Live Nation Entertainment Inc (LYV) — Q1 2022 Earnings Call Transcript

Good afternoon and thank you for joining us. Momentum has picked up for all of our businesses over the course of the first quarter. As a result, we have delivered financial performance that greatly surpassed our previous expectations with AOI of $209 million. Artists are back on the road and fan demand has never been stronger. The reflection of live events remains a clear priority for consumers as our social lives restart. Ticket buying serves as a leading indicator to our overall business. Ticketmaster's strong first quarter performance drove the company's overall profitability and shows how well our concert and sponsorship businesses are positioned to deliver record results this year. Despite some markets taking longer to reopen, the quarter was our second highest ever in transacted GTV, excluding refunds, trailing only Q4 2021, with March being our highest transacted GTV month ever. In primary ticketing, we're now benefiting from the 17 million new fee-bearing tickets we gained in 2021, which helped us drive transacted GTV for the quarter up 33% relative to 2019. This quarter, we also added 7 million new additional tickets through new contracts with venues as well as content creators, setting us up for ongoing growth this year and into 2023. Our secondary ticketing GTV growth was even higher, up 106% relative to 2019, driven largely by average retail ticket price up 20% relative to 2019, and a tremendous fan demand pushed up the market pricing, with Ticketmaster gaining additional market share by effectively leveraging its team and league partnerships across NFL, NBA, and other sporting events. The market continued growing at a double-digit pace, demonstrating high demand for live events, as well as how much runway there is for continued pricing efficiency. Fan demand and signing of new contracts accelerated even faster than expected this quarter, reinforcing Ticketmaster as the enterprise platform of choice for teams, artists, and content creators, and continuing to be the most effective fan marketplace. Our sponsorship activity fully returned in Q1, delivering financial results that well exceeded 2019. We're seeing growth across a number of dimensions: expansion of existing relationships, new categories expanding our breadth to partners, and new ad units being created both onsite and online. The number of strategic sponsors that generated over $1 million of revenue per year has risen by almost 30% since 2019. With our committed span up 70% and accounting for 80% of our total sponsorship revenue, about 60% of this growth has come from three categories of particular priority over the past two years; technology, telecom, and purchase path integration, which has collectively more than doubled their sponsorship since 2019. Much of our focus with brand partners is how we collectively elevate the fan experience. We've had great success with this in recent years. And so far this year through our partnership with Verizon, we started powering our venues with cutting-edge 5G connectivity and are launching initiatives with Snap to give artists augmented reality capabilities at shows and festivals. At this point, sponsorship sales are up double digits relative to 2019, and we have a solid 90% of our planned sponsorship for the year, positioning us for continued strong financial performance. The concert division, all leading indicators, point to double-digit growth and fan attendance at our concerts relative to 2019. Approximately 11 million fans attended our shows in the first quarter compared to 15 million fans in 2019. This was expected as we planned for limited concert activity in the early months of the year to allow for markets to open. More importantly, we continue to build our flywheel with over 70 million tickets now sold for shows in 2022, up to 36 million compared to 2019, and committed show count is up 44% through the end of April, relative to 2019, setting us up for continued ticket sales over the year. We continue to see fans are showing up for the concerts they have tickets for, with attendance rates in the US across all venue types at 2019 levels, with no shows generally in the low mid-single digits. The industry continues to embrace market-based pricing, particularly on the best tickets, shifting $500 million to artists for shows this year, resulting from a double-digit increase in ticket pricing and reducing the price arbitrage in the secondary market. At the same time, in the US, the average entry-level price to get in and enjoy the show remains under $35, approachable for almost all fans. Early reads on consumer spending on our shows across the US and UK also indicate fans continue their spending when they get to the show. We had two million fans at 10 shows at our theaters and clubs in the first quarter, with average per fan revenue up 30% relative to 2019. We also had four festivals over the past few months that drew over 300,000 fans, with average per fan revenue up 30% as well. Looking ahead to the summer and the rest of the year, we remain optimistic that we are just getting going as all leading indicators reinforce record activity levels and financial results. Ticket sales were at record levels in Q1, with momentum building over February and March. We sold almost 20 million more tickets to our concerts this year at this point in time compared to 2019, with a large number of tours still to go on sale, and concert fans are showing no sign of slowing down. They are paying for the best tickets, attending the shows, and spending more on site as they create lifetime memories. We're continuing to build Venue Nation, our platform of operated venues, with a pipeline of 20 venues, including the recently opened Moody Center in Austin, in addition to adding 38 more festivals this year. Sponsors are looking to spend more this year on live entertainment than ever and Live Nation's scale and global platform is making us the partner of choice. While the US and UK have driven much of our activity over the past year, the rest of the world is now rapidly opening up. Assessing this financial performance for the quarter, we exceeded our 2019 results and both Latin America and Western Europe are expected to have record attendance for our concerts this year. I continue to expect this just to be the start of our run, as the global addressable markets for concerts, ticketing, and sponsorship all provide a long runway for continued growth. We have over 60 tours already under discussion for 2023, and our earliest indicators for next year are positioned for ongoing growth. With that, I'll turn it over to Joe.

