Live Nation Entertainment, Inc. Price & Performance (LYV)

Good afternoon, and welcome to the Live Nation Full Year and Fourth Quarter twenty twenty four Earnings Conference Call.

Joining us today is our President and CEO, Michael Rapinoe our President and CFO, Joe Berchtold. We would like to remind you that this afternoon's call will contain certain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ. Including statements related to the company's anticipated financial performance, business prospects, and 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 eight ks for 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 our earnings release.

The release reconciliation can be found under the Financial Information section on Live Nation's Live With that, we will now take your questions. Operator?

Thank you. We will now be conducting a question and answer session. And the first question comes from the line of Steven Lasek with Goldman Sachs. Please proceed with your question.

Hey, guys. Thanks for taking the questions. Maybe the start off from Michael on consumer demand. You guys have a lot of stadium supply on the market over the last few months. I'm curious if you maybe could talk a little bit more about the demand trends you're seeing play out across the slate so far this year. Is there anything that you're seeing that makes you any more constructive or perhaps any more cautious on the demand front since we last caught up in November? Before a lot of the supply went on sale?

Thank you, Stephen. As you said, we've had a great start to the year. We've got a lot of inventory In the marketplace, we are seeing continued strong demand. We're seeing sell through rates At the stadium Live, higher than any previous year. If we look at one stat, the first week on sales we're selling through over 75% that's much higher than the last year. So we're seeing consumers buying up those stadium dates faster than ever up year over year or any comparable base So no slowdown at all. Lots of inventory [indiscernible] great demand selling most of these stadiums out or close to being sold out by the time we get to the show dates. That's great. And then maybe a follow-up for Joe.

Given that inventory that Michael spoke to on the stadium side year and the mix shift in that direction. I'm curious, Joe, if you could speak a little bit more about the puts and takes on Concert segment margin or maybe how we should think about AOI growth this year. How does the mix shift back towards stadiums in 2025 impact that? And I'm curious as well the visibility you feel like you have on the Venue Nation, amphitheater side of the equation. Year and now that factors into the AOI growth?

For the segment? [indiscernible] Thanks, Stephen. I think that this year is going to be more like a twenty three year as we look at how we're growing the business with all this stadium volume leading the way, I'd expect to see some good revenue growth I think Ticketmaster first and foremost, they'll be a big beneficiary. I talked a lot about last year on the other Live. [indiscernible] deliver the kind of revenue for Ticketmaster's one stadium show we have all those stadium shows. So I think you'll really see that benefiting on the Ticketmaster side. I think that we continue to have a sponsorship business that's performing extremely well.

We note here 75% sold up double digits. So you expect that to continue to deliver some ongoing strong growth. Then on the Concert side, again, all these shows, all these stadium shows are absolutely making money on attractive. Returns. We just don't get to count the beer money and the parking money we do with our own venues. So I think it it will ultimately come down to the pace of revenue growth versus the pace of AOI growth, which we don't know yet because haven't gotten into the AMP season. So the latter part of your question, on how much growth do we get on our per caps at our AMPs at our festivals, theaters and clubs over the course of the year.

All of that will just help determine the exact balance of of revenue growth versus AOI growth there. But we expect to see all of all the businesses performing well this year. And as Michael said, in aggregate continuing to deliver double digit AOI growth for the business.

That's great. Thank you both. And the next question comes from the line of Brandon Ross with Lighthead Partners.

Please proceed with your question. Hi guys. Thanks for taking the questions.

Something that stood out in the release to me was that 3% and then the event related deferred at 11%. I thought that would have been much higher Live the pipeline and frankly the answer that you gave to Steven's last question. Can you guys explain the the disconnect for me?

Sure. Let me take the different pieces because I think they're slightly different in terms of what's going on. So ThinkMaster transacted volume, as you noted, is up 3%, while our Concert tickets are up 10%. So if you look at the numbers, our concert tickets were up around 6,000,000 The TM transacted tickets, which is everything at the high end of of all of our tickets, to at the lower end family shows and other lower price things. Up 3%. Off of roughly almost double the base. So what you have is at this point in the year, strong growth in the Live Nation concerts that Ticketmaster has been selling, You have a bit less activity in some of the other, whether they're promoters or some of the other activity in the Ticketmaster buildings but we're still very early in the Ticketmaster scheme. It's about 100,000,000 tickets and we ended up the year last year at about three thirty million tickets. We expect to see growth off off of that. So we're at a pretty early point for the Ticketmaster volume as opposed to somewhat further along on the Live Nation side?

