Q2 2024 Live Nation Entertainment Inc Earnings Call

I'm running down the road trying to loosen my load I got seven women on my mind Four that want to hold me, two that want to stone me One, she's a friend of mine Take it easy, take it easy Don't let the sound of your own wheels drive you crazy

Unknown Speaker: Well, I'm a-runnin' down the road, tryin' to loosen my load I got seven women on my mind Four that want to hold me, two that want to stone me One, she's a friend of mine Take it easy, take it easy Don't let the sound of your own wheels drive you crazy Lighten up while you still can Don't even try to understand Just find a place to make your stand Take it easy Well, I'm a-landin' on a corner in Winslow, Arizona And such a fine sight to see It's a girl, my lord, in a flatbed Ford Showin' down to take a look at me Come on, baby, don't save me I gotta know if your sweet love is gonna save me We may lose and we may win But we will never be here again So open up, I'm climbin' in So take it easy

Don't even try to understand Just find a place to make your stand Take it easy Well I'm a-landin' on a corner in Winslow, Arizona Such a fine sight to see It's a girl, my lord, in a flatbed Ford Goin' down to take a look at me Come on baby, don't say nay I gotta know if your sweet love is gonna stay

Operator: Greetings and welcome to the Live Nation Entertainment second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker Change: Greetings and welcome to the Live Nation Entertainment second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Amy Young, head of investor relations. Thank you, Amy. You may begin.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Amy Yong, Head of Investor Relations. Thank you, Amy.

Amy Yong: Good afternoon, and welcome to the Live Nation second quarter 2024 earnings conference call. Joining us today is our President and CEO, Michael Rapino, and our President and CFO, Joe Berchtold.

Speaker Change: Good afternoon and welcome to the Live Nation 2nd Quarter 2024 Earnings Conference Call.

Speaker Change: Joining us today is our President and CEO Michael Rapino and our President and CFO Joe Berchtold.

Amy Yong: Before we begin, 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, new developments, and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements, including 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.

Speaker Change: Before we begin, 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, new developments, and similar matters.

Speaker Change: Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements, including 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 our earnings release. The release reconciliation can be found under the financial information section on Live Nation's website.

Speaker Change: 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 our earnings release.

Operator: With that, we are now ready to take your questions. Operator. Thank you. Well, now we can talk about any question and answer. If you'd like to ask...

Speaker Change: The release reconciliation can be found under the financial information section on Live Nation's website. With that, we are now ready to take your questions. Operator?

Operator: Thank you. We will now be conducting a 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 your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Thank you. We will now be conducting a 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 your line is in the question queue.

Speaker Change: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Operator: One moment, please, while we poll for questions. Thank you. Our first question is from Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Speaker Change: Thank you. Our first question is from Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Stephen Laszczyk: Great. Good afternoon.

Stephen Laszczyk: Great. Good afternoon. Thanks for taking the questions. Joe, on stand count, it looks like it grew 5% in the second quarter with some diverging growth trends between North America up 26% and international down 16%. I just wondered if you could talk a little bit more about the attendance trends you're seeing across region and then within that across venue type. And then maybe related to that, there's been a lot of attention just on tour cancellations and consumer demand over the last few months. Could you comment on what you're seeing on that front? And then to what extent you think that demand...

Stephen Laszczyk: Thanks for taking the questions. Joe, on stand count, it looks like it grew 5% in the second quarter with some diverging growth trends between North America, up 26% in international, down 16. I just wondered if you could talk a little bit more about the attendance trends you're seeing across region and then within that, across venue type. And then, maybe related to that, there's been a lot of attention just on tour cancellations and consumer demand over the last few months.

Stephen Laszczyk: Could you comment on what you're seeing on that front, then to what extent you think that demand extends into the back half of the year and what that means, ultimately, for attendance growth into the back half of 23? And then I have a follow-up question for Michael. Thank you.

Speaker Change: extends into the back half of the year and what that means ultimately for attendance growth into the back half of 23. And then I have a follow up for Michael. Thank you.

Joe Berchtold: It's about a four-part question, so let's start with some of the easier pieces.

Speaker Change: Let's start with some of the easier pieces. In terms of cancellation rates, our cancellation rates we're seeing...

Joe Berchtold: In terms of cancellation rates, our cancellation rates, we're seeing historical norms below last year. They historically run kind of 4 to 5 percent of shows, about a percent and a half of fans, absolutely in line with historical trends. I think most of the reports that we've seen have been efforts to take one or two data points out of a very large number of tours and shows, and we're just not seeing anything unusual there. In terms of overall demand, it continues to be extremely strong.

