Live Nation Entertainment, Inc. (LYV) on Q2 2022 Results - Earnings Call Transcript
Operator: Good day, everyone. My name is Hector, and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's Second Quarter 2022 Earnings Conference Call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q&A. Instructions will be given at that time. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that can 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 Live Nation's SEC filings, including the risk factors and cautionary statements included in the Company's 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. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release, reconciliation and website supplement can be found under the Financial Information section on Live Nation's website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir. Michael Rapino: Good afternoon. Thank you for joining us. The second quarter confirmed that live entertainment industry is back globally and bigger than ever. Live Nation led this return and continues to deliver the best global network to support artists as they play shows for the fans around the world. Every key operating metric is at an all-time high as we promoted more concerts, had more fans attend shows, they spent more money, sold more tickets and enable brands to connect with fans at a scale we have never seen before. As a result, relative to 2019, with over a 40% increase in revenue to $4.4 billion and a 50% increase in AOI to $480 million. With most of the world fully reopened, it's clear that concerts remain a high priority for fans. Consumers are seeking out and spending more on experiences. And the growing demand for live music and events is driving our business to record levels, far outpacing any macro issues or cost increases. Momentum across our business has remained strong in recent months and weeks, and demand combined with the substantial concert pipeline gives us confidence in our ongoing growth this year and into 2023. During the second quarter, we promoted over 12,000 concerts for 33.5 million fans, each up over 20% relative to the second quarter of 2019. Of the over 6 million additional fans this quarter, 5 million of that growth came from international markets, driven by the addition of OCESA and the reopening of most global markets with particularly strong focus and demand through Europe and Latin America. Growth was broad-based with double-digit attendance increased at venues of all types, demonstrating strong demand for events at all sizes from large-scale stadiums and festivals, sentiment clubs and theaters. Even as show count and attendance grew, fans demonstrated their willingness to pay more for the best seats with the average price of a ticket for our concerts this year up 10% globally relative to 2019, which remains less in the U.S. inflation level over the period. At the same time, our average entry price for concerts remain affordable at $33, up only 5% from 2019. With market-based pricing being widely adopted by most tours, we expect to shift over 500 million from the secondary market to artists this year, continuing to support those who created the concert and ensuring they are benefiting from it. On the venue side of our concert business, we continue to build our portfolio of operated venues with an active pipeline of almost 30 new venues across the globe. We are seeing the benefit of operating more venues as a number of fans who attended shows in our owned and operated venues during the quarter was up 13% to over 14 million fans, and we expect that figure to reach over 50 million fans for the full year. And fans are spending more on site with average per fan revenue up 20% at each of our amphitheaters, festivals, theaters and clubs relative to 2019, with the average per fan revenue at our amphitheaters this year at $38.50, up 30% relative to 2019. Our ticket business also demonstrated strong growth in the quarter, transacted fee-bearing ticket volume up 48% to 77 million tickets and transacted GTV up 76% to $7.3 billion, both relative to 2019. This is our highest fee-bearing GTV quarter ever, with April, May and June, accounting for three of our top five all-time fee-bearing months. 75% of this growth came from concerts, another indicator of the high demand for live music. Along with the volume increase, transacted ticket prices globally was up approximately 15% for the first half of the year relative to 2019 as both concerts and sporting events saw similar low double-digit price increases during the period. Even with strong primary ticketing sales and increased pricing, demand for live events on our secondary ticketing marketplace remain high. And as a result, our GTV more than doubled for the quarter relative to 2019. We are continuing to see the benefits of our technology investments at Ticketmaster, including our global leadership in digital ticketing between new capabilities and the sales effectiveness of our ticketing marketplace, we consistently deliver high