Q1 2022 Live Nation Entertainment Inc Earnings Call
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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 first quarter 2022 earnings Conference call. Today's conference is being recorded following management's prepared remarks, we will open the call for Q&A.
Instructions will be given at that time.
Before we begin live nation has asked me to remind you that this afternoon's call will contain certain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ.
<unk> statements related to the company's anticipated financial performance business prospects, new developments and similar matters.
Please refer to live nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on forms 10-K, 10-Q, and 8-K for a description of risks and uncertainties that could impact the actual results.
Live nation will also refer to some non-GAAP measures on this call in accordance with the SEC regulation G. Live nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in the earnings release or website supplement, which also contains other financial or statistical information to be <unk>.
On this call the release reconciliation and website supplement can be found under the financial information section of live nation's website at investors Dot live nation Entertainment Dot 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.
Good afternoon, and thank you for joining us.
Momentum has picked up for all of our businesses over the course of the first quarter.
As a result, we have delivered financial performance greatly surpassed our previous expectations.
Of $209 million.
Back on the road in fan demand has never been stronger.
A reflection that live events remain a clear priority for consumers are socialized restart.
Ticket buying serves as a leading indicator to our overall business.
Taking a master's strong first quarter performance drove the company's overall profitability and shows how well our concerts and sponsorship businesses are positioned to deliver record results. This year.
Despite some markets taking longer to reopen the quarter was our second highest ever we're transacting with GTP, excluding refunds trailing only Q4 2021 with March being our highest transacted CTV months ever.
Primary ticketing, we're now benefiting from the 17 million new fee bearing tickets, we gained in 2021, which helped us drive transaction CTV for the quarter up 33% relative to 2019.
This quarter was also added seven new additional tickets through new contracts with venues as well as content creators.
Setting us up for ongoing growth this year and into 2023.
Our secondary ticketing GTP growth was even higher at 106% relative to 2019, driven largely by average retail ticket price up 20% relative to 2019, a tremendous span demand pushed up the market pricing.
Master gaining additional market share by effectively leveraging its team and linked partnerships across NFL NBA and other sporting events.
And the market continued growing at double digit pace, demonstrating high demand for live events as well as how much runway there is for continued pricing efficiently.
Sand demand and signing of new contracts accelerated even faster than expected this quarter reinforcing ticketmaster's enterprise platform for choice of teams artists and content creators are continuing to be the most effective ban marketplace.
Our sponsorship activity fully return to Q1, delivering financial results well exceeded 2019.
We're seeing growth across a number of dimensions expansion of existing relationships new categories expanded our breadth of partners and new AD units being created both onsite and online.
The number of strategic sponsors that generated over $1 million of revenue per year has risen by almost 30% since 2019 with their committed spend up 70% accounting for 80% of our total sponsorship revenue.
About 60% of this growth has come from three categories of particular priority over the past two years technology Telecom and purchase path integration, which is collectively more than doubled their sponsorship in 2019.
Much of our focus with brand partners is how we collectively elevate the fan experience.
We've had great success with this in recent years and so far this year through our partnership with Verizon We started powering our venues with cutting edge <unk> connectivity and are launching an initiative with snap to give artist augmented reality capabilities at shows and festivals.
At this point swatch of sales were up double digits relative to 2019, and we have a solid 90% of our plant sponsored for the year positioning us for continued strong financial performance.
The concert division, all leading indicators point to double digit growth in fan attendance at our concerts relative to 2019.
Approximately 11 million fans 10 of our shows in the first quarter compared to 15 in 2019. This was expected as we planned for limited concert activity in the early months of the year fill out for markets to open more.
More importantly, we continue to build our flywheel with over 70 million tickets now sold for shows in 2022 up 36 compared to 2019.
Committed show Count is up 44% through the end of April relative to 19.
US up for continued ticket sales over the year.
We continue to see the fans are showing up for the concert tickets for with attendance rates in the U S across all venue types of 2019 levels with no shows generally in the low mid single digits.
The industry continues to embrace market based pricing, particularly on the best tickets shifting $500 million artists for shows this year, resulting from a double digit increase in ticket pricing and reducing the price arbitrage in the secondary market.
At the same time in the U S. The average entry level price to get in and enjoy the show remains under $35 approachable for almost all fans.
Early reads on consumer spending at our shows across the U S and U K also indicate fans continue their spending when they get to the show.
We had 2 million fans attend shows that our theaters and clubs in the first quarter with average per fan revenue up 30% relative to 2019.
And we've had four festivals over the past few months totaling over 300000 fans with average per fan revenue up 30% also.
Looking ahead to the summer and the rest of the year. We remain optimistic that we are just getting going as all leading indicators reinforce record activity levels and financial results.
