Q2 2023 Eventbrite Inc Earnings Call
Which was nearly three times the profitability of a year ago.
From the topline to the bottom line, we have substantially grown our business in the first half of 2023.
The most urgent priority of our creators is selling more tickets and eventbrite scale products and consumer brands are uniquely positioned to help them succeed faster.
Our results provide strong momentum as we head into the second half of 2023 and as we focus on improving both the creator and ticket buyer experience in our marketplace.
We know the audiences are seeking the vast and diverse categories found on Eventbrite from great live music to summer time, food and drink festivals to air shows and even reptile Expos.
Nearly 33 million users bought or registered for tickets on eventbrite during the second quarter, which is a new all time record surpassing pre COVID-19 levels.
Total ticket volume grew year over year in each of our top five geographies with the U S setting a new Q2 record for tickets transacted.
And monthly average users on the Eventbrite mobile App continued to accelerate growing 39% year over year in Q2.
The team focused on three core areas in the quarter to boost demand in the marketplace.
First increasing consumer traffic to event listings second boosting SCO and discovery relevance and third launching content partnerships to gain broader awareness for seasonal events.
To drive more traffic to event listings. We recently launched a video feature to give creators the ability to showcase their event more dynamically to consumers.
Creators who use this feature saw a 74% increase in consumer traffic to those event listing.
To increase relevance in S. E T O N on discovery pages, we're using machine learning to deliver better personalization and event recommendations to our things to do and for you pages improving listing views by 64%.
To reach a wider audience, we've launched a new partnership with either the digital media brand focused on dining in restaurant discovery, which reaches 30 million people each month.
A jointly curated collection of the best Springtime food events in New York City became one of our most highly viewed city collections ever.
We plan to do many more brand partnerships with theater and others to boost consumer traffic and bring new audiences to eventbrite events.
These initiatives and more increased our ability to drive ticket sales through notification browse and discovery channel.
Eventbrite drove over 6 million paid tickets, which equates to $202 million in gross ticket sales and another 13 million free tickets in the quarter.
We drove 4 million tickets in the music category alone.
Listing on Eventbrite Sparks, a powerful growth flywheel for creators and we're investing to build even more value into demand generation features. This is a key unlock for event success, because each incremental ticket sale represents revenue opportunity through food and beverage merchandize and other event related transaction.
Some of our targeted investments in Q2, we're focused on the ads product to drive demand first Eventbrite adds launched internationally in Canada, and Australia, expanding to our third and fourth largest markets.
Second ads are now available for recurring events, meaning creators can easily manage multiple promoted listings with a single campaign.
Third we're deploying generative AI to support end to end marketing motion.
And now helps creators it fell quickly it's something that may have taken them ours in the past, giving them more time to focus on creating content.
And then the coming quarter, we aimed to expand AI to event listings creation, reducing the time it takes to publish an event to less than one minute.
And fourth we continue to make progress on our cost per click model for ads, which we expect will drive more dynamic pricing and better transparency for return on AD spending.
Non ticketing revenue from Eventbrite, boosting ads grew 27% quarter over quarter with ads revenue exceeding $1 million for the first time on the one year anniversary of its launch.
We believe that the growing appeal of our marketing and advertising capabilities is a strong signal that creators value of eventbrite as a marketplace and demand engine.
As we spend more time and effort on the demand side of our marketplace. We remain fully committed to the success of independent entrepreneurial creators.
Our creator base has grown year over year for nine straight quarters that includes a record number of frequent creators in the second quarter, representing about 24% of total creators.
Finally, I wanted to give you an update on one more move we're making to better position the value and accessibility of Eventbrite as marketing tools.
Today creators come to Eventbrite for ticketing and then as a second order. They appreciate the strength of booths should drive more ticket sales through paid social advertising in premium email marketing tools.
As we've gotten better at delivering value to our customers through a great product experience, we realize that it's important for all creators have access to these features.
Therefore, we're changing the onboarding of Eventbrite to include these marketing tools as part of the core product.
Beginning in Q3, we're introducing a new packaging framework that offers this comprehensive feature set to event creators are free and paid events for a fee.
We're excited to be opening up access to boost to a much wider set of creators and will bring you updates as this rollout continues.
Before Lanny discusses financial results I want to welcome Doctor P. Alarm on Schoen, who is joining our board of directors today.
Pelorus as senior director of Engineering, leading AI research of Google in a groundbreaking leader in this field.