Michael Rapino: Historical norms below last year, they historically run kind of four to five percent of shows, about a percent and a half of fans, absolutely in line with historical trends.

Speaker Change: I think most of the reports that we've seen have been efforts to take one or two data points out of.

Speaker Change: Out of a very large number of tours and shows, and we're just not seeing anything unusual there.

Joe Berchtold: We tried to highlight here a couple of casual fan metrics that we think are important, and obviously, we've heard a lot of things from other companies over the past weeks or month or so. One is just when we put on promotions, our summer concert week back in May or more recently our 4-pack promotion, those tend to be focused on the casual fan, and we've seen an increased interest from fans and their purchase behavior. So that's a positive signal. The other signal that we look at is how do shows close.

Speaker Change: In terms of overall demand, it continues to be extremely strong. We tried to highlight here a couple of...

Speaker Change: Casual fan metrics that we think are important.

Speaker Change: where obviously we've heard a lot of things from other companies over the past weeks or month or so.

Speaker Change: One is just when we put on promotions our summer concert week back in May, or more recently our four pack promotion, those tend to be focused on the casual fan, and we've seen increased interest.

Speaker Change: of fans and their purchase behavior. So that's a positive signal. The other signal that we look at is how do shows close in the last couple of weeks before the amps play off? Are people buying more of those lawn tickets?

Joe Berchtold: In the last couple of weeks before the amps play off, are people buying more of those lawn tickets as they're making the last-minute decision on whether or not to go to the show? That number is up 16% year-to-date, so again, we're seeing very strong casual demand there. And finally, once they go to the show, what is their behavior?

Speaker Change: As they're making the last minute decision on whether or not to go to the show.

Speaker Change: That number is up 16% year-to-date, so again, seems very strong.

Joe Berchtold: And again, we're seeing no issues that we continue to be on track for a couple dollars of growth in our APF spend at our amphitheater. So I think it's all consistent with our concerts being seen as very good value for money. It's a much more memorable event than a lot of other experiences you can get at that price point. So we continue to feel very good about the strong level of consumer demand we're seeing.

Speaker Change: Casual demand there.

Speaker Change: And finally, once they go to the show, what's their behavior?

Speaker Change: And again, we're seeing no issues that we continue to be on track for a couple dollars growth in our APF spend.

Speaker Change: at our amphitheater. So I think it's all consistent with.

Speaker Change: Our concerts being seen as very good value for money. Two-thirds less than $100, third of them less than $50.

Speaker Change: It's a much more memorable event than a lot of other experiences you can get at that price point. So we continue to feel very good about the strong level of consumer demand we're seeing.

Joe Berchtold: In terms of the specific fan count numbers that we've seen over the quarter and over the first half of the year, I think it's really, it's really venue type driven. It's not so much geography driven.

Speaker Change: In terms of the specific fan count numbers that we've seen over the quarter and over the first half of the year, I think it's really, it's really is venue type driven, it's not so much geographic driven.

Speaker Change: It's very consistent with what we've been saying for the past year, this was not going to be a big stadium year. You're seeing that.

Speaker Change: play out in terms of lower stadium shows, lower fan count. That impacts our international number. North America, where we've had very strong

Joe Berchtold: It's very consistent with what we've been saying for the past year. This was not going to be a big stadium year. You're seeing that play out in terms of lower stadium shows, lower fan counts, that impacts our international numbers. North America, where we've had very strong performance, particularly on the amphitheater side, as you see here, we said amphitheater attendance was up 40% for the second quarter. So it's really that amphitheaters are up very strongly year to date; arenas, theaters, and clubs are all up double digits as well.

Speaker Change: Performance, particularly on the amphitheater side, as you see here. We said amphitheater attendance up 40% for the second quarter So it's really that amphitheaters are up very strongly year to date arenas, theaters and clubs

Joe Berchtold: So you're seeing, in totality, continued growth despite not having the stadium shows this year. And just from a geographic standpoint, that happens to benefit the US doesn't make any comment on any kind of macro, longer-term trend.

Speaker Change: All of double digits as well. So you're seeing in totality continued growth despite the not having the stadium shows this year. And just from a geographic standpoint that happens to benefit the US doesn't make any comment on any kind of macro longer term trend.

