Q3 2022 Vivid Seats Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Good morning, and welcome to <unk> third quarter 2022 earnings Conference call. Following management's prepared remarks, we will open the call for Q&A I will now turn the call over to Kate catalysts.
Good morning, and welcome to the state.
Third quarter 2022 earnings conference call.
I'm, Kate coupled head of Investor relations activity.
Joining me today to discuss the results are.
Dan <unk>, Chief Executive Officer, and Larry Seay, Chief Financial Officer.
By now everyone step backs up the company's third quarter earnings press release filed earlier this morning.
We also provided supplemental earnings slides.
The press release and earnings slides are available on the Investor Relations page of <unk> website at investors doctors at state Dot com.
During the course of this call management may make forward looking statements within the meaning of federal Securities laws.
These forward looking statements are subject to the risks and uncertainties as described in the company's press release and other filings with the SEC.
On today's call, we will refer to adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures provide useful information for investors you'll.
You'll find a historical reconciliation of adjusted EBITDA and adjusted EBITDA margin to the corresponding GAAP measure in the earnings press release supplemental earnings, but in our SEC filings.
Now I would like to turn the call over to Stan.
Good morning, everyone and thank you for joining us today.
I'm excited to discuss our third quarter results and another solid performance from the Vivek it's team at.
The momentum we've seen in our business has continued and we've now set quarterly records for both marketplace <unk> and revenues for the last six consecutive quarters.
These results are a testament to our powerful technology platform and our team's ability to capture industry strength with agility.
We continue to enhance our unique offerings to reinforce our long term strategy of acquiring and retaining customers through strong product and service differentiation, while making targeted investments to foster brand awareness and loyalty. This morning, I want to share an update on the business and our strip.
<unk> progress before turning it over to Larry to discuss our results and financial guidance in more detail.
To begin with I'd like to remark on our first year as a public company, which is a milestone we just passed this October .
It has been an incredible year for <unk>, we reported record quarters capitalized on strong live event demand with strong execution and furthered our long standing track record of growth and profitability.
Next I'd like to highlight our recent brand efforts.
In September we launched a new integrated brand campaign, highlighting vivid seats reward and vivid picks.
The real rewards for real fans campaign launched with content across paid owned and earned media and with curated for category reach and the targeted recruitment of high value audiences.
This campaign highlights one of the key differentiators of our brands vivid seats rewards connecting vivid seats with the number 11 and driving awareness of the key perk of the vivid seats rewards program the free 11th ticket.
Most notably with this campaign vivid seats is the first brand ever to sponsor a bonus 11th play on the iconic ESPN Sportscenter top 10 series and features homepage takeovers with our brand partners.
Our recent brand campaigns contract to our initial brand push during the fourth quarter of 2021, which focused on increasing mass market brand awareness.
While 2021 brand campaign, indeed corresponded with a double digit percentage increase in awareness, we have achieved more significant and sustained increases in awareness with more targeted initiatives. There are many of our refined efforts in channels and frac bands across some of these channels have proven to be too.
Times more likely to be aware of vivid seats and two to three times more likely to consider purchasing from vivek seats.
As we look to drive more awareness with high value live event ban we continue to expand our brand partnerships with category endemic media outlets such as our recent partnership with Bleacher report.
I'm also excited to announce that we recently finalized our partnership with the New York Post and are looking forward to launching that over the next few weeks.
Lastly to target younger sports and music fans, we are building on our cultural cachet through Influencer marketing and collaborations.
At <unk>, we are focused on building customers for life and our data and ecosystem are at the center of that effort.
Our dynamic marketing tech stack and just multiple data streams goes well beyond transactional data and creates a powerful unified customer profile, where.
We're smarter about the customer than ever before and we surgically prospect the most valuable segments through programmatic channels and triggered communications.
Consumer preferences, and propensities illuminate the best action to drive lifetime value through continued engagement and purchase activity via vivid seats and vivid picks.
We are pleased to report that our customer repeat rates are trending higher across event categories, indicating that our brand and loyalty efforts are working we will retain the optionality to invest in highly targeted brand channel to amplify the initial traction that we are seeing.
Ultimately, we expect higher repeat rates to yield significant margin leverage.
That said live events are a low frequency category and it will take time for new cohort of loyal customers to make repeat purchases and drive leverage.
On the seller side of our marketplace, we continue to attract and retain sellers with our industry, leading technology offerings and excellent customer service.
Professional ticket sellers use an ERP to manage their inventory and we are proud that skybox is their most widely adopted ERP.
