Universal Music Grp U/Adr

Good evening and welcome to Universal Music Group's fourth quarter and fiscal year earnings call for the period ended December 31st, 2023. My name is Nadia and I'll be your conference operator today. Your speakers for today's call will be Sir Lucian Grange, Chairman and CEO of Universal Music Group and Boyd Muir, Executive Vice President, CFO and President of Operations. They will be joined during Q&A by Michael Nash, Executive Vice President and Chief Digital Officer. 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 followed by the number one on your telephone keypad. If you would like to withdraw a question, please press star followed by two. As a reminder, this call is being recorded. Please also let me remind you that management's commentary and responses to questions on today's call may include forward-looking statements, which by their nature are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may vary in a material way. For a discussion of some of the factors that could cause actual results to differ from expected results, Please see the risk factors section of UMG's 2022 annual report, which is available on the investor relations page of UMG's website at universalmusic.com. Management's commentary will also refer to non-IFRS measures on today's call. Reconciliations are available in a press release on the investor relations page of UMG's website. Thank you. Solution, you may begin your conference.

Thank you, Operator, and thanks to everyone for joining us on today's call. I'm thrilled to have the opportunity to report to you on another extraordinarily successful year for UMG. There is much to say, but my principal focus will be on three key areas. What we accomplished last year in 2023, our priorities for this year, 24, and how our global organizational redesign is planned to accelerate our long-term growth. First, let's look at our exceptional performance last year, exceptional creatively, financially, and strategically. With 2023 year full-year revenue growth of 11% and adjusted EBITDA growth of 15% in constant currency, we've continued our strong performance since our listing in 2021. The source of all our success is, of course, our artists and songwriters. They had so many achievements last year. I'll take a moment just to highlight a few of them. For more than a decade now, the IFPI, the Global Recorded Music Industry Association, announces the world's top-selling best artists for the year, taking into account both physical and digital sales, as well as streams on subscription services, and ad-supported streaming. How did we do last year? Well, UMG had nine of the top ten of the world's most commercially successful recording artists, including all of the top eight, with some obviously expanding their success globally as well. Worldwide, Taylor Swift was at number one, No other company in the history of the IFPI chart has come even remotely close to UMG's outstanding performance last year, as well as year after year. Here are a handful of some of the other remarkable achievements by our artists in 2023. Of the top 10 global artists on Spotify, UMG had six. Of the top 20 global songs on Apple Music, we had 13. And on YouTube, UMG artists had three of the top five songs, with Morgan Wallen's Last Night at number one. In the US, the world's largest music market, the foremost streamed artists on Spotify were ours, Taylor Swift, Drake, Morgan Wallen, and The Weeknd, as were six of the top ten albums on the Billboard 200. And on Billboard's Hot 100 songwriters in the US, Universal Music Publishing Group had three of the top five. In the world's other major music markets, our artists' success was similarly spectacular. For example, in Japan, the world's second largest market by revenue, UMG had five of the top 10 albums. In Germany, we had six of the top 10 albums. Our successes in these and other countries were achieved by a combination of local artists as well as our global superstars. It's a clear indication of our strategy at work. I'll have more to say about that in a minute or two. And whilst I'm enormously proud of our artists and teams for achieving the seemingly impossible year after year, we are, as we must be, relentlessly focused on the future. And that's why I'd like to discuss with you next exactly what our company and the industry will look like in the immediate and longer-term future. Let me begin today I'll look forward with a brief look back, I suppose. Why? Because some of the steps we started taking in 2023 are already having a major impact in 2024 and will continue to do so in future years as well. Around this time last year, in discussing our 2022 performance, I spent some time outlining our artist-centric approach, a transformational strategy designed to put into place proper incentives for platforms and our partners to promote artist discovery, reward real, true artistry, and build deeper engagements with fans by cleaning up all the noise, fraud, and algorithmic gaming that was contaminating fans' experience in seeking out real music that they want to discover. I then went on to say that a transformation of this scope and complexity would take many years, which is why We were particularly encouraged to see that in a matter of just months, several platforms, including Visa and Spotify, announced their plans to profoundly advance our collaborative effort in this by adopting artist-centric principles that in time will benefit independent, major and DIY artists alike. I can't adequately express how gratifying the show of leadership from many of our platform partners has been by providing fans, artists and music companies, music companies of all sizes within an environment that revives the fundamentals of artist discovery and artist development. These partners are paving the way to strong commercial growth. Whilst fully accomplishing our artist-centric goals will take years, we hope to see more platforms adopting artist-centric principles in the near future. And we're excited about our recent conversation with our platform partners about monetizing superfans and developing premium tiers for our best music customers. In my remarks last year, I also made one other point about the artist-centric approach that has recently become, I suppose, a rather hot topic. And that is this, the philosophy that must apply to all platforms that are reliant on artists and songwriters and their music. All platforms. not just music streaming platforms, all platforms, including short-form video and social media. We meant it a year ago, and with artist-centric principles being put