Live Nation Entertainment, Inc. (LYV) on Q2 2021 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 2021 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 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 Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on Form 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 definition 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 and thank you for joining us. As communities reopened, we're seeing the pent-up demand for live events play out as artists and fans are eager to reconnect in-person. In the U.S. and U.K., we're seeing strong ticket sales and the restart of our concerts and festivals highlighted over the past weekend by Lollapalooza and Rolling Loud in the U.S. and Latitude in the U.K. hosting three-quarters of a million fans combined. With the vaccine rollouts increasing throughout Canada and Europe, we expect additional markets to open up broadly in the coming months. And momentum for the return of live has been building every month, with ticket sales and concert attendance pacing faster than expected, underscoring the strength and resilience, the Concert business, live events in general. This progress combined with our cost discipline has enabled us to deliver positive AOI for the second quarter, well ahead of where we thought we would be for this quarter. We expect to see for the ramp up accelerate to the rest of the year with all segments returning to AOI profitability for the second half of the year, then it's up for a full-scale 2022. As we put more shows on sale for this year and next, ticket sales are the best early indicator for concerts and our overall business. To that end, June was Ticketmaster North America's fourth best month in history for transacted ticket volume. This was driven in part by our U.S. Concert division, putting the highest number of shows on sale ever during a single month, 50% more than the next highest mark back in 2019. In Concerts, our or recovery this summer continue to be led by our outdoor events at our festivals and amphitheaters. We expect to have over 6 million fans attend our festivals during the second half of the year, with about two-thirds of our festivals increasing their attendance compared to 2019. Most of our major festivals sold out in record time, while average ticket prices have been 10% higher than 2019. And while still early at our amphitheater shows over the past few weeks, we have delivered strong double-digit increase in average per fan revenue and onsite spending versus 2019. Looking forward to 2022 and that 2023, all our leading indicators continue to point to a roaring era for concerts and other live events. Starting with our Concerts division, every major venue type arenas, amphitheaters, and stadiums, our pipeline indicating double-digit growth in our show count and ticket sales relative to 2019 levels. In some cases, our pipeline is so strong, we are extending our planning into 2023 and even beginning to discuss tours that extended to 2024. The same time, Ticketmaster's leading edge technology continues to attract new clients, adding 11 million net new feed bearing tickets so far this year, already surpassing any previous full year growth. As a result, Ticketmaster is set to benefit in 2022 from both increased Live Nation concert ticket sales, as well as additional sales from new clients. In our Sponsorship business, our brand partners have maintained and grown their interest in live events, with contracts and sponsorship up double-digits for 2022, where we were at this point in 2019 for 2020. As our revenue is rebounding, we continue to evolve our business to maximize opportunities and the global recovery and strengthen our flywheel. We have structurally reduced our cost basis by $200 million, making us more nimble and converting more of our revenue AOI. We have integrated our Ticketmaster team globally, enabling us to work toward a global product roadmap that will both reduce our costs and increase our flexibility and speed to deploy new client tools and approve our marketplace experience. And we continue to build our direct to consumer business initiatives ranging from streaming concerts NFTs to artists merchandise, bringing more value to artists and deepening fan relationships. These enhancements combined with our strongest supply and demand dynamics our industry has ever seen are fueling our core flywheel strategy and setting us up for multiple years of growth, attendance revenue, and AOI. And with that, I'll let Joe take you through more details of our results. Joe Berchtold: Thanks, Michael, and good afternoon, everyone. As we've done over the past year, we've added some tables at the back of our earnings release that reconcile in more detail some of the numbers I will refer to today. In the second quarter, our AOI was positive for the first time since the start of the pandemic, as the U.S. by far our largest market, accelerated its reopening also driving our revenue to the highest level since the first quarter of last year. As a result, our contribution margin ramped up faster than expected, particularly