Ticket sales were at record levels in Q1 with momentum building over February and March.
We sold almost $20 million more tickets to our concerts. This year. So at this point in time in 2019 with large number of tours still to go on sale.
In concert fans are showing no sign of slowing down they are paying for the best tickets attending the shows.
Spending more on site as they create lifetime memories.
We're continuing to build venue nation, our platform of operated venues with a pipeline of 20 venues, including the recently opened Moody's Center in Austin. In addition to adding 38 more festivals this year.
Sponsors are looking to spend more this year on logging containment than ever and live nation scale and global platform is making us the partner of choice.
While the U S and UK have driven much of our activity over the past year. The rest of the world is now rapidly opening up <unk> financial performance for the quarter exceeded its 2019 results in both Latin America and Western Europe are expected to have record attendance for our concerts this year.
We continue to expect this just to be the start of our run the global addressable markets for concerts ticketing and sponsorship all provide a long runway for continued growth.
We have over 60 tours already under discussion for 2023, our earliest indicators of next year and great positioning for ongoing growth.
With that I'll turn it over to Joe.
Thanks, Michael and good afternoon, everyone given the unique situation in 2020 in 2021 Q1 of 2019 is the best comparison for us in terms of understanding our operations and key performance indicators. So while I will provide some commentary around our results relative to Q1 of 2021 most of our focus will be.
Relative to 2019.
Overall, our Oi of $209 million for the quarter was $361 million better than 2021 led by an improvement of $269 million in ticketing $66 million in sponsorship and $26 million in concerts.
This was our highest Q1 ever exceeding Q1 of 2019 by $94 million, which had been our previous record first quarter.
Let me give a bit more color on each division then I will give you more on 2022, leading indicators.
Continued shift towards more market based pricing helped grow GTD levels with average primary ticket prices up double digits for the first quarter relative to Q1 2019.
And then resale or average price increased 18%, while our overall resale GTD doubled compared to the first quarter of 2019, indicating that demand for the top seats across all live events continues to outpace efforts by sports teams artists and others to capture more of the full value from their events.
As the first effectively normal Q1 since 2019, we are seeing the digital tickets have now become the norm across five events with the NFL and NBA, leading the way with 96% of fans using digital tickets to enter games up from 53% in Q1 of 2019 more broadly 72 <unk>.
<unk> of our tickets globally, where digital in Q1 of 2022 relative to 33% in Q1 2019.
With this level of digital adoption, we can now accelerate our efforts to foster our direct fan relationships this year and into 2023.
Next sponsorship continue to ramp up with the reopening of venues and expanded online opportunities.
As a result, 2022, Q1 sponsorship and advertising AOI of $70 million grew by 75% relative.
Relative to 2019, Q1 Oi of $40 million this.
<unk> comes across both onsite and online each delivering record Q1 Oi the growth versus 2019 was driven by expansion of our online business new festivals that launched in the quarter and the addition of assesses brand partners.
Finally in concerts AOI was a loss of $49 million, which compares to a loss of $74 million in Q1 of 2021 and positive ROI of $5 million in Q1 of 2019.
As we indicated on the last call we planned for fewer arena tours in Q1, this year, which typically drives our first quarter performance, resulting.
Resulting in concert seasonality that will be even more Q2 and Q3 driven this year than has historically been the case.
For theaters and clubs they were on par in all up we are 2% better.
We haven't had enough volume on other outdoor events to have meaningful metrics, yet, but generally those venues had strong reopening last summer. So we don't expect any issues there.
In general the U S was ahead of the rest of the world, but the U K is now fully back to pre pandemic no show rates as well and we have not seen any evidence in any markets or any long term impact on our shows.
Michael gave you the topline on our first quarter average revenue per fan growth up 30% for both theaters and clubs and festivals.
For theaters and clubs key drivers include onsite concessions and Upsells.
And for festivals the growth was heavily driven by onsite concessions and increased VIP purchases.
All indicators of continued strong fan spending as they look to make the most of going to the show.
Finally, COVID-19 continues to have less and less impact on our concert schedule and by March in the U S. We cancelled only around 1% of our planned concerts.
As we look to the remainder of 2022.
Looking at our leading indicators through the end of April 1st.
<unk> bookings are up over 40% overall and up double digits for each amphitheaters arenas stadiums and festivals.
Second ticketing has sold 130 million fee bearing tickets for events this year up.
Up 26% from this point in 2019.
Of these 88 million tickets or for concert events, which is 40% higher than 2019.
Related to this we have $3 $5 billion in event related deferred revenue almost twice the level of Q1 2019. These are largely tickets that have been sold by Ticketmaster for live nation concerts, but the revenue and AOI hasn't flowed through yet and we'll do so over the course of this year as events happen.
