Q1 2023 Live Nation Entertainment Inc Earnings Call
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Good day, everyone. My name is John 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 2023 earnings conference call.
Today's conference is being recorded following management's prepared remarks, we will open the call for Q&A instructions will be given at that time.
Before we begin live nation has asked me to remind you that this afternoon's call will contain certain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ including statements related to the company's anticipated financial performance business prospects, new developments and similar matters.
Please refer to live nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on 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 their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call.
The release reconciliation and website supplement can be found under the financial information section on live nation's website at investors that 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 2023 is off to a tremendous start.
For the first time in three years all of our markets are fully opened.
The common theme, we're seeing around the world live experiences are a high priority with hands.
Q1, we delivered record results across all divisions.
Well as record support for artists.
And ticket sales to attendance non site spend every sign points to incredible demand for live events.
In the first quarter were 19 million fans attending our shows across 45 countries.
We sold over 145 million tickets with record levels of activity across all markets.
We delivered revenue of $3 1 billion, an NOI of $320 million up 70, 353% respectively.
To Q1 last year in general all my comments will be relative to Q1 last year.
This performance is indicative of our continued long term growth and set the stage for a record 2023 as we are more positive than ever about artist touring fans attending concerts to see their favorite artist and our role helping to make this happen.
What is clear is we look at our results and operating metrics as the global demand for live events continues to reach new Heights.
Demand has been growing for a long time and is showing no signs of letting up.
Talking to fans they say that live experiences are the number one leisure activity, where they expect to spend more in the future nats.
Naturally this is leading to record levels of activity in both our concerts and ticketing business.
In concert we saw.
Hold nearly 90 million tickets for shows this year tracking more than 20% ahead of this point last year.
These are early sales have been driven by a record number of stadium shows continued strong growth in arenas tours.
With many major tours from beyond say draped to Bruce Springsteen demand has been so strong that even with artist at a number of additional shows they still are able to meet all of the fan demand.
As a further initiatives to make tickets affordable to all fans, we launched today, our summer concert week with $25 tickets available to nearly 4000 shows.
When fans again shows the continued spending to enhance the experience.
While our key outdoor season has not yet started early reads from U S and European indoor venues that we operate demonstrate further growth and average per fan revenue.
As we provide more elevated hospitality options for fans, we have launched by the folks destination events centered around live music and lots. This week with the sale of the Youtube sphere, VIP packages selling out.
We've also continue building our <unk> portfolio with new venue is expected to host nearly 3 million fans 1000 shows this year.
Driving long term growth and profitability across all our businesses.
Our ticketing business benefits from the same structural tailwind as concerts with further growth driven by our success in adding new clients, notably in international markets.
As a result, we sold 73 million fee bearing tickets in the first quarter up 40% and delivered $7 7 billion in <unk>.
Fee bearing <unk> up 60%.
We are seeing growth in both volume and pricing across our global markets. This holds true across all of that types from sports to concerts.
Superstars to new artists.
Our brand partners recognize the passion for live music has never been greater.
Live nation provides a unique onsite and online platform to connect with fans in meaningful ways on a global scale and in the first quarter, we continued adding partners for 2023 and beyond.
Adding Google pixel Paypal and Levi's with this we have commitments for over 80% of our planned sponsorship of the year.
Equally important fans, who are embracing the value brands can provide to the concert experience with over 70% of live music goers agreements brands can enhance their time at the show.
Our team is the best in the industry working with brands to develop programs that deliver value fans, which in turn grows our brand relationships and attract new ones.
Our results for the first quarter demonstrates the success of our strategy. It sets up for a strong growth in 2023.
We expect to host a record number of fans this year, even against the 2022 comparison, which benefited from rescheduled shows attended by 20 million fans.
Ticketmaster's should deliver record activity.
With around 600 million tickets manage globally this year.
And our sponsorship business, even after an incredible growth last year it looks to be on track for double digit NOI growth this year.
So we look to 2024 and beyond we have all the necessary labors to build our flywheel globally continue to compound AOI by double digits for the foreseeable future.
That I will turn the call over to Joe to take you through more details. Thanks.
Thanks, Michael and good afternoon, everyone building on 2022, we started out this year with a record Q1, our highest first quarter revenue AOE fan count and ticket sales.
