Q1 2024 Live Nation Entertainment Inc Earnings Call
Sam.
Got it.
[music].
Yeah.
Family.
[music].
No.
Marina.
[music] Microsoft.
Unknown Speaker: I've been without seeing you for a long time, and I'm still here. And not a day goes by that I don't think of you. I've been without seeing you for a long time; tell me if you still love me, if you remember me.
Unknown Speaker: Okay.
Unknown Speaker: But on the other.
Unknown Speaker: No.
Speaker Change: Let's see how about.
Unknown Speaker: Campbell.
Speaker Change: Let's see.
Unknown Speaker: Mckenna.
Unknown Speaker: Nope.
Unknown Speaker: [music].
Unknown Speaker: Okay.
Unknown Speaker: Yes.
Unknown Speaker: Yes.
Unknown Speaker: Yes.
Unknown Speaker: Okay.
Unknown Speaker: Yes.
Unknown Speaker: Okay.
Unknown Speaker: Yes.
Unknown Speaker: Yes.
Unknown Speaker: Yes.
Unknown Speaker: Yes.
Unknown Speaker: Cash and stuff to chew on.
Unknown Speaker: Sure.
Unknown Speaker: Yes.
Unknown Speaker: Nice job.
Speaker Change: Oh sure sure.
Unknown Speaker: Alright.
Unknown Speaker: This deal or not.
Unknown Speaker: Sure.
Unknown Speaker: So I'm sure that it's great.
John: Good afternoon. My name is John, and I'll be your conference operator today. At this time, I would like to welcome everyone to Live Nation's first quarter 2024 earnings call. I would now like to turn the call over to Ms. Yong. Thank you, Ms. Yong. You may begin your conference.
John: Good afternoon, My name is John and I'll be your conference operator today at this time I would like to welcome everyone to live nation's first quarter 2024 earnings call.
Yong: I would now like to turn the call over to Ms. Young.
Yong: Thank you Ms. Young you may begin your conference.
Amy Yong: Good afternoon, and welcome to the Live Nation first quarter 2024 earnings conference call. Joining us today is our President and CEO, Michael Rapino, and our President and CFO, Joe Berchtold.
Yong: Good afternoon, and welcome to the live Nation first quarter 2024 earnings conference call. Joining us today is our president and CEO, Michael Rapino, and our President and CFO Joe Berchtold.
Amy Yong: We would like 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, regulatory and legal matters, 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 actual results.
Amy Yong: I would like to remind you that this afternoon's call will contain certain forward looking statements 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 regulatory and legal matters.
Amy Yong: 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.
Amy Yong: Live Nation will also refer to some non-GAAP measures on this call. In accordance with SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable gap measures in the earnings release. The release reconciliation can be found under the financial information section on Live Nation's website. With that, I will now turn it over to our president and CFO, Joe Berchtold.
Joe Berchtold: In accordance with the SEC regulation G. Live nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in the earnings release.
Joe Berchtold: These reconciliations can be found under the financial information section of live nation's website.
Amy Yong: With that I will now turn it over to our president and CFO Joe Berchtold.
Joe Berchtold: Thanks, Amy. We appreciate there's a lot of interest in what's going on with the DOJ. So let me address that up front. We obviously know about the press reports claiming the DOJ Antitrust Division has decided to file a lawsuit against Live Nation, potentially seeking a breakup of Live Nation Ticketmaster. At this point, we're just about to begin discussions with senior division leadership about the issues their staff has been investigating, which is typically in the final phase of an investigation. Transcripts provided by Transcription Outsourcing, LLC.
Joe Berchtold: Thanks Amy.
Joe Berchtold: We appreciate there's a lot of interest in what's going on with the Doj. So let me address that upfront.
Joe Berchtold: We obviously know about the press reports, claiming the Doj antitrust division has decided to file a lawsuit against <unk> nation.
Joe Berchtold: Potentially seeking a breakup of live nation Ticketmaster.
Joe Berchtold: At this point, we're just about to begin discussions with senior Division leadership about the issues. Their staff has been investigating which is typically in the final phase of an investigation.
Joe Berchtold: Decisions about whether to sue over what in what relief to seek ordinarily paid at the end of that process.
Joe Berchtold: Of course, we know that some competitors and interest groups are urging the DOJ to sue us, and Sue to break us up. Let me add that. Let me address that directly. As we previously stated, the DOJ's investigation appears to be focused on specific business practices, not the legality of the Live Nation Ticketmaster merger or our overall business structure. Very little of the conduct the DOJ has raised with us relates to the combination of ticketing and promotion resulting from the merger.
Joe Berchtold: Of course, we know that some competitors and interest groups are urging the Doj to Suez.
Joe Berchtold: And to us.
Joe Berchtold: Let me add that George let me address that directly.
Joe Berchtold: As we previously stated the Doj's investigation appears to be focused on specific business practices not the legality of live nation Ticketmaster merger or our overall business structure.
Joe Berchtold: Very little of the conduct the Doj has raised with us relates to the combination of ticketing and promotion, resulting from the merger.
