Operator:

Good afternoon. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to Live Nation's First Quarter 2024 Earnings Call.

Amy Yong:

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

Operator:

[Operator Instructions] And the first question comes from the line of Brandon Ross with LightShed Partners.

Michael Rapino:

Thanks, Brandon. I think we addressed this in our last call. At Live Nation, we run a very decentralized organization, and I'm very proud that we've built 3 incredible businesses sponsorship concerts and ticketing, and we're about to embark on our fourth venture around Venue Nation. So these businesses all run incredible core businesses on their own. Ticketmaster, as you know, was a stand-alone business for many years.

Brandon Ross:

Great. And then you're continuing to express confidence in double-digit AOI growth this year. Obviously, you exceeded that in the first quarter, but deferred is actually down. Can you just quickly reconcile that? I assume the makeup is the profitability per fan based on the venue mix, but any additional color you could give would be helpful.

David Karnovsky:

We've seen some noise in the press recently around festival demand and that maybe some of the more established events in the U.S., Europe, are seeing challenge in moving tickets. Just wanted to see if you could dig in a bit on what you're observing for live or even the industry?

David Karnovsky:

And then on your venue strategy, just as you look to deploy capital to locations around the world, Can you discuss kind of criteria where it's best for Live Nation to execute independently versus where we've seen you kind of partner with a third-party like an Oak View Group, for instance?

Stephen Laszczyk:

Maybe one on sponsorship for Michael. Revenue was up I think, 24% year-over-year in the quarter. It sounds like a lot of that was driven by strengths internationally. Could you maybe just talk a little bit more about what's driving that growth in international? And is the step-up that we saw in 1Q, something we should expect to see throughout the year, or is the fact that it's more internationally driven? Does that suggest it could be more 1Q, 4Q aided as we move throughout '24?

Stephen Laszczyk:

Got it. And then maybe another one for you Joe or unless Michael wants to jump in on sponsorship?

Joe Berchtold:

Sure. I think probably 3 factors that we're still going to watch play out over a bit of time. One is FX. As we noted, for Q1, we, on a reported basis, were up 7 basis points year-on-year. At constant currency, were up 37 basis points. So clearly, that can have a material impact on how much we grow.

Cameron Mansson-Perrone:

So I want to follow up on 2 of the earlier questions on growth and then on the venue business. I guess, first, on the growth outlook for the year. I think you've spoken to potentially more muted growth in the first quarter given the venue mix considerations this year, which makes a 20% growth look even healthier. So maybe -- could you just help frame how we should think about growth this year in light of all that? And then on the higher CapEx outlook from new venue opportunities, Joe, you've talked in the past about generally wanting to prove out CapEx and then ramp it gradually over time. What should the higher outlook tell us about the opportunity you see from this incremental spend?

Peter Supino:

I wanted to ask first about -- more about the venue build-out project. I'm wondering if in your comments 3 months ago, about longer-term growth view that the company could compound AOI at a double-digit rate for many years to come. If you didn't build any big 15,000, 20,000 student arenas outside the United States, could you still achieve that goal? It's just a way to ask whether that capital project and the returns from it are built into your long-term outlook. It's a question we've heard a lot from clients. And then related to that, I wonder, when you talk about returns on capital, maybe as a company or specifically on these venues, how are you [indiscernible] those returns? Is that an EBITDA number? What are the numerator and denominator?

Operator:

And the next question comes from the line of Jason Bazinet from Citibank.

Joe Berchtold:

In terms of venues of the [indiscernible] business, at this point, we're not thinking about them as separate segments. We still organizationally have concerts and venues under the same organizational structure. So it'd be premature to think about it in terms of the segments down the road, who knows. It's just -- we're trying to get everybody internally also focused on this as an important area to be growing. So that's why we use that term loosely.

Operator:

And the next question comes from the line of Benjamin Soff with Deutsche Bank.

Joe Berchtold:

Sure. I think that is largely a function or fully a function of the international stadiums we had, particularly Southern Hemisphere in Q1 of last year and just fewer stadiums as we've been talking about. So that meant that the primary growth in Q1 was in North America. Overall, this year kind of define the trend of where international is going, which is an increasing share because a lot of the growth will come out of our amphitheaters, I probably would expect disproportionate growth out of North America.

Operator:

And our final question comes from the line of David Joyce with Seaport Research Partners.

Joe Berchtold:

So in terms of driving the fan attendance, we've been talking in North America for past several years about a hyper-local focus and that has absolutely been helping us drive our penetration, if you want, on a per fan basis. That will continue, and our expectation is we'll continue to build our fan base in North America.

Michael Rapino:

Thank you, everyone, and we'll look forward to talking to you in the summer.

Operator:

Good afternoon. My name is John, and I'll be your conference operator today. At this time, I would like to welcome everyone to Live Nation's Fourth Quarter and Full Year 2023 Earnings Call. And I would now like to turn the call over to Ms. Yong. Thank you. Ms. Yong, you may begin your conference.

Operator:

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] And the first question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Joe Berchtold:

Sure, Stephen. This is Joe. I'll go first. In terms of the mix shift, there's several dimensions of this. Let's start with deferred revenue. Deferred revenue in the level to which it's up is impacted on a timing basis by what we've talked about in terms of stadium volume being lower this year, amp volume being higher. So, you have less Q4 far ahead on sales with the stadiums, so that's going to compress that deferred revenue line that you see as of the end of the year relative to what you'd see in a more normal year. Then, in terms of how that specifically flows through on the concert side, because it's going to be a shift to more outdoor with the amphitheaters, it's going to be more heavily weighted to Q2 and Q3. It's going to have a higher AOI per fan, because we're counting the beer money, the parking money, other revenue streams when we have the fans on site. It will mean, just on a top-line basis, a lower revenue per fan because the stadium tickets tend to be the highest price tickets, so you'll see a real divergence there between the AOI per fan and the revenue per fan. That, obviously, will translate into improved margin on the Concert segment this year, which should particularly come through in the second and third quarters. On Ticketmaster, the way it flows through is that it would have had fewer on sales in the fourth quarter because the amphitheater shows tend to go on sale closer in time to the shows. So, we still outperformed, grew Ticketmaster in the fourth quarter, increased our number of fee-bearing tickets by about 5 million. But that was against the headwind of that mix shift. So, we expect to be selling more of those tickets into Q1 and Q2 for the amphitheater. But because those tickets are deferred from a revenue recognition standpoint at Ticketmaster, you won't see the AOI on those tickets until the shows play off in Q2 and Q3. On the Sponsorship?

Stephen Laszczyk:

Yeah, that's helpful. And then, just on Sponsorship.

Stephen Laszczyk:

Great. Thank you, both.

Brandon Ross:

Hey, everyone. How are you doing? Joe, you talked about amps in the answer to the last question a lot in the mix shift this year. I was actually curious what -- I want to better understand the future upside in the amp business. Your portfolio has been fairly fixed for a long time. And you've done a pretty incredible job of increasing per caps over the last decade. Where does the real growth come from in the amphitheater business at this point? I have some follow-ups.

Michael Rapino:

I'll start, and then you can go in there, Joe.

Michael Rapino:

Just let me step on that. I think Brandon you've heard us talk about it at our Venue Nation Day. We think we're in this double win right now. We think we have global scale that will still continue because of international markets and more to come. But we also have an incredible amount of opportunity to monetize the scale we have. And for the first 10 years, we built scale. We just kind of ran the scale. The last couple of years since COVID, we launched our Venue Nation division and really focused hiring up and bringing in new skill sets around hospitality, best-in-class food and beverage, best-in-class VIP clubs, et cetera. We think our amphitheaters are run very well. As I say, they're run very well like Southwest Airlines. They're very efficient, and they've been great machines to-date. But we think we're seeing when we invest capital on site, we're getting 20%, 30% returns on capital when we turn that grassy area into a VIP club, a membership club. You're going to see Jones Beach this summer. When you walk up to Jones Beach this summer, at an amphitheater, you're going to call me and go, now I get it. Now I see what these -- the machines could double their AOI when you start to really treat them as arenas have been doing a much better job about how do we upscale on site, elevate the experience and take over. So, we think the 50 amphitheaters we have, the bones of them are amazing. They do incredible job. They're efficient. We think we can double the business as we start to actually look inside the hood and upgrade on site, whether it's our Liquid Death idea that has been a huge surge in our food and beverage, our shaker cup, our own custom-branded liquor that we launched on site to our new clubs, we're rolling out to our VIP boxes, to our elevated. If you look at our overall amphitheater business, about 9% of it is premium. We think that should be 30% to 35%, to give you kind of macro numbers. If you doubled that overnight, your business would double in the long run. So just take your current house, upgrade it, double your capacity on a VIP business, and your business would double. That's the simplest way to look at it.

Brandon Ross:

Great. Then over the past couple of years, I know Platinum has been a pretty big tailwind for probably both the Ticketmaster business and the Concert's business. And I was curious how far along you are in the rollout of Platinum ticketing, both in domestic and international? And then, how you expect Platinum to continue to contribute to the growth at both Concerts and Ticketmaster?

Joe Berchtold:

The other way I think about it, Brandon, is that the typical secondary ticket is still almost twice the price of a primary ticket. So, as Michael said, just think of Platinum as being the market priced ticket, artists are going to be more and more saying I want that through the house. I want that to be closer to really take away that scalper margin.

Joe Berchtold:

I'll start. I think, first of all, our show pipeline is up double digits, very strong for -- driven by the arenas and amphitheaters as we've talked about. Michael gave all the reasons why we're highly confident in our ability to execute at our amphitheaters now. So, the volume of fans that we're confident in having and our ability to drive the profitability off of those fans gives us the visibility and confidence that we're going to deliver double-digit growth this year.

Operator:

And the next question comes from the line of David Karnovsky with JPMorgan. Please proceed with your question.

Joe Berchtold:

Sure, let me start with the CapEx. As we noted, we're projecting right now about $540 million CapEx, two-thirds rev gen, one-third maintenance. If you look at the rev gen, about $300 million of that is either new venues or major renovations of existing buildings. And about half of that, about $150 million, is our top-four projects, would include major revamp of Foro Sol, which is the top international stadium in the world down in Mexico City. Michael talked about Jones Beach. Those projects would collectively have a return in the 20%s. So, we're definitely seeing some chunkiness now in some projects that cost tens of millions of dollars, happen to have several -- four of them line up this year that drives a lot of that. The other rev gen would be a combination of tactical things in existing venues, a new VIP club, a new viewing deck, rock boxes, some new bar designs that are extremely high returns, generally 40%s, 50%s-plus, sort of tactical improvements and some things at Ticketmaster heavily tied in with the sponsorship group and the creation of new ad units. And then maintenance is a combination mainly of venues, some Ticketmaster. I think that's continuing to rise at a rate lower than our revenue, lower than our ticket sales. So, we're watching that pretty closely and making sure we have that limited. In terms of the...

Joe Berchtold:

Yeah.

Joe Berchtold:

And then finally on DOJ. I don't think we've got a lot to report. We continue to answer any questions they have. They control the timing, and we'll watch it play out, but we don't have any specific updates.

Michael Rapino:

We're 100% cooperative.

Cameron Mansson-Perrone:

Thanks. Two, if I can. Michael, you've spoken in the past about kind of the current big shift in the promotion business being a move from kind of national booking and towards increasingly global booking. I'd love to hear just an update on where you think we are in that shift today? And then I thought it was interesting in the release that you're seeing all-in pricing lead to higher conversion. Is that something that you think can lead to adoption of third-party venues, or do you think that stays at your operated venue portfolio for now? Thanks, guys.

Cameron Mansson-Perrone:

Interesting. Thanks.

Jason Bazinet:

I just had a quick question on CapEx. You guys have been so consistent with this sort of 2%, 2.5% of revenues on CapEx. Given what's happening in your business and the high returns on invested capital we can see from the outside, why doesn't it make sense to sort of open up the envelope and spend a bit more?

Joe Berchtold:

And I think the market just accepts it more if we demonstrate it and then do it a bit more. As you said, we've been demonstrating that return on the invested capital. As we continue, we spend a bit more. We demonstrate those returns. The market will let us spend a bit more. The market doesn't tend to want you to take big leaps and big turns. So, we're not doing that. We're just steadily building a pipeline. And as the market sees the demonstrated returns, then you earn the right to continue to do more of it.

Operator:

And the next question comes from the line of Ashton Welles with Evercore ISI. Please proceed with your question.

Michael Rapino:

I'll start and then Joe can jump in. I mean, I see the ticket sale on my daily ticket sale counts. We just went on sale, jeez, within the last week on Usher, Justin Timberlake, Jennifer Lopez, just announced Jelly Roll this morning. These shows are flying out the door from top to bottom. So yeah, we're seeing no slowdown on the consumer from -- I was in Columbus, Ohio for a sold-out Drake show last night. We had two nights in a row sold out, incredible high-merch numbers. They were buying all the sweatshirts and onsite the GM told me they were -- we're doing really strong numbers. So, we're seeing at our current business, they're buying and showing up across the country and across the globe right now.

Ashton Welles:

Thank you.

David Katz:

Hello, everyone. Thanks for taking my question. When we think about the different business lines, how would we think about the trajectory or arc of growth in Sponsorship relative to Concerts? And what I am essentially getting at is whether there is an acceleration of growth in sponsorship and advertising that is begotten from this outperformance and this -- this acceleration that you're seeing in -- on the concert side of things later on?

David Katz:

So just to follow it up, and I'm not fishing for any kind of guidance or anything like that. But the growth rate in Sponsorship obviously could outgrow and grow more than potentially that of Concerts at some future day, right, if we're sort of plotting those lines?

David Katz:

Got it. Okay. Thank you.

Michael Rapino:

Thank you. I appreciate all your support, and we'll talk to you at the end of Q1.

Operator:

Good afternoon. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to Live Nation’s Third Quarter 2023 Earnings Call. And I would now like to turn the call over to Amy Yong, Head of Investor Relations. You may begin your conference.

Michael Rapino:

Thank you for joining us. As you can see from our results, the structural tailwinds behind our business are accelerating faster than ever and as a fan demand truly globalizes and artist were able throw more broadly than ever, this is still in an unprecedented global desire for concerts. This is happening at all levels with both casual and diehard fans and from small clubs to massive stadium events. We will start the conversation today in the next week a deeper into our results how these trends are setting up the industry for ongoing growth. Joe, anything to add.

Operator:

Thank you. [Operator Instructions] And the first question comes from the line of Brandon Ross with LightShed Partners. Please proceed with your question.

Joe Berchtold:

Sure. Thanks, Brandon. I’ll start first of all just on the legislative, which I think is pretty straightforward. Right now there is an all-in pricing bill by Senators Cantwell and Cruz under consideration. We are fully supportive of there’s a BOTS Act that Senator Blackburn introduced, I mean, you call main, which we’re also fully supportive of, and in general, everything we’re hearing legislatively are things that I think are pretty consistent with what we outlined in the FAIR Ticketing Act and things that we would definitely be supportive of. On the DOJ and the article that came out yesterday. I think, not surprisingly, it’s our impression that the DOJ is taking at least the first level look at almost everything that our competitors complain about and from there they look further at some issues and not others and if they tell us they have a problem with something we talked to them about it. But, let me emphasize this, as far as we can tell nobody thinks that the fundamentals that drive our promotions business are unlawful. We pay top dollar to artists and provide them with top-notch tour support and those are good things. I think the article also seems to reinforce that the investigations looking at specific business practices versus our overall business model, which as I’ve said previously, is my impression-based on what I’ve heard. On the specifics, I mean, recall on the agencies getting document retention letters. I think generally anyone the DOJ’s six documents from gets the cover letter like this saying they should retain documents related to the investigation. So all this tells us is they think the agencies have relevant information, which seems pretty obvious given the topics that are being discussed and competitors complain about. Finally, we obviously find it interesting, as I think, you tweeted that the timing of this always seems to come up at earnings. We don’t think there’s any real news right now. Concerning the investigation, we’re completing our document production that they’ve asked for. We haven’t even started depositions and our impression is that the investigation is kind of in its mid-stages at this point. And yeah, we have another new story on the day before earnings which we don’t seem to think a coincidence.

Joe Berchtold:

Sure. We’re seeing no issues. Let me give you that in the two piece. I think you asked about, first of all, Q3 and then call it October. So Q3 was very strong volume quarter. So it was really driven by ticket volume $90 million fee-bearing tickets that we sold in the quarter, which --and the growth came from both North America and internationally. So we’re seeing that the demand consistent globally. 90% of the growth came from Concerts, which again tells you that the fans are looking to go to the Concerts. The one thing, I would note on Q3 is just a reminder, the last year, we had an unusual concentration of client renewal expenses, which are normally spread out over the second half, but largely came together last year. But really the quarter was about the tremendous volume and tremendous fan demand that flowed through Ticketmaster. Looking then more specifically at just October. If we looked at our Ticketmaster platform for the month of October, ticket sales were again up year-on year relative to last year. They were up double digits in North America. So we’re seeing no sign of weaknesses. Another metric that we look at is as we look at just for our U.S. Concerts division we track every week, year-on year sales and again over the past five weeks since the end of the quarter, those sales continue to be up double digits. So we’re seeing no weakness at all. We gave you the leading indicators for show commitments for next year and we’ll get into a more, but feeling good about everything that we’re putting on-sale.

Michael Rapino:

And Brandon just for more color. Yes.

Michael Rapino:

I have weekly booking calls with over the 40 Presidents around the world. When we talk both from clubs to stadiums and festivals. And we have not seen anything taper off in any sense or on-sales for next year, whether it’s an early festival across the pond or was there, let’s say, a festival -- a club tour playing in Pittsburgh on a Tuesday, as you say, or maybe the blink-182 who toured last year, now is back on tour again this year playing Pittsburgh just to Cleveland on Wednesday and any pullback in any way from a club to a stadium tour from Malan to Argentina right now. The consumer supply-demand seems to be consistent across the globe small to big.

Operator:

And the next question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Joe Berchtold:

Sure. I think, let me start by just noting that, year-to-date our Concert margins are up year-on year and for the full year, I expect margin expansion of at least 50 basis points relative to last year, so making good progress verging on halfway back towards the 2019 levels and that’s despite growth for the overall year that will be definitely skewed to third-party venues driven heavily by stadiums. If we look at the quarter. I think if we look at Q3, about 47% of our fans were in arenas or stadiums, which is pretty good proxy for third-party buildings. The comparable last year for that number was 42%. So we had a lot more fans mix in arenas or stadiums this year. Those two buildings accounted for about 75% of the 7.5 million fans that we added in the quarter. And that does two things, as we’ve talked about in the past. It drives our AOI up, because we’re making money on these fans and negatively impacts margins. So that’s why you’ll see the quarter-to-quarter fluctuations. We don’t worry a lot about, but I think, if you take the overall combination of high growth and third-party buildings shifts the mix towards more third-party buildings and make substantial progress in our margins for the full year, I think we’re pretty happy as we look at the totality of that.

Michael Rapino:

Yeah. Thank you. Well, I’m sorry, I’ve seen this written, but we didn’t promote the Taylor tour. So I don’t have that comparable to worry about in 2024. Beyonce was our tour wildly successful. But when we look at any artist across Ticketmaster Live Nation, no artists is going to account for more than 1% of the tickets. So no one tour will ever hurt us year-over-year, it’s about our macro portfolio of artists and tours. And we have a very good pipe as we’ve been saying for next year. We think next year -- crazy to say, but sitting here looking at this year that we’re looking at double-digit growth over this year, next year on ticket sales and our stadiums are gaining a lot of steam. So we’re very confident. We’re going to have big record-breaking tours on the road next year as Bad Bunny just went up again and more to come announced -- more to be announced. So we are very confident that well Ticketmaster Live Nation are going to have big strong years next year with a pipe full that we will overcome this year’s numbers.

