Madison Square Garden Q1 2026 Earnings Call Transcript

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November 6, 2025

Key Takeaways

  • Positive Sentiment: Strong Q1 operating momentum: Revenues were $158.3M (up 14%) and adjusted operating income rose to $7.1M (up $5.2M), with a record number of concerts at the Garden and management expecting solid full-year revenue and AOI growth.
  • Positive Sentiment: Christmas Spectacular outperformance: Advanced ticket revenues are pacing double digits, show count increased to 215 (from 200), management expects >1M attendees and higher per‑show revenue, and Sphere Immersive Sound will enhance future productions.
  • Positive Sentiment: Share repurchase and capital allocation: The company repurchased ~623,000 Class A shares for ~$25M this quarter, has ~$45M remaining under the buyback authorization, and says opportunistic capital returns remain a priority.
  • Negative Sentiment: Balance sheet and charges: unrestricted cash was $30M versus $622M of debt (net debt ~ $592M, ~2.6x leverage), management reported a $13.8M non‑cash impairment on Two Penn Plaza and noted ongoing interest and full cash tax obligations.
  • Positive Sentiment: Commercial monetization initiatives: in‑house sponsorship sales are largely in place with new partners (e.g., Sephora, Dove), and premium suite renovations are already generating incremental revenue, supporting upside in F&B, merch, and sponsorships.
AI Generated. May Contain Errors.
Earnings Conference Call
Madison Square Garden Q1 2026
00:00 / 00:00

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Operator

Good morning. Thank you for standing by, and welcome to the Madison Square Garden Entertainment Corp Fiscal 2026 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the call over to Ari Danes, Senior Vice President, Investor Relations and Treasury. Please go ahead.

Ari Danes
Ari Danes
SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp

Thank you. Good morning, and welcome to MSG Entertainment's Fiscal 2026 First Quarter Earnings Conference Call. On today's call, David Collins, our EVP and Chief Financial Officer, will provide an update on the company's operations and review our financial results for the period. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investor section of our corporate website. Please take note of the following: today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties.

Ari Danes
Ari Danes
SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp

The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On pages four and five of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income, or AOI, a non-GAAP financial measure. With that, I'll now turn the call over to David.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Thank you, Ari, and good morning, everyone. We are several months into fiscal 2026, and I'm pleased to say we are off to a strong start. We continue to see broad-based strength across our business, most notably for bookings and this season of the Christmas Spectacular, both of which I will discuss in more detail shortly. In light of the demand we're seeing, we are increasingly confident in our ability to drive solid growth in revenue and adjusted operating income this fiscal year. That confidence in both the near and longer-term outlook for the business was behind our decision to repurchase approximately $25 million of our Class A common stock this past quarter as we continue to deliver on one of our core capital allocation priorities. Now, let's review some first-quarter operational highlights. During the quarter, our venues welcomed over 900,000 guests across 140 events.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

That includes a new record for the number of concerts in any quarter at The Garden, as we hosted a number of sold-out multi-night runs and welcomed new headlining acts to the arena this past quarter. From a consumer demand standpoint, the majority of concerts across our portfolio of venues were, again, sold out during the first quarter. In addition, food and beverage per caps at concerts at The Garden were up, while per caps at our theaters were down as compared to the prior year quarter, which we primarily attribute to the mix of events. Looking ahead, we are booking events at a steady pace and remain on track to grow the total number of events at our venues in fiscal 2026. This reflects our expectations for growth in concerts this year, including at The Garden.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

