Q2 2021 Eventbrite Inc Earnings Call
Net.
And then.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Eventbrite second quarter 2021earnings conference call. At this time all participants are in listen only mode. After the speaker's presentation there'll be a Q&A session.
And session if you'd like to ask the question and say these price stuff and it by 1 and telephone keypad. Please be advised that today's conference is being recorded I would like to know how and drive the conference acute and MS. Catherine Chen head of Investor Relations.
Keith.
Good afternoon, and welcome to above right. So I think whether it's 2021 earnings call.
Prior to this call and release, our shareholder letter announcing our financial results, which can be found on our website at investors on Eventbrite Dot com.
Before we begin I would like to remind you that during today's call, we will be making forward looking statements regarding future events and financial performance.
Of bringing people together through life experiences and the second quarter of 2021 was a testament to the enduring nature of that mission.
As restrictions lifted across many region, we hosted and all time record number of events, nearly 1.5 million and the quarter and.
And demand for in person events came roaring back as evidenced and our results.
Art platform helped millions of people get back to doing what they love and reclaim and an important part of their normal lives.
At the same time, we all recognize by now that our collective recovery as a society from the pandemic will not be perfectly linear.
We're well positioned for any recovery scenario because of 3 key reason <unk>.
First the decisive actions, we've taken have created a stronger and more profitable business model that can effectively whether volatile period.
Second we built and strengthened our format agnostic platform such that we can successfully meet the needs of our creators whether they're hosting in person or virtual events.
And finally, the critters that are using eventbrite today are battle tested day.
Is a very promising sign that our core creators are ready and able to support the recovery.
And church of 8 wheels is a great embodiment of that and momentum.
After more than a year of leading has congregation outdoors, David miles junior J K, a the father of gate welcome them home to his historic Church turned roller rink.
With the use of key information and our event and safety playbook automated waivers and the checkout flow and falling local math mandates. This temple of disco and skating can safely hooked up to 5 separate events and a single day, resulting and over 6000 tickets sold this year, so far and they're just getting started and.
And.
This is just 1 example of how creators are successfully navigating the world of pandemic error and safety and health restriction.
Throughout it all event brightest and their trusted partner not only building and improving product features to save them time and expand their reach but also providing relevant content. So that they can focus on what day do bass.
Case in point, our inaugural virtual customer, some and and May titled Reconvene with an example of our deep connectedness to the creator community.
And with a new returning and prospective creators gathered online to learn from thought leaders industry experts and each other.
Over the 2 day experience our community was bolstered by connectivity and inspiration to redefine the live events and history for the future.
Of that reconvene on yet more than 2 thirds reported that they either were new customers are returning customers to eventbrite.
In fact for the second quarter, we acquired over 88000 total new creators of 13 per cent increase versus last quarter.
All of these signs point to confidence around the return of life events and creators choosing eventbrite as their platform of choice to help produce events and reconnected with audiences.
As we said before frequent creators are central to our strategy.
For the second quarter of 2021, he ticket volume for this group more than tripled from a year ago.
Frequent creators comprise roughly 2 thirds the total paid ticket volume and the second quarter up from 64% a year ago, and 58 per cent and the second quarter of 2019.
Looking through the lines and paid events. The numbers are just as compelling with frequent creators accounting for more than 80 per cent of paid events organized somebody eventbrite platform and the second quarter.
I'm proud to report that our product and engineering team delivered more new products and enhancements to existing features and the month and me than any other month and the past year.
We are rolling out features that make more high event management easier and more intuitive and more strength thing mean, our infrastructure and ensure and improved user experience.
In addition to making it easier to create events and sell tickets relative focused on expanding audiences and reach.
Demand and her age and and audience discovery are an important part of our long term strategy and we'll keep eventbrite at the forefront of meeting the needs of independent and entrepreneurial creators.
And that bright boost which was launched and may and to help event creators increase audience size or marketing and analytical tools like automated AD campaigns and branded event ages.
This product has been available to crater for just a few months where please the early results.
We're also evaluating the potential of a future growth and monetization channel with our Eventbrite Dragon tickets and other words directing audiences 2 events through the Eventbrite website and mobile app.
He's a temporary driven tickets already accounted for 24 per cent of total ticket volume for the second corner and our goal is to continue growing that number over time.