Joe Berchtold: As we head into the back half of the year, again, no underlying issues with fan demand at all. Expect to see continued growth in the fan count over the course of the second half. I think most of that will come in Q4. In Q3, you'll see the continued impact of the stadium show count. And I think we had, if we just look at the summer season, Q2, Q3, probably about two-thirds of your amp growth in terms of shows and fans was in Q2, as we got started earlier in the year, and the majority of arena shows as well. So, but we expect. Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES

Speaker Change: As we head into the back half of the year, again, no underlying issues on fan demand at all.

Speaker Change: expect to see continued growth in the fan count over the course of the second half.

Speaker Change: I think most of that will come in Q4, Q3 you'll see the continued impact of the stadium show count.

Speaker Change: And I think we had, if we just look at the summer season, Q2, Q3, probably about two-thirds of your amp growth in terms of shows and fans was in Q2 as we got started earlier in the year, and the majority of arena shows as well.

Speaker Change: But we expect still solid fan demand growth or fan growth overall for the second half of the year. Again, probably more in Q4 than Q3.

Stephen Laszczyk: Got it. Thanks for that.

Speaker Change: Got it. Thanks for that. And then maybe just from Michael, as you look out into 2025, any early reads on how the touring pipeline is shaping up? I think in the press release, you mentioned it was expected to be a busy year. Just any more color or commentary around that, particularly on the stadium front and arenas and amps as well?

Stephen Laszczyk: And then maybe just from Michael, as you look out into 2025, any early reads on how the touring pipeline is shaping up? I think in the press release, you mentioned it was expected to be a busy year. Any more color or commentary around that, particularly on the stadium front and arenas and amps as well? Yeah, as we, you know, as we said,

Michael Rapino: Yeah, as we said from day one, this was never going to be a big stadium year. We are, we're thrilled that we can still grow the business coming off two years of extraordinary growth given where we were in 2019. So it's still a strong year for us overall. Stadiums were always the challenge, and international was always going to be a stadium issue, given the Paris Olympics; most of France shut down for that month.

Michael Rapino: Yeah, as we, you know, as we said from day one, this was never going to be a big stadium year. We are, we're thrilled that we can still grow the business coming off two years of

Michael Rapino: Extraordinary growth given where we were in 2019, so still a strong year for us overall. Stadiums were always the challenge and international was always going to be a stadium issue given Paris Olympics. Most of France shut down for that month.

Michael Rapino: And most of that affected a lot of the stadium business for the summer. So the good news is, as we predicted, 25 looks like to be a big banner year. Again, we're looking right now at our stadium pipeline for 25. It's bigger right now than it was two years ago for 23. Our amph and arena is bigger right now than it was last year at this time in terms of our pipeline.

Michael Rapino: and most of that affected a lot of the stadium business for the summer. So, the good news is, as we predicted, 25 looks like to be a big banner year again. We're looking right now at our stadium pipeline for 25. It's bigger right now than it was two years ago for 23.

Michael Rapino: Our AMP and ARENA is bigger right now than it was last year at this time in terms of our pipeline.

Michael Rapino: So we've always thought 2024 would be the year of AOI, and amphitheaters and arenas in 25 will be back to a solid, continual growth of stadiums. And as we've always predicted, post COVID, we'd be back to an 8-9% compounded annual growth as an industry on the top line. And we'll see that come back to life next year and probably more.

Michael Rapino: So, we've always thought 2024 would be the year of AOI and amphitheaters and arenas. In 2025, we'll be back to a solid, continual growth of stadiums.

Michael Rapino: And as we've always predicted, post-COVID, we'd be back to an 8-9% compounded annual growth as an industry on the top line. And we'll see that come back to life next year and probably more.

Speaker Change: Great, thank you both.

Operator: Thank you. Our next question is from Brandon Ross with Light Shed Partners.

Speaker Change: Thank you. Our next question is from Brandon Ross with Light Shed Partners. Please proceed with your question.

Brandon A Ross: Thanks, I'll try and keep it tight. Just as a follow-up to Stephen's seventh question, I think that was just in terms of the stadium activity. And what does that look like for you in terms of ticketing performance the rest of this year? Should we expect a big Q4 this year, similar to the types of Q4s that you were putting up in larger stadium years? And where does that kind of bring ticketing overall for the year since there's, you know, relative weakness in Q2 and Q3. Given the Sure, Brandon.

Brandon A Ross: Thanks, I'll try and keep it tight, just as a follow-up there on Stephen's.

Speaker Change: Seventh question, I think that was.

Brandon A Ross: So just in terms of the stadium activity and what does that look like?

Speaker Change: for you in terms of ticketing performance the rest of this year. Should we expect a big Q4 this year?

