Live Nation Entertainment, Inc. (LYV) on Q2 2023 Results - Earnings Call Transcript
Operator: Good afternoon. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to Live Nation's Second Quarter 2023 Earnings Call. Joining us today from Live Nation, our President and CEO; Michael Rapino, President and CFO, Joe Berchtold, and Head of Investor Relations, Amy Yong. And I would now like to turn the call over to Mr. Berchtold. Thank you. Mr. Berchtold, you may begin your conference. Joe Berchtold: Thanks, everyone, for joining us. As I think you noticed from our earnings release this time based on some feedback that we've gotten on our release and the materials in general. We've switched it up this time to get a little more comprehensive and data-driven in terms of numbers and the facts. So you see an earnings release that we reduced the narrative and increase, if I give you on a more structured basis all the key numbers and then also put a trending schedule that I think there was a link to you can get as a PDF or an Excel file, so you can track this quarter's numbers relative to history to make some of it easier. So I'll turn it over to Amy to give you a quick reminders, and then Michael and I will go straight into taking questions that folks have. Amy? Amy Yong: Thanks, Joe. We would like to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to our SEC filings, including the risk factors and cautionary statements included in our most recent filings on Forms 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results. We will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, we have provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in our earnings release issued earlier today. The release reconciliation can be found under the Financial Information section on our website. And with that, we are now ready to take questions. Operator? Operator: [Operator Instructions]. And the first question comes from the line of Brandon Ross with LightShed Partners. Please proceed with your questions. Brandon Ross: I think investor concern now, if you were to pull the buy side is that with the past few years coming out of COVID being so strong, you're going to have trouble growing next year. And I think the Street is only at mid- to high single-digit growth. I guess, this is a good problem to have, but you said there are positive indications for '24, and wanted to see if you can kind of break that down into domestic and international. So on the domestic side, what are the positive indications that you're seeing besides this very early pipeline? Will supply match what we've seen in the past couple of years. And then on international, obviously, LatAm has been a huge tailwind post-acquisition. You've seen some other green shoots in Asia and parts of Europe. Should we expect continued growth in those markets or just more M&A on top? Joe Berchtold: So Brandon, thanks. This is Joe. For starters, as I think you probably noticed we put in the release that at this point, our confirmed shows and shows that we have offers in on our arenas, amphitheaters, stadium shows is up relative to where we are at this point last year coming into '23. So we're seeing continued growth in the show count, which should lead to continued growth in attendance. As you know, our formula is to drive that growth in attendance and from there, accelerate the AOI levels even higher with increasing per fan profitability on-site, increasing sponsorship, increasing our ticketing business. So I think we're set up for a very strong continued growth into 2024 across the board. And a lot of that activity, these are going to be the shows that have the longest lead time on. So a lot of these are going to be global in nature, cutting across both North America and international. As you noted and as I think much of the release lays out, this has been a tremendous quarter for growth in international markets up, I think it was 46% fan growth so far this year, which given that we were closed part of last year, we expected to see very strong growth. But we still think we're in the early innings. If you take Latin America, we're up about 35% this year so far year-to-date with roughly 10 million fans. But we think we're still in the early innings in South America. We launched the Town festival already sold 400,000 tickets on our way to probably 500,000 tickets, which is unheard of for a festival in its first year. So as we continue to layer on our promoting business bringing in our sponsorship business, bringing in our ticketing business throughout Latin America. That just continues to drive it forward. In North America, again, a very good year this year, and we're seeing the sort of growth that we think is possible ongoing year-to-date, up 8% in North America with the fan count expect that to be double-digit fan growth in Q3, probably verging on double-digit fan growth for the full year in North America as we're seeing top to bottom. We're seeing strong growth in theaters and clubs. Our amphitheaters are doing great, substantially up in number of fans attending per show and the high-end stadiums are doing very well. I've seen some things talking about is the middle, how is the low end demand across all of those continues to be very strong. Michael Rapino: And I'll just jump in. And Brandon, just to reiterate the pipe, right? The most important thing for us is just how does the pipe look for next year. As you know, a year ago, we sat here, and I think everyone thought '22 was the record year, and we were headed into an air pocket, and we've blown the doors off in '23. I would just step back. We believe for the next multiple years that this industry, in general, is going to have a growth surge on a global