Q1 2022 Eventbrite Inc Earnings Call
Period.
Many customers are reporting their new discovery of existing features that they simply have never known about.
Meanwhile, adoption of calendar of collections and more advanced reporting functionalities are increasing and we believe these deepening usage patterns will help strengthen customer retention over time.
We introduced a new paid email feature within boost at the start of the quarter and this premium priced offering is proving to be just as highly popular among creators as we anticipated since.
Since January more than one third of booths, new subscribers have been drawn in by premium paid email our creators total email campaign volume has increased by more than 50% over the same timeframe.
One of our featured creators, Matt or love is producing some of the most sought after parties in the country right. Now he has over 91000 email subscribers in Los Angeles alone priority using Eventbrite premium email campaign tool he struggled to get a strong click through rate for his weekly emails.
Now all of estimates that E mail sent via boost are three times more effective than other services. He's tried because there's customers trust the eventbrite brand.
We also upgraded booths social media marketing features in the quarter, adding AI generated keyword recommendation and automated audience targeting.
Both of these features save creators time and leverage event price extensive live event data.
Creators have now marketed more than 30000 events, yeah boots and the average return on AD spend among these users has been an attractive five to one return.
The last set of Q1 product wins I'll call out today's center on improving the customer checkout experience.
Upgrades the ticket buyer payment experience have lifted checkout conversion rates and delivered a direct sales volume benefit to our creators. We also added Apple pay in our largest markets in the first quarter and this two shows encouraging sign for conversion rates.
When we step back and take the full measure of our product initiatives.
A few key themes stand out.
First our focus on frequent creators means that our product roadmap addresses the needs of the largest and broadest set of creators in our market.
As a result, new products, we introduced are making faster wider ripples across a large base of valuable customers.
Second our commitment to delivering a self service product experience means we are continually redesigning for greater ease and efficiency.
These are value propositions that resonate with busy creators and strengthen our user loyalty.
And third our close connection to our creators means that we have an intimate understanding of their needs and expectations. This reduces the risk and increases the probability of success associated with our product investment decisions.
While the Creatives, we serve are often individuals or small nimble teams. Our platform serves these businesses collectively at enormous scale.
Over 300000 creators chose have embraced the power of nearly $1 4 million events. During the first quarter, we transacted over 62 million tickets to these events, which translates to nearly 700000 tickets processed every day all around the world.
We believe our ticketing volume places event right at the top of our industry and we're committed to extending our leadership position.
Our commitment is not only to help new creators joined the live experience economy, but also to build a strong creator community, where all participants can benefit.
For example, we're extending our industry reach beyond our product investments into the vibrant community of creators who rely on eventbrite.
In Q1, we announced the launch of two new programs aligned with our customers the creator collective and the reconvene accelerator.
The creator collective as an ambassador program for established event Influencers to connect with us and each other setting the agenda for our reconvene summit in series and amplifying their work across our marketing channels.
The reconvene accelerator will sponsor emerging creators with grants and mentorship opportunities.
These initiatives generate valuable insight for our product development team to incorporate into our roadmap.
Looking ahead, we'll continue investing in our frequent creator tools as we also lean into a continuous release cycle for them prices.
We're developing boost into a comprehensive solution for both paid and free creators to manage their events engage their communities and raise their brand awareness.
Features like organic social media news, social media integration and promoted content are all in different stages of development and we look forward to updating you on these in the future.
Demand generation within boost is an attractive opportunity with strong interest appeal among our creators.
Making progress on product development here and actively assessing the best paths to monetization.
And then probably driven tickets are already a valuable benefit for creators who host events on our platform. These tickets made up 26% of total ticket volume in the first quarter, that's equivalent to over $174 million in gross ticket sales.
That's a remarkable number that really highlights the existing sophistication of our demand generation capabilities. It's also why we're so encouraged about the impact we can drive for creators as they work to build bigger audiences.
Another area of Eventbrite leadership will be our social impact program.
As everyone on this call knows our mission is to bring the world together through live experiences.
And then important offshoot of that mission is the impact we can have on combating the negative mental health consequences of social isolation.
We believe we're uniquely positioned to activate creators and events on our platform help alleviate isolation, especially among young people.