Operator:

And the next question comes from the line of David Karnovsky with JPMorgan. Please proceed with your question.

Joe Berchtold:

Yeah. Sure. I’ll start just on the ticketing. Absolutely, Ticketmaster continues to benefit from the non-service fee revenue sources it has. On the upsells and other services that itself to fans, as well as increasing array of services that it’s providing to venues and promoters are all good sources that are helping us increase the profitability per ticket that we’re selling.

David Karnovsky:

Thanks.

Ashton Welles:

Thank you. I think you guys are on track to add 6 million fans or so this year at your owned and operated venues. Is this sort of the right run rate to think about going forward or could this step up in coming years?

Operator:

And the next question comes from the line of David Joyce with Seaport Research. Please proceed with your question.

Joe Berchtold:

Sure. So, first of all, at this point, through Q3, we’ve not sold a ton of tickets for 2024. That’s why we focus more on what the show bookings are. So we have sold -- and we sold more tickets this year, which is part of what goes into the deferred revenue, I will come back to you. But we’ve sold on the order of I think 18 million tickets for shows next year. So relatively small portion of what we’re ultimately sell. So that’s not the driver of our Ticketmaster results for Q3. To a very great extent, it’s more of the other factors that I talked about. And then, deferred revenue is up, because, yes, we have sold more tickets for the shows next year. We’ve also sold more tickets for the shows that are occurring in Q4 and it’s our expectation that because of that pipeline and because as Michael noted, it’s turned into a pretty solid period for stadiums, as well as arenas. We expect to see that deferred revenue number continuing to grow for the next seven months, eight months.

Operator:

Ladies and gentlemen, at this time, we have reached the end of the question-and-answer session. I would like to turn the floor back over to Michael for any closing comments.

Operator:

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator:

Good afternoon. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to Live Nation's Second Quarter 2023 Earnings Call. Joining us today from Live Nation, our President and CEO; Michael Rapino, President and CFO, Joe Berchtold, and Head of Investor Relations, Amy Yong. And I would now like to turn the call over to Mr. Berchtold. Thank you. Mr. Berchtold, you may begin your conference.

Amy Yong:

Thanks, Joe. We would like to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to our SEC filings, including the risk factors and cautionary statements included in our most recent filings on Forms 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results. We will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, we have provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in our earnings release issued earlier today. The release reconciliation can be found under the Financial Information section on our website. And with that, we are now ready to take questions. Operator?

Brandon Ross:

I think investor concern now, if you were to pull the buy side is that with the past few years coming out of COVID being so strong, you're going to have trouble growing next year. And I think the Street is only at mid- to high single-digit growth. I guess, this is a good problem to have, but you said there are positive indications for '24, and wanted to see if you can kind of break that down into domestic and international. So on the domestic side, what are the positive indications that you're seeing besides this very early pipeline? Will supply match what we've seen in the past couple of years. And then on international, obviously, LatAm has been a huge tailwind post-acquisition. You've seen some other green shoots in Asia and parts of Europe. Should we expect continued growth in those markets or just more M&A on top?

Michael Rapino:

And I'll just jump in. And Brandon, just to reiterate the pipe, right? The most important thing for us is just how does the pipe look for next year. As you know, a year ago, we sat here, and I think everyone thought '22 was the record year, and we were headed into an air pocket, and we've blown the doors off in '23. I would just step back. We believe for the next multiple years that this industry, in general, is going to have a growth surge on a global basis. We've talked to all these factors before, international, global artists, consumers. There's a whole bunch of great articles written on why there's a boom happened in a live business on a long-term basis. So we don't think this is just any COVID catch-up. We think that this is going to be the time we're live on a global basis is going to have an incredible growth run for years to come. We obviously benefit from that any time the market gets this level of growth because we'll capture that growth also. So we're looking next year, we're seeing top to bottom, as Joe said, incredible pipe of artists that will be filling all of the different venue types and markets across the world. So we think we're heading to a very, very strong 24, 25 onward, a combination of the market is going to grow, the consumer demand is growing and our ongoing bolt-on acquisitions, venues, new market entries compounded on top of our organic growth is going to give us this continual 1, 2 punch of growth for the next multiple years.

Stephen Laszczyk:

Just maybe on the outlook for consumer spending. There's been a lot made over the last couple of months about the impact of student loan payments starting up in the fall. Maybe for Joe, if you could just remind us what percentage of the comps are going based you think might be skewed toward this cohort? And then maybe more broadly discuss how you're thinking about the risk that consumer spending pulls back maybe into the back half of the year or next year? Are there any parts of your business that you think are more or less exposed and perhaps festivals, and just would be curious if you could dive a little bit more deeply into the demands under the equation.

Stephen Laszczyk:

Great. Thanks for that. And maybe just one on Concert segment margins. It looks like ALM margins were up year-over-year in the second quarter. I think there might have been some assumptions that margins would be pressured year-over-year just given the mix of the slate towards stadium and arena this year. So I'm curious what drove margin expansion in the quarter? And if you think this is a trend that will be sustainable for the rest of the year? Thank you.

Operator:

And the next question comes from the line of David Karnovsky with JPMorgan. Please proceed with your question.

Joe Berchtold:

Sure. I think the general reaction has been overwhelmingly positive. People understand that getting the all-in price upfront is absolutely the best consumer experience. I think there is a lot of concern that there will be still confusion in the marketplace because there will be a mix of all-in pricing for shows on our sites and on the primary tickets on our sites and you go to secondary sites, you'll see a different approach. So that's why we continue to support legislation that drives a consistent fan experience. Because we are the primary ticketing provider in these events, I think it's our expectation in general that even that all-in primary price is generally going to still be lower than any secondary price even without service fees. So our experience thus far in New York or Louisiana that's recently implemented it, we haven't seen any impact on our primary ticket sales.

Joe Berchtold:

Sure. I think if you look at the overall $300 million of spend is vast majority of it would be concept-driven, 75%, 80% of it would be on the concert side. If you look then on the concert side, I would put it in 3 buckets. One is where we're doing a lot of tactical improvements across a broad set of our amphitheaters or theaters and clubs around revenue-generating opportunities, putting in new bar designs, putting in additional points of sale, things that are going to tactically help drive our APF levels. Second is, when we renew our amphitheaters or our theaters and clubs, we often go through a CapEx refresh cycle, that because we're going to have a long-term lease, we're going to be able to get a strong return off of that investment. And then, third would be the new builds where whatever level generally coming in and building out the shell and taking on that building would be the third bucket. And it's going to move around year-to-year within those 3, but those would be the 3 large buckets. And then in terms of the priorities, absolutely, international, Latin America, Asia and more in Europe is highest priority for the Venue Nation strategy. In the U.S., you benefit from having a strong arena infrastructure because NBA, NHL, their teams and their affiliate teams provide you with some of that infrastructure that you don't tend to have in the rest of the world. So this lets us both benefit from strongly attractive returns on those venues also, let's just put on more shows for more fans, because we're putting an infrastructure in place that didn't previously exist.

Stephen Glagola:

Joe, you're on track for $300 million fee bearing tickets this year which is 7% growth over 22. IN the first half ticket growth on fee bearing is 22% year-over-year. So just maybe help us understand what's the slowdown in the second half in ticketing or is that just some conservatism in the numbers. And then I have one more follow-up. Thanks.

Stephen Glagola:

Okay. Thank you. And then similarly on the ticketing margin side, you came in north of 40% again in Q2. You're reiterating high 30s in the back half -- for the full year, excuse me, implies sort of like a mid-30% margin in the back half. But just similar to the revenue line, what's going on there sequentially and the puts and takes. Thanks.

Stephen Glagola:

Okay. And should we expect contract renewals again for Q3, similar to last year?

Operator:

And our next question comes from the line of Peter Supino with Wolfe Research. Please proceed with your question.

Michael Rapino:

On the global part, Joe -- I don't think the strategy has changed. I think if you've listened to us for the last 5 years, or longer. We've been talking about that live as a global business, the artist has been unlocked globally. Consumers, thanks to social media and others are driving global consumption with no gatekeepers. So we have 100 offices in over 40 countries. We have been on this march for a long time. And we think there's still lots of opportunity, obviously, as we talked about in Latin America, Pacific Rim, Eastern Europe. But kind of plan is following as we kind of predicted the artists would continue to go global -- more global artists and international markets would want to be just like New York and Boston would want to be hosting U2 and Beyonce’s of the world, so we had an opportunity to build out those markets. So pedal down, we see lots of great growth opportunity for years to come on that front.

Operator:

And the next question comes from the line of David Katz with Jefferies. Please proceed with your question.

Joe Berchtold:

Yes. At this point, digital ticketing is largely ubiquitous globally coming out of COVID. I haven't seen the latest numbers, but I expect it to be the 90s that are now digital tickets. It's a very informed shifting from barcodes to what we call safe ticks, which is rotating barcodes or NFC keep tickets from being counterfeited and sold over and over. So we have a number of initiatives that have launched them to use that data. We've talked extensively about some of the things we've done in marketing, bringing all of our data together to better understand the fan, how we market to that fan. How with the digital connection, we're able to market to them on behalf of our Digimaster clients, how we're able to market to them on behalf of sponsors, how we're able to send them messages for upsells when they go to shows in our buildings. So that all continues. And then in the background, we have Ticketmaster using the data that it gets for a range of, I'll call it, machine learning purposes and tools in terms of helping clients figure out how do they price their shows, how they market their shows, what are the tools that they should use can help our concert folks in terms of understanding likely demand for tours and shows in specific markets. So certainly, now it's the point where that data and now is used is permeated the business.

Joe Berchtold:

Yes. I want to have characterized it as artists not allowing it. I mean the artists are the ones who are set the price of their tickets. It's our job to provide the information to them to help them understand the market value of their tickets, so they can figure out the balance that's right for them and their fan base in terms of pricing the tickets. So they're getting the value. Are they giving it to the fans, how do they keep it from going to the scalper. A lot of artists now I would say it's almost becoming the standard that they're understanding they should price the front of their house to capture most of the value. Otherwise, it's the scalper who's going to take it. And then they want to make sure the back of the house is priced so that every fan can afford to buy a ticket can get in. The trend we've seen coming out of COVID is, I think, a switch from it being partially used to being very ubiquitous here in North America. And then over the past year or so is becoming much more heavily adopted in international markets. I think we still have a long ways to go in international markets towards full adoption. And if you look at the pricing with platinum, there's still a substantial gap relative to average secondary pricing which would imply that artists are continuing or attempting to give a lot of the value to fans and we'll see how that evolves over time.

Operator:

And the next question comes from the line of Jason Bazinet with Citi. Please proceed with your question.

Joe Berchtold:

Well, first off, again, just to keep it in context, we've long said that, first and foremost, our job is to sell the primary ticket. We're a primary ticketing company and its secondary is a kind of low to mid-teens portion of our GTV. So it's relevant, but it's also not the primary focus. We have long thought that we need to be in secondary because fans have a need to buy a ticket. And when a show is sold out if we're not giving them an option to buy a legitimate secondary ticket, then we're forcing them to go to other platforms to buy their tickets, and we think they're better off being served within the Ticketmaster ecosystem. I think as we continue to do a better job with our offer, reducing friction, understanding how to deliver on the fan needs as we've aligned with the NFL, the NBA and others on the sports side have a slightly different model for secondary. I think we've naturally grown our position in the market. But what really matters to us, first and foremost, is that we have a great primary sale, and that's managed in a way that is going to keep content happy.

Paul Golding:

Congrats on the quarter. I just quickly wanted to see if you had an update on a metric you've given before in terms of the average ticket price and how that's been trending? I think in the past, you've said it's been below $35. And then, secondly, as a follow-up, as we watch sort of the macro tightening in the backdrop and not so much for your business. But in general, in tracking sponsorship, any color you could give on cohorts that are more or less meaningful for that sponsorship growth that you've been seeing as we track forward into this tightening environment. Thank you.

Paul Golding:

I guess my question around that was more around sector. So for example, if we were to think about sports and sports betting maybe being a predominant sponsor, boost this year or at the tail end of last year. Anything in that type of area of color around the mix.

Operator:

And the next question comes from the line of Cameron Mansoon-Perrone with Morgan Stanley. Please proceed with your question.

Michael Rapino:

We think the -- kind of our global playbook has always been the same. We enter most of these markets, low cost, maybe a bolt-on promoter or festival. We end up having enough content that we can bring the tour to the market, and then we build up the flywheel once we get to that market. So in Brazil, we've got Rock In Rio, an incredible festival foundation. We now have a great touring business there, bringing artists to the ground. We've launched our sponsorship business there, and now we've just launched ticketing there. So I think it's a great combination. We'll see a continual growth in Latin America, Brazil, a big year and Argentina is crazy as the market is on ticket sales. We like the entire market down there. So you'll see us organically grow. We've always been a predominantly organic-driven business and then we'll use continual bolt-ons to keep powering and doubling up on our efforts there.

Joe Berchtold:

I mean that spend across the board. I think on their concert side, we've done well in terms of starting to get shows on our dream platform down to Mexico. Latin artists are clearly on fire. So they've got very, very strong set of regional shows they've been doing. Their festival business is doing great. We've worked with them to get the ticketing platform enhanced and that's continuing to perform very well, and they've been bringing in sponsors. So it's really across all elements of their business, I would say, has well outperformed relative to what we thought when we acquired them or even when we thought 6 months ago, 9 months ago or now this year would be.

Cameron Mansson-Perrone:

If I can follow up quickly on one of those points. Is that generally a one-way bringing sponsors from elsewhere into those new markets? Or is there also kind of a reverse dynamic where you're taking local sponsors and also giving them exposure in North America, Europe that they may not have had previously?

Operator:

And our final question comes from the line of Matthew Harrigan with Benchmark Company. Please proceed with your question.

Joe Berchtold:

Let me take the second one first. This is Joe. Just to be very specific, what happened was there were two vectors of attack during that on-sale. One was a very large number of bots trying to crash into our verified fan system. That slowed down the fan experience, but that did not crash the system, or it could cause it to stop. At the same time, we had what was in effect the attempted cyber hack that was a brute force cyber-attack that had the fact of a dial service attack, not through our front door of our Verified Fan system, but through a specific surfer that we have. In order to fight off that cyber-attack, we had to stop the on-sale. Within 5 hours, we had figured it out how to fully reinforce the defenses to and in fact, move out the defense line so that stopping the cyber-attack. We know the attempted cyber-attack, we no longer have any load on our system for the verified fan experience, we started it back up. So the answer to your question is within 5 hours, we had solved that problem. It's not something that's taken us 6 months or 9 months to figure out how to solve. So we solved it quickly. We ultimately did sell 2 million tickets that day. And once those 5 hours were passed, while it was a long wait at times for fans because there were a lot of people trying to buy the tickets, there were not the system overload issues. I'll let Michael speak to it.

Matthew Harrigan:

Clockenflap in Hong Kong, festival. I knew it was small, it got a little bit of a test in the trade meeting and you did put out the press release. I assume it obviously isn't that much of an expansion platform, but if you have any specifics on your ability to do anything on that market and expand more in Asia, outside of Australia and Japan, I thought that would be interesting. Thanks.

Michael Rapino:

Just to jump on for others. I mean, we talked about Latin America, but Pacific Rim and others are equally important. It's a global business. So Japan, a real, real important market for us. Latin America, I mean, Pacific Rim in general, we're already in most of markets in some form have offices in Singapore. We've had a very successful operation in Korea, which has been kind of the foundation on why we ended up being the promoter for PTS and other [cape of] [ph] artists throughout the world. So we look at Pacific Rim equally as important is Latin America, you'll continually see us with a bolt-on promoter Venue festival as we're building up that business and driving content there also. Operator Thank you, everyone. This marks the end of the question-and-answer session, and this also concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.

Operator:

Good day, everyone. My name is John, and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's First Quarter 2023 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions]. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on Forms 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement which also contains other financial or statistical information to be discussed on this call. The release reconciliation and website supplement can be found under the Financial Information section on Live Nation's website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Joe Berchtold :

Thanks, Michael, and good afternoon, everyone. Building on 2022, we started out this year with a record Q1, our highest first quarter revenue, AOI, fan count and ticket sales. All of our markets are fully open, selling tickets, hosting tours and connecting brands with fans. Our reported revenue of $3.1 billion for the quarter was $1.3 billion better than Q1 2022, an increase of 73%. On a constant currency basis, our revenue was $3.2 billion for the quarter. So there was roughly a 2% unfavorable impact due to the slight strengthening of the U.S. dollar, primarily against the Canadian and Australian dollars. Given the limited FX impact on our numbers, the rest of my comments will just be a reported currency. Our reported AOI of $320 million for the quarter, was $111 million better than 2022, up 53% with an improvement of $65 million in ticketing, $50 million in concerts and $26 million in sponsorship. Over half of our AOI growth came from our Asia Pacific and Latin America markets where we are expanding our global touring activity and diversifying our historical seasonality. We converted roughly 59% of this AOI to adjusted free cash flow of $190 million, which is significantly higher than our 43% conversion in Q1 2022. In our deferred revenue, a key leading indicator of growth ended this quarter at $4.4 billion, up 28% from this point last year. Let me give a bit more color on each division. First, in concerts, we had the highest concert attendance ever for Q1 with 19.5 million fans attending our shows, up 79% compared to 2022 when we had approximately 11 million parents. Show count was 9,600 events, up 43% compared to 2022, with more fans per show due to a heavier mix of stadium and arena events and stronger than historical average attendance levels. As a result, our concerts revenue for the year grew by 89% to $2.3 billion, while we delivered $1 million in AOI, a $50 million improvement over Q1 2022. This is the beginning of what we see as a very solid year for our concert segment, including margin expansion relative to last year. Looking a bit deeper at our fan metrics, we had strong growth across the board. Stadium attendance more than quadrupled to 3.3 million fans this quarter, up from 800,000 fans in 2022. This growth primarily came from our Asia Pacific and Latin American markets. Arena attendance was 6.7 million fans for the quarter, up $3 million or almost 80% from 2022, largely as a result of growth in Europe and Australia touring. Theater and fan club count was up 45%. And while it's not a large quarter for festivals, we did see festival fan count grow by 50% from our Mexico and Australia and New Zealand expansion. Overall, our international markets drove fan count growth, accounting for over 90% of our increase versus 2022. This was due in part to the closure still in effect in Q1 2022. That said, we expect continued strength across all global markets through 2023, along with some seasonal shift towards Q1 activity. Last year, we discussed the various cost headwinds at our operated venues and festivals. Thus far this year, cost pressures are declining and our operational cost per fan is down across our indoor buildings and we are forecasting that cost increases will remain below general inflation levels for our festivals and amphitheaters. As a result of these improved conditions, we expect overall profitability per fan will again increase this year as cost increases are more than mitigated by increasing average revenue per fan, pricing and on-site sponsorship. Next, in ticketing, where our numbers reflect growing fan demand for live experiences. In Q1 2023, we sold $72.6 million fee-bearing tickets, up 21 million tickets or 41% compared to 2022. Nearly 2/3 of the growth was driven by concert tickets as North America concert ticket sales increased by 35%, while international concert ticket sales increased even more by 65%. With this increased ticket volume GTV for the quarter was $7.7 billion, up 60% compared to 2022. At peak sales times during the quarter, Ticketmaster sold 15,000 tickets per minute in North America with more than 20 million fee-bearing tickets sold each month globally. And in Q1, over 99.9% of all TM transactions were processed without any issues. While secondary ticketing volume grew at a similar rate, ours continues to be largely a primary ticketing business with secondary ticketing accounting for only a mid-teens percent of our overall GTV. With these growing ticket sales, revenue for the quarter was $678 million and AOI was $271 million, delivering margin of 40%. It's hard to compare these margins to Q1 of last year, given the geographic mix shift and increased cost of ramping our staff back up over the course of last year. But these margins are ahead of our full year 2022 numbers, and we expect margins for the full year to continue being in the high 30s. On the pricing front, average ticket prices on primary tickets rose by 16% compared to Q1 of 2022, driven by fan demand for the best seats, particularly at concerts. Average secondary ticket prices remain close to double that of a primary ticket continuing to show the extent to which concerts and other live events remain price below market value. We also saw revenue from nonservice fees grow double digits as we further build ancillary revenue streams, including insurance, upgrades and other upsells. Lastly, so far this year, we have signed clients accounting for nearly 8 million net new tickets, up 15% compared to this point last year, positioning us for ongoing growth. Finally, in our sponsorship business, top line revenue improved by $54 million or 47% to $170 million in Q1. Our AOI for this high-margin business was $96 million, up 37%. Sponsorship's growth during the quarter was driven by the reopening of international markets that were closed in Q1 of last year, the increase in high-profile artists on sales that attract premium marketing partners and the expansion of our venue network. We had double-digit growth in both on-site and online sponsorship with on-site sponsorship representing most of our AOI growth year-over-year. From a geographic perspective, our international markets delivered 54% growth in the quarter while North America had 26% growth. Contributing to our sustained growth since last year has been our strategic sponsors to generate over $1 million of revenue in the year. Relative to Q1 of last year, our number of strategic sponsors grew by 15%, while the revenue from those partners rose by over 20%. These marketing partnerships now account for 85% of our total sponsorship revenues. Sponsorship margins were slightly lower than average during the quarter as we had higher variable expenses due to artist activation costs for A-list talent presales with tickets sold for these key sponsor programs 4x that of last year. As timing plays out, we anticipate that for the full year, variable expenses and margins will be in line with 2022. A few other points on 2023. We continue to project that CapEx will be approximately $450 million this year, with 2/3 on revenue-generating projects, including new venue builds and renewals as well as other organic investments to support growth. The remaining 1/3 is on maintenance CapEx as we catch up on deferred 2020 and 2021 maintenance. We ended the quarter with $2.4 billion of available liquidity between free cash an untapped revolver capacity, giving us ample flexibility to continue investing in growth. We're comfortable with our leverage, particularly given the AOI growth ahead with approximately 87% of our debt at a fixed rate with an average cost of debt of roughly 4.7%. In addition, the majority of our debt is long dated and nothing is maturing within the next 18 months. The only notable change to our below-the-line guidance from Q1 is on accretion due largely to a set as impressive growth above previous projections, we estimate that accretion will be approximately 40% higher in 2022, and this should be factored into your EPS estimates. At this point, we don't expect any material FX impact on revenue or AOI for the year. With that, let me open the call for questions. Operator?