Joe Berchtold: And most of what happened was anticipated and addressed by the consent decree, allowing the merger to go forward. Based on the issues we know about, we don't believe a breakup of Live Nation and Ticketmaster would be a legally permissible remedy. Live Nation, Digging Master, and Came Together, LA, for a merger that the DOJ reviewed and approved, subject to divestitures and other remedies. The DOJ has repeatedly stated in court filings that the merger and settlement were in the public interest.
Joe Berchtold: And most of what does was anticipated and addressed by the consent decree, allowing the merger to go forward.
Joe Berchtold: Based on the issues, we know about we don't believe a breakup of live nation, and Ticketmaster would be legally permissible remedy.
Joe Berchtold: Five nation Ticketmaster came together lawfully through a merger that the Doj reviewed and approved subject to divestitures and other remedies.
Joe Berchtold: Jay has repeatedly stated in court filings that the merger and settlement we are in the public interest.
Joe Berchtold: Furthermore, structural relief such as divestiture is rarely granted. Legally, it's only available where there is a strong connection between the corporate structure and the company's ability to engage in the allegedly unlawful conduct. We believe that communication is lacking with regard to the bulk of the issues in this investigation since the conduct under scrutiny falls either within our ticketing segment or within our concert segment and not across those segments. We're looking forward to our upcoming meetings with the division leadership and remain hopeful that we can amicably resolve any remaining disputes.
Joe Berchtold: Furthermore, structural relief such as the divestiture is rarely granted legally it's only available where there is a strong connection between the corporate structure and the companys ability to engage in the allegedly unlawful conduct.
Joe Berchtold: We believe that connection is lacking with regards to the bulk of the issues in this investigation since the conduct under scrutiny falls either within our ticketing segment or within our concert segment and not across those segments.
Joe Berchtold: We're looking forward to our upcoming meetings with the division leadership and remain hopeful that we can amicably resolve any remaining disputes, but if not we're prepared to defend ourselves in court.
Joe Berchtold: But if not, we're prepared to defend ourselves in court. That's all we're going to say on the DOJ on this call. And operator, can we now open it up for questions for me and my? Yes, thank you.
Speaker Change: And that's all we're going to say on the Doj on this call and operator can we now open up for questions for me and Michael.
Operator: Yes, sir. We will now be conducting the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star 2 to remove a question. For any participant using speaker equipment, it may be necessary to pick up your handset before pressing the start key.
Speaker Change: Yes. Thank you Sir we will now be conducting the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the queue.
Operator: Press Star two to remove a question from the queue.
Operator: Are there any participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Operator: One moment, please, while we poll for questions. And the first question comes from the line of Brandon Ross with LightShed Partners. Please proceed with your question. Hi, thanks for taking the question.
Operator: One moment, please while we poll for questions.
Operator: And the first question comes from the line of Brandon Ross with <unk> Partners. Please proceed with your question.
Brandon A Ross: Hi, thanks for taking the questions. I think you probably hit the biggest investor questions with your statement on regulatory compliance. But I think there's one big question that's remaining in investors' minds, and that's, how do you see the relative value of Ticketmaster inside Live Nation versus as a separate standalone company?
Brandon A Ross: Hi, Thanks for taking the questions I think you probably hit the biggest investor questions with you.
Brandon A Ross: Your statement on regulatory.
Brandon A Ross: But I think there is one big question, that's remaining in investors' minds and that's how do you see the relative value of Ticketmaster inside live nation versus as a separate Standalone company.
Speaker Change: Thanks Brandon.
Speaker Change: I think we addressed this last call.
Joe Berchtold: I think we addressed this in our last call. You know, at Live Nation, we run a very decentralized organization, and I'm very proud that we've built three incredible businesses, sponsorship, concerts, and ticketing, and we're about to embark on our fourth venture, around Venue Nation. So these businesses all run incredible core businesses on their own. Ticketmaster, as you know, was a standalone business for many years.
Speaker Change: As a nation, we run a very decentralized organization and I'm very proud that we've built three incredible businesses sponsorship.
Joe Berchtold: And ticketing and robust all embark on our fourth.
Joe Berchtold: Sure around designation.
Joe Berchtold: So this business is all run incredible core businesses on their own Ticketmaster as you know was a standalone business for many years.
Joe Berchtold: We're proud that when we took it over, we were able to bring some leadership to it, upgrade its technology, open up its platform, and elevate its consumer and marketplace, much like most enterprise platforms like Airbnb and etc. So, you know, I've always said these are incredible portfolio pieces around Live that we own. They are all part of what we think is a great portfolio. But I've also said that these are incredible businesses on their own. So I think, long term, together or separately, these would all be very successful businesses. We happen to think that we like our portfolio today and plan on keeping it.
Joe Berchtold: When we took it over we were able to bring some leadership to it.
Joe Berchtold: <unk> technology open up a platform and an elevated consumer end and marketplace much like most enterprise platforms, like Airbnb and et cetera. So.
Joe Berchtold: I've always said these are incredible portfolio of pieces around lives that we own.
Joe Berchtold: They are all part of what we think is a great portfolio, but I've also said these are incredible businesses on their own.
Joe Berchtold: So I think I think long term together or separate these would all be very successful businesses.
Joe Berchtold: We happen to think that we like our portfolio today and plan on keeping it.
