Q3 2024 Live Nation Entertainment Inc Earnings Call
Speaker Change: I know, la-la-la-la-la-la-la Still I don't let go And since the sun's gone Oh, it feels like I'm falling in love Maybe for the first time Maybe it's a mild mind You blow It feels like I'm falling in love You're throwing me a lifeline And this is for a lifetime I know
Speaker Change: I know that in this kind of scene Of two people there's a spark between One gets torn apart One gets a broken heart I know, la la la la la la la I know, la la la la la la la Still I don't let go Until the flowers bloom Oh, it feels like I'm falling in love Maybe for the first time Maybe it's a mile a mile
Speaker Change: It's love, it feels like I'm falling in love You're throwing me a lifeline This is for a lifetime, I know It's love, it feels like I'm falling in love You're throwing me a lifeline Oh, now for a lifetime
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 third quarter 2024 earnings call. I would now like to turn the call over to Miss Young. Thank you, Miss Young. You may begin your conference.
Speaker Change: Good afternoon and welcome to the Live Nation third quarter 2024 earnings conference call. Joining us today is our president and CEO Michael Rapinoe and our president and CFO Joe Berchtold.
Speaker Change: 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 development, and similar matters.
Speaker Change: 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, 8-K for description of risks and uncertainties that could impact the actual results.
Speaker Change: LiveNation will also refer to some non-GAP measures on this call. In accordance with the SEC Regulation G, LiveNation has provided definitions of these measures and a full reconciliation to the most comparable GAP measures in our earnings release.
Speaker Change: The release reconciliation can be found under the financial information section on Live Nation's website. With that, I'll turn it over to Joe for brief remarks.
Joe Berchtold: Thank you everyone for joining our quarterly conference call. I think we'll go right into questions on the on the release and as everybody knows we have our investor presentation coming up Wednesday and then again on Thursday.
Episode 2
Speaker Change: Thank you. At this time, we will be conducting the question and answer session. If you would like to ask a question, please press the star key followed by 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 from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment while we pull for questions.
Speaker Change: And the first question comes from the line of Brandon Ross with LightShed Partners. Please proceed with your question.
Speaker Change: Thanks for the questions. First, you gave a lot of very positive, forward-looking indicators in the release.
Speaker Change: was hoping you could help us think about how that's eventually going to flow through the P&L.
Speaker Change: And I guess on the Ticketmaster side, it's been a tough year. Assume...
Speaker Change: that outlook on stadiums is going to reverse that trend, but how will that look over Q4, Q1 and next year from a timing perspective?
Speaker Change: And then on concerts, it was a big margin year. Can that continue next year in addition to the obvious top-line growth that the indicators are showing?
Joe Berchtold: Thanks Brandon, this is Joe. I'll start and then Michael can add. Starting with Ticketmaster and starting with Q4, as we noted
for October first quarter of the month.
Joe Berchtold: Ticketmaster sales were up 15% year-on-year. Concerts, they're up 23%. So we're expecting that great stadium and arena pipeline to start to manifest itself in Q4.
Joe Berchtold: and deliver a very strong Q4 and Ticketmaster next week alone. We have over 200 stadium and arena shows going on sale. So we're, I think, in a period of unprecedented level of activity for Ticketmaster and Q4.
Joe Berchtold: And then that'll continue into Q1 and through next year. We expect, you know, next year's Ticketmaster to look more like a 23, where you've got that great volume of stadium activity that you get with the on-sale, but then you also get as it plays off.
Joe Berchtold: Obviously, next year, expectations strong for continued AOI growth, having growth in arenas and amphitheaters from our baseline of this year.
Joe Berchtold: added to that the more like 23 or beyond in stadiums should be very strong revenue growth, very strong AOI growth. I think it's probably a bit early to know the exact mix of all those venues for margins, but overall both strong revenue and AOI growth for the county.
Thanks for your business.
Speaker Change: Okay, and a lot of investors think that Trump is going to be a very good thing for you. I'm sure you've studied it very closely.