On the sponsorship side commitments are up double digits from this point in 2019 and overall, we have more than 90% of our planned sponsorship net revenue for 2022 set.
On the cost side, we're obviously tracking closely cost increases associated both with labor and in general with supply chain challenges and inflation.
Costs tend to hit US primarily in the venues, we operate amphitheaters theaters and clubs and festivals.
For Amp of theatres and theaters and clubs labor is the largest factor given we have our venues in place.
Across this entire fan base, we expect our variable cost per fan excluding talent to increase by $2 to $2 50.
Relative to 2019.
This remains well below our average revenue per fan growth.
And so we still expect to grow average per fan profitability across our operated venues this year.
Festivals have a broader range of costs given the wider set of equipment and services involved in building. These events current projections are that variable cost per fan excluding talent will be up 7%. This year, which is well below our expected increase in ticket revenue per fan.
Helping offset all of these costs is the $200 million cost reduction exercise that we executed last year, which remains well in place.
A few other points on 2022.
We now expect the assessor will deliver full year results in line with 2019 levels is Mexico is fully active with most of their oi flowing through our sponsorship and ticketing divisions.
In light of the <unk> acquisition, we want to provide more guidance on a few line items below Oi, which impacted our earnings per share calculation.
First on depreciation and amortization, we expect the combination of these accounts to be roughly in line with 2019. The addition of a SaaS is offset by the impacts of our reduced investment in Capex and M&A over the past two years.
With the acquisition of assessor and anticipated strong performance of our festivals many of which are joint ventures, we expect noncontrolling interest expense will be roughly double 2019 levels.
We are projecting accretion to be about $150 million. This year again, the increase compared to 2019 is largely attributable to the <unk> acquisition.
As a result of the additional financing opportunities over the past two years, our interest expense is now roughly $70 million per quarter.
Finally in comparison to 2019, we expect income tax expense will grow in line with our AOI growth.
In anticipation of the growth opportunities ahead of us. This year, we continue to expect 2022 capital expenditures to be approximately $375 million with two thirds of this spent on revenue generating projects.
We generated $89 million of adjusted free cash flow this quarter and expect free cash flow conversion from AOI to be back in the <unk> for the full year.
We ended Q1 with $1 9 billion of available liquidity between free cash an untapped revolver capacity, giving us sufficient flexibility to invest in growth.
We are comfortable with our leverage with over 85% of our debt at a fixed rate.
Our average cost of debt is roughly four 3%.
This union as well in this interest rate environment.
With that let me open the call for questions operator.
Thank you at this time, we'd like to conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your hand.
Before pressing the star keys, one moment, please while we poll for questions.
Yes.
Your first question comes from line of.
David Karnofsky with J P. Morgan. Please proceed with your question.
Alright, Thank you Michael you've given a lot of great leading indicators for 'twenty two so I apologize to jump ahead, but you did mentioned that at least 60 tours in discussion for 'twenty three and I was hoping you could put some context around that how elevated would that number be kind of relative to what you might normally be looking at this early on in the way to kind of think through how much of that is sort of <unk>.
Backlog.
Continue to work through from the pandemic versus sort of just you organically increasing your footprint.
Yes. Thank you.
The 23 is really no backlog.
Two is the year, where we would have flushed out any reschedule tours from 2019 to 21 wherever 'twenty 'twenty three is kind of if you want to call almost back to business.
And yes, it's a very vibrant pipe.
I think we said at the Investor day.
I want to kind of scale back and look at the next five years, you can kind of look at what we can coin into 19, where we we looked at the industry growing at almost 10% a year on a on a compounded basis. We think the industry is going to be doing that again it's.
It's back to full growth.
High quality growth sector industry, and we think we tend to outperform the industry. So we look at 'twenty three will be.
If you want to call it a record year coming off of 'twenty, two and we think we're in for multiple record years of growth.
Okay, Great and then just on ticket Master I was wondering if you could just walk through some of the drivers of the strong secondary growth Youre seeing in particular, you mentioned share gains, whereas in the past I think we tended to think of market shares for you and your competitors is generally stable maybe you could just speak to some of the initiatives you are taking up the longer team level to kind of drive that higher and then just as a.
Follow on is there any update you can provide on the NFL relationship just given that is now extended to 2020.
Hey, David This is Joe I'll take it and I think the questions are related.
Start with the NFL, we entered a partnership with the NFL four years ago I guess.
That relationship was really technology, driven and it was a mutual strategy of figuring out how do we shift the industry to digital ticketing and how do we understand.