into practice, we mean it even more today. We're committed to supporting a healthier, sustainable, exciting, and yes, more competitive music ecosystem, an environment in which great music is not drowned out by a sea of noise, where music is easily and clearly accessible for fans to discover and enjoy, and most importantly, an environment in which the creators of all music, all music content, whether in the form of audio or short-form video, are fairly compensated and they will therefore be able to thrive as artists and creators for decades to come. There must not be free rides for massive global platforms such as TikTok that refuse to meaningfully address issues around AI, platform safety, or pay their fair share for our artists' and songwriters' work. That is why we are grateful for the outpouring of support not only from individual artists and songwriters, but from artist rights organizations, independent labels and publishers, songwriters advocacy groups, and others who share our resolve that all platforms that operate or seek to build businesses on the music of artists and songwriters must protect as well as fairly compensate them. Relating to a key concern we have with TikTok, our responsible AI initiative was launched last year to place the protection of artists and the advancement of their interests at the very core of how we think about AI. It includes things like ensuring that human artists are not economically disadvantaged, protections against deepfakes and transparency requirements for AI companies, regarding how they train their models on our IP and the artist's work and their creativity. It is critical that as an industry we advocate for the public policies that put appropriate guardrails in place so that the market can best deliver win-win outcomes. That's exactly at the core of who and what we are, win-win outcomes. And that's why we're forging innovative private sector partnerships with AI tech companies. Having learned from the industry's many prior encounters with disruptive technology, we decided to take an unprecedented first step this time around. We learned. Instead of waiting for AI to take hold and then trying to figure out business models that will fairly compensate artists and music companies, we got ahead of the game this time. We formed a historic relationship with our longtime partner, YouTube, whereby we and our artists have a seat at the table to help shape the technology's development, and determine how to harness and monetize it for the benefit of the entire creative community. And to be honest, that's what we expect from all our partners. In addition to YouTube, we're also collaborating with a number of entrepreneurial enterprises on market-led opportunities and approaches, always with artists at the forefront of our thinking. Even as we're helping artists protect their rights to their work and their names and likenesses, We fully understand that the technology is not just a threat. The reality is that AI has the potential to enhance and support the creative process and produce revolutionary music experiences. So we continue to strike groundbreaking agreements with companies to develop responsible commercial uses for AI and expect many more exciting developments and partnerships this year. Looking at 2024 and beyond, I'll turn now to the accelerating expansion of our global presence, which I referred to earlier. I'm happy to report that our stated strategy is already making some exciting advances that this year and in the future will accelerate our growth in amongst other places, China, South Asia, and Africa. The strategy has three goals. The first of these focuses on signing artists outside of established music markets. One major example is China. In December, we unveiled a new strategic partnership with Jay Chou, the internationally renowned King of Mando Pop, and his prestigious label, JBR Music. In addition to securing the rights for Jay Chou's extensive music catalog, as well as his future projects, we're also pleased to be supporting rising talent and new artists from his label, JBR. The addition of Jay Chou who was the IFPI global album sales chart leader in 2022, to UMG's artist roster, underscores our commitment to developing Mando pop music globally. At the end of last year, following the release of Chin Up, his first studio album in five years, we were thrilled to announce UMG China's renewal of his contract with Chinese pop megastar Yishan Chan. With 75 billion streams to his career, I'll repeat that, Get your head around that, 75 billion streams. So far, we're excited to see how this one-of-a-kind artist, how far he can actually go. The second element of our expansion strategy consists of providing local labels and entrepreneurs with global promotion, distribution, and a full suite of artist services. Our Virgin Music Group is a key part of that strategy with great leadership. serving as a vital local and global partner to labels and entrepreneurs around the world, different regions, different markets, different cultures. In each market, we take a bespoke approach. In India, we're just now embarking on a significant partnership with Represent, an independent talent management company whose artists will now have access to UMG's global footprint across distribution, publishing, brands, and more. Through this partnership, along with those with Desi Melodies and TM Ventures, as well as UMG's in-house labels, UMG India is leading the Indian music market in reflecting the vibrant diversity of genres and styles and languages in that country, while also supporting the independent music scene. The third global accelerator is partnering with and investing in local labels, catalogues and artist services business. There are two very recent deals we have great hopes for. and this is the core of the business, continually seeking new scenes, styles, and market developments. Earlier this year, we entered into an agreement with the iconic South Asian record label, Oriental Star Agencies. We've acquired their catalogue of audio and video recordings, as well as publishing rights to approximately 18,000 songs, featuring many legendary and genre-defining Pakistani and Indian artists. OSA is the most prominent South Asian record label in the UK. It has been pivotal in establishing the UK Bangra scene and launching the careers of numerous significant British and South Asian artists. Our acquisition of OSA will further drive the momentum of our South Asian music business, enabling local artists to reach their largest possible audience in a global community. Further, earlier this week, we were