basis. We've talked to all these factors before, international, global artists, consumers. There's a whole bunch of great articles written on why there's a boom happened in a live business on a long-term basis. So we don't think this is just any COVID catch-up. We think that this is going to be the time we're live on a global basis is going to have an incredible growth run for years to come. We obviously benefit from that any time the market gets this level of growth because we'll capture that growth also. So we're looking next year, we're seeing top to bottom, as Joe said, incredible pipe of artists that will be filling all of the different venue types and markets across the world. So we think we're heading to a very, very strong 24, 25 onward, a combination of the market is going to grow, the consumer demand is growing and our ongoing bolt-on acquisitions, venues, new market entries compounded on top of our organic growth is going to give us this continual 1, 2 punch of growth for the next multiple years. Operator: And the next question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question. Stephen Laszczyk: Just maybe on the outlook for consumer spending. There's been a lot made over the last couple of months about the impact of student loan payments starting up in the fall. Maybe for Joe, if you could just remind us what percentage of the comps are going based you think might be skewed toward this cohort? And then maybe more broadly discuss how you're thinking about the risk that consumer spending pulls back maybe into the back half of the year or next year? Are there any parts of your business that you think are more or less exposed and perhaps festivals, and just would be curious if you could dive a little bit more deeply into the demands under the equation. Joe Berchtold: Sure, Stephen. Thanks. I think first, just for context, I think it's important to remember a relative scale. So if you look at consumer spend, discretionary spend on goods versus experiences. As we know, it was in the high 60s in experience. I mean this is a Goldman report that talks about this. pre-pandemic and then how that has dropped and it hasn't yet caught up. So our analysis shows that the tailwind impact from getting experiences back as a portion of discretionary spend is about 10x the impact of any potential headwind coming from the student loan payments needing to get made. So we think that the tailwinds on that specific macro factor as far outweighs any headwinds. As Michael talked on a global basis, we continue to see this as a tremendous tailwind business as you have further and further globalization of demand. As we look at all the different pockets, as I mentioned earlier that the amphitheaters is an example of a mid-level act. We're seeing high single-digit increases in attendance per show, which is really driven by more lawn tickets being sold. So the people that you might say are going to be the most price conscious are continuing to spend strongly per caps growing even as we're continuing to increase our number of fans per show, which again means that even the marginal fan is continuing to spend a lot when they show up. So we're not seeing any indicators that would give us any concern on any slowdowns. Stephen Laszczyk: Great. Thanks for that. And maybe just one on Concert segment margins. It looks like ALM margins were up year-over-year in the second quarter. I think there might have been some assumptions that margins would be pressured year-over-year just given the mix of the slate towards stadium and arena this year. So I'm curious what drove margin expansion in the quarter? And if you think this is a trend that will be sustainable for the rest of the year? Thank you. Joe Berchtold: Yes. As we said in the last quarter, our expectation for the full year on concerts is that you will see margin expansion relative to last year. You're correct that any fan in third-party buildings is generally going to be a lower margin than fans in our building. But the countervailing factors is that we continue to increase the per-fan profitability across all of the different venue types. So as we increase that per fan profitability through all the different ways that we have to monetize, then we're going to see some margin expansion. That comes from increased per caps on our own building, it also comes from continuing to focus on the costs. I think in particular, in North America, we've been very effective. We look at our amphitheaters, if we look at our theaters and clubs globally, we've been able to actually drive down our average operating cost per fan this year relative to last year, which certainly helps with our margins. Operator: And the next question comes from the line of David Karnovsky with JPMorgan. Please proceed with your question. David Karnovsky: I'm curious with your voluntary all-in pricing initiative, I know you haven't implemented this yet. But curious what the reception has been so far from fans, clients, lawmakers. And then, can you discuss, have you thought about any potential demand impact as or for the shows that your venues as I think now optically at least you're raising prices relative to maybe competing locations? And then maybe for third-party venues that would opt-in, how you would think about the demand impact there? Thanks. Joe Berchtold: Sure. I think the general reaction has been overwhelmingly positive. People understand that getting the all-in price upfront is absolutely the best consumer experience. I think there is a lot of concern that there will be still confusion in the marketplace because there will be a mix of all-in pricing for shows on our sites and on the primary tickets on our sites and you go to secondary sites, you'll