Live Nation Entertainment, Inc. (NYSE:LYV) Q4 2023 Earnings Call Transcript

Live Nation Entertainment, Inc. (NYSE:LYV) Q4 2023 Earnings Call Transcript February 22, 2024

Live Nation Entertainment, Inc. misses on earnings expectations. Reported EPS is $-1.25 EPS, expectations were $-1.08. LYV isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

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

Amy Yong: Good afternoon, and welcome to the Live Nation fourth quarter and full year 2023 earnings conference call. Joining us today is our President and CEO, Michael Rapino; and our President and CFO, Joe Berchtold. Before we begin, we would like to remind you that this afternoon’s call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the company’s anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation’s SEC filings, including the risk factors and cautionary statements included in the company’s most recent filings on Forms 10-K, 10-Q and 8-K for a description of risks and uncertainties that could impact the actual results.

Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in our earnings release. The release reconciliation can be found under the Financial Information section on Live Nation’s website. And with that, let me open the call for questions. Operator?

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Q&A Session

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

Stephen Laszczyk: Hey, great, thank you. Good afternoon. Maybe one on the mix shift in the slate and one on Sponsorship. A lot has been made on the mix shift shifting more towards the amphitheaters this year. Maybe for Joe, just from a modeling perspective, could you help us think through how the mix shift will impact the cadence of revenue growth and margin expansion across the Concerts and Ticketing segments in 2024? And maybe how we should expect the business to pace towards the double-digit AOI growth you called out in the release? And then, on Sponsorship, maybe for Michael, you had two notable tailwinds to the Sponsorship business this year: MasterCard is replacing Amex, and you have Rock in Rio, which is a bi-annual event coming in this year. Is there any way you can help us size the contribution from these two factors and perhaps where else you’re seeing demand in the Sponsorship business this year? Thank you.

Joe Berchtold: Sure, Stephen. This is Joe. I’ll go first. In terms of the mix shift, there’s several dimensions of this. Let’s start with deferred revenue. Deferred revenue in the level to which it’s up is impacted on a timing basis by what we’ve talked about in terms of stadium volume being lower this year, amp volume being higher. So, you have less Q4 far ahead on sales with the stadiums, so that’s going to compress that deferred revenue line that you see as of the end of the year relative to what you’d see in a more normal year. Then, in terms of how that specifically flows through on the concert side, because it’s going to be a shift to more outdoor with the amphitheaters, it’s going to be more heavily weighted to Q2 and Q3.

It’s going to have a higher AOI per fan, because we’re counting the beer money, the parking money, other revenue streams when we have the fans on site. It will mean, just on a top-line basis, a lower revenue per fan because the stadium tickets tend to be the highest price tickets, so you’ll see a real divergence there between the AOI per fan and the revenue per fan. That, obviously, will translate into improved margin on the Concert segment this year, which should particularly come through in the second and third quarters. On Ticketmaster, the way it flows through is that it would have had fewer on sales in the fourth quarter because the amphitheater shows tend to go on sale closer in time to the shows. So, we still outperformed, grew Ticketmaster in the fourth quarter, increased our number of fee-bearing tickets by about 5 million.

But that was against the headwind of that mix shift. So, we expect to be selling more of those tickets into Q1 and Q2 for the amphitheater. But because those tickets are deferred from a revenue recognition standpoint at Ticketmaster, you won’t see the AOI on those tickets until the shows play off in Q2 and Q3. On the Sponsorship?

Michael Rapino: Stephen, does that help?

Stephen Laszczyk: Yeah, that’s helpful. And then, just on Sponsorship.

Michael Rapino: Yeah. I just want to give Joe a macro level on the kind of concert supply just so we’re aligned. This is going to be a great year. We’re pacing ahead on our arena and our amphitheater business, which is the higher-margin business as we’ve talked about. So, we’re going to have a fabulous year. We’re going to be able to monetize that around the world. We actually look at ’25, looks like it’s going to be a monster stadium year again as that pipe kind of reloads itself. So, I wanted to just make sure on a macro level, we’re seeing continual artist supply at record levels. And we made decisions this year, Usher could have been in stadiums. We wanted to get them in arenas this year and put a great show together. Justin Timberlake, Bad Bunny in arenas versus stadiums.

So, you make those trade-offs in different years. But the good news for us is we’re going to have a fabulous arena/amphitheater year, festival year around the world. That’s going to drive our overall AOI margin cash flow. Probably bounce back with some bigger stadium activity in ’25 and then the cycle will continue. But as we’ve stated over our Investor Day, we look at this as continual growth year-over-year industry for the next 10 years on a global basis. And we’ll see that again this year. Sponsorship, to your macro point, the demand we’re seeing, strong as ever. I just spent some time in New York with my team with some clients, Verizon, et cetera. Our demand in terms of clients that want to be part of this live experience surge right now is stronger than ever, as you can imagine.

Most CMO’s want to sit down with us and talk about how can they have some part of this live explosion on a global basis. So, we’re seeing, as you’ve seen with Mastercard and updated deal with Verizon and others to be announced, our pipe is up year-over-year. We expect this to continue to be a double-digit growth business, as we’ve seen in the past. We’ve seen nothing slowing down there.

Stephen Laszczyk: Great. Thank you, both.

Operator: And the next question comes from the line of Brandon Ross with LightShed Partners. Please proceed with your question.

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