Live Nation Entertainment Q2 2022 Earnings Call Transcript

Quartr
Provided by Quartr
August 4, 2022

There are 11 speakers on the call.

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 2nd Quarter 2022 Earnings Conference Call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q and A.

Operator

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 certainties 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 ks, 10 Q and 8 ks 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.

Operator

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 Rapinoe, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Speaker 1

Good afternoon. Thank you for joining us. The Q2 confirmed that Live Entertainment Industry is back globally and bigger than ever. Live Nation led this return that continues to deliver the best global network to support artists as they play shows for the fans around the world. Every key operating metric is at an all time high as we promoted more concerts, had more fans attend shows, we spent more money, sold more tickets and enabled brands to connect with fans at a scale we have never seen before.

Speaker 1

As a result, relative to 2019, we 40% increase in revenue to $4,400,000,000 and a 50% increase in AOI to 480,000,000 With most of the world fully reopened, it's clear the concerts remain a high priority for fans. Consumers are seeking out and spending more on experiences, And the growing demand for live music and events is driving our business to record levels, far outpacing any macro issues or cost increases. Momentum across our business has remained strong in recent months weeks, and demand combined with the substantial concert pipeline gives us confidence in our ongoing growth this year and into 2023. During the Q2, we promoted over 12,000 concerts Of the over 6,000,000 additional fans this quarter, 5,000,000 of that growth came from international markets, driven by the addition of Obsessa and the reopening of most global markets with particularly strong focus and demand through Europe and Latin America. Growth was broad based with double digit attendance increased at venues of all types, demonstrating strong demand for events at all sizes from large scale stadiums and festivals to intimate clubs and theaters.

Speaker 1

Even as show count in attendance grew, fans demonstrated their willingness to pay more for the best seats, with the average price of a ticket for our concerts this year up 10% globally relative to 2019, which remains less than the U. S. Inflation level over the period. At the same time, our average entry price for concerts remain affordable at $33 up only 5% from 2019. With market based pricing being widely adopted by most tours, We expect to shift over $500,000,000 from the secondary market to artists this year, continuing to support those who created the concert and ensuring they are benefiting from it.

Speaker 1

On the venue side of our concert business, we continue to build our portfolio of operated venues with an active pipeline of almost 30 new venues across the globe. We're seeing the benefit of operating more venues as a number of fans who attended shows in our owned and operated venues During the quarter, it was up 13% to over 14,000,000 fans, and we expect that figure to reach over 50,000,000 fans for the full year. And fans are spending more on-site with average per fan revenue up 20% at each of our amphitheaters, festivals, theatres and clubs relative to 2019, with the average per fan revenue at our amphitheaters this year at 38.50, up 30% relative to 2019. Our ticket business also demonstrated strong growth in the quarter. Transacted fee bearing ticket volume up 48 percent to 77,000,000 tickets and transacted GTV up 76% $7,300,000,000 most relative to 2019.

Speaker 1

This was our highest fee bearing GTV quarter ever April, May June accounted for 3 of our top 5 all time fee bearing months. 75% of this growth came from concerts, another indicator of the high demand for live music. Along with the volume increase, transacted ticket prices globally was up approximately 15% for the first half of the year relative to 2019, as both concerts and sporting events saw similar low double digit price increases during the period. Even with strong primary ticketing sales and increased pricing, Demand for live events in our secondary ticketing marketplace remain high. And as a result, our GTV more than doubled for the quarter relative to 2019.

Speaker 1

We are continuing to see the benefits of our technology investments at Ticketmaster, including our global leadership in digital ticketing. Between new capabilities and the sales effectiveness of our ticketing marketplace, we consistently deliver high ticket sales for our event organizers. As a result, we continue to win business from new and existing clients. To the first half of this year, we had a $12,800,000 net new fee bearing tickets to our marketplace, led again this year by our international markets, which accounted for 60% of this new growth. Sponsorship has also benefited from the concert flywheel this quarter, driving 74% growth in revenue relative to 2019.