see a different approach. So that's why we continue to support legislation that drives a consistent fan experience. Because we are the primary ticketing provider in these events, I think it's our expectation in general that even that all-in primary price is generally going to still be lower than any secondary price even without service fees. So our experience thus far in New York or Louisiana that's recently implemented it, we haven't seen any impact on our primary ticket sales. David Karnovsky: Okay. And then, Joe, for the $300 million of growth CapEx, I wanted to see if you could provide any additional color around that? How would you bucket that between concerts and ticketing and then within concerts, new builds or other growth initiatives? And then your release noted international locations, specifically for the Venue Nation pipeline. I'm interested, you now kind of see international is the key area where you're going to be adding venues? Joe Berchtold: Sure. I think if you look at the overall $300 million of spend is vast majority of it would be concept-driven, 75%, 80% of it would be on the concert side. If you look then on the concert side, I would put it in 3 buckets. One is where we're doing a lot of tactical improvements across a broad set of our amphitheaters or theaters and clubs around revenue-generating opportunities, putting in new bar designs, putting in additional points of sale, things that are going to tactically help drive our APF levels. Second is, when we renew our amphitheaters or our theaters and clubs, we often go through a CapEx refresh cycle, that because we're going to have a long-term lease, we're going to be able to get a strong return off of that investment. And then, third would be the new builds where whatever level generally coming in and building out the shell and taking on that building would be the third bucket. And it's going to move around year-to-year within those 3, but those would be the 3 large buckets. And then in terms of the priorities, absolutely, international, Latin America, Asia and more in Europe is highest priority for the Venue Nation strategy. In the U.S., you benefit from having a strong arena infrastructure because NBA, NHL, their teams and their affiliate teams provide you with some of that infrastructure that you don't tend to have in the rest of the world. So this lets us both benefit from strongly attractive returns on those venues also, let's just put on more shows for more fans, because we're putting an infrastructure in place that didn't previously exist. Operator: Our next question comes from the line of Stephen Glagola with TD Cowen. Please proceed with your question. Stephen Glagola: Joe, you're on track for $300 million fee bearing tickets this year which is 7% growth over 22. IN the first half ticket growth on fee bearing is 22% year-over-year. So just maybe help us understand what's the slowdown in the second half in ticketing or is that just some conservatism in the numbers. And then I have one more follow-up. Thanks. Joe Berchtold: Yes. I think it's just -- you don't yet know what Q4 looks like in terms of timing with on sales for shows next year. So I think we're confident in the $300 million number at this point with the visibility we have. When we're sitting here talking next. I think we'll have better visibility into what Q4 is and we'll guide from there. Stephen Glagola: Okay. Thank you. And then similarly on the ticketing margin side, you came in north of 40% again in Q2. You're reiterating high 30s in the back half -- for the full year, excuse me, implies sort of like a mid-30% margin in the back half. But just similar to the revenue line, what's going on there sequentially and the puts and takes. Thanks. Joe Berchtold: Yes. I think is a long talk. There's a lot of timing that happens with us in a given quarter. I think you saw last year a lot of the same questions. We had lower margins in the second half as we had a lot of costs associated with contract renewal cycles and other factors. So I think at this point, we're comfortable continuing to reiterate the high 30s for the margin, but not yet ready to get more specific than that. Stephen Glagola: Okay. And should we expect contract renewals again for Q3, similar to last year? Joe Berchtold: I don't think we're looking to guide in a specific margin for a specific quarter as much as just give the overall year guidance. Operator: And our next question comes from the line of Peter Supino with Wolfe Research. Please proceed with your question. Peter Supino: Question on international with it growing so strongly, more major tourist -- artists touring globally. Has your strategy changed at all? Does this fact invite you to spend more money perhaps on international M&A? Are there other things that you can do now with higher visibility to international demand that you might not have done in the past? And a second shorter question just is on technology. There's all the controversy around bots and scalpers over the last year indicate that the company could productively spend materially more on technology and solve some of those problems? Thanks. Michael Rapino: On the global part, Joe -- I don't think the strategy has changed. I think if you've listened to us for the last 5 years, or longer. We've been talking about that live as a global business, the artist has been unlocked globally. Consumers, thanks to social media and others are driving global consumption with no gatekeepers. So we have 100 offices in over 40 countries. We have been on this march for a long time. And we think there's still lots of opportunity, obviously, as we talked about in Latin America, Pacific Rim, Eastern Europe. But kind of plan is following as we