We're excited and delighted to have her join the Eventbrite team and look forward to her guidance and strategic vision as we build innovative product experiences for our customers.
Now Lanny will discuss our Q2 results and Q3 outlook.
Thank you Julia we had a strong second quarter that moves us another step closer to our long term financial targets.
Revenue of $79 million was at the high end of our outlook range of 19% year over year and up 20% on a constant currency basis.
Gross margins rose to a new record at 69%.
The higher ticket volume and increase in services revenue and control over fixed costs.
Adjusted EBITDA was $12 million, excluding restructuring and other non routine costs the.
That equates to a 15% adjusted EBITDA margin for the quarter on an operating basis.
Up two points from Q1 and advancing toward our long term margin target of 20% or higher.
Finally, we ended the second quarter with a strong balance sheet available.
Available liquidity increased by $8 million during the quarter to $366 million as described in our shareholder letter.
I'll provide more detail on second quarter results and then discuss our outlook for Q3 and the full year.
Total creators, including those hosting free events.
<unk> 420000 in the quarter.
Paid creators grew 12% year over year to 189000.
Paid events per creator averaged three events down 2% from Q2 of 2022.
Total paid events reached 563000 in Q2.
Up 10% year over year to a new all time record.
Including free events, a total of 1.6 million live experiences issued tickets on Eventbrite during Q2.
Paid tickets prevent averaged 41 down from 43 in the same quarter of last year.
Total paid ticket volume of $23 3 million was up 7% versus a year ago.
The U K and Canada were the strongest in Q2 and paid ticket volume grew roughly 5% year to year in the United States.
Average ticket price was slightly above $38 for the second quarter, essentially flat compared to a year ago and.
Gross ticket sales were $890 million in the quarter.
Finally revenue take rate was eight 9% in the second quarter.
A full point higher than a year ago and another new record.
Revenue per ticket was $3.39.
Up 12% versus a year ago.
These improvements in monetization flow from investment we've made in the core product.
Increasing revenue from boost and Eventbrite ads.
This changes undertaken in early 2023.
As we continue to emphasize and expand eventbrite stability to help creators grow their attendance.
We see opportunity to add even more value further differentiate our marketplace and strengthened monetization into the future.
Revenue from Eventbrite ads grew by more than 40% from Q1 to Q2.
And while advertising remains a small contributor to total revenue we're encouraged by the progress we've made in our first year.
On an advertiser account level Eventbrite ads is already producing the revenue and take rate uplift that is at the high end of the ranges we outlined during investor day.
Validating key assumptions that support our strategic investment in ads.
Looking ahead fine tuning, our search algorithms and introducing cost per click pricing are important next steps for the growth of Eventbrite ads.
Turning to the P&L since we detailed the quarter's line by line results in our shareholder letter I think it may be more helpful. On this call to look at how our business model is performing relative to a year ago and in particular against the Rangers and targets, we put forth at our Investor Day last June .
First in terms of our overall unit economics.
Eventbrite is revenue per paid ticket in the first six months of 2023 was $3.37.
Compared to $3 <unk> per ticket that we showed at the Investor meeting.
We've achieved that 11% improvement even as average ticket prices have been steady.
Our investment in our core product the introduction of new marketing and promotion features and thoughtful balanced pricing actions.
As a result, our revenue take rate has improved by a percentage point since the Investor day, and we believe there is plenty of opportunity for these same levers to deliver further gains in unit economics and take rate in the future.
We've also made significant progress to our long term expense ratio and margin targets, which we present on an operating basis, excluding non routine items and restructuring charges.
I'll note here that the restructuring initiated earlier this year is on track and we expect roughly 13% to $14 million in annual operating cost to be freed from our expense base and made available for partial reinvestment in the talent and product.
We expect the costs associated with the restructuring to be less than $20 million for the full year.
At the time of the Investor Day gross margin was 64% on a trailing 12 month basis.
And we laid out a long term gross margin target of 68% to 70% of revenue.
As of the first half of 2023, we're already in the middle of that target range.
And we expect to scale to the top of the range as ticket volume and services revenue continued to grow.
Product and development expenses were 32% of revenue at June 2022.
And we stated that with revenue driving investment and consistent management of expenses, we can move that into the 27% to 30% of revenue range over coming years.
As of the first half of 2023, we've shaved four points off this ratio.
At 28% of revenue product development costs are already within our target range.
Our new development centers in Spain, and India should make these gains sustainable as we continue to build for profitable growth in the future.