Speaker Change: Just wanted to hear what your thoughts are on how he's going to approach antitrust and the associated remedies.
Speaker Change: Do you think they will favor structural or behavioral? And then separately from a timing perspective, when do you think you'll next have an opportunity to get to the table with the DOJ?
Speaker Change: Thanks. Yeah, I think it's still very early in the transition process, so we're hesitant to say too much, but absolutely we are hopeful that we'll see a return to the more traditional antitrust approach where the agencies have
Speaker Change: generally tried to find ways to solve problems they see with targeted remedies that minimize government intervention in the marketplace.
Speaker Change: and without getting into specifics, at least some parts of the case we think, believe, reflect a
Speaker Change: Much more interventionist philosophy today than you'd expect of a Republican administration, obviously the request to break up.
Live Nation and Ticketmaster would be an example of that.
highly interventionist approach.
So...
Speaker Change: We'll obviously be ready to engage as soon as they are. They need to get through the appointments and get things settled on their end, but we'd certainly be hopeful that we could start engaging with them early in next year.
Thank you.
Speaker Change: And the next question comes from the line of David Karnofsky with JP Morgan. Please proceed with your question.
Speaker Change: Hey, thank you. Just two for me. First on the revision to 2023 financials, can you walk through what triggered that and what the notable changes are?
Speaker Change: And I didn't see it in the release, but you have an updated 23 AOI and quick cash flow. And then second, you called out for Q4 possible mid-teens FX impact to AOI due to LATAM. Can you just refresh us on the general mix?
Speaker Change: Aladdin versus other regions in the fourth quarter and then any early view on how to think about FX under 25. Thanks.
Thank you.
Sure, so first on the revisions of the financials, so...
Speaker Change: for context what we had is we had a non-cash, non-operating tax adjustment that we had to make. This has to do with when we purchased OSESA and a difference between statutory and U.S. GAAP.
accounting on some non-consolidated investments.
Speaker Change: So it was it was just on the U.S. side, we missed...
Speaker Change: uh... we paid the taxes in mexico we missed it in the u s
Speaker Change: It was not material to our 20 or 23 numbers, but working through with the auditors, we made the decision. It made sense to do it.
Speaker Change: restate those numbers. So, again, a one-time, non-cash, non-material to those numbers.
Speaker Change: In terms of the FX impact, you know, we had previously talked about Q4 this year looking strong in Latin America, which it still does, all the operating metrics we've been talking about in terms of
Speaker Change: both the supply and the demand profile are looking good. We've also just seen a downturn in the FX on Latin American markets.
over the past several weeks.
Speaker Change: and because we had a disproportionate amount of growth in the numbers.
Speaker Change: coming from those markets this fourth quarter. We just wanted to flag that, therefore, that has a disproportionate impact on our AOI and NOI for the quarter.
Speaker Change: We don't look at it as being material. When you step back and you look at the full year 25 and the magnitude of activity that we're going to have, it's more just a Q4 modeling point for people to be aware of, and we'll see how some of the effects.
Speaker Change: that plays out over time and we'll update you but I don't think it's a material 25 issue at this point.
Speaker Change: It's really just more a 24, which tends to be our lowest activity. So, when you have your lowest activity quarter and...
you have.
Speaker Change: where your growth is coming from, get impacted by FX, that can just start to swing things around.
Thank you.
Speaker Change: And the next question comes from the line of Stephen Lasacek with Goldman Sachs. Please proceed with your question.
Speaker Change: Hey, great. Thanks for taking the questions. Two, if I could, maybe first for Michael, you called out in sponsorship the number of strategic partners increasing by 20% this year. I'm curious, looking at the 25, how you would encourage us to think about the sponsorship business next year. Are there any verticals of the business where you see maybe outsized opportunities for execution where you could replicate this performance? And then second for Joe, on the concert segment AOI in 4Q, you called out some of the on-sales coming in over the next couple of weeks here. I'd be curious if you could help us think about how much marketing spend could be associated with those on-sales and maybe any color on just how to think about 4Q concert segment AOI. Thank you.