particularly excited to announce our majority investment in Maven, one of the world's most dynamic and exciting independent record labels. Based in Nigeria, Maven is home to and the driving force behind many of the African continent's most established and accomplished artists, including Reema, who is responsible for the biggest Afrobeat song of all time, the most viewed video of all time by an African artist on YouTube, and the first African track to surpass one billion streams on Spotify. Pretty impressive. Our investment in Maven will provide UMG greater exposure to the fastest-growing continent for recorded music consumption. Thanks to young demographics and increasing connectivity, Africa, we believe, is poised for significant growth. Maven also gives us an opportunity to increase our global presence in Afrobeats. Streams of Afrobeats should be noted in the US for the first half of 2023, for example, increased by 34% year-on-year. Founder and CEO Don Jazzy and COO Tega, who are proven creative executives and very experienced A&R professionals, will continue to lead Maven. In addition to our accelerating international expansion, I want to discuss another key investment we've made this year that can accelerate our future growth for years to come. As Boyd and I have stressed on prior calls, we use our cash wisely, and we're extremely selective in rights acquisitions. Last week we announced that we are acquiring an interest in Chord Music Partners. Chord is a leading music investment fund formed by Dundee Music Partners and KKR in 2021 to acquire premium music rights. Today the fund has made a number of catalogued rights acquisitions and is home to more than 60,000 music publishing and recorded, as well as recorded, music copyrights. We're excited about this transaction for several reasons. First, Chord's recorded music catalog and music publishing catalogs are very high quality. And through the Global Resources Virgin Music Group and Universal Music Publishing Group, we will actively manage them. Second, through a combination of leverage and partner equity capital, the structure of the deal provides us with a platform for recorded music catalog acquisitions and publishing catalog acquisitions without significant further capital allocation. And finally, With Dundee Partners, we have a partner who shares our long-term bullish vision for opportunistically and flexibly acquiring significant premium as well as timeless music catalogs. All of this activity, from achieving record-breaking artist performances to encouraging sustainable industry growth through supporting innovative business models and being brave enough to encourage them, to embracing cutting-edge technology and securing a seat at the table in the development of perhaps the most transformative technological evolution that we've seen for many, many years. Lastly, to partnering with companies that accelerate this strategy. All of this requires that we continually make sure we have the right organizational structure to extend our success. In this context, we are redesigning our global organization To put it simply, we're creating the blueprint for the music company and the labels of the future. When it comes to signing artists, our labels will act with even greater flexibility and speed. And when it comes to supporting their rosters, they will have access to our highest performing internal teams and resources to bring the new artists to even higher levels of success. And that includes new artists as well as the currently established ones. The redesign carefully preserves what we're best at, creative A&R, marketing independence, unique label brand identities, which is very, very important, and entrepreneurial and internally competitive spirit, while creating efficiencies that will generate more impactful support and promotion, distribution, audience, monetization, B2C, e-commerce, and other areas. In a few moments, Boyd will walk you through the financial details and annualized savings the redesign will produce above and beyond its significant strategic benefits. For example, the redesign will enable us to lean into new growth areas that will address the next phase of our artist-centric initiative, the strengthening of the artist-fan relationship. We believe that signing and developing new generations of talent imposes on us an obligation and an opportunity to provide those artists with the widest possible range of options through which their talent can shine and be available to their fans. We already act on this belief through our expanding audio-visual strategies, award-winning original short-form and long-form content, while continuing to build up brand sponsorships, merchandise, and artist-branded products. But we will do more as we expand the range of these options going forward. For example, to accelerate our artists' ability to connect with their most ardent fans. Last week, we also announced a strategic partnership and investment in Complex Network. This new company, whose other investors include the original Interscope and Beats founder Jimmy Iovine, a good friend of ours, is a combination of the iconic digital media culture brand with fast-growing marketplace technology. Together, Complex and Network form a definitive cultural commercial, content, and experiential platform. reaching a large and dedicated audience. This is to create a new commercial marketplace for the Superfans. Our collaboration with them will also give our artists access to a dynamic network that will deliver industry-leading and culturally innovative opportunities to deepen connection with those Superfans through unique and unprecedented experiences, content offerings that will create a powerful market into a powerful marketplace, as I said, to sell products. We're looking forward to this collaboration and pleased to be reunited with Jimmy who will help drive the complex network strategy. Let me close with this final thought before I turn it over to Boyd. Whilst UMG has been around for generations and the experiences of this management team spans many decades, we're aware of the fact that as a public company, we're still young. But in the short time since we've been public, We hope that we've demonstrated that we do what we say. We set strategic goals and we deliver. Going forward, we're committed to continuing delivering for our artists and our shareholders. 2023 was a busy year for us that brought us positive changes. And as you can see, already in 24, we've only accelerated our pace. And there's so much more to come. And with that, thank you. Mr. Boyd, I'd like to turn it over to you.

