned from this Q4 experience and have already initiated steps to realign our sales force's focus back to higher margin digital revenue opportunities. We believe we'll start seeing the positive impact of those adjustments in both revenue growth and margins as early as Q2. Let's turn now to our multi-platform group, which includes our broadcast radio, networks, and events business. In the fourth quarter, revenues were up 1% versus prior year, adjusted EBITDA was down 8% versus prior year, and our adjusted EBITDA margins were 31.4%. Our multi-platform group has again demonstrated its resiliency during this challenging economic climate, generating adjusted EBITDA margins in the low 30s, which we expect to expand as the economy recovers and our revenue follows. Our broadcast radio assets alone reach more people than any other media company in the U.S. This is important because reach is at the very core of marketing. Marketers convert a certain percentage of people who hear their messages into customers. Therefore, the more people they can reach with their message, the more customers they can acquire. So our unparalleled consumer reach is a compelling benefit to advertisers and is also a huge advantage for us as we've used it to build our own new high-growth businesses. The advertising world also continues to move toward unified media buying and planning, considering all media together rather than in silos. How this plays out is unique for each agency and advertiser, but given that broadcast radio has traditionally been underbought relative to the reach and scale it offers, we think iHeart's broadcast radio will be a beneficiary of this shift to data-driven planning algorithms making media allocation decisions instead of human beings that have both personal and historical biases. Before I turn it over to Rich, I want to leave you with this final thought. We're taking all appropriate actions and executing with agility to navigate the current macroeconomic environment, an environment that Rich and I and our broader leadership team are no strangers to, given our long history leading organizations. At the same time, we remain steadfast in continuing to transform and position iHeart to take advantage of the coming economic recovery and the upturn in advertising. We're laser-focused on deploying our strong cash flow to improve our balance sheet and investing growth and leveraging our core strengths, including our scale, deep industry expertise, operational prowess, and seasoned sales force to deliver revenue and profit growth as well as shareholder returns over the long term. And now, I'll turn it over to Rich.

