Live Nation Entertainment Reports Third Quarter 2019 Financial Results

Highlights:

• Revenue up 6% Year-to-Date to $8.7 Billion
• Operating Income up 12% Year-to-Date to $408 Million
• Adjusted Operating Income up 13% Year-to-Date to $862 Million
• 92 Million Concert Tickets Sold for 2019 Shows, up 5 Million through mid-October
• Sponsorship & Advertising Committed Net Revenue up 14% Year-to-Date
• Ticketmaster Fee-Bearing Gross Transaction Value up 5% in the Quarter, Highest Q3 Ever

LOS ANGELES, Oct. 31, 2019 /PRNewswire/ -- Live Nation Entertainment, Inc. (NYSE: LYV) today released financial results for the three and nine months ended September 30, 2019.

Live Nation delivered its highest operating income and adjusted operating income ("AOI") quarter ever as we continue to scale our business globally and build on favorable supply/demand dynamics for live music. Operating income grew 11% in the quarter and 12% year-to-date while AOI grew 11% in the quarter and 13% year-to-date, outperforming a record third quarter last year, and demonstrating the strength of our business model in today's experience-based economy.

In response to recent questions around consumer demand, we are seeing fan spending as strong as ever. In September, our amphitheater and arena shows actually closed stronger than shows in September of last year, and our fan spending on-site also showed ongoing growth.

At the center of our flywheel, the demand for live events continues to grow, as we have sold 92 million tickets through mid-October, up 6% or five million tickets compared to this time last year, and are on track to have nearly 100 million fans attend our shows this year.

And we have translated that fan growth into strong operating income and AOI gains in on-site spending, sponsorship and ticketing. As a result, as we wrap up a successful 2019, we are confident that we will deliver double-digit operating income and AOI growth for the year.

Concerts Global Platform Expanding

Looking at our Concerts business, year-to-date we have had 73 million fans attend over 26 thousand concerts, delivering $113 million in operating income, which is up 14%, and $333 million in AOI, which is up 17% from last year. 

Our international business has been particularly robust this year, delivering much of our fan growth with a strong year for stadiums and theaters, while in the United States our arena and theater activity was also up. As we have grown our show volume and the breadth of artists with which we work, we have also been more effective in pricing tickets closer to market value, particularly with our platinum pricing tool. So far this year we have had over 3,000 arena and amphitheater shows use platinum tickets, with a 54% increase in the number of platinum tickets sold per show.

Looking at our venue operations, we have furthered our focus on the fan experience, improving our hospitality across the board, from our food and beverage offerings to the lawn experience to VIP options.  As a result, we increased our average revenue per fan by $2.50 in our amphitheaters to over $29, while also increasing fan spending at our festivals, theaters and clubs.

As we continue building our expertise in on-site execution, we are finding more opportunities to build new venues or to take over operation of existing ones, and since the start of this year we have added 36 venues to our portfolio, ranging from the Brooklyn Bowls in New York and Las Vegas to the Danforth Music Hall in Toronto to the Sportpaleis in Belgium.

As a result, we are confident in the success of our Concerts flywheel for 2019, where we will promote more shows, reach more fans, price more effectively and provide a better fan experience at our venues, which we expect will then drive double-digit operating income and AOI growth for the business this year.

Sponsorship Double-Digit Growth Continues

Turning to Sponsorship, with the first days of Rock in Rio and strong growth across our entire sponsorship platform, our high-margin Sponsorship business delivered 17% operating income and 18% AOI growth for the quarter and 14% operating income and 13% AOI growth year-to-date. 

We are the global leader in music sponsorship, delivering the unique value proposition of nearly 100 million fans on-site for brands looking to make a direct connection with consumers. As part of this, we continue to innovate new ways for brands to interact with fans on-site at our venues and festivals, with new programs such as Bud Light's branded photo installations at our amphitheaters and Revlon's roller rink at Lollapalooza. As a result, sponsorship revenue has grown by 11% year-to-date at our venues, while festival sponsorship has grown by 31% year-to-date.

