Eventbrite Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 27, 2024

Key Takeaways

  • Record 2023 results: Eventbrite delivered $3.6 billion in gross ticket sales, achieved 25% year-over-year revenue growth, exceeded 70% gross margin in Q4, and reached a 12% adjusted EBITDA margin for the full year.
  • Marketplace shift accelerates: Non-ticketing revenue rose from 2% to over 10% of total revenue in Q4, driven by widespread adoption of marketing tools, organizer fees, and Eventbrite Ads.
  • Paid ticket volume down: Paid tickets declined 4% in Q4 versus last year and are expected to remain lower in Q1 2024 due to the implementation of organizer fees impacting creator acquisition.
  • To reignite ticket growth, management will target high-volume events through sales, optimize self-sign-on onboarding and pricing tiers, and boost event visibility via personalization, SEO and distribution partnerships.
  • 2024 outlook: Revenue is forecast at $359 million to $372 million (12% growth at midpoint) with adjusted EBITDA margins in the low to mid-teens, excluding restructuring and other items.
AI Generated. May Contain Errors.
Earnings Conference Call
Eventbrite Q4 2023
00:00 / 00:00

There are 10 speakers on the call.

Operator

Good afternoon, and welcome to Eventbrite's 4th quarter 2023 earnings call. My name is Katherine Chen, Head of Investor Relations. With us today are Julia Hartz, our Co Founder and Chief Executive Officer and Lanny Baker, our Chief Financial Officer. As a reminder, this conference call is being recorded and will be available for replay on Eventbrite's Investor Relations website at investor. Eventbrite.com.

Operator

Please also refer to our Investor Relations website to find our shareholder letter announcing our financial results, which was released prior to the call. Before we get started, I would like to remind you that during today's call, we'll be making forward looking statements regarding future events and financial performance. We caution that such statements reflect our best judgment as of today, February 27th, based on the factors that are currently known to us and that actual future events or results could differ materially due to several factors, many of which are beyond our control. For a more detailed discussion of the risks and uncertainties affecting our future results, we refer you to the section titled Forward Looking Statements in our shareholder letter and our filings with the SEC. We undertake no obligation to update any forward looking statements made during the call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events, except as required by law.

Operator

During this call, we'll present adjusted EBITDA and adjusted EBITDA margin, which are non GAAP financial measures. These non GAAP financial measures are not prepared in accordance with generally accepted accounting principles and have limitations as an analytical tool. You should not consider them in isolation or as a substitute for analysis of our results of operations as reported under GAAP. A reconciliation to the most directly comparable GAAP financial measure is available in our shareholder letter. We encourage you to read our shareholder letter, which contains important information about GAAP and non GAAP results.

Operator

And with that, I'll now turn the call over to Julia.

Speaker 1

Thank you to everyone joining us to review our Q4 and fiscal 2023 results. We took bold action this year to accelerate our sided marketplace model. Success meant delivering audience growth to our creators, tapping into new and vast consumer opportunities and driving increased financial returns for our business. I'm proud of the team for making progress on these priorities. Gross ticket sales totaled $3,600,000,000 in 2023 as we helped power the global experience economy.

Speaker 1

Our community grew to over 91,000,000 people who love to go to events and nearly 1,000,000 event creators who trusted Eventbrite to handle ticketing and promotion for over 5,000,000 events last year. We democratized online advertising for our creators with the widespread release of our marketing tools. For consumers, we helped bring events to life with a richer and more personalized search and discovery experience. Our strong 25% top line growth for the year reflects our ability to serve ticketing, marketing and event discovery needs. Looking ahead to 2024, we remain focused on our goal of becoming the go to marketplace for shared experiences.

Speaker 1

Thanks to our thoughtful product investments, the creator experience became more differentiated than ever during 2023. Our focus on generating demand has been a key driver in our marketplace transition. We've become a demand generation partner by providing marketing tools to all Eventbrite users. Over 75% of creators we surveyed already consider us a partner in boosting their event success. We believe our brand equity, consumer presence, and ability to influence event marketing outcomes will set us apart from other solutions.