To conclude our second quarter results showed a glimpse of what is to come and it's and exciting picture.
Where adaptable and nimble to move quickly better enable our customers to thrive and any environment. We have the power of a horizontal platform like and empower any creator to produce their event in person or virtually to meet their audiences where they are.
And those creators are enjoying powerful demand for life experiences.
My team and are thankful for the partnership and support of are resilient creators are talented and dedicated employees and our valued shareholders.
We are proud of what we've achieved and excited to keep you updated on our progress.
With that and now turn the call over Delaney.
Thank you Joy book or second quarter results were strong and the top line and Baltimore and.
And I also sugars, the strength of our strategy and and appeal of our business model.
Let me explain by Tuesday, and <unk>, some of the key trends and developments and cute too.
Cause vaccinations became more widespread and restrictions and social gatherings relax, but that approach revenue rose 67 per cent between the first quarter and second quarter of 2021.
The other acceleration reflects not only strong consumer demand for and personal experiences, but also the logistical nimbleness of our creators who have shown the resilience and and ability to still up quickly and successfully whether that's pivoting to online for returning to in person to those as I did and the first child.
Put it and tickets are grown each month and year to do.
Volume rising fired for some sequentially month to month and April 15% and day or.
At 11 per cent in June.
And July.
And and Roses other 9 per cent per month, continuing to book the normal seasonal trends typically sucks July as our seasonal low point for the ear.
Ah critters agility, and even more clearly evident within the second quarter metrics, the power or revenue bottle.
The number of paid event creators active on our part 4 and rose 24 per cent quarter to quarter, reaching 97000 and total.
More than 95 per cent of dark growth came by are highly efficient self sign on acquisition channel.
Was healthy growth and paid creators. We also saw a big lift and the number of events hosted on there that's like popcorn.
<unk> rose by almost 50 per cent from the first quarter to the second quarter and a number of events per creator increased by 20 per cent quarter on quarter.
Matching the surge and supply consumer demand across our part 4 and was outstanding and paid.
Tickets per event increased by 5 per cent from the first quarter to the second quarter.
Putting the pieces together are creators total paid ticket volume rose by 57 per cent quarter to quarter and Eventbrite revenue grew at a slightly faster pace Ah.
A great demonstration of the inner workings of our ticketing revenue model and the alignment between our own financial objectives and goals of the craters and serve.
The second quarter results also provide a view into the operating leverage and profitability potential of and French refocused technology centered operating model and.
Notably more than 40 per cent of the increasing revenue between 2.1 and 2 true flowed through to drive improvement and adjusted EBITDA.
Furthermore, excluding and parked of adjustments, we made to reserves and the second quarter. Adjusted EBITDA was slightly positive for the second quarter, 2 quarters and out of our expectations and on a far smaller revenue base. There was required previously.
And and privileged and profitability and compared to the first quarter was driven by a combination of higher gross margins as well as controlled operating expense growth.
The second quarter gross margin of 61 per cent was 10 percentage points higher than the first quarter of 2021, thanks to increase ticket volume and higher net revenue.
Given the elimination and 2020th of certain cost of revenue and the fact that a portion of cost of revenue was relatively fixed.
We believe there's room for gross margin to move into the high 60 per cent range and the future when ticket volume and revenue scale further.
Turning to operating expenses, we supported the quarter to quarter surge and volume and revenue with modest expense growth.
Displaying the longterm margin muscle and our model and our cost discipline.
Specifically total operating expenses were $47 million and the second quarter and not included a 5 million dollar reversal of reserves for us today, those debates paled losses as.
As well as and offsetting 5.6 million dollar expense related to reserves associated with litigation.
Excluding those 2 adjustments.
And your lying operating expenses and the second quarter of 2021 were 46 million.
For comparison reporting operating expenses were $40 million and the first quarter of 2021 and.
And 42.2 million after adjusting for non operating expenses recognized and a quarter.
Accordingly, our underlying operating expenses rose just under 10 per cent from quarter to quarter, even as paid ticket volume jumped 57 per cent.
And the increases and we did see and are spending were primarily investment and product and engineering, rather than variable expense growth associated with higher grader and ticket volume.
The operating leverage of the first half of 2021 isn't and intentional outcome of our product first business strategy and a redesign and financial model.
Our per ticket economics now include only 1 major variable cost item, which is the standard transaction processing too many strong revenue flow through to gross profit.