Professional sellers continue to migrate to skybox with over 110 sellers added thus far in 2022.
Our first party skybox data offers <unk>, a uniquely thorough and real time picture of the live event industry, we utilize our data advantages to fuel our marketing engine and power our marketplace flywheel.
Moving on to the consumer we continue to see healthy demand across categories and it's clear that live events are resonating with consumers as they continue to shift wallet share from goods to experiences.
In Sports Minor League baseball has enjoyed a family friendly resurgence and our minor League baseball gross order value is now eight times 2017 levels.
In music festivals appear more popular than ever and so far in 2022 vivid seats has already helped fans attend nearly 150 more festival events than in 2019.
To capitalize on this trend this year, we launched the Lucky roller and interactive Vivek <unk> brand experience at popular music festivals like Coachella bottle rock volatile loser and Austin City limits.
We continue to see encouraging changes in consumer purchasing patterns.
Specifically MLB disclosed that 2022 regular season baseball attendance was down 6% versus 2019. Meanwhile, vivid seats MLB orders have increased significantly. This data is supportive of more inventory flowing to the secondary ticketing market as a consumer preference continues to.
A shift from season ticket packages to more flexible buying.
As we look to 2023, we're seeing positive indications of a robust concert calendar artist often announced their tours for the following year during the fourth quarter.
In the third and fourth quarters to date, we've already had exciting tumor announcements from top artists, including Taylor Swift George Strait, Ed Sheeran, Blink 182, and <unk> company.
On the product side in the third quarter, we continued to expand our offerings to engage with and reach new live events fans.
We introduced new sports categories within the vivid <unk> app, including WNBA tennis, UFC and F. One we are currently in the midst of our first NFL and NBA season, with an integrated vivid fixed product and are still early in unlocking value across our platform.
Shortly after the third quarter ended we've reached an exciting milestone to support the ongoing growth of our business and to attract retain and foster talent. We moved our headquarters to the historic Marshall Field building in downtown Chicago. The New headquarters is not just an investment in Chicago is growing tech sector.
It's an investment in <unk> current and future employees, which will support a scaled workforce and hybrid work model with shared and collaborative workspaces.
As a business we are passionate about enabling fans to experience. It live and we are intent on doing the same for our employees with our new office.
Turning to the competitive environment throughout the year, we have continued to see ramping and now unprecedented pressure from competitors eager to regain past position or obtain scale, putting near term pressure on margins.
We remain confident and enthusiastic that our strategy to invest in differentiated products and services such as Vivek picks Skybox, and our award winning customer service increases customer lifetime value and where we see unique opportunities to enhance our strategy, we intend to continue making investments that Matt.
<unk> is the long term value of our customer relationships.
Our focus remains on driving long term shareholder value by making both the right short and long term investments and strategic decisions.
One of those strategic decisions was to become a public company and augment the levers available to us.
Beyond increased customer trust and brand awareness inherent to a publicly traded company. We gained an invaluable investor and partner in Todd Bully, who has continued to provide significant strategic benefits to our business with these connections in both music and sports, including Rolling stone for asking that.
Rogers, the Lakers and now Chelsea within the English Premier League Importantly, we also strengthened our balance sheet to a position where cash exceeded gross debt and were able to immediately deploy equity capital to expand into an adjacent category daily fantasy.
Being public with a healthy balance sheet continues to provide the flexibility to increase growth and make investments that drive long term shareholder value.
A year later, it's clear that the strength of our business reflects the power of our differentiated model and our unique value proposition.
Our ability to capitalize on the strength of the live events category, which is benefiting from both near term and long term tailwind and demonstrating resiliency to recessionary factors continues to drive our success.
With that I will turn it over to Larry.
Thank you Stan.
I'll begin with a discussion of our third quarter trends and results before turning to our updated outlook for the remainder of 2022.
This quarter, we lapped very strong results from the third quarter of 2021, when we set multiple records by capturing exuberant if reopening demand.
During the third quarter of 2022, the live event demand environment remained healthy and we are proud that David seats continued to set new records for third quarter marketplace <unk> revenues.
And once again achieved our highest quarterly total marketplace orders ever.
Meanwhile, David seats remained highly profitable and generated $28 million of adjusted EBITDA, while continuing to invest in our differentiated platform.
Our third quarter 2022 marketplace <unk> of $782 million increased 10% year over year, driven by a 9% increase in total marketplace orders, while average order size of $304 increased slightly.
We view 2019 is a better baseline in 2021 for trend line due to pandemic impacts throughout last year.