Speaker 1

We're happy with the progress made throughout the year on Eventbrite ads. Our team has worked tirelessly to support a record number of creators who are looking to promote their events in the marketplace. In response to feedback from our creators, we have introduced new ways to tailor event listings, resulting in better ads efficacy and accelerated sign up rates. With the implementation of AI powered event and marketing flows, we drastically decreased the time it takes to create an event listing and marketing campaign. We continue to find new ways to apply conversational AI to serve our customers' needs and generative AI to make hosting an event intuitive and successful.

Speaker 1

Each of these product areas focuses on addressing the most urgent need of creators to sell more tickets and improve event success. In 2023, we better positioned our team to deliver that outcome for our customers by repurposing investment resources toward growth enablement. Earlier this year, we restructured our teams to reduce operations overhead. We outsourced customer support functions to the Philippines to streamline operations and scaled our development capacity in Spain and India. We believe this new operating mode will help us execute our proven ticketing playbook more efficiently.

Speaker 1

By doing this, we can focus on creating more value for our customers and also better target those creators in the future. We've already witnessed the advantages of this strategy in our financial performance. Although monetization has increased, we've been able to maintain moderate operational expense growth by improving efficiency and cost management on a daily basis. We aim to continue these gains this year and strive to achieve even better results. Our decisions reflect our thoughtful transition to the 2 marketplace model that we believe best serves creators and consumers and creates long term value for our business.

Speaker 1

We've made strong progress on our product roadmap to support our marketplace repositioning over the past year. Where we now see the biggest opportunities are in honing our go to market strategy and continuing to improve our consumer product experience. This means attracting and winning creators who value and amplify our differentiation. It also means enhancing personalization and search and discovery to delight consumers and increase engagement. These are our immediate priorities as we address paid ticket growth and ensure each lever of our business positively reinforces our growth model.

Speaker 1

As we look forward, we plan to evolve our sales and marketing in 2024 to target the events we know our most valuable consumers seek, starting with nightlife. We plan to supplement our value proposition to win this inventory and increase our total addressable market by building new tools that our creators want, like timed entry and better business empowerment tools. To make discovering events even easier, we plan to lean into distribution partnerships to put the right event in front of the right person at the right time, wherever they are. To encourage repeat purchasing, we plan to evolve how consumers interact with our brand across all critical surface areas, starting with the consumer mobile app. We plan to continue building trust in our marketplace for both creators and consumers by anticipating and protecting against fraud, as well as modernizing our support channels to deliver rapid problem resolution for more customers.

Speaker 1

We believe that our focus on driving demand for creators, coupled with our consumer roadmap, will yield great benefits for both sides of our marketplace and result in increased ticket growth. By leaning into our scale, trusted brand, and powerful operating model, we are confident that we can chart a path forward, which enriches live events, brings the world together through live experiences and creates value for all stakeholders. With that, I'll turn the call over to Lanny to discuss our financial performance and outlook.

Speaker 2

Thank you, Julia. I'll address financial highlights from the Q4 and full year before providing more detail on paid ticket performance and our actions there, and then I'll turn to our outlook. Shifting toward becoming a 2 sided marketplace has led to meaningful changes in our financial results over the past year. First, we've grown non ticketing revenue from 2% to more than 10% of our revenue as of the Q4 of 2023. We've done this by deliberately delivering and extracting value associated with the demand generation we provide to creators.

Speaker 2

Subscription and per event organizer fees totaled $6,600,000 in the 4th quarter, as creators brought 1,400,000 events to be ticketed in our marketplace during the quarter. Eventbrite ads revenue was $2,300,000 in the 4th quarter, up 28% quarter over quarter as the number of advertisers and spend per advertiser both grew to new highs. Collectively, demand generation embodied by marketing tools, organizer fees and Eventbrite Ads revenue helped us reach a new revenue record in the Q4. And we expect to build on this in 2024. 2nd, we updated our ticketing and service fees in early 2023 to reflect prior product investments and align with industry norms.

