Vivid Seats Inc. Q1 2023 Earnings Call
[music].
Good morning, and welcome to the David seats first quarter 2023 earnings Conference call. Following management's prepared remarks, we will open the call for Q&A I would now like to turn the call over to Kate couples.
Good morning, and welcome to visit and see first quarter 2023 earnings Conference call.
Kate coupled head of Investor relations activity.
Joining me today, but as Scott said the results are Stan Chia, Chief Executive Officer, and Larry Seay, Chief Financial Officer.
By now everyone should have access to our first quarter earnings press release, which we released earlier this morning.
We have also provided supplemental earnings slide.
The press release and earnings slides are available on the Investor Relations page of the Street's website at investors Doc visits C 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 our earnings press release and other filings with the FCC.
On today's call, we will refer to adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures provide useful information for our investors.
You will find a historical reconciliation of adjusted EBITDA and adjusted EBITDA margin to the core.
Corresponding GAAP measure in the earnings press release supplemental earnings slides and our SEC filings.
And now I would like to turn the call over to Stan.
Good morning, everyone and thank you for joining us today.
I'm thrilled to share our exceptional first quarter 2023 results with you.
As always we prioritized initiatives that generate long term value and stickiness in our marketplace and I'm excited to report on our progress.
Our first quarter financial results speak to our ability to relentlessly drive incremental efficiency and simultaneously invest in competitive product differentiation.
To begin with I'll walk through our financial and strategic highlights from the quarter before turning it to Larry to take you through our financial results in more detail and to discuss our updated outlook for 2023.
We set out strong in 2023 and I'm proud to report, we generated $856 million of marketplace JV $161 million of revenues and $42 million of adjusted EBITDA in the first quarter.
We delivered double digit growth for marketplace, <unk> and revenues and doubled adjusted EBITDA, Despite a highly competitive ticketing environment.
Thanks to a strong March we quickly exceeded expectations set during our Q4 call and we are accordingly, raising our 2023 marketplace <unk> revenue and adjusted EBITDA guidance.
The live event environment in the first quarter 2023 was robust due to a combination of exciting events supply an exuberant fan demand.
Consumers continue to creative live experiences in the first quarter and we believe this trend will continue for many years.
Consumers were eager to secure their seats for concert headliners like Drake and beyond say and for sporting events, such as the World Baseball Classic and NC double a women's basketball final four.
The women's final four with the latest data points supporting an exciting trend of outsized growth across women's sports is a category that we believe will continue for decades to come.
While consumers are seeking their favorite live events, our marketing campaigns are focused on ensuring fans are aware of our differentiated experience underpinned by our unique vivek seats rewards program.
Vivid seats rewards aligns us with fans by offering more rewards the more they buy in addition to ticket savings. Our loyalty program includes a host of other benefits ranging from surprise upgrades to exclusive game day experiences.
Our buyer experience and engagement efforts, starting with our loyalty program are designed to cultivate brand awareness and lasting affinity for our platform.
Engagement during in between live events is crucial and our relatively low frequency category and we are seeing continued improvement as we invest in both marketing and product vehicles to drive engagement.
With marketing efforts, whether at an onsite events or through our growing social presence, our buyers are engaging with us more than ever before.
In social we lead the competition with the highest positive sentiment and we have been rapidly growing our social following.
Our social engagement has grown 50 times since we began our initiatives in earnest and nearly doubled quarter over quarter in Q1.
We continue to innovate and differentiate our product focus engagement efforts to buyers and are excited to announce our first free to play product available directly within the vivid seats act fully powered by Vivek picks.
Launching in May users will be able to play daily challenges with a chance to win free tickets.
We're thrilled to get this product off the ground and offer another compelling engagement opportunity for our buyers within our App experience.
On the seller side Skybox drive, our new automated pricing product that leverages, our powerful marketplace data continues to progress and has moved into its beta phase. We are incorporating feedback as we march towards an exciting launch in the latter half of the year.
Our leading products are the result of consistent investments focused on driving long term stickiness on both sides of our marketplace.
Our installed base of sellers on Skybox already includes more than 50% of professional sellers.
On the buyer side, we continue to grow by adding new buyers and driving accretive repeat order activity.
In tandem with our investments in loyalty and differentiated buyer experience the portion of repeat orders placed on Vivek.
Increased to 56% in 2022 from 47% in 2018.