in ticketing. Even with the increased activity, our monthly gross burn for the first half of the year was lower than the monthly burn during the last three quarters of 2020 due to our structural cost savings and continued cost discipline. As a result, we remain confident that actions taken to reduce cash burn and increased liquidity will provide us with the runway we need as shows return. And as we move toward reopening in more markets, we continue to balance the strong cost and cash management with making the necessary investments to grow the business. While we expect to generate positive AOI overall, and for each segment for the second half of the year, we will also reduce costs this year by over $800 million and reduce cash spend by $1.5 billion relative to pre-pandemic plans. Looking at our Q2 results. Revenue for the quarter was $576 million compared to $74 million in the second quarter of 2020 for growth of over $0.5 billion. All three of our business segments more than doubled their revenues from last year. Our AOI for the quarter was $10 million compared to a loss of $432 million for the second quarter of 2020. Our Q2, 2021 AOI consisted of $351 million of contribution margin, which included $364 million from operations, along with various one-time items, including gains from insurance recoveries and government support and losses from ticketing service fee refunds paid out. This was then offset by $341 million in operational fixed costs. Getting into our business segments a bit deeper, starting with ticketing, which was the primary driver of our results this quarter, contribution margin for the quarter was $204 million or nearly 60% of our total contribution margin delivering $99 million in AOI. Ticketing revenue for the quarter was $244 million or just over 40% of our total revenue for the quarter. Each month of a quarter, Ticketmaster had progressively stronger results, culminating with June being Ticketmaster North America's fourth best month ever for transacted ticket volume. In general, North America drove much of this resurgence, accounting for over 75% of total transacted tickets in the quarter as compared to approximately two-thirds of transacted tickets for 2019. Contract tickets drove much of this activity, and as a result, the top 10 artists sold over $513 million in GTV during second quarter this year compared to $329 million in the second quarter of 2019. Secondary ticketing has similarly rebounded. Our June GTV was only 8% below June of 2019. That trend has continued into the third quarter, with July 12th marking the highest resale GTV day in our history, driven by the U.S. Open along with strong NBA, NFL, and concert presale volumes. These results in ticketing are a leading indicator to our concerts business. For the second quarter, our concerts AOI loss of $84 million was an improvement of $127 million relative to Q2 last year, and our revenue was up $145 million relative to Q2 last year, as we promoted nearly 1,700 shows for 1.3 million fans during the quarter. More importantly, these tickets sales drove our event-related deferred revenue up to $2.1 billion, representing a pipeline of future activity, even higher than the $1.6 billion we had at the end of the second quarter in 2019. In part, this event-related deferred revenue is associated with over 25 million tickets we have sold for our concerts in the second half of this year, along with also being part of the 14 million tickets that we have already sold for concerts in 2022, which reflects strong double-digit growth in our 2022 pipeline for show count and fans relative to 2019. Sponsorship and advertising then naturally flow from our ticketing and concert platforms. Our sponsorship and advertising AOI for the quarter was $13 million and revenue was $45 million, with the bulk of our activity tied to our ticketing platform and concert presales. We continue to find brands are committed to maintaining or increasing their span with Live Nation to reach our music fans and other live event audiences. And during the quarter we added several long-term strategic partners, including Allegiant Air, Adobe and Cinch in the airline technology and auto sectors, respectively. And more broadly, we expect our sponsorship and advertising full-scale activity to return somewhere between ticketing and concerts timing. Most importantly, as we look out at our 2022 pipeline, confirmed activity is pacing well ahead of where we were in 2019 at this point. And with many multiyear contracts on the books, we are lining up to be growing this business in 2022 and beyond. Looking at free cash and liquidity. As of June 30th, we had total cash of $4 billion, including $1.1 billion in ticketing client cash and $1.8 billion in net concert event related cash, leaving free cash of $1.1 billion. This was flat relative to our first quarter reported number. Our free cash, along with $971 million of available debt capacity, gives us $2.1 billion in readily available liquidity up from $1.6 billion at the end of 2020, and steady with our Q1 ending liquidity. Benefiting our free cash position, the second