Speaker 2

As a result, we have increased our ticketing take rate and enhanced revenue per ticket by more than 10% during 2023. These gains strengthen our ability to further invest in the consumer side of our marketplace. And third, the changes in monetization arising from our marketplace strategy have helped our margins reach new highs. Gross margin exceeded 70% for the first time during Q4 compared to 66% a year ago. Our adjusted EBITDA margin also improved.

Speaker 2

Excluding restructuring costs, reserve adjustments and other items, we more than doubled our adjusted EBITDA margin year over year, reaching 12% for the full year 2023 with 40% of year to year revenue growth flowing through to adjusted EBITDA. These encouraging financial benefits arising from our marketplace strategy have to be considered in the overall context of our business, however, and we've seen a near term impact on paid ticket volume from the changes we've introduced. Paid tickets were down 4% in the 4th quarter versus the prior year, even as total revenue was up 23% year to year to $88,000,000 which was the midpoint of our Q4 business outlook range. Paid ticket volume is expected to be lower year to year in the Q1 of 2024 as well. And this has been factored into our business outlook for the quarter and the full year.

Speaker 2

When organizer fees were widely implemented in September, October of 2023, This was the first time Eventbrite had imposed any charge associated with accessing our marketplace and our audience reach. The larger objective here was to shift our model and our go to market and to reposition Eventbrite as a marketplace delivering attendees for creators and serving up great live experiences for consumers. We continue to have conviction in this strategy and we are focusing on attracting creators of high quality events who seek audience growth and showcasing the appealing events that feed strong consumer demand in order to improve paid ticket volume in 2024. Nonetheless, we see recent paid ticket volume trends having a near term impact. And I want to turn to what this means for our immediate operating priorities and then our business outlook for the coming year.

Speaker 2

We are pursuing 3 main levers to improve paid ticket growth. And in a marketplace mode, these efforts play on and reinforce each other. 1st, highly visible, high volume in demand events are central to our marketplace. And we have focused inbound and outbound sales to target these strategic accounts. Our sales team closed 24% more new accounts in the second half of twenty twenty three than in the same period last year.

Speaker 2

And that momentum remains strong in early 2024. With changes we've made to monetization, we can be very competitive and profitable in the sales channel today, and we're leaning in here. Next, we're focused on the self sign on channel and making adjustments to move past what we believe is a temporary disruption in creator acquisition tied to the implementation of organizer fees. We intend to improve landing pages and sign up flows, better explain and simplify our new pricing tiers through product marketing, and in some cases, adjust pricing. For instance, introducing annual plans for institutions that prefer to be billed in advance and new rates for non profits.

Speaker 2

Then on the consumer side, our near term priorities are elevating the visibility of top events, either via Eventbrite ads or through algorithm updates. We're also steering users to the personalization and ease of our mobile app and investing in SEO and distribution partnerships to expand top of funnel traffic. Combined, these actions are expected to improve paid ticket volume growth as the year unfolds. Based on current information, we anticipate revenue of $359,000,000 to $372,000,000 for full year 2024. The midpoint of that range would equate to 12% revenue growth over 2023.

Speaker 2

For the Q1 of 2024, our business outlook anticipates revenue in a range of $84,000,000 to $87,000,000 or 10% year to year revenue growth at the midpoint for the Q1. There are a number of assumptions reflected in our quarterly and full year revenue outlook, including the following. Paid ticket volume is expected to be lower year to year in the first half and down slightly to up modestly for the full year. As comparisons become easier, we move beyond the initial marketplace changes and we execute on our product, marketing and sales priorities. Average ticket prices are expected to increase low single digits year over year, providing a similar size for the first time in Q1, Q2 and Q3 of 2024 and are anticipated to contribute to revenue growth for the full year in the process.