Our markets are fully open selling tickets hosting tours and connecting brands with fans.
Our reported revenue of $3 $1 billion for the quarter was $1 $3 billion better than Q1, 2022, an increase of 73%.
On a constant currency basis, our revenue was $3 $2 billion for the quarter.
So there was roughly a 2% unfavorable impact due to the slight strengthening of the U S dollar primarily against the Canadian and Australian dollars.
Given the limited FX impact on our numbers.
The rest of my comments will just be a reporting currency.
Our reported NOI of $320 million for the quarter was $111 million better than in 2022 up 53%.
An improvement of $65 million in ticketing $50 million in concerts and $26 million in sponsorship.
Over half of our growth came from our Asia Pacific and Latin American markets.
We are expanding our global touring activity in diversifying our historical seasonality.
We converted roughly 59% of this OE to adjusted free cash flow of $190 million.
Is significantly higher than our 43% conversion in Q1 2022.
And our deferred revenue a key leading indicator of growth ended this quarter at $4 4 billion up 28% from this point last year.
Let me give a bit more color on each division.
First in concerts.
We had the highest concert attendance ever for a Q1 with $19 5 million fans attending our shows up 79% compared to 2022, when we had approximately 11 million parents.
Show Count was 9600 events up 43% compared to 2022 with more fans per show due to a heavier mix of stadium and arena events and stronger than historical average attendance levels.
As a result, our concerts revenue for the year grew by 89% to $2 3 billion.
We delivered $1 million in.
A $50 million improvement over Q1 2022.
This is the beginning of what we see as a very solid year for our concert segment, including margin expansion relative to last year.
Looking a bit deeper at our fan metrics, we had strong growth across the board.
Stadium attendance more than quadrupled to $3 3 million fans this quarter up from 800000 fans in 2022.
This growth primarily came from our Asia Pacific and Latin American markets.
Arena attendance was $6 7 million fans for the quarter up $3 million or almost 80% from 2022, largely as a result of growth in Europe and Australia touring.
Theater in fan club count was up 45% and while it's not a large quarter for festivals. We did see festival fan count grow by 50% from our Mexico, and Australia, and New Zealand expansion.
Overall, our international markets drove fan count growth accounting for over 90% of our increase versus 2022.
This was due in part to the closure is still in effect in Q1 2022.
That said, we expect continued strength across all global markets through 2023, along with some seasonal shift towards Q1 activity.
Last year, we discussed the various cost headwinds that are operated venues and festivals.
Thus far this year cost pressures are declining and our operational cost per fan is down across our indoor buildings and we are forecasting cost increases will remain below general inflation levels for our festivals and ample theaters.
As a result of these improved conditions, we expect overall profitability per fan will again increase this year as cost increases are more than mitigated by increasing average revenue per fan pricing and onsite sponsorship.
Next in ticketing, where our numbers reflect growing fan demand for live experiences.
In Q1, 2023, we sold $72 6 million fee bearing tickets of 21 million tickets or 41% compared to 2022.
Nearly two thirds of the growth was driven by concert tickets as North America concert ticket sales increased by 35%.
While international concert ticket sales increased even more by 65%.
With this increased ticket volume GTA V for the quarter was $7 7 billion up 60% compared to 2022.
At peak sales times during the quarter Ticketmaster sold 15000 tickets per minute in North America.
With more than 20 million fee bearing tickets sold each month globally.
Q1 over 99, 9% of all TM transactions were processed without any issues.
While secondary ticketing volume grew at a similar rate ours continues to be largely a primary ticketing business with secondary ticketing accounting for only a mid teens percent of our overall <unk> TV.
With these growing ticket sales revenue for the quarter was $678 million in AOI was $271 million.
Delivery and margin of 40%.
It's hard to compare these margins to Q1 of last year, given the geographic mix shift and increased cost of ramping our staff back up over the course of last year, but these margins are ahead of our full year 2022 numbers and we expect margins for the full year to continue being in the high Thirty's.
On the pricing front average ticket prices on primary tickets rose by 16% compared to Q1 of 2022.
Driven by fan demand for the best seats, particularly at concerts.
Average secondary ticket prices remain close to double that of our primary ticket continuing to show the extent to which concerts and other live events remain priced below market value.
We also saw revenue from non service fees grow double digits as we further build ancillary revenue streams, including insurance upgrades and other upsells.