Thanks, Bob. As I take you through our results, you'll notice that, as Bob mentioned, we perform well despite the increasingly challenging macroeconomic environment. Our Q4 2022 consolidated revenues were up approximately 6% year-over-year, at the high end of the guidance range we provided of up approximately 2% to 6%. Our direct operating expenses increased 7% for the quarter, driven primarily by the increase in revenue, which drives higher content and profit sharing expenses, third-party digital costs, and expenses related to the timing and return of local and national live events. Our SG&A expenses increased 4% for the quarter, driven primarily by investments in key high growth areas and expenses related to the timing and return of local and national live events, partially offset by a lower bonus expense compared to our over-target bonus performance in the prior year. Our fourth quarter GAAP operating income was 173 million, compared to an operating income of $123 million in the prior year quarter. Our fourth quarter adjusted EBITDA was $316 million compared to $294 million in the prior year quarter. At the middle of the guidance range, we provided $305 to $325 million. Turning out to the performance of our operating segments, And as a reminder, there are slides in the earnings presentation on our segment revenue performance. In the fourth quarter, digital audio group revenues were 10% year over year, while adjusted AVIDA was flat, and our Q4 margins were 33%. Within the digital audio group are our podcasting revenues, which grew 17% year over year, and our non-podcasting digital revenues, which grew 7% year over year. To reiterate what Bob said in his remarks about our Q4 2022 performance. First, we are compared to an exceptionally strong prior year quarter. when Q4 2021 podcasting revenues were up 130% year over year. And second, we were impacted by costs of targeting certain revenue streams, which in retrospect had a negative impact on our overall revenue growth and margin for the quarter. We have learned from this experience and initiated steps to realign our Salesforce focus back on high-margin digital revenue opportunities. Multi-platform group revenues were up 1% year-over-year, and adjusted EBITDA was down 7.5% year-over-year. Excluding the impact of political, multiplatform group revenues were down 2.8% year-over-year. Multiplatform group adjusted EBITDA margins were 31.4% compared to 34.2% in Q4 2021. The increase in multiplatform group expenses was primarily driven by the timing of costs associated with live events. Audio and media services group revenues were up 44% year-over-year, and adjusted EBITDA was up 149% year-over-year. These increases were primarily attributable to radio and TV political revenues within our tax business. At quarter end, we had approximately $5.1 billion of net debt outstanding. Our total liquidity is $761 million. which includes a cash balance of $336 million. In the fourth quarter, we reduced our net debt by $180 million. We finished 2022 with a net debt to adjusted EBITDA ratio of 5.3 times and remain committed to our long-term goal of approximately four times. As highlighted on past calls, we have no material maintenance covenants and no debt maturities until 2026. In the current macro environment, this type of debt profile positions us to both be resilient and opportunistic in responding to debt market developments. In Q4, we proactively repurchased $141 million of the principal balance of our 8 and 3As, senior unsecured notes. bring our full year 2022 repurchase total to $330 million, resulting in annualized interest savings of approximately $28 million. We're able to repurchase these notes in the market at a meaningful discount to their par value, generating both earnings and free cash flow accretion. We will continually monitor market conditions and will look to further improve and optimize our capital structure as opportunities arise. In the fourth quarter, we generate $165 million of free cash flow, slightly below the target that we discussed in our last quarter earnings call due to the timing of working capital items. This implies a full year free cash flow yield in the high 20% range. Our cash balance is $336 million, and our total available liquidity is $761 million. As Bob highlighted, we remain focused on free cash flow generation and are committed to utilizing that cash in a manner that creates the most value for our shareholders. Turning now to our outlook on Q1. As we touched on, 2022 was a year of macroeconomic uncertainty, which is continuing into 2023. To that end, I want to provide some insights into what we were seeing in Q1, as well as some high-level thoughts about cash and liquidity for the full year. I also want to remind you that Q1 2022 was a strong quarter for us, and that the economic uncertainty last year didn't really affect our business until the very end of the quarter, which is impacting our Q1 2023 comps. With that in mind, we expect our Q1 2023 revenues to be down mid single digits year over year. Our January revenues were down 1% year over year. Turning to adjusted EBITDA, the Q1 2023, we expect to generate adjusted EBITDA in the range of 80 to $90 million. Let me provide some assumptions regarding cash. We expect our full-year capital expenditures to be between $100 and $120 million, a significant year-over-year reduction from $161 million in 2022, driven by our deliberate reduction of capital outlay in times of economic uncertainty. We expect lower cash restructuring expenses as our savings initiatives are fully implemented. We will be a full cash taxpayer in 2023. We will continue to further opportunistically improve our capital structure as the market allows, and while our interest expense has been reduced by our debt repurchase program, we are impacted by the high interest rate environment as approximately 40% of our debt is floating. I want to leave you with this. IHOT has unparalleled assets that have proven their resiliency through economic downturns like the one we're in now. We continue to make solid progress on our transformation, which enables us to operate through a softer macroeconomic environment better than ever before. As we navigate these uncertain economic conditions, we remain committed to driving shareholder value through our rigorous allocation of capital, identifying additional cost savings opportunities, utilizing new technologies to expand our product offerings, and improving our operational efficiency. And we believe the strength of our assets will become even more apparent as the economic environment and the advertising sector recovers. In closing, I'd like to thank the entire iHeart team who continue to deliver for our communities, advertisers, and our shareholders. Now we'll turn it over to the operator to take your questions. Thank you.

Thank you. As a reminder at this time, if you do have a question, that will be star one on your telephone. We'll hear first today from Stephen Cahill with Wells Fargo.

Thanks. Maybe just, Rich, could you provide a little more context in the Q1 EVA guide? It was a kind of surprisingly low number, and it was lower than you did in 1Q21 even. So I know 22 was a really strong quarter, but is there anything in the OPEX line? Are you making any significant investments there? Just because the top line seems a little more what we expected, but that was a bigger surprise. So any color would be great.

Steve, thanks for the question. Not really any additional insight. Just as a reminder, we do always deal with the law of small numbers because of the fixed course nature of certain parts of our business. And just as a reminder, our Q1, when you compare it to not just the strength of last year, but just the absolute number size, is always about significantly smaller than the fourth quarter of the year, just starting to compare the two. So just really nothing more than that.

I think also I would just add the one thing that we did reference is that in Q4, we self-inflicted trying to push some new revenue streams, change some of our commission and sales plans, and I think it had a negative impact on the product mix within DAG. I think we're expecting that to continue into Q1 and probably right itself by Q2. Yep.

Great. And then just on what you're seeing in the ad market, so a lot of what we've heard is that December was kind of bad across the market, and then it's been a little better since. I think you had January down 1%, but your guidance for Q1 is down a little more than that. So are you expecting a deterioration, or is that something related to some of those changes in product strategy, Bob, that you were just talking about, or how else should we read into that?