Speaker 1

As we further enabled more brands to connect with an increasing number of fans on a global basis. Festival sponsorship has performed particularly well during the first half of the year, more than doubling from 2019, led by 9 new festivals in our Mexico and Latin American businesses that accounted for roughly half this increase, along with broad growth and sponsorship levels across most of the North American festivals. And we continue adding more clients in technology, telecom and purchase path integration, including Google, AWS and Hulu, with these categories collectively more than doubling the sponsorship since 2019. As we look forward to the second half of twenty twenty two and into 2023, we have sold over 100,000,000 tickets for our concerts this year, more than we sold for the entire year 2019. Fan demand remains strong and continued growth in ticket buying and on-site spending.

Speaker 1

And given the long term nature of most of our sponsorship partnerships, our planned sponsorship for the year is not fully committed. As we prepare for 2023, everywhere globally is open for concerts, and we are actively rooting all of our markets with the largest artist pipeline we have ever seen at this point of the year. And for the 2023 tours we have put on sale so far, all signs continue pointing to strong fan demand. With that, I will let Joe take you through more details of our results.

Speaker 2

Thanks, Michael, and good afternoon, everyone. As with last quarter, 2019 is 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 $4,400,000,000 for the quarter was $1,300,000,000 better than Q2 2019 or an increase of 40%. On a constant currency basis, our revenue was $4,600,000,000 for the quarter, so there was roughly a 4% impact due to the strengthening of the U.

Speaker 2

S. Dollar. And our reported AOI of $480,000,000 for the quarter was $160,000,000 better than 20 19, up 50% and led by an improvement of over $100,000,000 in ticketing and $80,000,000 in sponsorship. On a constant currency basis, our Q2 AOI was $502,000,000 The FX impact of negative $23,000,000 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%.

Speaker 2

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 $379,000,000 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 $123,000,000 for the quarter, which compares to $133,000,000 in Q2 of 2019. It It was one of Concert's strongest second quarters ever despite limited activity in our Asia Pacific region and operating cost increases. Additionally, while Ocessa had a very strong return to activity, its AOI largely flows through sponsorship and ticketing, while their concerts division absorbs most of its costs.

Speaker 2

In the quarter, we had over 33,000,000 fans at 1012,500 events, growing nearly 25% compared Q2 of 2019 when we had 27,000,000 fans at 10000 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 dollars, an increase of $9 per fan over 2019 levels or 30% growth. At our theaters and clubs in the U.

Speaker 2

S, free 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, camping 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.

Speaker 2

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 $231,000,000 of AOI, making it the most profitable quarter ever for Ticketing, meeting the record set just last year in Q4 and nearly doubling the Q2 2019 AOI results of $124,000,000 Our growth came from both primary and secondary ticketing with transacted ticketing and GTV up 69% and 141%, respectively. Transacted ticket volume, excluding refunds, was 77,000,000 tickets, our highest quarter ever, vesting our former record of 65,000,000 tickets in Q4 2021 by 18 percent and 25,000,000 tickets or 48% higher than Q2 of 2019. Transacted ticketing and GTV, excluding refunds, was $7,300,000,000 our highest quarter ever, besting our former record of 6 $600,000,000 of Q4 of 2021 by 11% and $3,100,000,000 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.

Speaker 2

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 the number of on sales expected to happen in Q3 getting moved up into Q2. Even as more of the ticket's value is captured for content organizers, our secondary marketplace has continued to grow rapidly with 4 of our 5 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 $178,000,000 80 percent higher than our Q2 2019 AOI of $98,000,000 With the U. S, the U.

Speaker 2

K. And now Mainland Europe all fully open, we had high growth in both on-site and online sponsorship with each delivering record Q2 AOI. The growth in our large multi year multi asset sponsor speaks to our value of connecting live music fans Global Brands. We are nearing in on 100 such major sponsors that in total generate well over $500,000,000 in revenue 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.

Speaker 2

1st, confirmed show bookings are up over 30%, driven by double digit increases in every market and across all venue types. Our concert ticket sales 10 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 1,000,000 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.

Speaker 2

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. 2nd, Ticketing has sold 183,000,000 primary fee bearing tickets for events this year, up 30%. Of these, 122,000,000 tickets are for concert events, which is 42% higher than 2019.

Speaker 2

Related to this, we have $3,200,000,000 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 in AOI hasn't flowed through yet and will do so over the course of the next year as the events occur. We remain on course for a strong Q3 and ticketing as our deferred revenue is recognized, but also impacted by the shifts 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.

Speaker 2

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 UK and Mainland Europe, we've experienced FX headwinds and through the end of June, our AOI has been adversely impacted by $23,000,000 This was almost entirely in the 2nd quarter as the U. S. Dollar strengthened significantly against the euro and the British pound.