Lastly, so far this year, we have signed clients accounting for nearly 8 million net new tickets up 15% compared to this point last year positioning us for ongoing growth.
Finally in our sponsorship business topline revenue improved by $54 million or 47% to $170 million in Q1.
Our AI for this high margin business was $96 million up 37%.
Sponsorships growth during the quarter was driven by the reopening of international markets that were closed in Q1 of last year. The increase in high profile artist on sales that attracts.
Premium marketing partners and the expansion of our venue network.
We had double digit growth in both onsite and online sponsorship with onsite sponsorship representing most of our OE growth year over year.
From a geographic perspective, our international markets delivered 54% growth in the quarter, while North America had 26% growth.
Contributing to our sustained growth since last year has been our strategic sponsors that generate over $1 million of revenue in the year.
Relative to Q1 of last year, a number of strategic sponsors grew by 15% while the revenue from those partners rose by over 20%.
Marketing partnerships now account for 85% of our total sponsorship revenues.
Sponsorship margins were slightly lower than average during the quarter as we had higher variable expenses due to artist activation costs for AOS talent pre sales with tickets sold for these key sponsor programs four times that of last year.
As timing plays out we anticipate that for the full year variable expenses and margins will be in line with 2022.
A few other points on 2023, we continue to project that Capex will be approximately $450 million. This year with two thirds on revenue generating projects, including new venue builds in renewals.
As well as other organic investments to support growth.
The remaining one third is on maintenance Capex as we catch up on deferred 2020 in 2021 maintenance.
We ended the quarter with $2 4 billion of available liquidity between free cash an untapped revolver capacity, giving us ample flexibility to continue investing in growth.
We're comfortable with our leverage, particularly given the AOE growth ahead with approximately 87% of our debt at a fixed rate with an average cost of debt of roughly four 7%.
In addition, the majority of our debt is long dated and nothing is maturing within the next 18 months.
The only notable change to our below the line guidance from Q1 is on accretion.
Largely to assesses impressive growth above previous projections, we estimate that accretion will be approximately 40% higher in 2022, and there should be factored into your EPS estimates.
At this point, we don't expect any material FX impact on revenue or NOI for the year.
With that let me open the call for questions operator.
Thank you Sir we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the queue. You May press star two if you would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
One moment, please pull for questions.
And the first question comes from the line of David Karnofsky with Jpmorgan. Please proceed with your question.
Hey, Thank you Michael.
Michael Chou.
<unk> seen a couple of bills introduced in Congress to address ticketing practices in contracts. So I'm wondering first how you think some of these items might impact your business, assuming they were fully enforced.
And then just based on meetings you've had do you think these bills largely meet the primary concerns with lawmakers as you've come to understand.
Yes. Thanks.
Yes.
Watching what's going on and we believe that through all of the noise. Most people are ending up.
The industry in politics at exactly where we are and the principles of what the Fair Act as to whether it's all in pricing cleanup deceptive practices in secondary <unk>.
Artist more tools those seem to be all of the common themes coming out and all of these different bills, which were fully supportive often and having our own belt Fair Act.
We know senator Cardwell in crude since two stairs NEVA is got a build coming tended.
Senator club, which are in corn.
These are all in the same vein in the same thematic around helping the artist control their ticket and get them in the hands of the fans.
<unk> be a way of some of the practices in the secondary and the spec selling deceptive websites hopefully better protection on box and we've always support are all in pricing. So this is this is not <unk> versus any of these we are aligned to all of these bills. We think all of these bills, we've said continuously for a long time.
Is better for our business.
Because it helps us deliver a better on sale and fan experience. So right now it's the wild West we're doing our best but any bills. These natures that start putting some better regulations and controls around the experience is going to help our overall business.
Okay.
Hoping you can expand a bit more on <unk>.
Maybe can you frame the opportunity.
Yes.
Is this something you plan to build primarily for your major festivals residencies or is this.
Is there a wider opportunity across our promotional footprint and then just interested what drove the decision to kind of build this out internally versus.
Maybe putting that out to bid for and events partner.
Yes, we look at the we look at the segment overall.
If you look at what we've been talking about on our Investor days the last few years.
The premium business as a huge opportunity for us I think I've said many times. This is an industry that has done a great job of being scaled.