Thank you, Stephen. On the sponsorship side...
Speaker Change: Again, we'll be giving more guidance this week as we get to our Investor Day, but ThoughtShip has continually been our...
Speaker Change: Our star for the last decade or so, multiple years of double-digit growth. We look at this business still very, very strong, very different than maybe some of the advertising challenges other companies have. We see overall companies spending more money on-site experiential.
Speaker Change: and moving dollars into that segment. And anytime that happens, that's good for our business. We tend to rise with that. So we look at 25 and onward as continual AOI growth that we've been able to deliver in the past in sponsorship.
Speaker Change: One of the foundational drivers of that is our globalization. And every time we do more shows around the world, we provide ourselves more opportunity and more sponsors. So when you're...
Speaker Change: doing all these Latin American shows, when you're doing shows now in India, Middle East, Singapore, Asia, growing our Australian business, it just provides us more and more inventory to open new borders and new relationships. So as our global pipe continues to grow, so will our sponsorship and we'll see continued growth.
Speaker Change: And, Stephen, as it relates to the concert in Q4, obviously...
Speaker Change: Q4 in concerts is a peculiar beast because in some regards, right, the more we're ramping up for a great
next year.
the more that impacts our AOI, so I think...
Speaker Change: As we're standing here, we'd expect a double-digit increase in our advertising expenditure that we have to write off at the end of the year. We're certainly ramping up activity and personnel to be prepared to handle.
Speaker Change: The Tremendous Volume of Shows that we're doing next year, but I think even with all that is we're looking at the numbers now as again is the broad context. We do expect our margins for the full year in the concert business to land around where they were in 2019. I'm not going to worry.
Speaker Change: three or four months from now, plus or minus 10, 15 basis points, but I think that in total we expect it to come in around where we were in 2019.
Great. Thank you both.
Speaker Change: And the next question comes from the line of Cameron Manson Perroni from Morgan Stanley. Please proceed with your question.
Speaker Change: Thank you. On the CapEx increase, I was wondering if you could provide some color on what the pipeline right now looks like for new venue opportunities, and then for the new AMP project, anything further on what changed to pull that forward? I'm assuming that was already in the pipeline as of...
Speaker Change: July and it's more of just a timing consideration but any
Michael Rapinoe: color there. And then to follow up on the sponsorship question, Michael,
Speaker Change: that's been growing the number of partners that are generating over a hundred or one mil
Speaker Change: Can you talk about, is that new sponsors or is it expanding, you know, current or existing relationships and maybe, you know, what's allowing you to execute if it's growing those relationships, what's allowing you to execute so well there? Thanks.
Speaker Change: A quick last sponsorship, you know for a few years we've been saying anytime you can take that...
Speaker Change: regional relationship or that start of that relationship at a large brand, form that relationship, deliver for them. We tend to do good at then getting the next time around with the CMO and talking broader programs. So we continue to grow our current base.
Speaker Change: with sponsors. We tend to have a very good renewal rate and we tend to be able to upgrade you once we've gotten you into the ecosystem and understand your brand needs.
Speaker Change: So, most of it is coming from current customer base of our nine to a thousand sponsors and growing our current base with them, and then obviously expanding outside markets.
Speaker Change: On real estate, Joe will give you the the updates. We continue to have a great pipeline. We'll take more more details for you this week in terms of what venues are going to be kind of rolling out into 25 onward and the CapEx returns on that.
Speaker Change: Yeah, and on the specifics of the capex here for the quarter, as you know, we often
Speaker Change: build buildings in partnership with others. So this is a situation where a partner we've been talking to for an extended period about doing an amphitheater together, that partner had already put a fair bit of capital into the ground.
Speaker Change: and it was only recently that we then signed the formal agreement. By signing the formal agreement, which would give us controlling interest in the amphitheater, we then need to move all the CapEx onto our books.