ticket sales for our event organizers. As a result, we continue to win business from new and existing clients. And to the first half of this year, we had a 12.8 million net new fee-bearing tickets to our marketplace, led again this year by our international markets, which accounted for 60% of this new growth. Sponsorship has also benefited from the concert flywheel this quarter, driving 74% growth in revenue relative to 2019. As we further enabled more brands to connect with an increasing number of fans on a global basis, festival sponsorship has performed particularly well during the first half of the year, more than doubling from 2019, led by nine new festivals in our Mexico and Latin American businesses that accounted for roughly half this increase, along with broad growth in sponsorship levels across most of the North American festivals. And we continue adding more clients in technology, telecom and purchase path integration, including Google, AWS and Hulu, with these categories collectively more than doubling this sponsorship since 2019. As we look forward to the second half of 2022 and into 2023, we have sold over 100 million tickets for our concerts this year, more than we sold for the entire year 2019. Fan demand remained strong and continued growth in ticket buying and on-site spending. And given the long-term nature of most of our sponsorship partnerships, our planned sponsorship for the year is now fully committed. As we prepare for 2023, everywhere globally is open for concerts. And we are actively rooting all of our markets with the largest artist pipeline we have ever seen at this point of the year. And for the 2023 tours we have put on sale so far, all signs continue pointing to strong fan demand. With that, I will let Joe take you through more details of our results. Joe Berchtold: Thanks, Michael, and good afternoon, everyone. As with last quarter, 2019 is the best comparison for us in terms of understanding our operations and key performance indicators, so most of our focus will be relative to Q2 of 2019. For the Company, our reported revenue of $4.4 billion for the quarter was $1.3 billion better than Q2 2019 or an increase of 40%. On a constant currency basis, our revenue was $4.6 billion for the quarter, so there was roughly a 4% impact due to the strengthening of the U.S. dollar. In our reported AOI of $480 million for the quarter was $160 million better than 2019, up 50% and led by an improvement of over $100 million in ticketing and $80 million in sponsorship. On a constant currency basis, our Q2 AOI was $502 million. The FX impact of negative $23 million or 4% was largely driven by the devaluation of the euro and the pound. This was not only our highest Q2 AOI ever but it was also our highest quarterly AOI ever, beating our prior record quarter, which was Q3 of 2019 by 12%. Notable given that Q3 is traditionally our highest AOI quarter each year, and we converted almost 80% of this AOI to adjusted free cash flow of $379 million. Let me give a bit more color on each division, and then I'll give you more on full year leading indicators. First, in concerts, our AOI was $123 million for the quarter, which compares to $133 million in Q2 of 2019. It was one of concert's strongest second quarters ever despite limited activity in our Asia Pacific region and operating cost increases. Additionally, while OCESA had a very strong return to activity, its AOI largely flows through sponsorship and ticketing while their concerts division absorbs most of its costs. In the quarter, we had over 33 million fans attend 12,500 events, growing nearly 25% compared to Q2 of 2019 when we had 27 million fans attend 10,000 shows. And we continue to see growth in our on-site spend with no signs of change. Here's what we're seeing so far this year by venue type across our owned or operated buildings. In our amphitheaters, ancillary per fan revenue has risen to $38.5, an increase of $9 per fan over 2019 levels or 30% growth. At our theaters and clubs in the U.S., ancillary per fan revenue has increased by over 25%, driven by higher concession sales and increased purchases of premium packages, fast lane entry and night of show upsells. In our theaters and clubs in the U.K., ancillary per fan revenue has risen by 20% compared to 2019, largely as a result of increased food and beverage consumption, pricing optimization as well as the shift to cashless payment. Finally, at our major festivals, increased spending on concessions, campaign and VIP experiences has driven ancillary per fan revenue up by over 30%. The consistent theme here is that as we continue elevating our hospitality operations and create more premium options, fans are eager to enhance their experience. At this point, we still have a lot more room to grow these higher-quality experience offerings throughout our owned or operated portfolio, which includes over 400 venues and festivals globally at this point. Next, ticketing had another very successful quarter, delivering $231 