In the first half of 2022, AOS increased 12% relative to the first half of 2019.
In line with the 3% to 4% annual CAGR, we have seen historically.
And then in the third quarter of 2022, Pos increased 7% versus Q3 2019 with the deceleration primarily driven by strong growth in select lower AOS categories.
<unk> and some mix shift.
Later, MLB playoff timing with the playoffs, primarily occurring in Q4. This year also contributed.
Okay.
We continue to see robust consumer demand this quarter with AOS for our top 50 artists by <unk> up 14% versus Q3 2019.
And our AOS for top 20 artists up 19%.
Our third quarter 2022 revenues of $157 million increased 12% year over year and our take rate was 16, 7%.
Our take rate, which is calculated by dividing our marketplace revenues by our marketplace <unk>.
It was consistent with historical levels when considering the impact of our loyalty program, which is accounted for as a reduction to revenue.
Meanwhile, cancellations in the third quarter were roughly flat on a sequential basis and substantially lower year over year.
We generated $28 million of adjusted EBITDA in the third quarter at an 18% adjusted EBITDA margin.
Adjusted EBITDA margins were lower on a sequential and year over year basis due to higher marketing expense.
Increased competition in performance marketing channel.
In tandem, we ramped targeted brand investments to retain users and increase lifetime value.
Meanwhile, marketplace gross margins were stable and G&A expense net of EBITDA adjustments with sequentially steady despite revenue growth.
Exceptional margins from the third quarter of 2021 benefited from a lean pandemic sized cost structure.
<unk>, who were slower to seize upon the reopening.
After returning to scale incurring public company costs, and making deliberate brand investments our third quarter 2022 margin performance should be contemplated within the context of our full year 2022, adjusted EBITDA margin guidance provided last quarter, which was approximately 20%.
We closed out the third quarter of 2022 with $274 million of cash on our balance sheet, which slightly exceeded our gross debt balance.
Cash from operations has been slightly positive year to date, which is less than our normal EBITDA cash conversion due to several nonrecurring items previously discussed.
Including sales tax payments.
Our next door credit redemptions in.
And the normalization of seller payables as postponed events finally occurred.
We expect our business to return to meaningful cash generation in 2023.
As a reminder, we have low levels of interest expense and Capex and as we grow working capital is typically a positive contributor to cash flow as we receive payments from our buyers before remitted corresponding payments per ticket sellers.
During the third quarter, we deployed approximately $3 million to buyback roughly 400000 of our shares at a volume weighted average price of $7 65.
As of the end of Q3, approximately $37 million remains under our buyback authorization.
We may continue to selectively repurchase shares went out as an attractive use of capital while balancing the need to maintain sufficient trading flows.
We view our sizable cash balance is a significant asset that provides us flexibility to make strategic investments in ticketing and adjacent areas as compelling opportunities arise.
Turning to our 2022 financial guidance.
After raising our marketplace year over year revenue guidance. After both our first and second quarter results, we are raising our guidance again this quarter.
The midpoint of our new marketplaces, <unk> and revenue guidance is more than 10% above our initial guidance.
Healthy demand that we saw earlier in 2022 has continued.
And downside scenarios for Covid variant research into <unk>.
<unk> decreased consumer discretionary wallets have not materialized in our business.
Yes.
We now anticipate 2022 marketplace <unk> to be in the range of three five to $3 2 billion in.
In 2022 revenues to be in the range of $580 million to $595 million.
With both metrics more than 30% higher year over year at the midpoint.
Our 2022, adjusted EBITDA guidance is unchanged at $110 million to $117 million.
With less than two months remaining in 2022, our updated guidance range reflects our policy to remain agile with the competitive environment.
With continued strong demand supporting an increase in marketplaces, <unk> and revenue guidance, we are maintaining adjusted EBITDA guidance as we continue to invest for the long term.
Specifically, where we see opportunities to continue winning customers, we'll do so.
Unlike competitors with heavy debt loads are subscale reach does it can afford to be both profitable and opportunistic.
Our scale clean balance sheet, and cash generation as well as our differentiated value proposition to buyers and sellers give us a right to win in the long term and we will continue making the necessary investments to ensure long term success.
Okay.
Our guidance range continues to contemplate potential scenarios for demand.
While our record results through the third quarter would imply recession resiliency live events are nonetheless, a consumer discretionary category that may be impacted a consumer wallets are stretched further.
Similar to Stan I'd like to reflect on what our team has accomplished in the last year since becoming a publicly traded company.