Unknown Speaker: Great. And then you're continuing to express confidence in double-digit AOI growth this year. Obviously, you exceeded that in the first quarter, but the third is actually down.
Joe Berchtold: Great.
Joe Berchtold: And then your you are continuing to express confidence in double digit NOI growth. This year, obviously you exceeded that.
Unknown Speaker: In the first quarter, but deferred is actually down can you just quickly reconcile that I assume the makeup is the profitability per fan.
Joe Berchtold: Can you just quickly reconcile that I assume the makeup is the profitability per fan, based on the venue mix. But any additional color you could give would be helpful. Sure, I mean, they're, they're sort of
Joe Berchtold: Based on the venue mix.
Joe Berchtold: But any additional color you could give would be helpful.
Joe Berchtold: Sure. I think there are sort of two questions within that question, Brandon.
Joe Berchtold: Sure.
Speaker Change: Sort of two questions within that question Brandon. The first is what's going on with consumer demand and then technically what's going on with the numbers. So just to make sure we were hit hard on the consumer demand.
Joe Berchtold: The first is what's going on with consumer demand, and then technically, what's going on with the numbers. So just to make sure we hit hard on consumer demand, we are seeing no weakness. The things that we look at that give us an indication of how the shows are selling, how the fans are spending when they go to the site all continue to be very strong. We alluded to some in the release, but just to hit a few of the highlights, when we look at a number of artists that toured last year and they're touring again this year.
Joe Berchtold: We are seeing no weakness the things that we look at to give us an indication of how the shows are selling how the fans are spending when they go to the site all continue to be very strong.
Joe Berchtold: We were just some in the release, but just just to hit a few of the highlights when we look at a number of artists towards last year and they're touring again. This year. So those are the best like for like examples of demand. We're consistently seeing the sell through of the shows are at or above where they were last year and that the overall grosses for the artists are consistently higher so no.
Joe Berchtold: So those are the best like for like examples of demand. We're consistently seeing the sell-through of the shows is at or above where they were last year, and the overall grosses for the artists are consistently higher. So no issues at all with fan demand relative to last summer. And when you look at our overall arena volume, which is the largest volume at this point early on, despite a tremendous growth in terms of the number of arena shows, which you could be concerned would lead to some cannibalization. We're not seeing any such cannibalization.
Joe Berchtold: Issues at all on fan demand relative to last summer and when you look at our overall arena volume, which is the largest volume at this point early on despite a tremendous growth in terms of the number of arena shows, which you could be concerned with leads to some cannibalization, we're seeing no such cannibalization, we're continuing to see strong.
Joe Berchtold: We're continuing to see strong sell-through, as strong as it was last year. And then when we look at on-site spending, theaters, and clubs, where we have the bulk of our activity in our venues in Q1, we're seeing strong growth in fan spend. So just to make sure we hit that out of the gate. And then, technically, what's going on. I think what's going on with deferred revenue and ticket sales is 100% consistent with what we've been saying for the past six plus months.
Joe Berchtold: Sell through as strong as it was last year and then when we look at onsite spending and theaters and clubs, where we have the bulk of our activity in our venues in Q1, we're seeing strong growth on fan spend so just to make sure we hit that out of the gate.
Joe Berchtold: And then secondly, what's going on I think what's going on with deferred revenue and ticket sales is 100% consistent with what we've been saying for the past six plus months, we expected that this isn't going to be a big stadium year Stadium tickets sell earliest they're also the highest price ticket so theyre going to lead historically to a very high deferred revenue number at this.
Joe Berchtold: We expected that this wasn't going to be a big stadium year, because stadium tickets sell the best. They're also the highest-priced tickets, so they're going to lead historically to a very high deferred revenue number at this point in the year. With a shift to more arenas and more amphitheaters, you're going to see the sales cycle come in a bit later. And overall, the story for the year is going to be less of a revenue story, more of a shift in the portion of the fans that are in our venues, higher fan profitability, concert AOI growth through margin expansion, and still confident or still believe in the double-digit growth that we've been saying.
Joe Berchtold: Many of the year with a shift to more arenas and more amphitheaters youre going to see the sales cycle come in a bit later and overall the story for the year as can be less of a revenue story more of a shift in the portion of the fans that are in our venues higher fan profitability.
Joe Berchtold: Concert AOI growth through margin expansion.
Joe Berchtold: And still confident or still believe in the double digit growth that we've been saying.
Speaker Change: Thank you very much.
David Karnovsky: And the next question comes from the line of David Karnovsky from J.P. Morgan. Please proceed with your question.
Joe Berchtold: And the next question comes from the line of David Karnofsky from J P. Morgan. Please proceed with your question.
David Karnovsky: Thanks for the question. We've seen some noise in the press recently around festival demand and that maybe some of the more established events in the U.S. and Europe are seeing challenges in moving tickets. Just wanted to see if you could dig in a bit on what you're observing for live or even the industry.
David Karnovsky: Hey, Thanks for the question.
David Karnovsky: <unk> seen some noise in the press recently around festival demand and maybe some of the more established events in the U S. Europe.
David Karnovsky: We're seeing challenge in moving tickets just wanted to see if you could dig in a bit on what you are observing for live or even the industry.