On the family show front, Cirque du Soleil's "‘Twas the Night Before" will begin its holiday season run at The Chicago Theatre and The Theater at Madison Square Garden next month. In terms of marquee sports, next week we welcome UFC Back to The Garden, which will be followed next month by the return of The Garden Cup, marking the second consecutive year of tennis at the Arena. With regards to the Knicks and Rangers, the teams recently began their 2025-2026 seasons at The Garden. This fiscal year, the cash component of the arena license fees will be $45 million. It will continue to grow at 3% each year through fiscal 2055. While still early, we are seeing positive momentum across our share of food, beverage, and merchandise sales at Knicks and Rangers home games.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Turning to the Christmas Spectacular, the 92nd holiday season kicks off later today with 215 shows planned for this year's run. This compares to 200 performances last year. We continue to embrace new technologies, and this year's production will utilize Sphere Immersive Sound, the cutting-edge audio system we recently installed at Radio City. The introduction of this technology is the next evolution in the venue's nearly 100-year legacy and will elevate the audio experience for artists and guests alike. Guests will experience the Christmas Spectacular with a new clarity and purity of sound that fully envelops the audience, and the system rolls out in January for all future events. In terms of advanced ticket sales, we continue to pace ahead of where we were at the same time last year.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Based on the demand we are seeing, we anticipate once again welcoming over 1 million guests to the Christmas Spectacular this holiday season. We also continue to expect higher per-show revenue, which, combined with the increased number of shows, puts us on track to deliver another year of record revenues for the production. Turning to our marketing partnerships business, as you know, around this time last year, we made the decision to bring our sponsorship sales effort back in-house. With our internal sales teams now largely in place, we believe we are well-positioned to capitalize on upcoming opportunities in fiscal 2026 and beyond. In terms of premium hospitality, we continue to see strong new sales and renewal activity for our suites. We also recently completed the renovation of several Lexus-level suites and are seeing the benefit of incremental revenue from these enhanced spaces.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Now, let's turn to take a look at our financial results. For the fiscal 2026 first quarter, we reported revenues of $158.3 million, an increase of 14% versus the prior year quarter. This reflected an increase in revenues from entertainment offerings and, to a lesser extent, higher food, beverage, and merchandise revenues. The increase in revenues from entertainment offerings primarily reflected growth in the number of concerts at the company's theaters and at The Garden, as well as higher per-concert revenues. In addition, revenues from other live entertainment and sporting events increased year-over-year, primarily due to an increase in the number of events at The Garden. The increase in food, beverage, and merchandise revenues mainly reflected higher F&B sales at concerts due to higher per-concert revenues, as well as the impact of more concerts at our venues.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

F&B sales at other live entertainment and sporting events also increased year-over-year. First-quarter adjusted operating income of $7.1 million increased $5.2 million as compared to the prior year quarter. This primarily reflects the increase in revenues, partially offset by higher SG&A and direct operating expenses. I would also note that the first-quarter operating loss results include a non-cash impairment charge of $13.8 million related to the company's operating lease at 2 Penn Plaza. Turning to our balance sheet, as of September 30th, we had $30 million of unrestricted cash, while our debt balance was $622 million. This reflected $602 million outstanding under our term loan and $20 million drawn on our revolving credit facility. Since the end of the quarter, we have paid down the full $20 million revolver balance, and we continue to expect to generate substantial free cash flow as we progress through the year.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

This reflects the following expectations for fiscal 2026. Solid growth in adjusted operating income. Ongoing net interest payments related to our national properties debt, which totaled $45 million in fiscal 2025. Our status as a full cash taxpayer, and capital expenditures, which will include incremental spend related to certain suite renovations at The Garden, as well as enhancements at The Beacon Theatre and Radio City Music Hall, where we recently installed Sphere Immersive Sound. As I mentioned earlier, during the quarter, we repurchased approximately 623,000 shares of our Class A common stock for $25 million. Following these repurchases, we have approximately $45 million remaining under our current buyback authorization, and going forward, we will continue to explore ways to opportunistically return capital to shareholders. In summary, we're seeing positive momentum across our business.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

We are increasingly confident in the company's trajectory this fiscal year, and we believe we are well-positioned to drive long-term value for our shareholders. I will now turn the call back over to Ari.

Ari Danes
Ari Danes
SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp

Thanks, David. Operator, can we now open up the call for questions?

Operator

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Stephen Laszczyk of Goldman Sachs. Your line is open.

Stephen Laszczyk
Stephen Laszczyk
Analyst at Goldman Sachs

Hey, guys. Thanks for taking the questions. Maybe starting first with the Christmas Spectacular. Just with the show kicking off today, would love to get your latest thoughts and views on how sell-through and pricing are trending heading into this holiday season. It seems like there's no shortage of debate around the consumer at the moment. Would just be curious what you're seeing in terms of demand out there and if there's any pockets worth calling out on either the positive or negative side. I have a follow-up.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Sure, Stephen. Thanks. Thanks for the question. A few things to note about the Christmas Spectacular. First of all, this year's production is seeing very strong demand, and we're pleased to say that we expect to, again, host over 1 million guests at the show this holiday season. I want to also note that the Rockettes are celebrating their 100th year anniversary this calendar year, which is helping us to drive increased interest in the show for both our guests and our partners. Advanced ticket revenues are currently pacing up double digits as compared to this time last year, which reflects both higher individual and group ticket sales, and that is being driven by both higher volume and average ticket yields. The progress in advanced tickets puts us almost halfway to our ticket revenue goal for this year already.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