Thanks, Michael, and good afternoon, everyone. Given the unique situation in 2020 and 2021, Q1 of 2019 is the best comparison for us in terms of understanding our operations and key performance indicators. So while I will provide some commentary around our results relative to Q1 of 2021, most of our focus will be relative to 2019. Overall, our AOI of $209 million for the quarter was $361 million better than 2021, led by an improvement of $269 million in ticketing, $66 million in sponsorship, and $26 million in concerts. This was our highest Q1 AOI ever, exceeding Q1 of 2019 by $94 million, which had been our previous record first quarter. Let me give a bit more color on each division. Then I will give you more on 2022 leading indicators. First, ticketing was again the star of the quarter, delivering $206 million in AOI, making it the second best quarter ever for ticketing, and more than doubling the Q1 2019 AOI results of $100 million. The first quarter of 2021 was heavily impacted by the pandemic, resulting in an AOI loss of $63 million. Ticketing was successful across the board. Let me give a few key statistics for the quarter. Our growth came from both primary and secondary ticketing with transacted GTV, excluding refunds up 33% and 106%, respectively. Transacted ticket volume, excluding refunds, was 63 million tickets, our fourth highest quarter ever, and 7 million tickets higher than Q1 of 2019. Transacted ticketing GTV, excluding refunds, was $6.3 billion, our second highest quarter ever after Q4 of 2021, and 39% higher than Q1 2019. This was driven by concerts and sporting events whose GTV was up 49% and 73%, respectively, compared to Q1 2019. A continued shift toward more market-based pricing helped grow our GTV levels, with average primary ticket prices up double-digits for the first quarter relative to Q1 2019. In resale, our average price increased 18%, while our overall resale GTV doubled compared to the first quarter of 2019, indicating that demand for the top seats across all live events continues to outpace efforts by sports teams, artists, and others to capture more of the full value from their events. As the first effectively normal Q1 since 2019, we are seeing that digital tickets have now become the norm across live events, with the NFL and NBA leading the way, with 96% of fans using digital tickets to enter games, up from 53% in Q1 of 2019. More broadly, 72% of our tickets globally were digital in Q1 of 2022, relative to 33% in Q1 2019. With this level of digital adoption, we can now accelerate our efforts to foster our direct fan relationships this year and into 2023. Next, sponsorship continued to ramp up with the reopening of venues and expanded online opportunities. As a result, 2022 Q1 sponsorship and advertising AOI of $70 million grew by 75% relative to 2019 Q1 AOI of $40 million. This strength comes across both onsite and online, each delivering record Q1 AOI. The growth versus 2019 was driven by the expansion of our online business, new festivals that launched in the quarter, and the addition of new brand partners. Finally, in concerts, our AOI was a loss of $49 million, which compares to a loss of $74 million in Q1 of 2021 and positive AOI of $5 million in Q1 of 2019. As we indicated on the last call, we planned for fewer arena tours in Q1 this year, which typically drives our first quarter performance, resulting in concert seasonality that will be even more Q2 and Q3 driven this year than has historically been the case. In the quarter, we had nearly 11 million fans attend 6,600 events, continuing to be led by the US and the UK, which accounted for almost 80% of these fans. In comparison, Q1 of 2019 had 15 million fans and 8,200 shows when all of our markets and all venue types were fully open. For ticket sales through late April for shows playing this year, our average ticket price was up double digits relative to the first quarter of 2019, again mainly driven by demand for the best seats. At the same time, our average entry price remains less than $35 overall and less than $30 for amphitheater and club shows. Michael mentioned that no-show rates were back to pre-COVID levels. So I wanted to give a few more specifics to hopefully set the record straight. Looking at the full year through mid-April for the US, our no-show rates were the same or better than the same period for 2019. For arenas, they were 1% better, for amphitheaters they were 4% better, and for theaters and clubs, they were on par. All up, we are 2% better. We haven't had enough volume on other outdoor events to have meaningful metrics yet, but generally those venues had strong reopenings last summer and so we don't expect