Michael Rapino: Yeah, I'll start. You know, we've read some of it.
Speaker Change: Yes, I'll start.
David Karnovsky: We've read some of it also we haven't seen it in our business. We are we have over 100 festivals around the world.
Michael Rapino: Also, we haven't seen it in our business. We have over 100 festivals around the world. I think currently ticket sales are up double digits year over year, so we're seeing a strong start to our festival portfolio. We also, you know, remind you that festivals are a huge business around sponsorship, similar to venues. Our sponsorship is up over 20% year over year on festivals, so we're seeing a strong, strong start to them. We're a global company, so we do see that, you know, having a portfolio helps.
Speaker Change: I think.
Speaker Change: Currently ticket sales are up double digits year over year. So we're seeing a strong a strong start to our festival portfolio.
Michael Rapino: We also remind you.
Michael Rapino: Festivals are huge.
Michael Rapino: Around the sponsorship similar to venues with our sponsorship was up over 20% year over year on festivals.
Michael Rapino: So we're seeing a strong strong start to them.
Michael Rapino: We're a global company. So we do see that having a portfolio helps we've launched some new festivals internationally, we launched about 10, new festivals a year.
Michael Rapino: We've launched some new festivals internationally. We launch about 10 new festivals a year. You know, you're lucky if 50% of them make it the next year, and I think this year we started 10.
Michael Rapino: Lucky a 50, 50% of them make make it to the next year.
Michael Rapino: And I think this year, we started 10, we shutdown six so you're always kind of cutting off the weak performers and restarting some new ideas.
Michael Rapino: We shut down six, so you're always kind of cutting off the weak performers and restarting some new ideas. I think the only trend we see overall is, I think, the three-day massive festival that's going to appeal to everybody with a great, unique headliner. The kind of, the original part of this business, that seems to be really hard to deliver year on year out, whether it's Coachella or Bonnaroo. Those are big missions to deliver, and artists are making a lot of money in arenas and stadiums, so it's not as easy to get that special headliner.
Michael Rapino: The only trend we see overall is I think the three day massive festival.
Michael Rapino: That's going to appeal to everybody with a great unique headline here.
Michael Rapino: Was the original part of this business that seems to be really hard to deliver year on euro whether its coachella bonnaroo.
Michael Rapino: Yes.
Michael Rapino: Those are big missions to deliver and artists are making a lot of money and arenas and stadiums. So it's not as easy to get that special headliner, where we're seeing great success, though no one or two day festivals that are appealing to a more of a niche and it's maybe 35000 people and its exactly right down a certain genre of music or life.
Michael Rapino: Where we're seeing great success, though, is, you know, one- or two-day festivals that are appealing to more of a niche, and it's maybe 35,000 people, and it's exactly right down a certain genre of music or a lifestyle, and it's maybe a higher-end business like Bottlerock does in Napa, where we've got a couple great calling festivals out on the coast. Eddie Vedder's So we are probably seeing a shift to more niche one- and two-day festivals with higher ticket prices, higher sponsorship value, and less big swings across Let's Go After with three-day, 100,000 people. There are still, though, the Coachellas, the Lollapaloozas, the Austin City Limits. They're kind of like passage of rights, so they seem to have a life and will live long.
Michael Rapino: Styles, and it's maybe a higher end business like bottle rock does in Napa and we've got a couple of great calling festivals out on the coast.
Michael Rapino: Eddie Betters Festival.
Michael Rapino: On the water side of San Diego. So we are seeing probably a shift to more niche one and two day festivals with higher per heads higher sponsorship value and less big swings across let's go after a three day 100000 people.
Michael Rapino: There is still though the coachella as the Lollapalooza Austin city limits, there kind of passage of right. So they'll they seem to have a life and will live long.
Michael Rapino: But definitely, if you're starting a new one, you're probably starting a more niche strategy and trying to make sure it's a better experience versus just putting 75,000 people in a field. But to us, a big part of our business overall, it's a nice piece in our overall portfolio to drive our sponsorship business. And it's, on a global basis, a nice piece of our overall portfolio.
Michael Rapino: Definitely if you're starting a new one you're probably starting to lower niche.
Michael Rapino: Strategy and tried to make sure it's a better experience versus just putting 75000 people in the field.
Michael Rapino: But to us a big part of our business overall.
Michael Rapino: It's a nice piece in our overall portfolio to drive our sponsorship business.
Michael Rapino: And I'd say on a global basis.
Michael Rapino: This piece of our overall portfolio.
Michael Rapino: And then on your venue strategy, just as you look to deploy capital to locations around the world, can you discuss the kind of criteria where it's best for Live Nation to execute independently versus where we've seen you kind of partner with a third party, like an OCU group, for instance?
Speaker Change: Okay and then on your venue strategy, just as you look to.
Michael Rapino: Deploy capital to locations around the World can you discuss kind of the criteria, where it's best for live nation to execute independently versus where we've seen you kind of partner with a third party group for instance.