Yeah, I think on revenue, I think it is sort of the anomaly of Q1. If you look at most advertisers, Q1 is their worst sales quarter of the year. It is historically significantly, as Rich mentioned, lower revenue than Q4, for example, or Q2 and Q3. So I think in periods of uncertainty, what we find is advertisers holding back and taking a look at what the year might be. If they've got an opportunity to hold back, it's certainly in Q1. And through the year last year, we saw that the big advertisers were stronger than the small advertisers. In Q1, that has reversed it, which makes sense if you agree with the thesis we have, because when you're a brand advertiser, you can actually pull back more than you can if you're an advertiser who is advertising directly to get sales at that moment. And I think that's what we're seeing in Q1. And again, we continue to watch it, but I think it's a a function primarily of uncertainty and people holding back spend to see what happens.

You know, Stephen, and I would just add one last point which you didn't ask, but just, you know, in terms of fundamentally the business, and Bob pointed out the writing on the digital line, but as you think about this model we have going forward, we still feel exactly the same from the margin profile that we felt about the business. This is, you know, just look at Q4, I think we had a 52% conversion rate of EBITDA into free cash flow. And then so from a long-term, you know, as you go forward and model out, kind of that mid-single-digit modeling for DAG margins, the digital audio margins for EBITDA, is still something we're very comfortable with.

And maybe just related to that on podcasting, it does seem like there's been a real cooling off in some of the higher-priced content deals out there. Do you feel like that gives you some opportunity to be more aggressive in podcasting, or does it change your investment strategy at all now that the market's kind of rationalized to the point that you were always kind of playing for with it? Thanks.

Yeah, I think you've hit the nail on the head. Yeah, I do think there's an opportunity there. I think it'll have a positive ripple effect through the podcast business. I think there were people who thought they were buying share but were really buying losses. And I think there's a certain rationality that's returned, which is good for us, obviously, with our size and scale. If we're really bidding on product based on economics, we're in very good shape.

Anything further, Mr. Cahill? Nope, I'm all set. Thank you. Thank you. Thank you, Steve.

We'll hear next from Dan Day with B Reilly Securities.

Yeah, good afternoon, guys. Appreciate you taking the questions. Maybe just to go back to podcasting, just anything you can provide so far in 2023 in terms of, you know, pricing, volume, and impression growth, anything that could just anchor us in our models as we set up for 2023 on the podcasting line. Thanks.

Yeah, we haven't given any of that guidance. But again, I would say if you look at the revenue streams in media, podcasting appears to be the strongest of them all, but certainly is not immune from the downdraft of an ad slowdown.

You know, the only thing, Dan, I might add to that is, and you've heard us say this before about all the platforms we have and all the businesses we have, is advertising revenue always follows the consumer and always follows consumer engagement. I think Bob noted that podcasting now reaches over 60% of Americans and the fundamental aspects of podcasting in terms of the amount of time people spend, the larger advertisers that are coming to podcasting which is really starting to happen in the last couple of years, None of those have changed in our mind, and we continue to be very optimistic. It really starts with consumer engagement, which is rock solid.

Got it. And then on the other line within digital, the digital X podcast thing, I know there's some social media reselling in there, some third-party extension. Just wondering how those are doing, just given the kind of volatility we've seen in social media lands the last few quarters. and whether that, you know, the 7% growth, whether there's a big difference between, like, the radio streaming inventory sold versus the other buckets. Thanks.

You know, we haven't given that breakout, so I don't want to do it here, but I will say I'll refer back to, you know, we did goose a couple of lower margin aspects of it by accident. We didn't intend to do it at the expense of the others, and we are reconfiguring our sales priorities and

commissions to rectify that going forward. Okay. That's all I've got, guys. Thanks for the time.

Thanks.

Appreciate it.

And once again, for questions, that is star one at this time. We'll move next to Jim Goss with Barrington.

Thanks. A couple of questions about political advertising, or I guess the categories that in which they showed up, but absent those. In the most platform group, primarily broadcast radio, I presume, there tends not to be a lot of displacement. I'm wondering what accounted for the slide and ad revenues then in that category. Were there any key categories that were to blame?

Well, I think you just saw the ad slowdown continuing into Q4 and slowing down enough that the political advertising could not offset it the whole way.

And the other area, the Audio Immediate Services Group, I gather it's mostly CATS, which is more directional. Yes. And it's got TV in that, too.

Hey, Jim, just on CATS, as I know you know, but just as a quick reminder, we benefited greatly from political advertising on the TV side.

CATS is both radio and TV.

Okay, so is the TV side. Okay. Also, what do you think is a sustainable growth rate in podcasts? We had the surge. It was a little more modest now. Is the 17% growth you had something that is more normal, or will it fade from there as the category matures somewhat?

