There are a number of partners that we have had, some really good success, bringing new advertisers to the category. So, it’s a variety of factors behind it. I don’t think that the growth rate will stay as high as it’s been the last couple of quarters for the whole year. But I do think we expect it will be a double-digit growth rate. It just won’t be as high as it’s been in Q4 and Q1.
Unidentified Analyst: Thank you.
Operator: Our final question is from the line of Jim Goss with Barrington Research. Please proceed with your question.
Jim Goss: Hi there. Thank you. The movie advertising is going to be very immediate, obviously. Just coming out of CinemaCon, there is a lot of enthusiasm for ‘25 and ‘26 with return of film flow, but a very current tough environment over the next couple of quarters. I am wondering how big a drag do you think that can be and what your optimism is for next year? And also the mix of small screen versus big screen in terms of importance to your markets, I think it’s mostly a big screen, but tell me otherwise.
Scott Wells: Thanks Jim. Yes. No, you are absolutely right. We are more big screen oriented. We get some small screen, but not – that’s not the prevalent part of our mix. I think we – your characterization of the release schedule is maybe a little darker than what I hear. But that – I am not disputing that ‘24 will not be as good as ‘25. So, I do think that this is something that can be a multi-quarter positive category for us. It’s not an enormous part of our book. So, I don’t think I would characterize it as it’s going to make or break how ‘24 goes or what ‘25 can be. But with the political year where we don’t get a ton of direct political, although we are working very hard on that, but we don’t have a lot of direct political built into our guide, so that would be upside for us in ‘24 if we actually crack that one.
But with a year that has political, we are going to see overflow coming to us of people that are getting crowded out in the TV space or that want to find other ways to reach audiences that are fatigued with the 17th political ad in a row on the breaks in their sports that they are watching. So, movies can be a welcome growth driver in 2025. And I think we share your optimism for how that release schedule is going to look, and that should help offset some of the political comp that we build this year into next year. But again, it’s not going to make or break our business.
Jim Goss: Okay. Thanks. The other area I would like to touch on briefly, if I got it straight, you said airport margins should probably be high-teens business in general, but can vary quite a bit. And I am wondering if you might talk a little bit about the drivers you think are important in terms of either travel trends, the volume of the travelers, business versus personal and how that’s going to affect the revenue side and what you think might be impactful in terms of the expense side?
Scott Wells: So, let me start on the revenue side, and then I will let Dave dig in on the expense side. We really have changed how we sell airports over the last few years. We have become more focused on creating experiences that are particularly compelling for advertisers, whether that’s doing sampling or other on-site experiences, taking over different assets like tunnels between terminals. We have done that in a number of airports. And so what you have seen in the last kind of 18 months has been the progression of us just getting better at monetizing those assets. And that’s something that I am challenging the team to apply some of that same kind of thinking to our roadside assets and we are starting to see some experiments along those lines playing out.
But I think that the driver, so building out New York only was a big part of the driver. New York is largely built, although there will be meaningful projects as LaGuardia, some of the LaGuardia terminals finished, some of the JFK terminals finish, because there is still renovation going on there. So, there should be some more juice in just the expansion of that footprint. We have gotten much more strategic about where we deploy assets in different airports, and that’s been a tailwind of what’s going on. And you are going to have that pretty consistently. And until we get to where we have – the next big step back in airports will be when we lose a big contract, which inevitably at some point we will. There is nothing that we can see in front of us right now that we think is headed that way, and we have had good fortune doing direct extensions.
But that’s the nature of that business. At some point, we will take a step back in one of the big airports that we are in, and that will be a headwind. I think in terms of the actual travelers and who the advertisers are trying to reach, we had done a really nice job of getting people bought into the idea that even if people were pleasure travelers, they still represented very attractive demographics within business decision-making. And as business travel has come back and business travel is getting back close to where it was pre-pandemic, that has been like a cherry on top for us, because for certain airports gives you really nice uplifts as the business traveler comes back. And so that’s been part of the revenue story, too. But those are the big drivers, sort of different selling, ongoing expansion of our digital assets, and the traveler continuing to come back and continuing to be a super attractive premium target.
Dave, you want to talk to expenses?
David Sailer: Sure. Expenses, I would say, it’s definitely simpler than from a revenue standpoint. Obviously, there is a lot of drivers going into the fantastic revenue growth we have been seeing over the last several quarters. But from an expense standpoint, when you – the airports business, their biggest expense is site lease, what we pay to the airport authorities for the assets that we had in the airports. And when you think about that site lease, some of our or most of our contracts are a percent rent. The larger airports have a higher percent rent, lower – the smaller airports is slightly lower. So, your revenue mix actually has a big component of what your margins are going to be. And right now, I mean we are performing really well across all of those factors, which is really helping from a margin standpoint.
And we also have a few airports that are – it’s a fixed mag. So, if you drive revenue above that, that’s going to drop right down to the bottom line. We definitely experienced that in the first quarter. And then I will go back to the relief that we are continually getting and we are going to get that throughout 2024 to a lesser extent than we had in ‘23. But those are two of the main factors that are really driving it from an expense standpoint. But as that revenue grows, you are going to have margin expansion and that’s what we were seeing.
Jim Goss: Great. Thank you very much. Appreciate it.
Scott Wells: Thank you, Jim.
Operator: Thank you. At this time, I would like to turn the floor back to Scott for closing comments.
Scott Wells: Great. Thank you, Rob, and thank you to all of our questioners and for putting up with our little technical glitch there. Sorry for that brief window of silence. We appreciate your attention. We feel good about the year and look forward to seeing you all or many of you in upcoming events in the coming weeks. Take care.
Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time. We thank you for your participation and have a wonderful day.