New add on product offerings, such as Eventbrite boost provided additional revenue opportunities with even higher gross margin prospects down the road.
Our focus on product development to drive crater adoption means that growth will be driven by scalable software solutions also with minimal per unit variable operating expense characteristics.
And finally, we're committed to maintaining the cost is a fun we've established.
And the world together through life experiences and with that I'll turn the call over to the operator for the question and answer portion of the call.
And if you would like to ask a question please price stuff and it's like 1 and a tennis and keep up and if you change your mind piece by staff and if I'd say.
We have our first question and from behind some day of William Black High and.
Your line is ice and please go ahead.
Yeah, Hi, Julia how are you learning thanks for taking my questions and great to see and personal events coming back strong like and.
[noise] mainly.
Many you mentioned with the variance out there that results could get more variable month to month going forward.
I know you talked about July being up sequentially, but can you give a little more color there with with Delta stray and to try pieces higher here and the last couple of weeks or are you starting to see the impact demand at all and then have you seen anything on the creator side are they pulling back and in terms of you know, but then said on the system.
Yeah, So and he said he could do to grow really nicely true July and as we look forward. We are you know appropriately planning and anticipating that the delta variant.
Reds vaccination vaccination and hopefully see more of it could create more variability and the second half from your then we saw and the first half of the year, we haven't seen that today, we haven't seen the changes and you asked about whether there are craters put pulling back we haven't seen that we've seen strong growth and.
<unk> really strong growth and events per creator and as we said great demand across the platform for the events that are critters are putting on we have as you know made some pretty significant changes over the last year, including the integrations, we now have with that.
Best in class video platforms for for a virtual events. So in the event that it becomes more challenging for creators to have faith in person gatherings, we would anticipate and we'll see a shift back toward virtual events and now we stand ready and stand by to help them do that.
Got it and then if we see more of it and start to require a proof of vaccination or and negative test result, if that's something I've been break and and help with in terms of you know.
And that process to get people through the gate I guess.
Yeah 9 yeah.
Yeah, I think that let me and my card.
And what are created from me that they get back and team hosting and personal events and certainly with then yeah booming growth and if you too and what do you think like we can be a great sounding bard for our creator thigh publishing more content, that's really and we have and it.
And demand at 3 O time, and actionable, it's based on science and that's what we've done with our and and take your play book that we saw you know really be adopted quite strongly and and Q2, particularly.
That.
The rest utility and.
At 4 and it's so keep our our creators yeah, they're battle cats, and they've been through I I really don't want to attack ear and they're looking forward to both bringing back these and person events and are in such high demand, but doing it safe range and I think that that.
Whether or not you know.
And to the baseline an event the typical eventbrite event about 75 per cent of the events on our platform are actually fewer than 43 attendee. So it's a very different sort of gathering then you know and 10000 price Nevada. However, we really think that has our creators are demanding.
You know a a solution to be able to quickly and easily and efficiently get their attendees and the door and verify the vaccine path.
We're obviously going to be game pet and a great. That's the beauty of the platform is so it can object that we can move quickly and we can be flexible based on what they need for important events or virtual events.
Got it that that makes sense and.
And he brought up the the battle tested traders.
After some but it sounds like it starts and stops and they're getting it sounds like the sta's really picked up there.
There they'd under the shuttered venue grant program and and he's June and July.
And if you see those funds and started to get awarded are are you seeing that creator communities start to come back and a bigger way or is that day I had an impact on your business at all.
Absolutely you know are there any business is a really important part of the vamp right story. Because these are alive independent music venues and small business owners that have really have to shut their doors. Among the first and the businesses and as you know I've been and the last to be able to open for the federal relief actually make.
<unk> and <unk> from it's happened of the Bell Witch Vamp right was on the front lines lobbying for and actually making it into the bank accounts of the small business owners is a huge win and Q2 I think that you like and a set them not be able to invest and the infrastructure that they need to be able to bring people back safely and we're starting to see that happen and and <unk>.
These iconic independent music, 20th and also the you know the bar around the corner Rigo walk like music and you want to feel safe and you want to know that that that business owners and is in good shape and I think that's really going that's it and.
And certainly a difference between today and even 3 months ago is that underlying investment and those independent music venues is key for them to be able to you know really adapt and the new normal.