More details to share when the program launches next month.
We're kicking off 2022 with strong financial results that reflect the recovery of life events accentuated by the impact of our product led strategy liked.
Like me our whole team is energized by the progress we've achieved and the opportunity ahead.
Our product roadmap will accelerate throughout the year with marketing tools and demand generation shifting upwards on our priority list and we remain well positioned in a highly attractive market as the leading ticketing solution for independent entrepreneurial creators. These.
These are the people who are fueling the next phase of growth for live events.
And our team is laser focused on this momentum we're excited to share more details about our strategy and see many of you in person at our Investor Day on June 2nd.
As we look forward to those updates I have one more important announcement to share today, we're always looking for new perspectives and expertise to inform our strategy and strengthen decision, making our board of directors is highly engaged in these areas and I'm thrilled to announce that April under what has been nominated to join our board later this year.
April is an experienced public company board director and has a wealth of product knowledge gathered through her impressive career at places such as slack Twitter and Google.
On behalf of the entire team I want to thank our creators our employees and our shareholders for your ongoing support and dedication now let me turn the call over to Lanny.
Thank you Julia as you just said our strong first quarter financial results reflect clear strategy focused on execution and the inherent strength of a product driven business model that places the needs of our customers at its very core.
It's not a coincidence that our own strong growth in the first quarter of 2022 comes at the same time the creators on our platform are attaining new highs in their businesses.
Specifically paid tickets per creator and gross ticket sales per creator both grew at double digit rates year to year in the first quarter a clear sign of the success cruisers are having on our platform.
First quarter revenue of $55 $9 million more than doubled last year's first quarter results.
Storage locations for the period.
The external environment for live events improved after early February .
With our own product and marketing investments contributing to greater acquisition and volume growth.
Strong month over month growth throughout the first quarter.
In fact after a relatively slow start in January .
<unk> 2022 was the best month for gross ticket sales and for revenue that we've seen since the pandemic hit in early 2020.
The revenue growth, we achieved in the first quarter to do it right back to the key business metrics. We've shared with you as these really are the gears that drive our revenue engine.
Over 135 Dolphins event creators ticketed and marketed nearly 440.
Paid events on our platform during the quarter.
Increases of 16% and 32% respectively over last year's first quarter.
In March we surpassed 100000 monthly transacting creators for the first time since early 2020.
For the quarter the number of paid frequent.
Frequent creators grew by 40% year to year.
With more frequent creators on our platform the number of paid events per creator averaged 3.2 events for the quarter up from $2 seven events in the same quarter of 2019 prior to the pandemic.
Paid tickets per event.
By 34% over last year's first quarter.
Reflecting strong consumer demand.
As well as our ability to connect creators with audiences.
Average ticket value, 5% year over year, reaching its highest level in two years.
Finally, our revenue take rate improved by more than half a percentage point year over year, which helped propel revenue per ticket to $3 <unk> for the quarter.
Which is above what we saw even in the two years prior to Covid.
Turning to the profitability side of the equation gross margin was 64, 3% in the first quarter, nearly 14 percentage points higher than a year ago, driven by higher revenue against the partially fixed cost of revenue structure.
Total operating expenses grew 26% year to year, reflecting purposeful investments into our product and our team.
Almost 40% of our operating expenses are now dedicated to product development.
We're managing all expenses carefully.
What has been a highly competitive talent market.
<unk>, where our revenue has been growing 100% plus year to year.
Adjusted EBITDA for the quarter was $2 4 million, representing an adjusted EBITDA margin of 4%.
Impaired to a loss of $8 5 million in the first quarter of 2021.
Comparing year to year change in adjusted EBITDA for the year to year increase in revenue in the first quarter, we delivered a revenue flow through rate in the high 30 percents in the first quarter.
Which aligns with our objectives for driving adjusted EBITDA profitability and sustainable margin improvement as ticket volume and revenue growth through time.
Finally, our balance sheet is also strong at the end of the first quarter, we ended the quarter with $710 million in cash and cash equivalents.
Liquidity of $355 million.
Ample funding to support our investments in our growth objectives.