We know our buyers better than ever before and offer personalized recommendations and campaigns.
Even with our repeat rates trending higher across categories. There is still room to grow as we drive repeat behavior, among passionate sports and music fans.
At the same time, we will continue to attract cohorts of new buyers onto our platform, creating an ever growing network to nurture for repeat purchases that provide a tailwind for our margins.
Our strategic and operating principles are grounded in driving profitable growth. Our approach has always been to execute with discipline and rigor and maniacal testing such that we continue to attract new buyers, while increasing repeat rates through our consistent focus on things we can control.
Raising and consuming capital to drive unsustainable volume is a strategy that does not endure.
Sustained gains stemmed from differentiated product service and value and that is where we invest in itself.
To conclude we made important strategic progress this quarter and delivered healthy growth profitability and cash flow, we continue to strengthen our product and market position, while our strong balance sheet served as a substantial asset that we are ready to deploy to continue our track record of outpacing industry growth.
With that I will turn it over to Larry.
Thanks, Dan.
We kicked off 2023 with an exceptional first quarter and are raising our marketplace <unk> revenues and adjusted EBITDA guidance to account for our results to date.
I'll discuss the first quarter in detail before turning to our updated outlook for 2023.
Our first quarter 2023 marketplace.
$856 million increased 15% year over year, driven by a 13% increase in total marketplace orders and a 2% increase in average order size.
Our strong <unk> growth reflects the robust live event calendar, particularly in March coupled with a relatively easy Q1, 2022 comp due to the negative impact beyond the crime variant had on demand in Q1 of last year.
MLB opening day of marquee event that garners significant GOP shifted back into the first quarter. This year.
We also saw unprecedented demand for the World Baseball classic and top artists on sale activity, including trade can be entre.
Yeah.
Our first quarter 2023 revenues of $161 million increased 23% year over year, driven by marketplace GOP growth and an improvement in take rate.
Our take rate calculated by dividing marketplace revenues by marketplace.
With 16.0% in Q1 2023 compared to an unusually low 14, 9% in Q1 2022 due to the MLB lockout and several prominent concert tour cancellations.
Cancellations represented one 4% of pre canceled in Q1, 2023, which is down considerably from four 5% in Q1 2022.
This decline in cancellations provided several hundred basis points of year over year revenue growth.
Okay.
Our first quarter 2023, adjusted EBITDA of 42 million doubled year over year.
Driven by a combination of topline growth and margin expansion.
Margins benefited from improved marketing efficiency, which we achieved despite continuing intensity in the competitive environment as we continually seek pockets of improvement.
First quarter adjusted EBITDA margins also benefited from the cadence of certain brand related marketing investments along with tailwind from changes to our loyalty program.
In aggregate marketing timing and loyalty changes benefited adjusted EBITDA by approximately $8 million in the first quarter.
Accordingly, Q1, adjusted EBITDA margins were especially strong.
Results in the first quarter likely representing an outsized portion of full year EBITDA relative to a typical year.
Nonrecurring benefits aside we are encouraged by our continued underlying progress towards our long term EBITDA margin targets as we profitably captured underlying industry growth.
Cash flow was also strong in the first quarter, we generated $65 million in cash from operation and expect 2023, EBITDA to cash flow conversion to approach historical levels.
Our cash balance of $303 million exceeded our debt principal outstanding by $31 million at quarter end.
Our cash balance also reflects $8 million of share repurchases completed during Q1 as we fully utilize the remainder of our $40 million repurchase authorization during the quarter.
Turning to our updated outlook.
We are raising our guidance for each of marketplace E revenues and adjusted EBITDA to account for a tremendous start to 2023.
We now anticipate 2023 marketplace <unk> in the range of three five to $3 four zero billion.
Revenues in the range of $605 million to $630 million and adjusted EBITDA in the range of $115 million to $130 million.
Our updated outlook contemplates continued intensity across the competitive landscape, coupled with awareness of a potentially weakening macroeconomic environment, although we have yet to see any weakening in demand for live events.
Our 2023 outlook also reflects a more challenging comps Q2, and Q3 as we lap the periods that benefited from the occurrence of previously postponed concerts.
We have multiple paths to accelerate our trajectory and build long term value.
We see a vibrant long term growth outlook for live events, and we are very well positioned with our sizable cash balance ongoing cash generation loyal user base of buyers and sellers and superior product and data.
