Q3 2024 Vivid Seats Inc Earnings Call
Paul for Q&A, I would now like to turn the call over to Kate effort.
Kate: Good morning, and welcome to <unk> third quarter 2024 earnings Conference call.
Affleck: Affleck head of Investor relations activities.
Affleck: Joining me today to discuss <unk> results are Stan Chia, Chief Executive Officer, and Larry Seay, Chief Financial Officer.
Affleck: By now everyone should have access to our third quarter earnings press release, which we released earlier this morning.
Affleck: This release as well as supplemental earnings slides are available on the Investor Relations page of visits seats website at investors got vivid C dot com.
Affleck: During the course of todays call management may make forward looking statements within the meaning of federal Securities laws.
Affleck: These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our most recent annual report on Form 10-K, and our other filings with the SEC.
Affleck: On today's call, we will refer to adjusted EBITA and adjusted EBITDA margin, which are non-GAAP financial measures provide useful information for our investors.
Affleck: To the extent reasonably available a reconciliation of these non-GAAP financial measures to their corresponding GAAP measures can be found in our earnings press release, and our supplemental earnings slides.
Stan: And now I would like to turn the call over to Stan.
Stan: Good morning, everyone and thank you for joining us today.
Stan: Our strategy has always been to prioritize long term success by fostering stickiness in our marketplace for both buyers and sellers and I am excited to share the progress we delivered on that front in the third quarter.
Stan: Staying true to that strategy, we operated with discipline and delivered solid third quarter financial results. Despite market headwinds that we believe will be temporary.
Stan: Before discussing the market backdrop, and the strategic progress that we delivered I'd like to touch on our financial highlights, which Larry will cover in more detail.
Larry: In the third quarter, we delivered a $187 million of revenues and $34 million of adjusted EBITDA, including an 18% adjusted EBITDA margin.
Stan: These results demonstrate our ability to deliver strong unit economics, even when market factors were less favorable in the short term.
Affleck: To begin with I'd like to shed some light on those market factors.
Affleck: Compared to record concert years in 2022, and 2023, we would consider 2024 as a digestion year for concert industry supply with year over year declines seen most acutely in the third quarter.
Affleck: As we and others in the industry have discussed there was a notable reduction in stadium tour activity in 2024 compared to 2023, when many of the most popular artists played and the largest venues, which naturally command the highest prices.
Affleck: Partially counteracting this dynamic concert ticket volumes have held up quite nicely in 2024 with many artists playing more shows, albeit in smaller venues that typically come with lower prices.
Affleck: We believe that the mix shift in 2024 away from concerts and away from Stadium tour activity was a short term headwind that will soon abate.
Affleck: Looking ahead, we are now in the midst of concert on sale announcements for the 2025 calendar, which we expect should be a more normal year with concerts, including stadium shows growing again.
Affleck: Concert supply in 2024 was an anomaly and we look forward to normalizing supply intersecting with long term tailwind for live events next year and sustained and reliable concert growth going forward.
Affleck: We remain confident that the digestion that we're seeing in 2024 is a reflection of supply and not a reflection of demand.
Affleck: The ongoing strength that we're seeing in the industry and sports in theater is evidence of this dynamic.
Affleck: Overall, we believe that the demand for live events remains as robust as ever.
Affleck: Beyond the supply and demand backdrop marketing intensity was high in the third quarter with certain competitors focused on growing volume, where we believe marginal volume is uneconomic at least in the near term.
Affleck: We continue to focus on strong unit economics, and fostering long term stickiness in our marketplace occur.
Affleck: Accordingly, we are building on the long standing strength of our business and are poised to capitalize upon any alleviation of competitive behavior or upon a normalizing market backdrop, leveraging our investments that are focused on winning in the long term.
Affleck: Even as we continue to lean into long term initiatives that are driving our mix of repeat orders higher new customer acquisition via performance marketing remains an important channel.
Affleck: Accordingly, we are excited that Adam Stuart has now officially joined our board of directors.
Affleck: As we briefly touched on last quarter, Adam joins us with almost two decades of experience at Google, including his current position overseeing advertising partnerships and integrated solutions, including Google Dot Com.
Affleck: Adams extensive knowledge will be very valuable as we seek to drive further efficiencies in this channel.
Affleck: Now I'd like to turn to the strategic progress that we delivered in the third quarter.
Affleck: Efficiently increasing brand awareness continues to be a long term priority, helping to drive customer acquisition and ultimately the household penetration of our brand with key audiences.
Affleck: In the third quarter, we announced a new strategic partnership with Brandon Marshall's athlete led media platform I am athletes.
Affleck: Former NFL all pro receiver has built an impressive platform portfolio with a wide, reaching an engaged audience base that is passionate about entertainment sports and live events.
Affleck: In addition to exclusive content creation, featuring athletes and celebrities vivid seats key brand differentiators are being promoted to millions of sports fans across those channels through native organic mentioned during episodes and sponsored content.
Speaker Change: This unique partnership is a new way for us to engage with fans growing our brand awareness in new channels and also meet the growing consumer demand for best in class and compelling content, our partnership with IAA already appears to have accelerated our impact in social channels.
Speaker Change: In conjunction with these efforts we are also leveraging new and expanded strategies that drive engagement and grow affinity for our brand, including expanding our social presence, which is approaching 400000 followers.
Speaker Change: We also continue to differentiate our platform and drive marketing efficiencies through game Center, which is similarly approaching 400000 lifetime users playing games and our App.
Speaker Change: As we've shared in the past our engagement efforts are proving successful with game center users frequently browsing tickets, while playing which is translating to app orders. We are excited to share that 95% of ticket orders from game Center users now occur within our App incurring nearly zero marketing expense.