Michael Rapino: Yeah, we do it all. We've been partners with legends and the Fenway Group in Boston, a bunch of ones in the hopper right now across America at 5,000-foot venues with certain sports owners. Everybody that has a sports arena is looking to build out their retail footprint around it. So we're in partnership with, or potential partnerships with a bunch of different NBA, NHL, or NFL owners who are building out their concourse retail area.
Speaker Change: Yes, we do it all we've been partners with legends.
Michael Rapino: And spend.
Michael Rapino: Spending way group in Boston.
Michael Rapino: Bunch of a bunch of one's in the Hopper right now across America on 5000 feet venues with certain sports owners, everybody that has a sports arena is looking to build out their their retail footprint around it. So we're in partnership with <unk>.
Michael Rapino: Potential partnerships with a bunch of different NBA, NHL or NFL owners, who are building out their concourse retail area.
Michael Rapino: And we'll partner with them in capital to help build that out. So we're opportunistic, depending on who the developer is. And sometimes if there's a partner that makes sense to partner with, like we did with OBG in Austin, we'll do it. But around the world, I would say I was in a venue meeting this morning. We are very, very excited about this division. I called it the fourth leg this
Michael Rapino: Depending on who the developer is.
Michael Rapino: And sometimes if there is a partner that makes sense to partner with like we did with LPG in Austin will do it.
Michael Rapino: But around the World I would say I was in a venue meeting this morning.
Michael Rapino: We're very very excited about this division I called the fourth like this morning.
Michael Rapino: The global pipeline of where we think we could take this business that's very unsophisticated outside of America around the AMP arena, large theater business, the line, the lineup of the pipeline is long. We've got a lot that we're going to keep rolling out over the next few years. We can do them all 100% on our own.
Michael Rapino: The global pipeline of where we think we can take this business that is very unsophisticated outside of America around the Amp Arena large theater business line the lineup of the pipeline as long.
Michael Rapino: Most of the time, when the economics are there, or if there's a developer, we always will look at that and see if that's a better return on capital also. I would say we are probably the, you know, we're the one that everyone wants to partner with. So we have great optionality. We are always kind of the first demand partner that a developer is looking to bring us in and partner with. So we have great opportunities and more opportunities than execution power right now, but we're building that muscle fast.
Michael Rapino: One that everyone wants to partner with so we have great optionality.
Stephen Laszczyk: And the next question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question.
Michael Rapino: And the next question comes from the line of Stephen <unk> with Goldman Sachs. Please proceed with your question.
Stephen Laszczyk: Hey, great. Thanks for taking the questions. Maybe one on sponsorship for Michael. Revenue was up, I think, 24% year-over-year in the quarter. Sounds like a lot of that was driven by strengths internationally. Could you maybe just talk a little bit more about what's driving that growth in international trade? And is the step up that we saw in 1Q something we should expect to see throughout the year? Or is the fact that it's more internationally driven, does that suggest it could be more 1Q, 4Q aided as we move throughout 24?
Joe Berchtold: Hey Stephen, this is Joe. I'll get started, and Michael can hop in.
Joe Berchtold: A lot of what you're seeing in Q1 is, as you said, international. A lot of it is festivals, as Michael was just talking about the high performance of our festival business this year. And in particular, it's what's going on in South America and Asia. So one of the things we really like is that we're balancing out getting the southern hemisphere growth that'll help our Q1 and Q4 business. So I would expect we'll see a good chunk. We'll see the highest growth rates and sponsorship in Q1 and Q4 this year because we're getting real traction building.
Joe Berchtold: Got it. And then maybe another one for you, Joe, or unless Michael wants to jump in on sponsorship.
Michael Rapino: No, I was just, you know, I want to remind you of something like sponsorship or any of these numbers we're talking about. The growth is just, you know, we had an incredible comparable last year. I mean, we had two record years of incredible growth. So the fact that we're sitting here again, growing the business at these levels, I think it's just a testament and a mic drop to anyone debating how powerful the machine is, how hungry customers are to show up at the show, and whether the pipe is full or not.
Michael Rapino: So we're ecstatic to have a 20 plus percent sponsorship year over year after growing bigger numbers than that the last couple of years. I think the demand from brands is big. People, brands, while they're struggling to figure out how to reach customers, know that being on site, live, touching consumers at festivals and venues. The Spheres and all these great live experiences that are happening, it's a very, very hot space, and I think you're going to see this growth continue.
Joe Berchtold: Got it. And then maybe just one on concert margins for Joe, you called out in the release full year concert segment margins expected to be higher than last year. I think with the magnitude of that, depending on some factors, could you just talk a little bit more about the range of outcomes there? What would dictate coming in, I guess, meaningfully above last year versus maybe more in line?
Joe Berchtold: Sure. I think there are probably three factors that we're still going to watch play out over a bit of time. One is FX.
Joe Berchtold: As we noted for Q1, we, on a reported basis, were up seven basis points year on year. At constant currency, we're up 37 basis points. So clearly, that can have a material impact on how much we grow.
Joe Berchtold: The second is just what the level of Q4 arena activity we have. Q4 is still in the process of being booked. And as you guys all know, the reason I don't love going too deep in the margins is because if we do a lot of arenas in Q4, that could bring down our margin while increasing our AOI. And we'll do that all day long.