David Karnovsky :

Michael, Joe, we've seen a couple of bills introduced in Congress to address ticketing practices and contracts. So wondering first, how you think some of these items might impact your business, assuming they were fully enforced. And then just based on meetings you've had do you think these bills largely meet the primary concerns of lawmakers as you've come to understand.

David Karnovsky :

Okay. Then I was hoping you can expand a bit more on Vibee. Maybe can you frame the opportunity -- is this something you plan to build primarily for your major festivals and residencies, or is this -- is there a wider opportunity across your promotional footprint? And then just interested what drove the decision to kind of build this out internally versus maybe putting that out to bid for an events partner.

Operator:

And the next question comes from the line of Brandon Ross with LightShed Partners.

Joe Berchtold :

First of all, on the exclusivity point, I think first point I should make is, congratulations on the birth of your daughter. Glad to hear, everybody is doing well. But to the exclusivity point, I always start with, these are the venues rights. And the venues have been figuring out over time, how do they best monetize certain rights they have. What they have determined is the best way to monetize those rights in the U.S. is by actioning them off for exclusivity. So I think it's, frankly, primarily were there to be any changes in exclusivity it's venues that would be hurt the most because they would lose the ability to fully maximize their rights. We're very confident with the quality of our systems, its ability to handle on sales in a way that no other system can do has been shown both by the clients that we've been adding as well as you've seen in the press issues that other systems have with very modest on sales. So we're very confident in our ability to deliver. I think it's uncertain any bill, in today's Congress, not just this one, but any bill that doesn't have bipartisan support out of the gate as its challenges. But more fundamentally, I think that you'd see the venues respond to that and probably push back because they would be hurt a lot more than we would. In terms of the performance of the business, I tried to give a lot of details in there. I think that, as you know, first of all, we look more at the cash profitability of the business, where that is, how that's operating on a basis, which, as I said, we expect to continue to grow this year. I also noted, I think, in the concert side, the last year was a bottom tick in terms of our margins. We expect it to be coming back this year. We don't assess over margins because, for instance, this year, we expect to be having a great stadium and arena year, as you could tell by the numbers we already gave for that's inherently going to be a lower-margin business than one of our amputate customers. We're still going to pursue that business, still a great business, but it impacts technically the margin, while generating cash profitability. So I think that we're on an upward trajectory. I think '23 is going to be great. And every very early sign we have for '24 is continued success.

Michael Rapino :

Yes. Yes. We -- as you know, yes, we live this in the -- I think the fall was all about the air pocket and would there be enough shows in '23. So hopefully, we put that to bed. We don't think this has anything to do with pent-up demand or COVID rescheduling. That stuff has long been clushed out in '22. This is all about regular business back to business. And I think we're thrilled that we're sitting here looking of a comparable last year but basically had almost 1.5 years combined into a year because of all those rescheduled shows at 20 million. To be sitting here today above and beyond last year's numbers, shows the global strength of the business, and it also shows the global strength of the business from the amphitheater and the stadium to the club to the festival. We're looking at all territories around the world. Firing on all cylinders. We're looking at the kind of talent you see on the road right now. This isn't just The Rolling Stones, right? The question we always have to fight off, six of the top 10 artists were younger artists. You look at Lollapalooza Coachella with Bad Bunny, Carol G, Rosalina, the BLACKPINK, the BTSs, Billie Eilish. I mean there's just a host of great new talent every year coming up, filling the pipe that we didn't know Luke Combs was going to be selling stadiums out this year, two years ago. We had no idea Bad Bunny was going to be the largest selling artists last year. So we just continue to see the supply/demand, we think, for the future, is really, really strong. There's more and more artists sitting in the studio right now on TikTok. The greater economy is alive and low and they all want to be the next bad money. And we said it before, we're also seeing this encouraging new supply strategy where for many years, it was all about a U.S. or UK-based artists that filled the charts and fill the stadium. And most other talent was domestic. It might have been big in Canada, it might have been big in area, but it didn't travel. This is the real breakout year where the world and the consumer are truly global. And now you can see artists coming from Latin America and Korea and becoming global superstars. That didn't happen for the last 30 years. It was a very top U.S. or UK controlled industry. So we think that alone gives the next kick to the supply chain for the next 10 years of young talent from -- it will be from India, South Africa, it's going to be everywhere overnight finding their way to TikTok and Spotify and other places to become these global stars that are still in arenas and stadiums out in their markets.

Stephen Laszczyk :

Maybe for Michael, on underlying contract demand, setting aside the stadium and arena tours for the moment. Can you maybe talk about how demand for the average or even smaller amphitheater or club show is trending compared to what we saw for those types of shows last year? I think there's some concern that maybe the top shows are performing well this year, but it's perhaps coming at the expense of the smaller ones. So just love to hear your thoughts on how those smaller and average size shows are performing?

Michael Rapino :

And just to jump on Joe there. Unlike the movie theater kind of model, we're not a hit-driven industry, right, where we are a truly scaled business. And you're right, we looked at -- the Beyonces of the world are always going to do the great numbers. But when you're sitting here today, looking at even our festivals, the Lollapaloozas are the easy ones, but we have over 200 festivals, Bonnaroos to one-day festivals in smaller markets to our U.S. and international businesses. And all of it seems to be doing really, really well. So whether it's a middle of a road festival in a smaller market, whether it's a club act. At all levels, there seems to be incredible demand and on a global basis. So we haven't seen just the top stuff selling and they're not coming to the other stuff. The demand seems to be uniformed from clubs to stadiums from Pittsburgh to Milan.

Joe Berchtold :

Yes. I think this year would be typical in what we would hope to add in the low millions per year from our own venues with a mix of some new amphitheaters, new arenas at the larger end, while continuing to build out the club and theater portfolio. So it continues to be a meaningful part of it and more robust. As I said earlier, you can scale the stadiums and arenas faster. But over time, we've learned we can deliver a very accretive return for our shareholders by operating it and being able to count the beer money and the sponsorship money as well.

Operator:

And the next question comes from the line of Jason Bazinet with Citi.

Joe Berchtold :

No, I think just to make sure you have the cash numbers right, I think those cash numbers included untapped revolver capacity, right? So from that metric, it's probably not quite that extreme, but we continue to see a very strong set of opportunities to continue growing the business. We just talked about the venue business, which we've been in, but we think on a global basis has a lot of great opportunities to continue to build out the portfolio. And we think even within our existing portfolio, there's a lot of things that we can do to enhance the fan experience as Michael was talking about. So at the moment, we're maybe being a little conservative coming out of COVID, but looking to continue to grow the business, and we'll continue to assess it and see what the right options are.

Joe Berchtold :

Yes. I think the flip side of -- share repurchases tactically is one thing. I think we've also seen a lot of companies out there that embark on share repurchases and the market takes that as a signal that they are out of growth ideas. And I think that we have such a robust set of growth ideas that we wouldn't want that to be misunderstood. Secondly, when you invest in growth, you deliver compounded returns over time, you can maybe get an attractive return from a stock if you think there's a dislocation but you lose out on the accretive compounding impact that you can have by investing in these growth opportunities. As I said, I think we'll continue to look at all the options as we move forward. But I think in the immediacy of coming out of it, that's been our thought process. .

Stephen Glagola :

Yes. Thanks for the question, Michael and Joe. Just -- I had two specific questions around the proposed legislation and how that's going to potentially could potentially impact your business. So one on prohibition of ticket and exclusivity with venues. Can you just provide like, I guess, your color on the competitive position of Ticketmaster in international markets that you operate on an allocation or nonexclusive model, just to kind of glean insights on how the U.S. could be from that, like how renewals are trending there and new business there, one? And then two, on this Junk Fee Protection Act, I believe there's a provision that the FTC can determine if mandatory ticketing fees are excessive. So I just wanted to know how would fee caps impact your service fee revenue. Would that impact more than what the venue collects or what the primary ticketing service collects as well?

Operator:

And the next question comes from the line of David Katz with Jefferies.

Michael Rapino :

I'll jump and then Joe will -- I just want to remind what we said earlier, of all the legislative noise, we've been swirling around for 6 months. The common theme in all of this legislation that you're seeing come forward is around limiting and putting some handcuffs around the scalper and the business. So we do see a lot of this legislation moving forward is going to help the primary ticket, the content holder, do a better job on that front. And it will be harder for the scalper or the BOT, deceptive website, spec selling, a lot of practices, drip selling, et cetera. So we do think that overall, this market right now, legislatively, is moving against the secondary business in general, not going to ban it, not going to cap it, but some of the cleanup legislation does help primary hertz secondary. That's a big move that hasn't happened in the last 10, 15 years.

David Katz :

Thank you. And to say next quarter would be understating beating by $100 million.

Benjamin Swinburne :

Two questions. Michael, you also mentioned, I think, in your prepared remarks that the secondary prices are running about 2x primary. Last year, I think it was last year, sort of that Bruce Springsteen moment about market pricing expectations that more artists would embrace that. I was wondering if you could just sort of update us today on sort of the trend in market pricing on primary and sort of pricing back house, front of house the right way and where you feel the industry is and the business is today? And then secondly, you guys are always thinking pretty far ahead around technology. What are your thoughts on AI as an opportunity for Live Nation? Just broadly, it's obviously a huge topic these days. So would love to hear what you think.

Joe Berchtold :

Yes. Yes. I think on AI, just to be clear, I think it's all upside for us. There's no concern that somehow AI can never replace the live experience. For us, it's a -- I consider it an infrastructure tool for both efficiency and effectiveness. So if you think about using AI on recommendations, much better marketing much better individual recommendation in terms of making you aware of shows that you might want to go to. Clearly, we're using machine learning now to help inform models on suggesting pricing that we were just talking about. AI is just the same thing to the next level of data input through that machine learning process. It will help us automate a lot of tools, the event creation process that takes place at every venue being able to use much better data, machine learning, whatever what's going on elsewhere in the PM system will make that more efficient. All the chatbots that you have today, those will go to a whole another level of effectiveness, working with fans and be at a much lower cost than you have today. And then as we're fighting bots using AI to continue in our battles, to make sure we know who's a person or try to know who's a person, Brit, who's not. So it kind of runs throughout all of our infrastructure. It's a lot of places that we're using machine learning today AI is really that to the next level.

John Healy :

I just wanted to ask a question on kind of the pace of growth. I mean when we look at deferred revenue, I think it's up almost 30%. You talked about the concert ticket sales at this point, up 20%. Any help to you could give us just on if you think that type of pace of growth can be sustained this year. I think the message is clear, it's going to be a strong year, but would just love to get a little color and flavor about kind of the speed of what you could grow this year.

Michael Rapino :

And I think -- sorry, I just want to jump on there for one second, John. And just what's more important to us is just helping both sides realize what's the future in '24 on. So we went through -- obviously, COVID was down and last year was an extraordinary year. The Hut does '23 and '24 start to look. And we're very optimistic. We look at this year as being a very strong year coming off what people probably thought we couldn't be last year. We think '24 into forward, you kind of look at what we historically have delivered. We've been a high single industry growth business and a high single-digit revenue AOI business year after year for many years. And we look at going forward, we think we're back to being a great strong growth business year-over-year off this foundation of business. So we think the industry is back bigger than ever. And we think there's years of industry growth we've shown you when the industry grows, we tend to do a rise with that tide and capture as much as industry growth or we tend to do a couple of points better. So industry has been growing about 8% or 9% a year. We tend to beat it. We look at this as a long-term continual growth story again.

Joe Berchtold :

Yes. I don't think we start with thinking about it as margin. We think about them as being massive growth potential markets, probably the least developed of our major markets. So having great growth opportunity to continue to drive more fans, and more obviously, highly profitable fans. As we establish more venues in those markets, I am sure that you can get some attractive margin operability as you operate, but I think more than starting with any margin focus we're looking at just what's the volume of fans and what's the overall concerts, ticketing, sponsorship, profitability, we can drive off that.

Michael Rapino :

Appreciate everyone. Thank you. We'll talk to you in the summer.

Operator:

Good day, everyone. My name is John, and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's Fourth Quarter and Full Year 2022 Earnings Conference Call. Today's conference is being recorded. Follow the management’s prepared remarks we will open the call for Q&A. [Operator Instructions] Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties and that could cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on Forms 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release reconciliation and website supplement can be found under the Financial Information section on Live Nation's website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Joe Berchtold:

Thanks, Michael, and good afternoon, everyone. Given the uniqueness with our seasonality in 2022 after emerging from the pandemic, I will largely focus on our annual results. And as with prior quarters, 2019 is the best comparison for us in terms of understanding our results so much of our discussion will be relative to the full year 2019. For the company, our reported revenue of $16.7 billion for the year was $5.1 billion better than 2019 or an increase of 44%. On a constant currency basis, our revenue was $17.3 billion for the year. So there was roughly a 4% unfavorable impact due to the strengthening of the U.S. dollar, primarily against the euro and the pound. Our reported AOI of $1.407 billion for the year was also a record for the company, $465 million better than 2019, up 49%, led by an improvement of $345 million in ticketing and $226 million in sponsorship. On a constant currency basis, our full year AOI was $1.464 billion. The FX impact was negative $57 million or 4%. And we have converted roughly 69% of this AOI to adjusted free cash flow of $967 million, leading to a year-end free cash balance of nearly $1.8 billion. Net income for the year was also a record at $296 million, $226 million better than 2019, resulting in earnings per share of $0.64. Let me give a bit more color on each division. First, in concerts, we had the most concert fans ever with 121 million fans attending our shows in 2022, up 24% compared to 2019 when we had close to 98 million fans. Show count was 43,600 events, up 8% compared to 2019, with more fans per show due to a heavier mix of stadium and festival events. As a result, our concerts revenue for the year grew by 43% to $13.5 billion, while we delivered $170 million of AOI. Looking a bit deeper at our fan metrics. We had strong growth across the board. Stadium attendance more than doubled to 18.4 million fans this year up from 7.8 million fans in 2019. Festival attendance was 13.2 million fans for the year, up over 30% from 2019, with premier events, including Rock in Rio in Brazil, Rock Werchter in Belgium, Reading & Leeds in the UK and Lollapalooza in Chicago. Arena, amphitheater and club and theater attendance were all up double digits. And finally, our international fan count grew by nearly 50% in 2022, fueled by tremendous outdoor season in the UK and across Mainland Europe, and very strong growth in our South American markets as well as the addition of OCESA in Mexico. Giving you more details on ancillary per fan revenue by venue type, in our North America amphitheaters ancillary per fan revenue was $37, an increase of $8 per fan over 2019 levels or over 25% growth. At our major festivals globally, increased spending on concessions, camping and DIP experiences drove ancillary per fan revenue up nearly 30%. And there are theaters and clubs in the U.S. and the UK ancillary per fan revenue increased by 20%, driven by higher concession sales, fast lane entry, night of show upgrades and the move to cashless payments. As we have discussed in past quarters, we've had some headwinds associated with labor and supply chain cost pressures at venues we operate, notably amphitheaters and festivals as well as costs related to the reopening of our international markets during the year. Despite this, we still increased our per fan profitability, taking into account our company-wide revenue streams for fans attending shows at our venues. We have seen these pressures subside in recent months and do not expect the same level of impact in 2023. With this, along with our ongoing revenue initiatives and continued cost focus, we expect to continue to grow per fan profitability in 2023. Next, ticketing, where our numbers reflect sustained fan demand for the live experience. In 2022, we sold $281 million fee-bearing tickets, up 28% compared to 2019. It was the first year that our fee-bearing ticket sales exceeded non-fee-bearing ticket sales as we continue to build our global non-sports client base, particularly in international markets. With this increased ticket volume, GTV for the year was $27.5 billion, up 54% compared to 2019. Ours continues to be largely a primary ticketing business with secondary ticketing accounting for only a mid-teens percent of our overall GTV. With this activity level, revenues are over $2.2 billion for the year with AOI of $830 million. As we projected last quarter, we delivered full year margins in the high 30s, coming in at 37%. On the pricing front, average ticket prices on primary tickets rose by 17% compared to 2019, driven by fan demand for the best seats at premier concert and sporting events. Secondary ticketing pricing also rose by 12% on average and so the average secondary ticket price in the U.S. remained more than double that of a primary ticket. This shows the extent to which concerts and other live events remain priced below market value. We also saw revenue from nonservice fees grow double digits as we further build ancillary revenue streams, including insurance, upgrades and other upsells. Lastly, as Michael noted, we signed 23 million net new tickets and expect these client wins will help drive an increase in fee-bearing tickets sold for this year, positioning us for ongoing growth. Before leaving ticketing, I wanted to add a few comments on the regulatory front that Michael spoke to you. There has been a lot of discussion lately about so-called junk fees. We tend to get thrown into that conversation because the compensation to venues to help run their businesses and to Ticketmaster to distribute tickets is separately called out as a service fee instead of embedded in the price of the ticket. Very few people understand that and even fewer understand that most of the money goes to the venues. They think the service charges are just some arbitrary add-on to Ticketmaster pockets, which is not the case. We agree that real junk fees, hidden charges attached the goods and services that obscure the true price should be illegal. As one of the reasons we're advocating for legislation mandating all-in pricing where the consumer first sees the total price he or she is going to pay, as well as the breakdown of any fees. There are a range of other policy points that we're advocating for because we're strong proponents of artists and content rights, but none of these have a direct material impact on our business. Finally, it was a record year for our sponsorship business with top line revenue of $968 million, up 64%. Our AOI for this high-margin business was $592 million, up 62%. Looking back at sponsorship's growth during the year, our festival business increased by 75% and our platform integrations more than doubled. Once again, we had high growth in both on-site and online sponsorship of 61% and 64%, respectively, compared to 2019. Our international markets had an exceptional growth rate this year with AOI increasing by over 70% compared to 2019 due to greater festival activity across Europe and our expanding business in South America and Mexico. A few other points on 2023, while it's still very early in the year, based on current FX rates, we project very little impact on our revenue and AOI this year, less than 1%. We expect CapEx to be approximately $450 million this year, with two thirds on revenue-generating projects, including new venue builds and renewals and as well as other organic investments to support our growth. This is slightly higher relative to the past few years as we come out of supply chain constraints and generally tight spend controls. However, as a percentage of revenue, this is well within our historical range and consistent with our growth trajectory. We ended the year with $2.3 billion of available liquidity between free cash an untapped revolver capacity, giving us sufficient flexibility to continue investing in growth. As you're aware, in January, we issued $1 billion principal amount of 3.8 percent convertible senior notes due in 2029. As part of that transaction, we then developed a hedge to increase the effective convert price to $144. We used roughly half the net proceeds to repurchase the 2.5% convertible notes that were due in 2023, meaning we expect minimal dilution from this convert offering. We're comfortable with our leverage. Over 85% of our debt is at a fixed rate with an average cost of debt of roughly 4.7%, positioning us well in this interest rate environment. In addition, the majority of our debt is long dated and nothing is maturing within the next 18 months. Given that we're at the beginning of the year, we want to provide with more guidance on a few line items below AOI, which impact our earnings per share calculation. We anticipate the noncash compensation will be largely in line with 2022 and acquisition transaction expenses will run about two thirds of last year. As we continue our global expansion, we expect depreciation and amortization to grow by approximately $50 million for the year, evenly phased amongst the quarters. Given our recent financing, interest expense will increase to approximately $90 million per quarter. We're projecting accretion to be about 25% higher than last year, resulting from stronger forecasted future performance at a number of our joint ventures. And we anticipate that NCI and income tax expense will grow in line with AOI. With that, let me open the call for questions. Operator?