Speaker 2

And Eventbrite Ads revenue is expected to scale further as we improve reach, targeting and efficiency and realize higher adoption rates among creators. We plan to manage expenses tightly to focus on improving paid tickets and executing the marketplace strategy. We anticipate adjusted EBITDA margins in the low to mid teens for the year 2024, again excluding potential impact from reserve adjustments and other items. Product and development expenses, which as a percentage of revenue are already in line with our long term model, are expected to grow faster than revenue for the full year as we build out consumer and marketplace functionality. Sales, marketing and support expenses, which grew rapidly in the second half of twenty twenty three in support of the marketplace shift, are expected to grow modestly quarter over quarter during 2024.

Speaker 2

And we plan to manage general and administrative expenses as tightly as possible in order to drive operating leverage. Stock based compensation is a focus as we make progress toward profitability. As we've shifted more teams to new locations and substituted other forms of incentive and reward, SBC as a percentage of revenue declined by 3 percentage points in 2023 versus 2022. And we plan to take more steps to continue that progress in 2024 and beyond. In summary, we had a solid 2023 in which we achieved our overall financial objectives as we made significant strides in our marketplace strategy.

Speaker 2

In the process, we introduced changes in our go to market that we believe are both necessary and appropriate to unlock Eventbrite's full potential. That potential lies in doing more for creators than ticketing and payment processing. And it centers on leveraging our unmatched scale, our brand recognition and technical capabilities to attract consumers and drive demand for creators' events. We are fully focused on returning to paid ticket volume growth as we execute our strategy. I'll now turn the call to the operator for Q and A.

Speaker 3

Thank you. Ladies and gentlemen, we will now conduct the question and answer session. Your first question comes from Naved Khan from B. Riley Securities. Your line is now open.

Speaker 4

Thank you very much. A couple of questions from me. Maybe one on the on creator retention. And is that the metric that's being affected? Or is it this new creator sign ups that is more affected because of the increase in take rate?

Speaker 4

And the other is a related question. So with your efforts focused on sort of getting the paid creators that have the more in demand events, how long do you think that effort has to be in place for it to kind of start showing up in the numbers and moving the needle?

Speaker 2

Thanks for your question. I'll address the first one, which was around retention and the impacts of the introduction of organizer fees, sorry. When we introduced the organizer fees, we anticipated that there would be some near term impact in the marketplace. We did this in mind recognizing that there was a likely near term opportunity cost to ticket volume and greater growth. But on the other side of that, there was the long term benefit of extracting value for the investments we've made, significant investments in the performance of the product, in the strength of the brand, the trust and safety of our marketplace, and really most importantly, the demand generation that we bring to events on the platform.

Speaker 2

And we've seen that. And the impact in the short term has been some churn of creators who, for the first time, have faced fees to list their events on Eventbrite. It's impacted our self sign on acquisition funnel. And as we talked about, we're taking steps to improve the clarity of our messaging, the marketing on the self sign on side. And in time, we believe we'll return to the kind of growth that we've seen in the past.

Speaker 2

I want to point out that, we certainly have seen the vast majority of creators embrace our organizational fee our organizer fees. And one surprise for us has been that there has been stronger adoption of the subscription version of those organizer fees than the alacarte event by event organizer fees. And we take that to be a reflection of the partnership that is established between Eventbrite and those creators of events on our platform.

Speaker 1

On the strategic inventory side, in terms of the paid creators with more in demand events, this is really seen through both channels. So self sign on and sales. And while, you know, our sales efforts are focused on a smaller number of creators who are metros based on aggregate consumer data that we can mine to look for things that we know people will want to do. The beauty of this business is that we also see high quality consumer popular inventory coming through our self sign on channel, which is a very much lower cost of acquisition channel. And so combined, when we think across both of those channels, and then we look at the market through metros and again, through the consumer data that we have.

Speaker 1

We're starting to get better at merchandising those events, making sure they are highly listed in any the the site so that those promoted listings are again front and center. This is a flywheel approach to a marketplace. It's not uncommon. But it's pretty early days for us to be, you know, to be, oriented this way. And so I would say that, you know, we will get better and better at finding that signal throughout the year.