kind of predicted the artists would continue to go global -- more global artists and international markets would want to be just like New York and Boston would want to be hosting U2 and Beyonce’s of the world, so we had an opportunity to build out those markets. So pedal down, we see lots of great growth opportunity for years to come on that front. Joe Berchtold: And on the bots, certainly, new technologies allow us to continue to get more sophisticated in trying to stop the bots. We're regularly working on both the technologies as well as just new processes to try to weed out humans versus bots. Problem is some of the same technologies is also being deployed by the bad actors trying to jump the line and get those they have a $5 billion a year incentive to cheat get those tickets, which is why we've been continuing to advocate and I think we've seen a lot more visibility on some of the behavior that we need or we'd like at least more legislative support in terms of real punishments for the bad actors or the platforms that enable the bad actors, ending practices like speculative ticketing that is clearly price manipulative and anti-consumer. So we're continuing to do our part to fight it, and we hope that we'll be able to get some help with some rules and with some real penalties for people that are trying to cheat. Operator: And the next question comes from the line of David Katz with Jefferies. Please proceed with your question. David Katz: I wanted to just get an update, if you don't mind, on the digital process, right, digital ticketing, et cetera, and then the second derivative of being able to harvest and drive better returns off of the information gathered from it. So where is that today and where can it go? And how do you see that opportunity? Joe Berchtold: Yes. At this point, digital ticketing is largely ubiquitous globally coming out of COVID. I haven't seen the latest numbers, but I expect it to be the 90s that are now digital tickets. It's a very informed shifting from barcodes to what we call safe ticks, which is rotating barcodes or NFC keep tickets from being counterfeited and sold over and over. So we have a number of initiatives that have launched them to use that data. We've talked extensively about some of the things we've done in marketing, bringing all of our data together to better understand the fan, how we market to that fan. How with the digital connection, we're able to market to them on behalf of our Digimaster clients, how we're able to market to them on behalf of sponsors, how we're able to send them messages for upsells when they go to shows in our buildings. So that all continues. And then in the background, we have Ticketmaster using the data that it gets for a range of, I'll call it, machine learning purposes and tools in terms of helping clients figure out how do they price their shows, how they market their shows, what are the tools that they should use can help our concert folks in terms of understanding likely demand for tours and shows in specific markets. So certainly, now it's the point where that data and now is used is permeated the business. David Katz: Got it. And if I can follow up, please. With respect to Platinum, right, we do have discussions about inflation and the cost of things, et cetera, et cetera, which doesn't seem to be at play here. But where is that? Where can it grow? And any pressure points with respect other than the artists themselves authorizing it, right? Any pressure points toward sort of growth in Platinum and how that mixes you higher? Joe Berchtold: Yes. I want to have characterized it as artists not allowing it. I mean the artists are the ones who are set the price of their tickets. It's our job to provide the information to them to help them understand the market value of their tickets, so they can figure out the balance that's right for them and their fan base in terms of pricing the tickets. So they're getting the value. Are they giving it to the fans, how do they keep it from going to the scalper. A lot of artists now I would say it's almost becoming the standard that they're understanding they should price the front of their house to capture most of the value. Otherwise, it's the scalper who's going to take it. And then they want to make sure the back of the house is priced so that every fan can afford to buy a ticket can get in. The trend we've seen coming out of COVID is, I think, a switch from it being partially used to being very ubiquitous here in North America. And then over the past year or so is becoming much more heavily adopted in international markets. I think we still have a long ways to go in international markets towards full adoption. And if you look at the pricing with platinum, there's still a substantial gap relative to average secondary pricing which would imply that artists are continuing or attempting to give a lot of the value to fans and we'll see how that evolves over time. Michael Rapino: Just to jump in on Platinum. The magic of Platinum isn't to increase the first rows. The magic of Platinum is it gives that artist the opportunity to look at the whole house. We have never, and historically jumped on an earnings call and told you we couldn't sell the first 10 rows out. Our job is always to sell the last 10 rows out in the upper nosebleeds as they call them. So what platinum has enabled the industry to do is as the artist has increased show cost and needs to get a certain gross for that night is we should figure out how to maximize some of the front of the house closer to market, but that's also let us bring the price down in the back end of the house. So the net gross can be more overall, but it's giving fans a better sell-through rate on the back