Brandon Ross:

Yes thanks for taking the question. You laid out your prescription for solving many of the structural issues in ticketing today. But there is a lot of elected officials and fans that think you're way too big despite the slipping share that you highlighted. And I want to know why are both your ticketing and promotion business is so dominant? And why wouldn't a more competitive industry solve any of these issues at hand with the ticket buying experience?

Brandon Ross:

Okay. And then you talked about the amount of junk that's in ticket fees, and it's a huge concern of, I think, fans and regulators. The amount of fees or the percentage of fees that go into each ticket sale. Can you get a little more granular on why ticket prices are so high? What percentage of the fees goes to you and what is “junk”? And then you have these growing junk fees, you're giving venues of bigger and bigger cut, and now there's the consumer and regulatory pressure, why should the investors be worried about the sustainability of the Ticketmaster and the Live Nation O&O venue ticket fees as we look to the future?

Brandon Ross:

So you are saying if ticket prices or ticket fees were regulated, then ticket prices would just stay the same because they would just be passed on in another way?

Brandon Ross:

Got it. Okay. Thank you.

Brandon Ross:

Got it. Thanks for the explanation.

Operator:

And the next question comes from the line of David Karnovsky with J.P. Morgan.

Michael Rapino:

Yes, it's a great question. First, I want to kind of look at where the drama that gets created, if you kind of zoom out, we did 550 million tickets last year, about 540 million of those were happy customers that were seamlessly delivered. About 10 million of those are five tours historically a year, have this incredible demand with supply demand is out of whack and it creates lots of tension and unhappy customers. And that's kind of always kind of been the historic challenge in the business. At Live Nation Ticketmaster, historically we've really been a B2B business. Our Ticketmaster job is to service the venue and our concert job is to service the artist. And we've done a fabulous job building those businesses and having very, very happy customers. And part of that proposition historically has been to take a bit of the heat at the front end. When the ticket prices are high, when the service fees are high, if the demand supplies out of whack, Ticketmaster has historically been the one that's taken the punch or the ticket seller in general, if you look at all ticket companies, all their NPL scores are all kind of the same. There's only two customers as Fred Rosen famously said, the one that got the ticket is happy and all the ones that didn't are pissed off, right? So you never always – you can never kind of make – this is an industry where there's just not enough inventory to make everyone happy. And we've lived that historically. But absolutely, we've got to now start adjusting on our B2C side. We've got to get much more lean forward on our government relations and our PR side. We've historically not had a big incentive to kind of shout out loud that venues are charging high service fees or artist costs are expensive that hasn't been a big business incentive to date. But I think now education is paramount. We've got to now go out and do a much better job. So the policymakers, some consumers understand how the business does operate and how we all have a hand on the wheel, and we've got to all probably do a better job going forward. One of the real challenges that I think has kind of highlighted this this core problem, right? For 40 years, there's always been a show that with not enough tickets and a fan was unhappy. Obviously, in the last while, I think which kind of set the nuclear chaos on this on sale is the secondary business. You think of what happens on those four or five big demand tours a year, that passionate fan, which is the hallmark of our business, thank god, fans are passionate. They're more passionate about the artist's relationship than they are sports or anything else. They're committed, and they want to see that artist at all costs. Now what's happening is you announce an on sale. I think Irving said it famously yesterday. We haven't announced the U2 on sale yet. We haven't announced when the dates will play. But secondary sites have U2 dates up with tickets on sale. So the consumer on these high demand on sales has really over the last couple of years, started to get pissed off and doesn't understand the process. Why are there so many tickets on spec selling sites? Why is 10 o'clock if I didn't get a ticket, are there five pages of scalper sites selling tickets for 5 times to face value. Ticketmaster, you must have given them tickets. This must – this doesn't seem fair. And that's kind of the digital ticket going online to add then a SeatGeek, StubHub, Vivid, the big scalpers with all of their ways of getting tickets before, after that's really highlighted, right? That's really become a new thing over the last few years that the consumers could see now online. They don't understand why they couldn't get a ticket and why there's so many tickets on secondary. So I think that's the part that we've got to now really lean in on that. We did that today with the Fair Act. I would tell you, yesterday, sitting at the industry conference at Polestar, if any of you want to hear the panel between Irvin, Garth Brooks, Jim Dolan and the DOJ ex-employee. I think it was fabulous because I think it really shows a united music industry in that conference yesterday was venue, promoters, managers, agents and artists. And I would say it was the most excited and most united I've ever seen them in the sense of we've got to now stand up as an industry. Artists historically have not been great at lobbying together and really the only lobbyists that exists is the Ticket Broker Association, they've done a good job. But I would say yesterday, that room was lit up that the artist and fan relationship and that books a moment when he sat out there and said, "When I want to charge a certain price for a ticket, I don't want someone in the middle making money off my IP, I want to deliver that ticket to my fan at my price". So I think we've been too passive in our approach on how we need to educate and act. This week was the start of where we're going to start moving. You're going to see us lean forward a lot more on education reform. And then ultimately, the part that matters the most is just being better at our products. We still are the best at the game right now. We're the only ones that have developed Verified Fan products to try to stock the secondary box. We're going to get better and better at that. We're going to be more transparent. We're going to do some new products on the Live Nation venue side that will lead the industry. So I think you'll see this year a lot more action from our side pushing back, leaning forward and ultimately better products with the artist. But I would tell you if there's one place you want to be standing right now is where we are. We work for the artist, they're very united behind us. We're doing a fabulous job for them. Scalpers have done a great job of hijacking the narrative. Obviously, when [indiscernible] start witness as the CEO of SeatGeek, we’ve not done a good job. We're going to move forward this year much more aggressive telling the artist side of the story. I think FAIR Act today is a good start at that.

Joe Berchtold:

Yes. I think, obviously we finished up a fantastic year. As I've told you guys in the past, I don't overly read too much in this quarter specific comparisons. You've got a lot of moving pieces. We obviously had some changes in the business with the addition of OCESA, a lot of impact last year. Timing of APAC closed most of the year. Europe only opened in the second half. So it was really just some timing shifts, nothing to read particularly into it or to read as a go-forward indication on the margin side. And then as you said, yes, our free cash flow came in very strong as the conversion to AOI. I think a little higher than expected, in part, just the overall AOI level, gave us some leverage on that. And then just some of the below the line pieces were a bit lower than what we expected. So I think we outperformed last year on that free cash flow conversion.

Operator:

And our next question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Michael Rapino:

So thanks Stephen.

Michael Rapino:

Go ahead Joe.

Michael Rapino:

Yes. And my commentary is similar. We are just amazed at the resilience of the customer this year. I think we all lived the November air pocket thesis and everyone's view on was 2022 an exception to the rule. Could we keep growing? Where was the customer? Was it just a bubble? We see nothing but strong growth demand everywhere in the world right now. We're up right now with stadiums in Asia, South America, Eastern Europe, all of our festivals are outperforming last year around the world. Our clubs and theaters are doing well. Our on-site spend in most of those clubs and theaters we see tracking in the right direction. We'd always – in this business, you always worry about the first – the superstars are going to sell out, and then how is the rest of the business do? That's kind of the meeting the potatoes of our business. How the amphitheater shows? How is all the middle stuff going to do? And we're just seeing incredible strength right now across the board on our festivals, our big festivals or niche festivals, our theaters, clubs, we think this is going to be a continual buyer, consumers, as we said. Still look at concerts, let's zoom out again as we always do, let's forget about the 3% of shows that are going to consume political tweaks. 97% of that shows are very affordable for consumers. We're still incredibly affordable option for fans to go have a memorable night out, much more affordable than concerts. I said to Joe earlier, we absolutely have done a bad job on PR because the Super Bowl, it was a badge of honor that tickets were $5,000 or $6,000 each, and most people couldn't attain it. But concerts are still incredibly cheap overall experience versus a best ball game, a dinner, a night out or a theme park. So we think that plays in. We haven't seen any pullback. We've seen more demand top to bottom on a global basis. We think that will rise through this year.

Joe Berchtold:

So we're delighted. We hired Dan Wall, for those of you who didn't see it, joined us formally following his retirement from Latham at the end of January. This is actually a conversation Dan and I started in May of 2019 at BottleRock. So Dan was planning on retiring from Latham, found working with us to be an exciting, fun business. And we talked that in 2020, he was going to announced his retirement, retire at the end of 2020, come join us. Like so many other people's plans, those got upended. So he didn't end up retiring until January, but this has been something that's been in the works now for three years that Dan wanted to do. He'll be instrumental in terms of our ongoing discussion. He's been in non-stop dialogue with the DOJ. It seems like for the past 13 years. He understands exactly the questions they asked their motivations. He just put together an op-ed piece that everybody should certainly read that was in Polestar today laying out on a fact basis as opposed to so many analysts and pundits that people refer to making broad statements about the DOJ, their process, the consent decree, risks of us being broken up. I think he does a fantastic job of laying out in very specific detail why so many of those beliefs are unfounded and I think creates a little higher requirement for people that are going to talk that way to need to disprove what he lays out there as opposed to generally speculating.

Operator:

And the next question comes from the line of Stephen Glagola with Cowen & Company. Please proceed with your question.

Michael Rapino:

Well, I believe that the artist has the best shot when they unite around their IP. I don't think – there is – the U.S. is probably about the only country in the world that doesn't have some level of regulation. I mean most other countries walk up and said, "Geez, if the artist wants to charge $300 an underpriced product for the fan to get a cheaper ticket why would a middleman be able to make $1,000. It doesn't seem logical, right? So most IP, if you look at the artist, you wouldn't be able to look, think about how much work Netflix is doing on password sharing just to save $7.99. So I think there's a lot of pent-up artists who are underpriced their product every day. I mean we're pretty much the only product in the world that's worth more of the second it's sold. I think they've done that for the betterment of their fan base. And like everyone else, they've seen now the sunlight online of the abuse that's been taken on their IP. So I like our position. I like stand up with the artist. I think the artists, Irving, you saw it yesterday with Garth. I do believe that the artist will have more control of their ticket like the PROJAM [ph] model they should. That doesn't mean that you are not going to transfer the tickets. We believe in tickets should have a fair exchange platform, and you should be able to exchange and sell tickets. And if an artist doesn't care about secondary then great, let the – the rush will then will move. If you do care and you want to limit it, you want to cap it at 30%, 20%. I just think that the artist since they're making the decision on how to underprice their product for the betterment of the fan should have a seat at saying, well, how does it go to market? Because we don't want the artist to continually say, well, I'm just going to charge $5,000 then, that's not better for the fan to charge market. So if they're going to charge under market, I believe that they should have a say in it. I do believe they'll be very persuasive over time with lawmakers when that story is presented. As you know, the secondary are running around trying to make sure that the second – tickets are freely transferred so they can sell them. I think that the good news in all of that's gone on in the last while, don't let a crisis go unused. I think that this has created a lot of great news as painful as it is for us some days. The bottle got on – the genie's out of the bottle. We were kind of suppressed on the back foot, not wanting to talk out loud too much about a lot of this business while we service our customers. I think the champagne bottle has been popped. I think artists I thought yesterday was very unique. I think you're going to see – we've been all sleeping, while the scalpers have done a fabulous job lobbying. I think they got woken up yesterday and recently. And I think the artist and the venue, remember have a big stake in this, right, especially sports. So I think the sports teams, sports leagues, content owners in general, like any other industry. May Kim was very clear yesterday. He talks a lot about the artist IP. We think that's a very valid position. We think that the artist or the content owner will be able to have more control on how and when they want to sell their tickets, and I think that's a big step forward.

Joe Berchtold:

Yes. A lot of the growth is certainly in the Venue Nation side. As you can imagine in 2020 and 2021, we had a substantial amount of deferred CapEx that we then do that the building is needed. Then in 2022, we were faced with a lot of supply chain constraints had to prioritize where to use the scarce resources that we were able to get. So that was a limiting factor. So there's some catch-up on the maintenance side of it. The return is really more of a rev gen side than a maintenance side. Most of the maintenance is required for continuing operation, health and safety issues. On the growth side, we have return requirements that are well above our cost of capital, haven't given specific ones, differs a bit by project, whether it's a brand-new project or it's just a – you're adding a new bar at a venue. So those are opportunities that we just think are continuing to present themselves as we expand the global footprint.

Operator:

And the next question comes from the line of Jason Bazinet with Citi. Please proceed with your question.

Joe Berchtold:

Yes. I don't think Concerts AOI per fan is a logical way to look at it, Jason. I think if you look at how we've talked about our business, we've talked about our business across the multiple pieces. So you have to look at it, what's the concerts plus sponsorship plus ticketing AOI per fan, which we've grown – and what we've said is that the concert business has been hit by some of these cost increases, supply chain constraints, increased costs on some of the inputs, but we've increased the overall profitability per fan both by executing on site with those fans coming to our venues, but then also by dramatically increasing our sponsorship per fan and by growing some of our ticketing revenue per fan, including the non-service fee side. So we look at it more holistically, recognizing there are going to be some puts and takes in a given year, certainly on the business.

Michael Rapino:

But also just I want to give some color there. Just to remind everyone, when we sat here a year ago, we didn't think we were going to be open in the summer. We had no staff. We ran 100 miles an hour to get open for May, hire 20,000 staff, every tour, concert couldn't find trust double cost for generators. I mean, we were running hard last year. Overpaying staff, suppliers, getting the show back together was tough last year. We still obviously delivered incredible numbers, but we're now back to that 2019 level of staff in place, costs have all come down, suppliers are all back in line, generators are normal cost. So we do obviously expect 2023 to be in terms of a cost basis back to a continual normal business.

Joe Berchtold:

I think it's premature to say that. I mean let me give you another just piece on what hit us last year with concerts was we had those. I talked about the 20 million fans for shows that got rescheduled. Those are shows that went on sale in 2019 or early 2020, and we're priced at the price level for those shows back then. Fast forward a couple of years later, nobody was repricing the rescheduled shows, and yet the market particularly for the best tickets and moved up substantially. So in 2022, you were operating a pretty good chunk of your business with a 2019, 2020 revenue stream against the 2022 cost structure. That's not going to replicate itself. That was a one-time unusual event. So I think you got to take a beat, let this year play out before you draw in a conclusion off of a single data point.

Operator:

And at this time, we have reached the end of the question-and-answer session. And I would like to turn the floor back over to the management team for closing remarks.