Yeah, I don't think we see the category maturing, but I do think it is... As we said, podcasting is not immune from the slowdown, but we do fully expect podcasting to continue to be the highest growth sector of the media business. And looking at the usage from consumers, I think, is probably the lead for us going to what Rich has earlier said, is that the advertising does follow consumers. And I think that's a very positive trend.

Okay. And last thing, your Tic Tac... exposure. Could you talk about that a little bit more and discuss whether there are risks that we ought to be concerned about?

Well, I don't think we got a lot of revenue coming on TikTok. We use it primarily as a marketing tool for us. And as you know, TikTok's been super hot. But we've got roughly 300 million social followers, about 27 million TikTok followers. And So we're willing to go and able to go and have a platform to go in whatever direction the consumer goes. So if there's any limitations on TikTok, wherever the consumers go, we'll be able to follow them.

And Jim, I'll just give you one data point for context for Bob's number of the 300 million social followers. That's about seven times larger than the next largest audio service, Spotify there.

Okay, nice. Thank you very much. Appreciate it. Thank you.

And from JP Morgan, we'll hear next from Sebastiano Petty.

Hi, guys. Thanks for taking the question. I just want to kind of go back to the EBITDA margin guide for the first quarter. It assumes a, call it at the midpoint, 11% implied EBITDA margin, which is below So the revenue flow through, if you were to just do a midpoint decline, is higher than what you had in 2020, 2019, everything besides 2022. But the implied EBITDA margin of 11% is also below prior years, excluding the pandemic period. So anything to unpack there? Is there anything going on at the segment level that we should perhaps be thinking about as well?

I don't think anything different than we've talked about. You know, we've highlighted, you know, Bob mentioned that we highlighted the flow through in terms of, I think the word Bob used was kind of goosing some of the non, you know, less high margin businesses in Q4. I think we've talked about that and we've rectified that, but we won't fully work through that until you get to Q2. And then when you have the advertising headwinds that we talked about as we turn the page into 2023 and the continued uncertainty in the environment, and I think, as you all know, the multi-platform business in particular, that we have all high-margin businesses, but that's like 75% to 80% incremental flow-through margin. But at the same time, when you don't have this robust revenue number there, as we've talked about in Q1, you get hit on the downside of a margin. But at the same time, and I'm just going to go back to a comment that Bob made, not just commenting on the results here, but also that we're, in addition to being focused on cost and taking out costs and generating cash flow, want to make sure that we're very well positioned as the economy starts to come back stronger, as advertising revenue starts to come back stronger, we're there to capture it.

Yeah, look, I think Q1 is simply you're seeing operating leverage And you're seeing, you know, when revenue goes down, the operating leverage bites you. When things go up, it's your friend. And, you know, we have hyper-focused the company on being ready for the recovery, making sure we're well prepared for it and can take full advantage of it. And at that point, we're going to see the operating leverage again as our helper.

And then could you perhaps unpack a little bit some of the, you know, some of these new businesses that you kind of delved into that you put at Goose as high-margin growth businesses. Richard, I think you talked about realigning the sales force. Anything that we should be thinking about?

Well, as you know, in the DAG group, we've got a number of digital businesses which some have pretty high margins, some have not ridiculously low, but much lower margins. And for us, the proper balance is to make sure whatever we're doing at low margin is incremental to the higher margin business. We don't want a flow of revenue going from high margin to low margin. And we may have overdone it a bit trying to do some of these lower margin businesses, which we thought could all be incremental. They turned out not to be. Learned our lesson, and we've adjusted. And, Sebastian, I just want to –

Come back to just what I said, I think, in response to when Steve was asking a couple of those questions. Just, again, as you know, we wanted to obviously share and be fully transparent. Gene, these are the steps we made, some of the missteps we made, the changes that we've made. But, you know, as you think about modeling out, we still are committed to believe that the Digital Audio Group is a mid-30s kind of, you know, a bit of a margin business.

And just a quick follow-up, was this more pronounced, you know, some of these not high-margin businesses, was that more pronounced perhaps in the fourth quarter, or is this something that's perhaps been building just as we're kind of thinking about extrapolating into the go-forward in terms of 23 and beyond?

We really think the impact was in Q4, and we think it will continue into Q1. We think we will have it rebalanced by Q2.

Thanks for the time. Okay.

Well, thank you very much for joining us today, and thanks for all your support.

Yep, thanks. And Mike and the team are available also with any follow-up questions, as are Bob and I. And that does conclude today's conference.

Again, thank you all for joining us, and you may now disconnect.