In terms of show count, we've added four more shows since our last earnings call, which includes two shows that were added just earlier this week due to the demand we've been seeing. We now have 215 planned performances as compared to 200 last year, and that translates into a high single-digit percent increase in show count. Finally, Stephen, I would say the Christmas Spectacular is a premium entertainment product in the market and is still well priced. I mean, priced well below average ticket prices for comparable entertainment options. We are always strategically managing and pricing our ticketing inventory to maximize revenue for every show. With all that said, we remain confident in our ability to deliver very strong growth with Christmas Spectacular this year.

Stephen Laszczyk
Stephen Laszczyk
Analyst at Goldman Sachs

That's great. That's all helpful. Just a quick follow-up on the show count point, adding four shows to 215 this year. Just would be curious, given the calendar this year, is there any opportunity to take that higher from this level? What would you need to see to maybe slide in a few more?

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Yeah. I mean, we certainly are always open to looking. We'll see how sales go, but we are certainly always looking for that and the way the demand's going. That's something we would consider for sure.

Stephen Laszczyk
Stephen Laszczyk
Analyst at Goldman Sachs

Great. That's helpful. Thank you very much.

Operator

Your next question comes from the line of Peter Henderson of Bank of America. Your line is open.

Peter Henderson
Peter Henderson
Analyst at Bank of America

Yeah. Good morning. Thank you for taking the question. Can you just provide updated thoughts on concert bookings for The Garden and the other properties and also where you stand on bookings now relative to this point last year for fiscal 2Q, 3Q, and 4Q?

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Sure. Thanks, Peter. As I had mentioned earlier, we had a robust fiscal first quarter here at The Garden, setting a new record for the number of concerts in any quarter at the venue. Looking ahead, we are booking events at a steady pace and remain on track to increase the number of booking events across all our venues in fiscal 2026. In terms of concerts, we are pacing up on a full-year basis for fiscal 2025 at both The Garden and our theaters. In fact, we have already booked more concerts at The Garden for fiscal 2026 than the actual number of concerts held at the venue all of last year. Across our venue portfolio, we are now nearly 85% to our concert booking goal for the year. As we look to the rest of the year at The Garden.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

We currently expect to be down in the December quarter at The Garden in terms of number of concerts. However, we view that as just timing of where concerts are landing during the fiscal year. I would say we are pacing up for both fiscal third and fourth quarters. At the theaters, we currently expect to be up in number of concerts in the December quarter. For the third and fourth quarters, we are currently pacing behind. With that said, typically, the lead time for our theaters for bookings is three to six months. We still believe we have time there. I would say overall, we feel really good about our start and remain confident in our path to growing the number of events at the venues this year.

Peter Henderson
Peter Henderson
Analyst at Bank of America

Thank you.

Operator

Your next question comes from the line of David Karnovsky of JPMorgan. Your line is open.

David Karnovsky
David Karnovsky
Analyst at JPMorgan

Hey. Thank you. On a prior call, you had noted some work to book major residency acts for 2027 or fiscal 2027. I wanted to check in on where things stand with that. As a follow-on, just given the recent share repurchase activity, maybe you can update on how you're thinking about capital returns or allocations from here.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Sure, David. Thanks for the questions. As far as the residency, we are definitely making progress to finalize a residency for next year. We expect that we'll have more to share in the coming months. As we mentioned on our last call, and I will reiterate here, this residency would include a substantial number of dates at the arena and would create the potential for concert growth at The Garden in fiscal 2027, which would be following what we expect is going to be a strong performance here in fiscal 2026. We look forward to sharing more details when we can and as soon as that's appropriate on that front. Talking about the capital returns, as you've heard us discuss before, we have three key priorities in terms of our capital allocation, and the first being that we like to ensure that we have a strong balance sheet.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

At the quarter end, we had net debt of approximately $592 million, which translates into net debt leverage of approximately 2.6x. As I mentioned earlier, at the end of the quarter, we repaid back our $20 million. We drew on our revolvers during the quarter. We should be able to continue to naturally deliver the business as we grow. I would say our second priority is to ensure that we do have the appropriate flexibility to pursue compelling opportunities if and when they arise. In terms of capital projects, there are not any major ones to flag at the moment as we look out for the rest of the fiscal year, but we will always be on the lookout for that. Our third priority remains to opportunistically return capital to our shareholders.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

As we had said, we repurchased $25 million of stock during the fiscal quarter, and we have $45 million remaining under our current buyback authorization. Going forward, we will continue to explore ways to opportunistically return capital to our shareholders.