end of the house. We used to be locked into kind of 3 ticket prices that didn't have that opportunity. So the biggest advantage to dynamic pricing and platinum price over the last few years was really just how do you help the whole house gets sold? How do you reduce the prices in the back end of the house? But are always the harder ones to sell so you truly get a full house on the proper gross for the artist and then all of us benefit when more people walk through those doors. Operator: And the next question comes from the line of Jason Bazinet with Citi. Please proceed with your question. Jason Bazinet: I just had a question on the secondary market. And my question is pretty simple. Is your philosophy or emphasis on this market changed? Because I think in your K, you talked about the GTV on secondary being something like almost $4.5 billion in 22 more than double 19 levels in this release, you're talking about secondary ticketing volumes up double digits. So is this just indicative of the overall strength that we're seeing in consumer interest and going to live events? Or is it something that you're doing as well or both? Joe Berchtold: Well, first off, again, just to keep it in context, we've long said that, first and foremost, our job is to sell the primary ticket. We're a primary ticketing company and its secondary is a kind of low to mid-teens portion of our GTV. So it's relevant, but it's also not the primary focus. We have long thought that we need to be in secondary because fans have a need to buy a ticket. And when a show is sold out if we're not giving them an option to buy a legitimate secondary ticket, then we're forcing them to go to other platforms to buy their tickets, and we think they're better off being served within the Ticketmaster ecosystem. I think as we continue to do a better job with our offer, reducing friction, understanding how to deliver on the fan needs as we've aligned with the NFL, the NBA and others on the sports side have a slightly different model for secondary. I think we've naturally grown our position in the market. But what really matters to us, first and foremost, is that we have a great primary sale, and that's managed in a way that is going to keep content happy. Operator: And the next question comes from the line of Paul Golding with Macquarie. Please proceed with your question. Paul Golding: Congrats on the quarter. I just quickly wanted to see if you had an update on a metric you've given before in terms of the average ticket price and how that's been trending? I think in the past, you've said it's been below $35. And then, secondly, as a follow-up, as we watch sort of the macro tightening in the backdrop and not so much for your business. But in general, in tracking sponsorship, any color you could give on cohorts that are more or less meaningful for that sponsorship growth that you've been seeing as we track forward into this tightening environment. Thank you. Joe Berchtold: So first of all, on the average ticket price, I think what we've talked in the past is that the average -- the entry ticket price, so the lowest price that a fan can find a ticket at for our amphitheaters, for theaters and clubs is generally average below $35. And for the reasons that Michael spoke to, it continues to be below $35 because the artists are wanting to make sure that almost all fans can get in to see their show. And then what you've seen is because their costs have gone up because they've seen what's going on in the secondary market, some of the closer in parts of the house or have increased ticket pricing. I mean, you can see from the overall Ticketmaster, GTV and number of tickets sold that pricing in total is up double digits still year-on-year while the entry prices remain low. On the sponsorship, I'm not sure I fully understood your question. I think we've seen no slowdown in terms of our sponsorship business. We have over 90% of our expected revenue for the year is booked being driven by a lot of the large multi-asset, multimillion dollar sponsors that we work with who have long-term agreements with us that continue to go very well and continue to sign more. Paul Golding: I guess my question around that was more around sector. So for example, if we were to think about sports and sports betting maybe being a predominant sponsor, boost this year or at the tail end of last year. Anything in that type of area of color around the mix. Michael Rapino: We have 900 different sponsor brands. Every category you can imagine is fairly distributed evenly. So we haven't seen any sector pullback that has affected any of the core business overall. We've always said, we believe that our business is a -- it is a much less of an investment than a lot of the other TV and big campaign investments that brands make, it's a much more targeted approach. So we've seen more brands shift some of their dollars from the other categories to the event space where they can kind of get that direct consumer interaction that they can't maybe get on digital and elsewhere. So we've seen most sectors increase their spend in our category. It's been growing, and we've been growing with it. We think that trend is going to stay because as they're all trying to figure out how to connect with consumers in a digital world, we in sports live, give them that one opportunity to hit consumers at scale on a Thursday in Pittsburgh. So we think we're going to see more growth in our category. Operator: And the next question comes from the line of Cameron Mansoon-Perrone with Morgan Stanley. Please proceed with your question. Cameron Mansson-Perrone: Two, if I can. The increase in accretion expectations for the year that you call in the release connected with