Joe Berchtold: So there's still some visibility to get into those numbers. And then, finally, we talked on the last call about how 25 is already shaping up to be a tremendous stadium year. A lot of the stadiums that they couldn't get access to this year because of the Olympics or Rugby World Cup or any of a variety of reasons, they're already stacking up very strong for a great stadium year next year. The only accounting impact of that is you put those shows on sale in Q4, and you incur the marketing expense to launch those shows, particularly for stadiums.
Joe Berchtold: And then you have to write off all that marketing expense at the end of Q4. So again, irrelevant over the lifecycle of the tour, but from a strict accounting standpoint and impact on margins, the more stadium tours that we put on sale in Q4 globally, the bigger the expense we hit. So we'll work through all of those numbers as we get closer and provide more guidance. But right now, those are all big factors that are all really good things to have happen.
Stephen Laszczyk: Got it. Thank you both.
Cameron Manson: And the next question comes from the line of Cameron Manson Peroni with Morgan Stanley. Please proceed with your question.
Cameron Manson: Thanks, I want to follow up on two of the earlier questions on growth and venue business. First, on the growth outlook for the year, you know, I think you'd spoken to potentially more muted growth in the first quarter, given the venue mix considerations this year, which makes the 20% growth look even healthier. So maybe you could just help frame how we should think about growth this year in light of all that.
Cameron Manson: And then on the higher capex outlook from new venue opportunities, Joe, you've talked in the past about generally wanting to prove out capex and then ramp it gradually over time. What should the higher outlook tell us about the opportunity you see from this incremental spending? Thanks, guys. Sure, on growth. I think you want
Joe Berchtold: Sure, on the growth, I think Q1 should tell you that... We are right to be positive and optimistic about our ability to continue to deliver double-digit growth this year. I gave a little bit in the context of Brandon's questions, but as I step back and say, how's our growth going to look at the end of the year? I think it's going to be driven by concert. AOI, heavily concert margin.
Joe Berchtold: It'll be secondly driven by sponsorship as we continue to, in particular, build out the international side of that business. And just Ticketmaster, because it's losing all those stadium, high ticket price shows, is going to have lower growth. So I expect all of the pieces to continue to grow and all of them to be very happy coming off what, as Michael said, were tremendous growth rates over the last couple of years. So to have all three pieces of the business continuing to grow is great.
Joe Berchtold: I expect all of the pieces to continue to grow in all of them to be very happy coming off of but as Michael said were tremendous growth rates over the last couple of years. So to have all three pieces of the business continuing to grow as great. I, just think that it'll be the the overall tenor of how it is we look back at this year.
Joe Berchtold: I just think that'll be the overall tenor of how we look back on this year. And in terms of the venues and the CapEx, I think what you should take away is that all the buildings that we're opening are performing at or above our expectations, and the volume of opportunities, as Michael said, every developer is coming to us as their first choice. Whether you're a sports team owner and want to replicate what Fenway Group did around their park, whether you're an international player looking to renovate a building or to build something from the ground up, developers are coming to us because they think that we're effective operators and good partners in terms of helping them make the building successful. So I think it's just a continued build out of the pipeline, and this is still incremental, but continued strong performance and strong pipeline.
Joe Berchtold: And in terms of the venues in the Capex I think we should take is is that all the buildings that were opening are performing at or above our expectations that the volume of opportunities as Michael said every developer it's coming to us as their first choice whether you are a sports team owner, who want to replicate with Fenway group did around their park.
Joe Berchtold: Whether you are an international player looking to renovate a building or.
Joe Berchtold: Or to build something from the ground. The developers are coming to us because they think that were effective operators and good partners in terms of helping them make the building successful so.
Joe Berchtold: I think it's just a continued build out of the pipeline and this is still incremental but continued strong performance and strong pipeline.
Peter Lawler Supino: And the next question comes from the line of Peter Supino with Wolf Research. Please proceed with your question.
Peter Lawler Supino: Hi, good afternoon. I wanted to ask first about the venue build out project. I'm wondering if, in your comments three months ago about longer-term growth, the idea that the company could compound AOI at a double-digit rate for many years to come, if you didn't build any big 15-20,000 student arenas outside the United States, could you still achieve that goal? It's just a way to ask whether that capital project and the returns from it are built into your long-term outlook. It's a question we've heard a lot from clients.
Peter Lawler Supino: To ask first about.
Peter Lawler Supino: What about the venue build out project.
Peter Lawler Supino: Wondering if any.
Peter Lawler Supino: In your comments three months ago about longer term growth will give us the company.
Peter Lawler Supino: Compound ally at a double digit rate for many years to come if you didn't build any.
Peter Lawler Supino: 15 to 20000 student arena is outside the United States could you still achieve that goal. It's just a way to ask whether that capital project and the returns from that are built into your long term outlook. It's a question we've heard a lot from clients and then.
Joe Berchtold: And then related to that, I wondered how you calculate returns on capital, maybe as a company or specifically on these venues. How are you calculating those returns? Is that an EBITDA number? What are the numerators?