The entity enable relationships with our fans for the leagues for the teams as well as for Ticketmaster and Thats proven to be very successful and obviously coming out of Covid not surprisingly the NFL said whats. The next technology agenda, and we worked with them on deploying in Ftes and I said this is all.
Great.
To talk now about linking back up for the next five years. So we know we can work together and figure out what's the next technology unlock how do we continue to use technology is really it's the core of the relationship or the starting point of the relationship with the fans.
So that's what led to the renewal we're excited about it we think the NFL has been a great partner and we will continue to be so naturally as you do that we continue with ticketmaster to get smarter and smarter about the fan as well.
Lets us continue to use our alignment and our mutual interest with the teams in the league in terms of driving Ticketmaster share in the secondary so we're taking all the data we have all the information we're working with them on all of their assets to help acquire customers to use all the season ticket holder inventory.
To continue to drive our share and provide a great marketplace, a great experience for fans through buying those tickets.
The combination of all of those has led to increasing share.
Which as Michael talked about part of how we've doubled secondary in the first quarter relative to 2019.
Okay. Thank you.
Your next question comes from Stephen <unk> with Goldman Sachs. Please proceed with your question.
Great. Thanks for taking the questions to start out I think theres been a fair amount of concern on the macro front you touched on a little bit at the end of your prepared remarks, but I was curious if youre seeing any signs of consumers changing their spending habits, whether that's on the initial ticket purchase or once you get to the event venue.
When you.
Again, so what's turning out to be a pretty difficult inflationary environment any data points from the last few weeks I think would be would be helpful. There.
Yes, I think this is Joe I think all of the data points that we're seeing continue to be very strong look at our concert ticket sales as we look at March and April each of those months.
Ticket sales were up 20% plus relative to 2019, so through March and April I think we've seen some of these pressures the gas and so on for a few months now so not just a few weeks, but so we've seen no impact at all on.
On the concert ticket sales, we talked about the pricing see no impact on the take rate of those tickets.
And the <unk>.
On site spending the Aps again.
Seeing those up substantially relative to 2019, so no impact there so from all different angles that we've looked at it we have not seen any pullback in consumer behavior. I think that this continues to be part of people want to get out have a social life the spend on experiences.
Taking money away from spending on goods and a lot of what we do is we spoke to the $30 35 dollar overall average entry price for a ticket or $30 for clubs and amphitheaters.
He used to be a very affordable night out for those that need to be most conscious of that.
Thanks, That's helpful. And then I think in the press release, you mentioned some opportunities create new AD units on the sponsorship side, both onsite and online I was wondering if you could talk a little bit more about this opportunity and the new inventory how much of it you expect to create over time and whether that might help bring a new ad categories.
Well there is it is creating new AD categories, we've talked about that in the in the technology space in the Fintech space throughout the whole purchase path integration all of that is creating new categories and thats whats driving even this year a lot of the growth in the sponsorship business.
Michael talked very explicitly about what youre seeing on site two great. Examples of how technology is being used to enhance the live experience with Verizon putting in the infrastructure with the <unk> connectivity and with snap is a great product development product design organization coming up.
Some ways to use their products and augmented reality to enhance the onsite experience. So really on the onsite piece. This is all about how do you make it better and better fan experience and we've got great brands partners that we work with are looking to do more and more to make that possible and then as we continue to work on.
The ticketmaster marketplace tie that in with the increased data that we have from the digital ticketing that we were just talking about how do we create more tailored AD units and.
And make more opportunities for more sponsors to connect with those fans as well.
Great. Thank you.
Your next question comes from Brandon Ross with light shed partners. Please proceed with your question.
Hi, Thanks for taking the questions just wanted to build on.
Macro concern at the last analyst kind of laid out.
Insofar as inflation and gas prices are concerned I think the results speak for themselves.
Investor Pushback has now moved to the possibility of recession and how that would affect you given.
How deeply consumer discretionary you are how do you think about your positioning.
If a recession scenario played out.
Your company and the industry looks very different than it did in 2010.
When we lost last saw that kind of macro pressure can you kind of compare contrast.
And I know you're booking those acts for next year kind of far in advance how much flexibility is there in those contracts.
Okay.
Sure Brendan starting Joe go ahead.
I'll start and then Joe can jump in I mean.
We always think as one of the great advantages of our business as the pricing is variable.
Alright, so there is no set cost of goods cost of goods.
And by the artist if they go on the road in there they are variable so.
That makes our products something that can move around on pricing, whether its taken advantage of the front row pricing thats underpriced or moving the total ticket price down in the backend of the house or reducing the overall price of the ticket.
To meet the market and the demand. So historically this is an industry that's been fairly recession proof.