Speaker 1

And then we also see a latency of about 45 days on average, between, you know, when a customer puts their tickets on sale and when that event happens. So roughly speaking across all of our events, it's a pretty fast feedback loop. And what we found is that we can then take the data of what's selling and what's working and reorient our sales and our marketing efforts towards finding more of those creators in, again, the metros that we really care about.

Speaker 5

Thank you.

Speaker 3

Your next question comes from Youssef Squali from Churit Securities. Your line is now open.

Speaker 6

Okay. Thank you so much. So let me just follow-up on that line of questioning about paid tickets. Maybe you can just help us try to reconcile the growth that you saw in paid events. I think that was up 2%, growth in paid creators that was up 3%, but paid tickets was down 4%.

Speaker 6

Does that imply that you guys saw a bigger churn at the maybe larger creators and maybe larger events? And then maybe as even as you added more events, maybe smaller events and maybe smaller venues, etcetera. So maybe just help us maybe work through that or understand that better. And then Randy, in the past, you had spoken about adjusted EBITDA margins being north of 20% by the Q4, by end of 2024, I think. Does that guide still hold?

Speaker 6

Is that still contemplated in your annual guide as we look at linearity of margin improvement throughout the year? Thank you.

Speaker 1

Yes. I can start from the pay ticket side. You know, when we rolled out our new marketplace fees, we expected that, you know, there there would be some shift in the, in the size of events that are happening on

Speaker 7

the platform. Actually, we haven't seen as much change

Speaker 1

as we had originally intended to wired to understand the changes and be able to react accordingly. But I do think that we have seen some right now, as we're speaking, there is this adjustment or transition that's happening because we are for the first time charging a fee for the marketing tools and demand generation tools that we offer to our customers. And we're continuing to build momentum generation value prop as we go to market more explicitly with it. So we're dedicating our go to market motions toward the popular and in demand events that I just spoke about. And we're also taking actions to increase the trust and safety on in our marketplace.

Speaker 1

So making sure that fraudulent events aren't in the marketplace, making really building the well lit marketplace that we know we want to scale. So what are we doing about the the obvious, you know, paid ticket differences or slow down right now? We're rolling out marketing tools and really focusing on making sure that all of our creators, now that they have access to these marketing tools, know the benefits and are adopting the tools. We're in about mid teens percentage of creators using these tools. And we continue to see that creators using the marketing tools are significantly outperforming on a same store basis, roughly 60% or so increase.

Speaker 1

We're also making strides in our demand generation messaging to our customers. We recently ran a survey across our customer base. And 75% of creators we we surveyed view us as a demand generation partner. So that's great on positioning. And then now we're focusing on heightened emphasis on the head inventory.

Speaker 1

So we expanded our sales team by 50% in the second half of last year. And that sales team has closed 24% more customers in the second half year over year. And we're seeing that momentum continue into the early part of this year. So deals that we have targeted and closed are, again, are focused on top metros. So San Francisco, New York, London, LA, etcetera.

Speaker 1

And these deals are on average 15% larger already than the prior 3 quarters of the year. So there's some good momentum. We can definitely lean in there more. We can remain disciplined and close profitable sales deals because we have the benefit of this demand generation capability, because we have the scale, and because we can show these customers that we can help them sell more tickets. So I have a lot of confidence in us being able to increase paid ticket sell through on Eventbrite by doing 2 things really well, creating better opportunity for this highly popular event content to sell out.

Speaker 1

And second, being able to increase our retention and engagement of consumers. And that's an area of investment for us, particularly through the mobile app.

Speaker 2

Yes. So in respect to the EBITDA margins, our long term target is 20% or better. And we can control the EBITDA margin. And we do believe that's in our future. We've made considerable progress over the last year and really over the last 3 years on the profitability of the company.

