Live Nation Entertainment, Inc. — 2024 Q1
Transcript
Each turn shows the speaker, their inferred role, the section, and that turn's net sentiment (×1000).
Good afternoon. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to Live Nation's First Quarter 2024 Earnings Call.
Good afternoon, and welcome to the Live Nation first quarter 2024 earnings conference call. Joining us today is our President and CEO, Michael Rapino, and our President and CFO, Joe Berchtold.
Thanks, Amy. We appreciate there's a lot of interest in what's going on with the DOJ. So let me address that upfront. We obviously know about the press reports claiming DOJ Antitrust division has decided to file a lawsuit against Live Nation, potentially seeking a breakup of Live Nation and Ticketmaster. At this point, we're just about to begin discussions with senior division leadership about the issues their staff has been investigating, which is typically in the final phase of an investigation.
[Operator Instructions] And the first question comes from the line of Brandon Ross with LightShed Partners.
I think you probably hit the biggest investor questions with your statement on regulatory, but I think there is one big question that's remaining in investors' minds. And that's, how do you see the relative value of Ticketmaster inside Live Nation versus as a separate stand-alone company?
Thanks, Brandon. I think we addressed this in our last call. At Live Nation, we run a very decentralized organization, and I'm very proud that we've built 3 incredible businesses sponsorship concerts and ticketing, and we're about to embark on our fourth venture around Venue Nation. So these businesses all run incredible core businesses on their own. Ticketmaster, as you know, was a stand-alone business for many years.
Great. And then you're continuing to express confidence in double-digit AOI growth this year. Obviously, you exceeded that in the first quarter, but deferred is actually down. Can you just quickly reconcile that? I assume the makeup is the profitability per fan based on the venue mix, but any additional color you could give would be helpful.
Sure. I think there are sort of 2 questions within that question, Brandon. The first is what's going on with consumer demand and then technically what's going on with the numbers. So just to make sure we hit hard on the consumer demand. We are seeing no weakness. The things that we look at that give us an indication of how the shows are selling, how the fans are spending when they go to the site, all continue to be very strong.
The next question comes from the line of David Karnovsky from JPMorgan.
We've seen some noise in the press recently around festival demand and that maybe some of the more established events in the U.S., Europe, are seeing challenge in moving tickets. Just wanted to see if you could dig in a bit on what you're observing for live or even the industry?
Yes, I'll start. We've read some of it also. We haven't said it in our business. We have over 100 festivals around the world. I think currently, ticket sales are up double digits year-over-year. So we're seeing a strong start to our festival portfolio. We also remind you festivals are a huge business around sponsorship, similar to venues with our sponsorship is up over 20% year-over-year on festivals, so we're seeing a strong, strong start to them.
And then on your venue strategy, just as you look to deploy capital to locations around the world, Can you discuss kind of criteria where it's best for Live Nation to execute independently versus where we've seen you kind of partner with a third-party like an Oak View Group, for instance?
Yes. We do it all. We've been partners with Legends and Spanaway Group in Boston, bunch of ones in the hopper right now across America on 5,000-seat venues with certain sports owners, everybody that has a sports arena is looking to build out their retail footprint around it. So we're in partnership with -- potential partnerships a bunch of different NBA, NHL or NFL owners who are building out their concourse retail area, and we'll partner with them in capital to help build that out.
And the next question comes from the line of Stephen Laszczyk with Goldman Sachs.
Maybe one on sponsorship for Michael. Revenue was up I think, 24% year-over-year in the quarter. It sounds like a lot of that was driven by strengths internationally. Could you maybe just talk a little bit more about what's driving that growth in international? And is the step-up that we saw in 1Q, something we should expect to see throughout the year, or is the fact that it's more internationally driven? Does that suggest it could be more 1Q, 4Q aided as we move throughout '24?
Stephen, this is Joe. I'll get started and then Michael can hop in. A lot of what you're seeing in Q1 is, as you said, it's international. A lot of it is festivals, as Michael was just talking about the high performance of our festival business this year. And in particular, it's what's going on in South America and Asia. So one of the things we really like is that we're balancing out getting the sentiment the Southern Hemisphere growth that will help our Q1 and Q4 business. So I would expect we'll see a good chunk -- we'll see the highest growth rates in sponsorship Q1 and Q4 this year because we're getting real traction building those businesses.
Got it. And then maybe another one for you Joe or unless Michael wants to jump in on sponsorship?
No, I would just -- I want to remind you some like sponsorship or any of these numbers we're talking about. The growth is just -- we had an incredible comparable last year. I mean we had 2 record years of incredible growth. So the fact that we're sitting here again growing the business at these levels, I think it's just a testament and a mic drop to anyone debating how powerful the machine is, how hungry customers are to show up at the show and whether the pipe is full or not. So we're extatic to have a 20-plus percent sponsorship year-over-year after growing bigger numbers than that the last couple.