Joe Berchtold: Yeah, in terms of the venue build out, of course, that's part of our long-term plan. We lay out every year, generally at Liberty, the six or seven levers and how we're going to continue to drive strong AOI growth over time. When we did that last year, venues were the largest component of that. So it's absolutely part of our thesis and part of how it is we're going to get to that continued strong growth rate. In terms of performance, I mean, it's a standard return on invested capital. So we look at it on a cash on cash basis, cash out, cash back.
Joe Berchtold: Yeah.
Joe Berchtold: The largest component of that so it's absolutely part of our thesis and part of how it is we're going to get to that continued strong growth rate.
Jason Boisvert Bazinet: And the next question comes from the line of Jason Bazinet from Citibank. Please proceed with your question.
Jason Boisvert Bazinet: I just had two questions related to disclosures, actually. I know you guys have been building venues for decades, but when you talk about setting up a fourth business with Artist Nation, are you hinting that you might disclose that as a second segment or not? And then my second disclosure question is, I noticed in the queue. There was something, I guess, that FASB came out with in November about expense disclosures. I don't know if the queue says you're still sort of deliberating about that, but any sort of color on what that FASB request is and how you're thinking about it would be great.
Joe Berchtold: In terms of venues for business, at this point, we're not thinking about them as separate segments; we still organizationally have concerts and venues under the same organizational structure. So it'd be premature to think about it in terms of segments down the road. Who knows? It's just We're trying to get everybody internally also focused on this is an important area to be growing. So that's, that's why we use that term.
Joe Berchtold: In terms of any FASB, generally, what we're doing is anytime there are new accounting regulations, we're going to be studying them until the day that we need to implement them. So I don't think anything here would be any different. We're just going to always use the time we have to make a full assessment of what leeway we have and how we do things and make the selection and prepare whatever revisions we need. Okay, thank you.
Benjamin Daniel Swinburne: And the next question comes from the line of Benjamin Sauf with Deutsche Bank. Please proceed with your question.
Benjamin Daniel Swinburne: Hey, guys, thanks for taking the question. Um, just wanted to ask about concert attendance. It looks like there was a bigger step up in North American attendance compared to international attendance this quarter. So you can unpack that a little bit and talk about how you think about growth in each region for the year. Thank you.
Joe Berchtold: Sure, I think that is largely a function or fully a function of the international stadiums we had, particularly in the Southern Hemisphere. Q1 of last year, just fewer stadiums than we've been talking about.
Joe Berchtold: It is largely a function or fully a function of the international stadiums, we had particularly the southern hemisphere in Q1 of last year, just fewer stadiums as we've been talking about so that meant that the primary growth in Q1 was in North America overall this year.
Joe Berchtold: So that meant that the primary growth in Q1 was in North America. Overall, this year, kind of defying the trend of where international is going, which is an increasing share, because a lot of the growth will come out of our amphitheaters. I probably would expect disproportionate growth out of North America. Again, I think it's out of character in the sense that if you look at all of the business where we're adding capacity to our venues, where we're adding ticketing clients, where our sponsorship's growing, we've got a heavy structural trend towards international growth, with international being the larger portion. I think that just from a cyclicality standpoint this year, there may be a bit of an aberration in that, but no change in terms of overall.
Benjamin Daniel Swinburne: Okay, that's helpful. Thank you.
Joe Berchtold: <unk> kind of define the trend of where international is going which is an increasing share.
Benjamin Daniel Swinburne: Because a lot of the growth will come out of our amphitheater as I, probably would expect disproportionate growth out of North America again, I think it's out of character in the sense that if you look at all of the business, where we're adding capacity with their venues, where we're adding ticketing clients, where our sponsorships growing we've got a heavy structural trend towards international growth.
Benjamin Daniel Swinburne: In international being a larger portion I think that just from a cyclicality standpoint. This year, there may be a bit of aberration in that but no change in terms of the overall trend.
Benjamin Daniel Swinburne: Okay. That's helpful. Thank you.
David Carl Joyce: And our final question comes from the line of David Joyce with Seaport Research Partners. Please proceed with your question.
Benjamin Daniel Swinburne: And our final question comes from the line of David Joyce with Seaport Research Partners. Please proceed with your question.
David Carl Joyce: Thank you. Two questions, please. First, when you look at a metric of country attendance versus the population, the U.S. over-indexes the rest of the world. What would be your path to growing that concert attendance per capita going forward? And then secondly, on ticketing, what are the plans from here for upgrading the ticketing platforms around the globe? And you know, what, you know, how much is in CapEx versus Op
David Carl Joyce: Thank you two questions. Please first when you look at the metric of comp.
David Carl Joyce: Country attendance versus the population the U S over index as the rest of the world what would be your path to growing that concert attendance per cap.
David Carl Joyce: Going forward.
David Carl Joyce: And then secondly on ticketing.
David Carl Joyce: The what are the plans from here for upgrading the ticketing platforms around the globe.
David Carl Joyce: How much is in Capex versus Opex.
Joe Berchtold: So in terms of driving fan attendance, we've been talking in North America for the past several years about a hyperlocal focus. And that has absolutely been helping us drive our penetration, if you want, on a per fan basis. That'll continue, and our expectations will continue to build our fan base in North America.
David Carl Joyce: So in terms of driving.
Joe Berchtold: Attendants, we've been talking in North America for past several years about our hyper local focus and that has absolutely been helping us drive our penetration if you want on a per fan basis that'll.