David Karnovsky
David Karnovsky
Analyst at JPMorgan

Great. Thank you.

Operator

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

Jack Stid
Jack Stid
Analyst at Wolfe Research

Good morning. Jack Stid here on for Peter. My question is, with Christmas Spectacular show count now at all-time highs, what's the next meaningful growth driver for that business? Longer term, is it feasible for the show to expand to future mini-Sphere venues? Thank you.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Thanks, Jack. We definitely see a runway of growth across a number of areas related to Christmas Spectacular. As you mentioned, the show count going from 200 to 215, which is still below our highest level in years past. We also are continuing to get smarter about optimizing the calendar. We think there's some more room to grow beyond that. Secondly, we continue to see opportunities to improve the show, the per show revenues. As I mentioned earlier, the Christmas Spectacular is a premium product, and it is still priced well below other comparable entertainment options in the area. We continue to strategically manage and price our ticketing inventory. We expect to see continued yield upside from here. We also see opportunities to drive revenue growth in areas such as F&B, merch, and sponsorship as the Rockettes brand continue to grow. For example, we recently.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Named Sephora as our first-ever official beauty retailer of the Rockettes and Christmas Spectacular and also welcomed Dove as an official partner of the Rockettes and the Christmas Spectacular. I would say lastly, we remain focused on operating the show more efficiently, including levering technology, which will allow for margin expansion. As far as what you had mentioned about the Sphere and other productions, I would say at this time, we have no plans to develop new productions, but we'll always consider opportunities that make sense for the business. We truly believe we have a unique franchise in the Christmas Spectacular, and we are focused on growing it over the long term for sure.

Jack Stid
Jack Stid
Analyst at Wolfe Research

Thank you.

Operator

Your next question comes from the line of Cameron Mansson-Perrone of Morgan Stanley. Your line is open.

Cameron Mansson-Perrone
Cameron Mansson-Perrone
Analyst at Morgan Stanley

Thanks for taking the question. Good morning. Just one from me. Wondering if you could elaborate on transitioning that sponsorship business back in-house. I think you mentioned that that was done, but wanted to confirm that. Just any color around how it's gone so far, how we should think about the kind of related cost and opportunity going forward from that change. Thanks.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Sure. Thanks, Cameron. Yeah, you heard correctly. As I mentioned, our internal sales team is now largely in place. We believe we are well-positioned to capitalize on opportunities in this fiscal and beyond to drive growth. I would say, first of all, we have several premium sponsorship assets available, which include our naming rights at The Theater at MSG, some notable presenting partnerships across the venues, as well as a good inventory of outdoor signings. We believe we have shown significant progress in this area of our business. For example, as I noted in the prior question, we recently named Sephora as the first-ever official beauty retailer of the Rockettes and Christmas Spectacular, which is a great example of a new category for our sponsorship business, which is leveraging our unique assets.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

We similarly recently welcomed Dove as an official partner of the Rockettes and Christmas Spectacular. One other thing I mentioned, we also have a number of renewals coming up and are very optimistic about those. I would say overall, we're seeing positive momentum in this area of our business.

Cameron Mansson-Perrone
Cameron Mansson-Perrone
Analyst at Morgan Stanley

That's helpful. Thanks.

Operator

Your next question comes from the line of Joe Stauff of Susquehanna. Your line is open.

Joe Stauff
Joe Stauff
Analyst at Susquehanna

Thanks. Good morning, David, Ari. First question is, with the new mayor, I was just trying to properly calibrate any new risks of higher taxes for MSG.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Okay. Sure. Thanks, Joe. I would say at this point, we are not going to speculate about hypotheticals regarding a new administration. I would say a few things, though. As it relates to city income taxes, I would note that any change would require action by the New York State Legislature and the governor as well. Similarly, I would say that any repeal of The Garden's property tax exemption would also require action by both houses of the New York State Legislature and the governor. As I said, we are not going to speculate on hypotheticals, but just wanted to point that out.