We have the balance sheet and internal capabilities to seize upon synergistic opportunities in ticketing or adjacent Tam enhancing areas that leverage our technology platform and ecosystem of buyers sellers and partners.
We also continue to evaluate all available opportunities to optimize our capital structure to drive long term shareholder returns.
To wrap it was an exceptional quarter for growth profitability and cash flow.
Live event industry continues to see robust demand and our team is delivering consistent outperformance, which serves as a testament to our ability to win in the long term.
To use them.
Thanks, Larry.
It was a truly exciting quarter and start to 2023 I'm proud of what our team delivered and excited about what we can accomplish at the live event ticketing environment evolve and we continue to drive long term value.
Yes.
In addition to our exceptional financial results I would like to highlight that we recently published our inaugural environmental social and governance update.
Our 2023, ESG factsheet outlines key initiatives, including our commitment to environmental sustainability, our dedication to diversity.
Our investments in our communities and our responsibility to safety and security we are committed to ethical decision, making across the organization and we are proud of our combined majority diverse leadership team and board.
We also recently celebrated world, which day with our partner <unk>, who we have been working with to grant life changing wishes, sending children and their families to events like the NC double a college football championship.
Daytona 500, and the NCI double a college basketball final four.
As a newly public company, we look forward to continuing to make positive contributions to our communities. While also delivering strong financial results.
With that operator, let's open it up for questions.
Sure thing.
To ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
In the interest of time, please limit yourself to two questions. Please standby, we compile the Q&A roster.
One moment for our first question.
Our first question comes from the line of Jason Bazinet from Citi. Your line is open.
Thanks, I just had two quick questions.
I was wondering if you could just talk about the increase in repeat orders and talk about what's driving it and how we should think about.
Margin implications if that continues to improve.
And then second this is a little bit of a strange question since you've raised your guidance, but can you just talk a little bit about the deferred revenue balance that I think sort of ticked down sequentially.
Sequentially is that meaningful at all in the context of future revenue growth.
Hey, good morning, Jason.
Yes look I think we've been.
Really thoughtful and invest.
Deliberate about our investments with respect to engagement.
And ensuring that our product is differentiated in a way that drives users to engage more with us and we're seeing a lot of that start to pay off as we talked about repeat rates being higher and I think that we started these investments in 2018, and almost 1000 basis point shift in order mix of repeat buyers. So we're seeing a lot of that goodness.
We're pretty excited about that and continue to invest in areas that drive that engagement.
Such as our free to play product that's launching later this month.
Look at margin right I think we've always talked about the ability for us to drive incremental margin leverage and certainly through our repeat buyers that is one element, where we are significantly more profitable on a repeat buyer versus a new buyer at despite the fact that we are first transaction profitable on new buyers.
So I think we continue to invest in all of those things. We think as we continue to increase our product. We expect to continue driving increased engagement with consumers that we think will play out in our long term story here that I'll punt that to Larry can you talk to your margin profile as well.
And quickly on the repeat orders.
A metric that will provide going forward on an annual basis, because we think there is.
Continued room to run for the foreseeable future and we will continue to see nice mix shift as well.
More cohort aging and the improvement of each of those cohorts as we focus on our buyer experience continues to grow.
On the deferred revenue balance that's primarily reflects our royalty accruals.
And so there was a quick note in the prepared remarks.
Around continued refinement of our estimates.
On what utilization will be.
The loyalty program.
And so youll generally see that number being pretty stable, but those estimates continue to mature as we get more.
David essence, we're still pretty early in the overall program maturation base.
That was really the rebalancing.
Okay. That's great. Thank you.
One moment for our next question.
Yes.
Our next question will come from the line.
Ralph <unk> from William Blair. Your line is open.
Good morning, and thanks for taking the question can you talk about some of the marketing efficiencies you saw in Q1, Larry I think you talked about $8 million.
Benefits, despite a tough <unk>.
Pettitte environment, so maybe a little bit more color on that and expectations going forward and then just sort of bolt on to that in the letter talks about the timing of certain marketing investments can you also provide a little bit on that and then I have a follow up.
Okay.
Yes, so I would characterize it.
Embedded a little bit about the $8 million.
The commentary.
That is the element that was more timing.
The balance of outperformance being more.
The sustainable efficiency.
On the sustainable efficiency I think we've acknowledged that we're in a.