Speaker Change: Orders from repeat customers weather driven through game center engagement or through other initiatives such as our industry, leading vivek seats rewards program are highly accretive and we look forward to incremental efficiencies as our investments in these initiatives have more room to run.
Speaker Change: Next I'd like to take a moment to highlight the progress and efficiencies that we're continuing to drive through synergies with our Vegas Dot Com acquisition.
Speaker Change: Early on we began cross listing complementary vivid seats inventory on Vegas Dot com.
Speaker Change: We are excited to share that orders from cross listed inventory are run rating at approximately 1% of our marketplace GOP. Additionally.
Speaker Change: Additionally, as we discussed last quarter, our cross sell campaign to convert biggest dotcom customers to visit customers in their home markets is off to a promising start with nearly 50% of cross sell emails being opened by customers. This campaign is now bearing fruit and converting to incremental orders and new vivek.
Speaker Change: These customers.
Speaker Change: As more Vegas dotcom cohorts age to their next live event purchased back home. We believe this channel will ultimately be another contributor to profitable <unk> growth.
Speaker Change: As we think about our Tam we continue to make great progress with our investments and strategically building out our global platform. As we've discussed previously we are internationalize, our platform and capabilities to scale efficiently as we expand our Tam across geographies, we remain focused.
Speaker Change: And on track to launch operations in select geographies by the end of the year.
Speaker Change: On the seller side of our marketplace. We are excited to announce that our innovative pricing tool skybox drive recently exited its beta phase and was met with rapid demand.
Speaker Change: As a result, we are already in the processes of Onboarding over 100 users and also have a sizable waitlist of prospective users.
Speaker Change: We are pleased with the reception of our product, which is turnkey integrated and exclusive to our skybox ERP and leverages the power of vivid seeds marketplace data.
Speaker Change: We look forward to driving incremental adoption with one hundreds of additional skybox sellers on our waitlist.
Speaker Change: It's important to remember that skybox remains the industry, leading ERP with over 55% of our professional sellers exclusively using our ERP to run their businesses.
Speaker Change: The added functionality of Skybox drive is a significant step that will further enforced the stickiness of skybox and fortify our already leading position with professional sellers.
Speaker Change: Lastly, I wanted to share that we recently announced vivid seats was included in Newsweek's list of America's Best customer service 2025, and the ticketing category for the fifth time as.
Speaker Change: As a company that is focused on rewarding fan and creating the most exceptional experiences in our industry. We are proud to be recognized again by Newsweek for our excellence in customer service.
Speaker Change: In summary, we made substantial strategic progress during the quarter, particularly through unlocking synergies with Vegas, dotcom and with the full launch of Skybox drive we are confident that the differentiated products and initiatives fostering stickiness to our platform will drive long term growth and value in our marketplace.
Speaker Change: Both in North America and abroad with our imminent international launch in the meantime, we will continue to operate with discipline and flexibility that we demonstrated in the third quarter.
Speaker Change: With the anticipated return of concert growth in 2025, we expect to return to organic growth and to continue delivering a double digit growth CAGR over the long term.
Speaker Change: With that I will turn it over to Larry for a more detailed review of the quarter.
Larry Seay: Thanks, Dan.
Larry Seay: In the third quarter of 2024, we generated $872 million of marketplace T O P. A 13% year over year decline.
Speaker Change: The drop in marketplace <unk> was driven by an 11% year over year reduction in average order size and a 2% year over year decline in total marketplace orders.
Speaker Change: Our lower average order size as a result of pressure on concert AOS, resulting in part from a softer stadium lineup.
Speaker Change: Along with our acquisition, bringing lower average order sizes.
Speaker Change: Despite the soft <unk> in the third quarter since 2019, our average order size has grown organically at a 2% CAGR and we continue to expect a 3% to 4%.
Speaker Change: CAGR moving forward.
Speaker Change: I would also note there were several large concert tour cancellations in the third quarter, which were headwinds to marketplace.
Speaker Change: In total marketplace orders.
Speaker Change: We delivered $187 million of revenues in the third quarter roughly flat year over year, despite the decline in marketplace to yoga.
Speaker Change: We delivered strong unit economics, whereby a 17, 5% take rate, which was up 200 basis points year over year.
Speaker Change: We delivered $34 million of adjusted EBITDA in the third quarter, which was slightly higher year over year we.
Speaker Change: We are pleased with our 18% adjusted EBITDA margin, despite lower marketplace GOP than anticipated.
Speaker Change: Lastly on guidance, we now expect 2024 marketplace <unk> to be in the range of three eight to 4.0 billion.
Speaker Change: <unk> 2020 for revenues in the range of $760 million to $780 million in.
Speaker Change: In 2024, adjusted EBITDA in the range of $145 million to $155 million.
Speaker Change: These revised ranges incorporate challenging concert supply dynamics as well as continued marketing intensity expected in the fourth quarter.
Speaker Change: Along with a range of outcomes for our remaining 2025 concert on sales.
Speaker Change: We will continue to operate with discipline and anticipate the return of concert industry growth in 2025.
Speaker Change: Back to you Sir.
Speaker Change: Thanks, Larry wrapping up we delivered key strategic progress in the third quarter and continued to position our platform for long term growth and profitability star.
Speaker Change: Strong consumer demand for live events continues and we expect an acceleration in industry growth in 2025 as favorable tailwind for live events intersect with normalizing supply.
Speaker Change: With that operator, let's open it up for questions.
Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, we ask that you please limit to two questions.