Sales marketing and support expenses were 20% of revenue at the Investor Day, and we set a multiyear target of 17% to 20% of revenue for these costs.
In the first half of 2023 sales marketing and support expenses were 21% of revenue slightly higher than our long term model.
We are reorganizing support teams into lower cost centers outside the United States, and we expect to achieve savings and leverage from this starting in 2024.
Additionally, we've stepped up marketing spending to accelerate our marketplace repositioning.
And is that strategy unfolds, we expect enhanced revenue to provide the sales and marketing leverage previously outlined.
General and administrative expenses were above 30% of revenue at the Investor day and as of the first half of 2023, G&A is equal to 26% of revenue and rapidly approaching the 22% to 24% of revenue range. We expect in the long term model.
And one final note. We've also taken steps to manage noncash expenses.
Most notably the issuance and amortization of stock based compensation.
As of the first half of 2023, depreciation and amortization expenses, including SPC, we're 21% of revenue.
That's two percentage points better than the low end of the range, we communicated a year ago and we plan to continue to manage these costs judiciously.
Putting the pieces together adjusted EBITA margin in the first half of 2023 was 14%.
More than two X, where we were at Investor day, and solidly on track toward our goal of 20% or greater than the long term.
Based on our progress and our plans, we expect to reach 20% adjusted EBITDA margins before the end of 2024.
Even as we will continue to invest to drive long term revenue growth of 20% or better.
Now wrapping up with our business outlook.
We currently anticipate third quarter revenue to be within a range of $79 million to $82 million.
The midpoint of that range would correspond with a fairly normal seasonal revenue pattern from Q2 Q3.
Looking to the full year, we've updated our business outlook and now anticipate total 2023 revenue to be within a range of $320 million to $330 million.
At the midpoint of that range revenue growth for the year would be 25%.
Slightly higher than in our prior outlook and consistent with our long term model of 20% or better annual revenue growth.
Based on the expense and profitability progress I described earlier.
And our strong margin performance of the second quarter and first half.
We're also updating and raising our adjusted EBITDA profitability outlook for the year.
We now anticipate that adjusted EBITDA margins will be in the range of 12% to 13% for the year.
Two to three points higher than in our initial view.
At the midpoint of our revenue outlook range in.
And excluding the impact of restructuring costs and other non routine items.
We expect adjusted EBITDA to be roughly $40 million for the year.
In summary, we're pleased with our financial and operational results year to date.
And we believe we are well positioned to drive our marketplace evolution across the remainder of 2023 and into next year.
I'll now turn the call back to the operator for the question and answer portion of the call.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
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The first question comes from Justin Patterson of Keybanc. Please go ahead.
Great. Thank you and good afternoon.
Julia can you talk about some of your marketplace transformation priorities for the second half you've clearly made a lot of progress with boost and ads and improving the discovery experience.
Nice to hear what's next there.
Then for <unk>, obviously, a lot of progress with the cost structure of this year.
You get the unit economics.
Benefit from adds flowing in and just get deeper into some of these cost savings initiatives I would love to hear a little bit more about how youre thinking about the pace of reinvestment versus potentially realizing that 20% earlier. Thank you.
Thanks, Stephen I'm really proud of the achievements we've made in the Q in Q2 as evidenced in our results, particularly around achieving a record 33 million unique buyers and having our AD that may use ground close to 40% year over year. So that's in Green we're building on.
That momentum and making targeted disciplined investments to focus on the demand side of the marketplace and really seeing some great results from that move which I talked about in the call event, something that I'll highlight our and you're making the event listing and the storefront itself more dynamic by them.
Adding features like video so buyers can really see the essence of of an event and talked about this on the last call, but we've seen now since then 74 increased 74% increase in page views or events that have used video to market their events. Additionally, our personalization.
Can work, where we've been tweaking, how we put relevant content in front of audiences. It's also resulted in a great increase in page views of 64% and then our recent design of the things to do pages that are really some of the strongest backbones of our consumer and discovery work address yellow.
Has led to a 40% increase in followers within the last quarter with the more optimization to come.
So I think that that work combined with.
The content partnerships that we talked about eater and more to come.
Also just really leaning into being everywhere all at once with our content through partnerships with Influencers and more content through social media and that really comes to a great place for the second half of the year, because we have a <unk>.
Round smile on.
Opportunity to drive the right buyer to the right events through the seasonal events, where we saw strength last year. So.