million of AOI, making it the most profitable quarter ever for ticketing, beating the record set just last year in the fourth quarter and nearly doubling the Q2 2019 AOI results of $124 million. Our growth came from both primary and secondary ticketing with transacted ticketing GTV up 69% and 141%, respectively. Transacted ticket volume, excluding refunds, was 77 million tickets, our highest quarter ever, besting our former record of 65 million tickets in Q4 2021 by 18% and 25 million tickets or 48% higher than Q2 of 2019. Transacted ticketing GTV, excluding refunds, was $7.3 billion, our highest quarter ever, besting our former record of $6.6 billion of Q4 of 2021 by 11% and $3.1 billion and 76% higher than Q2 of 2019. International markets are now largely back and contributing to this growth with transacted ticketing GTV up 67% relative to Q2 2019. As Michael mentioned, approximately 75% of our growth came from concerts, which was due to both higher fan attendance at our concerts and also timing with a number of on sales expected to happen in Q3 getting moved up into Q2. Even as more of the ticket value is captured for content organizers, our secondary marketplaces continue to grow rapidly with four of our five best resale days ever in Q2 and 12 of our top 20 resale days in 2022. We continue to believe that the secondary market is a leading indicator for primary pricing opportunities over the next few years as well as a buffer against any demand fluctuations. Finally, sponsorship had its biggest quarter ever with AOI of $178 million, 80% higher than our Q2 2019 AOI of $98 million. With the U.S., the U.K. and now Mainland Europe all fully opened, we had high growth in both on-site and online sponsorship with each delivering record Q2 AOI. The growth in our large multiyear multi-asset sponsor speaks to our value of connecting live music fans with global brands. We are nearing in on 100 such major sponsors that, in total, generate well over $0.5 billion in revenue and represents nearly 75% of our growth relative to 2019. As we look to the remainder of 2022, starting with our leading indicators through late July, all relative to 2019. First, confirmed show bookings are up over 30%, driven by double-digit increases in every market and across all venue types. Our concert ticket sales through the end of July are over 100 million tickets for events this year, up 38% and higher than our full year 2019 fan count. As a result, we expect a very strong Q3 for concerts with more shows and higher attendance, including fan growth at our owned or operated venues where we are continuing to see strong APF increases. Also, similar to last year, we are extending the amphitheater later in the year, adding over 1 million fans in Q4 this year relative to 2019. Michael also gave the numbers around much of our Q2 fan growth being driven by international markets, which is a great indicator of the broadly global health of our fan base. But I don't want anyone to over extrapolate this to the U.S. market as we expect North America will drive much of our fan growth in Q3. Second, ticketing has sold 183 million primary fee-bearing tickets for events this year, up 30%. Of these, 122 million tickets are for concert events, which is 42% higher than 2019. Related to this, we have $3.2 billion in event-related deferred revenue, double our level in Q2 of 2019. These are largely tickets that have been sold by Ticketmaster for Live Nation concerts but the revenue and AOI hasn't flowed through yet, and we'll do so over the course of the next year as the events occur. We remain on course for a strong Q3 in ticketing as our deferred revenue is recognized but also impacted by the shift of some of the on sales that moved into Q2. On the sponsorship side, we expect to see continued growth driven by our strong Q3 festival lineup with some of this activity also involving on-site activation support. On the cost side, increases continue to impact us primarily in the venues we operate, amphitheaters, theaters and clubs and festivals. But in all cases, we are delivering increased profitability per fan due to increased ticket and ancillary revenue. A few other points on 2022, given our presence in the U.K. and mainland Europe, we've experienced FX headwinds. And through the end of June, our AOI has been adversely impacted by $23 million. This was almost entirely in the second quarter as the U.S. dollar strengthened significantly against the euro and the British pound. Based on current rates, we expect our AOI to continue having a 3% to 4% hit in the second half. We provided detailed guidance on line items that impact our EPS calculation last quarter, and there's just one update that I wanted to make here, which is, as noted, we expect the headwinds with FX rates to continue through the remainder of the year, which at current forward rates result in approximately $15 million quarterly below-the-line expense due to currency exchange losses on the revaluation of our foreign balance