That's great to hear I guess, we're more of a squeeze it down here.
And the past you've talked about a full service customers are represented something like 40 per cent.
Ticket volume.
And you start to see you know traders trying on events again here do you have a feel for how many of those customers what will still use eventbrite.
And as a ticket or and then look somewhere else for for some of the other services that were provided or or you know maybe.
Right I Gotcha, how many wood wood shop around for a full service options from tomorrow.
You don't run and it's been it was harder and the only day to make.
And make a good read of that because so many of those customers were really shuttered by the pandemic.
Seen the vaccinations rollout and the the virus received the restrictions on social gatherings received and some and some places we've we've performed better than the original expectations with with those customers today 100 per cent of our customers, who are under that sorry, popcorn or using it and the.
Self serve fashion, we invested you know and our infrastructure and and our product pretty significantly during the pandemic period during the height of it to improve the software visibility of many of the key features and functions, we'd supported and the past with people and so we're really pleased with the progress we've made there.
And we think it's a really important strategic transition for us because it's allowed us to reallocate resources toward product development, Jerry and made the comment that and the middle of the second quarter and they we had 1 of the most fruitful periods of new releases of product that we've had and really a couple of years.
And that was very much a function of the working day to improve the infrastructure to improve yourself surface ability and really focus the company's resources on our product software solution. So you know, where we're doing well and I think we're doing well, primarily because of the investments fixed and and and making the product.
Okay, great. Thanks for the Tigers.
Thank you.
Our next question comes from you you just have to Squali of a curious securities.
Ask your line is 8 and please go ahead.
Great. Thank you very much and you guys and.
Congrats great to see the business spouse and back too so quickly and profitably Lenny and just going back to the to the guide or almost the guy you're not really got him, but if I just use that plus 9 per cent number that you gave for July month on month, just some back and.
And the envelope math was imply that July revenues could be oh already in the mid teens millions and I felt like if I look at Q3 of last year at the 22 million.
He just said you're not seeing any kind of you know pullback material pull back and maybe can you just provide [noise] they've been more color as to what's driving your your conservatism, we know that Australia, and New Zealand and they're starting to go under Lockdown et cetera, So and I.
No you have operations, there and maybe you can speak to that and.
And and anything there ought to be helpful or is it just a matter of we just don't know and therefore, you know you're trying to be you know maybe overly conservative and.
And our hybrid business model and they're not.
Today really predominantly hosting the same event virtually and in person, but they actually have 2 parts of their business out the reason why that is.
<unk> the demand generation question. You asked is that this is a new opportunity and new space for Eventbrite to show up as a clear partner and enabler for our creators to be able to find new audiences and convert those audiences into new attendees for their event series and you know the cornerstone of our effort here has really been around book.
This year, which is a new product that we brought to market and it's built on the foundation of the acquired company pound and honed and and Eventbrite worked for years together as partners delivering a solution to our to our core customer. So we know exactly where that product market fit lives and it's really and <unk>.
And to automate and marketing activities to be able to create demand for these events were effectively teaching our customers how to fish for their own customers and their scheme and the strong return on advertising dollars as a signal of efficacy for their marketing activity.
And we look at industry trends about 40% of the face value of the ticket is spent on marketing that event and so it's weekend and help to create efficiency and that spend and also you know if you look at our take rate is 8% start to you know build value through that activity and that motion that's really what we're focused on it.
It is helping creators build their businesses over the long term. So I think as we move forward you can expect that we're looking at you know the eventbrite marketplace and those and that's sort of surface area that that we own and our destination and being a great place for some of those promotional activities and.
Every time, we help or create or selling incremental ticket that is you.
Blowing through to a place where they're generating more profit because events have and fixed cost and so we really see that that increments holiday and that growth has been key to the eventbrite value proposition and it keeps coming back is 1 of the.
Top things that our creators need from us is to be able to to really be that tailwind to the growth of their business and so that's that's the genesis of what we're talking about here.
And if I'm correct and I remember correctly, I think you're charging for Bruce and subscription basis, but a true.
Instructional.
Model growth.
That's quite true and it's early days.
Very encouraged by the adoption that we're seeing of this product again, it's not a complete shock since we.
Absolutely built it with a you know with the creators needs and are in mind and and have.