Speaker 2

Our current outlook on 2024 does not anticipate us getting to that 20% target during this year. The way that we will get there is by resuming stronger core ticketing growth. We've built a much more efficient engine. Revenue per ticket, gross profit per ticket is stronger today than it's ever been, and then blending in more of the high margin non ticketing revenue from organizer fees and advertising and the like. We'll control corporate overhead, and we'll utilize the lower cost locations that we've built into our system around the world to continue to drive long term margin expansion.

Speaker 2

In the meantime, we will also continue to invest in our product, in our marketing, in our sales. So that long term target is still within our we have a line of sight to that, but it will not happen in 2024.

Speaker 7

Okay.

Speaker 6

Thank you both.

Speaker 3

Your next question comes from Justin Patterson from KeyBanc. Your line is now open.

Speaker 8

Great. Thank you. This is Sergio on for Justin. So a few questions for us. On the 2024 guidance, the revenue growth on the guidance implies some deceleration there.

Speaker 8

So just hoping you could give us some detail on what gives you confidence in these demand generation products and the reaccelerating ticket growth. I think you mentioned the 3 priorities earlier in the prepared remarks. So maybe if you could provide more color there and what gives you confidence? And then on the follow-up on the lower ticket volume, slower growth from the organized fees. Just wondering how that has played out versus your expectations?

Speaker 8

And anything you could maybe provide on how you plan to show the value and introduce these new tools to these advertisers either churned or are filling the friction to sign up, So how you're just, you know, functionally putting the product in front of them for them to try? Thank

Speaker 1

you. Sure. Thank you for the questions. So on our demand generation proposition and really what we're focusing on for our creators, we come into this year with 2 very distinct value propositions that we really haven't had in the past. So if you think about, marketing tools, the ability for creators to use our aggregate consumer data to build lookalike audiences and deploy social paid advertising effectively.

Speaker 1

And you imagine that we can increase the surface area options for those ads. We're seeing 5 to 6 x ROA, on on the product already, and much stronger adoption now that we are offering it across the board. We've seen a mid teens adoption so far, and we've only been in market for a few months. So we think that there is some considerable upside in helping creators become better marketers and look to Eventbrite to help them spend their marketing budget, which is typically 40 to 50% of the face value of their ticket. We see the strengthening of our own gross margins in offering features like Eventbrite ads.

Speaker 1

You know, we are targeting our highest value creators, both with ticketing and advertising for the first time in the company's history. So as we improve things like consumer traffic and relevance and personalization, we improve consumer engagement and we expand the ad inventory options throughout the Eventbrite Discovery experience, that's also going to boost the adoption of Eventbrite Ads, which is a much stronger, gross profit product for us. So all told, marketing tools and Eventbrite ads is already about 10% of our revenue mix. As we continue to scale paid ticketing, we think that combination is pretty killer, and that's what gives me confidence for this year and beyond.

Speaker 2

And thinking about the ticket volume impact and the introduction of organizer fees, we weigh carefully the short term opportunity cost of some disruption to our ticket volume against, as I said earlier, the long term value of extracting more for the investment we've made in our product and for the demand generation that we drive. In the Q4, that revenue balance, if you look at the paid tickets, perhaps the negative impact on paid tickets versus the additional revenue from organizer fees, it was a positive trade off for us on a revenue, dollar for dollar revenue in the Q4, and it will be so again in the Q1 this year. And those organizer fees are higher margin revenues than the ticketing revenue. Now most importantly, we will rebuild the strength of the paid ticket volume and we'll get paid ticket volume back to growth the things that we talked about. And as we do, that will come with the improved monetization of the model overall that is earning us credit for the demand generation and the tools that we're providing that are helping creators with their success.

Speaker 3

Okay. Your next question comes from Daley from JPMorgan. Your line is now open.