Thanks, Lucien. You've heard from Lucien about the exceptional performance of our artists and songwriters, as well as both the industry-wide and UMG-specific strategic initiatives we continue to drive forward. These initiatives have translated into continued strong performance in 2023, with robust growth on both the top and bottom lines. For the year, revenue grew 11% and adjusted EBITDA grew 15% in constant currency, with revenue growth continuing to outpace our midterm guidance and absolute adjusted EBITDA ahead of expectations. This resulted in an adjusted EBITDA margin of 21.3%. A portion of our strong revenue growth comes from lower margin but incrementally profitable physical and merchandising revenues. Physical and merchandising revenues were both above our expectations in the fourth quarter, and revenue mix is an important component when considering margin trend. In addition to revenue mix, one-time items can have a significant impact on margins, and in Q4, there was an unanticipated one-time item which, when excluded, takes adjusted EBITDA margin for the year to 21.5%, a 90 basis point improvement compared to the 20.6% margin we reported in 2022. Please note that adjusting for all one-time items in both 2022 and 2023 Adjusted EBITDA margin improved 1.2 percentage points. 2023 earnings per share grew to 69 euro cents, up from 43 euro cents. And adjusted diluted earnings per share grew to 87 euro cents, up from 80 euro cents in 2022. We had 561 million euros in non-cash share-based compensation expense and 76 million euros of cash compensation savings in 2023. For 2024, we expect about 260 million euros in share-based compensation expense, 80 million euros of which reflect the final impact of one-time transition grants and front-loaded accounting recognition. We are delighted with the healthy growth we continue to see throughout the business. Now to put the year into context for you. Since our listing, revenue growth has meaningfully exceeded our midterm guidance of high single-digit CAGR, growing at a CAGR of over 14%. And adjusted EBITDA has grown even faster at a CAGR of 16.5%. Free cash flow before investments has more than doubled from 817 million euros in 2020 to over 1.7 billion euros in 2023. And free cash flow after investments has grown to over a billion euros a year for the past two years. even as we've continued to make meaningful strategic long-term investments in our company turning to the fourth quarter as i mentioned the fourth quarter of 2023 included an unanticipated one-time item negatively impacting recorded music adjusted ebitda we booked a 15 million euro provision related to the latest court decision in a decades-old artist estate litigation in Latin America. This has been a highly unusual process, and several appeal options remain open to us, but taking this charge is the required approach for the time being. In the fourth quarter, revenue growth was strong across all three business segments. with total revenue up 15.6%. This revenue growth was higher than we anticipated, with physical sales especially strong. Adjusted EBITDA grew 15% in constant currency, and adjusted EBITDA margin was flat at 21.1%. However, excluding the legal provision, adjusted EBITDA for the quarter grew 18%, to 692 million euros and a margin grew half a point to 21.6%. Now let me turn to the results from each of our business segments. Recorded music revenue grew nearly 15% for the quarter and 10% for the year in constant currency. You'll recall that full year 2022 results included a settlement from a copyright infringement lawsuit with an internet service provider, which was included in other digital and amounted to 71 million euros in revenue and 52 million euros in EBITDA. Excluding the settlement from the prior year, recorded music revenue grew 11% in 2023. Recorded music adjusted EBITDA grew 11% for the year, Excluding the one-time items in both year, recorded music adjusted EBITDA grew 15% and adjusted EBITDA margin expanded 0.8 percentage points to 24.3% from 23.5%. Physical revenue growth was especially strong, up 17% in the fourth quarter and 19% for the year. Physical revenue represents incremental spending from superfans above and beyond streaming revenues. But the margin percentages on physical are less than on streaming. So the exceptional growth of our physical business helped drive our strong EBITDA growth, but due to the revenue mix impact, lowered our overall margin percentage. Inevitably, after seeing such remarkable growth, it will be difficult to sustain performance at this level in 2024. However, we do believe the physical business can grow over time as we increase our capability to connect fans with our artists. Looking further at recorded music revenue, we continue to drive strong double-digit subscription growth, up 15% for the quarter, and 13% for the year. The acceleration in growth this quarter compared to the