quarter was $161 million in favorable timing, largely the result of classification of our event-related deferred revenue between short-term and long-term. Our total free cash usage in the quarter was $163 million or $54 million per month, which included $115 million per month of operational burn up from $100 million per month in the first quarter, as furloughed employees returned to prepare for our reopening and we reinstated full pay for most employees, plus another $58 million per month of non-operational costs, including investment in capital expenditures, acquisitions and artists and ticket client advances to give us $173 million average per month in gross burn. In Q2, we had $119 million average per month cash contribution margin, double our Q1 average. Turning to other balance sheet items, more on deferred revenue. At the end of the second quarter, event-related deferred revenue for shows that we'll play in the next 12 months was $2.1 billion, up from $1.5 billion at the end of the first quarter. Ticket sales in the second quarter were nearly $900 million, while refunds totaled $100 million and shifted deferred revenue from short-term to long-term for shows that were rescheduled into the back half of 2022, totaled $150 million. This long-term deferred revenue will then largely shift back to short-term during Q3 and Q4 reversing the timing benefit and free cash this quarter. Our total capital expenditures were $52 million for the first six months, with $38 million spent on revenue generating items. The markets have reopened faster than expected. We will similarly be accelerating some of our investments to take advantage of additional opportunities this year and into 2020. As a result, we now expect total capital expenditures for 2021 to be approximately $170 million, with over 60% of this spend going into revenue generating CapEx projects. Our total debt as of June 30th was $5.3 billion, and our weighted average cost of debt was 4.4%, with about 90% of that debt at a fixed rate. Finally, looking forward, as Michael said, we continue to expect concerts to scale further in the second half of this year in key markets, notably outdoor, and led by the U.S. and U.K. With this activity, we will continue to ramp up our operations, enabling Ticketmaster to run its on sale, the concerts division to book end market 2022 tours and sponsorship staff to support delivery for brands onsite and online. Given the COVID issues in our key markets appear to be short-term at this point, we continue to expect 2022 activity and results to exceed 2019 levels with continued growth opportunities from there. With that, let me open the call for questions. Operator? Operator: Thank you. At this time, we'll be conducting a question-and-answer session. Your first question comes from the line of David Karnovsky with JP Morgan. Please proceed with your question. David Karnovsky: Hi. Thank you. Just with COVID kind of being what it is at the moment, the Delta variant, can you just maybe talk through how you're thinking about navigating some of the challenges that might come up in the next a month or two, like changing health mandates, shifts in demand, any hesitation or concerns on the part of the artist? Joe Berchtold: Sure. David, this is Joe. I think what we're seeing is a shift to increasing requirements for entry of either vaccinated or tested or fully vaccinated. We had Lollapalooza over the last weekend, very successfully done, over 90% of the people were fully vaccinated, which I think was a great signal in terms of people's commitment and support of being vaccinated in order to go to these shows. So, my expectation is that we will see that continue, whether at the artist's level, at the city level, like New York just announced or large crowds, frankly Lollapalooza certainly went above and beyond what was happening at baseball games in Chicago. And similarly, I think, in other markets we're going above what others are doing. So, we'll continue to focus on that. I think the great news is that at this point, the discussion is around what are the requirements to hold the events? What do we need to see in terms of vaccinations and testing? Not hearing discussions, certainly in the U.S. or the U.K. about impacting those shows to any scale. David Karnovsky: Got it. And I know you just restarted the amp and the festivals, but any early insights in the fan behavior so far. You mentioned per caps are up at the amp, is there any additional color you can provide what's driving that. And then, maybe with digital ticketing, any learnings from having that tech kind of rolled out at scale across your own music venue footprint? Thanks. Joe Berchtold: Yeah. At this point, we've probably done about 50 amp shows that we've gotten the data on in time for today's call. And as we said, all of that looks to be continuing to trend up. People are buying more food and beverage. We're selling more VIP packages, more upsells. So, in general, the pocket books are open. I think it's pretty mature to get any real specific inferences. And I think it's also just -- it's a little bit early to