Universal Music Group N.V. (UMG) Earnings Call Transcript & Summary

Good evening, and welcome to Universal Music Group's Third Quarter Earnings Call for the period ended September 30, 2026. My name is Gavin and I'll be your conference operator today. Your speakers for today's call will be Mr. Lucian Grainge, Chairman and CEO of Universal Music Group; and Matt Ellis, Chief Financial Officer. They will be joined during Q&A by Michael Nash, Chief Digital Officer; and Boyd Muir, Chief Operating Officer. [Operator Instructions] 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 differ from expected results, please see the Risk Factors section of UMG's 2025 Annual Report, which is available on the Investor Relations page of UMG's website at universalmusic.com. Management's country will also refer to non-IFRS measures on today's call. Reconciliations are available in the press release on the Investor Relations page of UMG's website. Thank you, Lucian. You may now begin your conference.

Thank you, and good morning to everyone. If I'm a little congested, I apologize. I've got a call this morning, but not important. Let me begin with the quarter. UMG's total revenue grew by 12%. Core revenue grew 5%, excluding Downtown. Our margins increased by 40 basis points, driving adjusted EBITDA growth of 7% to EUR 729 million. Subscription streaming grew 9.5% and 19.2%, including Downtown. Downtown is the most important acquisition UMG has made since [indiscernible]. This was a timely strategic move, and we are only just beginning to realize the full benefits. The numbers are already proving why we made this deal, and we continue to capture upside in terms of additional capabilities, revenues and synergies. While quarterly results provide a useful snapshot, our focus is to keep evolving how we serve our artists and songwriters whilst delivering sustained growth and profitability. Making great music is emotional, instinctive as well as unpredictable. Building lasting careers takes disciplined investment and a long-term view. But another way, success takes a combination of EQ to understand our street and IQ makes sound commercial decisions. That balance matters even more in the age of AI. Generating tracks may be easier, but great art and great music cannot be made to order. Building a career people care about matters more than ever. Artists need a partner who helps them realize their vision, grow our fan base and deliver commercial opportunities and the vast majority of the music ecosystem value comes from career artists. We are building from a position of strength. The industry is healthy and growing. New fans, new markets and new ways to [indiscernible] to keep expanding the possibilities that makes us more ambitious, not more comfortable. Let me start with the foundation of everything we do, creative success. Achieving it consistently is the hardest thing in music. It is also a defining strength of UMG. Year-to-date in the U.S., the world's largest music market, UMG artists sold 7 of the top 10 albums, including 4 of the top 5. This quarter Taylor Swift returned to #1 with Life of a Showgirl: The Encore, taking her to a historic 100 career weeks at the top of the Billboard 200, making her the first colors to reach triple digits. Ariana Grande earned our seventh #1 out with Petal, while Karol G. secured her fifth #1 on the Top Latin Album chart. At the same time, we're building a new generation of global stars, including Olivia Rodrigo, now account Morgan Wallen and Olivia Dean, all of whom delivered strong carryover performance this quarter. And great music, as we know, is Evergreen. 15 years after its release, Katy Perry's The One That Got Away was named TikTok's Global Song of the Summer. Jobs, capture a moment, we help turn that moment into deeper fan engagement and greater value while building the catalog of tomorrow. That is why sustained investment in artist development is the lifeblood of our business. It drives future returns, powers the growth of streaming services and gives UMG a stronger voice in how the economics around the music evolve. Dreaming has many years of growth ahead. The model is working, but it can work better. At our Capital Markets Day 3 years ago -- 2 years ago in 2024, we produce the global paid music subscriptions would hit EUR 1 billion by the end of '28. We are on track to exceed that target. Industry forecasts now point to 1.5 billion paid subscribers by 2035. Growth will come from both more subscribers and more value per subscriber. In India, for example, UMG launched premium early access this quarter, giving paying subscribers access to selected releases 72 hours before they reached ad-supported services. That is something we [indiscernible]. We will pursue more market-specific innovation like this, where music engagement is high, but pave adoption remains low. There is also room to earn more by giving fans more, differentiated subscriptions, petro experiences and benefits they value. That is one component is streaming to point out. Another is integrity, making sure compensation more fully reflects the value artists and their music bring to the platforms. Let me say more about what that means. When we launched our artist-centric initiative in 2023, we were the first company to speak out about the proliferation of lower-quality functional content that, in some cases, barely passes