Speaker Change: similar to the types of Q4s that you were putting up in larger stadium years? And where does that kind of bring ticketing overall for the year since there's, you know, relative weakness in Q2 and Q3, given the mix?

Joe Berchtold: Let me also just start that with a little bit of context. Since 2019, Ticketmaster AOI was up around 130%, sponsorship around 85%, and concerts around 35%. So I think one of the things we're seeing this year is, as you'd expect as the businesses grow, some normalization, and those numbers start to come together more. So that said, our views on Ticketmaster remain unchanged.

Speaker Change: Sure, Brandon. Let me also just start that with a little bit of context.

Brandon A Ross: I think we look over multi-year trends entering this year since 2019.

Speaker Change: Digimaster AOI was up around 130%, sponsorship around 85%, and concerts around 35%. So I think one of the things we're seeing this year is, as you'd expect as the businesses grow, some normalization and those numbers start to come together more.

Speaker Change: So, that said, our views on Ticketmaster remain unchanged. We think it's going to be a mid-single digit.

Joe Berchtold: We think it's going to be mid-single-digit growth this year. It's going to be Q4-driven by the on-sales Michael was just talking about with the stadium activity. And I think, in general, a lot of people have just undermodeled the stadium impact, good and bad. I think it's been undermodel to the upside in Q4. As I've said in the past, from just purely a ticketing perspective, narrowly based on how they do their numbers, one stadium show is triple the fan count and triple the average ticket price of an amphitheater show.

Speaker Change: Unknown Speaker This year it's going to be Q4 driven by the on sales Michael was just talking about.

Michael Rapino: With the stadium activity and I think.

Speaker Change: In general, a lot of people have just under modeled.

Michael Rapino: The stadium impact, good and bad. I think it's been undermodeled, the upside in Q4.

Michael Rapino: As I've said in the past, from just purely a ticketing perspective,

Joe Berchtold: So while, overall, those amphitheater fans are very valuable to us as a company and have helped drive our AOI growth this summer and this year overall, as you look specifically at the ticketing segment, you're going to see it impacted the other way.

Michael Rapino: Nearly to how they do their numbers.

Michael Rapino: One stadium show is triple the fan count and triple the average ticket price of an amphitheater show. So while overall those amphitheater fans are very valuable to us as a company and have

Michael Rapino: helped drive our AOI growth this summer and this year overall, as you look specifically at the ticketing segment, you're going to see it impacted the other way.

Michael Rapino: And then just overall on the lawsuit, I don't want to ask about where you stand with the DOJ. But I just wanted to ask how that whole situation overall is impacting your strategic decision making. When you look at M&A opportunities, both domestically and abroad, is that piece of it in the back of your mind and swaying how you allocate capital now at all? Or are you just going straight ahead as if there was nothing going on?

Speaker Change: Great. And then, just overall on the lawsuit, I don't want to ask about where you stand with the DOJ, but just wanted to ask how that's...

Speaker Change: That whole situation overall is impacting your strategic decision-making.

Speaker Change: When you look at M&A opportunities both domestically and abroad, is that piece of it in the back of your mind and swaying how you allocate capital now at all, or are you just straight ahead as if there was nothing going on?

Michael Rapino: Yeah, we are, you know, we're able to isolate. So if you're in my legal department, you're working for the DOJ, if you're running any one of my divisions, it's business as usual.

Speaker Change: Yeah, we are, you know, we're able to isolate. So if you're in my legal department, you're you're working on the DOJ, if you're running any one of my divisions, it's

Michael Rapino: So we are, you know, we've always said for the last while we've been focusing on Venue Nation, global venues around the world. I think we put in that press release that we've got 15 coming online over the next year, still 75 or so in the pipe. At a venue meeting this morning, we looked at 10 new venues that we're looking to build across the US, Latin America, and Asia in the pipe. So business as usual, we think there's still a great, great white space on the global venue base, and Ticket.

Speaker Change: It's business as usual. So we are, you know, we've always said for the last while we've been focusing on venue nation, global venues around the world. I think we put in that press release, we've got 15 coming online over the next year, still 75 or so in the pipe.

Speaker Change: I had a venue meeting this morning. We looked at 10 new venues that we're looking to build across the U.S.

Speaker Change: Latin America and Asia in the pipe so business as usual we think there's still a great great white space on a global value basis

Michael Rapino: I think you saw last week that we expanded ticketing in South Africa and have a few more of those on an international basis. So lots of opportunities still ahead of us, and business as usual, in the

Speaker Change: And ticket, I think you saw last week, we expanded ticketing and in South Africa and have a few more of those on an international basis. So lots of lots of opportunities still ahead of us and business as usual in the divisions.