Operator:

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Operator:

Good day, everyone. My name is John and I will be your conference operator on today’s call. At this time, I would like to welcome everyone to Live Nation Entertainment’s Third Quarter 2022 Earnings Conference Call. Today’s conference is being recorded. [Operator Instructions] Before we begin, Live Nation has asked me to remind you that this afternoon’s call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the company’s anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation’s SEC filings, including the risk factors and cautionary statements included in the company’s most recent filings on Forms 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release reconciliation and website supplement can be found under the Financial Information section on Live Nation’s website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Joe Berchtold:

Thanks, Michael and good afternoon everyone. As with last quarter, 2019 is the best comparison for us in terms of understanding our results. So, most of our discussion will be relative to Q3 of 2019. For the company, our reported revenue of $6.2 billion for the quarter was $2.4 billion better than Q3 2019 or an increase of 63%. On a constant currency basis, our revenue was $6.4 billion for the quarter. So, there was roughly a 3% impact due to strengthening of the U.S. dollar. This was a record quarter for revenue for the second quarter in a row and bested our Q2 figure by 39%. And our reported AOI of $621 million for the quarter was $194 million better than 2019, up 45% and led by an improvement of over $86 million in concerts and $81 million in sponsorship. On a constant currency basis, our Q3 AOI was $645 million. The FX impact of negative $24 million or 4% was largely driven by the devaluation of the euro and the pound. And year-to-date, we have converted roughly 76% of this AOI to adjusted free cash flow of $996 million. Let me give a bit more color on each division then I will give you more on leading indicators. First, in concerts, our AOI was $281 million for the quarter, which compares to $194 million in Q3 of 2019, an improvement of 44%. U.S. concert’s strongest quarter ever far surpassing the previous record of $200 million AOI in Q3 of 2018. It was a stellar summer season for concerts. We had over 44 million fans in the quarter, the most ever, growing 40% compared to Q3 of 2019 when we had close to 32 million fans. Looking a bit deeper at our fan metrics, stadium attendance more than tripled to 8.7 million fans in Q3 of this year and festival attendance was 6.5 million fans in the quarter, up nearly 40% from Q3 of 2019 with premier events, including Rock in Rio, Rock Werchter, Reading and Lollapalooza. Pricing has been a key part of our strategy in 2022 capturing market pricing for the best tickets while maintaining an affordable entry point for all fans. For tickets sold to shows at our amphitheaters, arenas and stadiums globally this year, front-of-house pricing increased for each by double-digits relative to 2019, while starting prices for all shows in the U.S. rose just 6% and remain under $35 on average. And giving you more details on ancillary per fan revenue by venue type in our U.S. amphitheaters, ancillary per fan revenue was $38, an increase of $8 per fan over 2019 levels or close to 30% growth. At our major festivals globally, increased spending on concessions, camping and VIP experiences drove ancillary per fan revenue up by nearly 30%. And that our theaters and clubs in the U.S. and the UK, ancillary per fan revenue increased by over 20%, driven by higher concession sales, fast lane entry, night of show upgrades and the move to cashless payments. On the cost side, as indicated before, increases continue to impact this primarily in the venues we operate, amphitheaters, theaters and clubs and festivals. But in all cases, we are delivering double-digit growth in profitability per fan due to increased ticket sales and ancillary revenue. Next, ticketing had another successful quarter, delivering $163 million in AOI, nearly 30% higher than Q3 of 2019. Q3 was our top quarter ever in terms of reported ticket sales in GTV and it was our second highest quarter ever in terms of transacted ticket sales in GTV behind only Q2 of this year. When we look at the year-to-date performance of our ticketing business, the numbers reflect the incredible demand we have had. Through September 30, we have sold 197 million fee-bearing tickets, up 38 million tickets or 24% compared to 2019. GTV for the first 9 months is $19 billion, up $6.3 billion or 49% compared to 2019. As a result, revenues are close to $1.6 billion for the first 9 months of the year, which is up almost $500 million or 45% compared to 2019. And with all this, we drove AOI to $600 million, up 71% as we deliver strong operating leverage. Across both sporting and concert events, ticket buyers continue to prioritize purchasing the best seats available, driving a 17% average price increase in the primary market year-to-date relative to 2019. Secondary pricing has risen by 10% on average with sales volume up as well. With these increases, the average secondary ticket price in the U.S. remains almost twice that of a primary ticket, demonstrating additional opportunities for market-based pricing as well as a large buffer from any demand shifts. For those of you focused on margins, as we have indicated previously, it’s difficult to evaluate based on a single quarter. Q3 margins were impacted by our mix of clients and shows, along with technology investments. All of this is as expected and in line with our full year margin expectations in the high-30s as we have been indicating over the past few quarters. Finally, growth in our high-margin sponsorship business continued this quarter, with revenue up 59% relative to Q3 2019 and now up 64% year-to-date. We once again had high growth in both onsite and online sponsorship, driving record Q3 AOI of $226 million, 56% higher than our Q3 2019 AOI. Looking back at sponsorship’s growth through the first 9 months, we have seen our festival business nearly double and our platform integrations more than double. Our strategic multiyear multi-asset sponsors now generate $0.75 billion in revenue for us. Back in 2017, we had 56 such clients, representing approximately two-thirds of our total sponsorship revenue. Today, that number has grown to over 100 such partners that account for 80% of our revenue, growth in both the number of partners and the level of their spend, which demonstrates the value we deliver and the importance they place on our unique on-site and online scale platforms. As we look to the remainder of 2022, starting with our leading indicators through late October, all relative to 2019, concert ticket sales are over 115 million tickets for events this year, up 37% and 20% higher than our full year 2019 fan count. Second, Ticketing has sold over 200 million primary fee-bearing tickets for events this year, up 27% relative to 2019 at this point. Of these, 135 million tickets are for concert events, which is 38% higher than 2019. Related to this, we had $1.9 billion in event-related deferred revenue, consistent with our levels in Q3 of 2021, despite the deferred shows in last year’s numbers. Excluding the deferred shows from last year’s numbers, we would be up 35% year-on-year. A few other points on 2022, given our presence in the UK and mainland Europe, we have experienced FX headwinds. And through the end of September, our AOI has been negatively impacted by $47 million. This was almost entirely in the second and third quarters as the U.S. dollar strengthened significantly against the euro and British pound. Based on current forward rates, we expect a 4% impact to AOI in the final quarter of this year. Due to some delays in construction projects as a result of supply chain disruptions, our 2022 capital expenditures forecast is now approximately $300 million, with roughly two-thirds allocated to revenue-generating projects. We expect the key revenue-generating projects, which are delayed, will still be completed early next year. So don’t anticipate any impact next year on the return from these projects. We expect free cash flow conversion from AOI to be in the mid to high 50s for the full year. We ended Q3 with $2.6 billion of available liquidity between free cash and untapped revolver capacity, giving us sufficient flexibility to continue investing 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 4.5% positioning us well in this interest rate environment. In addition, the majority of our debt is long dated with only our 2023 convertible debt maturing within the next 2 years. We will continue to optimize our capital structure based on market conditions. With that, let me open the call for questions. Operator?

Brandon Ross:

Hey, everyone. At this point, most investor focus is on 2023. So I wanted to dig a little more there. And I know it’s hard to determine the demand side for the full year. But can you speak maybe quantitatively and qualitatively about the supply side for next year? I think last year, you gave that kind of top touring apps for the year ahead and what that looked like year-over-year. How is that trending? And then what’s your view on the quality of the supply next year versus this current year?

Brandon Ross:

Second piece. So...

Brandon Ross:

Great. And then keeping on ‘23, you said your book sponsorship is, I think, up 30% year-over-year. And that’s kind of a different story than we’re hearing across the ad and sponsorship universe. Have you seen any recent slowdown there? And why generally do you think your trends in Sponsorship are different than what we’re seeing?

Michael Rapino:

Brandon, for comparison, the – if the NFL was a public company or NBA, I’m sure that would be reporting record sponsorship also. So we kind of put us off from that league, right? He’s not having any pullback. If you’ve got a scarce commodity like a beyond state tour or an NFL game, those are still very rare pieces of business that you want to be associated with, and they have longevity to them. So we haven’t seen any slowdown talking to the NBA and NFL. We haven’t seen it over there either. So I think those are the comparables for you.

Joe Berchtold:

Yes. We don’t believe there will be any impact whatsoever if there was a nationwide mandate for all-in pricing. We think it makes sense. It just has to be done collectively at the same time. And if you look back and you listen to the comments, the comments were all about transparency, which is really all-in pricing. The commentary was not about fee levels or any of the other issues that some people have brought up. That’s been looked at, and we feel comfortable with what our business model is in that regard. So I think that we will work with the FTC. We will work with the DA in the State of New York, and we’re very supportive of that and some other shifts to make ticketing more transparent and a better consumer experience.

Brandon Ross:

Great. Thank you.

David Karnovsky:

Thanks. Maybe I’ll flip Brandon’s first question around and push on the demand side. But you’ve been able to maintain AOI growth in a low double-digit range over a long period. And you’ve done that in markets even a time for fan attendance has been down. And I know you just spoke to the supply, but given that uncertain demand environment, how do you think about some of the other factors in your control on revenue or cost that can kind of keep you in that historical range?

Joe Berchtold:

Yes. So again, just to – I mean, to repeat the numbers, which are the mix of supply and demand, which is that our tickets sold for the shows that we have on sale for next year are up consistently across all venue types relative to a year ago. So the demand is absolutely coming for the supply that’s showing up. Now on a broader basis, you’re right, we’ve consistently – if you looked at 2010 to 2019, we’ve consistently grown our business double-digit AOI. In 2011, we grew our business double-digit AOI while fan attendance was down. So we do have a number of other levers, and Michael spoke to those as part of his commentary. We’re continuing to grow our venue base. And fans that shows in our venues are much more profitable than others. We continue to have increased on-site spend. We continue to have pricing as a lever, which drives through both our concerts business and our ticketing business continuing to add globally Ticketmaster clients. And then I’ve given you the numbers on Sponsorship, which we think continues to be a double-digit growth business into the future. So all of those levers on top of the supply-demand dynamic is what gives us confidence as we continue to look to our future of the growth potential.

Joe Berchtold:

Yes, Michael, sorry, just to jump back in on you. Again, counter to some of the commentary that I’ve heard out there were also – we’re not dependent on acts that have been around for a long time. If you look at how vibrant the new artists are – I mean, I look at our top artists we’ve had this year, the Harry Styles, Dua Lipas, Billy Eilish, Bad Bunny, Morgan Wallen, The Weeknd, Olivia Rodrigo. These are all artists that are at the early stages of their career. Across, as Michael talked about, all genres, most of those are obviously in arenas and stadiums, but these are tremendous talents that are just showing the breadth of supply that we have in our business.

Joe Berchtold:

Yes. Our focus this year has obviously been on the latter of how do we create new assets on this Ticketmaster platform that can continue to drive the economics. And then as you improve your volume of tickets or improve your site visits, the math is just additional growth on top of that. So, we feel like we would view any other platform we own in its own way just a counterpart to the on-site. We have people’s attention through a period of time. We have them going through a purchase process. And all of that is something that we can monetize. We saw a great progress on the platform integrations, particularly around the checkout this year. We think there is earlier upstream. We think there is advertising dollars that can still be significant that we can drive from it. And we are focused much more on how do we use Ticketmaster as a platform to drive its own set of non-service fee revenue streams. And we think that has a long runway.

Operator:

And our next question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Michael Rapino:

Yes. I wouldn’t say ‘23 – our conversation is any different than it’s been in any year. We have an incredible – great pricing team, a lot of data scientists that are talking and analyzing the business with our managers and agents. So, as you know, there is no one paint brush, depending on what artists – where you are in your cycle and what your demand is. So, I just saw some counts this morning for Shenoy [ph] went up, up-sell. Today, big, big numbers out of the box. She is an iconic artist. So, you are not worried about pricing if you are talking to Shenoy and how she prices her tour, if you are a little baby going on tour next year. You have a younger demo, you are building your audience, maximizing your growth isn’t your priority. It’s getting to as many markets and fans as you can. So, I wouldn’t say ‘23 is even in my buyers’ minds right now. What is in their head is over the last few years, it’s just better pricing dynamic strategy from day one on the market. Price is different on a Friday than a Tuesday, the aisle seat’s worth more than the middle. The front is always underpriced. We have yet to see anything get close to secondary demand yet. So, most of our shows are still going to be underpriced in the front. So, our job is to do what we can up-sell the front, so we can lower the price in the back, get sell-through all the way through. So, I wouldn’t say that any artist or manager is having any panic of talking to me about demand for next year. They know the Taylor Swift ticket Verified Fan that went up this week that’s probably going to break all records. I mean artists are seeing the demand is there. If you price it smart, you have got the right markets. You have been out of the market maybe 3 years, 4 years. We are not feeling the demand from inflation or ‘23 pressures that are driving strategy. It’s just overall us being better at what we do today than we were last year and the year before on pricing strategy per market by artist for territory.

Joe Berchtold:

Yes. I think as Michael will talk to you, first and foremost, our strategy is to help ours get paid market value for their show. And we are spending more and more on having the people and the data to help them do that. That said, for a lot of reasons that he went over around how they want to build their fan base, how they want to build their brands, they are leaving money on the table. And we are continuing to see that just almost insatiable demand in the secondary market. I talked about average price of a secondary ticket is still almost twice that of a primary ticket. So, that continues to grow, and we continue to price a little bit trying to catch up to that. So, we don’t see the secondary market going away anytime soon, and we are going to be active participants. And I talked, I think last quarter about the fact that we believe the shift to secondary tickets has helped us because it’s just eliminated friction to use us as the secondary platform to buy and sell the tickets. As we get better and better with that Ticketmaster app, you can manage your tickets, you can sell them, you can buy them on our secondary. As all of that gets easier and easier, I think that just naturally continues to build the business with us.

Operator:

And our next question comes from the line of Stephen Glagola with Cowen. Please proceed with your question.

Joe Berchtold:

As regards to the consent decree, we have an ongoing discussion. We have an external monitor who we have regular dialogue with. We have an internal monitor who oversees everything. We are very happy that we have got an active dialogue now, which is what was lacking in the first 10 years post our merger. We feel good about all of those discussions. I don’t think there is anything structural, substantive that we are finding that’s inconsistent with the message that we send all of our people, which is these are independent decisions on promotion and ticketing and the two shouldn’t be tied together. So, we feel good about that process that we have with them. As we look at Ticketmaster, I think it’s continuing to be successful because it’s a very effective platform. I think if you look at – again, we have talked a lot over the past few quarters about because of our continually improving in high-quality platform, both for the enterprise side as well as the customer side, particularly internationally, that’s differentiated and driving a lot of wins internationally. North America, where it’s more a mature market, you need to be able to compete on price in addition to features. And I think our business has shown that we can continue to scale that, grow it and do so very profitably.

Michael Rapino:

Yes. Just on a macro level, this is a business that overall we don’t win – most shows don’t sell out. Majority of your shows don’t sell out, always room for a few more tickets to be sold. So, although the press always talks about the expensive tickets or the sold-out ticket, that’s not your real business. Your real business is night and day, theater, clubs, amphitheaters, arenas, selling those tickets night by night. So, most tours ultimately do well in the end, artists make money and we make money. There are some tours a small percentage that just don’t sell enough ticket, the demand isn’t there. And the tour that gets canceled or the promoter and the artist lose money. So, I have seen some of those publications where they want to grab those six tours or some that didn’t make money and then try to extrapolate something larger. So, I just don’t see that trend. We did over 8,000 club shows last year and 95% are going to make money and do well and the artists will deliver those 400 tickets or 1,100 tickets as they are building their business and their costs are associated with it. It was a tougher year for all of the industry as the supply chain challenges, labor, everyone getting back to work, getting the security guards, everyone’s costs were up this year. So, that would have affected all artists on the road relative to their revenue. But those seem to have worked their way through the system. So, I don’t see any trend that the emerging or younger artists are having any harder time than any young emerging artists when they are taking those risks building their businesses on the way up. Generally, majority are going to be okay in terms of selling enough tickets, paying the bills and building their business. So, we don’t see any trends in the bottom end, any new trends that would suggest that the club and the emerging artists space isn’t growing. There is more clubs opening up all the time, lots of demand in every market, lots of options for artists to play 500 seats, 1,000 seats. We just know from our venue portfolio on the demand on opening up and building theaters and clubs is bigger than ever. So, that demand wouldn’t be driven if the supply wasn’t there.

Operator:

And our next question comes from the line of Peter Supino with Wolfe Research. Please proceed with your question.

Joe Berchtold:

So, just technically, Peter, just to answer your first question, I think the way that we have laid out the story in the release and then Michael talked about it is, first, he talked about the fact that ticket sales are up. He talked about the sponsorship growth. And then he said, in addition to those, there are a number of other levers that we have to continue to grow the business. So, I don’t think he ever said anything that said we weren’t – the fan growth didn’t come into this. At this point, looking at ‘23, yes, we have got some of the stadiums we talked about high growth in arenas. Some of that’s booked. It’s still somewhat early for the second half of the year. But macro in terms of our pipeline for next year, it would account for more fans than we had going into this year. The hard part that we have is just sorting out because of the shows that were rescheduled, trying to figure out how many of those were naturally flown into this year versus not. But we are feeling very good about the attendance levels for next year. Michael will talk about the venues.

Peter Supino:

Thanks Michael. Thanks Joe.

David Katz:

Thanks for taking my question. In the past, you have talked about the evolution of digital ticketing. And I know there was some commentary, I believe in the spending to that end. An update on sort of how that’s progressed, where it is and what we might expect in the near-term and longer term would be helpful, please.

David Katz:

And there is a sort of clear quantifiable earnings benefit where the rubber meets the road from that, correct?

David Katz:

Understood. Thank you.

Operator:

Good day, everyone. My name is Hector, and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's Second Quarter 2022 Earnings Conference Call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q&A. Instructions will be given at that time. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that can cause actual results to differ, including statements related to the Company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the Company's most recent filings on Forms 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release, reconciliation and website supplement can be found under the Financial Information section on Live Nation's website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Joe Berchtold:

Thanks, Michael, and good afternoon, everyone. As with last quarter, 2019 is the best comparison for us in terms of understanding our operations and key performance indicators, so most of our focus will be relative to Q2 of 2019. For the Company, our reported revenue of $4.4 billion for the quarter was $1.3 billion better than Q2 2019 or an increase of 40%. On a constant currency basis, our revenue was $4.6 billion for the quarter, so there was roughly a 4% impact due to the strengthening of the U.S. dollar. In our reported AOI of $480 million for the quarter was $160 million better than 2019, up 50% and led by an improvement of over $100 million in ticketing and $80 million in sponsorship. On a constant currency basis, our Q2 AOI was $502 million. The FX impact of negative $23 million or 4% was largely driven by the devaluation of the euro and the pound. This was not only our highest Q2 AOI ever but it was also our highest quarterly AOI ever, beating our prior record quarter, which was Q3 of 2019 by 12%. Notable given that Q3 is traditionally our highest AOI quarter each year, and we converted almost 80% of this AOI to adjusted free cash flow of $379 million. Let me give a bit more color on each division, and then I'll give you more on full year leading indicators. First, in concerts, our AOI was $123 million for the quarter, which compares to $133 million in Q2 of 2019. It was one of concert's strongest second quarters ever despite limited activity in our Asia Pacific region and operating cost increases. Additionally, while OCESA had a very strong return to activity, its AOI largely flows through sponsorship and ticketing while their concerts division absorbs most of its costs. In the quarter, we had over 33 million fans attend 12,500 events, growing nearly 25% compared to Q2 of 2019 when we had 27 million fans attend 10,000 shows. And we continue to see growth in our on-site spend with no signs of change. Here's what we're seeing so far this year by venue type across our owned or operated buildings. In our amphitheaters, ancillary per fan revenue has risen to $38.5, an increase of $9 per fan over 2019 levels or 30% growth. At our theaters and clubs in the U.S., ancillary per fan revenue has increased by over 25%, driven by higher concession sales and increased purchases of premium packages, fast lane entry and night of show upsells. In our theaters and clubs in the U.K., ancillary per fan revenue has risen by 20% compared to 2019, largely as a result of increased food and beverage consumption, pricing optimization as well as the shift to cashless payment. Finally, at our major festivals, increased spending on concessions, campaign and VIP experiences has driven ancillary per fan revenue up by over 30%. The consistent theme here is that as we continue elevating our hospitality operations and create more premium options, fans are eager to enhance their experience. At this point, we still have a lot more room to grow these higher-quality experience offerings throughout our owned or operated portfolio, which includes over 400 venues and festivals globally at this point. Next, ticketing had another very successful quarter, delivering $231 million of AOI, making it the most profitable quarter ever for ticketing, beating the record set just last year in the fourth quarter and nearly doubling the Q2 2019 AOI results of $124 million. Our growth came from both primary and secondary ticketing with transacted ticketing GTV up 69% and 141%, respectively. Transacted ticket volume, excluding refunds, was 77 million tickets, our highest quarter ever, besting our former record of 65 million tickets in Q4 2021 by 18% and 25 million tickets or 48% higher than Q2 of 2019. Transacted ticketing GTV, excluding refunds, was $7.3 billion, our highest quarter ever, besting our former record of $6.6 billion of Q4 of 2021 by 11% and $3.1 billion and 76% higher than Q2 of 2019. International markets are now largely back and contributing to this growth with transacted ticketing GTV up 67% relative to Q2 2019. As Michael mentioned, approximately 75% of our growth came from concerts, which was due to both higher fan attendance at our concerts and also timing with a number of on sales expected to happen in Q3 getting moved up into Q2. Even as more of the ticket value is captured for content organizers, our secondary marketplaces continue to grow rapidly with four of our five best resale days ever in Q2 and 12 of our top 20 resale days in 2022. We continue to believe that the secondary market is a leading indicator for primary pricing opportunities over the next few years as well as a buffer against any demand fluctuations. Finally, sponsorship had its biggest quarter ever with AOI of $178 million, 80% higher than our Q2 2019 AOI of $98 million. With the U.S., the U.K. and now Mainland Europe all fully opened, we had high growth in both on-site and online sponsorship with each delivering record Q2 AOI. The growth in our large multiyear multi-asset sponsor speaks to our value of connecting live music fans with global brands. We are nearing in on 100 such major sponsors that, in total, generate well over $0.5 billion in revenue and represents nearly 75% of our growth relative to 2019. As we look to the remainder of 2022, starting with our leading indicators through late July, all relative to 2019. First, confirmed show bookings are up over 30%, driven by double-digit increases in every market and across all venue types. Our concert ticket sales through the end of July are over 100 million tickets for events this year, up 38% and higher than our full year 2019 fan count. As a result, we expect a very strong Q3 for concerts with more shows and higher attendance, including fan growth at our owned or operated venues where we are continuing to see strong APF increases. Also, similar to last year, we are extending the amphitheater later in the year, adding over 1 million fans in Q4 this year relative to 2019. Michael also gave the numbers around much of our Q2 fan growth being driven by international markets, which is a great indicator of the broadly global health of our fan base. But I don't want anyone to over extrapolate this to the U.S. market as we expect North America will drive much of our fan growth in Q3. Second, ticketing has sold 183 million primary fee-bearing tickets for events this year, up 30%. Of these, 122 million tickets are for concert events, which is 42% higher than 2019. Related to this, we have $3.2 billion in event-related deferred revenue, double our level in Q2 of 2019. These are largely tickets that have been sold by Ticketmaster for Live Nation concerts but the revenue and AOI hasn't flowed through yet, and we'll do so over the course of the next year as the events occur. We remain on course for a strong Q3 in ticketing as our deferred revenue is recognized but also impacted by the shift of some of the on sales that moved into Q2. On the sponsorship side, we expect to see continued growth driven by our strong Q3 festival lineup with some of this activity also involving on-site activation support. On the cost side, increases continue to impact us primarily in the venues we operate, amphitheaters, theaters and clubs and festivals. But in all cases, we are delivering increased profitability per fan due to increased ticket and ancillary revenue. A few other points on 2022, given our presence in the U.K. and mainland Europe, we've experienced FX headwinds. And through the end of June, our AOI has been adversely impacted by $23 million. This was almost entirely in the second quarter as the U.S. dollar strengthened significantly against the euro and the British pound. Based on current rates, we expect our AOI to continue having a 3% to 4% hit in the second half. We provided detailed guidance on line items that impact our EPS calculation last quarter, and there's just one update that I wanted to make here, which is, as noted, we expect the headwinds with FX rates to continue through the remainder of the year, which at current forward rates result in approximately $15 million quarterly below-the-line expense due to currency exchange losses on the revaluation of our foreign balance sheet balances to U.S. dollars. In anticipation of the growth opportunities ahead of us this year, we continue to expect 2022 capital expenditures to be approximately $375 million, with 2/3 allocated to revenue-generating projects. We expect free cash flow conversion from AOI to be back in the mid-50s for the full year. And we ended Q2 with $2.5 billion of available liquidity between free cash and untapped revolver capacity giving us sufficient flexibility to continue investing in growth. We are comfortable with our leverage with over 85% of our debt at a fixed rate and our average cost of debt of roughly 4.3%, positioning us well in this interest rate environment. With that, let me open the call for questions. Operator?