Speaker 2

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 that continue through the remainder of the year, which at current forward rates result in approximately $15,000,000 quarterly below the line expense In anticipation of the growth opportunities ahead of us this year, we continue to expect 2022 capital expenditures to be approximately $375,000,000 with 2 thirds 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 $2,500,000,000 of available liquidity between free cash and untapped revolver capacity, 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?

Operator

Thank you. We'll now be conducting a question and answer session. Our first question comes from David Karnovsky with JPMorgan. Please proceed with your question.

Speaker 3

Hi. Thank you. Michael, wanted to get your thoughts on pricing and VIP tickets. We've seen artists embrace 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?

Speaker 1

Yes, thank you. I think we've been saying for a few years that over time, we believe that that secondary $10,000,000,000 $12,000,000,000 depending on what number you see globally, has to start getting captured by the artist at some level. It's just too transparent. The more they see all of the online pricing, while they work so hard to put that show on. So I do think that right now I'd like to count some of it in the front end.

Speaker 1

I don't want to be sold out at 10.01 At $200 to have someone else make $2,000 fans not getting a deal anyways, they're spending $2,000 from Somebody else. So I do think they're looking and saying, the front of the house, can we capture some demand? Now the advantage is, the artist has one objective as we do, as does the venue to fill every seat. So you're never looking for the gross, you're looking to make sure that every seat is filled for the best experience. We want that, Just want that.

Speaker 1

So I do think the new dynamic pricing, the better we have become these tools to the artist, they're looking at the holistic picture. Maybe I can charge a bit more in the front row. I'm going to charge less in the back row because net I'm going to sell through the back end of the house that maybe is always spot in our business. Now if you can still get the same gross, but you can lower the ticket price in the back part of the house, that's a win for everyone. So We're right now, Joe has the exact math we looked at yesterday.

Speaker 1

It's still a small percentage of Total growth is price platinum and or dynamic, 1%, 2% kind of numbers. And really non existent outside of America. We've just invested in Europe. So there is, yes, there's a long runway where the artists will look at the small, again, even as much noise as you heard about the Springsteen sale, 1% of the tickets were priced a little higher to capture the second business versus 99% of the house. So to the artist, I think they'll look at us to look at them the premium, the dynamic, How do I better price my product, fill the house, lower the price in the back, capture more of the front.

Speaker 1

And we think that's got many years of runway for us to expand on a global basis.

Speaker 3

Okay, great. And then I just wanted to ask on concerts AOI in the quarter. I think it was roughly flat versus 'nineteen, 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.

Speaker 3

I think Q2 2019, if I remember correctly, had some pull forward from Q3 in that year.

Speaker 2

This is Joe. Yes, I'll take that. I think we laid out a handful of factors that we think were some combination of timing and one offs that impacted This quarter, Asia Pacific is not fully open, yet we've got the organization up and running to prepare for it being open. Just the structure of OSSES' P and L is they really drive their economics through ticketing and sponsorship, whereas most of their cost structure is in the concert side. We talked about some operating cost increases for our operated venues, Still driving per fan profitability increases, but you have some costs there.

Speaker 2

And then it's just I wouldn't over read 1 quarter. I gave you in mind, for instance, that a lot of this was in international markets that we had our growth, less growth in this quarter in North America, but Then we have a lot of growth in Q3 in North America. As I look at the numbers overall, North America if you look at our 100,000,000 tickets, North America has 30% growth. So as that flows through in Q3, you'd expect to see some of that flipping around. I just want to read too much into it.

Speaker 4

Great. That's real clear. Thanks.

Operator

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

Speaker 4

Hey, thank you. Just wanted to drill down a little more on David's question about Platinum Ticketing. And I was wondering, Michael, if you could just because I think a lot of investors and fans are not really educated on how platinum ticketing works. Can you talk about who sets The prices and kind of the cadence of ticket releases and how you think about The when tickets are going to be released kind of this move from fast ticketing where everything was available at the on sale to maybe trickling out tickets more over time. And then how you think about the balance of dollars and maximizing profits for the artist with this idea of fandom and fairness and what your role in that is.

Speaker 1

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 And decides when they tour, how they tour, where they tour.