Turning to our business outlook based on the information the expectations. We have today, we anticipate second quarter revenue to be between 60 and $63 million representing.
Representing double digit growth at the midpoint over our first quarter results.
This outlook reflects a stronger Q1 to Q2 revenue progression that we've seen historically pre pandemic.
And the primary factor behind that difference is the softness we saw at the start of the first quarter.
We are prepared for the possibility that COVID-19 related impacts could lead to greater than normal month to month volatility and results.
Longer term the <unk>.
And customer momentum, we've built up over the last 24 months.
Higher than anticipated first quarter results.
<unk> real encouragement that our product blood strategy can lead to strong and sustainable revenue growth our.
Accompanied by steady margin improvement.
We look forward to taking a much deeper dive into our long term growth strategies and our financial plan. When we meet live on June 2nd at our Investor Day.
With that I'll turn the call over to the operator for the question and answer portion of the call.
Absolutely.
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We will pause here briefly as questions are registered.
Our first question excuse me our first question does to Ryan Sundby with William Blair Bryan. Your line is open. Please go ahead.
Yeah, Thanks, Hey, Julien Hi, Randy Hey, Stephanie Thanks for the questions.
Yes, it really great to see revenue and paid ticket volume to exceed expectations. Despite all the headwinds we've seen so far this year.
I think in the shareholder letter you talked about a surgeon events from January to March. It's Omnicom Wayne can you just zoom in a little bit more and talk about what that recovery looks like intra quarter, because I would assume a lot of those 18 million paid tickets.
We're heavily weighted to March which sounds like the best month since we started with <unk>.
Okay.
Ryan Youre right March was the best month that we've seen since the start of the pandemic.
And particularly so in the face value of tickets and the volume of tickets as well as transaction creators. So really strong months normally the progression from December to January to February to March.
As you know kind of like a 5% increase in January and then a 5% increase in.
In February and then the stronger kind of mid teens increase in March. This year, we saw a big downturn between <unk> between December and January trying to remember now, but thats really when omicron was sweeping across the entire United States, putting a real restriction on local gatherings, but that abated and we saw probably three or four.
Five times as much month over month month over month growth.
In February and March as we normally see in those months and so but if you sort of put it altogether Ryan I think that's where I think the real.
Kind of the big takeaway comes because the month to month stuff.
So interesting if we look at where we are in March relative to where we were in December .
We're about 10 plus points ahead of.
Where we would be normally under kind of normal seasonality. So.
We fully come back and then some and I think as we said a lot of that can be attributed to the product momentum the marketing momentum.
Leadership that we have with the category and it really seems to be helping us out in this improved environment.
Okay, that's great to hear.
We see it all come together.
Hi.
Revenue per ticket, reaching its highest quarterly level since 2018.
Alright.
Couple of factors there higher average ticket values improved take rate decline in ticket refund activity could you size each of those for US and then I guess with that improved take rate is that due to a change in pricing or mix or is that more of a reflection of some of the new tools. He got it.
Things like Quickbooks.
Okay.
It's not it's not really due to boost.
We tried to break it down.
The.
Take rate has improved primarily.
Because of focused on frequent creators and the product market fit that we have between our software our solution our platform and frequent creators.
Valued by frequent creators very very highly they are they're our wheelhouse and there is a strong recognition of eventbrite being the solution for them and that certainly helps from a pricing perspective.
Currently we have seen a little bit of an improvement in ticket price about 5% year over year, but the year to year increase in revenue per ticket has been kind of low teens. So you could think of it as five points of improvement in AR.
And the price of the ticket and another call it seven or eight points in growth from.
Take rate and that improvement in take rate has had theres a little bit of a reduction in the reserve sorry refund activity.
But I.
I think more than anything else, it's been really kind of the focus on our core customers who value the product must highlight and frankly, if you look back we compared the revenue, particularly to where we were in 2018 in 2019 and.
We did that to show that were.
One to explain to people hey, we're at a level that we haven't been at before.
Two.
When we think in any customer looks at the difference in our product today versus where it was in 2018 2018.
We've made substantial progress and I think that's what's being reflected in the revenue per ticket.
Got it maybe more thing for me.
It sounds like Youre seeing free and pay traders.