Speaker Change: We will now begin our question and answer session.
Speaker Change: Andrew Moreau with Raymond James. Please go ahead with your question.
Andrew Moreau: Hi, Thanks for taking my questions.
Speaker Change: I was wondering if you could dig into the implied take rate guidance in <unk>, a little bit we saw through Q3 Q come up above recent trends and it looks like <unk> may be coming back down a little bit. So just wondering if you could get into some of the drivers behind that and maybe how your loyalty program is playing into that.
Speaker Change: Yes, Thanks, Andrew.
Speaker Change: Yes, I think as.
Speaker Change: Hi.
Speaker Change: As you noted strong performance on take rate in Q2 or Q3.
Speaker Change: The combination of a couple of factors.
Speaker Change: Some of which we think will continue.
Speaker Change: Some of which everyone flexibility alright, so were always.
Speaker Change: Looking to balance take rate and volume.
Speaker Change: And as you can imagine if you try to push take rate.
Speaker Change: Put pressure on volume and the inverse is also true.
Speaker Change: And depending on how market environments evolve, we want to make sure that we're retaining the ability to flex accordingly.
Speaker Change: Second piece I would say this.
Speaker Change: Very based on mix, but generally speaking.
Speaker Change: World series as they can.
Speaker Change: White high ticket.
Speaker Change: Hi.
Speaker Change: <unk>.
Speaker Change: And when World series increases.
Speaker Change: Increases as a percentage of the book of business.
Speaker Change: We will have a deep waiting effect on take rates and I don't think it would be unreasonable to call. The world series matchup this year the dream scenario.
Speaker Change: And so while I think thats, a very nice to answer on a nominal basis, when youll get percentage take rate settled.
Speaker Change: Create a little bit of a downward pressure.
Speaker Change: Got it. Thank you your dream scenario I think Yankees fans may argue with that but maybe maybe a higher level question as it relates to kind of the overall ecosystem and then I'll jump back in the queue, but when youre talking about 24 being a digestion year I know normal has kind of been hard to come by since the pandemic, but in kind.
Speaker Change: A normalized environment do you see this largely as a cycle like a couple of big gears a digestion year.
Speaker Change: Or is it something thats kind of just idiosyncratic based on when big artist decided to tour.
Speaker Change: Yes, it's a great question.
Speaker Change: The phrase that we.
Speaker Change: Used most often on our site is of that mix.
Speaker Change: And I think you can have multiple.
Speaker Change: Drivers of variance or multiple sine curves happening across the various leagues in categories.
Speaker Change: That can blend together.
Speaker Change: Into it.
Speaker Change: A more difficult to predict.
Speaker Change: Trends.
Speaker Change: So if you were to focus exclusively on concerts.
Speaker Change: Which I think is the story of this quarter.
Speaker Change: When Q3, which is a bit more concert heavy.
Speaker Change: You saw particularly challenging comps or the lineup last year at the top of the ticket was quite strong and diversified across a number of artists.
Speaker Change: The other 50 comp was particularly strong you move into this year just a different story right are more more distributed.
Speaker Change: Number of artists playing in smaller venues.
Speaker Change: And so you had a fairly meaningful headwinds there.
Speaker Change: With the script, a little bit to sports.
Speaker Change: This year in Q1, we touched on a little bit you had a really nice college football playoff matchup lapping a not so good college football playoff matchup heading into 'twenty five youll have expanded playoffs.
Speaker Change: Probably set up for another nice event mix there.
Speaker Change: Great World series matchup this year pretty poor World series match up from a ticketing standpoint last year. So those are competing.
Speaker Change: You've got a theater you had a record setting Matt right on sale and tour happening last year not the same thing happening, Michigan. So we started out the map all of those together.
Speaker Change: Across the categories you can add.
Speaker Change: <unk> headwinds and it adds to some of the challenging precisely predicting where it'll go.
Speaker Change: But I do think it is fair to assume some level of oscillation based on that mix much of which is exogenous and not really indicative of fundamental trends.
Speaker Change: Understood. Thanks for the color I appreciate it.
Speaker Change: Thank you Andrew.
Speaker Change: Our next question will come from Maria reps go ahead Maria.
Speaker Change: Great. Good morning. Thanks, so much for taking my questions. Firstly can you maybe talk about your expectations for the broader industry growth next year sort of given the potentially.
Speaker Change: More robust content supply calendar Comping, and we care I guess, how should we think about growth relative to a more normalized high single digit growth rate.
Speaker Change: Hey, Maria Thanks for the question, Yeah look I think as we as we've discussed on the on the prepared remarks, and I think today and I think what we've seen.
Speaker Change: This year and maybe.
Speaker Change: Adding a little bit more color back to beyond the distribution of the artists on the concert side I think you had a.
Speaker Change: Sort of a retrenchment or digestion of the venues as well, where we certainly saw much larger concentration of arenas versus stadiums certainly reflected by others in the industry as well.
Speaker Change: As we look forward to.
Speaker Change: Next year, we remain really bullish about the secular trends that we've seen in the category. We certainly heard I think others in the industry remark about how there will be a return.
Speaker Change: Two stadium tours and in strength next year and I think we remain excited about about that prospect.
Speaker Change: Certainly as we've been looking at it we we use the data that we have available tangibly and we remain I think optimistic and looking forward as as the slate for next year continues to unveil itself.
Speaker Change: Got it and then I just wanted to get a little bit more color sort of on your Q4 full year guidance, our implied Q4 guidance.
Speaker Change: So I think your prior guidance sort of suggested that the strong 2025 concert lineup should sort of support sales in Q4 can you maybe just talk about what has changed here more recently is it just the timing of some of those events kind of okay with.