Speaker 1

Our job is to provide all the tools, platform and services to help them Our decision is they're genius brand managers. They have to balance the needs of their family, supply demand and pricing. And some brands like the Rolling Stones have been Very good, always saying expensive experience and we're that proud and I'm able to deliver that brand position. But I think artists are always trying to find a find 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.

Speaker 1

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 look at shows and realize that some ways they 1%, 2% of the house higher and achieve some of those economics versus the scalper, while still pricing 98% of the house in a very profitable brand position. So we can achieve both. This is an industry that for 30 years, We would do a tour. They would set 3 second prices, dollars 140, dollars 79, and that would be the 3 prices in every city for every night for the market.

Speaker 1

As you know, that's just not the way it's going to operate forward, a different price on a Friday in New York than in Indianapolis on a Tuesday. So dynamic smart pricing, now that we're able to provide that level of sophistication, the bands are much more sophisticated And they're now able to use tools to figure out how do I price it better and achieve some better economics to get Some of the leakage of secondary, but still maintain an overall ticket price, leaving dollars on the table, Still finding that balance between the consumer demand, the brand and the slippage of the economics, the secondary they've been losing. Got it.

Speaker 2

And sorry, Brandon. Sorry, Brandon, sorry. Just one comment to respond to is, your commentary about trickling out tickets, that's not a practice. That's not something that is the norm or something that we do.

Speaker 1

I

Speaker 2

think that the speed of ticketing has to do with just what's The pace at which some of them sell out with the theory being for some artists if they price a lot of tickets at market price, they may not all sell out in the first hour. So it has nothing to do Ticketmaster takes all the tickets, it gets puts them directly on sale. It does nothing to try to limit Supply or anything in that manner. So I just want to make sure we're crystal clear on that.

Speaker 1

Yes. No, I wasn't Yes, great point.

Speaker 2

We We are the season anyway.

Speaker 1

Yes, but I think we're just addressing because the marketplace, the consumer obviously gets a little confused at 10 o'clock there's lots secondary tickets, right. So historically, the Bruce fan would have been sold out at 10 and had to go to a secondary to buy that good seat. So today, we're sorting through that process where we can provide information on the hands, but our job at Ticketmaster is put every sale, pick up I'll provide that into the secondary market and provide all the data for the artist that he can adjust up and down as market adjusts.

Speaker 4

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 response to market conditions in bringing ticket prices down as much as you bring them up in this demand environment.

Speaker 2

Sure. Yes. Tools can be used go ahead, Michael. No.

Speaker 1

I said it before In our last call, I mean, we looked at the last recession, there was a single digit back and some ticket sales, but we were years ago, not even in the same way on pricing, nor do 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 drop the 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.

Speaker 2

Right. And our And again,

Speaker 1

the number one goal is to set their number one goal So, they're always going to be in a variable reality of how do I price it to whether I got to reduce Our end of the house, front end of the house, what do we need to do to sell through on a Tuesday night in Indianapolis? Let's adjust pricing.

Speaker 2

The other part of the buffer, Brandon, is just the secondary market itself and how big it is and its continued growth. I gave you the numbers. The secondary market for us grew 140% this quarter. So that tells you that even as some pricing is going up in the primary side, The secondary is growing up going up even faster, both in terms of volume and price points. So our first line of defense

Speaker 4

Got it. And then finally, if

Speaker 1

you could just double click

Speaker 4

a little on 30 additional venues that you were 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?

Speaker 1

Well, I think in our investor conference, we wanted to kind of highlight, I think it's always been an under strong business, but we put more focused on it from an operational design development. We've got over those 300 venues. We manage off We've been adding 20 to 30 a year over the last few years. As you know, with Austin, we've been an incredible success in which will provide a return. And those 30 that we have in the pipe now another 75 behind of those On a global basis, everything from clubs to arenas, depending on where the whole in the market may exist.

Speaker 1

We see great platform there. And as we've said before, when we show in an operated venue that we have the sponsorship and the ticketing and the food and beverage and all the revenue streams. That's our highest return for us.

Speaker 4

Great. Thanks for the time.

Operator

Your next question comes from Steven Lachik with Goldman Sachs. Please proceed with your question.

Speaker 5

Hey, great. Thanks for taking the questions. On fan growth for the year, maybe for Joe, I think you mentioned in your prepared remarks not extrapolating

Speaker 1

international growth or contribution on the U.