sheet balances to U.S. dollars. In anticipation of the growth opportunities ahead of us this year, we continue to expect 2022 capital expenditures to be approximately $375 million, with 2/3 allocated to revenue-generating projects. We expect free cash flow conversion from AOI to be back in the mid-50s for the full year. And we ended Q2 with $2.5 billion of available liquidity between free cash and untapped revolver capacity giving us sufficient flexibility to continue investing in growth. We are comfortable with our leverage with over 85% of our debt at a fixed rate and our average cost of debt of roughly 4.3%, positioning us well in this interest rate environment. With that, let me open the call for questions. Operator? Operator: Thank you. We will now be conducting a question-and-answer session. Our first question comes from David Karnovsky with JPMorgan. Please proceed with your question. David Karnovsky: Michael, I wanted to get your thoughts on pricing in VIP tickets. We've seen artists and VIP inventory even amid some fan pushback and negative press, which looks to me to be a break from prior years. So do you think the industry has collectively gotten to a place where artists are now kind of comfortable reclaiming the secondary market economics? And then, how much more room is there to kind of drive this process? Michael Rapino: Yes. Thank you. I think we've been saying for a few years that over time, we believe that, that secondary 10 billion, 12 billion, depending on what number you see globally has to start getting captured by the artist at some level. It's just too transparent. The more they see all of the online pricing while they work so hard to put that show on. So I do think that right artists looking at us saying, I'd like to count some of it in the front end. I don't want to be sold out at 10 01 at $200 to have someone else make $2,000. Fans not getting a deal anyway, they're spending $2,000 from somebody else. So I do think they're looking and saying, the front of the house, can we capture some demand? Now, the advantage is the, artist has one objective as we do as the venue to fill every seat. So you're never looking for the gross, you're looking to make sure that every seat is filled for the best experience. We want that. We just want that. So I do think the new dynamic pricing, the better we have become, these tools to the artists, they're looking at the holistic picture. Maybe I can charge a bit more in the front row. I got to charge less in the back row because net I'm going to sell through the back end of the house that maybe is always spot in our business. Now if you can still get the same gross, but you can lower the ticket price in the back part of the house, that's a win for everyone. So, we're right now -- Joe has the exact math. We looked at it yesterday. It's still a small percentage of the total growth is price platinum and/or dynamic, 1%, 2% kind of numbers, and really nonexistent outside of America. We just -- so yes, there's a long runway where the artists will look at the small, again, even as much always, as you heard about the Springsteen sale, than 1% of the tickets were priced a little higher to capture the second business versus 99% of the house. So to the artist, I think they'll look at us -- and then the premium, the dynamic, how do I better price my product, fill the house, lower the price on the back, capture more of the front, and we think that's got many years of runway for us to expand on a global basis. David Karnovsky: Okay. Great. And then I just wanted to ask on concerts AOI in the quarter. I think it was roughly flat versus '19, and that's with the increase in fans and the per caps. Just wondering if you could speak to the impact of things like cost inflation, mix. I know you said APAC wasn't fully open and then maybe timing as well. I think Q2 '19, if I remember correctly, had some pull forward from Q3 in that year? Joe Berchtold: This is Joe. Yes, I'll take that. I think we laid out a handful of factors that we think were some combination of timing and one-offs that impacted this quarter. Asia Pacific is not fully open yet we've got the organization up and running to prepare for being open. Just the structure of OCESA's P&L is they really drive their economics through ticketing and sponsorship whereas most of their cost structure is in the concert side. We talked about some operating cost increases for our operated venues, still driving per fan profitability increases, but you have some costs there. And then it's just -- I wouldn't over read one quarter. I gave you in mind, for instance, that a lot of this was in international markets that we had our growth, less growth in this quarter in North America. But then we have a lot of growth in Q3 in North America. As I look at the numbers overall, North America, if you look at our 100 million tickets, North America has 30% growth. So as that flows through and Q3, you'd expect to see some of that flip it around. I just don't want to read