Speaker Change: With them shifting sort of later into the year or.
Speaker Change: Is there anything else.
Speaker Change: Keep in mind you.
Speaker Change: Understanding that sort of thing.
Speaker Change: Near term dynamics here, a little bit weaker.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: I think there's two things.
Speaker Change: Happening the first.
Speaker Change: Yes, I think we've commented on.
Speaker Change: And you can see in the numbers softness in the concert slate in Q3.
Speaker Change: Until the next wave of on sales happens in mass.
Speaker Change: Presume that that softness with continue sorry, do you start moving into Q4 call. It.
Speaker Change: Yes.
Speaker Change: Softer than expected performance, we saw in August and September in the concert space continues into October it's not unreasonable.
Speaker Change: Your appellation.
Speaker Change: And then yes, we have we have talked about hopes.
Speaker Change: Expectations for a robust calendar we've seen.
Speaker Change: A few.
Thank you.
Speaker Change: Coal play Oasis.
Speaker Change: The soul.
Speaker Change: Not enough as of today to declare.
Speaker Change: Victory on it being a robust calendar, so theres still a fair bit.
Speaker Change: Speculation.
Speaker Change: And so what we tried to strike was.
Speaker Change: Our balance where.
Speaker Change: Closer to reflecting what we know.
Speaker Change: While acknowledging that there's been positive comments.
Speaker Change: Those positive comments just haven't manifested.
Speaker Change: Tangible reliable announcements in mass yet.
Speaker Change: Got it thank you so much.
Speaker Change: Thank you Maria.
Speaker Change: Yeah.
Speaker Change: And for our next question and our next question comes from Ryan to go go ahead Ryan.
Speaker Change: Good morning, guys Stan <unk>.
Speaker Change: Mentioned high marketing intensity, that's been a common theme now for several quarters.
Speaker Change: Yes, it's consistent with our checks as well and Moody's actually cut their free cash flow estimate by nearly $200 million and cut in half on one of your scale competitors, which is evident of that but given this ongoing headwind does it make you rethink.
Speaker Change: If it's near term and then maybe even longer term strategy on customer acquisition.
Speaker Change: So I think your prior guidance sort of suggested that the strong 2025 concert lineup should sort of support sales in Q4 can you maybe just talk about what has changed here more recently is it just the timing of some of those events kind of okay with.
Speaker Change: Yeah, Hey, Ryan Thanks for the question.
Speaker Change: Yes, I mean look I think adding spot on with what you've seen in your research.
Speaker Change: When when others go out and I think.
Shifting sort of later into the year or.
Speaker Change: Take aggressiveness to the point of certain uneconomic volume I think we're always faced with decisions that we have to make both in the near term and the long term and what I would say is as you've seen evidence.
Speaker Change: Is there anything else.
Speaker Change: Keep in mind you.
Understanding that sort of.
Near term dynamics here, a little bit weaker.
Speaker Change: Yes. Thanks.
Speaker Change: I think there's two things happening.
Speaker Change: I think our investments and certainly our results we've always prioritize long term value right I think the investments that we may continue to differentiate our product ecosystems continue to allow us almost if you think about mix to be fairly.
Happening the first.
Yes, I think we've commented on.
Speaker Change: And you can see in the numbers softness in the concert slate in Q3.
Until the next wave of on sales happens in mass.
Speaker Change: Prescriptive and direct about the volume that we do target right I think we have the industry leading loyalty program you can certainly see.
Speaker Change: Presume that that softness with continued so if you start moving into Q4 call. It.
Speaker Change: Fortifying the product that we have across both sides of the marketplace and as evidence even in a supply challenged quarter. The ability to continue to deliver strong unit economics. So I think what youll see from US is certainly a disciplined in how we execute our focus on the long term and should market environment.
Yes.
Speaker Change: Softer than expected performance, we saw in August and September in the concert space continues into October it's not unreasonable.
Speaker Change: Your appellation.
Speaker Change: And then yes, we have talked about folks in.
Speaker Change: Expectations for a robust calendar we've seen.
Speaker Change: <unk> I think the ability to always pivot and pivot nimbly to capture opportunity.
Speaker Change: A few.
Coal play Oasis.
Speaker Change: Helpful.
The soul.
Speaker Change: Good question Skybox drive congrats on moving that out of beta testing in the full market launch what are you seeing the most excitement I know, it's early with that Onboarding, but is it with.
Speaker Change: Not enough as of today to declare victory on it being a robust calendar, so theres still a fair bit of speculation.
Speaker Change: So what we tried to strike was.
Speaker Change: A smaller professional sellers of the bigger ones across the board is it.
Speaker Change: Our balance where it is.
Speaker Change: Getting new users.
Speaker Change: Closer to reflecting what we know.
Speaker Change: Users on the ERP system is kind of a way to further evidenced that.
Speaker Change: While acknowledging that there's been positive comments those positive comments, just haven't manifested tangible reliable announcements in math yet.
Speaker Change: Or is it with the existing customers et cetera, et cetera, but where are you seeing the most success early on.
Speaker Change: Thanks, Ryan Yeah, Great question look I think we're excited and pleasantly surprised at the pace of the adoption and excitement I think as you heard in the remarks, we're in over 100 people already on boarded onto the platform.
Speaker Change: Got it thank you so much.
Maria: Thank you Maria.
Speaker Change: Standby for our next question and our next question comes from Ryan to go go ahead Ryan.