But not done a great job of doing a premium experience for customers the sports in new arenas and stadiums are doing a great job on that but as an industry live nation music industry has not done that and we think there's a great opportunity overall to launch more products and services that can provide a better premium.
For the customer. So this will just be an extension and a continual strategy towards what we call. The premium experience. We've got a company called VIP Nation will do about 1000 of those events. This year those are based around the concert and the tour and go into a sound check early experience or a meet and greet so we've been the leader in that Spa.
<unk> and expanding that.
Ticketmaster's lots ticketmaster travel looking at ways, we can map we can.
Put both the ticket and an airline or hotel together to take advantage of that scale and with the testing that in the UK with great success and <unk> is another product, where we looked at pall in and we looked at one.
One location in CIB in Quincy and others that we're doing it the differences we have the scale.
Already have been doing it.
<unk>. So we looked at our insomniac team and built up Bobby launched it with the Youtube experience sold out or.
Close to $20 million in ticket sales around a high end premium experience. So we have the in house expertise and this is another product in our ongoing strategy, whether it's club's premium memberships premium clubs subscriptions all the ways. We're going to continue to look to say, how do we turn them into a premium.
Experienced product.
I know there is also the challenge with some of these other cut.
Companies have as well.
The expensive part about doing this is the right and we don't have that problem. So when youre chasing the the Olympic right. So you're chasing.
Our business for premium.
It's a little harder unless youre in house, so I am sure on location does fabulous with their UFC experiences.
Ross, we don't have to pay right. These are our rights. So we can do it in house, we don't have to outsource it and split any of that upside was with anyone else, but our own.
Businesses.
And the next question comes from the line of Brandon Ross with Light shed partners. Please proceed with your question.
Hey, guys. Thanks for taking the questions.
One on your fundamental and then a follow up to David's question on the bills in Congress actually I'll start with that one.
I think the <unk> Bill very specifically attack your venue exclusivity.
Can you kind of just respond to that Phil and how important is the venue exclusivity model to you in North America, and then kind of on the fundamental like last year was obviously, a pretty depressed year in terms of constant margins.
The word margins Joe will go into it anyway.
Hi.
Is it should we see a real bounce back in that and continuing titles.
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'twenty three and beyond into future years.
Okay.
Thanks, Brandon first of all on the exclusivity point I think.
First point I should make is congratulations on the birth of your daughter glad to hear everybody is doing well.
Thank you.
Right.
Exclusivity I always start with these are the venues rights and the venues have been figuring out over time, how do they best monetize certain rights. They have what they have determined is the best way to monetize those rights in the U S is by auctioning them off for exclusivity so.
I think it's frankly, primarily where there to be any changes in exclusivity.
Venues that would be hurt the most because they would lose the ability to fully maximize their rights, we're very confident with the quality of our systems its ability to handle on sales in a way that no. Other system. Ken can do that's been shown both by the clients that we've been adding as well as you've seen them.
Press issues that other systems have with very modest on sales. So we're very confident in our ability to deliver.
I think it's uncertain and email and today's Congress not just this one but any build it doesn't have bipartisan support out of the gate has as its challenges, but but more fundamentally I think that.
You'd see the venues respond to that.
And probably pushed back because they would be hurt a lot more than we would.
In terms of the performance of the business I tried to give a lot of details in there I think that as you know first of all we look more at the cash profitability of the business where that is how that's operating on a per fan basis, which as I said, we expect to continue to grow this year.
So noted I think in the concert side last year was a bottom tick in terms of our margins, we expect it to be coming back this year.
We don't obsess over margins because for instance, this year, we expect to be.
A great Stadium and arena here as you can tell by the numbers, we already gave for Q1 that's.
That's inherently going to be a little lower margin business than one of our amphitheater customers, we're still going to pursue that business is still a great business.
But it's but it impacts technically the margin while generating cash profitability. So.
I think that we're on an upward trajectory I think 23, it's going to be great and every very early sign rehab for 'twenty for his continued success.
Just one quick follow up to that comment.
I think there is concerned about lapping the supply side for next year.
Feel good about.
The supply side coming out into 'twenty two 'twenty three.
You get asked this question every year as things grow but.
Do you feel confident with what youre seeing so far.
Yes, yes.
Yes, we live this in the I think the fall was all about the air pocket and would there be enough shows 23, so hopefully we've put that to bed.