Joe Berchtold: The other thing that's just generally going on is every year you have the same artists who've been touring, back out touring on whatever cycle, and we're adding in more artists. We added in K-pop, we added in Latin, now we're adding in Afro. So we're adding in more artists, which also attract more fans, and that'll continue to help with penetration. As we look at the international markets, it's all a function of how penetrated they are in the major cities where we have a presence.
Joe Berchtold: That'll continue and our expectation is we'll continue to build our our fan base in North America. The other thing that's just generally going on as is every year you have the same artists who've bantering back out train or whatever cycle and we're adding in more hours. We added in K pop when we added in Latin now, we're adding in <unk>.
Joe Berchtold: So were adding in more artists, which also draw more fans and that will continue to help with the penetration as we look at the international markets. It's all a function of how penetrated are they in the major cities, where we have a presence and a lot of markets, we think that theres the opportunity for driving that traditional venues ties into our international.
Joe Berchtold: In a lot of markets, we think that there's the opportunity to drive that for additional venues, which ties into our international venue strategy that Michael was talking about earlier. In other markets that may be more penetrated, like the UK, you're gonna see more of a hyper-local strategy, which is why we continue to focus on making sure we have a lot of activity going on in Manchester. So every market's a bit different, but certainly a focus on how we continue to get more fan growth from the biggest in the world.
Joe Berchtold: A new strategy that Michael was talking about earlier in other markets that may be more penetrated like the U K youre going to see more of a hyper local strategy, which is why continue to focus on making sure we got it.
Joe Berchtold: Lot of activity going to Manchester not just wanted so every market is a bit different but certainly a focus on how we continue to get more fan growth from from the biggest to the largest.
Joe Berchtold: In terms of ticketing, I think we've talked a lot about the tremendous progress we think that we've made. We think we've got the leading enterprise software system in the world. And you continue to develop products for that. A lot of that cost is in CapEx, but it's been a pretty stable investment level over the past couple of years. We expect it to continue as we are delivering new products for both enterprise customers and the marketplace, but nothing dramatic has changed.
Joe Berchtold: In terms of ticketing I think we've talked a lot about the tremendous progress. We think we've made we think we've got the leading enterprise software system in the world.
Joe Berchtold: And you continue to develop products for that.
Joe Berchtold: A lot of that cost is in capex.
Speaker Change: Understood. Thank you.
Michael Rapino: Thank you. I would now like to turn the floor back over to Michael for any closing comments.
Joe Berchtold: Thank you I would now like to turn the floor back over to Michael for any closing comments.
Operator: Thank you, everyone, and we'll look forward to talking to you in the summer. And, ladies and gentlemen, that does conclude today's teleconference.
Michael Rapino: Thank you everyone and we'll look forward to talking to you in the summer.
Operator: Ladies and gentlemen, that does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Michael Rapino: Ladies and gentlemen that does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
Unknown Speaker: [inaudible]
Unknown Speaker: Uh huh.
Unknown Speaker: Dave.
Unknown Speaker: But the.
Unknown Speaker: Okay.
Unknown Speaker: Hum.
Unknown Speaker: We studied.
Unknown Speaker: Sales in Japan.
Unknown Speaker: So that.
Unknown Speaker: Rob we would run we shall ito business values on that.
Unknown Speaker: <unk> no.
Unknown Speaker: Most of these that we've put the new work.
Unknown Speaker: No change.
Michael Rapino: Thanks, Ron.
Unknown Speaker: Sure.
Unknown Speaker: Martina.
Unknown Speaker: Rob.
Unknown Speaker: <unk>.
Unknown Speaker: And currently as.
Unknown Speaker: Is where are we.
Unknown Speaker: The demand is.
Michael Rapino: With that Rob.
Unknown Speaker: On that day in March.
Unknown Speaker: These savings.
Unknown Speaker: That is correct.
Unknown Speaker: Okay.
Speaker Change: Got that.
Unknown Speaker: Jamie.
Unknown Speaker: Rajiv.
Speaker Change: I don't know.
Unknown Speaker: Right.
Unknown Speaker: Right.
Michael Rapino: Thanks, Brad.
Unknown Speaker: Uh huh.
Michael Rapino: Thanks for asking.
Speaker Change: Oh gosh.
Unknown Speaker: No.
Unknown Speaker: On the graph.
Unknown Speaker: The last.
Unknown Speaker: Alaska.
Unknown Speaker: Does that make it budget.
Unknown Speaker: And then the bump up.
Michael Rapino: Well, it's a platform that was the plan.
Michael Rapino: Just last week were still on behalf of <unk>.
Unknown Speaker: Right.
Unknown Speaker: They've been on that path.
Unknown Speaker: In the past.
Unknown Speaker: Great.
Unknown Speaker: On that.
Unknown Speaker: But while not being honored.
Unknown Speaker: Okay.
Unknown Speaker: Yes.
Unknown Speaker: [music].
Speaker Change: Got it.
Unknown Speaker: [music].
Unknown Speaker: Yeah.
Unknown Speaker: Yeah.
Unknown Speaker: I live in the two upon Linzess.