Speaker 7

Thanks for taking the question. I have 2. I guess the first one, I don't know if you addressed this on the call already, but how far along are you guys in cycling through some of these unorganized or fee introduction based related evidence? And secondly, I mean, it feels like organizer fee, as long as the creators are using all of the features that come with it, it's good value for them. So just wondering like why do you think some creators aren't fully utilizing some of the features that come along with it?

Speaker 7

Is it just a matter of not just realizing it's there or is there something else related to that? And in terms of the pay ticket volume growth trend, are you seeing any changes in the competitive landscape that's affecting that as well? Thank you.

Speaker 2

Go ahead. Okay. With the introduction of the organizer fees, I think from the creator's perspective, this is the first time that there has been a fee associated with listing your event on Eventbrite, and that has, you know, there's some natural market digestion with that. The vast majority of creators have, as you said, paid very affordable fees and stayed on the platform and continue to produce events and sell tickets. There has been some impact.

Speaker 2

It's been it's been greater on the free ticket side where Eventbrite's been free in all respects in the past. And today, we have a fee to list even free events. And we believe we'll cycle through this introduction of the organizer fees. So I think it will probably take a we think it will take throughout the Q1 into the second quarter, and we'll be able to cycle past this disruption into the second half of this year.

Speaker 1

And then on the feature side, in terms of adoption of marketing tools and Eventbrite ads, I really think that's a combo of us continuing to strengthen our demand gen messaging. And certainly, you know, with our recent creator survey showing that the vast majority of our creator surveyed agree that we help them sell tickets. We think that's a good leading indicator that we can continue to connect them with the tools that they need to not only become better marketers themselves because, you know, frankly, they know their communities. So they should be the ones, as superheroes, but also to understand that they can unlock the, value of buying, promoted listing space and essentially through Eventbrite Ads in the marketplace. I think it's it's awareness and then it's building trust by showing results.

Speaker 1

And so we are contemplating different ways to be able to allow our creators to test these tools. So we have a free trial today with our pro subscription. We'll also look to see if we can incentivize our larger creators and, the creators of popular consumer inventory to be leveraging these tools, on a free trial basis to induce, adoption of the tools. In terms of the ticket volume trends that we're seeing and any, any changes in the competitive landscape, No major changes have occurred other than us observing that some of the mid market, sales driven companies continue to slow down and be challenged because the unprofitable nature of the deals are closing are starting to wear, you know, their balance sheets. We are leaning in and being very thoughtful, very aggressive, but also disciplined.

Speaker 1

We run a profitable sales model. We think we have the best platform and technology out there. We think combined with our marketplace value proposition and ability to drive demand, we are the superior solution. So we're going back out and into the market to engage customers that we know well, customers that we're new to. And I'm really excited about some of our wins.

Speaker 1

We recently, partnered and closed Bar Pop in Perth, Australia, Gingerline in London, and the Calgary Folk Festival. And this is all within the last few weeks. These are indicative of the customers that will continue to engage. And we're going to be fierce competition for especially entertainment, nightlife and music in the metros we really care about.

Speaker 3

Your next question comes from Cameron Manson Perron from Morgan Stanley. Your line is now open.

Speaker 9

Thanks. Hi, everyone. A few, if I can. First, you haven't mentioned it, so I'm assuming that the answer is no to this. But I'm curious if consumer demand, if you're seeing any softness there reflected in the paid ticket growth.

Speaker 9

And then on the margin trajectory as we think about into next year, I think as ads and organizer fees continue to scale that take rate and gross margins would improve off of 4Q levels. You just did a 68% group margin on full year 'twenty three. So you have a couple of basis points, I think, at least or sorry, a couple of 100 basis points of improvement, I think, year over year going into 'twenty four to help you kind of deliver the 12% lowtomidteens adjusted EBITDA guidance for the year. I just want to make sure I'm thinking about that right. It seems like even outside of OpEx, there should be 200 bps of tailwind there on the margin trajectory.

Speaker 9

And then I was wondering if you could help contextualize the 91,000,000 people buying on the platform this year. Sorry if I missed it, but curious how much that was up year over year. And then as we think about your focus on demand gen, where do you think that can go over time? Thanks.