for music. We saw the wave of AI spot heading towards the music ecosystem. In early 2025, roughly 10,000 AI-generated tracks were arriving each day. Today, more than 90,000 fully AI-generated tracks are uploaded daily, but volume is growing faster than the safeguards. We have made real progress. We introduced first-of-their-kind anti-dilution protections in our platform agreements. We're helping establish AI labeling and chart standards for licensed human-led recordings. We helped launch the streaming integrity initiative and have taken legal action against bad actors while supporting legislation that protects artists and their livelihood. Many of our DSP partners are also taking meaningful steps and we welcome that progress. But the scale of the problem is still outpacing the guardrails. Let me illustrate this with an example. Look at the blue chart. The blue represents only a tiny fraction of total music consumption, but its cultural and historical importance is enormous. On some major DSPs, Blues charts, as many as 5 of the top 10 albums that are attributed to AI-generated acts without clear labeling or disclosure. The Blues is a north star of authenticity in music from deeply personal human experience and its charts are being polluted by AI content that synthetically imitate that emotional impact. Let me be clear. This isn't an argument against AI. It's an argument for licensed innovation, transparency and fair economics because this is not harmless clutter. AI slot degrades the fan experience and diverse value from real artists. If there's no one, not artists, platforms or consumers. We know how to build win-win agreements with our DSP partners and the shared problem, now human's shared action. We will enforce our contractual protections and insist on clearer labeling across the ecosystem. Our research is clear, fans do not want undisclosed AI swap in their music experience. There is also plenty of evidence for some of that consumption is fraudulent. That raises the basic question. What does market share mean when AI slot and music by real artists accounted as the equivalent? The uniform application of pro rata payments makes the problem worse. By treating AI slot is the same as the greatest songs in the world by some of the greatest artists. It incentivizes industrial scale content production and dilutes the compensation earned by real talent. Put timely, unethically generated AI track should never be compensated on the same basis as music let creates real and lasting demand. And why would a music service even more to host them? Career artists and song artists create the vast majority of the music ecosystem value. They build lasting connections with fans. They bring subscribers to streaming services and give them a reason to stay. That demand extends beyond streams into concert tickets, vinyl CDs, merchandise and committed fan communities. No company has done more to develop and sustain those careers with UMG. We've represented nearly 70% of the world's best-selling artists over the last decade. And UMG artists produced nearly half of the 900 music tracks streamed more than 100 million times in the U.S. just last year. Streaming services depend on those offices and the music that attract subscribers and keeps them engaged. That's why the structure of our DSP agreements has to change. So the compensation better reflects the value different content creates. The larger opportunity is still ahead, more subscribers, more value per subscriber a better fan experience and economics that reward the artists and music that creates lasting demand. And the opportunity expands beyond streaming. We also see opportunities for long-term growth by doing more for more office. From expanding our menu of label services and growing our geographic reach to building additional capabilities in direct-to-consumer sales and merchandise to create new live experiences and superfan products. These strategies are interconnected. They do build on one another. Virgin Music Group is already the industry's second largest artist and label services company. Our ambition is to become the leading partner to attendant labels, entrepreneurs and DIY artists, giving them a way to work with Virgin on terms that fit their ambitions. That broader reach gives us a sharper view of where talent and demand are emerging, especially in fast-growing markets where large audiences and dynamic local music companies, [indiscernible] cultures are not yet fully reflected in market value. As that network grows, so does our ability to deepen fan relationships. For example, our recent agreement with Apple Corps expands merchandise licensing and e-commerce around The Beetles. Our partnership with the tech startup, Hook, found a licensed way to remix and share the music they love with attribution and compensation built in, different partnerships, same goal help artists turn attention into participation, community and long-term value. AI can extend that further, giving artists and fans new way to create and participate. Here again, 2 approaches strengthen each other, protect human artistry and embrace innovation. Our partnership with ElevenLabs. ElevenLabs Is the latest step in a broader art-centric AI strategy. ElevenLabs' Spotify audio and play are developing new listens forms of pain creativity. Stability AI and Splice are developing professional tools for