Pretty intense competitive environment, but put that back doesn't exempt us from continuing to drive efficiency as we've always done.
This quarter was a good example of that where we saw particularly in the performance marketing realm. Some some pockets of opportunity to continue to refine and drive.
Efficiency.
Pretty granular and detailed when you pick apart how we got there.
And a little bit of secret thoughts, but I think it's sort of endemic to who we are that that will continue finding those pockets.
There definitely is a meaningful portion of that that we believe is a sustainable.
Efficiency that we drove.
Great and just one more if I could just on the competitive environment can you maybe just provide an update I guess, what you saw this quarter the trends.
On competition, and maybe how that compared to previous quarter. Thank you.
Hey, Ralph it's Dan.
I think when we look at it.
That's one of the pieces that we think.
An important distinction I think we've seen a lessening of the competitive activity.
If anything I would say that space as we continue to see consumer resiliency has become more competitive so I think.
A testament to some of our efforts here and our ability to.
Continue to drive efficiency, even in that environment.
I think this is just when you look at the advantages we have with our first party data with the ability to drive.
Marketing algorithms combined with all of the infrastructure, our Sky box platform. Our engagement engine all of these things firing together such that even in a heightened competitive environment. We are still able to drive earnings and profit really efficient manner.
Great. Thanks, Dan Thanks, Larry.
Enrollment for next question.
Okay.
Our next question comes from the line of Maria Rips from Canaccord. Your line is open.
Great. Thanks, so much for taking my questions and that congrats on strong results.
First can you maybe share a little bit more color on the macro environment and consumer discretionary spend any notable changes in consumer purchase behavior that you would highlight and as ticket prices sort of stay elevated are you seeing sort of consumers trading down to less expensive event and then I have a quick follow up.
Yes.
Yes, I'd say no change observed.
Keeping with prior quarters, we continue to acknowledge that there is a lot of chatter and concern out there that that will change and not just in future, but continues to be the case that.
We're seeing very robust demand.
Across our event categories across.
<unk> points maybe.
We continue to see average order size.
Increasing broadly in line with historical levels.
Level.
On top of that I'd say, if anything we've been pleasantly surprised by the supply.
Calendar.
There was a little bit of a.
Disconnect between our tone on industry outlook for the balance of the year.
Some folks that are closer to I mean, we live nation, who has <unk>.
Information that we don't.
On who's coming up in the calendar and as it played out I think they are happy to see that.
They didn't know something we didn't know is some of the major announcements coming like.
Great. Most recently Aerosmith and that has led to what has continued to be a really strong events calendar and it gives us optimism that despite lapping a bunch of concert postponements, we have a very robust supply environment to match up to that.
That demand dynamic.
Got it that's very helpful. And then secondly, you had really strong cash generation in Q1 can you maybe just talk about key drivers behind that kind of would that enabled and then how should we think about cash conversion going forward.
Yes, so generally speaking.
We have really nice cash conversion.
The main uses of cash as you expect from EBITDA to true cash generation will be.
Interest expense.
And taxes.
Partially offset by working capital benefit as we grow.
The seasonal fluctuations beyond that conversion are really driven by working capital and with the way our working capital dynamics, where you should think of.
It's less about volume we deliver.
<unk> and more about the volume delivery in the last month of the quarter.
And so March is a pretty strong month.
So perhaps counterintuitively Q1 ends up being seasonally stronger on working capital in Q4, because the end of Q4 slows down post holidays.
So because march and strong.
Seasonal strength in Q1.
That if you get into Q2.
Will soften a little bit at the end of June as post NBA and NHL playoffs, and so you see a little bit less activity at the end of the quarter, which is flowing through on the working capital.
Speaking of general cash conversion.
Historically said, we think our true cash generation in the year will be 60% to 70% of our EBITDA again most of that Delta.
Interest expense and cash taxes. This year, there's a little bit of noise will likely be below that level in terms of cash taxes, which is great offset by the remaining elements of our store credit redemptions.
So the net of those two will probably be on the lower end of our historical range, but should be back in that range. After 2022, where we had a bit more noise as we cleaned up some pandemic related items.
Great. That's very helpful. Thank you very much for the color.
One moment for our next question.
Yeah.
Our next question comes from the line of Benjamin Black from Deutsche Bank. Your line is open.
Alright. Thank you for taking our question. This is Sean <unk> on for Ben.