David Karnovsky:

Michael, I wanted to get your thoughts on pricing in VIP tickets. We've seen artists and VIP inventory even amid some fan pushback and negative press, which looks to me to be a break from prior years. So do you think the industry has collectively gotten to a place where artists are now kind of comfortable reclaiming the secondary market economics? And then, how much more room is there to kind of drive this process?

David Karnovsky:

Okay. Great. And then I just wanted to ask on concerts AOI in the quarter. I think it was roughly flat versus '19, and that's with the increase in fans and the per caps. Just wondering if you could speak to the impact of things like cost inflation, mix. I know you said APAC wasn't fully open and then maybe timing as well. I think Q2 '19, if I remember correctly, had some pull forward from Q3 in that year?

Operator:

Your next question comes from Brandon Ross with LightShed Partners. Please proceed with your question.

Michael Rapino:

All right. That's a lot. I'll try to take some pieces. We work for the artist. We're a B2B business. The artist is that decides when they tour, how they tour. Our job is to provide all the tools, platform and services to help them succeed in that tour from -- a year. Now our decision is -- they're genius brand managers. They have to balance the needs of their fans, supply demand and pricing. And some brands, like the Rolling Stones, have been very good at always saying expensive experience and we're that proud and enable to deliver that brand position. But I think artists are always trying to find a fine line on how do I make the show accessible? How do I make sure all my fans can show? How do I price it fairly versus how much money can I make? So I think they see that. I think today, while the technology is advancing and they're starting to look at more technology and more pricing data, I think they can now -- good shows and realize that some ways they keep price, 1, 2% of the house higher and achieved some of those economics versus the scalper while still pricing 98% of the house at a very stable brand position. So we can achieve both. This is an industry that for 30 years, we would do a tour. They would set three ticket prices 140, 79 and 39, and that will be the three prices in every city for every night for the market, as you know. That's way it's going to operate forward, a different price on a Friday in New York than Indianapolis on a Tuesday. So dynamic smart pricing, now that we're able to provide that sophistication, the bands are much more sophisticated. And they're now able to have tools to figure out how do I price it better and -- some better economics, get some of the leakage of secondary, but still maintain an overall ticket price, leaving dollars on the table, but still finding that balance between the consumer demand, the brand and the slippage of the economics to secondary they've been losing.

Brandon Ross:

Yes. No, I wasn't agreed on that decision anyway.

Brandon Ross:

Got it. And then talking about dynamic pricing, if there was to be some kind of downturn in the next year or so that actually affected the live entertainment business, do you see kind of the same tools as flexibility to respond to market conditions in bringing ticket prices down as much as you bring them up in this demand environment?

Michael Rapino:

No. I said it before in our last call, I mean, we looked at the last recession, there was a single-digit back in some ticket sales, but we were -- years ago, not even in the same -- indication on pricing nor did we have the tool. So yes, we look at data pricing now, dynamic pricing, look at all market data algorithms to figure out what is the price point that we'll sell through. And we do believe that because of the upside right now in the premium secondary side of our business, that if we had to pull back ticket sales and dropped prices by 5% or 10% to match supply/demand of inflation, we have so much flexibility in pricing to get that done and still sell through the house and lower price if that was needed for a band to sell-through tickets.

Michael Rapino:

The number one goal is to set -- their number one goal -- sell every ticket. So there are always going to be in a variable -- of how do I price it -- what do I got to reduce our end of house, front end of the house? What do we need to do a sell-through on a Tuesday night in Indianapolis? Let's adjust pricing.

Brandon Ross:

Got it. And then finally, if you could just double-click a little on 30 additional venues that you're talking about adding. Are those -- what venue types are those? And how impactful do you see that to be in the future?

Operator:

Your next question comes from Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Joe Berchtold:

Sure. I'll use as the basis, the 100-or-so million tickets that we sold through July because I think that just -- that gives the numbers and the facts. And as I indicated, within that, the U.S. is up about just over 30% and international was up 40-odd percent. So you have strong organic growth across both North America and international. Our primary acquisition, of course, would be OCESA, and that would be somewhat less than half of the international growth. So the international growth, even absent acquisitions would be in the mid- to high 20s. So again, this is not an acquisition dependent growth? This is organic plus acquisition.

Joe Berchtold:

Yes. I'll take this. Michael is having some audio problems here. I think that what we're seeing is a very broad-based, high priority of going to concerts against fans that are interested in going to concerts. So it's a bit of all of the above. We're certainly we have people who haven't gone to concerts in a long time going. We have concerts that will go to one, now going to two. We have concerts -- we have people that are going to many. So it's not -- I don't think you could pull it apart as one factor. I think you're seeing a broad-based high demand return to shows and when they're there, a broad-based pattern on site.

Stephen Glagola:

Concert ticket prices, I want to go back to that being up 10% year-over-year versus 2019. Joe, can you just break out how much of this increase is being driven by market pricing versus price ticketing increases at the on sale?

Operator:

Your next question comes from David Katz with Jefferies. Please proceed with your question.

Michael Rapino:

Yes, we're seeing no difference right now in demand across the globe. You can look at, I guess, Springsteen just went on sale last week, global stadiums across Europe everywhere, sold out just as fast in Europe as it did here similar to Post Malone, Kendrick. So the tours that are selling here are selling it as fast in our international markets, Latin America, Mexico, continue to see completely record demand in all those markets. We're also still seeing walk up strong at our festivals and on-site as of last weekend, right? So that's kind of current data. There's still spending money. They're still buying tickets at high demand. So we have pullback yet in Europe or any international market.

Michael Rapino:

Go ahead.

Joe Berchtold:

Yes, we're still in early innings. This is the first summer that we're really deploying at scale, the data and the technology so that we can reach out to fans once they bought the ticket, do upsells, first people who are going to shows that our venues, connecting them with sponsors, seeing some very good increases in our upsell levels as we talk about some of our average per fan spending, and the increase on premiums at our amphitheaters, for instance, more premium parking, more premium entry, VIP clubs. It's certainly enhanced by our ability to reach -- have a platform that can reach out and sell to those fans effectively, and you're not depending on them just figuring it out night of. So we're very happy with the early progress we're making.

Ryan Sundby:

With Asia Pac still limited this quarter, I was wondering if you could talk a little bit more about, one, how quickly that ramps from here? And then maybe two, a little more on the long-term opportunity there volume, the recent acquisitions in Thailand and the Philippines, I think plans in place to bring Lollapalooza to India next year. Any color on how that kind of comes together and how large not really, that would be great?

Operator:

Your next question comes from Matthew Harrigan with Benchmark. Please proceed with your question.

Joe Berchtold:

Yes. This is Joe. I gave you some numbers that in our amphitheaters. We do expect to have about 1 million more fans attending shows than we had in 2019. So, we're certainly seeing an extension of the amphitheater outdoor season, particularly through the more southern states. Theaters and clubs have always been very active in Q4. Arenas tend not to be quite as big just because it gets -- the routing gets interrupted by more of the holidays. So, we'll see a bit. I don't think it will dramatically change.

Operator:

Your next question comes from Paul Golding with Macquarie Capital. Please proceed with your question.

Michael Rapino:

I think we were clearing things a bit. We were not moved by the thesis that might have been for a moment that live is duplicated and digital. What we've always said that this magic two hours, you have to physically experience this. But we love the . It's a very unique space. It can't be duplicatable. But we've always said that we have all these shows and the most accessible, especially in dedicated fan, but you can expand that show and there's an audience that wants to watch their favorite artist over the weekend. We had an incredible broadcast on Hulu for today's high-quality filming and broadcasting live festival, fabulous. So we've always thought the screen is an extension. It's great for our sponsorship business, where we have 900 sponsors looking always to be part of the show, both on and off. So, we love beats, we love the opportunity. We're doing thousands of shows. And we think it's an ancillary business that helps our overall sponsorship business as well as our committed festival business. Our business is so big now. I wouldn't say it's a material piece on its own. We never thought it would be, but it's another service we provide to both the artist, festival and sponsor, and it's something you have to be in.

Michael Rapino:

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

Operator:

Good day, everyone. My name is Hector and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's First Quarter 2022 Earnings Conference Call. Today's conference is being recorded. Following managements prepared remarks will open the call for Q&A. Instructions will be given at that time. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risk and uncertainties that can cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments, and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on forms 10-K, 10-Q and 8-K for a description of risk and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release, reconciliation and website supplement can be found under the financial information section of Live Nation's website @investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Joe Berchtold:

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 a $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 were 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 were up 49% and 73% respectively relative to Q1 2019. A continued shift toward more market-based pricing help grow our GTV levels with average primary ticket prices up double-digits for the first quarter, relative to Q1 2019. And 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 expansion of our online business, new festivals that launched in the quarter and the addition of O's 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 off 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 amphitheatre and club shows. Michael mentioned that no-how 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 amphitheatres, they were 4% better, for theaters and clubs, they were on par and 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 re-openings last summer and so we don't expect any issues there and used there. In general, the US was ahead of the rest of the world, but the UK is now fully backed 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 strong fans 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 cancelled 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 1, confirmed show bookings are up over 40% overall and up double-digits for each amphitheatres, arenas, stadiums and festivals. 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 over 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 plan 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; amphitheatres, theaters and clubs and festivals. For amphitheatres 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 so 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 wanna 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 of our festivals, many of which are joined ventures, we expect non-controlling interest expense will be roughly double 2019 levels. We are projecting increasing 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 and 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 as well in this interest rate environment. With that, let me open the call for questions. Operator?

David Karnovsky:

All right. Thank you. Michael, you've given a lot of great leading indicators for '22. So I apologize to jump ahead, but you did mention in the release 60 tours and 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 continue to work through from the pandemic versus sort of just you organically increasing your footprint?

David Karnovsky:

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 taking it to league or team level to kind of 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.

David Karnovsky:

Thank you.

Stephen Laszczyk:

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.

Stephen Laszczyk:

Thanks. That's helpful. And then I think in the pressure release, you mentioned some opportunity to create new ad units on the sponsorship side, both on site and online. I was wondering if you 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?

Operator:

Your next question comes from Brandon Ross with LightShed Partners. Please proceed with your question.

Joe Berchtold:

Sure. Brandon, This is Joe. Oh, go ahead.

Joe Berchtold:

Yeah. And just to build on that first is we now have a level of information that is very -- 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's even impacted. And 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 the 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. So we continue to think that as long as we stay focused on what is the value perceived by the fan, stay aligned with that. We'll be able to bring the acts out and sell the tickets.

Joe Berchtold:

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. It 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 amputates yet for the summer, but again, taking that as the leading indicator, we feel good about it. And we think there's a long runway. We talked in February about how we still think that there's 30%, 40%, 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.

Operator:

Your next question comes from Stephen Glagola with Cowen. Please proceed with your question.

Joe Berchtold:

So I guess, let me break into a couple of pieces there. So this year we expect both Mexico and Latin America broadly to do well. I think that 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. You have to kind of triangulate. They're 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.

Michael Rapino:

Both concerts -- both concerts and Ticketmaster, just to remind you, it's a huge upside in Mexico and ticketing and that we, we're only a 30% owner to Mexico. And 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 big upside secondary, etcetera, to add in Mexico and throughout Europe. So big growth opportunity, both in concerts and sponsorship and ticketing.

Joe Berchtold:

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 waiting if you will right now, but with the cost taken out, we think it, this year 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.

Operator:

Your next question comes from David Katz with Jefferies. Please proceed with your question.

Joe Berchtold:

No, absolutely. The over the overall double-digit increase is driven by the high end across our major stadiums arenas. Amphitheatres, I think we've probably about doubled the number of tickets to go into what we call the platinum or market based pricing. So more than anything else is probably more of the tickets are getting market priced or closer to market priced, and then depending on the artist than the show, yes, it's also flexing upward from where it would've 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.

Joe Berchtold:

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. So I think we're feeling fine about our 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.

Operator:

Your next question comes from Ben Swinburne with Morgan Stanley. Please proceed with your question.

Joe Berchtold:

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 move to a single integrated platform. And 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 that working with Ticketmaster, 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 product is unparalleled in its commitment to continuing to enhance for the teams and the artists and the fans, what their experience is gonna be. You always have price pressure, you have price competition and everything. There's no new news there. That's what you always have. 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 that 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.

Joe Berchtold:

We're not seeing any signs of softening. Michael gave you some of the numbers on these -- on the large relationships that we have, the million dollar plus relationships that have been our focus on growing the number of those relationships, the breadth of assets that we provide to them, and 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 amphitheatre. We also are going to have an online presence. It's a much higher level of integration than just a simple ad by with some of the other players out there. So we're not seeing that impact at all.

Benjamin Swinburne:

Yep. I saw that you, Michael.

Ryan Sundby:

Hey guys. Thanks for the question. You mentioned 20 new Venues in the pipeline and 38 new festivals, I guess, starting on the, 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, a large number here of festivals that struggle during COVID and then on the venue side, how should we think about the, the timing of those opening up and maybe the size in terms of overall staying capacity that could add.

Ryan Sundby:

Great. How about here Venues?

Ryan Sundby:

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

Joe Berchtold:

Great. Hear, thank you.

Matthew Hargan:

Thank you. Two conceptual questions, firstly the end it feels like it's a nice digital memorabilia compliment in experience versus something that someone buys it at Sotheby's and it's right in your wheelhouse. You know, what innovation are you seeing with the NBA this season in the NFL? And there's a way to really personalize it even more and have more variety? And then secondly, at your investor today, you talked a lot about hyper slicing nomenclature sounds very Elon Musk, does that also have some affectability to Mexico with ESSA and even some of the European markets? I know you talked about that really keeping the U.S. around 40% of the TA, but some of those other larger markets, it seemed like you could apply that concept of local act acts over a period of time? Thank you.

Joe Berchtold:

I'm Sorry. On the hyperly thing. No, I got it. I got it. Yeah. So on the hyper local strategy that we've been talking about absolutely applies in throughout Europe, throughout Mexico, Latin America, all of the markets in we're going into each country, we're establishing a beachhead, getting to some scale, leveraging that scale to then say, what are each of the specific markets that we can go to and expand the operation. So that's a core part. Somebody was talking earlier how we, when we make the acquisition, we grow it substantially. Well, our, our, with Germany, when we grew in, they were operating in two cities and then selling off the con the concert in all the other cities that there are 10, 12 cities in Germany where you could easily have the population to route your chore through. So that became the focus and that's how we grew that business. So we'll be following that playbook globally. It is a large part of when you look at the Tam and why the Tam 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. Great. Thank you.

Barton Crockett:

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 is you know, sounds compelling, but, but it'd be great to have a little bit more context. And 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?

Barton Crockett:

Okay. And switch gears a little bit on the recession question. You know, back in the, the last kind of the great recession. Oh, 8 or 9 or 10 were concerts in your experience at live nation, more, a lagging indicator or a leading indicator, I would guess lagging. And so 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?

Operator:

Decline in our business.

Operator:

Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn a call back to Mr. Joe behold and Michael Rapino for closing remarks.