Speaker Change: As we brought it out of beta and maybe piecing that apart certainly as you think about the range of sellers I think its certainly across size, we've seen lots of interest and rapid adoption. If you think about new users versus under skybox versus existing it skews a little bit in this early stage to existing users.
Ryan: Good morning, guys.
Ryan: You mentioned high marketing intensity, that's been a common theme now for several quarters I.
Speaker Change: I guess it is consistent with our checks as well and Moody's actually cut their free cash flow estimate by nearly $200 million and cut in half on one of your scale competitors, which is evident of that but given this ongoing headwind does it make you rethink.
Speaker Change: And naturally so as you can think about the way we design that was meant to be turnkey integration for existing skybox users, where it is almost no effort to bring folks onboard.
Ryan: If it's near term and then maybe even longer term strategy on customer acquisition.
Speaker Change: And now they have access to an industry leading product that we believe has wonderful differentiated features and unique data that is powered by the <unk> marketplace. So.
Speaker Change: Yeah, Hey, Ryan Thanks for the question.
Speaker Change: Yes, I mean look I think adding spot on with what you've seen in your research.
Speaker Change: Really pleasantly surprised and again very optimistic about the prospects as we have seen I think rapid rapid adoption in these early days.
Speaker Change: When when others go out and I think.
Speaker Change: Take aggressiveness to the point of certain uneconomic volume I think we're always faced with <unk>.
Speaker Change: Thanks, guys. Good luck.
Speaker Change: Decisions that we have to make both in the near term and the long term and what I would say is as you've seen evidence.
Speaker Change: Thank you Ryan.
Speaker Change: Yes.
Speaker Change: Our next question comes from Dan Kronos go ahead Deb.
Speaker Change: I think our investments and certainly our results we've always prioritize long term value right I think the investments that we may continue to differentiate our product ecosystems continue to allow us.
Deb: Great. Thanks.
Speaker Change: I'm going to give you a few rapid fire Stan.
Speaker Change: Just any thoughts on the change in administration, and what that means for either antitrust or consolidation and M&A in the space.
Speaker Change: Most if you think about mix to be fairly <unk>.
Speaker Change: Prescriptive and direct about the volume that we do target right I think we have the industry's leading loyalty program you can certainly see.
Deb: Also maybe Stan just thoughts on I know this is a very common topic, but we've seen some sports venues trying to sort of priced in the secondary Delta. These days. So just your thoughts on.
Fortifying.
Speaker Change: The product that we have across both sides of the marketplace and as evidence even in a supply challenged quarter. The ability to continue to deliver strong unit economics. So I think what youll see from US is certainly a disciplined in how we execute our focus on the long term and should market environment change I think the ability to always.
Deb: Being able to maintain kind of that gap with primary and then lastly for Larry.
Deb: Just wanted to get a sense I know, there's a ton of noise with cancellations and moving pieces here in venue mix, but just free cash conversion.
Speaker Change: <unk> pivot and pivot nimbly to capture opportunity.
Larry Seay: Dynamics, just when do we get back to that 60% to 70% flow through and are there any other kind of puts and takes we might want to think about thank you.
Helpful.
Speaker Change: So a question Skybox drive congrats on moving that out of beta testing into full market launch what are you seeing the most excitement I know, it's early with that Onboarding, but is it with the.
Larry Seay: Hey, Dan Thanks for the rapid fire, we will try to rapidly respond as well on the first one.
Speaker Change: The smaller professional sellers of the bigger ones across the board is it.
Speaker Change: It's still really early days, so very hard to say I think what's certain is that there will be change and it looks like there will be change across the spectrum, there and that's I think us along with everybody else we'll continue to.
Speaker Change: Getting new users.
Speaker Change: Users on the ERP system is kind of a way to further evidenced that.
Speaker Change: Or is it with the existing customers et cetera, et cetera, but where are you seeing the most success early on thanks, Yeah. Thanks, Ryan Yeah. Great question look I think we're excited and pleasantly surprised at the pace of the adoption and excitement I think as you heard in the remarks, we're in over 100 people already on boarded onto the platform.
Speaker Change: Watching and ensure that we have line of sight and a pulse on what that means for the industry.
Speaker Change: On the on the second one is as you as you look at I think where you're seeing perhaps as you allude to venues I think I remain really centered on the fact that the secondary ecosystem benefits greatly.
Speaker Change: We brought it out of beta and maybe piecing that apart certainly as you think about the range of sellers I think its certainly across size, we've seen lots of interest and rapid adoption. If you think about new users versus under skybox versus existing it skews a little bit in this early stage to existing users and.
Speaker Change: All who participate from a distribution standpoint that includes the venue that includes the rights holders.
Speaker Change: And certainly on the consumer side, the incremental distribution that we provide remains really strong and so I think.
Speaker Change: As we look into the future we remain really confident that.
Speaker Change: And naturally so as you can think about the way we design that was meant to be turnkey integration for existing skybox users, where it is almost no effort to bring folks onboard and now they have access to an industry leading product that we believe has wonderful differentiated features and unique data that is powered by the <unk> marketplace. So.
Speaker Change: Working together across the ecosystem. This industry and this platform will continue to see lots of growth as consumers frankly look for more choice look for more option more distribution.
Speaker Change: And continue to prioritize live events moving forward.
Speaker Change: And Larry the free cash question, yes, the cash flow conversion.
Speaker Change: Im really pleasantly surprised and again very optimistic about the prospects as we have seen I think rapid rapid adoption in these early days.
Speaker Change: Nothing's changed with our fundamental model and belief and are 60% plus conversion normalized growth environment.
Speaker Change: Thanks, guys. Good luck.
Ryan: Thank you Ryan.