any issues there as well. In general, the US was ahead of the rest of the world, but the UK is now fully back to pre-pandemic no-show rates as well, and we have not seen any evidence in any markets of any long-term impact on our shows. Michael gave you the top line on our first quarter average revenue per fan growth, up 30% for both theaters and clubs and festivals. For theaters and clubs, key drivers include onsite concessions and upsells, and for festivals, the growth was heavily driven by onsite concessions and increased VIP purchases. All indicators have continued to show strong fan spending as they look to make the most of going to the show. Finally, COVID continues to have less and less impact on our concert schedule, and by March in the US, we canceled only around 1% of our planned concerts. As we look to the remainder of 2022, looking at our leading indicators through the end of April, confirmed show bookings are up over 40% overall and up double digits for each amphitheater, arena, stadium, and festival. Second, ticketing has sold 130 million fee-bearing tickets for events this year, up 26% from this point in 2019, of these, 88 million tickets are for concert events, which is 40% higher than 2019. Related to this, we have $3.5 billion in event-related deferred revenue, almost twice the level of Q1 2019. These are largely tickets that have been sold by Ticketmaster for Live Nation concerts, but the revenue in AOI hasn't flowed through yet and will do so over the course of this year, as events happen. On the sponsorship side, commitments are up double digits from this point in 2019, and overall we have more than 90% of our planned sponsorship net revenue for 2022 set. On the cost side, we're obviously tracking closely cost increases associated both with labor and in general, with supply chain challenges and inflation. These costs tend to hit us primarily in the venues we operate; amphitheaters, theaters and clubs, and festivals. For amphitheaters and theaters and clubs, labor is the largest factor given we have our venues in place. Across this entire fan base, we expect our variable cost per fan, excluding talent, to increase by $2 to $2.50 relative to 2019. This remains well below our average revenue per fan growth, and we still expect to grow average per fan profitability across our operated venues this year. Festivals have a broader range of costs, given the wider set of equipment and services involved in building these events. Current projections are that variable costs per fan, excluding talent, will be up 7% this year, which is well below our expected increase in ticket revenue per fan. Helping offset all these costs is the $200 million cost reduction exercise that we executed last year, which remains well in place. A few other points on 2022: we now expect OCESA will deliver full year results in line with 2019 levels, as Mexico is fully active with most of their AOI flowing through our sponsorship and ticketing divisions. In light of the OCESA acquisition, we want to provide more guidance on a few mine items below AOI, which impact our earnings per share calculation. First on depreciation and amortization, we expect the combination of these accounts to be roughly in line with 2019. The addition of OCESA is offset by the impacts of our reduced investment in CapEx and M&A over the past two years. With the acquisition of OCESA and anticipated strong performance from our festivals, many of which are joint ventures, we expect non-controlling interest expense will be roughly double 2019 levels. We are projecting it to be about $150 million this year. Again, the increase compared to 2019 is largely attributable to the OCESA acquisition. As a result of the additional financing opportunities over the past two years, our interest expense is now roughly $70 million per quarter. Finally, in comparison to 2019, we expect income tax expense will grow in line with our AOI growth. In anticipation of the growth opportunities ahead of us this year, we continue to expect 2022 capital expenditures to be approximately $375 million with two-thirds of this spent on revenue-generating projects. We generated $89 million of adjusted free cash flow this quarter and expect free cash flow conversion from AOI to be back in the fifties for the full year. We ended Q1 with $1.9 billion of available liquidity between free cash and untapped revolver capacity, giving us sufficient flexibility to invest in growth. We are comfortable with our leverage, with over 85% of our debt at a fixed rate, and our average cost of debt is roughly 4.3%, positioning us well in this interest rate environment. With that, let me open the call for questions.