Operator:

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

Operator:

Good day, everyone. My name is Diego, and I will be your conference operator on today’s call. At this time, I would like to welcome everyone to Live Nation Entertainment’s Fourth Quarter and Full Year 2021 Earnings Conference Call. Today’s conference is being recorded. Following management’s prepared remarks, we will open the call for Q&A. Instructions will be given at that time. Before we begin, Live Nation has asked me to remind you that this afternoon’s call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the Company’s anticipated financial performance, business prospects, new developments, and similar matters. Please refer to Live Nation’s SEC filings, including the risk factors and cautionary statements included in the Company’s most recent filings on Form 10-K, 10-Q, and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release reconciliation and website supplement can be found under the financial information section on Live Nation website at investors. livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Joe Berchtold:

Thanks, Michael, and good afternoon, everyone. Given the unique seasonality we experienced last year, I’ll provide an overview of our annual results, but also give some specifics on the fourth quarter as we believe that is a better indicator of what lies ahead for 2022 and beyond. Overall, our AOI of $324 million for the year was $1.3 billion better than 2020, led by an improvement of $800 million in ticketing, over $400 million in concerts and $150 million in sponsorship. For the fourth quarter, we delivered AOI of $160 million, led by a record quarterly AOI results in ticketing and strong performance in sponsorship. On the balance sheet, we ended the year with $1.5 billion in free cash and $2.3 billion in event-related deferred revenue. This deferred revenue is almost twice the level of Q4 2019, giving us one of several leading indicators for how strong 2022 is lucky. Let me give a bit more color on each division and then I will give you more on the 2022 leading indicators. First, in concerts, we had 16 million fans attend 9,300 events in the quarter, continuing to be led by the U.S. and the UK, which accounted for almost 90% of these fans. The strength of fan spending we discussed in Q3 continued through Q4, with consistent increases in ticket pricing and average per fan spending. Concert ticket pricing was up 11% overall for the year relative to 2019 14% in North America. As demand in many major venue types

David Karnovsky:

Hey, thank you. Some of forward commentary wrote 45% increase in ticket sold versus 30% increase in large venue supply. I’m wondering to understand more of what you’re seeing on the demand side, given your own customer data, the average concert goers buying more shows than they were buying earlier. Are you seeing more first-time concert goers, any additional you could provide would be great?

David Karnovsky:

Okay. And then you told the assessment for a few months now, would just be interested to hear any update on how you view the asset in terms of revenue synergies or how maybe their cost structure looks relative to when you first executed the deal in 2019? And then could you provide an update on how we should think about the Mexico market ramp-up?

David Karnovsky:

And anything on the cost side, I mean, you see on their commentary sort of indicated taking out a lot of expenses during the pandemic as well. I wasn’t sure if we should be thinking of the kind of AOI structure that business is different than maybe it exists to pre-pandemic?

Michael Rapino:

And it’s Michael stepping in. And also, we know this company very well. Alex , the CEO is a professional. You don’t get to be the third largest promoter in the world without being kind of an all round good businessman and operator. So he runs an incredible good business. But yes, like myself and our team through COVID, he was able to dig in and decide what’s – where’s some rust and some bureaucracy? And how can we streamline some of the business? So like us, I would expect him to hold on to some cost savings and run more efficient, regardless of the merger. And we think now together, we’ve already started the process of how do we elevate the ticket business? How do we upgrade the software? How do we introduce secondary? How do we excel the hospitality and sponsorship business? So I’m sure there’s some cost savings, but we’re more excited about, as Joe said, we think we can bring another gear to his already well-run machine.

Operator:

Thank you. Our next question comes from Steven Laszczyk with Goldman Sachs. Please state your question.

Michael Rapino:

You know, and I will preface here. We have our Investor Day tomorrow. So we’re going to dig into all of these topics probably in much more detail. So if we’re a little shorter tonight, just expect us tomorrow, you’ll have a much more opportunity to dig into all of these levers. International, it looks like everything is opening up fast and we see a full summer/spring business across the globe. Australia and New Zealand have only been – has been the only real I would say slower some of the Pacific Rim a little slower in some of the markets, China, Japan. But for our business, we think most of the business across Europe, international, South America, we start Coldplay March 18 in Costa Rica going down to Latin America. We believe most of our big Lollapalooza is in South America in March and April will happen. And all of our summer festivals in Europe are scheduled to happen. So it looks like 70% to 80% of the business around the world will be open, little bit of Pacific Rim might have some delays.

Joe Berchtold:

Yeah, in terms of remaining inventory, as you know, a lot of our inventory is what we create and what our sponsorship team has the ability to come up with ideas for how we expand into new categories, and how we take existing categories and break them down in pieces. So we don’t feel generally speaking inventory constrained. The team is often working on a variety of areas, fintech and others that we think can steer still deliver a lot this year and into next year. As Michael said, we’ll get more into that tomorrow. But we still think there’s a great runway in that business. And as you also noted, a lot of these deals are multi-year. So as we establish a new baseline this year, we just have the opportunity to keep growing from that next year and beyond.

Operator:

Our next question comes from Brandon Ross with LightShed Partners. Please go ahead.

Joe Berchtold:

Well, I think, again, Brandon, you’ll be there tomorrow. Well I think you just have to look at the size of the prize right now. I mean, if you look at it, just from a secondary perspective, how much unrealized underpriced are the tickets, unrealized pricing opportunity, if you want to call it. So I would say right now, Platinum is adopting a great tool to get a higher ticket price, but we still have very low penetration across a global business, huge upside still.

Joe Berchtold:

Yeah, this is Joe. We see what everybody else sees, which is yes, insurance costs going up. We don’t think it’s material to the business overall. I think we’re in a good position as it relates to inflation more broadly. If you look at inflation of inputs versus your ability to price on the outputs, I think, we’re in a very good position that while you have some price pressures on your inputs, whether it’s insurance or labor. We have, for your first question, a much greater level of pricing ability on the outside, which led us as we talked about, use the same logic as we had last summer at the amps, still drove CM per fan up double digits. So we’re watching every cost is everybody else’s, we understand which ones are movie where, and we’re just figuring out how we make sure we’re pricing overall to to keep our AOI.

Operator:

Our next question comes from David Katz with Jefferies. Please go ahead.

Joe Berchtold:

Sure. We like every business. I’ve seen employees are demanding some higher wages as you’ve come back from COVID. And as we built our cost – structural cost savings, we knew that was going to be the case. And we built that in and we talked in the past about the levels of those cost savings. So I just rather than get into every quarter trying to reconcile for you guys, well, how does your cost of living adjustment this year impact your structural savings? I want to make it clear we’re delivering those savings, having expected that there was going to be some labor cost increases as we were going through, no different for us than anybody else.

Joe Berchtold:

Well, yeah, it’s the same point as what Brandon asked about. It’s the inelasticity of demand for the best tickets, plus the general overall desire for fans to get back to live events. So if they didn’t buy a ticket for the sporting event, or for the concert, they missed out, they’re buying it on secondary, and they’re paying whatever it takes on those best tickets to get in. So as we strive on the primary to be pricing it such that to bring the dollars back the content to the artists, so we think deserve every dollar for their performance. We’re doing that through platinum and through other tools. As we do that, secondary continues to grow rapidly. We’re not shrinking secondary yet. So we have the opportunity to continue to move pricing and primary as I was talking about earlier, while looking at secondary and figuring out how far do we go.

Operator:

Our next question comes from Stephen Glagola with Cowen. Please state your question.

Joe Berchtold:

So let me give you some facts on that. Thanks for that question. Because I think there’s been a lot of reporting by anecdote out there, as opposed to reporting by collective facts. And I don’t think our experience is any different than the industry is, as a total. I think that on occasion, you have aberrations for a variety of reasons. But just to give you a macro feel, I’ll give you the – for first of all, arenas in 2019, if you look at the number of people that showed up for a concert versus the number of people that bought tickets, it ran at 93% in 2019. That number thus far, in 2022, over the past six weeks is running at 91%. So not materially different from the 93% for the total of 2019. For our theaters and clubs, the smaller shows, you tend to have a slightly higher no-show rate. And that number was 87% in 2019. It’s running at 83% in 2022. So I think if you first of all recognize that there were a number of shows that have taken place over the past few months that were rescheduled, and when shows get rescheduled, people will naturally forget about the show or have a conflict different than what they originally had. It’s probable that accounts for all or almost all of that difference in the attendance level. So we don’t think that reporting is at all accurate.

Michael Rapino:

Just had that color that I remember reading those articles, they dramatize, I think they were saying as 15%, 20% weren’t showing, but again, they weren’t taking into account that on a normal year, 7%, 8% of people don’t show up to shows. So you’re already starting at that level. So if you look at what our current data says, we’re basically back to 2019 levels and people are showing up at the same rates are not showing up in that 7% to 8%. The history has always kind of shown.

Joe Berchtold:

I mean, I think if you look at Q4 versus 2019, you – Q4 is generally a loss. It’s a lower activity quarter. You have, as you noted, prepaid advertising running through. If you look at our fan base in 2021 versus 2019, Q4 back that off. It’s not surprising, you’re still carrying your fixed cost plus you have your end advertising all against the lower volume.

Joe Berchtold:

Thanks.

Ben Swinburne:

Thanks. Good afternoon. I had a couple of questions. First, Michael, I also noticed you mentioned the secondary market growing faster than primary a couple of times in your prepared remarks. And I was thinking of Ticketmaster as the clear market leader in primary and I know you’re in secondary, but I – maybe I just don’t think about Ticketmaster as the leading, is particularly focused on the secondary market. I’m wondering if you could just talk about whether you see that accurately as I described it, or if you think you – there’s anything you would change in the strategy for that business going forward, given what we’re seeing in secondary, I noticed Joe also mentioned, we haven’t seen the secondary shrink yet. So maybe that’s tells me the answer. But I’m just wondering if you guys are pivoting at all, as you think about the growth of those two parts of the ticketing business, because it does seem like secondary is quite robust?

Ben Swinburne:

Got it. That makes sense. And then just wanted to go back to the forward bookings, numbers and leading indicators you guys talked about the 45% and the 30%. We heard some stats at least directionally similar on NSGs call, and I’m wondering if there’s a timing element to this. Just should we be extrapolating those into full year growth rates? Or are we seeing some activity happening sooner because we’re still sort of dealing with the pandemic hangover or the pandemic? And so concerts are filling up the calendar sooner and going on sale sooner. I’m just wondering if there’s any sort of caveat you’d want to give us to think about translating those into a forecast? That makes sense?

Ben Swinburne:

Yep, makes sense. Thanks, guys.

Operator:

Our next question comes from Ryan Sundby with William Blair. Please go ahead with your question.

Ryan Sundby:

Yeah, so just to be fair, that was the outdoor activity over the last five months of last year. So stadiums, amphitheaters and festivals, there was definitely some benefits. You got a few festivals like Electric Daisy that moved into the fourth quarter from May and we pushed the amphitheater season later in the year. So I wouldn’t try to take anything arithmetically from that as much as a very – 2021 was a year of very strong fan return to outdoor events. 2022 setting up to be a very strong fan return to every site, every sort of venue, every sort of event.

Joe Berchtold:

We think overall that number is real. We think that there is higher fan spending and there is greater fan acceptance of some higher pricing and there’s greater fan demand for real hospitality some higher end luxuries. We gave some specific math last time that wouldn’t have changed much in terms of what was the incremental span versus what was some mix issues, but it is largely what fans spending more money at out the shows and we think that continues.

Operator:

Thank you. Our next question comes from Jason Bazinet with Citi. Please go ahead with your question.

Joe Berchtold:

Well, I think the first thing you got to start with, Jason, is we don’t have a hockey stick. We’re not a COVID business that was floating along with near zero, and all of a sudden took off like a hockey stick. And everybody thought the hockey stick was going to continue forever. When you look at the long-term growth of the business, start with the most macro of GDP spending on goods shifting to experience, on increased demand for luxuries, on desire to go to concerts, on increased ticket pricing to concerts, everything on a global basis, s Michael said, all of this has been we’ve been drawing the same chart since 2010. And most of our investors today, I think, have been looking at that chart and saying the best predictor of the future is the past. And we had a very bumpy couple of years from macro over time. This is a company and this is an industry that is able between their tailwinds, their ability to drive increase market share, their ability to drive global, to bring the supply to the latent demand that exists in the marketplace to continue to grow the business.

Joe Berchtold:

But Jason, had those businesses that they tell you for the past five years, they went from $18 to $22 to $24 to $26 to $29. I mean, do they tell you – do they give you for the past six years, every year how they were consistently delivering growth? So we could debate is that growth rate continued? Is there some normalization? Is there a reversion to a mean over a number of years? You can have all of those debates, but don’t frame it as a hockey stick, or somehow as the bumps in the road, the world is going to collapse back down to $18. I think you got to give us the credit that we’ve set a strategy and we’ve executed very consistently for a considerable period, and delivered on sustained growth. So yes, there’s some catch up of a couple of years, because 2020 and 2021 didn’t exist as much. Sure. But that doesn’t mean that they’re aberrations.

Joe Berchtold:

So right now, I have in front of me a list of 40 some tours for 2023 that are either confirmed or in our pipeline. Normally, at this point, a year from earlier, we’d have a list of five to 10. So yes, we have a lot of confidence that 2023 and beyond look very good because there is a lot of pent-up supply, there is a lot of pent-up demand, and we expect it’s a multi-year run.

Operator:

Thank you. And ladies and gentlemen, that was our last question for today. And that also concludes today’s conference. All parties may now disconnect. Have a great evening. Thank you.

Operator:

Good day everyone. My name is Hector, and I will be your conference Operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's Third Quarter 2021 Earnings Conference Call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q&A. Instructions will be given at that time. Before we begin Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the Company's anticipated financial performance, business prospects, new developments, and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the Company's most recent filings on Form 10-K, 10-Q, and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release reconciliation and website supplement can be found under the financial information section on Live Nation website at investors. livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Joe Berchtold :

Thanks, Michael and good afternoon, everyone. Before getting into the detail on each business, a few points of context for the quarter, first, this is primarily a U.S. and UK driven quarter. These markets accounted for 95% of our fans in Q3 versus 75% in Q3 of 2019. And they represented 90% of fee-bearing GTV in Q3 versus 80% in Q3 of 2019. Second, our concerts activity primarily ramped up in August with 90% of our attendance for shows occurring in August and September. Let me now go into more detail on the divisions. First concerts, as Michael noted, pricing and onsite spending was up for both our amphitheaters and our major festivals in the U.S. and UK. With almost 1200 amphitheater shows played off, these shows give us the best data set for comparing to 2019. So, give you more detail on trends for these shows, and in general, the same trends also hold for our festivals. On pricing, average ticket pricing at our amphitheaters was up 17% to $63. There are 2 primary drivers to this. First, ticket pricing, including more platinum and VIP tickets for shows this year, increased average ticket pricing by $7. Secondly, our concert week promotion and other promotions were smaller-scale this year, which had an impact of $2 per ticket. Then for onsite spending, average fan spending was up 25% to $36. This growth came from a combination of more orders per fan, more items per order, and higher average spend per order. Many of our fans shifted to buying higher-priced products, which was part of our higher spend per order. And the shift to cashless also helped as card transactions have historically been larger than cash transactions, and this has held up as we shifted to 100% cashless. Finally, operating costs, including labor costs were up. These higher labor costs are driven by several factors, fewer shows per building, our accelerated ramp up to open the buildings this summer, new health and safety protocols and a generally tightened labor market. At the same time as noted with increased average ticket price and higher onsite spending, we increased the contribution margin per fan and did so to such a level that our profitability per fan, net of operating expenses rose double digits. Turning now to Ticketmaster, as Michael said, Ticketmaster had a record AOI of a $172 million for the quarter, driven by its fourth highest fee-bearing GTV quarter excluding refunds, and lower cost structure from its reorganization. Along with lower ramp-up labor costs as we accelerated activity faster than the return of staff. Primary ticketing was driven substantially by concerts, which accounted for over 70% of fee-bearing GTV, while sports was the second largest category, and together they represented approximately 90% of all fee-bearing GTV. Geographically, North America accounted for 80% of fee-bearing GTV as activity remained limited internationally outside the UK. In secondary ticketing, we similarly saw concerts and sports account for over 90% of fee-bearing GTV, though in this case, sports were the primary driver with the launch of new football and basketball seasons. Another contributor to our growth in ticketing is the continued signing of new clients with over 14 million net new fee-bearing tickets added this year through the third quarter. These new client additions have been particularly strong internationally, accounting for 2/3 of our new client tickets. Finally, sponsorship AOI surpassed a $100 million in the quarter for the first time in 2 years as it again had available ad units at scale, both on-site and online. Like our other businesses, it was largely U.S. and UK driven together accounting for approximately 90% of total activity. And as activity resumed, we were also able to engage new sponsors, adding 8 new strategic sponsors in the quarter. As we look to Q4, we see a continuation of the same trends we had in Q3. With concerts, we expect North America and the UK to continue ramping toward historical activity levels. While the rest of Europe and other international markets have limited activity given the lead time to plan concerts. With ticketing we expect a broader recovery as most European markets put stadium and arena tours on sale in Q4, enabling GTV levels that could approach Q4 2019 levels, despite 65 million fee-bearing tickets already being sold for 2022 events. And while Q4 is typically a seasonally slower period for sponsorship, it too should benefit from concerts and ticketing sales ramping up. Let us now turn to our cash and cost management. We have free cash at $1.7 billion at the end of the quarter, which includes $450 million earmarked for the OCESA acquisition. This was our first quarter since 2019 where our cash contribution margin was higher than our cash burn, contributing a net $166 million in free cash. We also added $850 million in cash in the quarter through our $400 million drawdown of our Term A loan and $450 million equity raise for ASESA, mentioned previously. We then had free cash reduced by $370 million, largely resulting from long-term deferred revenue shifting into short-term for show's next summer as we previously indicated would be happening. This improved cash position was also helped by our ongoing cost and cash management program as this year, we expect to reduce costs by $900 million and cash spend by $1.5 billion relative to pre -pandemic plans and on the cash, side excluding ASESA. As we prepare for 2022 plans, we remain confident that we have structurally reduced our operating costs by $200 million relative to our pre -pandemic 2020 plans. A few other balance sheet items. Our deferred revenue at the end of the quarter was $1.9 billion. This is compared to $950 million at the end of Q3 of 2019, which gives us the best like for like view of the demand pipeline already in place. And then a reminder on our debt, that we continue with our liquidity covenants until we report Q4 this year, at which point we switch to a more traditional leverage test. Given our current liquidity and expected Q4 and 2022 activity levels, we do not anticipate any covenant issues through next year, and expect to continue investing in growth. With that, let me open the call for questions, Operator.

David Karnovsky:

Thank you. AC rob returned to target scale. What have you found about operating with a reduced cost structure, and how do you think about expense growth from here relative to pre -pandemic where I think you've noted you were just less focus as an organization on driving cost efficiencies? And then just a second question, how are you thinking about labor constraints as you ramp toward this huge wave supply coming in 2022, are there any concerns about finding out road as new crews and then to the extent costs you move up, who bears that promoter or is that kind of goes to the artist. Thanks.

Michael Rapino :

Just to add a little -- just to add texture to that, we would have absolutely in July or August with the idea that we had to instantly hire 20,000 people for summer amphitheaters usually would happen way back in April, we would've had concern but we surprisingly we're able to fully staff all of those jobs, as Joe said. Marginal cost increased a few million dollars. So, we did see that the part-time seasonal workforce that needed to come back to help make the machine work were eager to get back. So, we didn't have that challenge. I think we're going to keep looking at how we do a better job of attracting and retaining them in today's environment, but we don't see that as a cost challenge, we think it's an exciting category so a lot of people like coming to work at the amphitheater, the club, the theatre, the lifestyle type job, and then as Joe said, we had no supply chain issues. The artist gets on stage, there's plenty of trucks, lights, staging, etc. to make the machine work on a global basis.

Operator:

Our next question comes from the line of Q - Brandon Ross with LightShed Partners. Please proceed with your question.

Michael Rapino :

Yeah, I'll jump in and Joe can jump. We've -- we had a global call yesterday this week with all of our different presidents. We're feeling very confident, obviously Canada, U.S., UK are fully open. Europe will be fully open by the end of the year. So, we'll have most of the main markets open into January. Pacific Rim, Latin America, all looks positive in terms of being open fully for international artists by April. We think internationally, on a global basis by April the world will be moving around again. It doesn't overly affect our business short-term because most of the outdoor stadium festival business is summer time, so that will be all fully up and rolling. We have Lollapalooza starting in April in Latin America and Australia festivals. So, we think we'll be open for prime season, and we'll be rolling around indoors in the main markets of U.S., Europe, Canada, and the UK between now and April.