Could you. Please give some color on how skybox is supporting growth there, possibly I think.
Maybe assumed the supply side of the information on the platform.
Can you repeat the first part of the question I'm, sorry, I didn't catch all of it.
Yes.
Give some color on how skybox is supporting growth here.
Possibly adding to your competitive strength to failures.
Accretion on the platform.
Yes, sure thing I think skybox continues to be the industry leading platform.
ERP for the professional selling community over 55% of professional sellers now on the platform and when you think about that that really means that.
It professional sellers represent 80% of the industry than more than 40% of the entire industry flows through our infrastructure and we utilize that data to ensure.
That we can empower our best in class marketing algorithms, which allow us to compete efficiently.
Sure.
For our customer acquisition. Similarly, I think as we continue to develop technologies, such as Skybox drive, which we talked about it in its database that allows us to deepen our relationship with sellers as well as we continue to power elements of their business.
And maybe one more if I can.
You ask like how should we think about phasing of the U S for the balance of the year.
Yes, so generally speaking we pointed to.
3% to 4%.
Annualized growth.
Out of the pandemic, there was a bit more noise from chop in the water.
If you had.
That spike in demand some inconsistent supply and so if you look at our trending throughout.
2020 in 2021 ship distortions relative to normal levels.
I'd say more typically.
Not huge fluctuation quarter to quarter from a seasonal standpoint.
A general comment Q3 is usually pretty carefully.
That's largely because a disproportionate amount of volume as regular season baseball that has a lower AOS.
<unk> four is usually quite strong driven by.
World series, all major sports being an action and then some major concert on sales of the following year.
Great.
Nothing as we look to the back half or the remainder of this year.
I would point to anything other than.
Directional performance similar to Q1, we're sort of back to a year over year.
Performance in the low single digit growth over the prior year.
Okay, great. Thank you so much.
Thank you one moment for our next question.
Our next question comes from the line of Stephen Ju from Credit Suisse. Your line is open.
Okay. Thank you so Stan Larry a follow up on the repeat order rate disclosed earlier.
On the back.
So I'm wondering if you could talk about how that moves around during the course of the year and should we think about that rate stepping up or down on a quarterly basis. When there are one off major events.
The World Baseball Classic where you.
You may actually lead to acquire more new users.
Hey, Stephen good morning.
Yes, I think we talked about it a little bit last last quarter or two and we look at repeat rates across the categories. I think we've continued to see is as our investments in engagements are starting to pay for it is that okay.
Cross each of the categories, we've seen the repeat rates for customers continued to trend higher and they're kind of right now they are in.
The highest point that they have been historically, whether youre talking about baseball.
Paul.
Any of the sports category or concert now I think when you go into the deeper part of patient seasonality I think you can almost expect.
Some of the.
Cohorts in sports Youre going to see some of that may be mix, a little bit differently. I E. There is 81 home games for baseball, which is unique versus other categories and so logically you see repeat rates in that category in particular kind of little higher than the rest, but overall, we remain really excited and we continue to see.
A step function change in repeat across every single category that we have.
Thank you.
One moment for your next question.
Our next question will come from line of Logan reach from RBC capital markets. Your line is open.
Hey, Good morning. This is Logan on for Brad Erickson.
Congrats on the results. This morning, guys. Just one quick question on the guide it looks like your EBITDA guidance.
Implies some deleveraging for the balance of the year can you just talk about kind of whats.
Included in the guidance for the expense side, and particularly marketing and kind of how you guys thinking about margins for the balance of the year.
Yeah, Thanks, a lot again.
Yes, it's already been two months since we gave our full year guidance, So I would say thematically.
<unk> for the balance of the year remained consistent namely we continue to take a cautious view regarding the macroeconomic environment and our building in <unk>.
Central for softening.
At the macro level.
And should that happen I think that would be.
Net tailwind relative to what we've assumed.
I think specific to margins probably the more.
Salient item is competitive landscape, which we've alluded to.
It has been.
Pretty inherently anticipated remaining so and as we put together our EBITDA.
EBITDA guidance for the balance of the year, we wanted to make sure we have sufficient flexibility to make targeted investments.
Respond.
As flexible a manner as possible.
In light of that backdrop.
And so we will certainly be as thoughtful and efficient as possible, but we did want to make sure we retain that flexibility.
Okay. Thank you very much.
One moment for our next question.