All right. Thank you, Michael. You've given a lot of great leading indicators for '22. So I apologize for jumping ahead, but you did mention in the release 60 tours in discussion for '23 and was hoping you could put some context around that. How elevated would that number be, kind of relative to what you might normally be looking at this early on? And is there a way to kind of think through how much of that is sort of backlog continuing to work through from the pandemic versus just you organically increasing your footprint?

Yeah, thank you. The '23 is really no backlog. '22 is the year where we would've flushed out any rescheduled tours from 2019 to 2021, wherever. So 2023 is kind of, if you want to call it almost back to business and yes, it's a very vibrant pipeline. I think we said at the Investor Day, if you want to kind of scale back and look at the next five years, you can look at what we did going into '19, where we looked at the industry growing at almost 10% a year on a compounded basis. We think the industry is going to be doing that again. It's back to full growth, a high-quality growth sector industry, and we think we tend to outperform the industry. So we look at '23 as a record year coming off of '22, and we think we're in for multiple record years of growth.

Okay. Grant, and then just on Ticketmaster, I was wondering if you could just walk through some of the drivers of the strong secondary growth you're seeing, in particular, you mentioned share gains, whereas in the past, I think we tended to think of market shares for you and your competitors as generally stable. Maybe you could just speak to some of the initiatives you're taking to the league or team level to drive that higher. And then just as a follow on, is there any update you can provide on the NFL relationship just given that's now extended to 2026. Thanks.

Hey David, this is Joe. I'll take it. I think the questions are related. Start with the NFL. We entered the partnership with the NFL four years ago, I guess, and that relationship was really technology-driven, and it was a mutual strategy of figuring out how do we shift the industry to digital ticketing? How do we understand identity-enabled relationships with the fans for the leagues, for the teams as well as for Ticketmaster? That's proven to be very successful, and obviously coming out of COVID, not surprisingly, the NFL said, what's the next technology agenda? We worked with them on deploying NFTs, and they said this is all great, better to talk now about linking back up for the next five years. So we know we can work together and figure out what's the next technology unlock. How do we continue to use technology as the core or the starting point of the relationship with fans? So that's what led to the renewal. We're excited about it; we think the NFL's been a great partner and will continue to be. So naturally as you do that, we continue at Ticketmaster to get smarter and smarter about the fan as well. That lets us continue to use our alignment and our mutual interest with the teams and the league in terms of driving Ticketmaster's share in the secondary. So we're taking all the data we have, all the information we're working with them on all of their assets to help acquire customers, to use all the season ticket holder inventory, to continue to drive our share and provide a great marketplace, a great experience for fans to be buying those tickets. So the combination of all of those has led to increasing share, which is part of how we've doubled the secondary in the first quarter relative to 2019.

Thank you.

Great. Thanks for taking the questions. Just to start, I think there's been a fair amount of concern on the macro front. You touched on a little bit at the end of your prepared remarks, but I was curious if you're seeing any signs of consumers changing their spending habits, whether that's on the initial ticket purchase or once they get to the venue against what's turning out to be a pretty difficult inflationary environment. Any data points from the last few weeks I think would be helpful there.

Yeah, I think this is Joe. All of the data points that we're seeing continue to be very strong. Look at our concert ticket sales; as we look in March and April, each of those months, the ticket sales were up 20% plus relative to 2019. So through March and April, I think we've seen some of these pressures, the gas and so on for a few months now. So not just a few weeks, so we've seen no impact at all on the concert ticket sales. We talked about the pricing, seeing no impact on the take rate of those tickets and the onsite spending, again, seeing those up substantially relative to 2019. So no impact there. From all the different angles that we've looked at it, we have not seen any pullback in consumer behavior. I think that this continues to be part of people wanting to get out, have a social life, and spend on experiences—taking money away from spending on goods. A lot of what we do is we spoke to the $35 overall average entry price for a ticket or $30 for clubs and amphitheatre. It continues to be a very affordable night out for those that need to be most conscious of that.

Thanks. That's helpful. And then I think in the press release, you mentioned some opportunity to create new ad units on the sponsorship side, both on site and online. I was wondering if you could talk a little bit more about this opportunity and the new inventory, how much of it you expect to create over time and whether that might help bring in new ad categories?

It is creating new ad categories, right? We talked about that in the technology space, in the FinTech space, throughout the whole purchase path integration, all of that is creating new categories. That's what's driving even this year a lot of the growth in the sponsorship business. Michael talked very explicitly about what you're seeing on site. Two great examples of how technology's being used to enhance the live experience with Verizon, putting in the infrastructure with the 5G connectivity and with Snap as a great product development, product design organization, coming up with some ways to use their products and augmented reality to enhance the onsite experience. So really on the onsite piece, this is all about how do you make a better and better fan experience? We've got great brand partners that we work with that are looking to do more and more to make that possible. And then as we continue to work on the Ticketmaster marketplace, we will tie that in with the increased data that we have from digital ticketing that we were just talking about—how do we create more tailored ad units and make more opportunities for more sponsors to connect with those fans as well.