artists and NVIDIA is helping us advance music discovery and engagement. Across these partnerships, the standards are the same, artists and Sunrises has opt-in whenever their voice, image, name and like this, lyrics or compositions are used and the creative community shares fairly in the value that's created. We are moving from principles to products and from products to revenue. We expect these partnerships to begin generating incremental revenue in fiscal '27. More artists, more markets, deep fandom, new tools for creativity, we're still early. The economics will compound as these opportunities connect. We will pursue them all with discipline, each must address a real need for artists, provide a best-in-class solution and earn an attractive return on the capital we commit. To capture those opportunities, UMG itself must keep evolving. We will continue to reduce costs, operate more efficiently and improve margins. That is a clear financial objective. At the same time, we will sustain what drives this business, investment in great artists, songwriters and catalogs and enhanced operating model would also give us more capacity to invest behind creative success and the new wave of growth. When we announced our strategic organization redesign in February '24, we committed to delivering EUR 250 million in annual run rate savings by the end of 2026. We also committed to strengthening what makes UMG distinctive. Our leadership in artist development, the individual created identities of our labels to help us attract the widest range of the world's most successful artists and the entrepreneurial culture that drives the innovation. That program is now complete. You can see the results in our cost structure. Excluding share-based compensation, SG&A as a share of revenue has declined by more than 2 percentage points since we've begun the realignment even after reinvesting some of those savings in the business as we discussed last quarter. Over the same period, we paid a growing share of revenue to artists, Sunrises and label partners. This increase reflects the broader ways in which we work with artists and the associated deal structures as well as the growth of our artist and label services business, specially including Virgin, which provide a different range of services and pays a higher share of revenue back to artists and label partners by design. Looking ahead, our continued transformation will allow us to expand our margins by levering technology to redesign processes and bring together noncreative functions currently spread across labels and regions. That work is already underway. Our approach is straightforward, strengthen what makes UMG distinctive, simplify where scale improves service and lower cost and invest where we can create the most value and build durable advantage. That means keeping creative judgment local, leveraging UMG's global reach and empowering our best executives Frank Briegmann is one example. He's led our business across Central Europe and the Nordics for many years, helping artists build long-term careers through creative leadership, commercial judgment, technological expertise and respect for each individual local culture. That track record is why our take on a broader group of markets. in our overseas Canada, Australia and New Zealand, along with the majority of Europe. This expanded remit will bring these markets closer together, speed collaboration and help more artists reorgans across borders, while preserving what makes each market distinct. Scale matters when it makes artists, sunrises and local teams stronger. That is why we are adding company-wide expertise in data, AI, operators and partnerships. Hannah Poferl, our Chief Data Officer, joined from the New York Times and recruited Oscar Celma, our Senior Vice President of Applied AI and Machine Learning. Oscar brings experience in music discovery and personalization including at Spotify. Together, they are building a central team to sharpen audience insights and input talent discovery tools. Tseyin Foo, our President of Global Supply Chain brings experience from Nike and Skechers. She is strengthening execution across our digital, physical direct-to-consumer and merchandise operations. Libby Bush and other joins us next month from CAA as President of Global Brands and Commercial Partnerships. Arena includes improving economics and ad support music by connecting UMG's premium artist content, fan insight and global brand relationships. The goal is simple, better insight, faster execution and more opportunity. Through all of it, music and artist development remain our center of gravity. I'm committed to extending our leadership in the years ahead and continuing to invest and develop career artists and securing win-win partnerships with DSPs but properly reward their work and ours. With that in mind, we've begun the next phase of our transformation, which will run through to the end of 2028. We'll build on the organizational redesign and look closely at how we negotiate price and execute platform agreements, how our central commercial organization operates how our labels and international businesses are structured and how we use data across the entire company. We'll share more about its scope and financial objectives when we report our full year results. So thank you for that. And now, Matt, I'm going to turn it over to you.