<unk> scaled rapidly to capture pent up demand coming out of the pandemic and delivered record results.
We accelerated our trajectory through excellent customer service to both buyers and sellers.
<unk> Opportunistically utilized our digital marketing prowess to capture industry strike.
We are seeing initial traction on our brand and loyalty investments with higher repeat rates across different categories.
We look forward to what we can accomplish as a team during our second year as a public company.
Even so after an exceptional first year it would be prudent to expect reversion towards our longer term growth trend line, particularly in the face of an uncertain macro environment.
To recap demand for live events remains healthy and resilient in the third quarter.
<unk> converted industry strength to strong results, while remaining highly profitable.
With that I will hand, it back to stand for closing remarks.
Thanks, Larry in conclusion vivid seats continue to set records this quarter and I'm proud of what our talented and committed team accomplished.
We are well positioned and confident that we have the right people product technology scale and balance sheet to win in the long term, we look forward to discussing our strategy and outlook for 2023 on our fourth quarter call and with that operator, I will open it up for questions.
Thank you.
Yes.
As a reminder to ask a question you will need to press star one on your telephone.
We ask that you limit yourself to two questions. Please standby, while we compile the Q&A roster.
Our first question comes from Marine rips with canopy.
Canaccord Genuity your line is open.
Good morning, and thanks for taking my questions and congrats on strong results here can you maybe just talk about what kind of sort of macro backdrop and consumer behavior is embedded in your Q4 outlook and have you seen any signs of deceleration. So far in Q4 from what you sort of saw in Q3, and then I have a quick follow up.
Yes, I think from a guidance philosophy standpoint.
Nothing has changed where we're trying to capture.
Potential range of scenarios.
I think.
Prospects on the Covid related meaningful slowdown has certainly diminished now that we've had.
A number of.
Unaffected quarters in a row.
Alongside that I think the prospects for potential impact of consumer softening feel like they are increasing.
Despite not having seen it in the numbers today.
As we think about.
That overlay on Q4.
I'd say a couple of things one we're now through the MLB season, with MLB playoffs, having a pretty meaningful impact.
Our Q4 <unk>.
There were technically more games because of the shift in format to adding more gains in the wild card round.
Were many fewer than normal championship series games, and so there is a bit of a headwind in the MLP world.
And then beyond that I think November and December are really important months in the concert realm.
Track on sales, while Theres been a couple of encouraging ones and there are some rumors slowing at this point I think it's a little too early to call it and that'll be a big determinant of where things shake out per quarter.
Got it that's very helpful and can you maybe talk about any early takeaways from the latest brand campaign as well as additional color on the 11th Influencers. The company is partnering with to promote the campaign.
Yeah, sure Hey, Maria.
Look I think we're really excited I think when you when you think about the things that we control and the things that we've invested in you start with our loyalty program our brand campaigns.
Really pleased to note across the board, we've seen higher repeat rates across every category, which gives us a lot of enthusiasm that offer is really resonating with consumers.
As you then look out and see the capabilities that we continue to build on that side.
We're seeing significant sustained increases in both.
Retention and repurchase, especially when we hit high value audiences through some of our more targeted.
Vehicles. We're also looking at I think as you as you look through that new partners that we launched we talked about the New York post today.
Certainly also in the quarter.
Launched collaborations with brands like Doritos Snapchat.
We are in early stages on collegiate Nio deals do so when you look across that spectrum of I think programs that we offer with consumers combined with capabilities that we're investing in on the retention and brand marketing side, we continue to be really enthusiastic about the results that we're seeing.
Great. That's very helpful. Thank you very much.
Thank you one moment our next question.
And our next question comes from Stephen Ju with Credit Suisse. Your line is open.
Hi, Thanks, guys. So I think the retail came in pretty strong on a nominal dollar basis. So I'm just kind of wondering what's driving that strength.
General environment.
Or are you doing something from a product perspective.
Hi, Bob.
I guess it might be a little bit early but.
And this question anyway. So just wondering if you could update us on how the change.
Or better.
David is going and whether you start with early signs of synergies.
Yes.
<unk> side of things I would say consistent with.
Raising of guidance on the topline and we've seen it has been a pretty healthy overall market and frankly is coming in above.
Our expectations over the course of the year.
As a.
Representative seller, our retail group is there is no exception to that strength.
Nothing fundamentally has shifted and the ongoing strategy. There. So it's really been a story of right side more than anything.
Yes.
On the <unk> side I think we are we're excited about what we continue to see there as we mentioned.