Through our research we know that there are various channels, we're discovering things to do in fact nine out of 10 respondents in a recent consumer survey said that they use more than one way to find things to do and we know that word of mouth is the most common way. So what we're really focused on looking forward in the marketplace is.
To continue improving personalization.
To strengthen discovery on and off of that right.
And to make it easier for people looking for things to do to be incentivized to bring their friends.
We will continue to scale content and Influencer partnerships, and we will really lean into the strongest ticket sales.
Season in later Q3 early Q4.
And Justin on the on the question about unit economics, and expense and investment management cost savings, where do we think about it is that.
We've invested in our core product its put us in a position to be able to realize improving unit economics data through the pricing changes that we made at the start of 2023, the repackaging of our marketing tools that Julia talked about just recently and the growth of advertising as each of those things on.
Our marketplace is generating stronger unit economics, and we're looking at those improved economics to fund and support the investments in things like growing our consumer experience growing our consumer reach funding those.
Where can we get behind the partnership's Julian has talked about so.
The monetization of the marketplace. That's improving unit economics provides provides resources and margin frankly to continue to invest on the consumer side of the business as we look at our margin path into 2024, we see a real clear path to achieving that 20% target long term target before the end of the year.
We will see margin benefits from gross margin on higher ticket volume will continue to see more revenue contribution from higher margin services like advertising will continue to benefit from pricing and take rate upside that we've talked about.
And as we relocate our support and payment teams to lower cost locations and move beyond some of the temporarily duplicated costs that we have today there'll be more leverage there and then finally as we have done and we'll continue to do well manage the operating cost very very tightly. So we see a very clear path to those long term targets and it's not too far away.
Thank you both.
Thank you. The next question comes from Matt Farrell of Piper Sandler. Please go ahead.
Thanks, guys. Congrats on the strong results in the in the really impressive execution you raised the midpoint of the guidance for the full year, which really speaks to the confidence you have as you enter the second half from your perspective.
<unk> has anything changed from a consumer behavior or a creator behavior perspective over the last few months.
Thanks, Matt I think I'll start with the demand for experiences and then Lenny you talked about are a bit more about the guy.
Have a finger on the pulse of consumer trends and we're seeing strong demand signals across the board, particularly particularly for our categories like music.
Film and media food and drink nightlife, performing and visual arts and as an anecdote in the marketplace. We're seeing people really want to get out and connect with one another high singles and dating events are 50% up year over year independent singer songwriter hosted events are up 60% and I'm sure you are not.
He's with us, but AI related events have tripled.
So we're just seeing the strong growth across categories and geographies, it's really about the demand side of the marketplace and I think.
With our business the flywheel of growth is really when you see surging demand you see.
Strengthening confidence on the event creator side, so where we're seeing more and more creators be able to have its more of that in their category because they have that confidence that they'll be able to sell more tickets and so we're meeting them right at that point and you know with our changes that we talked about today, we're putting mark.
<unk> tools.
This paid social advertising email marketing right in front of them at the right time, so that they can continue to strengthen that flywheel and I think all signs both externally and internally point to a really strong second half of the year in terms of.
Take a buyer demand for doing interesting things together through live experiences Lenny.
And then is there anything else you'd add.
As we look at the.
I'll look for the full year, our assumptions are that we'll see continued healthy demand for live events.
Fairly normal seasonality, which always points toward a stronger fourth quarter by a little bit I think the nature of our business today and the nature of seasonal holiday fall events.
They are becoming a little bit more popular and that probably leads to a little bit stronger.
Second half seasonality than we've seen historically and that plays out as we expected.
Those are the kind of things tend to correlate with the higher end of our range.
We expect continued growth for Eventbrite ads.
Over the course of the year, a little bit more noticeable revenue benefit from the organizer fees.
And the packaging of our marketing tools and Joe you talked about.
And maybe as a follow up.
Would love to just hear a little bit more about the decision, making process and the logic behind including the including the demand generation tools into the core product.
And is there any way that we should be thinking about the potential financial model impact of these changes. Thanks.
Thank you.
I'll start with the one and let Lenny talk about the model. Our mission is really to push marketing tools to all of our creators to make demand generation central to the value proposition and this has been something we've worked on over the past nine months and our live events.
<unk> platform is clearly highly valued by creators who are seeking larger audiences and our marketing tools are performing exceptionally well.