We don't think this has anything to do with pent up demand or Covid rescheduling that stuff has long been flushed out in 'twenty. Two this is all about regular business back to business.
And I think we're thrilled that we're sitting here looking at comparable last year, but basically had almost a year and a half combined into a year because of all those rescheduled shows a $20 million to be sitting here today above and beyond last year's numbers shows the global strength of the business and it also shows the global strength.
The business from the amphitheater and stadium to the club to the festival, we're looking at all territories around the world firing on all cylinders. We're looking at the kind of talent you see on the road right. Now this isn't just the rolling stones right. The question, we always have to fight off six of the top 10 artists were younger artists you'll look at Lollapalooza Coachella was.
Bad money Carol Jean Rosalina.
Black Black point, Henk <unk> Billy Iris.
There's just a host of great new talent every year coming up filling the pipe.
We didn't know Luke Combs, who is going to be selling stadiums out. This year two years ago. We had no idea bad money was going to be the largest selling artist last year.
So we just continue to see the pipe the supply demand we think for the future is really really strong there is more and more artist studio right now on Tech talk the greater economy is alive and well and they all want to be the next pad money.
And we've said it before we're also seeing this encouraging new supply strategy, where for many years. It was all about a U S. A U K based artist that filled the charts and filled the stadiums and most other talent was domestic it might've been baked in Canada. It might've been big in Korea, but it didn't travel. This is the real breakout year, where the World Cup the world and the <unk>.
<unk> are truly global and now you can see artists coming from Latin America, Korea, and becoming global Superstars that Didnt happened for the last 30 years. So it was a very pop U S or UK controlled industry. So we think that alone gives the next kick to the supply chain for the next 10 years of young talent from it would be for me.
India, South Africa, it's going to be everywhere.
Overnight finding their way to tick tock.
And Spotify and other places to become these global stars that are still in arenas and stadiums out in their markets.
Thank you and the next question comes from the line of Stephen <unk> with Goldman Sachs. Please proceed with your question.
Hey, great. Thank you and maybe for Michael on underlying contract demand setting aside the stadium and arena tours for the moment could you maybe talk about how demand for the average or even smaller amphitheater clubs.
And compared to what we saw for these types of shows last year I think there is some concern that maybe the top shows are performing well this year, but it's perhaps come at the expenses from the smaller ones. So would just love to hear your thoughts on how those.
Mauler and average size of those shows are performing.
Yes, Stephen it's about them.
Matt.
Yeah.
Just to give you the feel on that.
We don't have a lot of amphitheater has yet just in the first quarter, but if you look at our theaters and clubs, which tend to be pretty strong in this point of the year. They are tracking around 8% ahead in terms of average attendance per show.
We're doing that with.
Also increased pricing lower cost structure on a per fan basis. So those shows are performing very well for us.
And just to jump on Joe there. Unlike the movie the movie theater kind of model, where not a hit driven industry right, where we are truly scale business.
<unk>.
You are right, we looked at the beyond phase of the world.
Always going to do the great numbers.
When youre sitting here today looking at even our festivals lollapaloozas are the easy ones, but we have over 200 festivals bonnaroo.
<unk> rose to one day festivals in smaller markets to our.
Our U S and international businesses.
All of it seems to be doing really really well, but whether it's a middle of a growth festival in a smaller market, whether it's a clawback at all levels, there seems to be incredible demand and on a global basis. So we haven't seen just the top stuff selling in.
They're not coming to the other stuff the demand seems to be uniform from clubs to stadiums from Pittsburgh to timberland.
Great. Thanks for that and then maybe just one on the venues business you called out in the press release. Thank you expect to host 3 million incremental fans at new live nation venues. This year I'm curious maybe for Joe as you look at your ambitions on the venue side. How many incremental fans are shows you think you can you can add to the flywheel over the next couple of years.
Just given how does the venue pipeline stands today.
Yeah.
Yes, I think this year it would be typical on what we would hope to add in.
The low millions per year from our own venues with a mix of some.
New amphitheaters, new arenas at the larger end, while continuing to build out the club and theater portfolio.
Alright.
Continues to be a meaningful part of it and more robust as I said earlier, you can scale, the stadiums and arenas faster, but over time, we've learned we can deliver a very accretive return for our shareholders.