Take up more of these tools are calendars.
Yes on the free side are you starting to see the investments, which we will start to drive conversion and to pay down or we may be too early for that.
One of the things about the free event creators that we like is that theyre discovering the capability to market their events and reach a wider audience through the 20% at least customers today are free event creators and boosted our subs paid subscription service. So it's really.
The first time and have embraced history, where we've been able to offer something of great value to professional creators who are hosting three events and they are paying for that value, which includes particularly the ability to.
Market their events sufficiently out in social media as well as.
Most notably what's driven this uptick in free creator adoption of boots has been our premium E. Mail campaign. So we're seeing about it increased about 50% volume of our premium premium email versus our legacy email tool and predominantly that speaking to.
These creators of large free event, where the revenue is not necessarily in the ticket price. That's why it's a free event, but the revenue is actually elsewhere within the event. So it's either lead gen or its food and beverage or it.
<unk> merchandise.
So we will continue to lean into that opportunity and that's really what we saw.
<unk> had some early signals here in the quarter in terms of conversion from free to pay rent paid Ryan I would say that what helps us on that is building trust with those creators such that they are bringing over their paid events and then also giving them insight into what they could be making if they.
Turns to at ticket price for their for their event, but that's a longer cycle, that's not something that we will see right away usually when somebody signs up on the platform.
Got it makes sense.
Hey, guys. Thanks.
Thanks.
Thanks, Brian .
Thank you Ryan.
Our next question goes to Cameron Perone with Morgan Stanley Kevin. Your line is open. Please go ahead.
Thank you for taking the question Hey, guys.
First on gross margin understanding that.
It was up year over year.
It ticked down a little bit sequentially. So anything you guys can call out there or should we just expect to see a little bit of noise in that quarter to quarter, and then to follow up on the <unk> strength for the 5% contribution coming from.
Kind of core price call. It are there types of creators are events that you can kind of intentionally faster to drive rate or is it.
On the core pricing front kind of less of a managed outcome.
Sure I'll take the first one on the gross margin.
If you look at where we were in the fourth quarter to where we were in the first quarter.
Half of the change in gross margin was just due to the change in revenue level against some of the fixed costs that exist within cost of revenue. So that piece as we recover from where we were at the first part of the year and start to scale.
Volume and revenue higher piece of reversing pretty quickly. There also at the start of the year in that Homochrome environment was a little bit higher refund activity, we anticipate a little bit higher refund activity.
So there was another small portion of the gross margin comparison versus.
First quarter versus fourth quarter that included a higher reserve rate for future refunds that too should sort of unwind in a more normal environment and then the last small difference where.
Some of the composition of where ticket sales were occurring geographically not every part of the world has the exact same.
Transaction processing costs, and we had a little bit more volume in some of our more expensive markets. This quarter relative to the last quarter, but I think kind of zooming out on that question from month to month and quarter picture.
We've said it before and we'll say it again.
Our cost base within within there is a portion of the gross profit that is fixed.
Most of it is sort.
Sorry, the cost revenue the specs.
Variable expenses are about 25 cents on the dollar and so as the dollars of the revenue dollars grow we would expect that the gross margin continues to move upward kind of in a gradual and steady rate number in the high 60% to 70% range.
Got it helpful.
Yeah Gregg on your second question I'll.
I will take us.
Starting in July you can add to this.
The.
The strength that we have that we've seen so far in the revenue per ticket and in the take rate.
It really does reflect our focus our customer focus.
And that is it sort of stands to reason that your primary customers who value your product the most for whom it is the best solution at the tightest fit to all of their needs.
Are the place where we.
We see enjoys the best pricing.
And.
We have there been other parts are going at the fringes of our model where we are.
At the discount in the past if we don't have to discount today is the competitive dynamic has changed so really what you've seen from a pricing perspective as a focus on the healthiest customer Honda.
<unk> customers in the marketplace.
Rather than any sort.
Step function change on pricing that we've taken we haven't done that.
As Julian talks about a moment ago boost isn't there.
A R premium using our product as an incremental fee.
And those things over time will drive the take rates are very very small today.
In terms of your question about different types of events that we could do we could think about maybe you can talk about that.