Thank you, Lucian. We're encouraged by the progress we've made in several areas of the business this quarter while recognizing that there is still important work ahead of us. As Lucian discussed, we recently completed the actions that we passed about EUR 250 million organizational redesign. We know there are additional opportunities to improve efficiency and strengthen our financial performance, and the next phase of this work to build the UMG of the future will focus on both further improving our cost structure and accelerating growth across the business. We look forward to sharing more details with you soon. For now, let me walk you through the quarter. As in prior quarters, I'll discuss our results on a constant currency basis. And I'll also provide the underlying performance, excluding the contribution from Downtown. The integration Downtown is well underway, and it's contributing to our business as we expected it would when we agreed the deal. We passed an important milestone in the integration a few weeks ago, and our Virgin and Downtown employees are now working within the same people systems. We have already delivered the initial synergies target on a run rate basis and the team sees additional opportunities. Our total revenue for the quarter grew 11.7% year-over-year to EUR 3.4 billion. Downtown contributed EUR 195 million of revenue during the quarter. Excluding Downtown, revenue grew 5.3%, driven by healthy growth in recorded music. Adjusted EBITDA grew 9.0% to EUR 729 million. Downtown contributed EUR 13 million of adjusted EBITDA during the quarter. Excluding Downtown, adjusted EBITDA grew 7.0%, with adjusted EBITDA margin improving 40 basis points to 22.4%, driven by margin expansion in recorded music. Let me turn to our segment results. Recorded Music revenue grew 14.7% for the quarter, with Downtown contributing EUR 162 million. Excluding Downtown, Recorded Music revenue increased 7.4% year-over-year. Recorded Music adjusted EBITDA increased 14.9% and grew 12.7%, excluding Downtown. Margin expanded 1.2 percentage points to 26.2%. The benefit of revenue growth and lower relative A&R as well as improved cost discipline across marketing and overhead more than offset pressure from revenue in [indiscernible]. Looking further at Recorded Music, Year-over-year subscription revenue growth accelerated compared to the first half of the year, up 19.2% or 9.5% excluding Downtown. Growth continued to benefit from Streaming 2.0 pricing initiatives which contributed slightly more than the 3.5 percentage points we saw in Q2, thanks to a partial benefit from Apple's recent retail price increase. Market share remained a headwind, although the drag moderated this quarter. The remainder of the growth reflects the underlying healthy subscription performance of the industry and other recurring items such as minimum guarantees, audits and accruals. Ad-supported streaming revenue increased 13.5% or 4.7% excluding Downtown, with growth across several of our key video and digital partners. Better per-play rates more than offset the ongoing shift in consumption to short-form platforms. Physical revenue, which had no contribution from Downtown, continued to be strong, growing 17.4%. Performance was broad-based across North America, Japan and Europe, and across frontline and catalog. Releases from Mrs. Green Apple, Stray Kids, Olivia Rodrigo, The Beatles, Rolling Stones and Ariana Grande all performed strongly and more than offset the pre-released sales of Taylor Swift's album last year. The strong level of physical sales we've delivered this year across both artists and geographies gives us continued optimism about the contribution from this category going forward, although the fourth quarter will be lapping exceptional volumes from last year. Licensing and other revenue excluded -- excluding Downtown decline as growth in synchronization and audiovisual revenue was more than offset by lower live and related income. Turning to Music Publishing. Revenue grew 7.5% or 1.5%, excluding Downtown. Exporting Downtown, digital revenue grew 3.9% and subscription growth more than offset softer ad-supported revenue. Synchronization revenue declined 4.7% as lower-than-anticipated film and television activity in the period more than offset improvements in advertising. Adjusted EBITDA declined 3.5% or 4.3% excluding Downtown, impacted by the timing of expenses in the prior year period. As we've discussed in recent quarters, music publishing results can be affected by the cadence of industry distributions and the timing of synchronization activity, which creates variability in quarterly growth rates. That said, growth this quarter was below the level we expect from this business over time. We continue to believe this will be a mid-single-digit growth business in 2027. Turning to merchandising. Revenue declined 4.6% year-over-year, direct-to-consumer revenue grew as we broaden the rollout of our ship-to-home program for merchandise and certain tools. However, this was more than offset by lower touring income due to a larger number of high-profile tours in Q3 last year. Adjusted EBITDA declined EUR 2 million to EUR 11 million due to lower revenue, while margin contracted 60 basis points year-over-year, but it was up nearly 10 percentage points compared to the first half results. As we've discussed, we continue to make structural changes to this business with a particular focus on strengthening our direct-to-consumer capabilities and improving profitability over time. Overall, we're encouraged by the progress we saw in several areas this quarter, including the acceleration in subscription revenue, continued strength in physical sales and improved profitability. At the same time, we recognize that there is more work ahead of us. As you heard from Lucian, that work is underway. We're focused on building on our progress addressing the areas where there are opportunities to improve and driving stronger growth and profitability over time. With that, Lucian, Michael, Boyd and I will be happy to take your questions. Operator, please open the line for Q&A.