Joe Stauff
Joe Stauff
Analyst at Susquehanna

Gotcha. Structurally, it does require the state. It's not something that can be done specifically from the city.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Correct.

Joe Stauff
Joe Stauff
Analyst at Susquehanna

Maybe just a follow-up. I know you had answered in various ways maybe. Questions on the consumer, but just wondering if you see any slowdown really in the buckets where maybe you would, which would be concessions and sales of merchandise. Just wondering if you see any pattern where, whether it be recently or a trend where maybe that's softened up a bit.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Sure, Joe. We keep a close eye on the macro environment. I have to say that we continue to see strong consumer demand. A few factors to point out that support our view. As I had mentioned earlier, we are seeing very strong demand for the Christmas Spectacular holiday season this year. Our advance ticket revenues are pacing up double digits compared to this time last year. I would say in terms of our bookings, the majority of our concerts at our venues were, again, sold out this past quarter. A number of upcoming acts across our venues have added additional shows in the coming quarters due to strong demand. When we look at the next two quarters, the sell-through rate for concerts is currently pacing in line with where it was this time last year.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

As I mentioned, we keep a close eye on it, but we continue to see strong demand from consumers.

Joe Stauff
Joe Stauff
Analyst at Susquehanna

Thanks very much.

Ari Danes
Ari Danes
SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp

Thanks, Joe. Operator, we have time for one last question.

Operator

Your last question comes from the line of David Joyce of Seaport Research Partners. Your line is open.

David Joyce
David Joyce
Analyst at Seaport Research Partners

Thank you. A couple of questions, please. First, do you have any updates on the redevelopment and renovation of Penn Station? Secondly, if you could please comment on the bookings growth by event type, family versus sporting events versus concerts. Thanks.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Sure, David. Thanks. Thanks for the questions. As far as the redevelopment plans for Penn Station, let me just say that the U.S. Department of Transportation and Amtrak announced in August a project schedule that includes selecting a master developer by May of 2026 and beginning construction by the end of 2027. That's a timeline they reiterated last week. From our perspective, as invested members of our community, we remain committed to improving Penn Station and the surrounding area. As we've said before, we and our guests are already seeing benefits of some of the recent improvements, which have taken place in the surrounding area and in The Garden. As this redevelopment of the area continues, we are committed to collaborating very closely with all the stakeholders. I would say that's all we'd probably say at this time. From your question on the.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

Bookings growth, we continue to expect growth. Driven primarily by concerts, family shows, and sports properties in our business. As we've discussed, our concert category is expected to return to concert growth at The Garden, as well as continued increases across our theaters. As I also mentioned earlier, we have already booked more concerts at The Garden for fiscal 2026 than the actual number of concerts held at the venue last year. Feeling good about that. Looking at the rest of the bookings business in terms of our family show category, I would say while we're not currently expecting growth in the number of events, we expect to see improved financial results, which is helped by the return of Cirque du Soleil for the holiday season at both The Theater at MSG and The Chicago Theatre next month.

David Collins
David Collins
EVP and CFO at Madison Square Garden Entertainment Corp

In terms of marquee sports, while we expect to see modest event growth this year, we are expecting another robust year of college basketball and boxing. I would point out that includes St. John's, who is ranked number five in preseason college basketball rankings. We have 13 games planned with St. John's at the arena versus nine last year. Lastly, I would just say in terms of special events, we are expecting a modest increase in the number of events in fiscal 2026. I would point out that we do face a tough comparison in this category in terms of financial results because of the absence of SNL's 50th Anniversary Special, which took place last year. I would say overall, we continue to expect growth across a number of our bookings category. We feel good about our calendar for fiscal 2026.

David Joyce
David Joyce
Analyst at Seaport Research Partners

Great. Thank you very much.

Operator

That concludes our Q&A session. I will now turn the conference back over to Ari for closing remarks.

Ari Danes
Ari Danes
SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp

Thank you all for joining us. Look forward to speaking with you on our next earnings call. Have a good day.

Operator

This concludes our conference call. You may now disconnect.

Executives
    • David Collins
      David Collins
      EVP and CFO
    • Ari Danes
      Ari Danes
      SVP of Investor Relations and Treasury
Analysts
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