Alright, so typically speaking, we see higher ticket prices and in.
In music in business, you know professional events as well as bigger episodic events and so I think it's it is the mix shift continues to play out as events start coming back as businesses start thinking about Hudson more conferences as music venues are opening up more shows and then as you know.
Bigger gatherings, where you see sort of more of that thousand to 10000 people gathering around at festival start to come back I think we'll start to see a stronger.
Average ticket price and we.
We will see.
Our revenue scale with that I would say that landing point on delivering value to our customers and then understanding that value is a key point for us and any pricing scenario. So when I talk to creators today, they're really appreciating eventbrite for our brand value. So there.
Customers are opening emails from them when they are sending it through eventbrite because they recognize the brand they're trusting that event because the event is on eventbrite. So a lot of our customers use the words validating.
And there and Theyre seeing what we're doing in marketing and they're getting really excited about it. So it's early days for us to be pushing into marketing and demand generation, but the savvy frequent creators that we're focused on can see what we're doing and they're I mean, they they want this help so that value conversation is shifting and I think.
That will be a really good thing for US is as we think about pricing in the future and how we deliver that's great that's great product.
Okay.
Thanks, a lot of sense. Thank you Julia that's all I had thanks guys.
Thanks Cam.
Thank you.
Thank you Kim.
Our next question goes to goes to Lamont Williams with Stifel. Your.
Your line is open. Please go ahead.
Hi, good afternoon, and thank you for taking my question.
The first question is is there anything you can discuss about April .
It seems that we've seen from COVID-19 kind of resurgence in some markets and I guess.
Trying to get a feel of if the transition after a strong margins kind of shifted up we've continued into April or haven't kind of seen a little bit.
And dislocation.
Equivalent to surgeons and then.
Secondly, Manny in terms of kind of be the investment that you.
Youre doing in product development and.
Some some higher head count costs is there any kind of color you can give us around that.
The restaurant will be investment in kind of over the next couple of quarters through the balance of the year.
Sure.
I think.
April .
We havent made any comments about April I can do it right now, but I wouldn't say.
Comparing what we're seeing right now with omicron too with Copa to what you saw in January and February .
Not even a close comparison, it's hard now to remember, but if you. If you do spend a minute just go look at.
Any of the graph the infection rates that were prevailing in late December and into January on Covid. It was a straight outline there for several weeks that really what's changing the life gathering marketplace and we don't we don't see that happening and as we've said now for two years you can take a pretty.
There's a pretty direct reverse inverse correlation between a surge in growth.
Decline in ticket purchases for live events and spoke a lot of other things.
But youre just not seeing that kind of a case count right now.
So far.
How much of a disturbance at the end of the first quarter.
In terms of our investment in product development and head count.
We're really excited we've made over 150 hires since the start of this year the bulk of that engineering and then just some really key engineering roles that go from the backend and our data teams through the frequent creator kind of core product offering and particularly into some of that.
Things that we're talking a lot about around boost in demand generation and the consumer side of our of our business. So we're really excited about the progress we've been able to make that's been purposeful.
That's been planned out for for this year and frankly, that's part of kind of a three year strategy that we've been talking about now so.
I think youll see a fairly steady progression there as we continue to add to the team that's bringing the product to market Thats. The difference between the external environment and the growth rate of the company, which is getting clearer and clearer.
Okay. Thank you.
Thank you Omar.
And our last question goes to daily with JP Morgan your.
Your line is open. Please go ahead.
Great. Thanks for taking the questions to first offer Julia silver pent up demand and desire to connect are clearly driving strong momentum in your business.
I guess looking ahead investors are increasingly concerned about macro factors, including inflation weighing on consumer demand.
Go ahead to commence Susan Mike how do you feel about the durability of the strong momentum that youre seeing in the <unk>.
Thats right now and are you seeing any signs of.
Consumer demand softening in your business and then secondly for me I am sorry to go back to the net revenue per paid ticket again.
Youre talking about what we've said so far it feels like the <unk>.
Drivers of the strong performance this quarter appears to be sustainable as we look ahead.
That's a good level of net revenue per basic or does it kind of expect from your business.
Yeah.
Yeah. Thanks, so much for the question so.