Brandon A Ross: Great, thank you very much.

Operator: Thank you. Our next question is from David Karnovsky with J.P. Morgan. Please proceed with your question.

Speaker Change: Great, thank you very much.

Speaker Change: Thank you. Our next question is from David Karnovsky with J.P. Morgan. Please proceed with your question.

David Karnovsky: Hey, thank you. Joe, Michael, we've heard from some other live entertainment companies recently about a pull-forward in demand post COVID, and that's starting to normalize. I'm curious for your view on this as it relates to concerts. Do you think there was any pull forward from kind of late 21 through 23? Is there anything in your kind of data to indicate that the frequency of concert going ramped up to an unsustainable level and is now kind of moving back to the trendline?

David Karnovsky: Hey, thank you. Joe, Michael, we've heard from some other live entertainment companies recently kind of talked to a pull forward in demand post COVID and that's starting to normalize.

David Karnovsky: I'm curious for your view on this as it relates to concert, do you think there was any pull forward from kind of late 21 through 23? Is there anything in your kind of data to indicate that the frequency of concert going ramped to an unsustainable level and is now kind of moving back to trendline?

Joe Berchtold: Yeah, Frankly, I find the concept of pulling forward for experiences like concerts to be a little bit of an odd one. I think that we have long said this is a supply-driven business; the demand is there. Notwithstanding the fact we have a lot fewer stadiums this year, we're actually still growing our show count, and we're still growing our fan count. We've talked a lot about new artists, and we've talked a lot about global artists.

Speaker Change: Yeah, I frankly, I'm, I find the concept of pull forward for experiences like concerts to be a little bit of an odd one. I think that

Speaker Change: We have long said this is a supply-driven business. The demand is there.

Speaker Change: Notwithstanding the fact we have a lot fewer stadiums this year, we're actually still growing our show count. We're still growing our fan count. We've talked a lot about new artists. We've talked a lot about global artists.

Joe Berchtold: Afrobeats, Latin, K-pop, exporting country. So I think what we're seeing is an acceleration of the continued globalization on the demand side, the artists seeing that they can go everywhere in the world. We'll have some shifts in terms of venue types and exactly which markets have which level of activity, but there's nothing that would suggest that we're really deviating from history.

Speaker Change: Afrobeats, Latin, K-pop.

Speaker Change: Exporting country. So I think what we're seeing is an acceleration of the continued globalization

Speaker Change: On the demand side, the artists seen that they can go everywhere in the world will have some shifts in terms of venue types and exactly which markets have which level of activity. But there's nothing that would suggest that.

Speaker Change: We're really deviating from historical trajectories on the ongoing growth of the business.

Michael Rapino: Yeah, we never predicted that the industry was going to grow at 30%.

Unknown Speaker: Unknown Speaker We never, we never predicted

Speaker Change: Unknown Speaker We never, we never predicted that the industry was going to grow at 30% a year going forward. We always wanted to restate that regardless of some of the COVID pent up demand or some of the shows.

Michael Rapino: The Covid pent-up demand, or some of the shows that got moved around this industry on a global basis, supply and demand, are the basics still sound, are they going to grow at a 9, 10 percent a year growth rate? And we see all of those trends we've talked about over the last year, globalization, and consumers. One to get to the show from Columbia to Pittsburgh, globalization of the artists, supply to man, and the experience economy still make this industry overall probably one of the best industries you're going to find out there. Continued double-digit growth amongst many of the divisions as well as on a global basis, a 9-10% annual base.

Speaker Change: that got moved around this industry in a global basis supply, demand, or the basics still sound? Are they going to grow at a nine, 10% a year growth rate? And we see all of those trends we've talked about over the last year, globalization, consumers.

Speaker Change: One, to get to the show from Columbia to Pittsburgh, globalization of the artists, supply to man, experience economy.

Speaker Change: Still make this industry, overall, probably one of the best industries you're going to find out there. Continued double-digit growth amongst many of the divisions, as well as on a global basis, a 9-10% annual base.

Joe Berchtold: And then your amp show count and attendance growth were particularly strong in the quarter, Joe. I think you might have said before, more of the show count growth slowing to Q2 this year due to an earlier season. And can you just frame what that should mean potentially on a relative basis for ALI growth or margin in Q3 relative to Q2? Yeah, I think Q3 is pretty much always

Speaker Change: And then your amp show count and attendance growth were particularly strong in the quarter, Joe. I think you might have said before, more of the show count growth slowing to Q2 this year.