Speaker Change: We've talked about the bridge from EBITDA to cash flow you've got some capex.
Yes.
Deb: Our next question comes from Dan Kronos go ahead Deb.
Speaker Change: Thats a negative thats typically offset by.
Deb: Great. Thanks.
Speaker Change: I'm going to give you a few rapid fire Stan.
Speaker Change: Benefit from our working capital.
Stan: Just any thoughts on the change in administration, and what that means for either antitrust or consolidation and M&A in the space.
Speaker Change: And then you have interest in taxes, and that's sort of the bridge from EBITDA to actual cash on the balance sheet.
Speaker Change: What we've seen in 2024, certainly have come in as evidenced by our reduction.
Ryan: Also maybe Stan just thoughts on I know this is a very common topic, but we've seen some sports venues trying to sort of priced in the secondary Delta. These days. So just your thoughts on.
Speaker Change: The guidance with less top line growth and so that working capital line, which was a meaningful tailwind in 2023 is targeting to a meaningful headwind in 2024.
Speaker Change: Being able to maintain kind of that gap with primary and then lastly for Larry.
Speaker Change: So when we look across our combined view of $23 24 in 2023, we had something approaching 80, 590% cash conversion, which is obviously higher than our target by quite a bit that attributable to the working capital benefit.
Speaker Change: Just wanted to get a sense I know, there's a ton of noise with cancellations and moving pieces here in venue mix, but just free cash conversion.
Dynamics.
Speaker Change: When do we get back to that $60 to 70% flow through and are there any other kind of puts and takes we might want to think about thank you.
Deb: This year, we're trending quite a bit below our target.
Dan: Hey, Dan Thanks for the rapid fire, we will try to rapidly respond as well on the first one.
Deb: Closer to not generating cash this year.
Deb: <unk> smooth them across it gets you in the vicinity of a 50% cash conversion and then if you sort of normalize the growth rate against that it'd be right back to that 60% range. So as we look forward to 2025.
Speaker Change: It's still really early days, so very hard to say I think what's certain is that there will be change and it looks like there will be change across the spectrum, there and that's I think us along with everybody else we'll continue to.
Deb: Expecting.
Speaker Change: Watch and ensure that we have line of sight and a pulse on what that means for the industry.
Deb: Return to growth assuming things.
Deb: Steady I think that 60%, 70% conversion for the right paradigm here soon.
Speaker Change: On the on the second one is as you said.
Speaker Change: You look at I think where you're seeing perhaps as you allude to venues I think I remain really centered on the fact that the secondary ecosystem.
Speaker Change: Great. Thanks, so much guys I appreciate it.
Speaker Change: Thank you.
Speaker Change: Please standby for our next call. Our next question excuse me.
Speaker Change: Benefits greatly.
Speaker Change: Next question comes from Cameron <unk> with Morgan Stanley Go ahead Cameron.
Speaker Change: All who participate from a distribution standpoint that includes the venues that includes the rights holders.
Cameron: Thanks, Good morning.
Speaker Change: And certainly on the consumer side, the incremental distribution that we provide remains really strong and so I think I think as we look into the future we remain really confident that.
Cameron: Two if I can first as we think about the industry headwinds and then the potential reversal heading into next year I was wondering if you could give provide some color on which.
Speaker Change: Working together.
Speaker Change: Across the ecosystem this industry and this platform will continue to see lots of growth as consumers frankly look for more choice look for more option more distribution.
Cameron: Across the channel square that pressure's coming from so whether it's broad based whether it's primarily.
Speaker Change: And continue to prioritize live events moving forward.
Cameron: Consumer to consumer sale headwind, whether to what extent, it's a professional seller kind of headwind in reverse so just.
Speaker Change: And Larry the free cash question, yes, the cash flow conversion.
Cameron: A little bit of channel on back of aircrafts that dynamic if it's relevant.
Speaker Change: Nothing's changed with our fundamental model and belief and are 60% plus conversion normalized growth environment.
Cameron: And then and then just kind of broader industry question. There are some headlines around the recent Oasis tour on cancellations happening.
Speaker Change: We've talked about the bridge from EBITDA to cash flow.
Cameron: <unk> ticket inventory that was being resold.
Speaker Change: Got some capex.
Speaker Change: Think that was just regarding the UK on sales so maybe not any real direct impact to you guys, but I'd be curious if you have any thoughts on whether that's a practice that you think could become more common or whether you see that as just kind of a one off situation.
Speaker Change: Negative that's typically offset by.
Benefit from our working capital float.
Speaker Change: And then you have interest in taxes, and that's sort of the bridge from EBITDA to actual cash on the balance sheet.
Speaker Change: What we've seen in 2024, certainly have come in as evidenced by our reduction.
Speaker Change: Thanks, Karen I'll take the first part.
Speaker Change: As we think about.
Speaker Change: Where.
Speaker Change: To guidance with less top line growth and so that working capital line, which was a meaningful tailwind in 2023 is targeting to a meaningful headwind in 2024.
Speaker Change: There's been headwinds.
Speaker Change: I would not call out a delineation between.
Speaker Change: The type of seller.
Speaker Change: I would say.
Speaker Change: Concerts.
Speaker Change: And so when we look across the combined view of 23% and 24 in 2023, we had something approaching $85, 90% cash conversion.
Speaker Change: If you look at the category level delineation.
Speaker Change: Concerts quite soft, particularly challenging year over year comp.
Speaker Change: Q3, but.
Speaker Change: Sequentially soft as well I would contrast that sports has had.
Speaker Change: She is obviously higher than our target by quite a bit that attributable to the working capital benefit.