OCESA, imply that the performance there is pacing pretty well above your expectations earlier in the year. Can you talk a little bit about what specifically has been outperforming with OCESA? And then more generally, in terms of Latin America, it's obviously been a focus for you guys. Do you feel like now with kind of touch points in Mexico, Brazil, Colombia, that you're in a position where you can kind of expand to the rest of that region organically? Or are there other kind of individual markets where it might make more sense to penetrate through M&A? Thanks. Michael Rapino: We think the -- kind of our global playbook has always been the same. We enter most of these markets, low cost, maybe a bolt-on promoter or festival. We end up having enough content that we can bring the tour to the market, and then we build up the flywheel once we get to that market. So in Brazil, we've got Rock In Rio, an incredible festival foundation. We now have a great touring business there, bringing artists to the ground. We've launched our sponsorship business there, and now we've just launched ticketing there. So I think it's a great combination. We'll see a continual growth in Latin America, Brazil, a big year and Argentina is crazy as the market is on ticket sales. We like the entire market down there. So you'll see us organically grow. We've always been a predominantly organic-driven business and then we'll use continual bolt-ons to keep powering and doubling up on our efforts there. Cameron Mansson-Perrone: How about on OCESA and what's driven that outperformance? Joe Berchtold: I mean that spend across the board. I think on their concert side, we've done well in terms of starting to get shows on our dream platform down to Mexico. Latin artists are clearly on fire. So they've got very, very strong set of regional shows they've been doing. Their festival business is doing great. We've worked with them to get the ticketing platform enhanced and that's continuing to perform very well, and they've been bringing in sponsors. So it's really across all elements of their business, I would say, has well outperformed relative to what we thought when we acquired them or even when we thought 6 months ago, 9 months ago or now this year would be. Michael Rapino: Remember, we bought OCESA in COVID. We believe in the market, did we model out our IRR to think that the industry would bounce back as big as it has, no. So anything we're doing down there has been above and beyond what we expected for Latin market and industry in general overall. And we've got an incredible management team down their partnership with the CEO. They're very, very well-run organization. They've got venues, ticketing we've been able to take a really kind of archaic ticketing platform and continually reinvent it now that we're partners on the Ticketmaster side, sponsorship upgrades. So off their incredible base, our expertise and the market dynamics. It's been an incredible return. Cameron Mansson-Perrone: If I can follow up quickly on one of those points. Is that generally a one-way bringing sponsors from elsewhere into those new markets? Or is there also kind of a reverse dynamic where you're taking local sponsors and also giving them exposure in North America, Europe that they may not have had previously? Michael Rapino: Yes. I don't want to say it's completely one way, but it's our global sponsorship partnership team. When you're sitting with any of these big brands you can imagine and you're trying to sell a global sponsorship that maybe they're only doing with the Olympics and F1 because there's not a lot of global properties, right, the NBA, most sports is regional. So when we can sit in that room, they know we have a big office and in a now market in Brazil, and we can get you to Rio, Sao Paulo and Mexico City and Milan. So the more major markets we can add to our pitch when we're sitting with that CEO, CMO on a global basis, it helps look at our spot ship business that we can now deliver kind of a global platform and bring bigger sponsors to some maybe local deals they had. So we'll always kind of look to replace a local deal with the global deal would be the return we look for. So adding Latin, adding Mexico City out in these markets, big markets for most big brands gives us more markets to sell our global story too. Operator: And our final question comes from the line of Matthew Harrigan with Benchmark Company. Please proceed with your question. Matthew Harrigan: Down to some fairly down in the [indiscernible]. You did an acquisition in March, Clockenflap in Hong Kong, a great name, by the way. Is that any sort of real expansion platform, and you did put out a release on it. Obviously, that market has -- it’s still early to say the least, but is that a potential growth vector for you? And then, secondly, I guess off Peter's question earlier, some of the issues with [indiscernible] in November weren't so much that the pass could get through Verified Fan is that your network basically couldn't handle the amount of traffic that was generated. Do you feel like you've made sufficient upgrades at this point that if you have the same situation and not going to be another immediate areas too, but if there was, do you think you'd be able to scale appropriately so you didn't have the level of discount to customers? Thank you. Joe Berchtold: Let me take the second one first. This is Joe. Just to be very specific, what happened was there were two vectors of attack during that on-sale. One was a very large number of bots trying to crash into our verified fan system. That slowed down the fan experience, but that did not crash the system, or it could cause it to stop. At the same time, we had what was in effect