Joe Berchtold: Unknown Speaker Due to an earlier season and to just frame what that should mean potentially on a relative basis for ALI growth or margin in Q3 relative to Q2.

Joe Berchtold: Yeah, I think Q3 is pretty much always our high watermark on margin as we have a high volume of festivals in addition to the amphitheaters. I'd see no reason for that not to continue.

Joe Berchtold: Yeah, I think Q3 is pretty much always our high watermark on margin as we have the

Joe Berchtold: High volume of festivals in addition to the amphitheaters. I'd see no reason for that not to continue. We expect to continue to have AOI growth as a result of that.

Joe Berchtold: We expect to continue to have AOI growth as a result of that margin expansion. I was trying to give you guys a little bit of more specific context for the modeling, but we expect this to be a very strong AOI growth year for concerts. I gave some of the numbers earlier where I talked about more normalization.

Speaker Change: Margin expansion, I'm just trying to, I was trying to give you guys a little bit of more specific context for the modeling, but we expect this to be a very strong AOI growth.

Joe Berchtold: So we do expect concerts to carry a lot of growth for the overall company this year, and we think that margins are moving back towards 2019 levels. I always hesitate to give an exact margin forecast because a lot of it depends on our volume of on sales and q4 that results in the expensing of marketing, but I expect that we're moving back towards 2019 margin levels on a full year basis.

Speaker Change: year for concerts. I gave some of the numbers earlier where I talked about more normalization, so we do expect concerts to carry a lot of growth for the overall company this year, and we think that margins are moving back towards 2019 levels. I always

Operator: Thank you. Our next question is from Cameron Mansson Perrone with Morgan Stanley. Please proceed with your question.

Speaker Change: Don't hesitate to give exact margin forecasts because a lot of it depends on our volume of on-sales in Q4 that results in the expensing of marketing, but expect that we're moving back towards the 2019 margin levels on a full-year basis.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question is from Cameron Mansson Perrone with Morgan Stanley . Please proceed with your question.

Cameron Mansson: Thanks, too, if I can. Notice that take rates have been up nicely at Ticketmaster this year, year to date. Is that success in some of the efforts that you've taken to kind of improve the ancillary monetization there? What's factoring into that? And then, Joe, on the higher CapEx guidance, you know, given the comment about pulling forward in the release, does that mean lower growth in CapEx next year? How should we think about that?

Speaker Change: Thanks, too, if I can.

Speaker Change: Notice that take rates been up nicely at Ticketmaster this year, year-to-date. Is that success in some of the efforts that you've...

Speaker Change: taken to kind of improve the ancillary monetization there.

Speaker Change: What's factoring into that? And then

Speaker Change: Joe, on the higher CapEx guidance, you know, given the comment about pull forward in the release, does that mean

Joe Berchtold: Lower growth in CapEx next year, how should we

Cameron Mansson: And on the note that you expect to generate free cash flow consistent with last year, despite how CapEx is ramping this year, any context in terms of how, you know, how you're achieving that, given the CapEx.

Speaker Change: Think about that. And on the note that you expect to generate free cash flow conversion consistent with last year, you know, despite how camp at CapEx is ramping.

Speaker Change: This year, just any context in terms of how, you know, how you're achieving that, given the CapEx ramp.

Joe Berchtold: Yeah, I think in terms of the pull forward we're speaking to specifically is that we're now expecting to have 14 major venues open between 24 and 25 as opposed to the 12 that we had last quarter. I think it's very early to start talking about 25 CapEx, as Michael talked about in an earlier question. We're regularly looking for all the venue opportunities we can find globally. He spends a lot of time with the teams in every market looking at them.

Speaker Change: Yeah, I think in terms of

Speaker Change: The pull forward, what we spoke, we're speaking to specifically is we're now expecting to have 14 major venues open between 24 and 25 as opposed to the 12.

Speaker Change: that we had last quarter. I think it's very early to start talking about 25 CapEx, as Michael talked about.

Michael Rapino: On an earlier question, we're regularly looking for all the venue opportunities we can find globally. We spend a lot of time with the teams in every market looking at that.

Joe Berchtold: I think that we'll continue to make those decisions on next year's CapEx based on the opportunities. Hopefully, there will continue to be a lot of great opportunities. Transcripts provided by Transcription Outsourcing, LLC, since the growth in the number in the forecast was for growth capex. I don't think that impacts how that number flows.