Operating it and being able to count for beer money sponsorship money as well.
And I think we laid that out in our November investor day, probably on a more macro level.
We wanted to remind investors we've been doing this for a long time, we have a large venue portfolio.
Don't see that strategy changing it's not it's not incrementally different than it's been year. After year, we bolt on add continue to look around the world that opportunity markets, where theres, a great return and we keep adding a venue club theater.
And if we can find the right market like Austin, where it's a big return. So we'll continue that strategy over time and I think we laid out in November cleaner cleaner in terms of how many and what numbers, we look to subscribe to overtime.
And the next question comes from the line of Jason Bazinet with Citi. Please proceed with your question.
I just had a question about your cash balance.
It seems like you guys used to run I don't know half a billion dollars or something and it's been four times that or something over the last year.
Do you just think.
In the spirit of being cautious that it just makes sense to have more cash on hand, or do you think there is some flexibility to deploy it.
One way or another.
Yes.
Make sure you have the cash numbers right I think those cash numbers included untapped revolver capacity right.
So from that metric, it's probably not.
Not quite that extreme but we continue to see a very strong set of opportunities to continue growing the business. We just talked about the venue business, which we've been in but we've been kind of a global basis.
A lot of great opportunities to continue to build out the portfolio.
We think even within our existing portfolio, there's a lot of things that we can do to enhance.
The fan experience as Michael was talking about so at the moment we're.
Maybe being a little conservative coming out of Covid.
Looking to continue to grow the business and we will continue to reassess it.
See what the right options are.
Can I just ask one follow up one of them are interesting things to me looking at your stock prices. It seems so depressed.
Relative to the fundamentals you guys have been putting up for the last year or so part of the Doj related part of it yourself.
Pent up demand.
But I was just surprised you guys didn't sort of take advantage of that seeming disconnect.
Share repurchases.
Yes, I think the flip side of share.
Share repurchases tactically is one thing I think we've.
We've also seen a lot of companies out there that embark on share repurchases.
And the market takes that as a signal that they are out of growth ideas.
And I think that we have such a robust set of growth ideas that we wouldnt want that to be misunderstood.
When you invest in growth you deliver compounded returns over time.
You can maybe get an attractive return from.
The stock if you think there is a dislocation, but you lose out on the accretive compounding impact you can have by investing in these growth opportunities.
As I said I think we will continue to look at all the options as we move forward, but I think in <unk>.
<unk> coming out of it.
That's been our thought process.
And the next question comes from the line of Steven <unk> with TD Cowen. Please proceed with your question.
Yes, Thanks, a question Michael and Joe.
Just two specific questions around the proposed legislation and how that potentially could potentially impact your business. So one on <unk>.
And prohibition of particularly in exclusivity with that news can you just provide like.
Yes.
On the competitive position of Ticketmaster in international markets that you operate on an allocation or non exclusive model just to kind of glean insights on how the U S could be from that.
Like you know how renewals are trending there and new business, they're one and then two on this junk fee protection I believe theres a provision that the FCC can determine if mandatory ticketing fees are excessive so I just wanted to know how it fee caps impact your service fee revenue would that impact more than what the venue collects.
Or what the primary ticketing service collects as well thank you.
I think you need to you need to go to some of the buckets interview it will help you.
Listen the venue drives as Joe said this is the venue business I know everyone wants to subscriber loss the venue demand demand most of the service fee.
Does the auction for the ticket so.
Again, we think that the.
The venue that's built in the 1 billion dollar arena multibillion dollars stadium.
In that market I think he's I think he is going to continually pre pretty strong and vocal about his rights and returns on what companies seeking higher exclusively or not too to services business. So whether it's whether it's Microsoft CRM or salesforce or our Ticketmaster I think there I think they are.
Going to look at all their options for their best return for the business. So we look at that.
From that perspective.
If we look at Europe , just because it was always thrown out really lightened. The international is on allocation in the U. S is here just just kind of for the trend International is moving more towards an exclusive model then away from it.
As new buildings are being built over there and you are building your arena, which really had been underdeveloped it was mostly a.
Our soccer business of football, but it's a new buildings are getting built they are looking over here and realizing that this is another revenue stream that they should be leveraging so I look at international probably moving closer to the U S model in the U S model moving to the international model because I think they are now realizing that they have been.