More broadly, growth is substantially driven by our strategic sponsors, all of whom utilize a range of our assets and span multiple years. Revenue from this group, which collectively accounts for 70% of our total sponsorship revenue, has grown 15% year-to-date.

With over 95% of our expected sponsorship revenue for 2019 now contracted, we are confident we will deliver low double-digit operating income growth and AOI growth in the mid-teens in Sponsorship for the full year.

Ticketmaster Leading Marketplace

Ticketmaster grew operating income growth by 30% and generated its highest AOI quarter ever, up 20% from last year, and delivered 5% operating income and 6% AOI growth year-to-date, as every quarter in 2019 has been one of our top 10 gross transaction value ("GTV") quarters ever.

This growth continues to provide Ticketmaster the scale to invest in the evolution from paper tickets to digital, which is being demanded by venues and content that are seeking greater control of their tickets and looking to develop a more direct connection with fans.

Our Presence rollout is pacing ahead of schedule, and we expect digital ticketing to be installed at over 700 venues, representing 120 million tickets, by the end of this year, with over 60% of the fans at digital-enabled events now entering with their mobile devices.

And digital adoption is even greater with the NFL, where 10 teams have now eliminated paper tickets and over 90% of fans for these games are using their mobile phones to get in. Digital ticketing has also expanded our engagement with fans, giving Ticketmaster a more direct connection, providing for more effective marketing and targeted offers. The Ticketmaster app is now regularly in the Top 10 rankings for  Entertainment in the Apple App Store, driving a 30% increase in app downloads over the past year. 

This, combined with continued improvements in our mobile web experience, has led to further growth in mobile transactions, now accounting for 46% of ticket purchases globally, up 15% over last year. Digital ticketing is a strong demonstration of what Ticketmaster can be – providing the best ticketing platform for venues by delivering value well beyond the sale of the ticket, and at the same time giving fans an ever improving, mobile-led ticket purchasing and management experience.

With these pieces coming together and continued growth in our Concerts activity, I expect we will deliver operating income and AOI growth at Ticketmaster in the mid-single digits for the full year.

Summary

As we approach the end of 2019, we are confident that our strong performance will deliver another record year with growth in revenue, operating income and AOI.

All of our businesses – Concerts, Sponsorship and Ticketing – have delivered growth year-to-date, and based on their key operating metrics, we currently expect each to deliver record revenue, operating income, and AOI for the full year.

With an early look to next year, our 2020 pipeline is up substantially, with over 1,500 stadium, arena and amphitheater shows booked already, up double-digits from this same point last year.

And as we look forward, we continue seeing tremendous opportunity to expand our global concerts and festivals business, driving further growth in on-site execution, sponsorship and ticketing.  

Michael Rapino
President and Chief Executive Officer
Live Nation Entertainment, Inc.

The company will webcast a teleconference today at 5:00 p.m. Eastern Time to discuss its financial performance, operational matters and potentially other material developments. Interested parties should visit the "News / Events" section of the company's website at investors.livenationentertainment.com to listen to the webcast.  Supplemental statistical and financial information to be provided on the call, if any, will be posted to the "Financial Info" section of the website. A replay of the webcast will also be available on the Live Nation website.

Notice Regarding Financial Statements

The company has provided certain financial statements at the end of this press release for reference.  These financial statements should be read in conjunction with the full financial statements, and the notes thereto, set forth in the company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission today and available on the SEC's website at sec.gov.

About Live Nation Entertainment: 

Live Nation Entertainment, Inc. (NYSE: LYV) is the world's leading live entertainment company comprised of global market leaders: Ticketmaster, Live Nation Concerts, and Live Nation Media & Sponsorship.  For additional information, visit investors.livenationentertainment.com.