I think it's it's a bit early to read too much into that number. Then in terms of the deferred, I think the on sale timing this year was slightly different than What we saw last year. This year, because we had such a strong stadium lineup, that really owned the fourth majority of the on sales So that drove growth, but we didn't have as early of on sales on the arenas and the amphitheaters we had last year. Last year because we didn't have the stadium volume at the end of twenty twenty three. We saw some earlier on sales on the arena and amphitheater Live. So that's in effect why you got the you got to double digit level of deferred growth at that point.

Great. And then Michael, you talked a lot about the strong demand for stadium shows. In answering Steven's question. But just optically, I look at some of these shows and I see a lot of high priced tickets still on sale.

For high profile shows you think ticket pricing is getting ahead of itself or is there some other explanation for that? And how should we expect apples to apples ticket prices to grow this year? So stadium versus stadium?

Yes, I think you're seeing the artist in general every cycle is a little more educated what's the best way to price Mike's ticket, how do I keep it the the front of the house. So we love seeing these stadiums sitting somewhere about 95% sold out right now. The instant we sold out at ten a. M. Means we've transferred a lot of wealth to the sculptors. If you see any of those tickets you're any tickets you're talking about are going to be the high end tickets. Sitting on the market, those will flush out between now and show date. So we think these artists on their stadium pricing are priced at almost perfection where strong, strong demand They also added more venues, which we love So they're helping consumers get to more shows at a good price. Also making sure that it's priced closer to market which means you'll have a few high end tickets sit around the rim until we get closer to show date. So that's the perfect on sale and land the plane on show date [indiscernible] So would it be silly to partially think about it as you're taking away from from secondary ticketers or ticket platforms and that's moving more to primary now.

Yes, for sure. I think the artist over years, we've been saying this for years, every tour is looking at that P1 and making sure that if their fans are going to buy it, they would rather buy it from them direct on show day than two days later from a secondary Live.

Ours included. So yes, Artis are going to figure out how to keep pricing the P1s a little more aggressively. Price the bottom, back end of the house lower, so we got a great sell through. Those artists you're talking about, any inventory see, we could sell that out in a minute if we drop the price, right?

So finding that right combination where you're kind of march along on the way to the show date versus the ten a. M. Thanks, Michael. And the next question comes from the line of Cameron Manson Peroni with Morgan Stanley.

Please proceed with your question. Thank you. First, just want to say thoughts go out to you guys and everyone in the LA office after everything that's happened this year. Pretty tough. Hope everyone's hanging in. As well as can be expected. But Michael, one high level question for you. As we frame the opportunity you've laid out for sustained double digit AOI growth over the next few years, I just love to hear your thoughts on whether you expect the drivers of that performance to evolve over that timeframe or whether it's really just down to executing against a similar playbook as what supported the growth that you delivered here in 2024? And then one for Joe, Joe. On the outlook for $900,000,000 of CapEx in $25,000,000 another big increase similar to what we saw in 2024 What would you say investors should take away from the decision to ramp that so healthily in terms of ROI? ROI you're seeing from that spend so far and any help with framing the timing from investment outflow to the returns showing up on the P and L will be helpful? Thanks.

I'll go back to your first question if I can remember it. But Yes, listen, we've been we love consistency over here. So if you've been following our stock and you've been to our Investor Days for the last few years, we don't we haven't deviated really from what we think our thesis of why the industry is a great industry. On a global basis. We think live has a real global unlock and will be a high high single double digit industry for the next decade as we were we saw our Coldplay Show In India sell out largest single concert in history. 25,000 people. We saw those dates sell out instantly. So we've been talking a lot about our the globalization of the consumer, supply demand of the globalization. Untapped markets to grow still. So our model is the same. We're 100 offices in about 40 countries. Keep growing those offices, growing our our market share in those underdeveloped markets and we will continue to follow that global trend of more consumers wanting to go to shows from Pittsburgh to The Philippines. We think the industry is growing We tend to grow better than the industry and be able to capture the revenue from our consumers walking in the door.