We've introduced new categories within the <unk> App.
The WNBA tenants USC F. One we're still early in unlocking value there, but certainly I think as we look at some of the early stage fully integrated product and email campaigns.
CRM activities.
Activities are looking to be at some of our highest performing campaign. So I think we're early in what we expect to be a very busy quarter on the pivot excited but all signs are very positive on our side.
Thank you.
Thank you one moment for our next question.
Our next.
Comes from Ralph Checkered with William Blair. Your line is now open.
Great. Thanks for taking the question Dan just on the brand campaign I think in the prepared remarks, you talked about.
Little bit more focus or more targeting on this campaign versus the other maybe couple of specific examples about what's resonating I'm guessing it's the loyalty program.
Program, but any color you could add there and then I have a follow up please.
Yeah, sure Hey, Ralph Yes, I think a lot of what we learned and as you look at some of the creative that we've launched in particular and I think we're really proud of what we're doing around the $311 ticket is that fair.
Fans with high intent in Pi.
Kind of category awareness is really the rewards program resonates strongly with them. So when you look at the things that we've done to reinforce that whether it is the iconic ESPN top 10 series 11 play or some of the homepage takeovers, we've seen those messages resonate really strongly there.
As you also then look across some of our partners whether again it is ESPN rollingstone. Some of this but as we look at again audiences that they serve and what we're able to do there. We found that those audiences tend to be two times more likely to be aware of it and.
And really from a consideration perspective, two to three times more likely to buy from us and so as we look at channel diversification as we look at channel that yield.
Economic benefit while driving our messaging for fan I think we look at the creative and we look at the channel and we feel really good about the partners that we found in that space.
Great. Thanks, and then just a follow up just on the.
Competition that you called out on margins just curious was that broad base within a larger competitor was it smaller road competitor just kind of wanted to get a sense of the competitive nature that you're saying thank you.
Yes, I think we've seen.
It's fairly widespread across the competitive side I think there is certainly a lot of competition now for.
What looks to be a fairly resilient industry.
I think when we look at what we do again versus everyone else. I think we are really confident in our strategy a unique product differentiation better service better rewards, our new product offering and debit picks is our way to continue winning in the long term versus potentially.
Spending overspending on marketing channels or potentially driving too much take rate pressure.
Great. Thanks, Dan.
Thank you one moment for our next question.
Our next question comes from Benjamin Black with Deutsche Bank. Your line is now open.
Hi, This is Sean on for.
Ben Black Thanks for taking our question so just thinking on the supply side.
How's broker side.
Chatting with high inflation rising rate.
Have you seen any kind of softness on the supply side, given the high cost of capital.
Yes.
Look I think.
On the sell side.
Alright.
Again in our business I think being a market marketplace business.
The sellers are managing both their costs and certainly what the dynamics of demand and supply are.
We've seen no softness on on either side of the market, yet and I think as we continue to grow our base on skybox, which I think we've talked about having over 110 sellers added year to date on the platform we continue to see.
Strength in the sellers being able to grow their businesses as well.
Current environment.
Thank you.
Thank you one moment for our next question.
And our next question comes from Brad Erickson with RBC capital markets. Your line is now open.
Good morning, guys.
I guess first question on the marketing spend as you can kind of deal with that competitive pressure you mentioned how sensitive are you in terms of sort of drawing a line on.
ROI thresholds youre not willing to go beyond versus just being more set on holding market share maybe just remind us on sort of what your broad philosophy is around that and then I have a follow up.
Hey, Brad.
Hi.
Let's start by saying I think we have historically had.
Target, where we would look to on the acquisition of a customer the first transaction blend to be.
Profitable.
But we've always been aware that theres, some meaningful slack in that chain. When you look at the lifetime value of the average new customer you bring in.
And so as we look at the current competitive environment, where we are seeing across a few different strategies.
What I would characterize as.
Increasing.
Investment and some incremental stream.
Some of those historical bounds, we definitely have to move beyond what I would characterize as a historical threshold.
Something that we're actively.
Actively looking at day to day on where that rate lines. You said you might have.
Everything that's happening in the competitive set.
Got it that's helpful. Thanks, and then I think stepping back maybe I think you've gotten some benefit here in the market certainly has gotten some benefit this year from kind of the COVID-19 catch up on concerts in particular, how should we think about the cadence of concerts into next year relative to.
Some of the year over year comps, you're facing as well as just from a capacity perspective. Thanks.
Yes.
Certainly when you look at the.