Speaker 1

Great. So on the consumer demand side, we are seeing steady resilient growth in consumer interests. And I think that is indicative of the very broad, nature of the inventory on our platform. We really benefit from being the largest mid market ticketing marketplace that, you know, has multiple categories, multiple geos. And, you know, with 5,000,000 events, there's a lot of variety in there.

Speaker 1

And we still see the mid market as strong and growing. Consumer purchasing power is resilient with the average ticket price being about $40 We'll continue to keep very close eye on consumer trends. We know that in sub upper ends of the market, there are differences in how creators are thinking about driving demand, and they're looking for more efficient ways to sell tickets. So we know that we have the right solution when creators are starting to feel the pinch because maybe producing their event might be marginally more expensive, or they're getting nervous about consumer demand. We're the perfect antidote to that.

Speaker 1

So what we're doing is focusing on the appeal of our marketplace on a local basis, really driving home the message that we have the events people want and showcasing them readily through search and discovery, personalization, distribution, and Eventbrite ads. And our, consumer reach was at record levels in 2023. So over 92,000,000 consumers transacted a free or paid ticket, which was up 7% year over year.

Speaker 2

On your question about margin trajectory, Cameron, you're right. As we layer in more of the non ticketing revenue from advertising and organizer fees, those have a really favorable effect on gross margins. So as we've gone from 2% of revenue from those sources to now north of 10%, and we expect to continue to grow the share of revenue coming from those higher margin demand generation related services. That will continue to have a very favorable effect on gross margins. And so I think the way you're thinking about it is similar to what we're contemplating in the outlook that we've provided.

Speaker 2

We've in the past talked about a incremental profitability range that goes from 25% to 50% of revenue growth flowing down to the bottom line. And our outlook for this year would be at the lower end of that range, but within that long term target. And I think you're understanding the margin trajectory in the same way that we're thinking about as we describe the outlook.

Speaker 7

Great. Thanks, guys.

Speaker 3

Your next question comes from Hamed Khorsand from BWS Financial. Your line is now open.

Speaker 5

Hi. Just a couple from me. One is, why is product development costs still rising if you've gone to lower cost markets as far as development goes? And the second is, on the last earnings call, you had made comments about churn not seeing churn or churn not being elevated. And then the theme of this call is that there was churn as far as organizers are concerned.

Speaker 5

And I'm just wondering how far along are you from the learning curve as to why those organizers left and how you're going about to get them back and the competitive nature of the landscape as far as these prices go, these costs are concerned so that this doesn't happen when you go into your peak moment of the year? Thank you.

Speaker 2

Sure. On product development costs, we're continuing to invest in the consumer side of our product experience, particularly our mobile app, the personalization, search, discovery, leveraging the data to bring to life a consumer experience that's really rich. Our mobile app users today are a little bit more than 10% of the total monthly usage, and we think there's a lot of room to drive that up. And we're excited to do that because the users of the mobile app typically purchase 30% to 35% more tickets in a period. It's a superior experience.

Speaker 2

It's the way it's where Gen Z and Millennials and Gen X are. And we're driving folks in that direction with our product investment. So we are investing more on the consumer product experience and we'll continue to do that because we think it drives repeat purchase volume, it drives consumer loyalty, it drives demand generation. And ultimately, those are the things that creators most want when they're looking for a partner like we want to be for them. As we look at the impact of the organizer fees, as we're coming into the start of this year, recently we've seen more impact from the organizer I think you'll see paid ticket volume be down in the probably high single digits in the Q1 of this year from where it was down about 4% in the prior quarter, And we'll begin a recovery from that point.

Speaker 2

So, I think we have a pretty good sense of understanding what the issues have been. You can imagine that we're doing surveys and focus groups and research on that and have a pretty good beat on the things that we need to do to adjust. I described some of them earlier and we'll be executing on those.

Speaker 3

There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for joining. You may now disconnect.

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