And Cameron, I think in some regards, second question is the same as your first question. Right, which is if our thesis is we're going to grow to 200,000,000 fans as the next step and the different levers we have and venue side is a key piece of it. And certainly, our capital deployment is going to mirror the delivery of that AOI growth. So I think we should take from the fact that we're increasing our capital spend is continuing to see a lot of opportunities that have very attractive again heavily focused internationally on the at the arena Live, globally focused on these large theaters, both types of venues that can not just deliver attractive returns, but also move some reasonable volume of fans. Expand our shows, grow the market. So that's the biggest takeaway I take from that. In terms of the timing, these projects are all different in terms of how long they take from shovel and the dirt through through growing it out. What we're trying to do and we gave you some pieces here is understanding of when or what venue is opening to how many millions of fans give you some guide for how we're seeing the impact roll in?

Got it. Helpful. Thank you both.

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

Hi, thank you. So just wondering, music labels and DSP have recently come to agreements that may allow for super premium tiers and wondering if you thought of potentially about the role of live music within some of these offerings, maybe it was something like ticket access is there inventory that could be made available and could this be a potential sponsor opportunity? Yes. Thanks, David.

Yes, we currently Our job is to use that inventory that we've acquired from the artist and maximize it through sponsorship currently. And we have a lot of pre sale programs in place with you've seen the mall, Horizons and Citibank, etcetera. So our job is always to look at that show, work with the artist, and figure out is there ways to maximize that inventory to business as well as consumers As far as the latest round Spotify and Apple and Amazon, we've They've approached us all. We've talked to them all. About ideas on if they wanted inventory? There's a cost to that and we would entertain and look at that option. If it made sense for us in comparison to other options we have for that that pre sell, which is a it's a very valuable asset. The artist themselves tend to their own deals We do deals for the artist. But ultimately the artist has control of it. And that artist job is to maximize the revenue from it. They're not giving that away to anyone for free. Whether we partnered with them and found sponsors or we paid for it, It's valuable and wouldn't surprise me, of course, the labels or the distributors to try to add a $5 premium to a monthly subscription and they don't have enough of their own inventory in terms of music or free songs it's always the easy go to, let's give them a presale access.

The hard part about pre sale is just scaling it. Everybody wants Beyonce pre sale. And that's hard to scale. So we've been working with all three of them trying to find a model that may work for us and them and assume they're talking to others also.

And then maybe just separate, the DOJ anti nominee recently indicated some openness to settlements where effective remedies can be put into place, just wondering what room you see to advance discussions with the agency relative to the prior administration? And then don't know just separate to this, are there any updates you can give on just the trial in terms of timing or kind of notable dates to be aware of?

This is Joe. The trial process continues to move apace as it has targeting early next year for a trial date. So question is, is over the course of this year can is there a path towards a resolution with the DOJ? Doesn't lead to the trial. We've said in the last administration, there was really no interest in any discussion on settlement. So we're hoping that this DOJ returns to a more traditional approach and is open because they don't own it in the same way. To those discussions, but we haven't had any discussions yet. The person that you would discuss it with is not been approved yet, not been appointed. So until that happens, there's nothing we can do. And we'll see how that plays out in the coming months. But Nothing really substantively new.

And the next question comes from the line of Peter Sopino with Wolfe Research. Please proceed with your question. Hi, everybody.

A question on Venue Nation capital. Wondering if the 2025 budget which I think you detailed as being $200,000,000 or $300,000,000 greater than 2024, is showing any change in the mix of U. S. Versus international? And then a parallel question on the large arenas for the 15,000 to 20,000 seat segment. I'm wondering if those opportunities are coming any faster or slower than you imagined and whether your appetite to invest in that particular segment has shifted at all? Thank you.

Well, the second question is, Joe, can do the first sorry, I was just going to jump on the second. The large opportunities on an international basis are coming consistently ongoing. So continues to see that ramp up. We tend to be the first second phone call if you're a developer, thinking about building or have land and want to that land or have a venue you want to sell. So we see that pipeline growing and our appetite still remains very large to expand in that platform. And just on that same thread, Michael just answered the first question too, which is I think that in general, you'll see a trend towards more of the capital being deployed internationally because of the attractiveness in volume of those arena opportunities.

Thank you. And the next question comes from the line of Peter Henderson with Bank of America. Please proceed with your question.