first three quarters of the year was driven largely by the price increases at Spotify. Ad-supported streaming revenue grew 5.6% in the fourth quarter and 3.6% for the year. Demand for music-based consumer engagement from advertisers remains strong, but the ad market recovery has not been uniform across all partners and regions, and we remain cautious on the near-term growth outlook for this part of our business. With regard to TikTok, we've disclosed that our former deal generated about 1% of total UMG annual revenue. Because other platforms in the social video category achieve much greater monetization, we're focused on accelerating our partnerships with YouTube, Meta, Snap, and others. And we look forward to updating you in the coming weeks ahead about exciting competitive developments and incremental opportunities emerging within the category. License and other revenue grew a robust 34% in the fourth quarter and 14% for the year, with continued underlying strength in licensing. And in the fourth quarter, we saw timing-related outperformance in neighboring rights and synchronization, touring, sponsorship, and also the benefit of a new licensing deal. Downloads and other revenue declined 46% in the fourth quarter and 36% for the year. The decline in the fourth quarter was a result of the continued industry-wide shift away from downloads, as well as other digital revenue. For the full year 2022, other digital revenue benefited from the 71 million Euro legal settlement I previously mentioned. For the year, Revenues grew at high rates around the world, led by 21% growth in Asia, 19% in Latin America, and 11% in Europe. Top sellers for the year included multiple albums from Taylor Swift and albums from Morgan Wallen, King and Prince, Karol G, and The Weeknd. Top sellers for the prior year included Taylor Swift, BTS, the Encanto soundtrack, Olivia, Rodrigo and Morgan Wallen. Turning now to Music Publishing. Revenue grew 15% in the quarter with 36% growth in digital and 25% growth in synchronization revenue. For the year, Music Publishing revenue grew 12% with healthy double digit growth across all major revenue lines. including digital revenue up 13%, performance revenue up 16%, synchronization revenue up 10%, and mechanical revenue up 15%. Excluding one-time items, music publishing revenue grew 16% in 2023, thanks to healthy growth across all revenue streams. Music publishing adjusted EBITDA grew 18% for the year, An adjusted EBITDA margin expanded 1.2 percentage points to 24%. Now merchandising. Merchandising revenue grew 27% in the quarter and 18% for the year. Both the quarter and the year reflect outsized direct-to-consumer sales driven by continued superfan demand. DTC growth more than offset the decline in touring revenue that we saw following the 2022 post-pandemic touring rebound when many of our merchandising artists were touring. Merchandising EBITDA, excuse me, our merchandising adjusted EBITDA grew 38%. And adjusted EBITDA margin expanded 0.9 percentage points to 6.7%. helped by the shift to direct to consumer sales, which have a higher margin than both retail and touring sales. Net profit for 2023 amounted to 1.26 billion euros compared to 782 million euros in 2022, resulting in earnings per share of 69 euro cents compared to 43 euro cents in 2022. The increase in net profit in 2023 included an increase of 425 million euros in the valuation of investments in listed companies, compared to a decrease of 617 million euros in 2022. Adjusted net profit, which adjusts for the revaluation of these investments, as well as adjusting for share-based compensation expense, amongst other items, grew 10% to 1.6 billion euros in 2023, resulting in adjusted diluted earnings per share of 87 euro cents compared to 80 euro cents in 2022. In line with our commitment to pay a dividend of at least 50% of our net profits, as adjusted for certain non-cash related items, UMG has proposed a final dividend for 2023 of 492 million euros or 27 euro cents per share. This would bring our full year dividend to 51 cents per share in line with 2022's dividend. As Lucien discussed, we are redesigning our organization to enhance our capabilities in the areas most critical to our future growth and success. These changes will strengthen our leadership team, foster innovation and create significant efficiencies across our business. We expect to generate 250 million euros in run rate cost savings, which will be accretive to our margins and which we will finish implementing by the end of 2026. The first redesign phase, which we are executing on imminently, will achieve 125 million euros in annual run rate savings, 75 million of which will be realized in 2024 with the full amount in 2025. In 2024, we expect to incur restructuring charges of 125 million euros, of which approximately 100 million euros will fall into Q1. We will look we will continue to look at accelerating