Really built it and partnership with our customers, but I think that it's very early days and we think you know there's a lot of room to grow to be selling this new product to the vast creator base on Eventbrite and we and again just in Q2 alone. We added 88000, new creators to the Eventbrite service.
Got it.
Thank you.
Yeah.
Yeah.
Our final question today comes from a daily of J P. Morgan Day. Your line is open and please go ahead.
Great. Thanks for taking the question.
And maybe for Julia.
To conclude our scoring and overall mix so as you and.
Look I'll return and what's the optimal mix of frequent creators who are seeking new and.
And your competitors are offering and the top 1% industry.
And I will share contributors and stuff.
Normal lead times from you.
And you were pretty their shoes.
Okay and level of petrol and there's different creators and then.
And secondly, and maybe this one's for you I mean, you talked about the sequential month over month.
From January to June and I was wondering if there is a need.
And the reason that are all performing versus other and like what are some puts and takes and you look across regions.
Yes.
Yeah.
Thanks for that day.
And for frequent creators, we're seeing and become a stronger mix of our total creator base. That's growing over time, and you know where we see strength is and not only acquiring more but also seen them post more events and bike ride or obviously, that's a strong signal that we've seen throughout.
The pandemic and it signals to us that they have content that is in demand and their resilience through these volatile periods and that's a customer that you want to bet on all day long. So I think that our strategic focus over the next few years on strengthening eventbrite to be a better platform for these frequent creators.
By making it easier to manage multi event series on the platform as well as build out more sophisticated marketing to reach audiences for and different events.
And then the third thing I would say is it's helping them drive demand by you know offering things like the followed feature where you know a creator can be followed by a consumer on eventbrite and get the updated eventhough. There posted I think these are all ways in which we can start to turn that flywheel and more and start to help them.
Gain more traction as well as hosting more events more frequently frequency you know I think you've heard us day. It a lot is really important to our business because it effectively makes eventbrite the operating system for the small business owner and it starts to really lock in that consistency of recurring revenue from.
From our paid frequent creators and so that's really underlying some of our focus on frequency.
And I think that when we see.
Hustle creators ramp on the platform, we have a thing and eventbrite that that these creators are you know, they're they're really borne and they're not made by about bright so they come with a great idea and it takes off you know I.
I wouldn't say quite easily, but I'd say that it and it has a strong clear signal of fix that within the first 45 days from publishing to ticket sales or it can be that happening and that ticket sales and between them. So that's what I would say around frequent creators hopefully I answered your question.
And I think in terms of the regional and certain regions around the world.
We talked about Australia, New Zealand, which you know to countries that did a really strong job comparatively and controlling the.
And virus early on and being able to reopen pretty quickly and.
Within 5 quarters of the onset of Covid, Australia, New Zealand or a new all time record levels of paid tickets.
We didn't it wasn't later that the sort of starting gun with start dates and in the U K U K had their reopening plan announced early in the spring and the United States. As you went through March April May and you saw the vaccinations being rolled out across various age groups and those markets accelerated at the time. So we saw in the <unk>.
Second quarter.
All of our major markets were.
Really very strong across the board and that.
And that continued all the way to the end of the quarter.
Hello, and thank you both and that's a follow up if I accounts.
And I think Glenn you talked about.
And we talked to build from there and then your numbers right now so I'm curious.
Is there something different about live events or maybe the restrictions that are there and.
And that targeting ligands and stuff.
Or is there something structurally different about.
And so you guys are hosting Doug might be more show there from.
Other Inc.
Well I do think there are some differences in our events as Julia said, 75% of the events.
And a quarter 45 or fewer attendees I think only about 5% of our events where more than 150 people and so thats. The size of event that is I think easier to move online move offline.
The size of event that is I think we see greater.
Great and if youre accelerating the frequency to accommodate what's very strong demand from from consumers.
And those are.
Presumably safer.
Kind of.
And then users of our Super gatherings and Mcmullen.
The next situations.
We talk a lot about the nimbleness and agility of our of our creators.
And.
These events are not without their logistical challenges, but our creators free goods graders are really very good.
The turn them up.
And moving them online if they need to so.
And I think that's already to some degree that has helped.
Helped our marketplace.
Come back really strongly during the first half of this year.
That makes sense. Thank you both.
We have no further questions on the line. So that concludes today's call. Thank you all very much for joining us today.
Have a good evening.
Yeah.
[music].