The live nation commentary it looks like they expect another robust year.
Look at the lineup.
Names that have either already announced tours are rumored to be announcing tours in the near future. So folks have already announced at share and $6 82, moving Taylor Swift beyond those.
Those are some really large names.
As evidenced that not everyone will be able to get out in 2022.
Yes, I think alongside that though you had a dynamic in 2022, where you saw a number of postponed events.
Perhaps higher utilization.
Arena, Okay capacity than you would normally see because you are expensing, both the normal slate of new shows and some catch up from postponed events. So perhaps for Tuesday night Wednesday night.
Thanks chosen than in a normal year.
So I think that.
That will have the details on as this coming year.
Our growth year on all in basis or is there a little bit of pressure on an all in basis relative to how you think about that postponed event calendar.
But overall I think we expect it to be another very healthy year.
Probably less yogurt growth than we saw this year just given how robust this past year was.
And I think it will be a meaningful decline in the number for quality of shows.
Yes, that's great understood. Thanks, guys.
Thank you.
One moment for our next question.
Our next question comes from <unk> <unk> with Evercore ISI. Your line. Your line is now open.
Okay. Thank you let me try two please.
What could you. Please provide some color on where you're investing when it comes to product and service you highlighted that in your prepared remarks understood. You also interesting.
<unk> awareness efforts.
Good.
To give details on product and service investments that would be great and then second also firsthand.
How do you define high value audience whether.
Whether it is through engagement or us dollar spend how should we think about that thank you.
Sure.
Good morning.
Boy.
On the product and service side and I think.
I almost go down the path.
We remain bullish about the two areas in particular that are differentiated I think we think about our rewards program and continuing to drive.
Increased differentiation through that as a vehicle that we can continue to drive increased.
Purchase patterns and behavior as well as retention with our with our brand and our site.
Kind of in parallel with that I think we feel again as a strong differentiator, our vivid product, which enables our users continued ways to engage with us beyond ticket transactions between ticket purchases and I think if you look at the offerings that we built there and as we've mentioned in todays remarks, we continue to enhance the number of categories.
James I think we see the ability there to engage consumers and keep them within our ecosystem, where we can then utilize our marketing capability is really a strong demonstration of our investment in kind of our product suite, but also.
Our product differentiation on the service side, Our award winning customer service to continue to do that to continue to invest in making sure that across the board. We have the best service there, but beyond that we also look for experiential service components, where we look at activating onsite whether it's at festivals, whether it's at our key event.
And we also talked about the Lucky roller, which we have as a unique activation event with users where they see us.
In cities with events, where they can then engage with the brand where they can then wind rewards and prizes, which then brings them into our ecosystem provides them a tremendous experience and also buttresses our brand investments so.
Across those two elements I think we feel really really strongly about.
Our investments there.
On the.
High value audience side, I think we continue to learn as we look at the call at Ocean.
<unk> that are interested in attending live events argue an event or who is.
We're looking for that once in a lifetime experience are you an event lower so as a category specific user and as we learn more about users I think our definition certainly have high value audiences. Our audience is where we believe we can maximize lifetime value through that and so as we look at the channels. As we've mentioned we are very focused on the marketing side.
And making sure that as the segment users into the highest LTV consumers that our channels correspondingly our focus on targeting those users and bringing them into <unk>.
Ecosystem.
Okay. Thank you Stan.
Thank you one moment for our next question.
And our next question comes from Thomas Forte with D. A Davidson your line is open.
Great. Thanks, Dan Larry Congrats on the quarter, one question and one follow up so I wanted to know if you could talk about how inflation impacts your results on that.
The pro side are you seeing a flow through from higher prices and then the con side. How are you seeing any kind of demand destruction.
Yes, I think on the <unk>.
Pricing side continue to have a little bit of a mixing bowl effects.
Pent up demand, perhaps having peaked in prior quarters alongside that you have an inflation trend line.
That's all mixing into our AOS, but I.
I think over the intermediate term our view is that there's no reason that tickets wouldn't behave.
Similar path as other.
All right.
Consumer expenditures.
Think we're insulated.
<unk> be some noise in isolation depending on.
A pent up demand and broader supply demand dynamic, but overall feel very well protected.
Sure deflation persists.
On the revenue side.
I have not seen it.
Demand to be.
The consumer.
Should be getting stretched at this point.
Which I think as many <unk> as we've seen.
We haven't seen it hit our category yet.
We have our own hypotheses on why.
But we certainly haven't seen it hit the numbers yet and then the last piece of the equation reiteration.