Speaker Change: I think that we'll continue to make those decisions on next year's CapEx based on the opportunities. Hopefully there will continue to be a lot of great opportunities.

Speaker Change: kind of 20 plus percent return profile that we tend to look at. In terms of the free cash flow conversion, I think those numbers, the cash conversion that we use is after maintenance capex and before growth capex. So the growth capex...

Speaker Change: numbers since the growth in the number in the forecast was in growth capex. I don't think that impacts how that number flows through.

Joe Berchtold: Back to your first question in terms of Ticketmaster. Yeah, Ticketmaster is continuing to perform well, again, adding a lot of clients internationally, and continuing to have strong renewal rates, both in North America and internationally. We're growing our upsells and ancillary spend with the ad units at Ticketmaster, so I think the underlying performance and the health of the business continue to be very strong. The fact that it's The AOI in Q2 was actually as high as last year, given the volume of stadium shows that they lost in the second quarter. The fact that it's still one of the top five quarters that it's had are all indications of the great performance and strength of that, on a multi-year basis.

Speaker Change: Back to your first question in terms of Ticketmaster. Yeah, Ticketmaster is continuing to perform well.

Speaker Change: Again, adding a lot of clients internationally, continuing to have strong renewal rates both in North America and internationally, we're growing our upsells and ancillary spend.

Speaker Change: with the ad units at Ticketmaster. So I think the underlying performance and the health of the business continues to be very strong. The fact that it's...

Speaker Change: The AOI in Q2 was actually as high as last year, given the volume of stadium shows that they've lost in the second quarter, the fact that it's still one of the top five quarters that it's had are all indications of the great performance and strength of that business.

Cameron Mansson: Got it. It's all really helpful. Thanks.

Speaker Change: on a multi-year basis.

Speaker Change: Got it. All really helpful. Thanks.

Operator: Thank you. Our next question is from Peter Supino with Wolf Research. Please proceed with your question.

Speaker Change: Thank you. Our next question is from Peter Supino with Wolf Research. Please proceed with your question.

Peter Lawler Supino: Hi, thank you. I was going to ask you two questions. One on the concert segment, with the really high growth, I wondered if you could parse the contribution from Venue Nation versus the promotion function. And then there was a question on growth capex. Your press release talks about 30% returns on venue upgrades, and in prior discussions, you aspired to 30% returns on some Greenfield venue builds. If Venue Nation generally does invest capital at a 30% incremental return, should we take the difference between total capex and maintenance capex and multiply that by 30% to forecast a return on your growth capex? Or would that be oversimplification?

Peter Lawler Supino: Thanks.

Peter Lawler Supino: Hi, thank you. I was, I wanted to ask two questions. One on the concert segment with the really high growth. I wondered if you could parse

Peter Lawler Supino: The Contribution from Venue Nation versus the Promotion Function. And then a question on growth capex. Your press release talks about 30% returns on venue upgrades.

Speaker Change: And in prior discussions, you aspired to 30% returns on some Greenfield venue builds.

Speaker Change: If Venue Nation generally does invest capital at a 30% incremental return, should we take the difference between total CapEx and maintenance CapEx?

Speaker Change: And multiply that by 30% to forecast a return on your growth capex, or would that be an oversimplification? Thanks.

Joe Berchtold: So first, venue nation versus concert promotion. Really, because that's transfer pricing, we don't spend a lot of time trying to separate the two; we don't have to.

Speaker Change: So first, on the venue nation versus the concert promotion,

Speaker Change: Really, because that's transfer pricing, we don't spend a lot of time

Joe Berchtold: I would say fully distinct P&Ls that would give you, at the AOI level, I think what you're asking about, we do look at the returns that we generate, the returns that we generate from all aspects of the business, to give you a feel that we're creating a lot of shareholder value as we're opening new venues and making other CapEx investments. I think that what we've said historically is that we strive for 20% north or higher on major renovations and new builds, and, as we showed here, 30% plus on some more tactical improvements.

Speaker Change: I would say fully distinct P&Ls that would give you...

Speaker Change: At the AOI level, I think what you're asking about, we do look at the returns that we generate, the returns that we generate from all aspects of the business. To give you a feel that we're creating a lot of shareholder value as we're opening new venues and making other CapEx investments.

Speaker Change: I think that what we've said historically is we strive for 20% north or higher on major renovations and new builds, and as we showed here, 30% plus on some more tactical improvements.