too much into it. Operator: Your next question comes from Brandon Ross with LightShed Partners. Please proceed with your question. Brandon Ross: Just wanted to drill down a little more on David's question about platinum ticketing. And I was wondering, Michael, if you could just -- because I think a lot of investors and fans are not really educated on how platinum ticketing works, can you talk about who sets the prices and kind of the cadence of ticket releases? And how you think about the -- when tickets are going to be released kind of this move from fast ticketing where everything was available at the on sale to maybe trickling out tickets more over time? And then how you think about the balance of dollars and maximizing profits for the artists with this idea of fandom and fairness and what your role in that is? Michael Rapino: All right. That's a lot. I'll try to take some pieces. We work for the artist. We're a B2B business. The artist is that decides when they tour, how they tour. Our job is to provide all the tools, platform and services to help them succeed in that tour from -- a year. Now our decision is -- they're genius brand managers. They have to balance the needs of their fans, supply demand and pricing. And some brands, like the Rolling Stones, have been very good at always saying expensive experience and we're that proud and enable to deliver that brand position. But I think artists are always trying to find a fine line on how do I make the show accessible? How do I make sure all my fans can show? How do I price it fairly versus how much money can I make? So I think they see that. I think today, while the technology is advancing and they're starting to look at more technology and more pricing data, I think they can now -- good shows and realize that some ways they keep price, 1, 2% of the house higher and achieved some of those economics versus the scalper while still pricing 98% of the house at a very stable brand position. So we can achieve both. This is an industry that for 30 years, we would do a tour. They would set three ticket prices 140, 79 and 39, and that will be the three prices in every city for every night for the market, as you know. That's way it's going to operate forward, a different price on a Friday in New York than Indianapolis on a Tuesday. So dynamic smart pricing, now that we're able to provide that sophistication, the bands are much more sophisticated. And they're now able to have tools to figure out how do I price it better and -- some better economics, get some of the leakage of secondary, but still maintain an overall ticket price, leaving dollars on the table, but still finding that balance between the consumer demand, the brand and the slippage of the economics to secondary they've been losing. Joe Berchtold: Sorry, Brandon. Sorry, Brandon. Sorry, just one comment I have to respond to. Your commentary about trickling out tickets, that's not a practice. That's not something that is the norm or something that we do. I think that the speed of ticketing has to do with just what's the pace at which some of them sell out with the theory being for some artists, if they price a lot of tickets at market price, they may not all sell out in the first hour, so it has nothing to do. Ticketmaster takes all the tickets. It gets -- puts them directly on sale. It does nothing to try to limit supply or anything in that manner. So I just want to make sure we're crystal clear on that. Brandon Ross: Yes. No, I wasn't agreed on that decision anyway. Michael Rapino: Yes. But I think we're just addressing because the marketplace. The consumer obviously gets a little -- time when at 10:00, there's lots of secondary tickets, right? So historically, the Bruce fan would have been sold out at 10 and had to go to a secondary to buy that good seat. So today, we're sorting through that process where we can provide information to the fans. But our job at Ticketmasters is put every sale on ticket -- provide none into the secondary market and provide all the data to the artists that they can invest up and down and as the market adjusts. Brandon Ross: Got it. And then talking about dynamic pricing, if there was to be some kind of downturn in the next year or so that actually affected the live entertainment business, do you see kind of the same tools as flexibility to respond to market conditions in bringing ticket prices down as much as you bring them up in this demand environment? Joe Berchtold: Sure. Controls can be used -- go ahead, Michael. Michael Rapino: No. I said it before in our last call, I mean, we looked at the last recession, there was a single-digit back in some ticket sales, but we were -- years ago, not even in the same -- indication on pricing nor did we have the tool. So yes, we look at data pricing now, dynamic pricing, look at all market data algorithms to figure out what is the price point that we'll sell through. And we do believe that because of the upside right now in the premium secondary side of