Valuing their exclusive ticketing rights for their venues.
Now, we do we do really well over there because we always will do well in the open market with the best technology, we sell more tickets than the competitor.
And open allocated market and youre going to allocate to us and others, we're going to do really really well because we're going to be the one that probably sell the most tickets for you. So you'll end up allocating more to us.
But we don't think that model probably ends up here more driven by the venue agenda, then ticketing agenda.
And the next question comes from the line of David Katz with Jefferies. Please proceed with your question.
Hi, good evening, everyone. Thanks for including me.
Covered a lot, but I was hoping you could just talk about the secondary ticketing market, which seems to be.
An area of growth for new smaller entities other.
<unk> technologies et cetera, and I know you've talked about in the past how.
What their impact is on the market.
Whats new with respect to that what can you do about it to protect yourselves better.
And I would just love an update there. Please if you could.
I'll jump and then Joe I just wanted to.
We said earlier of all the legislative noise, we've been swirling around for six months.
The common theme in all of this legislation that youre seeing come forward is around.
Limiting and putting some handcuffs around the scalper in the business. So we do see a lot of this legislation.
Moving forward is going to help the primary ticket content holder.
Do a better job on that front and it will be harder for the Gulf, where the bot deceptive website spec selling a lot of practices drip selling et cetera. So we do think that overall this market right now legislatively is moving.
Against the secondary business in general not not going to ban it not going to cap it but some of the cleanup legislation does help primary hurt secondary that's a big move that Hasnt happened in the last 10 15 years.
Yes, I think the other pieces you have to remember that secondary for sports is very different than secondary concert secondary in sports is often used as a distribution platform, where you sell the season ticket to the scalpers, They disaggregated and Theyre performing a function for the sports teams of guarantee.
And then some upfront funding.
That has value to the teams of value to the fans you don't have that in concerts. The concert. The issue is that they are using illegal and deceptive practices to get tickets.
With the sole objective of increasing the price and selling them to the fans. So I think what youre seeing is because the auditors don't have the same sort of collective central power that elite does today. They can set up a NFL ticket exchange.
You need to give the power back to the artists. So it's very clear that there can be the decision maker and then it becomes the onus of the secondary players to figure out how they are adding value right.
Alright, it's like any other business today, you have to survive and adapt and grow because you are adding value to others in your ecosystem.
That hasn't been what's how the scalpers have done it in music over the past several years and it has finally gotten to the point, where youre getting the pushback now from the artists and that's being fully understood by our politicians.
Thank you and just say nice quarter would be understating, beating by $100 million.
Thank you.
Thanks.
And the next question comes from the line of Ben Swinburne with Morgan Stanley . Please proceed with your question.
Thanks, Good afternoon two questions.
Michael You also mentioned I think in your prepared remarks that the secondary prices are running about two X primary.
Last year I think it was last year sort of that Bruce Springsteen moment about market pricing expectations that more artists would embrace that I was wondering if you could just sort of update us today on sort of the trend in market pricing on primary and sort of pricing.
Back of House front of house, the right way, where you feel the industry is in the business is today.
And then secondly.
You guys are at least thinking pretty far ahead around technology.
What are your thoughts on AI as an opportunity for live nation, just broadly it's obviously a huge topic. These days so I'd love to hear what you think.
Perfect.
On pricing I think we've been saying for the last few years.
The great transparency and sunlight of secondary.
Really help the artists and the management team look at their pricing models historically it was a fairly.
Static pricing three different maybe price points same price point all across the country.
If it was a Friday and New Yorker Tuesday in Pittsburgh. So the business has gotten really really sophisticated with our price master or different dynamic models that artist can now use so we see that there is still.
Years away.
Queen where the artist markets, the price and what the market's willing to pay.
The artist is one of the few are a few products in the world that's worth more than a minute, it's sold but they do that for their brand and accessible accessibility and I think that will continue.
But I do think we've seen the artists looking at their ticket price and the whole manifest and how do we bring the prices down in the back.
Bring the prices up on the front. So we can sell out and make sure everyone gets a ticket at an affordable price, but let's not let secondary runaway with the front row.
So we think that we're still dramatically underpriced versus demand.
And you see that everyday on the secondary.
And we think that's probably going to live for the next five to 10 years.