When I look ahead at what we're all facing in terms of you know an impending recession and obviously the current inflation that we're experiencing I'm not concerned about the durability and resilience of our business and that's twofold. One is that we've already lived through a recessionary period.
The company in 2009, what we saw obviously on a different scale than where we are today, but what we saw happening on the platform is people getting out and gathering even more so there were a few different societal and secular trends that we saw going on during that time. One is that everybody who is looking for a job needed to be out.
And being at working to find their next Jonathan we saw a huge rise of networking and professional skill building competences and workshop and the second thing is that we tended to see more.
Event categories around heathenism rise like music and food and beverage interestingly enough. So what we know about the consumer trends and our market where there are millions of events in the average ticket price is around $40 is that these types of gatherings and these behavioral trends that we've seen.
In the past.
Have a.
A high likelihood of repeating themselves in the future.
The second thing is that since.
March of 2020, Eventbrite is a structurally different company and as we've really thoughtfully built back from that place.
Taking $100 million plus out of our Opex, we have built back in a much more resilient manner. I mean, you can see it in the way that we're investing where we're investing and how we're investing and the profitability of the business. So I would say we are battle tested we haven't planned for the future that includes you know.
Many different scenarios and so that's what keeps me confident is both.
The longevity of Eventbrite and what we've seen in the past as well as the preparation that we've taken for the future and then finally I'll just say that our our event creators the ones that are hosting these events that are happening multiple times, a month and a week. There are small business owners that are very savvy and entrepreneurial and they've been through.
A really tough period of time during COVID-19 and so the theaters that are on the platform are the ones that have figured out how to operate through them.
That type of an environment as you can imagine in my experiences. So I haven't heard of faith in them and I know that there are three factors will get us through the future.
On the on the take rate question.
And it's not just to take your questions. Shortly our unit economics revenue per ticket.
Couple of things I'd say, let's start with the ticket price or ticket price. This quarter you could see was.
Just below 30, just below $40 $39 70, and if you were to go back to kind of 2018 2019, there and look at the ticket prices prevailing at that time, there is another 10 or 15% growth in the <unk>.
Average ticket value to get back to where we were previously.
One thing we did see you're right at the start of Covid was because I think because of the uncertainty of wasn't event happened what did not happen.
There was some kind of across every category across every market across every format pricing in of some of that uncertainty that led to ticket prices kind of every category in every format to come down a bit and that seems to be reversing right. Now. So there is there is that kind of call it 10% to 50% and ticket prices potentially.
That's one part of the drivers of our revenue equation that we don't frankly controlled entirely that's really a matter of the product market fit between the creators the creators.
Asian, and attendee interest as well.
Their ability to market those those events very very well and drive demand for them, but there is that over the same timeframe, we've improved take rate by probably three quarters of a percentage point.
And I talked about that earlier, that's been a focus on high value customers and a lot of investment.
In improving the product so that it has a great fit its driving their success. When we look at the first comment that I made in my prepared remarks was that.
Tickets per creator and revenue per greater or ticket sales value per creator.
Just.
So it increases year over year and were helping enabled it's certainly helpful too.
Celebrate our products effect in that success for creators and that leads to pricing power for us and that's reflected in the take rate as we look forward on the take rate Theres, a little bit of room, probably to continue to move it up on the core product, but I think the biggest opportunity for US is it's really some of them.
I think we've been talking about Julia talked about today around boost and around demand generation and bringing entirely new pockets of support and service and growth to the table for creators.
And we know they have a interest in those things they have a willingness to pay for demand generation. They have a willingness to they have an ability to pay for incremental ticket sales.
And those would be the places where I would look we are looking for the most long term upside in the take rate. So it's not really about.
Pricing on the core product are big opportunities are really to touch more and serve more of the graders operating budget and most greater spend between 20 and 40% of their budget on marketing.
It's a very very sizable addressable market.
Right next door to the part of the market that were heard adjusting pretty profitably and with some real growth.
Okay. Thanks for this cycle.
Thank you Jay.
That concludes today's Eventbrite first quarter fiscal year 2022 earnings conference call. Thank you for your participation you may now disconnect your lines.
Okay.