our business, that if we had to pull back ticket sales and dropped prices by 5% or 10% to match supply/demand of inflation, we have so much flexibility in pricing to get that done and still sell through the house and lower price if that was needed for a band to sell-through tickets. Joe Berchtold: And artist... Michael Rapino: The number one goal is to set -- their number one goal -- sell every ticket. So there are always going to be in a variable -- of how do I price it -- what do I got to reduce our end of house, front end of the house? What do we need to do a sell-through on a Tuesday night in Indianapolis? Let's adjust pricing. Joe Berchtold: The other part of the buffer, Brandon, is just the secondary market itself, and how big it is, its continued growth, right? I gave you the numbers. The secondary market for us grew 140% this quarter. So that tells you that even if some pricing is going up on the primary side, the secondary is growing up -- going up even faster, both in terms of volume and price points. So our first line of defense is keeping our eye on secondary and using that buffer if there is any variations in demand. Brandon Ross: Got it. And then finally, if you could just double-click a little on 30 additional venues that you're talking about adding. Are those -- what venue types are those? And how impactful do you see that to be in the future? Michael Rapino: Well, I think in our investor conference, we wanted to kind of highlight -- I think it's always been an under -- strong business, but we've put more focus on it from an operational design development. We've got over those 300 venues. We manage -- we've been adding 20 to 30 a year over the last few years. As you know, Boston been an incredible success in which will provide more return. And those 30 that we have in the pipe now, another 75 behind of those on a global basis are everything from clubs to arenas depending on where the hole in the market may exist. And we see great platform there. And as we've said before, when we show in an operated venue that we have the sponsorship and the ticketing and the food and beverage and all the revenue streams, that's our highest return for us. Operator: Your next question comes from Stephen Laszczyk with Goldman Sachs. Please proceed with your question. Stephen Laszczyk: On fan growth for the year, maybe for Joe, I think you mentioned in your prepared remarks, not extrapolating international growth or contribution on the U.S. market this year. Can you maybe unpack that for us a little bit and maybe touch on what portion of fan growth you expect will come from acquisitions versus organic growth in markets like the U.S. or the U.K. this year? Joe Berchtold: Sure. I'll use as the basis, the 100-or-so million tickets that we sold through July because I think that just -- that gives the numbers and the facts. And as I indicated, within that, the U.S. is up about just over 30% and international was up 40-odd percent. So you have strong organic growth across both North America and international. Our primary acquisition, of course, would be OCESA, and that would be somewhat less than half of the international growth. So the international growth, even absent acquisitions would be in the mid- to high 20s. So again, this is not an acquisition dependent growth? This is organic plus acquisition. Stephen Laszczyk: Great. That's helpful. And then maybe one for Michael. I was curious if you're seeing any unique trends develop in terms of fan behavior this year. For example, we've seen more first-time concert goers come out this year or fan set to attend events with greater frequency. I'd be curious if you've seen any of those data points or any of these trends that you're seeing, open portions of the market up going forward that maybe you haven't seen come into the industry before? Joe Berchtold: Yes. I'll take this. Michael is having some audio problems here. I think that what we're seeing is a very broad-based, high priority of going to concerts against fans that are interested in going to concerts. So it's a bit of all of the above. We're certainly we have people who haven't gone to concerts in a long time going. We have concerts that will go to one, now going to two. We have concerts -- we have people that are going to many. So it's not -- I don't think you could pull it apart as one factor. I think you're seeing a broad-based high demand return to shows and when they're there, a broad-based pattern on site. Operator: Your next question comes from the line of Stephen Glagola with Cowen. Please proceed with your question. Stephen Glagola: Concert ticket prices, I want to go back to that being up 10% year-over-year versus 2019. Joe, can you just break out how much of this increase is being driven by market pricing versus price ticketing increases at the on sale? Joe Berchtold: Yes. As Michael said, the dynamically priced tickets represent a very small percentage of the overall tickets. So it's not going to be felt by most people. I