the attempted cyber hack that was a brute force cyber-attack that had the fact of a dial service attack, not through our front door of our Verified Fan system, but through a specific surfer that we have. In order to fight off that cyber-attack, we had to stop the on-sale. Within 5 hours, we had figured it out how to fully reinforce the defenses to and in fact, move out the defense line so that stopping the cyber-attack. We know the attempted cyber-attack, we no longer have any load on our system for the verified fan experience, we started it back up. So the answer to your question is within 5 hours, we had solved that problem. It's not something that's taken us 6 months or 9 months to figure out how to solve. So we solved it quickly. We ultimately did sell 2 million tickets that day. And once those 5 hours were passed, while it was a long wait at times for fans because there were a lot of people trying to buy the tickets, there were not the system overload issues. I'll let Michael speak to it. Michael Rapino: Yes. You're deeper in the [indiscernible]. What the acquisition were you referring to? Which one? Matthew Harrigan: Clockenflap in Hong Kong, festival. I knew it was small, it got a little bit of a test in the trade meeting and you did put out the press release. I assume it obviously isn't that much of an expansion platform, but if you have any specifics on your ability to do anything on that market and expand more in Asia, outside of Australia and Japan, I thought that would be interesting. Thanks. Joe Berchtold: I would say it was part of a broad bolt-on strategy in Asia. As Michael said earlier, we'll go in and we'll look for local promoters, local festivals that we can bring on and then we can then tie in with our broader concerts platform, bring our sponsorship team into. So it was an example, I would say, of the type of activity or type of M&A that we're doing in the region. Michael Rapino: Just to jump on for others. I mean, we talked about Latin America, but Pacific Rim and others are equally important. It's a global business. So Japan, a real, real important market for us. Latin America, I mean, Pacific Rim in general, we're already in most of markets in some form have offices in Singapore. We've had a very successful operation in Korea, which has been kind of the foundation on why we ended up being the promoter for PTS and other [cape of] [ph] artists throughout the world. So we look at Pacific Rim equally as important is Latin America, you'll continually see us with a bolt-on promoter Venue festival as we're building up that business and driving content there also. Operator Thank you, everyone. This marks the end of the question-and-answer session, and this also concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.LYV Ratings Summary
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Live Nation Entertainment's Financial Performance and Market Position
- Live Nation Entertainment, Inc. (NYSE:LYV) reported an EPS of $1.66, surpassing estimates but indicating a slight decrease from the previous year.
- Despite a shortfall in revenue, effective cost controls contributed to a strong profit margin and a 5.1% increase in share price during extended trading.
- The company's financial metrics, including a high P/E ratio of 60.68 and a significant debt-to-equity ratio of 28.44, highlight investor confidence and leverage concerns.
Live Nation Entertainment, Inc. (NYSE:LYV) is a leading live entertainment company, known for its concert promotions and ticketing services through its subsidiary, Ticketmaster. The company operates globally, organizing live events and selling tickets, making it a key player in the entertainment industry. Competitors include companies like AEG Presents and Eventbrite.
On November 11, 2024, LYV reported earnings per share (EPS) of $1.66, surpassing the estimated $1.60. This performance exceeded the Zacks Consensus Estimate of $1.58 per share, as highlighted by Zacks. However, this EPS is a decline from the $1.78 reported in the same quarter last year, indicating a slight decrease in profitability.
Despite the positive EPS, LYV's revenue of approximately $7.65 billion fell short of the estimated $7.75 billion. This shortfall was mainly due to weaker contributions from its Concerts and Ticketing segments. The company's effective cost controls helped achieve a strong third-quarter profit, leading to a 5.1% increase in its share price during extended trading.
LYV's financial metrics reveal interesting insights. The company has a high price-to-earnings (P/E) ratio of 60.68, suggesting investors are willing to pay a premium for its earnings. The price-to-sales ratio of 1.28 and enterprise value to sales ratio of 1.40 indicate that the market values LYV slightly above its total sales.
The enterprise value to operating cash flow ratio stands at 25.27, reflecting the company's valuation compared to its cash flow from operations. With an earnings yield of 1.65%, LYV offers a modest return on investment for shareholders. However, the debt-to-equity ratio is notably high at 28.44, indicating significant leverage. The current ratio of 1.01 suggests that LYV has just enough current assets to meet its current liabilities.
Live Nation Shares Surge 6% Following Strong Q3 Earnings
Live Nation Entertainment (NYSE:LYV) posted impressive third-quarter earnings, surpassing analyst expectations and boosting shares by more than 6% pre-market today. The company, known for its concert promotion and ticketing services, reported adjusted earnings per share of $1.66, exceeding the forecast of $1.61. Revenue reached $7.7 billion, just shy of the anticipated $7.77 billion, but marked a 4% increase compared to the same period last year.