<unk> as we've seen this is still one of the top three entertainment choices for consumer.
Most affordable.
You may not in a recession take that trip you may not have a <unk>.
Large.
Our purchase of a dishwasher, but you will still go down to the amphitheater or the club with a theater and have a great adventure and a night out further.
The value. So we have always seen historically over time, the consumer still looks at the concert is a high value.
But even during a recession if there was a pullback this is something they still can't afford to do and it's actually a great alternative to a higher priced maybe travel package. So one we think it is a still a much.
A very affordable option for consumers and pricing will continue to be something that we can adjust if we see any pullback artists are always have one mode of the same as ours fill the house get everyone in the house.
So right up to the hour of the show we always look at variable of dynamic pricing options to say, how do we get the houseful.
Joe.
And just to build on that first is we now have.
The level of information that is we didn't have even 10 years ago and almost no industry has called the secondary market.
To Michael's point on pricing flexibility, we have the benefit of knowing real time, what is market pricing.
So.
One level you can make about $1 billion plus of price arbitrage that exists on our tickets. That's the first wall of defense and any.
Any recessionary environment as that pricing comes out first before our pricing is even impacted and we have a great read on what is the supply demand dynamic to be adjusting as we go along.
And then along with that again, you have again, the macros of the shift of spend from experience from goods to experiences, which is continuing you have the wealth buildup in the biggest gains in terms of the <unk>.
Income with a lower quartile so you've got good revenue there still you've got affordable entry prices that we've talked about on the tickets. So we continue to think that as long as we stay focused on what is the value perceived by the fan stay aligned with that we'll be able to bring the axe out and sell that.
<unk>.
Great and then for the first time that I can remember at least you called out.
The per caps at Peters clubs and festivals and so that's something you usually talk about that that's usually the amphitheater opposite opportunity can.
Can you kind of.
Help us understand where you stand relative to the amphitheater opportunity on per caps at those other owned and operated venue types and how much upside there could be.
For investors in that area.
Yes, we called out the theaters and clubs in the festivals this quarter because we knew that all of you guys were going to want some data on what's going on with the fans onsite.
It would be in the first quarter, we don't really have amphitheater data yet.
So we are trying to use what data we could have on our other buildings the theaters and clubs and festivals and then also to tie that back to any questions on <unk>.
<unk> costs. So that was the purpose of doing that was to give everybody comfort that we had.
Still a very strong onsite consumer behavior, we don't have the data on amphitheaters, yet for the summer, but again, taking that as a leading indicator.
We feel good about it.
And we think there's a long runway and we talked in February about how we still think that there is 30%, 40%, 50% increase in our onsite spend as we do a better job on some of the VIP and premium offers and do a better job of how it is we're marketing and selling opportunities.
Sell opportunities on site.
Alright, Thank you very much.
Your next question comes from Steven <unk> with Cowen. Please proceed with your question.
Yes. Thanks for the question Joe on Latin American expansion can you just unpack some of the assessor guidance of delivering full year results in line with 2019, a bit more I have.
From my calculation is about like $500 million in revenue and $85 million in EBITDA is that correct is that sort of the baseline and then typically you guys have been able to organically grow on your M&A, 70%, 80% plus.
The first couple of years after consolidating that asset is that a similar type of growth that we should expect as analyst in our model.
So I guess, let me, let me break it into a couple of pieces there.
So.
This year, we expect both Mexico, and Latin America broadly to do well.
I think that it would be a very strong Latin America year relative <unk>, even without a SaaS. So having assessed the only makes it all that much stronger.
Your numbers aren't terribly far off you have to kind of triangulate, but.
They are within the general ballpark of what what our numbers would be for 19.
And therefore for 'twenty two I don't think were ready to start declaring the specifics of what <unk> is going to be in 'twenty, three or 'twenty four yet.
Give us a little time to get there with them and we will keep you updated on it but we do see Mexico and Latin America more broadly certainly is one of our great growth drivers over the next few years.
Okay, and then thanks for that.
Concerts, both concerts and Ticketmaster just to remind you that it's a huge huge upside in Mexico, and ticketing and that we were only a 30% owner of <unk>, Mexico and now now that we own. It we have already had the team down there we are upgrading their still living on a green screen with not much feature functionality, so big upside secondary.
<unk> et cetera to add in Mexico and throughout Europe . So.
The big growth opportunity, both in concerts sponsorship and ticketing.
Okay. Thanks, Michael and just one more on modeling questions for the rest of this year and guidance.
Sort of as you have these two obviously the big rock in Rio Festival is scheduled this year that had an outsized impact I believe on the sponsorship segment in 2019.