would -- I don't have the exact numbers. I would guess that it's less than half of the impact is from that. And then there is a general increase. I can probably use the fact that the entry price of $33 is up about 5% from 2019 as a proxy for what's going on with the overall ticket pricing. And then maybe the remainder is driven by the more front-of-house activity. And again, those numbers are -- because there's a lot of attention on how much the overall ticket prices are up. If you look at the U.S. market, the U.S. is up between 12% and 13% in terms of inflation over the past three years as a comparative. Operator: Your next question comes from David Katz with Jefferies. Please proceed with your question. David Katz: I wanted to just get a little more color, if we can, about international markets and international landscapes. And if we obviously are seeing a lot of strong demand, is it relatively even if we look at international markets relative to the U.S.? Or are there any that are stronger or weaker, et cetera? Michael Rapino: Yes, we're seeing no difference right now in demand across the globe. You can look at, I guess, Springsteen just went on sale last week, global stadiums across Europe everywhere, sold out just as fast in Europe as it did here similar to Post Malone, Kendrick. So the tours that are selling here are selling it as fast in our international markets, Latin America, Mexico, continue to see completely record demand in all those markets. We're also still seeing walk up strong at our festivals and on-site as of last weekend, right? So that's kind of current data. There's still spending money. They're still buying tickets at high demand. So we have pullback yet in Europe or any international market. David Katz: Great. And am I permitted to follow up? Or would you prefer I went back in the queue? Michael Rapino: Go ahead. David Katz: Okay. With respect to digital initiatives around ticketing, if you could just talk about kind of -- it's obviously exciting and productive, sort of what inning you'd say we're in and any observation surprising or otherwise so far? Joe Berchtold: Yes, we're still in early innings. This is the first summer that we're really deploying at scale, the data and the technology so that we can reach out to fans once they bought the ticket, do upsells, first people who are going to shows that our venues, connecting them with sponsors, seeing some very good increases in our upsell levels as we talk about some of our average per fan spending, and the increase on premiums at our amphitheaters, for instance, more premium parking, more premium entry, VIP clubs. It's certainly enhanced by our ability to reach -- have a platform that can reach out and sell to those fans effectively, and you're not depending on them just figuring it out night of. So we're very happy with the early progress we're making. Operator: Your next question comes from Ryan Sundby with William Blair. Please proceed with your question. Ryan Sundby: With Asia Pac still limited this quarter, I was wondering if you could talk a little bit more about, one, how quickly that ramps from here? And then maybe two, a little more on the long-term opportunity there volume, the recent acquisitions in Thailand and the Philippines, I think plans in place to bring Lollapalooza to India next year. Any color on how that kind of comes together and how large not really, that would be great? Michael Rapino: Yes, most of that, I think it was Asia reference. We're currently in 40 countries, hundred offices in 40 countries, varying degree of market share from the U.S. to Cape Town or South Africa. So we've got a global platform, and that was always our first priority. So we can say that any artists, we can put you on the road in any market sponsorship make it happen. Then when we get kind of our flag in the ground, we start to maybe launch or build festivals, operate venues, build up our ticketing, sponsorship and the model and the flywheel start to work. You can kind of look at our business across the globe, different markets we're in varying degrees of that growth. Latin America, we were very, very undeveloped in all markets. Obviously, now with OCESA, we've got that flywheel in Mexico. We bought festivals in Latin America with Rockland Rio and then bringing Lala, a lot of couple of promoters. We're going to get some venues going. So the flywheel is starting to work in Brazil and Colombia and Argentina, but we're kind of go from zero market share to big opportunity there. So that will continue to be a big focus for us. Western Europe, there's still some markets we're undeveloped in whether be Portugal or Spain, certain markets, we don't have the full flywheel and you'll see us continually add a festival or a promoter or a venue to those markets. Asia, we have a good platform. We have people on the ground. We've got a really strong business in Australia and New Zealand. But as we moved up to Pacific Rim, we've been slowly building the flywheel in all those