Speaker Change: So you saw the increase of $50 million of expected CapEx for the year, but you also saw a $30 million increase in the capital coming from other parties.
Speaker Change: Most of the capital on this project is is what a partner has already put into it So the net cash that we're putting out is somewhat less than that
Speaker Change: In terms of the new venues, as we note in the release, we expect to bring 14 more venues online, either with substantial refurbishment or a new build over the next year and change through the end of 2025, accounting for about 8 million incremental fans.
Speaker Change: As Michael noted, we will get into more detail on sort of the mid-range planning on venues over the next couple of days.
Got it. That's all helpful. Thanks, guys.
Speaker Change: And the next question comes from the line of Peter Henderson with Bank of America. Please proceed with your question.
Speaker Change: Can you provide some color on what initiatives are resonating most with fans and driving up the per caps?
Speaker Change: And where do you think per caps can go over time and then just related to that? I mean how much opportunity remains to implement tiered experiences? And where are you monetizing on super or premium fans the most versus regular or casual fans? Thanks
Thank you.
Speaker Change: I'll give a quick shot again. We'll get into more detail this week because those are pretty strategic broad questions.
Speaker Change: I'm the premium fan or super fan. I know I hear other companies talk about it.
Speaker Change: selling to the super fan for quite a while, called that the premium fan, that wants a VIP experience at the show. So that's kind of been an ongoing skill set we've had forever. Our job every year is we see that pie still under serviced.
Speaker Change: We've used percentages in the past, 2%, 4%, 6% of the show is premium. We think it can grow up to 20% and more. So a lot of the refurbishments we're doing at venues is about taking regular seats and turning them into better experiences.
Speaker Change: for premium experiences at night. So, we think premium experiences is a big underpin to our entire growth forward because it's using the same customer base, but we always sell out of the boxes, sell out of the premium inventory first.
Speaker Change: We never have a problem selling that so we think that is a big part of our capex and our Refurbished as well as our new buildings when we're building them. We're starting with this mandate that they must
have a certain higher percentage of premium.
Speaker Change: seats and lounges and experiences. So those those venues start with a much better return.
Speaker Change: First question, shoot again the first question. Just what, you know, where do you think, you know, what initiatives are sort of resonating most of the fans and driving up per caps and where do you think per caps can go over time?
Speaker Change: Most of it is, you know, I've said this before, sports, these new venues, the billion-dollar arenas have done a fabulous job, the stadiums, the SoFi stadiums.
Speaker Change: They've all kind of we've all following the same playbook. We all probably started in a very traditional
Speaker Change: Food and Beverage offering, whether it was the old Forum here in L.A. versus the new Intuit Dome, it's night and day, and most of it is around having more POS. It's around having different high-end value offerings in the food and beverage bundle, about having mocktails, non-alcoholic options.
Speaker Change: higher-level food versus the traditional food. So that's the ongoing path we see in our amphitheaters, our theaters, our arenas.
Speaker Change: We've been using this $2 per head growth over the last few years. We think that's something in the future we can continue on.
So, it's all around upgrading our current...
Speaker Change: Customer base, our apps, our venues probably are the lower end of good, great quality F&B for historic measures. So every year it's about upgrading.
Speaker Change: that amount of POS offering, upgrading our selection, increasing our premium offering, and all of that combination we think still has lots of runway left.
Thank you.
Speaker Change: And the next question comes from the line of David Katz with Jeffries. Please proceed with your question.
Speaker Change: Evening, thanks for taking my questions. You know, number one, past week or so has brought quite a bit of change. I'm wondering if your, you know, thoughts have started to shift or philosophies start to shift around, you know, M&A given sort of the change over the past week, and then I have one quick follow-up, please.
Speaker Change: No, we haven't, you know, nothing's really changed in the last couple of years the way we've been moving around the world and building our business.
Speaker Change: We don't have any sizable M&A targets that we would do with or without where the regulation stands in America. We like kind of what we're doing. You see us at an arena in Austin.