Speaker Change: Quite strong year, frankly above their typical or that category typical growth rate and that has.
Speaker Change: This year, we're trending quite a bit below our target.
Speaker Change: Closer to not generating cash this year.
Speaker Change: Some ebbs and flows throughout the year, but it's been it started out strong and strong a really nice outperformer and then theater I would put in the consistent with long term trajectory. So it's really been a <unk>.
Speaker Change: <unk> smooth them across it gets you in the vicinity of a 50% cash conversion and then if you sort of normalize the growth rate against I think you'd be right back to that 60 ish percent range. So as we look forward to 2025.
Speaker Change: <unk>, Peter our strength, that's what balance our belief that this is not a demand issue.
Expecting.
Speaker Change: Return to growth assuming things.
Speaker Change: Concert event software, we think it really has been.
Speaker Change: Steady I think that 60%, 70% conversion for the right paradigm here soon.
Speaker Change: A relative short supplied weakening.
Speaker Change: The other slice on where has it been tougher sledding year over year in what's been a headwind would be by marketing channel and I think we've alluded to it but certainly the performance marketing sleep wear.
Speaker Change: Great. Thanks, so much guys appreciate it.
Speaker Change: Thank you.
Speaker Change: Standby for our next call. Our next question excuse me our.
Speaker Change: Next question comes from Cameron <unk> with Morgan Stanley Go ahead Cameron.
Speaker Change: So our competitors have been discussed earlier on the call has taken a.
Cameron: Thanks, Good morning.
Speaker Change: Two if I can first as we think about.
Speaker Change: Meaningfully more aggressive posture.
Speaker Change: Industry headwinds and then the potential reversal heading into next year I was wondering if you could give provide some color on which.
Speaker Change: And Thats put pressure on the incremental order for incremental dollar of <unk>, which.
Speaker Change: By our math is coming through in an economic way.
Speaker Change: Across the channels, where that pressure is coming from so whether it's broad based whether it's primarily.
Speaker Change: Yes.
Speaker Change: Your other question Kamran I think yes, we read it I think very similar to the to you that I think that pertain more to the U K.
Speaker Change: Consumer to consumer sale headwind, whether to what extent, it's a professional seller kind of headwind in reverse so just.
Speaker Change: I think as we look at the space and I think we've always looked at.
Speaker Change: During that we provide consumers.
Speaker Change: A little bit of channel unpacking aircrafts that dynamic.
Speaker Change: Wonderful platform for selecting tickets.
Speaker Change: If it's relevant.
Speaker Change: And then and then just kind of a broader industry question. There's some headlines around the recent Oasis tour on cancellations happening.
Speaker Change: We've got a great buyer guarantee we've got we've just recently been recognized as best consumer service.
Speaker Change: By Newsweek, again, and ticketing and I think we continue to see I think lots of strength in distribution and so I think we will continue to provide a platform with security and confidence for our consumers.
Speaker Change: Ticket inventory that was being resold I think that was just regarding the U K on sales. So maybe not any real direct impact to you guys, but I'd be curious if you have any thoughts on whether that's a practice that you think could become more common or whether you see that as just kind of a one off situation.
Speaker Change: Continue investing in that moving forward.
Speaker Change: Helpful. Thanks, guys.
Speaker Change: Thanks Cameron.
Speaker Change: Our next question will come from Thomas Forte with Maxim Group go ahead Thomas.
Speaker Change: Thanks, Darren I'll take the first part.
Thomas Forte: Great. Thanks, So one question and one follow up can you give your current thoughts on some of the fast growing emerging sports trends.
Darren: As we think about.
Where.
There's been headwinds.
I would not call out a delineation between.
Thomas Forte: Women's professional sports.
Thomas Forte: <unk> MLS and international events expected to be held in the U S.
Darren: The type of seller.
Darren: I would say con.
Concerts.
Thomas Forte: Yes.
If you look at the category level delineation.
Thomas Forte: Yeah, Hey, Tom Yeah really.
Thomas Forte: I mean, great great year for that as we continue to see I think.
Darren: Concerts quite soft, particularly challenging year over year comp in Q3, but.
Thomas Forte: Certainly earlier in the year and moving forward you know I think what started with a record setting.
Darren: Sequentially soft as well I would contrast that sports has had.
Speaker Change: Womens.
Speaker Change: <unk> performance than continuing to move as some of those stars progressed into the WNBA. So I think.
Darren: Quite strong year, frankly above their typical or that category typical growth rate and that has.
Darren: Some ebbs and flows throughout the year, but it's been it started out strong and strong really nice outperformer and then Peter I would put in the consistent with long term trajectory. So it has really been a.
Speaker Change: We've continued to see strength and growth there and we remain really excited I think about those.
Speaker Change: Those being contributors to the overall sports categories in ways that they haven't before.
Darren: Sports and beat our strength, that's what balance our belief that this is not a demand issue.
Speaker Change: Great and then for my follow up question can you again current thoughts are at this time on capital allocation either buying back shares investing in the business strategic M&A.
Darren: Concert so big software, we think it really has been.
Darren: A relative short supplied weakening.
Darren: The other slice on where has it been tougher sledding year over year in what's been a headwind would be by marketing channel and I think we've alluded to it but certainly the performance marketing sleep wear.
Speaker Change: Okay.
Speaker Change: Yes, I think.
Speaker Change: Same priorities remain.
Speaker Change: Yes.
Speaker Change: We'll always look for.
Speaker Change: Strategically and financially accretive targets.
Darren: Select select competitors.
Darren: Just earlier on the call have taken a.
Speaker Change: It's not lost on us.