Cost side.
We've generally seen certainly some pressure.
The labor World as we're not immune to the data.
Others, but.
All within normal bounds of expectation and just given the nature of our cost structure, we found it.
I think inflation has not been a meaningful impact to our cost in aggregate.
Great and then for my follow up.
And to ask does it fixed but you've already got a lot of great questions in <unk>.
So I'm down to is there an opportunity as it pertains to the World Cup preventative effects.
Yeah.
Hey, Tom.
Yes, I think it's a great question I think a lot of our current activities are focused on domestic games and products. So I think we.
We haven't necessarily look there, but we're happy to evaluate it as an opportunity.
Great. Thank you.
Thank you one moment for our next question.
Our next question comes from Andrew Merrick with Raymond James Your line is now open.
Thank you for taking my questions.
Can you just remind us about the quarterly seasonality of the business just maybe asking a guidance question in a different way I think in the past you've talked about <unk> being seasonally strong with three of the four big sports in season Christmas events et cetera.
But the guidance calls for revenue to be down Q over Q at the midpoint I guess, just talk a little bit more about the conservatism being baked in along that axis or has the thinking changed on seasonality.
Yes, nothing's changed structurally.
In Q4 as.
Some persistent reasons why on average outpaced the first three quarters mainly.
All the sports are in season.
With concert on sales happening.
It appears the concert announcements schedule will hold with with prior years.
That's more a question of magnitude.
Happen.
Yes, I think as we think about this year.
Two things one there is.
Still pretty meaningful unique elements as we think about not only this year's performance, but also the year over year trajectories.
Just given some of the noise last year with the opening dynamics changes to the competitive landscape against those reopening dynamics areas and whatnot.
But as we look at this year and sequentially I'd say.
There has certainly been a trend where as we've cautioned there studied ourselves for potential demand.
Risks.
Have not manifested the last several quarters.
But we've continued to abide by that strategy. This year just given the.
Still recent scars that we hope have slipped through the Covid experience.
So there could be.
Blue skies persists as we've said before that would be a scenario that would point you to the higher end.
Of outcomes.
Continued caution in light of what was the.
Effectively shorter MLB playoff.
The normal and in particular, when we say that we talked about the championship series, where there was a sweep in a five game theory normally.
<unk> hundred 90, <unk> slide 12.
That's meaningful.
And create some cancellations.
<unk> and Novartis.
Still a little early.
The nature.
The biggest on sales.
<unk>.
Meaningful impacts and as we sit here in first week of November .
There is reason to be.
Hopeful, but we don't control and so we're trying to remain.
Guarded and those views.
Understood very helpful. Thank you and then just kind of a semi related follow up as you are looking to build in those scenarios around.
The potential range of outcomes are you baking in any difference in macro resilience between sports and non sports is there still the dynamic where concerts or still kind of a novel experience or are you kind of viewing them. Both similarly at this point.
Yes.
Broadly similar right.
Think of standards, where he talked about the formal element.
In sports.
You saw that play out if you look at the World series, where you have Philadelphia, who hasnt.
At a world series or playoff run in over a decade <unk> was really elevated you can contract.
Astros there has been regular in the championship series and World series and while there was still strong interest it wasn't as a full year.
<unk> ability.
And so we certainly felt that replicating across sports in theory, if you will almost always have teams that.
Our cities that have been struggling for a number of years have ascended theres a lot of excitement around that.
And so youll always have some number of teams.
Our fans that are excited to get out and don't want to if the opportunity.
Pick on our Chicago.
We have another 106 years before the Cubs to make it back.
So you got to strike while you can.
There is definitely when we look at the result in sportswear the first area to reopen.
And so to the extent for Whitestone.
Reopening.
Demand are expected to get back for now is our second full season across all of the sports category. So we think were settled back in a more recurring cadence, whereas concerts and a lot of ways. This year was the first normally or faster its still pretty easy environment Covid protocols.
So it feels like sports or a little ahead of concert and settling into that.
Normal long term trend.
But by this time next year, I think everything will be pretty low alive.
Well I'm going to try a sports fan so I noticed like to go through a dark period here. Thank you for the color.
Okay. Thank you one moment for our next question.
And our next question comes from Matthew <unk> with Piper Sandler Your line is now open.
Hey, guys. Thanks for letting me ask the question and congrats on the strong execution, maybe just one for me.
When you take a step back a lot has changed.
Across the industry and per visit.
Keith as well over the last couple of years I guess.