[Operator Instructions] Our first question comes from the line of Ed Young from Morgan Stanley.

First of all, struck by your commentary on Downtown where you spoke about the beginning of synergy delivery as well as the major strategic benefit. If I annualize the Q3, it looks like you've already taken 4 turns off the acquisition multiple. Perhaps you could clarify if some of that is lumpiness. But moreover, I would love to hear more on what you're seeing in the business and your hopes for it. And then second, encouraging to see the operational gearing on the back of the strong subscription and Recorded Music growth. Could you help us understand what are timing benefits versus what's more structurally rightsizing costs? Just to give us an idea of the underlying margin performance.

Thanks for that question. I'll maybe start with the second part of your question on the margin, certainly very excited that we delivered the 40 basis points of year-over-year improvement and even larger amount on a sequential basis. That's really the result of better -- the strategic decision-making about where we are investing in our business on a continued basis. We indicated that on our last call that we would be looking at a number of those areas. You started to see the impact in the third quarter. That work will certainly continue as we go forward here. The next phase of our transformation and looking at the commercial organization structures, as Lucian and I have both said, more details to come on that, but we continue to look at the right way to run the business most efficiently while delivering the maximum amount of operational growth at the same time. So certainly expect to see a continuation of the trends that came through this quarter. And then on Downtown, I'll start and Lucian can pick up comments on there. Certainly, as we said, it's the most important acquisition that we've done since EMI and as the team has made very good progress on the integration plan, most of the benefits already now in the run rate there. And as we've gone through that, the team sees further opportunities, and it continues to be a very important part of the overall recorded music business. So we're very happy to be playing there in an even larger scale than we have previously.

Yes. Look, developing artists in this space is substantially growing throughout the whole of the world. In Latin America, obviously, [indiscernible] is a mature Anglo markets everywhere. Our strategic intention with the acquisition as well as our Virgin strategy is a partner with real people with real artists, real labels with entrepreneurs at every stage in their career. And strategically, it's an exciting leap forward in our ability to grow in this space. And we've -- we really like what we see here, some very, very strong people there, there's some great business opportunities. And it's a great opportunity to add to a business that propelled us to the #2 position quickly in this fast-growing artist and services sector. And we're very confident with what we see, it's just the beginning to unlock the value of that business within our entire global ecosystem.

Your next question comes from the line of Peter Supino from Wolfe Research.

I wanted to ask about your cost structure and your comments about improving it. I heard you loud and clear that you'll provide more details soon. And so without asking for any specificity, I wonder if you could talk about functions or areas or processes at UMG where you see incremental efficiency opportunities? And then as a second question, I wanted to ask about your market share results. They were much better than the first half of '26. That's consistent with your messaging throughout the year. I just wanted to reflect on the first half of '26, if you would share any lessons learned or process improvements that we could consider in forecasting the recorded music business for '27.

Yes. Thank you for the question, Peter. Yes, I'll start with the cost structure and then move on to the market share piece. I think Lucian touched on a number of pieces in his comments. The key for us is funding the right balance, and we're still taking the commercial decisions where they should be taken. But then we look across the whole business, how we best support that those commercial decision-making, where there's opportunities to bring the scale of UMG on a global basis together and improve both the efficiency of the work and also the effectiveness in supporting our frontline operators, we do that. So I would say you should expect to see changes to the cost structure across almost every facet of the company, all operating areas of the company as we run the business the right way that it should be run with the tools available to us and the way the industry will demand of us going forward. But more specifics on that as we said to come. In terms of forecasting market share results, there's -- we do not see new releases from artists in the same cadence as you see holiday season impacting retail, for example, where you know each year exactly where that's going to be. We certainly expect our -- to see another strong slate of performances from our artists next year with the new releases that will come out there. Glad to see the improvement as the year has gone on as we disclosed it would, and we'll keep doing what we do best. And that is -- Lucian touched on this in his remarks, the remarkable streak of the percentage of the top streaming artists and albums that are coming from the artists that we work with. So the timing of that is in the genius of the artists that we work with. And for those of us that are trying to put models together around that, it's not always so easy to predict, but we know that we'll see that genius come through.