Speaker 5

S. Markets this year. International growth or contribution on the U. S. Markets this year.

Speaker 5

Can you maybe unpack that for us a little bit and maybe touch on what portion of fan growth you expect Will come from acquisitions versus organic growth in markets like the U. S. Or the U. K. This year?

Speaker 2

Sure. I'll use as The base is the 100 or so 1000000 tickets that we sold through July, because I think that just that gives the numbers the facts. And as I indicated, Within that, the U. S. Is up about just over 30% and international is up 40 odd percent.

Speaker 2

So You have strong organic growth across both North America and international. Our primary acquisition, of course, would be OCCESSA, 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.

Speaker 5

Great. That's helpful. And then maybe one for Michael. I was curious if you're seeing any unique Trends developed in terms of fan behavior this year. For example, maybe we're seeing more first time concertgoers come out This year, our fans set to attend events with greater frequency, I'd be curious if you're seeing any of those data points or think that any of these trends that you're Seeing open portions of the market up going forward that maybe you haven't seen come into the industry before?

Speaker 5

Thank you.

Speaker 2

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 where certainly we have people who haven't gone to concerts in a long time going. We have concerts that will go to 1, now going to 2.

Speaker 2

We have concerts we have people that are going to many. So it's not I don't know if 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 spending pattern on-site.

Operator

Your next question comes from line of Steven Glagolo with Cowen. Please proceed with your question.

Speaker 6

Hi, thanks for the question. 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 And this increase is being driven by market pricing versus set price ticketing increases at the on sale. Thanks.

Speaker 2

Yes. As Michael said, the dynamically priced tickets represent a very small percentage of the overall tickets. So it's not going to be felt by most people. I don't have Exact numbers, I would guess that it's less than half of the impact is from that and then there's a general increase. We can probably use the fact that the entry price of $33 is up about 5% from 2019 as a proxy for what's going on with the overall ticket pricing and then maybe the remainder is driven by the more front of house activity.

Speaker 6

That's very helpful. Thank you.

Speaker 2

And again, those numbers are because there's a lot of attention on how much the overall ticket prices are up. If you look at the U. S. Market, the U. S.

Speaker 2

Is Up between 12% 13% in terms of inflation over the past 3 years is a comparative.

Speaker 1

Yes, thanks.

Operator

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

Speaker 7

Hi, afternoon everyone. Thanks for taking my question. I wanted to just get a little more color if we can about International markets and international landscapes and if we obviously are seeing a lot of strong demand, is it Relatively even if we look at international markets relative to the U. S. Or are there any that are stronger, weaker, etcetera?

Speaker 1

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 just 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.

Speaker 1

They're still spending money. They're still buying tickets at high demand. So we have no pullback In Europe or any international market.

Speaker 7

Great. And am I permitted to follow-up or would you prefer I went back in the queue? Sure. Go ahead. Okay.

Speaker 7

With respect to digital initiatives around ticketing, if you could just talk about kind of Obviously exciting and productive. Sort of what inning you'd say we're in and any observation surprising or otherwise so far?

Speaker 2

Yes, we're still in early innings. This is the 1st 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 for people who are going to shows at 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 to 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.

Speaker 7

Perfect. Thanks very much.

Operator

Your next question comes from Ryan Sundby with William Blair. Please proceed with your question.

Speaker 8

Hey, guys. Thanks for the question. With Asia Pac still limited this quarter, I I was wondering if you could talk a little bit more about, 1, how quickly that ramps from here? And then maybe 2, A little more on the long term opportunity there following the recent acquisitions in Thailand and the Philippines. And I think plans in place to bring Lyle Foods to India next year.

Speaker 8

Any color on how that kind of comes together and how large that would be would be great? Thanks.

Speaker 1

Yes, most of that. I think it was Asia reference. We're currently in 40 countries, the 100 offices in 40 countries, varying degree of market share from the U. S. To Cape Town or South Africa.

Speaker 1

So we've got a global platform. That was always our first priority. So we can say to any artist, we can put you on the road in any market, market and sponsorship make it happen. Then when we get kind of our flag in the ground, we start to Maybe launch or build festivals, operate venues, build up our ticketing, sponsorship and the model and the flywheel start to work. You can kind of look at our business across the globe.