Our next question comes from the line of Thomas Forte from D. A Davidson your line is open.
Great Tuesday, and Larry Congrats on the quarter, one question and one follow up.
Can you give your current thoughts on industry growth for 2023 and factors that could result in the higher growth rate for the year compared to the projected long term CAGR and then Ken womens sports or other emerging categories to increase the long term CAGR.
Yeah, I think hey, Tom good morning.
We look at the year and then Larry alluded to this a little bit earlier, I think we've been pleasantly surprised by some of the <unk>.
Particular concert strength, that's been announced this year, which is a little on season. The typical for what we see and at this point of the year. So I think if that were to persist.
And in a non typical manner. We're certainly excited about about the upside that we see this year.
In that lineup.
When you look at some of these other sports category. So if you have always looked at as a <unk>.
A more fixed category given the larger league then.
The number of games per season, I think we've also been really pleasantly surprised with some of the strength in women's categories. If you look at F. One and kind of the resurgence of our emergence as bad as it really strong category. So.
There's a few categories there that we've that we've continued to see emerge across both.
Sports and concerts that give us.
Certainly upside potential in the remainder of this year and then long term as well.
Great and then for my follow up can you quantify how did it picks has had a positive impact on your Tac through vivid seats.
Yes.
Talk about engagement.
We look at <unk> It takes as a as a fundamental part of our engagement engine wear.
We have a vehicle now to engage you between events right, which we think is part of nurturing that entire lifecycle of the customer. There is the event theres between event. There is at the event and we've deployed our marketing to engage people at the event and certainly to acquire the user there in between the event is where did it fixed comes in.
And we've talked about the number of entry.
Ryan I think our average entry now per month is in.
In the in the mid to high double digits.
And where we continue to see strength. There is as we have users who are both using our vivid fixed product and <unk> product anytime. They are cross users of each they are stronger users than if they were to just uniquely use one platform. Hence we get really excited about our investments there and in particular launching our free to play product.
Which will open up our entire audience base to what we think is a very unique and engaging product.
Thanks, Dan.
One moment for our next question.
And our next question comes from the line of Schweda could.
<unk> from Evercore ISI your line is open.
Okay. Thank you for taking my question.
Dan what do you think.
How high can repeat orders as a percentage of total or Scott what are you shooting for it seems like it's been trending up year after year to 56%.
Where can it go on your platform and how does that compare to industry repeat rates perhaps.
Do you have a sense of where it is uncompetitive platforms. Thank you.
Yeah.
Yeah I'll go ahead I'll start with.
Where it can Ron I think we continue to see runway for it to increase right. So I think we're excited that you know over the past four to five years, we've raised that niche from an order order mix perspective by almost 1000 bps could you say anything theres runway up but I think it's balanced when you think about the long term and maybe even medium term impacts.
Here is Tac as high today I think.
<unk> tax rate normalizes, I think theres, a great opportunity and for us with our multiple ways to acquire users to go out there and drive that so I certainly expect in a world where.
CAC normalize you might see a rebalancing if you will but certainly I think if you if you decompose that into the actual repeat rates of the users as well I think that continues to trend higher and I think were excited again about how our products will drive.
The repeat rates of the users that then drive the industry level mix of repeat orders.
Okay. Thanks, Dan any any sense on where it is for the industry or even by category. It sounds like sports is higher.
Yes, I think when you look at sports I think just to make that point, yes, you have a very.
Unique where a unique difference versus perhaps others, where theres just so many.
Home games in the nature of this home games drive repeat.
Sure.
When we look across the competitive landscape I think.
We feel pretty strongly that our repeat rates are.
Our trending perhaps higher than the industry index.
And I think as we continue to invest in the products we think.
That that that outperformance there should grow on our side.
Okay. Thanks, Dan.
One moment for our next question.
Our next question comes from the line of Matt <unk> from Piper Sandler Your line is open.
Yes.
Thanks, guys congrats on the strong results.
Yes, I wanted to touch on how youre thinking about balancing growth and profitability here amid the competitive dynamics and the macro uncertainty, but also still making sure that you are taking advantage of the strong consumer demand environment here in the near term.
Good morning, Hey, Thanks for the question I'll give you give you give you two things.
I think we've always.
Focus I think on the long term here and in the long term, making sure that we can build a sustainable business.
Where we are able to deliver both growth and margins and I think this is a quarter, where I think we demonstrated we clearly have the assets and the technology and certainly the execution of the ability to to drive both.