The kind of economic headwinds that seem to be appearing as we enter 2023 why is vivid in a better position than ever to weather the storm and potentially accel.
Uncertain environment. Thanks.
Yes.
Yeah, Hey.
Happy to talk about that I think the.
I'll start first with.
The model that we have continued to prove through and through right. We are.
Scale growing marketplace and when you look at US on every line of the P&L contribution margin positive free cash flow positive EBITDA positive I think that one allows us to.
Be able to invest as we see fit in an environment, where we know a lot of the competition does not have that dynamic.
You then couple that over to the balance sheet, we sit in a position where we've got a really strong balance sheet we sit.
Again that that positive here, where we're able to have both the resources and the cost structure to continue to invest in the business and then when you then look at I think the product and service differentiation that we've talked about whether that is that it takes in a unique way to engage a rewards program that nobody else has industry winning customer service.
And then alongside on the seller side of the marketplace as the leading ERP.
For the professional selling community I think we remain really bullish that across the board with our financial prowess, our capabilities on the product side and our service differentiation that truly we are best positioned in the competitive set too.
We continue to win customers, but maybe to more directly answer your question whether.
Whatever foreseeable storm is ahead of us.
Thanks, and congrats again.
Thank you.
At this time. This concludes our conference call. You May now disconnect everyone have a wonderful day and thank you for participating.
The conference will begin shortly to raise Johan during Q&A, you can dial star one one.
[music].
Okay.
Okay.
Okay.
Yes.
Yes.
[music].
Okay.
Okay.
Okay.
[music].
Yes.
[music].
Sure.
Yes.
Okay.
[music].
Okay.
Yes.
[music].
Okay.
Yes.
Yes.
Yes.
Sure.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
<unk>.
Thanks.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
Hum.
Yes.
Yes.
Yes.
Okay.
Yes.
Yes.
Okay.
Yes.
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
Thank you.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Thank you.
Yes.
Okay.
Sure.
Yes.
Okay.
At this point.
Yes.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Thank you.
Yes.
Okay.
Okay.
Okay.
Thanks.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
[music].
Yes.
Okay.
[music].
Okay.
Sure.
Yes.
[music].
Okay.
Yes.
Okay.
[music].
Okay.
Yes.
[music].
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Sure.
Yes.
Sure.
Okay.
[music].
Okay.
[music].
Yes.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
Yes.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Sure.
[music].
Yes.
Yes.
Okay.
Yes.
Okay.
Yes.
Yes.
Yes.
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
[music].
Okay.
Yes.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Okay.
Yes.
[music].
Okay.
Okay.
Sure.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Thank you.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Sure.
Okay.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Sure.
Yes.
Sure.
Okay.
Yes.
[music].
Okay.
Okay.
Okay.
Yes.
Please.
Okay.
Okay.
Yes.
[music].
Sure.
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Yes.
Sure.
Yes.
Okay.
Thank you.
Okay.
Sure.
Yes.
Great.
Yes.
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Right.
Thanks.
Okay.
Yes.
Okay.
Yes.
Thank you.
Okay.
Okay.
Right.
Okay.
Okay.
Yes.
Thank you.
Yes.
Okay.
Yes.
Okay.
Thank you.
Okay.
Okay.
Yes.
Okay.
Thank you.
Okay.
Okay.
Yes.
Okay.
Thank you.
Thank you.
Yes.
Sure.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
[music].
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Thank you.
Yes.
Okay.
Okay.
Thanks.
Okay.
Okay.
Sure.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Yes.
[music].
Great.
Yes.
Yes.
Great.
Okay.
[music].
Sure.
Okay.
Yes.
Thank you.
Okay.
Okay.
Okay.
Right.
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Thank you.
Okay.
[music].
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Great.
Yes.
Okay.
Thank you.
Okay.
Sure.
Okay.
Okay.
Okay.
Thank you.
Yes.
Okay.
Yes.
Okay.
Okay.
Great.
Yes.
[music].
Yes.
Sure.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Yes.
Hi.
Sure.
Yes.
Thanks.
Okay.
Yes.
[music].
Yes.
Okay.
[music].
Okay.
Sure.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Yes.
Yes.
Okay.
Sure.
Yes.
Yes.
Sure.
Okay.
Okay.
Sure.
Yes.
Okay.
Yes.
Yes.
Okay.
Yes.
Okay.
[music].
Okay.
Okay.
Yes.
Yes.
Yes.
Okay.
Yes.
Yes.
Yes.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
Yes.
Yeah.
Thank you.
[music].
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Yes.