Hi, thanks for taking the questions. Just wanted to build on the macro concerns that the last analyst kind of laid out, and insofar as inflation and gas prices are concerned, I think the results speak for themselves, but investor pushback has now moved to the possibility of recession and how that would affect you, given how deeply consumer discretionary you are. How do you think about your positioning at this point if a recession scenario played out? Your company and the industry look very different than it did in 2010 when we lost less of that kind of macro pressure. Can you kind of compare and contrast, and I know you were booking those acts for next year kind of far in advance—how much flexibility is there in those contracts?

Sure. Brandon, this is Joe. I'll start and then Michael can jump in. What we always think is one of the great advantages of our business is the pricing is variable, right? So there is no set cost of goods. The cost of goods is determined by the artist if they go on the road and they're variable. So that makes our product something that can move around on pricing, whether it's taking advantage of the front-row pricing that's under-priced or moving the total ticket price down in the back end of the house or reducing the overall price of the ticket to meet the market and the demand. Historically, this is an industry that's been fairly recession-proof. It's still, as we've seen, this is still one of the top three entertainment choices for consumers, but the most affordable. You may not in a recession take that trip; you may not have a large outpurchase of a dishwasher, but you will still go down to the amphitheatre or the club or the theater and have a great adventure and a night out for the value. Historically, we've always seen that consumers still look at the concert as a high-value item that, even during a recession, if there was a pullback, this is something they still can afford to do. It's actually a great alternative to a higher-priced travel package. We think it is still a very affordable option for consumers, and pricing will continue to be something that we can adjust. If we see any pullback, artists will always have one motive, the same as ours: fill the house and get everyone in the house. So right up until the hour of the show, we always look at variable and dynamic pricing options to see how we can get the house full.

I will start, and then Joe can jump in. What we always think is one of the great advantages of our business is the pricing is variable, right? So there are no set costs. The cost is determined by the artist if they go on the road, and they're variable. So that makes our product something that can flex on pricing, whether it's taking advantage of the front-row pricing that's under-priced or moving the total ticket price down in the back end of the house. Or reducing the overall ticket price to meet the market and the demand. Historically, we have seen that consumers still look at the concert as a high-value item, even during a recession, if there was a pullback, this is something they still can afford to do. We think it is still a very affordable option for consumers, and pricing will continue to be something that we can adjust.

Yeah, and just to build on that first, we now have a level of information that we didn't have even 10 years ago, and almost no industry has called the secondary market. So to Michael's point on pricing flexibility, we have the benefit of knowing real-time what is market pricing, and so on one level, you can think that billion dollars plus of price arbitrage that exists on our tickets, that's the first wall of defense in any recessionary environment. That pricing comes out first before our pricing even impacts. We have a great read on what is the supply that dynamic to be adjusting as we go along. And then along with that, again, you have, again, the macros of the shift of spend from experience from goods to experiences, which is continuing. You have the wealth built up and the biggest gains in terms of income with a lower quartile. So you've got good revenue there. Still, you've got affordable entry prices that we've talked about on the tickets. We continue to think that as long as we stay focused on what is the value perceived by the fan and stay aligned with that, we'll be able to bring the acts out and sell the tickets.

Great. And then for the first time that I can remember, at least you called out the per caps at theatres, clubs, and festivals; it's not something you usually talk about. That's usually the amphitheatre opportunity. Can you kind of help us understand where you stand relative to the amphitheatre opportunity on per caps at those other owned and operated venue types and how much upside there could be for investors in that area?

Yeah, we called out the theatres and clubs in the festivals this quarter because we knew that all you guys were going to want some data on what's going on with the fans on site. Being the first quarter, we don't really have amphitheatre data yet. So we were trying to use what data we could have on our other buildings, the theatres and clubs, and festivals, and then also to tie that back to any questions on costs. So that was the purpose of doing that was to give everybody comfort that we had still a very strong onsite consumer behavior. We don't have the date on amphitheatres yet for the summer, but again, taking that as the leading indicator, we feel good about it. We think there's a long runway. We talked in February about how we still think that there's a 30%, 40%, and 50% increase in our onsite spend, as we do a better job on some of the VIP and premium offers and do a better job of how it is we're marketing and selling upsell opportunities on site.

Yes. Thanks for the question. Joe, on Latin America expansion, can we just unpack sort of the assessment guidance of delivering full-year results in line with 2019 a bit more? I have, for my calculation, it's about $500 million in revenue and $85 million in EBITDA. Is that correct? Is that sort of the baseline, and then typically you guys have been able to organically grow on your M&A 70%, 80% plus in the first couple of years after consolidating that asset. Is that a similar type of growth that we should expect as analysts in our model?