get the specific impact of digital ticketing. We believe that eliminating friction always helps commerce, but we probably won't have the data on that till our next call. David Karnovsky: Thank you. Operator: Your next question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question. Stephen Laszczyk: Hey, great. Thank you. On the 2022 concert pipeline being up double-digits versus 2019, I was wondering if you could give us a sentence on how much of the pipeline is for sale today or sold today versus how much is still to come. And then, as you maybe look out over the next few quarters, how much headroom do you think is left to grow the concert slate in 2022, given some of the scheduling and health constraints you're working with, any commentary, there would be helpful. Joe Berchtold: Sure. We are -- go ahead. Michael Rapino: So, I'll start Joe, and then you jump. Most of our 2022 new tours wouldn't be on sale yet. Most of -- what you see on sale is what would have been rescheduled from 2021 are already on sale. So, we have a large on-sell slate plan between now and end of the year for most of the big global tours that will go out in 2022. And we're not -- we're very content with our 2022 lineup right now. We're talking mostly about what to add now into 2023 and 2024. So that idea that -- it's just one year of -- our bigness isn't really true. We've got three, four years here of strong demand that we're going to smooth out over the time, so everyone can get the right markets and the right Friday nights and the right dates. So, we see a good few year run with all this pent-up inventory. Stephen Laszczyk: Got it. Thanks. That's helpful. And then, on the Ticketmaster side, and you mentioned you had an 11 million net new fee bearing tickets year-to-date. I think I was up from around 5 million last quarter. I was wondering if you could talk a little bit about who you're winning this ticket business from. Is this a certain types of venues, league teams, maybe some of the things that's resonating with your pitch with these potential ticketing partners. Thank you. Joe Berchtold: Yeah. It's really happening on a global basis. We're seeing it in the U.S. We're seeing in Europe. We're seeing it in Asia. We put out various releases in terms of -- as we've been picking up some clients, but I wouldn't say that there's one market or one type of client in particular. It's pretty broad. I do think what's resonating is we've been very loud in terms of artist clearing the extent to which we're continuing to invest in ticketing, in the shift to digital ticketing and the benefit that that's going to be giving to the teams, the venues and the customers. And that seems to be working with the clients we're talking to. Stephen Laszczyk: Great. Thank you. Operator: Your next question comes from the line of John Janedis with Wolfe Research. Please proceed with your question. John Janedis: Thanks. I just had two questions. One was, with the expectations for the touring supercycle over the next, call it, two to three years. Can you talk about how you're thinking about the demand side in terms of fans and do you assume sale ups for the cycle are at pre-pandemic levels or maybe higher or lower? And then, on the ticketing margin side, there was -- a lift there. Is that a chunk of the $200 million in cost savings is kicking in and there's something close to that level of new normal, or are there any items to call out? Michael Rapino: I'll do demand side. I think we -- from the data we're seeing so far, everything we seem to be putting on sale is doing better than pre-pandemic. So, demand seems to be pent-up most of what we see going up for 2022 is great quality, tourists and artists. So, we would expect, as we've seen over the last 10 years, demand, overall for live on a global basis, has continually been growing. We like to always point out, we think that the product is still under priced, given all of the secondary business. So, this is still an attractive night out for a fan. And now that artists traveling more around the world, the fan base has grown for live as a functional -- entertainment item. So, we think global demand will continue, have double-digit growth as an industry for many years to come as the global landscape continues to grow. Joe Berchtold: And then, John, on the TM margin, I mean, clearly, I spoke in my comments that we're looking this year, that we're going to be reducing our total cost structure by about $800 million relative to where we were pre-pandemic. And the $200 million structural savings is a subset of that. So, what we're navigating this year is the pace at which we bring back some of the costs versus the pace at which we ramp up activity. And it's not going to be totally linear. We had a great month of June in TM, and we're finally getting back to scale there and we expect to have nice scale with Ticketmaster in the second half, but the first part of the year was lower scale. So, overall, yeah, we expect margins to improve, because a large chunk of that $200 million is going to come out of Ticketmaster and that would just naturally flow