How should we be thinking about that impact on the P&L. This year and then also this is the fourth consecutive quarter now with ticketing AOI margins above 40%.
Is this.
And believe it is probably just driven because most of the business in the U S and UK right now but is that something.
We can expect throughout the remainder of the year or do you expect that to moderate closer to the mid <unk> as the year progresses.
In terms of rock in Rio I think we've got that again this year. So I think it would be consistent with 19.
In that regard.
In terms of taking math. So you are right its continuing to do great. The margins are flowing through it is benefiting from the U S. Waiting if you will right now.
But with the costs taken out we think of.
This year will probably be a high thirty's.
Margin when all is said and done and you get some rebalancing with some of the international which has a lower margin business.
Alright I appreciate it thank you Joe Thanks, Michael.
Your next question comes from David Katz with Jefferies. Please proceed with your question.
Hi afternoon, Thanks for taking my questions.
There was some earlier discussion around.
<unk> consumer trends, if I recall at your Investor event, there was a fair amount of talk about.
Utilizing the premium end of pricing in platinum and other other kinds of high Ed.
Can you maybe unpack the.
Price ranges on things on Joe I know some of your comments were.
Yes, more towards the average or even the value customer are you seeing any change at all positive or negative at the at the high end.
Okay.
No.
The overall double digit increase was driven by the high end.
Across our major stadiums arenas amphitheaters I think we've probably about double the number of tickets that go into what we call the platinum or market based pricing so.
More than anything else is probably more of the tickets are getting <unk>.
Market priced or closer to market price and then depending on the artist and to show. Yes. It's also flexing upward from where it would've been historically as we try to get closer to the true market price.
Even though is doing this.
You can tell by our commentary about the size growth.
The secondary we've helped moved $500 million of the artist this year, but I think the second area has grown more on our ticket so.
It's not that we're out there capturing every penny even while getting these increases this year, but we're continuing to try to move in that direction.
Understood and if I may follow up in a different direction.
It's the first time, probably in two and a half years that we would even raise it.
But how are you thinking about sort of leverage and cap structure and how much cash versus how much debt.
Is that.
See a pattern going back a number of years, but any change in how you might think about that going forward.
Well I think one of the things that gives us a lot of comfort is that over 85% of our debt is fixed rate. So we're sitting at four 3% and a pretty fixed.
That debt structure.
With short term increases having a fairly limited impact on us. So I think we're feeling fine about our.
About our total debt level.
Our total coverage based on our AOE I think continues to be very robust.
We don't have any concerns about being able to grow in front from an NOI standpoint into our debt.
Okay. Thank you.
Your next question comes from Ben Swinburne with Morgan Stanley . Please proceed with your question.
Yeah.
Thanks, Good afternoon I have two questions first just on back on Ticketmaster pick you guys talked about her head and there will be 7 million new fever.
C bearing tickets one in the quarter.
<unk> thousand 14 last year I mean, it's really strong in terms of adding new business can you talk a little bit about.
Any context to what kind of business youre, adding U S versus international.
When you type in.
And what's driving that and what are you seeing any increased competitive behavior, we sort of hear about competition on the primary side, including on price, but it doesn't seem like it's affecting ticketmaster's share gains at all so just be interested in some more color around the success, there and whether this can keep up.
Yes, I think the $7 million story is the same as the $17 million story. When you are at this scale. It's it's everything.
International has been very strong which has been driven by the dramatic improvements in the international product.
We've had as we moved to a single integrated platform.
And that is further differentiated us, particularly internationally relative to where we've been at the same time. We've had continued success in the U S and many of the discussions are product driven the confidence that working with Ticketmaster youre only going to have the best enterprise products and the best marketplace today with a level of <unk>.
<unk> that we're making.
The scale of the dollars being spent to build new product is unparalleled in its commitment to continuing to enhance for the teams and the artists.
And the fans what their experience is going to be.
You always have price pressure have price spread price competition and everything that's there is no new news there. That's what you always have its always your job as a company to figure out how do I continue to create my product so that it's differentiated so that <unk>.
It is the price and then how do I continue to get more efficient and make money in other ways off my flywheel. So that overall aggregate economics continue to improve.
Nothing new there.
Got it and then.
Just back on the macro I know.
Everyone's concern given some of the other earnings results. It seems this quarter.
Your sponsorship business, Joe I think that's it's largely sort of longer term contracts that you might have some kind.
Kind of display advertising in there we've heard from some of the big digital AD players businesses have softened here in the second quarter can you just remind us sort of how long duration that business is for you guys and if youre seeing any signs of softening in any part of your sponsorship business just given what we've heard from other companies or we're not.