I'd add that, obviously, we watch market share closely. But we don't -- and we can't manage the business on 1 quarter's share number, and I've been quite consistent about that. 8 companies creative performance remains strong across genres, geographies and after all stages in their careers to break a new artist that will become huge. The frontline headwind moderated and the -- our catalog continued and was stable and continue to grow. Quarterly share moves with release cadence, obviously, I suppose, prior year comparisons, individual geographies and the changing mix of consumption across those platforms throughout the world. So we've got huge acts in Japan, and they stream less in Japan than the equivalent huge artists might stream in the mature Europe, in the larger, more significant Anglo markets, for example. And this next phase, we've got 2 clear objectives, to improve the margins as well as evolve our organization. We're going to continue to invest behind our system in Sunrise development. We're going to continue to extend our global reach while strengthening local market expertise, use our scale, use the data. We brought in new people. We've refreshed, refreshed. And work on our own tech stack, where we've got the opportunity. We have to improve service, speed and cost.

Your next question comes from the line of Stephen Laszczyk from Goldman Sachs.

Lucian, you spoke a good bit about the need to create guardrails around AI content. I was curious what tangible actions you would expect to see perhaps over the next year or so out of the DSPs out of regulators or perhaps even out of the labels themselves on this front. I'd be curious how much around this you think is within your control as the largest music label versus where you might feel like there's a need for greater buy-in from the community?

Michael, you actually handle -- that is something that we spend an enormous amount of time together.

Stephen, thank you for your question there. So with respect to DSP protection, we continue to negotiate and secure some very important protections in our agreements with the services. They vary, of course, according to the partnership. They include 4 key elements. First of all, AI models can't be trained on our artists work without consent. Second of all, AI recordings trained on our content without authorization have fee removed. Third, AI content that misappropriate, the identities of our artists and fringes on their right of publicity will also be removed. And perhaps most importantly, you've heard about this a lot from us. It's our aim that our content fully -- in our contracts, the fully AI-generated music doesn't dilute our artist royalties. Various monitoring requirements are also included in the agreement. We negotiated and secured key protections in our YouTube deal, recent Spotify agreement. We've highlighted AI protections and announcements with [ Roblox ] and [indiscernible] indicates a successful ever to secure AI protections across both channels in the music ecosystem. And regarding labeling, AI detection technology is now available and research indicates that 80% to 90% of consumers insist that AI content should be appropriately labeled. And keep in mind, this is a problem for the services, too. So questions about individual platform plans to manage AI music should also be taken up with them. They're incentivized to address these developments, which underline the user experience and the integrity of their services, as Lucian pointed out. For example, Spotify recently announced that they've taken more than 50 million tracks identified as AI swap and spam out of their recommendations, effectively partitioning this content off from consumers. This fall, their announcement earlier in the year about removal of 75 million span AI-generated tracks from their service entirely. Deezer is launching a kill switch feature that allows users to exclude only AI-generated content. And I would note there that 74% of U.S. consumers have expressed interest in having that type of interaction with the service to be able to exclude AI content. Consumers don't want to be to be the C. They don't want to have to guess if they're being forced Fed AI content. They want a connection with real artists. And finally, Apple reported earlier this year about its efforts to address the flood of AI outflows, that included the exclusion of 2 billion fraudulent streams last year. So we welcome these steps and further innovation to counteract harm that's posed by [indiscernible] in these platforms. But this is not sufficient, and I want to underscore this. We're facing a situation right now where as Lucian pointed out, first quarter 2025, 10,000 AI tracks uploaded a day. Now less than 2 years later, that increased by an order of magnitude to almost 100,000 AI tracks per day. This is ecosystem pollution at a massive scale. Clearly, the ecosystem is damaged by this flood of infringing content, completely detached from real and meaningful artists [indiscernible] relationships that drive on this economy. While most of the value in ecosystems being created by career artists and this is the antithesis of career artistry, this flooding of the platforms with this glut of pure AI content. So it's very important in terms of the integrity of the user experience and especially music discovery that we work with our partners to better address this problem.

I'd add though is -- the reality is it's a new technology and are developing activity in real clients, and it's exploded over the last several months, and it's got to stop. And we expect our partners to address it.

Your next question comes from the line of Jason Bazinet from Citi.