into a margin. I wouldn't try to overly analyze the single quarter and let's get you a few more quarters at more traditional scale, with more traditional costs and staffing over the next six months. John Janedis: That’s helpful. Thanks, Joe. Operator: Your next question comes from the line of Brandon Ross with LightShed Partners. Please proceed with your question. Brandon Ross: Thanks. A couple of questions ago, the conversation centered around ticketing wins and press releases for you guys. And I thought one of the more interesting developments in the quarter was the extension and expansion of your relationship with ASM. For two reasons, one is that ASM's, obviously half AEG and it didn't go to access. But more so that Ticketmaster could sell tickets for Live Nation promoted shows in the other ASM venues. And the North American ticket model's been exclusive for -- as long as I can remember, at least. Is this a sign of change in the future? Do you think that exclusivity model is here to stay, or do you think depending on event type, the promoter will ultimately control the ticket? Joe Berchtold: Yeah. I think the exclusive approach has worked well for the venues and the ecosystem is a large part of how the venues get funded and how the venues then make the rental costs approachable for promoters and artists. So, it's an ecosystem that's worked well in the U.S. and the Ticketmaster, as you know, has been a very large source of funding and the profit stream for the venues. I wouldn't read too much into this. If you look at ASM scale, that's not a common, typical scale in terms of the number of buildings they have. It's also a fairly unique situation where you have somebody who owns buildings. Who's saying, we're going to let you bring in Ticketmaster regardless of the situation. And they control both sides of that decision-making. It's not something that we are looking to do or that we see as any real mark of the industry going forward. Michael Rapino: What I would add, Brandon, I think the most -- Brandon, I wouldn't say the most important thing you said is what you lead with is the fact that ASM owned by AEG and a private equity fund, the largest venue management company, obviously did their homework and debated their own ticket options and renewed with Ticketmaster, because we ultimately provide the best global solution in ticketing for them. I assume they would have liked to have used their own in-house ticketing system. But I think our relationship and what we've done for all those venues for so long, won us that business, the met renewal. So that was a very important renewal, a very good testament to Ticketmaster. I give the ASM management team credit, they put their bias aside and what was the best option in the marketplace after looking at all options. So, we are very proud that that's a very good testament to the Ticketmaster core competency. You hit that part for sure. Brandon Ross: Cool. Thanks. Michael Rapino: And you can update your Twitter now that we've talked about COVID and Delta. We assumed it would -- what happened on this call. Brandon Ross: Great. Operator: Your next question comes from … Joe Berchtold: Sorry. We missed that. Is there a question? Operator? Operator? Operator: I apologize. Your next question comes from the line of Ben Swinburne with Morgan Stanley. Please proceed with your question. Ben Swinburne: Hi. Can you hear me? Joe Berchtold: Yeah. Ben, big build up. Ben Swinburne: Yeah. Better not follow it. A couple of questions. So, you ended your prepared remarks, I think by saying you continue to expect 2022 activity levels to exceed 2019. And I apologize if that's a reiteration of prior guidance that I might've missed. But just wanted to ask you what you meant by that. Is that a comment about revenue and AOI? I know where -- the street expectations are, but I thought I'd give you a chance to maybe expand on that. And then, the second question is just, you made a helpful comment around sponsorship saying that I think contracted business is up double-digits for 2022 relative to where you were in 2019 for 2020. I guess similar question, the ticketing question, how much of the forward year is sort of already in the books typically to understand what that tells us about next year and make sure we don't over extrapolate that comment about growth for a sponsorship. Thank you. Joe Berchtold: Yeah. Just in terms of overall 2022 expectations. First, it starts for us with what are the concert bookings. What are the show count look like? And from that, our expectations on the ticket counts, both of which we think, again, are up relative to 2019 based on what we said. And I think as we've gone through the past three months, whatever we said three months ago, we're more confident in that at this point. And as a result, we expect then revenue and AOI growth relative to 2019 as well to be and sponsorship, then we'll be a part of that expectation, up double-digits and committed sponsorship. Usually you'd have -- I mean, we've talked about how much of our sponsorship is in the form of multiyear, multi-million dollar, multi-asset