As we look.
And to the long term and how you balance that I think we've always said.
Do we want to do we want to go out there and buy fleeting or temporary volume and I think thats just not a not a good long term strategy to be deploying capital that doesn't really bring any call. It repeat behavior or long term profit then you know and I think that's where you're seeing when we look at re keep water mixed with some.
The questions, we've gotten trending higher there.
Investing in products that drive repeat behavior, I think we're always going to do that in a world where.
Thank the capital that's out there and being <unk>.
Utilized in a manner that is not sustainable runs out I think we will have.
The ability to then continue to go and build our user base in a stronger way.
I would point out as well I think where others, perhaps are buying that volume into bleeding cash reserves. We certainly are on the other side of that where we are efficient in driving repeat behavior, but also extremely efficient on the cash generating side and we sit here I think with the balance sheet that affords us a ton of opportunity as we look out and say.
How can we deploy this capital and as we see our investments working we are unafraid to deploy them.
<unk> to drive growth and product innovation, and we're certainly unafraid to deploy that inorganically as well should the right opportunities surface for us to accelerate any of our areas of strategic growth.
And then and then as a follow up.
Could you just maybe help us understand where there is the potential for further integration for vivid picks over the course of 2023 and 2020 for the the free ticket offering is an interesting one but where can we kind of be looking beyond that as we think about the crossover opportunity.
Yes, I mean, I would think about it maybe in two ways.
Certainly really excited about our our daily fantasy product, which is a little bit more limited from a regulatory standpoint.
Being compliant there and I think our launch of our free to play is the ability now for us to take the engagement engine that has been limited.
Certain audiences to be able now to drive that.
Every user that we have in one single App and we remain.
Bullish about the ability to do that especially in a world where you know I think we've talked about in the prepared remarks.
Our social mobility, our social engagement is now up 50 times from which we started that and we have the highest net positive and social sentiment amongst our competitive set I think that combined with accretive play product across.
Entirety of our user base is where we think we've got a standout offering in ways to engage users between events.
Yes, Matt.
Small addition to that I think bears really fertile ground to cross pollinate.
Information promoted feed users into a visit.
User.
Experience. So for example, if we know that you purchase a ticket to a game, we can <unk> CRM to make you a targeted offer.
We can cross pollinate pricing, so if you're on David picks based pricing will be real money, but there are opportunities for ticket discounts in.
Other leaderboards type awards per year really progress ecosystem benefit really anywhere.
Okay.
Okay Alright, thank you for a moment for our next question.
Our next question will come from the line of Andrew Moreau from Raymond James Your line is open.
Hi, Thanks for taking my questions two if I could please.
First I think you've given a little bit of color on this in the past around the world.
There'll be lock out and some of the contract cancellations in <unk> 'twenty, two but as we look out into the events supply side of the equation like how big a deal can some of these high end concert tours be thinking like the Taylor Swift the dregs that Blink 180, twos I guess given that there is a kind of a quote unquote.
<unk> impact since it didn't happen in 'twenty, two kind of how big of an impact than an individual high end tour half.
Yes, I think we are Directionally directionally say, we have a portfolio of events and I think that perhaps echo comments others have made.
While event calendars will have impacts.
Given month or quarter over the course of the year.
To even out so it is not.
The proverbial hit driven business.
Some other industries maybe.
So generally I think we spoke to you in Q1 of last year a larger.
Sure being potentially around 1% of full year <unk>, if you're a true headliner.
If you talk about the biggest pipeliner, who perhaps may be onto or at the moment.
Taylor, So that you could you could probably do a bit.
More than that.
On that one too early but directionally, even the largest banks are going to be.
One ish percent of Gov's, so very very diversified.
Other dynamic.
Referred to this before you have the pros of a really robust 2023 event calendar with the number of huge acts as you noted.
Taylor Swift beyond take rate.
82.
2022 had its fair share of a very good and then also had postponed.
Lynn.
Which was why in our guidance, we have taken a fairly cautious view around the.
The high bar to get above to drive growth in 'twenty, three even with a really robust calendar.
And as it played out.
23 calendar has been sufficiently robust.
To get to.
Above the bar.
But.
With the potential exception of the largest.
Sure there will be big names that go on in 'twenty four you heard <unk>, perhaps refer to their outlook for sustained high single digit growth in 'twenty four and beyond.