This year, we expect both Mexico and Latin America broadly to do well. I think it would be a very strong Latin America year relative to '19, even without OCESA. Having OCESA only makes it all that much stronger. Your numbers aren't terribly far off. They are within the general ballpark of what our numbers would be for '19 and therefore for '22. I don't think we're ready to start declaring the specifics of what OCESA is going to be in '23 or '24 yet. Give us a little time to get there with them and we'll keep you updated on it. But we do see Mexico and Latin America more broadly certainly as one of our great growth drivers over the next few years.

Okay. And then thanks for that.

Both concerts and Ticketmaster, just to remind you, there's a huge upside in Mexico and ticketing, and we were only a 30% owner in Mexico. Now that we own it, we've already had the team down there. We're upgrading; they're still living on a green screen with not much feature functionality. So there's big upside in secondary ticketing, etc., in Mexico and throughout Europe. There's a big growth opportunity, both in concerts and sponsorship and ticketing.

Okay. Thanks, Michael. And just one more on modeling questions for the rest of this year and guidance. You have these two, obviously the big Rock and Rio festival scheduled this year that had an outsized impact, I believe on the sponsorship segment in 2019. Just how should we be thinking about that impact on the P&L this year? And then, also, this is the fourth consecutive quarter now with ticketing AOI margins above 40%. I believe this is probably just driven because most of the business is in the US and UK right now. But is that something we can expect throughout the remainder of the year, or do you expect that to moderate closer to the mid-thirties as the year progresses?

In terms of Rock and Rio, I think we've got that again this year, so I think it would be consistent with '19 in that regard. And in terms of Ticketmaster, you're right; it's continuing to do great. The margins are flowing through; it is benefiting from the US weighting, if you will, right now, but with the cost taken out, we think it this year will probably be a high-thirties margin when all is said and done, and you get some rebalancing with some of the international, which is a lower margin business.

All right, appreciate it. Thank you, Joe. Thanks, Michael.

Hi afternoon. Thanks for taking my questions. There was some earlier discussion around broad-based consumer trends, but I recall your investor event; there was a fair amount of talk about utilizing the premium end of pricing and platinum and other kinds of high end. Can you maybe unpack the price ranges on things, and Joe, I know some of your comments were addressed more toward the average or even the value customer. Are you seeing any change at all, positive or negative at the high end?

No, absolutely. The overall double-digit increase is driven by the high end across our major stadiums and arenas. Amphitheatres, I think we've probably about doubled the number of tickets going into what we call the platinum or market-based pricing. So more than anything else, it's probably more of the tickets are getting market priced or closer to market priced, and then depending on the artist and the show, yes, it's also flexing upward from where it would have been historically, as we try to get closer to the true market price. Even as doing this, you can tell by our commentary about the size, growth of the secondary; we've helped move $500 million to the artist this year, but I think the secondary has grown more on our tickets. So it's not that we're out there capturing every penny even while getting these increases this year, but we're continuing to try to move in that direction.

Understood. And if I may follow up in a different direction, it's the first time probably in 2.5 years that we would even raise it. But how are you thinking about leverage and cap structure and how much cash versus how much debt. I see a pattern going back a number of years, but any change in how you might think about that going forward?

Well, I think one of the things that gives us a lot of comfort is that over 85% of our debt is fixed rate. So we're sitting at 4.3% in a pretty fixed debt structure, with short-term increases having a fairly limited impact on us. I think we're feeling fine about our total debt level. Our total coverage based on our AOI, I think continues to be very robust, and we don't have any concerns about being able to grow in from an AOI standpoint and into our debt.

Thanks. Good afternoon. I have two questions. First, just on Ticketmaster, I think you guys talked about or had in the release, 7 million new tickets won in the quarter, 14 last year. It's really strong in terms of adding new business. Can you talk a little bit about any context to what kind of business you're adding, US versus international, venue type, and what's driving that and whether you're seeing any increased competitive behaviour? We sort of hear about competition on the primary side, including on price, but it doesn't seem like it's affecting Ticketmaster's share gains at all. So just be interested in some more colour around the success there and whether this pace can keep up.

Yeah, I think the 7 million story is the same as the 17 million story. When you're at this scale, it's everything. International has been very strong, which has been driven by the dramatic improvements in the international product that we've had as we moved to a single integrated platform. That has further differentiated us, particularly internationally, relative to where we've been. At the same time, we've had continued success in the US, and many of the discussions are product-driven. The confidence of working with Ticketmaster means you're only going to have the best enterprise products in the best marketplace today, but the level of investment that we're making and the scale of the dollars being spent to build new products is unparalleled in its commitment to continuing to enhance for the teams, artists, and fans what their experience is going to be. You always have price pressure; you have price competition and everything. There's no new news there. It's always your job as a company to figure out how do I continue to create my product so that it's differentiated, so it reduces the price. And then how do I continue to get more efficient and make money in other ways off my flywheel so that overall my aggregate economics continue to improve? Nothing new there.