markets. Japan is probably the one market that's the best and biggest in that market. We've got to do more work on that. But we look at Asia as really undeveloped territory, low market share, huge opportunity over the next while. We like everyone else in the world, we look at Asia, we look at Latin America, and we're looking to the Middle East and Eastern Europe is areas where we have no real market share. But that consumer now on TikTok knows that Drake dropped the video last night, whether they live in Singapore, India, Cape Town. So we've got a global product, and we've got lots of opportunity to keep growing. Operator: Your next question comes from Matthew Harrigan with Benchmark. Please proceed with your question. Matthew Harrigan: Recognizing that you can't alter the weather or nature and there's an amphitheater season and all that, you're really inducing a lot of serial correlation, I think, activity among concertgoers. I mean people are going back and even when people, I think, go to movie theaters, you get people -- there's a hit movie and there tends to be a lot of repeat behavior. Do you think that all the initiatives you're undertaking are going to alter the seasonality in your business somewhat and maybe make Q4 a lot more active even on a relative basis than has historically been because it feels like there are a lot of things pushing in that direction if you take out concerns with weather and all that? Joe Berchtold: Yes. This is Joe. I gave you some numbers that in our amphitheaters. We do expect to have about 1 million more fans attending shows than we had in 2019. So, we're certainly seeing an extension of the amphitheater outdoor season, particularly through the more southern states. Theaters and clubs have always been very active in Q4. Arenas tend not to be quite as big just because it gets -- the routing gets interrupted by more of the holidays. So, we'll see a bit. I don't think it will dramatically change. Michael Rapino: But it will be -- why we look at our business as global. In the U.S., the arenas, NBA, NHL and NFL clog up the venues in the fall into the winter. But that's why we take a lot of these artists now and say let's go to Asia Pacific and Pacific Rim and Latin America. Let's get off-site middle of America and go to those markets as those open up. So there is a big 12-month-a-year business on a global basis. This industry is focused too much on the U.S. Western Europe summer business. But you are right, as the business expands in a lot of those markets, you have a 12-month strong market where you can put a sell-out show in other markets while you're waiting for a summer business here. Operator: Your next question comes from Paul Golding with Macquarie Capital. Please proceed with your question. Paul Golding: Michael and Joe, congrats on the quarter. I just wanted to ask, given the strong demand that we're seeing across the board here and what I presume is some overflow in terms of demand that is unable to get a seat, where does streaming fit into the medium-term strategy now? I know it was more of a focal point, of course, during the pandemic, but just seeing opportunity for sponsorship or advertising through that. How much incremental focus will there be on that going forward or sort of walking back from that a bit? Just help us think about monetization there or investment if it's still a strategic point for you. Michael Rapino: I think we were clearing things a bit. We were not moved by the thesis that might have been for a moment that live is duplicated and digital. What we've always said that this magic two hours, you have to physically experience this. But we love the . It's a very unique space. It can't be duplicatable. But we've always said that we have all these shows and the most accessible, especially in dedicated fan, but you can expand that show and there's an audience that wants to watch their favorite artist over the weekend. We had an incredible broadcast on Hulu for today's high-quality filming and broadcasting live festival, fabulous. So we've always thought the screen is an extension. It's great for our sponsorship business, where we have 900 sponsors looking always to be part of the show, both on and off. So, we love beats, we love the opportunity. We're doing thousands of shows. And we think it's an ancillary business that helps our overall sponsorship business as well as our committed festival business. Our business is so big now. I wouldn't say it's a material piece on its own. We never thought it would be, but it's another service we provide to both the artist, festival and sponsor, and it's something you have to be in. Operator: Ladies and gentlemen, we have reached the end of the question-and-answer session, and I'd like to turn the call back to Michael Rapino for closing remarks. Michael Rapino: Thank you, everybody. Have a great summer, and we'll talk in the fall. Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.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.