strategic sponsors. That's a large portion of our sponsorship base. So, last -- we probably wouldn't be talking about expectations of growth for next year already at this point, unless we had a pretty good feel that a lot of it was committed. Ben Swinburne: Sure. Makes sense. Great. Thank you very much. Joe Berchtold: Operator? Operator, do we have any other questions? David Katz, if you're on the line, can you go ahead and ask your question? I think you're next to the queue. Can you hear us? Operator: Yes. I apologize. Your next question comes from the line of David Katz with Jefferies. Please proceed with your question. David Katz: Okay. If you can all hear me okay. Joe Berchtold: Yep. No problem. David Katz: Appreciate you taking my question. Appreciate all the detail. What I wanted to ask about since it is prevalent in a lot of other areas of our coverage is, the issue of human resources and labor, where we have seen a lot of constraints around, frankly getting people to come back to work. You made a comment about it in your prepared remarks, bringing people back at full salaries and so forth. Is that a matter that you have had to deal with work around, strategize around and how do you see it? Joe Berchtold: Yeah. Start with, as you know, unfortunately we had to furlough a reasonable number of people over the course of the last year. At this point, we've brought back over 90% of our furloughed staff, of those we've called back over 90% have returned furlough. We had a fairly low turnover rate and we think turnover rate at, or below the overall entertainment industry. So, we feel very good about how we've been able to retain staff. I think it's a testimony to people's commitment to our industry and the culture that we've built here. So, in terms of the core people that are the ones that we've talked about, bringing back the shows, bringing back the ticketing and the sponsorship, those people are in place. As we've put on our shows in various amphitheaters and festivals sites around the country and around the world, we've been able to get the volume of people we needed. It hasn't been a material cost impact, taking in total. And we've had to work a bit harder at times to find the people, but it has not impacted our ability to put on the shows. David Katz: Perfect. Thank you very much. Michael Rapino: And I would add to that. I think the only piece that we're working through right now is the -- all the part-time employees that are on the front of the line at the amphitheater, at the festival, we're going to be rolling out soon our kind of mandated vaccine for our employees. We're going to move forward and be very progressive on ensuring all our employees are vaccinated. And we're going to move lower with artists and managers, where we're seeing there -- the likes of these artists that are going to want fully vaccinated and tested shows as ways to continue to keep the show moving forward. So, I think that the biggest challenge we've had is just scrambling on a day-to-day basis with part-time employees back, and abiding by different local COVID laws, mask, no mask, now test no test. I think that's been our only real challenge from an HR and communication. So, hats off to my frontline. They're doing an incredible job, running, hard, trying to adjust, and we're going to move to more central protocols now on mandating the backseat and helping them out, make sure they're all safe, too. David Katz: Super helpful. Thank you. Operator: Your next question comes from the line of Steve … Joe Berchtold: We are back here, operator. We missed the name. Michael Rapino: Well, we can put a concert on, but on a conference call. Operator: Steve Glagola, your line is now live. Michael Rapino: Steve? Joe Berchtold: Hey, Steve. Go ahead. Stephen Glagola: Hi, guys. Thank you. Well, you still have the best earnings call music. So, if that means anything. I'd say -- I just had a question on, can you discuss how much the ticketing GTV was tied to sports versus concerts in the quarter, and how you see that mix over the second half of the year? Joe Berchtold: Yeah. Those were certainly the two largest components, concerts and sports. And we'll again in the second half as we relaunch -- second half relaunch, NBA, NHL, NFL, all of those at scale. So you'll have a big full season of the three major sports. And at the same time, you're going to have a massive on sale for 2022. I wouldn't try to parse exactly which one's bigger than the other in a given month, but those two will be the two key drivers as they were in the past few months. Stephen Glagola: Okay. Thanks, Joe. And I don't know if you've already said this, so I apologize. But on the guidance for AOI profitability across every segment in the second half, is that for each quarter or is that just the sum of Q3 and Q4? Joe Berchtold: We just -- our comment was for the sum of Q3 and Q4 that each segment, we expect to be AOI positive. Stephen Glagola: Okay. All right. Thank you. Operator: Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to close the call out. 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.