Joe Berchtold: This is also all the venue-based CapEx. There's also Ticketmaster and other CapEx that we make. So I think it's probably a bit of an oversimplification, particularly if you're trying to apply it to a single time frame, given that the CapEx is often ongoing for a couple of years on a major project. So yeah, you have a little bit of timing complexity there. So it's probably just not quite as simple over time. You get those returns, but not if you're trying to do this on a quarter by quarter basis.

Speaker Change: This is also all the venue-based CapEx. There's also Ticketmaster and other CapEx.

Speaker Change: that we make. So I think it's.

Speaker Change: probably a bit of an oversimplification, particularly if you're trying to apply it to a single time frame, given that the CapEx is often ongoing for a couple of years on the major projects. So, yeah, you have a little bit of timing complexity there, so it's probably just not.

Speaker Change: Quite as simple over time, you get those returns, but not if you're trying to do this on a quarter by quarter basis.

Joe Berchtold: Thanks, Joe. Thanks, Andy.

Operator: Thank you. Our next question is from Barton Crockett with Rosenblatt Securities. Please proceed with your question. All right.

Speaker Change: Thank you. Our next question is from Barton Crockett with Rosenblatt Securities. Please proceed with your question.

Barton Evans Crockett: Hi, thanks for taking the question. I wanted to ask maybe a little bit more about what's happening with sponsorships.

Barton Evans Crockett: So, you know, revenue was up 3% in the quarter, but AOI was up 10%. And you're guiding for the year, you're talking about double-digit bookings, growth, and stable margins. I was just wondering if you could explain what drives the acceleration in the top line but kind of give back on the margin. And just talk generally about the health of what you're seeing in sponsorship at this point.

Barton Evans Crockett: Hi, thanks for taking the question. I wanted to ask maybe a little bit more about what's happening with sponsorships. So, you know, the revenue was up 3% in the quarter, but AOI was up 10%.

Barton Evans Crockett: and you're guiding for the year, you know, you're talking about double digit bookings growth and stable margins. I was just wondering if you could explain what drives the the acceleration in the top line, but kind of the give back on the margin and just talk generally about the health of what you're seeing in sponsorship at this point.

Joe Berchtold: Yeah, I'll give you some specifics on the margins, and Michael can comment on that overall. I think the business continues to be a 60% plus margin business. Very strong.

Michael Rapino: Yeah, I'll give you some specifics on the margins, and Michael can comment on overall. I think the business continues to be a 60% plus margin business, very strong. I think, as I long said, wouldn't overanalyze single quarters. I think over the course of the year, we'll continue to deliver similar margins as we have in past years.

Joe Berchtold: I think, as I have long said, when analyzing single quarters, I think over the course of the year, we will continue to deliver similar margins as we have in past years. This is all a part of, as Michael talked about, when you have a high single-digit growth business that is underlying in the industry level, and we're over delivering that. Part of that over delivery is if you look at sponsorship, it's been in the teens historically on an AOI growth basis, and as we continue to grow the fan count and grow the overall business. We expect we'll continue this sort of historical growth.

Michael Rapino: This is all a part to, as Michael talked about, when you have a high single-digit growth business, the underlying in the industry level, and we're over-delivering that.

Michael Rapino: Part of that over delivery is if you look at sponsorship, it's been in the teens historically on a AOI growth basis and as we continue to grow the fan count and grow the overall business, we expect we'll continue those sort of historical growth rates.

Michael Rapino: Yeah, and I would just say, as an overall, given I work with the team a lot on our big clients, we're seeing this continual upgrade, moving from a regional deal to a global or national deal. That has been our biggest strategy over the last five years, upgrading from a local to a national. [inaudible] our festivals, our tours, the artists, all the different ways they want to engage with live music. So we think it will continue to be a great, great business on an AOI growth basis for a long time.

Speaker Change: Yeah, and I would just say, as an overall, given I work with the team a lot on our big clients, we're seeing this continual upgrade, moving from a regional deal to a global or a national deal.

Speaker Change: And that has been our biggest strategy over the last five years, is upgrading from a local to a national deal with a larger relationship and a longer term relationship, more integrated. And the lineup continues to be strong on all major brands, all CMOs.

Speaker Change: look at us kind of like the NFL and want to find ways to work on our digital, our on-site, our festivals, our tours, the artists, all the different ways they want to attach the live music. So we think continue to be a great, great business on an AOI basis for a long time.

Michael Rapino: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Michael Rapino for any closing comments.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Michael Rapino for any closing comments.

Michael Rapino: Thank you, everybody. Have a great summer, and we'll talk in the fall.

Michael Rapino: Thank you, everybody. Have a great summer, and we'll talk in the fall.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.