Got it. And then just on back on the macro, I know everyone's concern, given some of the other earnings results we've seen in this quarter. Your sponsorship business, Joe, I think it's largely sort of longer-term contracts. I think you might have some kind of display advertising in there. We've heard some of the big digital ad players that businesses have softened here in the second quarter. Can you just remind us how long-duration that business is for you guys? And if you're seeing any signs of softening in any part of your sponsorship business given what we've heard from other companies? Thank you.

We're not seeing any signs of softening. Michael gave you some of the numbers on these large relationships that we have—the million-dollar plus relationships that have been our focus on growing the number of those relationships and the breadth of assets that we provide to them. Just how much of our sponsorship base they represent. So they're coming at it from multiyear, multi-asset, saying we want to be present at the festival, at the amphitheater. We also are going to have an online presence. It's a much higher level of integration than just a simple ad buy with some of the other players out there. So we're not seeing that impact at all.

And, Ben, just to jump in also on, I know you had brought it up also, our no-show rates. I know that's always been some rumor that goes out there, but as we stated in our release, we're seeing no challenges at all. People are showing up to the shows. We are showing similar to 2018, '19, your regular low-digit no-show rate of people that don't make it to the show. But back to normal, people come and enjoy those shows, no issues at all in terms of showing up.

Hey guys, thanks for the question. You mentioned 20 new venues in the pipeline and 38 new festivals. I guess, starting on the festival side, is something coming from OCESA? How many of these are, or maybe first time? And were you able to pick up a large number here of festivals that struggled during COVID? And then on the venue side, how should we think about the timing of those opening up and maybe the size in terms of overall staying capacity that could add?

On the festival side, we have a few great festival companies in Europe and America. Part of the success of Live Nation has been about organic growth—continuing to grow the business by finding new market shares, new global entry points, and festivals being a big part of regenerating our business. So we're always looking to add every year and let our festival companies launch new ideas. This year, we've had some great success. One of our young companies, C3, has been in business with a strong festival promoter, Jeff Shoeman. We launched a festival in Vegas; we hoped to sell 40,000 tickets but sold over 160,000 tickets in Vegas, so a huge success for a brand new festival. We love those stories. We encourage all of our festival entrepreneurs to take swings every year. We usually have a 50% success rate; some of those go on to be great brands while others fail and we move on quickly. So 38 is an indicator. I'll let you know, we have a large 100-plus portfolio of festivals around the world, like amphitheaters and venues. There are high-margin businesses because of sponsorship and food and beverage. Not only do we look to acquire and bolt on when we can, but we are also a big machine of organically creating new festivals, and the majority of our growth—and this year we're back to full speed on letting our entrepreneurs go swing and create some new revenue for us.

Great. How about the venues?

Joe can jump in. It's a similar story. We're starting and continuing—I mean, venues would be one that we didn't really slow down during COVID because they have a longer lead time. If you look at our Venue Nation division that we highlighted in the Investor Day, our continued focus around our 300-plus venues that we operate around the world, I think we said we have probably 75 in the pipeline and we annually open about 20 new festivals around the world. We're on plan, continuing to move on that aggressive front to continue to expand on a global basis—clubs, theatres, and theaters. We just opened a beautiful arena in Austin last week to record sales and record results, and we're proud of that one and more to come. So continued opening and phasing throughout the years we've been doing historically.

Great. And then it sounded like 72% of tickets were digital and Q1 versus 33% in '19. I know most of the attendance this quarter though came from the US and the UK, which I assume led the digital rollout. So I guess how should we think about digital penetration moving forward? And if you can talk a little bigger picture—if you're starting to act on that data that you're collecting?

Yeah, you're right; it's helped a little bit. I still think we end the year probably around 80% globally. A lot of this has to do with not just the infrastructure on our end but rolling out the access control new systems that have to get deployed for each of these venues and doing that on a global basis, just with some of the supply chain in terms of getting those pieces in place. It'll take a little bit of time, but we're making great progress. We're already acting on the data. Just saw some of the information yesterday, looking at how we're using it for more effectively targeting the marketing. When you see your email from Live Nation on what concerts, it's much more tailored to you than it was in 2019. As a result, the click-through rates and the buy rates are up substantially. As we get into the summer, and we have people going to our operated amphitheaters and our operated festivals, we expect that we'll be able to use that digital connection to more effectively market upsell and connect sponsors with fans. We'll see all of that activity beginning much more earnestly in this year.