Yes. Hi, everyone. So just wondering, I mean, there's been some concerns over the softness of U. S. Consumer, particularly in the low end recently It doesn't sound like you guys are experiencing any of that, but coming back to sort of Brandon's question as well, are you seeing any trade down from more affluent cohorts? And what are you seeing sort of from the more value conscious consumer And just related to that, I'm wondering, you recently announced that there will not be a long pass program in 2025. And I'm wondering if you could give any color on sort of the size of that and why the decision was made to end that program and what other programs you're considering.

Yes. I mean overall the demand seeing for the concert, and I assume the NFL has got the similar answer. We're seeing no pullback It's still on a global basis We're seeing strong demand. We're seeing it in small to big. So yes, Beyonce's are always going to have incredible demand. But if you look at my club business, we're going to do 30,000 club shows last in a year. Our club business is up 17% year over year. So So that's kind of the simplest way to say bottom end on a Tuesday in Indianapolis my business is doing better. Consumers are coming to the club to see the young bands. So we're seeing our festivals which are on sale already [indiscernible] They're selling at record levels So I'm seeing no pullback in any festivals from EDM to our country festival. Yes, As we always say, someone will write about one that gets canceled or a dog here and there, but generally overall macro our festival business globally is stronger than ever Our club and theater business is stronger than ever. And obviously our stadium business is on fire. So whether it's geographical, whether it's venue type or whether it's festival, we're still seeing strong, strong consumer across the board in terms of buying tickets for the twenty five season.

As far as the long past very small program, and we put some new leadership in charge of venues this year. We expanded Jordan Zachary's role and put some new thinking around how do we sell the summer amphitheatre. I think our belief was we were discounting too much, too early. With some of the programs we had. So was to pull back and relaunch, which we always do our annual concert week kind of our big, if you want to call that, our Amazon Prime Day Our concert weekend in later in the summer or earlier in the spring beginning of the summer, that's kind of our big deal. Where we sell all of our volume that matters. So we're going to just consolidate around that bigger idea and we're going to eliminate some of the swaddler programs that we're selling small, small volume of tickets overall. And the next question comes from the line of Jason Bazinet with Citibank.

Please proceed with your question.

I'm a big fan of the CapEx spending, so don't take this the wrong way. It's just a clarifying question.

When I look historically, VINU nation you'd own, I don't know, less than 10% of the venues most were leased or operated or whatever. Is this CapEx really moving more overtly into outright ownership of these arenas? Is that what we're talking about? Or is it spending CapEx and then having the right to lease it at a lower rate or operate it?

A chunk of it is absolutely Owning it. Every situation is different, but we're following your advice and trying to own more. Go upstream. So if we're in a situation where we can own it dirt on up, we do. [indiscernible] on the building, we'll do as much of the capital build out and minimize our lease. So You don't always have exactly what you want, but we're absolutely pushing it further upstream, if you will.

That's great. Thank you.

And the final question comes from the line of Ketan Marath with Evercore ISI.

Great. Thanks for taking the question.

Another one on Venue Nation. You provided a lot of great color at the Investor Day on the midterm outlook. I know that impacts to the model gets a bit tricky because as Joe mentioned, timelines vary greatly depending on how the shovel to dirt to growing the venue out process looks like.

It's an area where we get a lot of questions on. So I was hoping you could help us think about what the AOI impacts of VenuNation maybe was in 2024 and a little bit more specifics around how you see that evolving in 2025 Live given the growing venue base there?

Yes, we haven't really tried to break it out for you guys as a segment.

First of all, part of it a good chunk of it obviously comes from the sponsorship side and we've talked two thirds of sponsorship is venue driven. So you've got a component over there, you then you've got the operating component which is heavily driven by your by your beer and parking and so on. So we haven't really tried to fully model it and break it out that way for you unfortunately.

We try to use what we present at Liberty is the overall guideposts over over a mid term basis as you said to then try to back in and say how are these pieces potentially going to roll out? How do they maintain the sort of growth profile over the next several years? And am I comfortable they're going to be able to do it?

We're not really in a place that we're going to break out and give you the [indiscernible] Worth a shot. Thanks, Joe.

And I'd like to pass the floor back over to Michael Repino for any closing remarks.

Thank you, everybody. Look forward to talking about Q1 and May.

Ladies and gentlemen, that does conclude today's teleconference. We thank you for your participation.