And any signs of softening Michael gave you some of the numbers on these on the large relationships that we have a $1 million plus relationships that have been our focus on growing the number of those relationships. The breadth of assets that we provide to them and just how much of our sponsorship base. They represent so they are coming at it from a multi year.
Multi asset, saying, we want to be present at the festival at the amphitheater. We also are going to have an online presence. It's a much higher level of integration and just the simple AD buy would be with some of the other players out there. So we're not seeing that impact at all.
Yeah.
Thank you.
And then just to jump in also I know you had brought it up also our no show rates.
I know that's always been something.
Some rumor mill up there, but as we stated in our release we're seeing.
No challenges that all people are showing up to the shows we are showing similar to 2018 19 year regular low digit no show rate of people that don't make it to the show but.
Back to normal people come and jump.
To those shows no no issues at all in terms of showing up.
Yes, I saw that thank you Michael.
Yes.
Your next question comes from Ryan Sundby with William Blair. Please proceed with your question.
Okay.
Hey, guys. Thanks for the question.
You mentioned 20, new venues in the pipeline and 38 new festivals.
Starting on the vessel side, it sounds like coming from our SaaS.
Many of these are maybe first time and were you able to.
Pick up.
Large number here first of all Thats struggled during COVID-19.
And then on the venue side, how should we think about the timing of those openings.
And maybe the size in terms of overall tank capacity that could add.
Yes.
On the festival side, we have a few great festival companies.
Europe and America.
And part of the success of live nation that has been about organic growth continuing to grow the business.
Finding.
New market shares new global entry points and festival has been a big part of regenerating our business. So we're always looking to add every year and let our festival companies launch new ideas.
And this year, we've had some great success, one of our young companies see three it's been a business with a strong festival promoted Jeff Schuman with launch day. When we were when we were young festival out of Vegas, We hope to sell 40000 tickets, we sold over 160000 tickets in Vegas.
Huge success in a brand New festival. So we love those stories, we encourage all of our festival entrepreneurs to take swings every year, we usually have a 50% success rate some of those go on to be great brands. Some.
You fail fast and move on so 38 was the indicators I'll. Let you know we have a large 100 plus portfolio of festivals around the world.
Like amp of theatres and venues there are high margin business, because it's a sponsorship food and beverage and not only do we look to acquire and bolt on when we can but we are a big machine of organically created new festivals.
Majority of our growth this year, we're back to.
Full speed on letting our entrepreneurs go swing and create some new revenue for us.
Great.
Thank you.
Venues, Joe Joe can jump in it's a similar story, we're just starting continuing vendors would be one that we didn't really slow down during COVID-19 because they have a longer lead time. So if you look at our venue nation Division that we highlighted in the Investor day.
And kind of our continued focus around our 300 plus venues that we operate around the world I think we said we have probably 75 in the pipe and we annually open up probably about 20, new festivals around the world.
So we're on plan continuing to move on that.
Breast of front to continue to expand on a global basis Club theater and the theater, we just opened a beautiful arena in Austin last week.
Record sales record results proud of that one.
And more to come so continued.
<unk> and phasing throughout the year as we've been doing historically.
Okay, Great and then.
It sounds like 72% of tickets for digital in Q1 versus 33% and 19.
I know most of the tenants this quarter, though came from the U S and U K, which I assume.
As you rollout so I guess, how should we think about additional penetration moving forward.
And maybe can you talk about bigger picture, if youre starting to act on that data that you're collecting.
Yes, Youre right. It has helped a little bit I still think we end the year probably around 80% globally.
Lot of this has to do with not just the infrastructure on our end, but rolling out the access control.
New systems that have to get deployed four for each of these venues and doing that on a global basis, just with some of the supply chain in terms of getting those pieces in place will take a little bit of time, but we're making great progress and we're already acting on the data.
You saw some of the information yesterday looking at how we're using it for more effectively targeting the marketing. So when you get your email from live nation on what concerts, it's much more tailored to you than it was in 2019 as a result of click through rates and the buy rates are up substantially and then as we get into the summer.
We have people going to our operated amphitheater has our operated festivals. We expect it will be able to use that digital connection to more effectively market upsell connect sponsors with fans. So we will see all of that activity beginning.
Much more earnest.
And this year.
Thank you.
Your next question comes from Matthew Harrigan with benchmark. Please proceed with your question.
Thank you too conceptual questions firstly.
It feels like it's a nice digital memorabilia call format and experience versus something that someone buys at Sotheby's and its right in your wheelhouse. What innovation are you seeing with the NBA. This season and the NFL and is there a way to really personalize it even more and have more variety.