our progress on phase two. And if we are able to do so, we could see some additional savings and severance costs later in 2024. Now let me turn to cash flow. Our net cash provided by operating activities before income tax is paid for 2023 increased 15% year-over-year to €2.3 billion. As a reminder, this includes the €132 million we paid to settle employee tax liabilities arising from the equity plan grants. We opted to fund the taxes with cash rather than issue shares, which reduces the dilutive impact of the grants. In a similar manner, we intend to settle the employee taxes payable in cash for the March 2024 grants. Due to the timing of artist deals, royalty advance payments net of recruitment amounted to 100 million euros, down from 148 million euros in 2022. Income taxes and net interest paid both grew year over year. partially due to the prior year having benefited from 90 million euros in previously disclosed tax settlements and the associated interest income. Net interest costs were also impacted by the higher rates on our variable rate debt. Even with the higher interest and tax spend, Our free cash flow before investing activities reached 1.7 billion euros in 2023, a 6% increase over the prior year. Conversion to free cash flow before investments was 72% of adjusted EBITDA. This significant cash generation allowed us to continue our long-term strategic investment in the business. we spent 622 million euros on investments, including both catalog and other acquisitions. Even with the meaningful investment spending, we maintain free cash flow at over 1 billion euros for the second consecutive year. To give you a bit more color on our investments, In 2023, we spent 178 million euros on catalogue acquisitions, down from 359 million euros in 2022. Catalogue spending in the second half of the year included our previously announced acquisitions of RS Group in Thailand and Oriental Star Agencies, a British label focused on South Asian music, as well as several smaller artist deals. As we've continued to say and is now exemplified by the deal we've announced with CORD, it is not a strategic priority to use our balance sheet for large catalog acquisitions. And I will talk more about the CORD transaction in a moment. The remainder of our second half 2023 investment spending focused largely on deals which push forward our strategic initiatives. This includes the acquisition of UAE-based music company Shibaka as we continue investing in high-growth music markets. We'll update you further on our investments and plans when we hold our next Capital Markets Day, which will be in September at our iconic Abbey Road Studios in London around the third anniversary of our listing. For 2024, it's worth noting that the three deals Lucien discussed, the acquisition of Maven Records, the investment in Complex Network, and the investment in CORD, will collectively account for approximately 450 million euros of investment spending. We have a very healthy balance sheet with low debt and significant flexibility. our net debt declined to 1.7 billion euros at the end of 2023, leaving us with a leverage ratio below one times EBITDA. Our capital allocation priority remains reinvestment in the business, both through signing and developing artists around the world and, where appropriate, through continued strategic M&A opportunities. Now, let me spend a moment on CORD. We're pleased to have recently announced our acquisition of a 25.8% stake in Cord Investment Partners, an existing vehicle currently owned by Dundee Capital Partners and KKR. Cord is a special purpose vehicle which owns over 60,000 copyrights from 10 catalog acquisitions, including Cobalt Rights Management II. Chord is an interest in over 20 of the top 100 most streamed songs of all time on Spotify, with a catalog including music from The Weeknd, OneRepublic, David Guetta, Lorde, Kid Cudi, Diplo, Ellie Goulding, ZZ Talk, John Legend, Twenty One Pilots, and many others. As part of this transaction, UMG and Dundee are buying out KKR's equity. and Dundee will own the remaining 74.2% of CORD. Being part of CORD will allow UMG to tap into an already scaled acquisition platform to optimize for potential future catalog acquisitions without significant UMG capital allocation through a combination of CORD's leverage and also partner equity capital. Additionally, UMG will take over distribution and administration for all current and future assets of the fund towards the end of 2024. The acquisition was done at an effective 17 times EBITDA multiple. This multiple includes UMG's interest in CORD as well as the income from distribution and administration rights we will pick up, but does not include any anticipated uplift in the performance of the catalog from bringing the administration to UMG. So thank you. And with that, Lucien, Michael, Nash, and I will now take your questions. Operator, please open the line for Q&A.