The third quarter underscored Live Nation’s busiest summer concert season to date, with a concert schedule that continues to expand. Its Concerts division achieved record profitability, delivering an adjusted operating income of $474 million—up 39% year-over-year. This growth was primarily fueled by the popularity of shows in arenas and amphitheaters, with attendance seeing double-digit increases in these venues.
Demand remained high as October’s ticket sales jumped 15% overall, with concert-specific ticket transactions rising by 23%. For the upcoming year, the company has already sold over 20 million tickets for 2025 shows, a double-digit improvement from the same period in the prior year.
Despite some revenue and income pressure from foreign exchange fluctuations, especially in Latin American markets, Live Nation upheld its outlook for full-year adjusted operating income growth. The company anticipated that its adjusted operating income to free cash flow conversion would remain in line with historical patterns, reflecting a steady momentum in both fan interest and financial performance.
Live Nation Entertainment Earns an Upgrade at Roth/MKM
Roth/MKM analysts raised their rating of Live Nation Entertainment (NYSE:LYV) from Neutral to Buy, adjusting the price target to $114.00 from the earlier $92.00.
The analysts mentioned that the outlook for Live Nation remains robust with significant upside potential. The ongoing strong demand for live events and concerts is expected to position Live Nation favorably for higher-than-average growth in the upcoming years. The analysts believe that their revenue and AOI estimates, which are already above the consensus, might still be understated.
The analysts also anticipate that the DOJ's investigation into Live Nation will be resolved this year with minimal impact, which should alleviate a major valuation concern.
Live Nation Entertainment Earns an Upgrade at Roth/MKM
Roth/MKM analysts raised their rating of Live Nation Entertainment (NYSE:LYV) from Neutral to Buy, adjusting the price target to $114.00 from the earlier $92.00.
The analysts mentioned that the outlook for Live Nation remains robust with significant upside potential. The ongoing strong demand for live events and concerts is expected to position Live Nation favorably for higher-than-average growth in the upcoming years. The analysts believe that their revenue and AOI estimates, which are already above the consensus, might still be understated.
The analysts also anticipate that the DOJ's investigation into Live Nation will be resolved this year with minimal impact, which should alleviate a major valuation concern.
Live Nation Entertainment Stock Surges 5% on Morgan Stanley Upgrade
Morgan Stanley raised its rating on Live Nation Entertainment (NYSE:LYV) from Equal-Weight to Overweight, with an increase in the price target from $100 to $110 per share. As a result, the company’s shares surged more than 5% intra-day today.
The analysts highlighted that as we approach 2024, the music and live events sector appears to be the strongest in the Media & Entertainment (M&E) industry. They emphasized Live Nation's unique position to leverage the growing global live music market, expressing a heightened confidence in the company's long-term growth prospects.
The analysts also pointed out Live Nation's robust growth post-pandemic and the ongoing development of Venue Nation, which has contributed to an improvement in the company's return on invested capital (ROIC). This improvement has been from low single-digit to mid-single-digit percentages pre-pandemic to mid-teens percentages currently.
Further, Mansson-Perrone mentioned that additional disclosures about Venue Nation and an analysis of future fan engagement opportunities strengthen the belief in more potential upside than risk to the consensus expectations for 2024.
The investment bank anticipates that the ongoing shift in consumer spending towards experiential purchases will continue to thrive, even amidst a softer macroeconomic environment.
Live Nation Stock Rises 2% on Evercore Upgrade
Analysts from Evercore ISI changed their rating on Live Nation Entertainment (NYSE:LYV), raising it from In Line to Outperform and setting a price target at $100.00. As a result, shares gained more than 2% intra-day today.
The analysts mentioned that the prevailing regulatory challenges, questions regarding growth in 2024, and the potential for exceeding short-term expectations make Live Nation's stock a compelling buy. While Ticketmaster has faced antitrust inquiries in the past, the analysts aren’t convinced that the ongoing DOJ probe will have a significant impact on LYV's stock, currently priced at $78 per share.
The analysts highlighted the company's promising potential for continuous growth in the low double digits, fueled by rising public interest in concerts and live shows. They forecast a 5% increase in the Q3/23 adjusted operating income (AOI) and a 2% boost for the year 2023's AOI.
The company is scheduled to announce its third-quarter results for 2023 on Nov 2.