Joe Berchtold :

Yeah. It's a great point, right. You just forced yourself in this last 2 years to think differently and extract more value from your base, and we absolutely look at it now and see specially in most of Southern America we can stay open much longer than we historically have. So yes, we will look to extend the seasons in those markets for sure.

Michael Rapino :

I always think we underestimate bragging about our venue portfolio. We are ready well over 200 venues that we operate somewhere in the world, amphitheaters, theaters, clubs, arenas in Dublin, Holland, etc. So, we know that the venue when we go vertical is a high-margin business for us. And I consider festivals almost venues, because you get to own the real estate for the weekend, you're owning all the revenue streams. So anytime that we can put a show in our festival or our venue on ticketed by Ticketmaster's, have our sponsorship able to use the asset and count all the revenue streams, it's our highest margin business. What we've seen over time now is, in the last 5 years, is there has been a new real estate boom around the world where every major city in the world looks at live entertainment much like they used to look at movie theatres as being this incredible tenant in their development. So, we are talking ongoing to multiple developers around the world who are building something and they wanted 2,000-seat, a 5,000-seat, a 7,000-seat, maybe an arena than anchor into one of their developments. So, we've really ramped up that division over the last 2 years and we see great opportunity around the world of continuing to expand our venue portfolio in these prime markets. I mean, Austin's an example where there's no arena. We're going to open that arena in the next couple of years. It's going to be a monster of a return for us as a great single venue in the Austin market right now, for live shows to complement our club, our theater, our amphitheater portfolio. So, we'll continue to be very opportunistic in the markets around the world where there's an opening for a live venue of any size.

Operator:

Our next question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Joe Berchtold :

Sure. This is Joe. I'll start on the pricing and the per-caps. I think we believe this is structurally a level of spend that we're seeing from the consumer now on the pricing, heavily driven by the front of the house, the best seats where we've long known there's this arbitrage because of the size and continued growth of the secondary market even as we've been pricing and moving more money to the artists over the past several years. So, this year that trend continued. More VIP, more platinum tickets, getting that money to the artist. And we're seeing a relatively strong inelasticity on the demand for those best tickets. And then on the onsite, I think because we're seeing it come from a number of fronts, we are confident that it's staying. So, we talked about it in the comments, right. Moving from cash to cashless just opens up increase spend. It's been a long existing difference between those 2 moving to a 100% cashless, just raises the average because instead of being half of each. And then we're seeing again structural trends people are going to a bit higher quality in terms of some of the alcohol, some of our product offerings are making more of a deal for people to take higher price point products. All of those we think are a continuation of the trends that we've seen over the past several years and have no reason to expect that that would be any different going forward. In terms of the cadence for shows next year in general, and Michael talked about this a bit. You'll see similar where Q2 and Q3 will continue to be our strongest quarters. That's when we'll have a great stadium next year. It looks to be far and away the largest stadium we've ever -- we've had. That will be primarily in those Q2, Q3 outdoor months. Obviously, our amphitheaters and festivals, largely those months. And even the arena certainly here in the U.S. you just have more avails in those months because of the timing of the sport season. So, there's no reason not to expect similar seasonality in general as we've had historically.

Operator:

Our next question comes from the line of Stephen Glagola with Cowen, please proceed with your question.

Joe Berchtold :

Well, I think we absolutely believe you'll continue to expect to see higher than historical margins because of the cost reductions. This year you've -- this quarter you've got the particular benefit of a few things, one being that we ramped up our activity faster than we ramped up our staff. As we said, we were doing from our cost management so we pushed our people and extracted more from that side. And secondly, as we also talked, this is much more of a U.S. driven, and then secondly UK driven, and we've talked historically about the fact that the U.S. market is a higher service fee and therefore generally a higher margin market than internationally. So, some of that mix shift will convert back next year. I don't think we're ready to give exact numbers, but we certainly do think that the ticketing margin will improve relative to historical.

Operator:

Our next question comes from the line of David Katz with Jefferies. Please proceed with your question.

Michael Rapino :

Yes. I think to Joe's point, I think we've said it before. The good news is '22 is going to probably be a record year, but there's only so many Fridays and Saturdays and artists are pretty smart about how they route their tours and how they look at the world and find their right positioning. So, it’s kind of self-regulates itself. You're never going to have a bunch of tours on the same weekend piled on. So that just meant we have a more inventory to spread into '22, '23, and we're talking '24 now. So, I would say we have a backlog that needs to still work through the system in '22, '23. which will be incredibly strong years. And then we continue to get back to regular -- we've had over the year, double-digit growth in the live entertainment space ongoing. We project that to continue both on pricing and global volume as demand and supply continues to grow around the world.

Michael Rapino :

If you follow my Twitter, or what we're up to, we've been pretty active. We're back with our backlog of 30 to 40 things around the world. We're looking at that can keep propelling our business and growing our scale. So good pipe -- good pipeline will continue to be very aggressive at growing our global market share and then monetizing products on top of it.

Operator:

Our next question comes from the line of Ryan Sundby with William Blair, please proceed with your question.

Joe Berchtold :

Sure. as you said, 2/3 of them international, I think is indicative of particularly in the international markets. Just what a strong leadership position Ticketmaster has with a lot of the investments we've been making over the past 5 years. So digital ticketing, as you said, is -- overnight goes from being a nice feature to a critical part of it because you're moving away from contactless of any sort, you need a digital ticket, and our leadership there is a big differentiator, we've been investing for a long time, we're not trying to play catch-up. And these tickets are a mix of where we have the full allocation in some markets and other markets, we have a partial allocation. But in aggregate it's adding 14 million tickets to the portfolio.

Ryan Sundby:

Got it. That makes a lot of sense. And then just sequencing at this past quarter, it didn't sound like you called out a big impact from Delta here. Did you feel? And did you see a rebound then I guess as you move, pass it further out?

Ryan Sundby:

That's good to hear. Thanks for the questions.

Operator:

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session, and this concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.

Operator:

Good day, everyone. My name is Hector, and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q&A. Instructions will be given at that time. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on Form 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definition of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement which also contains other financial or statistical information to be discussed on this call. The release reconciliation and website supplement can be found under the Financial Information section on Live Nation's website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Joe Berchtold:

Thanks, Michael, and good afternoon, everyone. As we've done over the past year, we've added some tables at the back of our earnings release that reconcile in more detail some of the numbers I will refer to today. In the second quarter, our AOI was positive for the first time since the start of the pandemic, as the U.S. by far our largest market, accelerated its reopening also driving our revenue to the highest level since the first quarter of last year. As a result, our contribution margin ramped up faster than expected, particularly in ticketing. Even with the increased activity, our monthly gross burn for the first half of the year was lower than the monthly burn during the last three quarters of 2020 due to our structural cost savings and continued cost discipline. As a result, we remain confident that actions taken to reduce cash burn and increased liquidity will provide us with the runway we need as shows return. And as we move toward reopening in more markets, we continue to balance the strong cost and cash management with making the necessary investments to grow the business. While we expect to generate positive AOI overall, and for each segment for the second half of the year, we will also reduce costs this year by over $800 million and reduce cash spend by $1.5 billion relative to pre-pandemic plans. Looking at our Q2 results. Revenue for the quarter was $576 million compared to $74 million in the second quarter of 2020 for growth of over $0.5 billion. All three of our business segments more than doubled their revenues from last year. Our AOI for the quarter was $10 million compared to a loss of $432 million for the second quarter of 2020. Our Q2, 2021 AOI consisted of $351 million of contribution margin, which included $364 million from operations, along with various one-time items, including gains from insurance recoveries and government support and losses from ticketing service fee refunds paid out. This was then offset by $341 million in operational fixed costs. Getting into our business segments a bit deeper, starting with ticketing, which was the primary driver of our results this quarter, contribution margin for the quarter was $204 million or nearly 60% of our total contribution margin delivering $99 million in AOI. Ticketing revenue for the quarter was $244 million or just over 40% of our total revenue for the quarter. Each month of a quarter, Ticketmaster had progressively stronger results, culminating with June being Ticketmaster North America's fourth best month ever for transacted ticket volume. In general, North America drove much of this resurgence, accounting for over 75% of total transacted tickets in the quarter as compared to approximately two-thirds of transacted tickets for 2019. Contract tickets drove much of this activity, and as a result, the top 10 artists sold over $513 million in GTV during second quarter this year compared to $329 million in the second quarter of 2019. Secondary ticketing has similarly rebounded. Our June GTV was only 8% below June of 2019. That trend has continued into the third quarter, with July 12th marking the highest resale GTV day in our history, driven by the U.S. Open along with strong NBA, NFL, and concert presale volumes. These results in ticketing are a leading indicator to our concerts business. For the second quarter, our concerts AOI loss of $84 million was an improvement of $127 million relative to Q2 last year, and our revenue was up $145 million relative to Q2 last year, as we promoted nearly 1,700 shows for 1.3 million fans during the quarter. More importantly, these tickets sales drove our event-related deferred revenue up to $2.1 billion, representing a pipeline of future activity, even higher than the $1.6 billion we had at the end of the second quarter in 2019. In part, this event-related deferred revenue is associated with over 25 million tickets we have sold for our concerts in the second half of this year, along with also being part of the 14 million tickets that we have already sold for concerts in 2022, which reflects strong double-digit growth in our 2022 pipeline for show count and fans relative to 2019. Sponsorship and advertising then naturally flow from our ticketing and concert platforms. Our sponsorship and advertising AOI for the quarter was $13 million and revenue was $45 million, with the bulk of our activity tied to our ticketing platform and concert presales. We continue to find brands are committed to maintaining or increasing their span with Live Nation to reach our music fans and other live event audiences. And during the quarter we added several long-term strategic partners, including Allegiant Air, Adobe and Cinch in the airline technology and auto sectors, respectively. And more broadly, we expect our sponsorship and advertising full-scale activity to return somewhere between ticketing and concerts timing. Most importantly, as we look out at our 2022 pipeline, confirmed activity is pacing well ahead of where we were in 2019 at this point. And with many multiyear contracts on the books, we are lining up to be growing this business in 2022 and beyond. Looking at free cash and liquidity. As of June 30th, we had total cash of $4 billion, including $1.1 billion in ticketing client cash and $1.8 billion in net concert event related cash, leaving free cash of $1.1 billion. This was flat relative to our first quarter reported number. Our free cash, along with $971 million of available debt capacity, gives us $2.1 billion in readily available liquidity up from $1.6 billion at the end of 2020, and steady with our Q1 ending liquidity. Benefiting our free cash position, the second quarter was $161 million in favorable timing, largely the result of classification of our event-related deferred revenue between short-term and long-term. Our total free cash usage in the quarter was $163 million or $54 million per month, which included $115 million per month of operational burn up from $100 million per month in the first quarter, as furloughed employees returned to prepare for our reopening and we reinstated full pay for most employees, plus another $58 million per month of non-operational costs, including investment in capital expenditures, acquisitions and artists and ticket client advances to give us $173 million average per month in gross burn. In Q2, we had $119 million average per month cash contribution margin, double our Q1 average. Turning to other balance sheet items, more on deferred revenue. At the end of the second quarter, event-related deferred revenue for shows that we'll play in the next 12 months was $2.1 billion, up from $1.5 billion at the end of the first quarter. Ticket sales in the second quarter were nearly $900 million, while refunds totaled $100 million and shifted deferred revenue from short-term to long-term for shows that were rescheduled into the back half of 2022, totaled $150 million. This long-term deferred revenue will then largely shift back to short-term during Q3 and Q4 reversing the timing benefit and free cash this quarter. Our total capital expenditures were $52 million for the first six months, with $38 million spent on revenue generating items. The markets have reopened faster than expected. We will similarly be accelerating some of our investments to take advantage of additional opportunities this year and into 2020. As a result, we now expect total capital expenditures for 2021 to be approximately $170 million, with over 60% of this spend going into revenue generating CapEx projects. Our total debt as of June 30th was $5.3 billion, and our weighted average cost of debt was 4.4%, with about 90% of that debt at a fixed rate. Finally, looking forward, as Michael said, we continue to expect concerts to scale further in the second half of this year in key markets, notably outdoor, and led by the U.S. and U.K. With this activity, we will continue to ramp up our operations, enabling Ticketmaster to run its on sale, the concerts division to book end market 2022 tours and sponsorship staff to support delivery for brands onsite and online. Given the COVID issues in our key markets appear to be short-term at this point, we continue to expect 2022 activity and results to exceed 2019 levels with continued growth opportunities from there. With that, let me open the call for questions. Operator?

David Karnovsky:

Hi. Thank you. Just with COVID kind of being what it is at the moment, the Delta variant, can you just maybe talk through how you're thinking about navigating some of the challenges that might come up in the next a month or two, like changing health mandates, shifts in demand, any hesitation or concerns on the part of the artist?

David Karnovsky:

Got it. And I know you just restarted the amp and the festivals, but any early insights in the fan behavior so far. You mentioned per caps are up at the amp, is there any additional color you can provide what's driving that. And then, maybe with digital ticketing, any learnings from having that tech kind of rolled out at scale across your own music venue footprint? Thanks.

David Karnovsky:

Thank you.

Stephen Laszczyk:

Hey, great. Thank you. On the 2022 concert pipeline being up double-digits versus 2019, I was wondering if you could give us a sentence on how much of the pipeline is for sale today or sold today versus how much is still to come. And then, as you maybe look out over the next few quarters, how much headroom do you think is left to grow the concert slate in 2022, given some of the scheduling and health constraints you're working with, any commentary, there would be helpful.

Michael Rapino:

So, I'll start Joe, and then you jump. Most of our 2022 new tours wouldn't be on sale yet. Most of -- what you see on sale is what would have been rescheduled from 2021 are already on sale. So, we have a large on-sell slate plan between now and end of the year for most of the big global tours that will go out in 2022. And we're not -- we're very content with our 2022 lineup right now. We're talking mostly about what to add now into 2023 and 2024. So that idea that -- it's just one year of -- our bigness isn't really true. We've got three, four years here of strong demand that we're going to smooth out over the time, so everyone can get the right markets and the right Friday nights and the right dates. So, we see a good few year run with all this pent-up inventory.

Joe Berchtold:

Yeah. It's really happening on a global basis. We're seeing it in the U.S. We're seeing in Europe. We're seeing it in Asia. We put out various releases in terms of -- as we've been picking up some clients, but I wouldn't say that there's one market or one type of client in particular. It's pretty broad. I do think what's resonating is we've been very loud in terms of artist clearing the extent to which we're continuing to invest in ticketing, in the shift to digital ticketing and the benefit that that's going to be giving to the teams, the venues and the customers. And that seems to be working with the clients we're talking to.

Operator:

Your next question comes from the line of John Janedis with Wolfe Research. Please proceed with your question.

Michael Rapino:

I'll do demand side. I think we -- from the data we're seeing so far, everything we seem to be putting on sale is doing better than pre-pandemic. So, demand seems to be pent-up most of what we see going up for 2022 is great quality, tourists and artists. So, we would expect, as we've seen over the last 10 years, demand, overall for live on a global basis, has continually been growing. We like to always point out, we think that the product is still under priced, given all of the secondary business. So, this is still an attractive night out for a fan. And now that artists traveling more around the world, the fan base has grown for live as a functional -- entertainment item. So, we think global demand will continue, have double-digit growth as an industry for many years to come as the global landscape continues to grow.

John Janedis:

That’s helpful. Thanks, Joe.

Brandon Ross:

Thanks. A couple of questions ago, the conversation centered around ticketing wins and press releases for you guys. And I thought one of the more interesting developments in the quarter was the extension and expansion of your relationship with ASM. For two reasons, one is that ASM's, obviously half AEG and it didn't go to access. But more so that Ticketmaster could sell tickets for Live Nation promoted shows in the other ASM venues. And the North American ticket model's been exclusive for -- as long as I can remember, at least. Is this a sign of change in the future? Do you think that exclusivity model is here to stay, or do you think depending on event type, the promoter will ultimately control the ticket?

Michael Rapino:

What I would add, Brandon, I think the most -- Brandon, I wouldn't say the most important thing you said is what you lead with is the fact that ASM owned by AEG and a private equity fund, the largest venue management company, obviously did their homework and debated their own ticket options and renewed with Ticketmaster, because we ultimately provide the best global solution in ticketing for them. I assume they would have liked to have used their own in-house ticketing system. But I think our relationship and what we've done for all those venues for so long, won us that business, the met renewal. So that was a very important renewal, a very good testament to Ticketmaster. I give the ASM management team credit, they put their bias aside and what was the best option in the marketplace after looking at all options. So, we are very proud that that's a very good testament to the Ticketmaster core competency. You hit that part for sure.

Michael Rapino:

And you can update your Twitter now that we've talked about COVID and Delta. We assumed it would -- what happened on this call.

Operator:

Your next question comes from …

Operator:

I apologize. Your next question comes from the line of Ben Swinburne with Morgan Stanley. Please proceed with your question.

Joe Berchtold:

Yeah. Ben, big build up.

Joe Berchtold:

Yeah. Just in terms of overall 2022 expectations. First, it starts for us with what are the concert bookings. What are the show count look like? And from that, our expectations on the ticket counts, both of which we think, again, are up relative to 2019 based on what we said. And I think as we've gone through the past three months, whatever we said three months ago, we're more confident in that at this point. And as a result, we expect then revenue and AOI growth relative to 2019 as well to be and sponsorship, then we'll be a part of that expectation, up double-digits and committed sponsorship. Usually you'd have -- I mean, we've talked about how much of our sponsorship is in the form of multiyear, multi-million dollar, multi-asset strategic sponsors. That's a large portion of our sponsorship base. So, last -- we probably wouldn't be talking about expectations of growth for next year already at this point, unless we had a pretty good feel that a lot of it was committed.

Joe Berchtold:

Operator? Operator, do we have any other questions? David Katz, if you're on the line, can you go ahead and ask your question? I think you're next to the queue. Can you hear us?

David Katz:

Okay. If you can all hear me okay.

David Katz:

Appreciate you taking my question. Appreciate all the detail. What I wanted to ask about since it is prevalent in a lot of other areas of our coverage is, the issue of human resources and labor, where we have seen a lot of constraints around, frankly getting people to come back to work. You made a comment about it in your prepared remarks, bringing people back at full salaries and so forth. Is that a matter that you have had to deal with work around, strategize around and how do you see it?

David Katz:

Perfect. Thank you very much.

David Katz:

Super helpful. Thank you.

Joe Berchtold:

We are back here, operator. We missed the name.

Operator:

Steve Glagola, your line is now live.

Joe Berchtold:

Hey, Steve. Go ahead.

Joe Berchtold:

Yeah. Those were certainly the two largest components, concerts and sports. And we'll again in the second half as we relaunch -- second half relaunch, NBA, NHL, NFL, all of those at scale. So you'll have a big full season of the three major sports. And at the same time, you're going to have a massive on sale for 2022. I wouldn't try to parse exactly which one's bigger than the other in a given month, but those two will be the two key drivers as they were in the past few months.

Joe Berchtold:

We just -- our comment was for the sum of Q3 and Q4 that each segment, we expect to be AOI positive.

Operator:

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to close the call out. You may disconnect your lines at this time. Thank you all for your participation.

Operator:

Good day, everyone. My name is Hector, and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's First Quarter 2021 Earnings Conference Call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q&A. Instructions will be given at that time. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the Company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the Company's most recent filings on Form 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results.