Speaker 1

Different markets are were in varying degrees of that growth. Latin America, We were very, very undeveloped in all markets. Obviously, now with Ocessa, we've got that flywheel in Mexico. We bought festivals in Latin America with Rock in Rio and then bringing La la, bought a couple of promoters. We're We're going to get some venues going.

Speaker 1

So the flywheel is starting to work in Brazil and Colombia and Argentina, but we're kind of going from 0 market share to big opportunity there. So That will continue to be a big focus for us. Western Europe, there's still some markets we're undeveloped in, Whether it be Portugal or Spain, certain markets, we don't have the full flywheel and you'll see us continually add a festival or a promoter or a venue to those markets. Asia, we have a good platform. We have people in the ground.

Speaker 1

We've got a really strong business in Australia and New Zealand. But as we moved up to Pacific Rim, we've been slowly building the flywheel in all those markets. Japan is probably the one market that's the best and biggest in that market. We've got to do more work on that. But we look at Asia as really undeveloped territory, low market share, huge opportunity Over the next while, we like everyone else in the world, we look at Asia, we look at Latin America, and we look into the Middle East and Eastern Europe areas where we have no real market share, but that consumer now on TikTok knows that Drake dropped a video last night, whether they live in Singapore, India, Cape Town.

Speaker 1

So we've got a global product and we've got lots of opportunity to keep growing.

Speaker 4

Great. Thanks. Thanks, Ed.

Operator

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

Speaker 9

Thank you. Recognizing that you can alter the weather Nature and there's an amphitheater season and all that. You're really inducing a lot of serial correlation, I think activity And among concert goers, I mean, people are going back and even when people I think go to movie theaters, you get people there's a hit movie and there Tends to be a lot of repeat behavior. Do you think that all the initiatives you're undertaking are going to alter the seasonality In your business somewhat and maybe make Q4 a lot more active even on a relative basis And this has historically been, because it feels like there are a lot of things pushing in that direction if you take out concerns with weather and all that. Thanks.

Speaker 2

Yes, this is Joe. I gave you some numbers that in our amphitheaters, we do expect to have about 1,000,000 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. Theatres 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.

Speaker 2

So we'll see a bit. I don't think it will dramatically change. Thanks.

Speaker 1

But there will be why we look at our businesses global. In the The arenas, NBA, NHL and NFL clog up the venues in the fall into the winter. But that's why we take a lot of these artists now and say, let's go through in Asia Pacific Rim and Latin America. Let's get off-site Middle of America and go to those markets as those open up. So there is a big 12 month a year business on a global basis.

Speaker 1

This industry is focused too much on the U. S. Western Europe summer business. But you are right, as the business expands in a lot of those markets, You have a 12 month strong market where you can put a sellout show in other markets while you're waiting for a summer business here. Makes sense.

Speaker 1

Thank you.

Operator

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

Speaker 10

Thanks so much and Michael and Joe congrats on the quarter. I just wanted to ask Given the strong demand that we're seeing across the board here and what I presume is some overflow in terms of Demand that is unable to get a seat. Where does streaming fit into the medium term strategy now? I know it was more of a focal point, of Of course, during the pandemic, but just seeing opportunity for sponsorship or advertising through that, how much incremental focus Will there be on that going forward or sort of walking back from that a bit? Just help us think about monetization there or investment if it's still a strategic point for you.

Speaker 10

Thanks.

Speaker 1

Thank you. I think we were clear in the COVID. We were not By the thesis that might have been there for a moment that live is being duplicated in digital. What we've always said is that this This is a magic 2 hours you have to physically experience.

Speaker 4

That's how we

Speaker 1

call this industry and it's

Speaker 3

a very

Speaker 1

unique space. It can't be. It can't be. We've always said that we have all these shows and most successful especially And dedicated fans, but you can expand that show. And there is an audience who wants to watch their favorite artist.

Speaker 1

This weekend, we had a credible broadcast on Hulu for 3 days, high quality filming and broadcasting live our lows of festivals. It looked 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.

Speaker 1

We love the opportunity. We do 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.

Speaker 1

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.

Speaker 4

Great. Thanks so much.

Operator

Ladies and gentlemen, we have reached the end of the question and answer session. And I'd like to turn the call back to Michael Rapinoe for closing remarks.

Speaker 1

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

Operator

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

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Earnings Conference Call
Live Nation Entertainment Q2 2022
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