For instance, our AI assistant social media AD copy creation flow is launching campaign 30 times, 30% faster and creating three times as many campaigns.
Boost subscribers are seeing a 63% improvement in results achieving a return on AD spend of five to six that so it was that this point that we knew we.
<unk> saw a strong signal of efficacy and success in the customers who are using boost and who are advertising in the marketplace to move that freight and we think by bringing all of this value and growth enablement to the front door, but that's right it will benefit.
Greater and faster growth by creators and better value for the platform. So the timing was right from that perspective, the product experience is ready and we think that the skin all creators the opportunity to benefit from a demand generation tools now fully embedded in the core product.
Not the organizer piece that we're introducing are structured in a way that scales with both the success and the size of the creators never events.
As well as with the value that is provided by Eventbrite. The majority of events and we expect it can be as much as 60% of events, both free and paid events, we will be able to publish their events and use our tools for free as creators have success in their events become larger.
Few of our marketplace and our tools becomes more relevant and more important to them and we've matched the fee structure to that value with a modest scale per event fees to.
Creators for the most frequent and successful creators. We also have an unlimited packages that are available on a subscription basis much like Bruce.
And it's really early days, we'll be rolling this out more fully across the quarter or the rest of the marketplace during the third quarter.
We will update you as we go on and we'll report back as we learn more.
On a per event basis range from $10 to $50 per event, depending on capacity.
Which based on research that we've done extensive research that we've done we believe are very affordable and reasonable for the value that we provide.
Thank you. The next question comes from Kamran.
<unk> <unk> of Morgan Stanley . Please go ahead.
Thanks, Hi, guys.
I'd love to hear your take rates are already up at 9%.
Randy I'd love to just get some color from you on.
Whether or not you think there is room for that to move meaningfully higher.
And.
It seems like we're still a little early in the kind of rollout in terms of seeing.
And the tailwind from the price increase kind of gradually rolled through but would love any kind of update that youre willing to provide there.
And then really nice sequential growth in paid creators quarter over quarter.
After that was down a tick and <unk>.
Would love to hear any color in terms of what you think the.
The drivers of that of that improvement.
Thanks, guys.
Yeah.
Sure. Thanks, Tim.
Great.
The biggest driver right now year over year really is the pricing change on the transaction fees that largely are consumer related fees that we introduced starting to this year.
It applies to probably about 70% of our ticket volumes and it was effective raise the pricing by about 10%, it's a fairly modest amount of.
Price price change relative to the overall value of the event and to the value of the ticket.
But that has gone well we've been pleased with what we're seeing in the market reaction towards the uptake.
And as I said earlier that improvement in.
Unit Economics helps us go faster and more strongly on the consumer's demand generation side of the business.
Uplift from ads and from our marketing tools has also been meaningful over the last year.
Yes.
Probably combined between boost and as we're getting close to diamond Herb paid ticket now that's a little bit of a mixed calculation because about 20% to 25% of those revenues from boost and ads are coming from creators of free events really value our ability to help them market and promote those events, but one.
It's an important driver we're really early days on the as far as Julian said it was about $1 million of revenue will be over $1 billion revenue in the quarter.
Marketplace that didn't nearly a $1 billion of ticket sale transactions. So.
We believe that there is.
Our push to drive these marketing demand generation tools, there is quite a bit of value that we're delivering to customers and that value that we deliver turns around the take rate opportunity and value capture for eventbrite.
And then on the sequential growth in paid creators, we see the fruits of our labor really coming through in this quarter in terms of our targeted marketing and sales campaigns around greater confidence.
To step back a minute yeah self sign on is 99% of our creators says that channel where creators are discovering about Brian good word of mouth or buying tickets to events, they're discovering eventbrite Raphael our paid marketing.
Driving the bulk majority of this growth and thats, great because the gross margins are really strong there.
In terms of categories and geographies, we're seeing business professional grow quite quickly performing and visual arts as well and in general community cultural events.
We think communities are coming back out together and really seeking new ways to be together and meet new people and then geographies.
U S. Total tickets had a record high in Q2, which is great outside of the U S. Canada grew 25% year over year and the U K grew 10% year over year. So we're seeing some strength come back and non U S market, which is promising so all told I.
Really want to give credit to the team here, we focus on delivering a message that's based on event demand generation coming to eventbrite to reach bigger audiences and really putting proof points in front of our creators through a myriad of different methods that seems to be working well.
Great. Thanks, guys.
Ladies and gentlemen, this does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.