Great, thank you.

Thank you. Two conceptual questions. Firstly, the NFT—it feels like it's a nice digital memorabilia complement in experience versus something that someone buys at Sotheby's—it's right in your wheelhouse. What innovation are you seeing with the NBA this season in the NFL, and is there a way to personalize it even more and have more variety? And then secondly, at your investor day, you talked a lot about hyper slicing nomenclature, sounds very Elon Musk. Does that also have some applicability to Mexico with OCESA and even some of the European markets? I know you talked about that really keeping the U.S. around 40% of the total addressable market, but some of those other larger markets, it seemed like you could apply that concept of local acts over a period of time? Thank you.

On the NFT, I think we're deep into discussions and product development and testing. Like all of the leagues are doing, we have a dual lens. If you want to call it on Ticketmaster's side, we are working hand in hand with the NFL and NBA on minting all of the tickets. We did all the Super Bowl tickets through Ticketmaster that were NFT souvenirs. We're doing it for the teams. We've been working with Mark Cuban and others. So on the Ticketmaster side, we're getting to see all the best versions of what some sports teams and brands are doing with NFTs. On the concert side, we've worked on our artist management division with our artists and seen some of the versions that they're looking at, whether it's in the metaverse or whether it's a song on an NFT. We're looking and learning on that side, and on the Live Nation side, the NFT is really just an extension of what someone mentioned earlier, the digital ticket. The most important thing for us overall is to have identity tied to the ticket. So moving from a PDF ticket where we knew nobody, it had no contract, it had no rights, it had no carry-on value, moving to a blockchain digital NFT ticket in general that just opens up the doors to first having identity tied to the ticket. So we can have a better conversation with you. We think NFTs tied to that ticket will allow us to create a community of value and look at how to add value to you on an ongoing basis if you've opened up and been part of the Live Ticket Stub NFT today. We think it's a great opportunity to add more value to the relationship with that purchaser. We're going to keep experimenting with ideas on that front. The second question, I didn't quite hear it well enough. Joe can jump in on it.

Sorry. On the hyper-local strategy that we've been talking about, it absolutely applies in Mexico, Latin America, and throughout Europe. All of the markets we're going into, we establish a beachhead and get to some scale, leveraging that scale to look at each of the specific markets that we can go to and expand the operation. That's a core part. Somebody was talking earlier about our growth after acquisitions. When we made the acquisition, we grew it substantially. Our teams were operating in two cities; now we're selling off concerts in 10 to 12 cities in Germany where you could easily have the population to route your tours through. That became the focus, and that's how we grew that business. We'll be following that playbook globally. It is a large part of when you look at the total addressable market and why it is so large; it's because all of that demand exists through so many different markets, not just the ones where we're historically bringing shows to.

Okay, great. Thank you for taking the question. You know, I wanted to ask a little bit about this 60 tour marker booked already for 2023, which sounds compelling, but it would be great to have a little bit more context. I was wondering if this might kind of get at it. Can you give us a sense of, at this time of 2019, how many tours, if any, did you have already booked for 2021? That might be one way to look at it. And secondarily, if you've got 60 tours already booked for 2023, how many do you have booked right now for 2022?

I think I can give you generalities to make you feel good that '23 is going to look good. If you look at '20, to your point of how many did we have booked or how many would we be reviewing for a historic year at this time period, we would be about double where a historic marker would be if you want to use that as a basic line. So, 60 would be a fabulous number to be talking about this time of year for next year’s activity. That gives you a robust feeling of what '23 will look to be.

Okay. And switch gears a little bit on the recession question. You know, back in the great recession of 2008 or 2009 or 2010, were concerts in your experience at Live Nation more a lagging indicator or a leading indicator? I would guess lagging. If there is a recession impact, you might be the last to feel it, but I was wondering if you had any thoughts about that.

Yeah, it was a lagging indicator. It didn't hit until 2010. We had it for one summer. We had a lot less data on the market then than we have now. I talked about the secondary market and how that provides great transparency today into the specific supply-demand dynamics, and pricing—not just in the front of the house, but through the whole building. We didn't have that back then. We were making a lot of decisions a lot more blindly. We have better information and we're set up to be much more nimble in terms of how we respond to that information.

Okay. That's great. Thank you.

All right, everybody. Thank you. Have a great summer. We'll talk soon.