Speaker Change: Latter part is more difficult to achieve win win our multiple is lower than it historically.
Darren: Meaningfully more aggressive posture.
Darren: And Thats put pressure on the incremental order for incremental dollar of <unk>, which.
Speaker Change: So that will be a factor as we evaluate what can Jim Barr.
Speaker Change: I think it also on a relative basis as you explore buying yourself back versus buying other assets, certainly where you're trading on a multiple basis is a factor.
Darren: By our math is coming through in an economic way.
Speaker Change: Yes, I think your other question Kamran I think yes, we read it I think very similar to the to you that I think that pertain more to the U K and.
Speaker Change: On the latter as we.
Darren: I think as we look at the space and I think we've always looked at <unk>.
Speaker Change: Returning to <unk> to cash generation and growth.
Speaker Change: Yes, I think we continue to believe that buying ourselves back when were attractively priced is compelling.
Darren: Ensuring that we provide consumers.
Darren: Wonderful platform.
Darren: For selecting tickets and we've got a great buyer guarantee we've got we've just recently been recognized as best consumer service.
Speaker Change: We've touched on in the past there is some.
Speaker Change: Incremental considerations around.
Speaker Change: How best to execute that but it does remain something of keen interest for us the result.
Darren: By Newsweek, again, and ticketing and I think we continue to see I think lots of strength in distribution and so I think we will continue to provide a platform with security and confidence for our consumers.
Speaker Change: Great. Thanks for taking my questions.
Thomas: Thank you Thomas.
Darren: We continue investing in that moving forward.
Speaker Change: Our next question comes from Ralph with William Blair Go ahead Ralph.
Speaker Change: Helpful. Thanks, guys.
Speaker Change: Thanks Kamran.
Speaker Change: Hey, good morning, Thanks for taking the questions two if I could just on international I think you talked about launching by the end of the year, Stan maybe kind of just remind us of that opportunity and maybe give us a sense of the competitive nature and some of those markets versus what you might be temporarily seeing there and then maybe as a follow up.
Speaker Change: Our next question will come from Thomas Forte with Maxim Group go ahead Thomas.
Thomas Forte: Great. Thanks, So one question and one follow up can you give your current thoughts on some of the <unk>.
Speaker Change: Fast growing emerging sports trends women's professional sports soccer boats MLS and international events expected to be held in the U S.
Speaker Change: In terms of incremental growth that you talked about 1% of <unk> coming from cross sell at Vegas Dot Com.
Speaker Change: Like a good initial start here, but maybe if you could sort of frame that opportunity do you have the pieces in place to further scale at GMB contribution or just maybe give a sense, how you're thinking about that opportunity. Thank you.
Yes.
Speaker Change: Yeah, Hey, Tom Yes, really.
Speaker Change: I mean, great great year for that as we continue to see I think.
Speaker Change: Certainly earlier in the year and moving forward I think what started with record setting.
Speaker Change: Hey, Ralph.
Speaker Change: On the first one I think we are.
Speaker Change: Womens NCWA performance than continuing to move as some of those stars progressed into the WNBA. So I think we.
Speaker Change: We're well on track and underway I think and internationalize ing the infrastructure.
Speaker Change: Components of the platform right I think we've continued to make good progress and are certainly on track to launch.
Speaker Change: We've continued to see strength and growth there and we remain really excited I think about those.
Speaker Change: Before the end of the year I think we continue to see the international landscape as a big opportunity, where we feel like our product and offering and compete very nicely in what certainly from our research and optics look to be a less competitive dynamic than here in domestically and so I think we are excited about.
Speaker Change: Those being contributors to the overall sports categories in ways that they haven't before.
Ken: Great and then for my follow up question, Ken again current thoughts this time on capital allocation either buying back shares investing in the business strategic M&A.
Speaker Change: The ability to go compete and compete meaningfully.
Speaker Change: With a product that I think again is differentiated and will do quite well.
Okay.
Speaker Change: Yes, I think.
Same priorities remain.
Speaker Change: In that landscape.
Speaker Change: On the Vegas front I think we were still I would say early days, but already excited about the fact that we have.
Yes.
We will always look for.
Strategically and financially accretive targets.
Speaker Change: Run rate at that 1% I'd say as we've primarily looked at driving the two synergies that we.
Speaker Change: It is not lost on us.
Speaker Change: Latter part is more difficult to achieve when when our multiple is lower than expected historically.
Speaker Change: <unk> had when we acquired the business one driving the accretive inventory across that as a distribution channel, which has proven to be a really really nice add to a to a platform that.
Speaker Change: So that will be a factor as we evaluate what can Jim the bar.
Speaker Change: I think it also on a relative basis as you explore buying yourself back versus buying other assets, certainly where you're trading on a multiple basis is a factor.
Speaker Change: Benefits from incremental selection on the other side, we've also seen as you've seen some of the highest.
Speaker Change: On the latter right as we.
Speaker Change: Returning to cash generation and growth.
Speaker Change: Open rate and performance metrics from our CRM campaigns as those Vegas customers go back into their home markets.
Speaker Change: And we introduced them to Vivek seats.
Speaker Change: All the more so meaningful when you think about an aggressive dynamic where I think the landscape hasnt that people are out there competing and paying.
Speaker Change: Very large acquisition cost for users we have a free acquisition channel that we are excited about and we will continue to tap and invest in and where we can bring those users home in a very profitable manner.
Speaker Change: Great. Thanks, Dan.
Speaker Change: Thank you everyone for your participation in today's conference call. This concludes todays Vivek seeds call. You may now disconnect. Thank you.
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