We're confident that the.
The calendar will continue rolling months.
Great. Thank you and you kind of led into my second question, which is on the impact of lapping those postponed events from 'twenty. Two is that primarily going to hit orders or is there an AOS component to that as well. Thank you.
So Q1 or.
<unk> growth was 15% of that 2%.
The balance 13% was quarters.
As we alluded to.
No reason to believe that Pos trajectory will meaningfully diverged from what we saw in Q1, which is generally consistent with what we've seen throughout cycles over over prior years.
In the 3% to 4% annualized growth range with the balance.
Of growth being driven by.
Order count.
Great. Thank you.
Thank you.
Our next question.
And our last question comes from the line of Dan <unk> from the Benchmark Company. Your line is open.
Great. Thanks, Good morning, really strong results guys just wanted to dig in on two areas that you've kind of already touched on obviously a lot of questions have been asked already but.
With the with one of the players.
Players finally confidential IPO.
It's sort of an interesting dynamic.
Feel like Theyre, probably.
And the weakest position.
The group and so as you guys think about the dynamics I don't know if youre seeing either sort of a widening of take rate across categories. So maybe more aggressive in sports versus concerts, which I think you've called out in the past and subsequently sort of their needs to show profitability.
How either you standard later you are thinking about.
Yes.
If they have to moderate spend at some point in order to.
Proceed with that process when we start there and then I've got a follow up for you.
Hey, Dan Good morning, Stan.
Thanks for the question I think when we when we hear.
Potential things I think we focus really on the things that we can control and I think honestly we welcome.
Our uniform transparent reporting field, where I think again our differentiation.
Certainly on the P&L side will be.
Very well differentiated in terms of an entity or accompany that.
Is burning cash versus one that's generating cash so I, certainly think our ability to stand out and be differentiated should that hypothetically be at what comes to market I think it's something that we look forward to.
Again, as we continue our investments in that arena too to drive.
Our long term strategy and I think our balance sheet is going to be really important here.
And certainly I think where we see opportunity I think we've talked about our levers to drive either growth or profitability or innovation through product I think certainly when there is an opportunity to deploy that cash balance sheet.
To drive disproportionate.
Growth I think we're certainly willing to do that in an environment, where I think we see.
Competition, perhaps with a shrinking cash balance again, I think we are excited and unafraid to deploy our capital to continue to win the long game.
Yes, Dan I think.
Part of the peculiar dynamic as we see it today and embedded in your question you said it is they need the pursuing demonstrate profitability.
Which one would I think reasonably presumed in the current environment.
The growth at all cost profile has gone somewhat out of favor demonstrating favorable unit economics is important.
We don't have direct insight or you can pay us with certainty, but generally our metric that we can see a pretty accurate and predictive and we are not seeing that behavior.
And so when we talk about the potential unlock.
If we see folks shift to pursuing profitability in the current period. That's when we think we will really see a benefit and a tailwind in both volume and margin.
It's one thing to say next year, we promised.
They are to deliver it in a current period.
We're excited for when you have to deliver it in the current period on equal footing to what we're doing.
Got it that's super helpful.
<unk>.
Outside of marketing and you've kind of alluded to this.
I mean, given the earlier question on cash conversion and that really strong flow through in Q1. As you guys are able to maybe delay or push off the marketing spend and haven't really strong flow through.
You guys are going to generate a boatload of cash this year youre already.
Net debt net cash positive at this point. So you have some opportunities in front of me I don't know what the environment from either M&A or kind of where your head is that for capital deployment, given the share buyback a little bit of a trickier.
Competition from here, but just help us think through sort of maybe.
Other uses of cash at this point other than just it's always nice to have and building on the balance sheet in uncertain environment.
Yes for sure Dan.
Yes that I think I think the best way to frame. It is on the capital structure I would certainly say, we're always going to look for ways to optimize that.
Ultimately deliver.
The most shareholder value that we can.
But certainly as we look at the industry.
If anything as we continue to generate cash I think our posture towards both organic investments and inorganic one.
Should the right opportunity surface I think youll see us.
Aggressively pursue things that we think are accretive to.
So the asset base that we have that will continue to drive things. So I would say aggressive posture and certainly a balance sheet to support it across all dimensions.
Alright, great. Thanks, very much guys I appreciate it.
Thank you and that ends our Q&A session for today.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
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