• As of September 30, 2019, total cash and cash equivalents were $1.8 billion, which includes $747 million in ticketing client cash and $406 million in free cash.
• Event-related deferred revenue was $952 million as of September 30, 2019, compared to $759 million as of September 30, 2018.
• For the quarter ended September 30, 2019, net cash used in operating activities was $260 million and free cash flow — adjusted was $308 million.
• We currently expect capital expenditures for the full year to be approximately $325 million, with approximately half to be revenue generating capital expenditures.
• We currently expect the amortization of non-recoupable ticketing contract advances for the full year 2019 to be in line with the last few years of expense.

Forward-Looking Statements, Non-GAAP Financial Measures and Reconciliations:

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements regarding anticipated double-digit operating income and adjusted operating income growth and growth in revenue for the company in 2019, including double-digit operating income and adjusted operating income growth in the company's concerts business, low double-digit operating income growth and adjusted operating income growth in the mid-teens for sponsorship, and operating income and adjusted operating income growth in the mid-single digits for Ticketmaster, with record revenue for each business for the year; projected attendance at the company's concerts of nearly 100 million fans in 2019; and the expectation that the company's Presence digital ticketing product will be installed at over 700 venues, representing 120 million tickets, by the end of 2019, with over 60% of the fans at digital-enabled events entering with their mobile devices; and the strength of the continuing opportunity to expand the company's global concerts and festivals business, driving further growth in on-site execution, sponsorship and ticketing. Live Nation wishes to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, including but not limited to operational challenges in achieving strategic objectives and executing on the company's plans, the risk that the company's markets do not evolve as anticipated, the potential impact of any economic slowdown and operational challenges associated with selling tickets and staging events.

Adjusted Operating Income (Loss), or AOI, is a non-GAAP financial measure that the company defines as operating income (loss) before certain stock-based compensation expense, loss (gain) on disposal of operating assets, depreciation and amortization (including goodwill impairment), amortization of non-recoupable ticketing contract advances and acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation). The company uses AOI to evaluate the performance of our operating segments. The company believes that information about AOI assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results.  AOI is not calculated or presented in accordance with GAAP.  A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business.  Accordingly, AOI should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP.  Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

Constant Currency is a non-GAAP financial measure. The company calculates currency impacts as the difference between current period activity translated using the current period's currency exchange rates and the comparable prior period's currency exchange rates. The company presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

Free Cash Flow — Adjusted, or FCF, is a non-GAAP financial measure that the company defines as net cash provided by (used in) operating activities less changes in operating assets and liabilities, less maintenance capital expenditures, less distributions to noncontrolling interest partners. The company uses FCF among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than maintenance capital expenditures.  The company believes that information about FCF provides investors with an important perspective on the cash available to service debt, make acquisitions, and for revenue generating capital expenditures.  FCF is not calculated or presented in accordance with GAAP.  A limitation of the use of FCF as a performance measure is that it does not necessarily represent funds available for operations and is not necessarily a measure of the company's ability to fund its cash needs.  Accordingly, FCF should be considered in addition to, and not as a substitute for, net cash provided by (used in) operating activities and other measures of financial performance reported in accordance with GAAP.  Furthermore, this measure may vary among other companies; thus, FCF as presented herein may not be comparable to similarly titled measures of other companies.

Free Cash is a non-GAAP financial measure that the company defines as cash and cash equivalents less ticketing-related client funds, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaids.  The company uses free cash as a proxy for how much cash it has available to, among other things, optionally repay debt balances, make acquisitions and fund revenue generating capital expenditures.  Free cash is not calculated or presented in accordance with GAAP.  A limitation of the use of free cash as a performance measure is that it does not necessarily represent funds available from operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash should be considered in addition to, and not as a substitute for, cash and cash equivalents and other measures of financial performance reported in accordance with GAAP.  Furthermore, this measure may vary among other companies; thus, free cash as presented herein may not be comparable to similarly titled measures of other companies.

SOURCE Live Nation Entertainment

Related Links

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