Hardest moves closer to market, probably never gets to market.
But between here and where they feel comfortable we think there's years of upside, but they'll continue to look at.
AI, Joe you can talk about the TM yeah, Yeah, I think just to be clear I think it's all upside for US. There is no concern that somehow AI can never replace the live experience for us it's a considered a infrastructure tool for both.
Efficiency and effectiveness.
Think about using AI on recommendations much better marketing much better individual recommendation in terms of making you aware of shows that you might want to go too clearly we're using machine learning now to help inform models on suggesting pricing that we were just talking about AI is just the same thing.
The next level of data input through that machine learning process.
It'll help us automate a lot of tools the event creation process that takes place at every venue being able to use much better data machine learning whatever what's going on elsewhere in the <unk> system will make that more efficient.
All the chat bots do you have today those would go to a whole another level of effectiveness working with fans.
And and be at a much lower cost than you have today and then as we're finding box using AI to continue in our battles.
To make sure we know who is the person who are trying to know who is the person who is not so.
Kind of runs throughout all of our infrastructure. It's a lot of places that we're using machine learning today.
He is really that to the next level.
Thank you Jeff very helpful.
And the next question comes from the line of John Healy with Northcoast Research. Please proceed with your question.
Yes. Thank you for squeezing me in just wanted to ask a question on kind of the pace of growth I mean, when we look at deferred revenue I think it's up almost 30% you talked about the concert ticket sales at this point up 20%.
He helped that.
You could give us just on if.
If you think that type of pace of growth can be sustained this year I think I think the message is clear it's going to be a strong year, but would just love to get a little color and flavor about kind of the speed at which you could grow this year.
Yes, I think that you generally start the year coming out of the gate fast this when youre led by stadiums.
Arenas. So that those are the shows that we've long talked about get put on sale earliest relative to the show date. So you've got great scalability in the stadiums, which youre seeing four times the level of activity good scalability and Youre arenas, so thats driving your huge ing.
Increase in attendance strong increase in ticket sales at $90 million in your deferred revenue I think as you get into more of the shows that take place in our buildings across the festivals.
Amphitheater has to some extent theaters and clubs you generally have a lower level of scalability you still have very solid growth, but not the same level as you have with your stadiums and arenas. So I don't think we're ready to try to declare an exact number but I think we recognize the level you have in Q1, it's probably.
It's going to be the high point of the year.
Okay. That's great and then just wanted to ask and I think sorry, I just wanted to jump on that for one second John and just what's more important to us.
Just helping.
Both sides realized whats the future in 'twenty fall on.
So we went through obviously COVID-19 was down and last year was an extraordinary year, but how does 23 and 24 start to look and we're very optimistic we look at this year as being a very strong year coming off with people probably felt we couldnt be last year. When we think 'twenty four into forward you kind of look at what we historically have deliberate keeping up.
Our high single industry growth business, and a high single digit revenue <unk> business.
Year after year for many years and we look at going forward. We think we're back to be in a great strong growth business year over year.
This foundation of business. So we think the industry is back bigger than ever and we think there's years of industry growth. We've shown you in the industry grows we tend to we tend to rise with that tide and capture as much as industry growth. We tend to do a couple of points better so and just been growing about eight or 9% a year we tend to.
Beat it.
This is a long term continual growth story again.
And then just a big picture question I'm going to ask I think you called out APAC and Latin America is fueling some growth to start the year just as we think about those businesses long term.
Is it safe to say that as they become a bigger piece of the pie at the margin level of the business should rise are those bids I always thought those businesses had potential to be maybe higher margin than the U S market, but we're just kind of curious how you're thinking about those.
I sit today.
Yes, I don't think we start with thinking about it as margin, we think about them as being massive growth potential markets.
Probably the least developed of our major markets, so having great growth opportunity to continue to drive more fans.
And more obviously highly profitable fans as we establish more venues in those markets to ensure that you can get some attractive margin.
Off the buildings or operate but I think more than.
More than starting with any margin focus were looking or just what's the volume of fans and what's the overall concerts ticketing and sponsorship profitability, we can drive off of that.
At this time, we have reached the end of the question and answer session and I would like to turn the floor back over to Michael Rapino for any closing comments.
I appreciate everyone. Thank you talk to you in the summer.
Thank you everyone that does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Okay.