Speaker Change: at Napa Theater in some white space, or a 5,000 seat.
Speaker Change: and similar around the world. You know, we're always kind of looking in these hundred cities that are out there that want great entertainment. And whether it's an amphitheater or a festival or a promoter, we like bolting those on. And we have.
Speaker Change: Big pipe of those around the world. Nothing's changed over the last two years and don't think anything changes going forward
Speaker Change: Okay, understood. And I just wanted to ask a more general question about the secondary ticketing market, which I recognize is, you know, a smaller part and in some sense, a strategic portion.
Speaker Change: of kind of what you do. But, you know, it seems as though every time we have something like a World Series and ticket prices get high, it just draws a tremendous amount of attention.
that sometimes seems a bit misplaced.
Speaker Change: you know, toward you as the biggest. Are there any strategies or, you know, and maybe this is not the best forum to talk about them, but, you know, it's just something that comes to mind that we've written about a bit, and I thought I would raise it and see if there's any answer that's appropriate here.
Speaker Change: Yeah, I think it's a much, much, much broader statement, but
Yes, we are always a little amused that
Speaker Change: Sports is kind of a badge of honor how expensive those tickets go for but music which is Priced much lower than sports seems to get more of the emotional
Speaker Change: a reaction. But, you know, America seems to be, you know, a market where secondary is free to run. We hope there's always been this hope between different legislators, we get better regulation around secondary. Hasn't really come to life yet around that minimum, at least bots.
Speaker Change: and Speck Selley and some of the other practices around secondary that we'd like to clean up. So, we hope over time, seems to be more and more attention around the secondary market. So, we hope over time, better regulations get put in place to help the consumer.
Got it.
Speaker Change: And the final question comes from the line of Peter Cepino with Wolf Research. Please proceed with your question.
Thanks, hi team. A question about Ticketmaster, with all the
activism that the DOJ
Speaker Change: a question that we've heard a lot in the last year.
has related to the defensibility.
of Ticketmaster's competitive position, and one of the...
Pillars of that is technology
Speaker Change: And so I wondered if you could just comment on the investments that Ticketmaster is making in technology, whether it relates to bots or demand generation or other initiatives that you think are the most important ways Ticketmaster is reinforcing and extending its competitive position technologically. Thanks.
Speaker Change: Sure, yeah. And Peter, as you know, we spend tens of millions of dollars in capital on Ticketmaster. I think first and foremost,
Speaker Change: We need to continue to innovate the products that we offer to on the enterprise side to our venues to promoters
Speaker Change: and others who use the platform. Past recent years, that's included a lot around pricing technology to help everybody understand the market value of the content they're delivering. It certainly also is on the marketing side, developing great marketing science capabilities.
Speaker Change: to help people market their shows. Big investments over the past couple of years on continuing to enhance our ability to handle that high demand on sale. We think Ticketmaster is the best in the world and we've seen a number of on sales recently where Ticketmaster has been able to
Speaker Change: delivering much better experience and sell tickets at a volume that others have been unable to handle.
Speaker Change: and then obviously also just on the ticket itself all the things that we've done around digital tickets and as you said trying to stop bots so range of consumer facing technologies as well
Speaker Change: We expect it's ongoing, right? Big Master is a technology company, so you're going to continue to be developing products on both an enterprise and a marketplace basis.
Speaker Change: And at this time there are no further questions and I would like to pass the call back over to the Live Nation management team for closing remarks.
Speaker Change: Thank you everybody and look forward to talking more about our business this week.
Speaker Change: And ladies and gentlemen, that does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: When we're together Listen to music You were left in the long As you danced in the breeze Lost in the song And while the music was on I was there and to see Felt in the long
Speaker Change: Music is better when we're together Listen to music Music is better when we're together Listen to music Music is better when we're together
Speaker Change: David Karnovsky, David Karnovsky, David Karnovsky, David Joyce