And then secondly at your Investor Day, you talked a lot about hyper slicing nomenclature sounds very Elon Musk does that also helps the mountains ability to Mexico with assessor and even some of the European markets. I know you talked about that really keeping the U S around 40% of the Tam, but some of those other large.
As your markets. It seemed like you could apply that concept with local out acts over a period of time. Thank you.
Yeah on the NFC I think I think we're deep into discussions in product development and testing.
Like all of the leagues are doing we have a dual lens. If you want to call. It on ticket Master side, we are working in tandem with the NFL and NBA on me.
Mid teen all of the tickets, we did all the Super Bowl tickets through Ticketmaster that were NSP souvenirs, we're doing it for the teams with working with Mark Cuban and others. So on the Ticketmaster side, we're getting to see all of the best versions of what some sports teams and brands are doing within Ftes on the concert side, we've worked on our artist management Division.
Our artists and seen some of the versions that Theyre looking at whether it's been the meta versus whether its a fortnite or whether it's a song.
So we're looking and learning on that side and on the live nation side. The NFC is really just an extension of what someone mentioned earlier the digital ticket.
Most important thing for us overall is to have identity tied to the ticket. So so moving from a PDF ticket, where we knew nobody it had no contract. It had no rights. It had no carry on value moving to a blockchain digital NFC ticket in general.
That just opens up the doors to first having identity tied to the ticket. So we can have a better conversation with you and we think in ft to that ticket, we can create a community of value and look at it.
<unk> to add value to you on an ongoing basis, if you've opened up and been part of the live ticket stub hub NFC to date. So we're.
We think its great opportunity to add more value to the relationship with that purchaser and and we're going to we're going to keep experiment ideas on that front. The second question I didn't quite even though I didn't hear it well enough Joe can jump in Oh I'm sorry.
Yeah, No I got it alright.
Yes, so on the hyper local strategy that we've been talking about absolutely applies throughout Europe throughout Mexico, Latin America all of the markets.
We're going into each country, we're establishing a beachhead getting some scale leveraging that scale to then say what are each of the specific markets that we can go to.
And expand the operation. So that's a core part somebody was talking earlier, how we when we make the acquisition we grow it substantially.
With Germany, when we grew and they were operating in two cities and then selling off the concert and all the other cities.
There are 10 12 cities in Germany, where you could easily have the population to route your tour through so that became the focus and that's how we grew that business. So we'll be following that playbook.
Globally. It is a large part of when you look at the Tam and why the Tam is so large it's because all of that demand exists through so many different markets not just the ones, where we're historically bringing shows too.
Great. Thank you.
Your final question comes from Barton Crockett with Rosenblatt Securities. Please proceed with your question.
Okay, great. Thank you for taking the question.
I wanted to ask a little bit about the 16th tour marker booked already for 2023 wishes.
Sounds compelling, but it'd be great to have a little bit more context, and I was wondering if this might kind of get at it can you give us a sense of at this time of 2019, how many tours. If any did you have already booked for 2021.
That might be one way to look at it and secondarily, if you've got 60 towards already booked for 2023, how many do you have booked right now for 2022.
Okay.
Okay.
I can give you generalities to make you feel good that <unk> going to look good.
Obviously youre trying to get at so I think if you look at 'twenty.
To your point on how many do we have booked or how many would be reviewing.
Our historic year at this time period.
We would be about double.
Our historic market would be if you wanted to use that as a basic line. So so 60 would be a fabulous number to be talking about this time of year for AG for a next year activity.
So that's that kind of gives you.
Kind of a robust feeling of whats what 'twenty three we'll look to be.
Okay and switching.
Switch gears, a little bit on the recession question.
Back in the last kind of the great recession of late on Idaho Tag.
Our concerts and your experience at live nation more of a lagging indicator or leading indicator I would guess lagging and so if there is a recession impact you might be the last to feel it but I was wondering if you had any thoughts about that.
Yes, it was a lagging indicator didn't hit till 2010, we had it for one summer.
And I think we had a lot less data on the market than we have now I talked about the secondary market and how that provides such great transparency today into the specific supply demand dynamics the pricing not just in the front of the house, but through the whole building. We didn't have that back then so we were.
Making a lot of decisions a lot more blindly.
So we have better information, we're set up to be much more nimble in terms of how we respond to that information.
And again that was the one year out of not just the last recession, but if you look over the past 30 years at a handful of different recessions. It was the one year when there was there any decline in our business.
Okay. That's great. Thank you.
Ladies and gentlemen, we have reached the end of the question and answer session and I'd like to turn the call back to Mr. Joe Berchtold, and Michael Rapino for closing remarks.
Alright, everybody. Thank you have a great summer and we'll talk soon.
This concludes today's conference you may disconnect your lines at this time. Thank you all for your participation.
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