Got it. And then maybe just one on concert margins for Joe. You called out in the release, full year concert segment margin is expected to be higher than last year. I think with the magnitude of that, depending on some factors, could you just talk a little bit more about the range of outcomes there? What would dictate coming in, I guess, meaningfully above last year versus maybe more in line?
Sure. I think probably 3 factors that we're still going to watch play out over a bit of time. One is FX. As we noted, for Q1, we, on a reported basis, were up 7 basis points year-on-year. At constant currency, were up 37 basis points. So clearly, that can have a material impact on how much we grow.
And the next question comes from the line of Cameron Mansson-Perrone with Morgan Stanley.
So I want to follow up on 2 of the earlier questions on growth and then on the venue business. I guess, first, on the growth outlook for the year. I think you've spoken to potentially more muted growth in the first quarter given the venue mix considerations this year, which makes a 20% growth look even healthier. So maybe -- could you just help frame how we should think about growth this year in light of all that? And then on the higher CapEx outlook from new venue opportunities, Joe, you've talked in the past about generally wanting to prove out CapEx and then ramp it gradually over time. What should the higher outlook tell us about the opportunity you see from this incremental spend?
Sure. On the growth, I think Q1 should tell you that we are right to be positive and optimistic about our ability to continue to deliver double-digit growth this year. I gave a little bit in the context of Brandon's questions, but as I step back and say, how is our growth going to look at the end of the year? I think it's going to be driven by concerts AOI heavily concerts margin. It will second be driven by sponsorship as we're continuing to, in particular, build out the international side of that business. And just Ticketmaster because it's losing all those stadium high-ticket price shows is going to have lower growth.
And the next question comes from the line of Peter Supino with Wolfe Research.
I wanted to ask first about -- more about the venue build-out project. I'm wondering if in your comments 3 months ago, about longer-term growth view that the company could compound AOI at a double-digit rate for many years to come. If you didn't build any big 15,000, 20,000 student arenas outside the United States, could you still achieve that goal? It's just a way to ask whether that capital project and the returns from it are built into your long-term outlook. It's a question we've heard a lot from clients. And then related to that, I wonder, when you talk about returns on capital, maybe as a company or specifically on these venues, how are you [indiscernible] those returns? Is that an EBITDA number? What are the numerator and denominator?
Yes. In terms of the venue build out, of course, that's part of our long-term plan. I mean we lay out every year, generally at Liberty, the 6 or 7 levers, and how it is we're going to continue to drive strong AOI growth over time. When we did that last year, venues were, I mean, the largest component of that. So it's absolutely part of our thesis and part of how it is we're going to get to that continued strong growth rate. In terms of the performance, I mean it's a standard return on invested capital. So we look at it on a cash-on-cash basis, cash out, cash back to the business.
And the next question comes from the line of Jason Bazinet from Citibank.
I just had 2 questions related to disclosures actually. I know you guys have been building venues for decades, but when you talk about standing up a fourth business with our destination, are you hinting that you might disclose that as a second segment or not? And then my second disclosure question is, I noticed in the Q, there was something, I guess, that FASB came out with in November about expense disclosures. I don't know if the Q says you're still sort of deliberating that? But any sort of color on what that FASB request is, and how you're thinking about it would be great.
In terms of venues of the [indiscernible] business, at this point, we're not thinking about them as separate segments. We still organizationally have concerts and venues under the same organizational structure. So it'd be premature to think about it in terms of the segments down the road, who knows. It's just -- we're trying to get everybody internally also focused on this as an important area to be growing. So that's why we use that term loosely.
And the next question comes from the line of Benjamin Soff with Deutsche Bank.
Just wanted to ask about concerts attendance. It looks like there was a bigger step up in North American attendance compared to international tenants this quarter. So can you unpack that a little bit and talk about how you think about growth in each region for the year?
Sure. I think that is largely a function or fully a function of the international stadiums we had, particularly Southern Hemisphere in Q1 of last year and just fewer stadiums as we've been talking about. So that meant that the primary growth in Q1 was in North America. Overall, this year kind of define the trend of where international is going, which is an increasing share because a lot of the growth will come out of our amphitheaters, I probably would expect disproportionate growth out of North America.
And our final question comes from the line of David Joyce with Seaport Research Partners.
Two questions, please. First, when you look at the metric of country attendance versus the population, the U.S. over index is the rest of the world. What would be your path to growing that concert attendance per capita going forward? And then secondly, on ticketing, what are the plans from here for upgrading the ticketing platforms around the globe, and what -- how much is in CapEx versus OpEx?
So in terms of driving the fan attendance, we've been talking in North America for past several years about a hyper-local focus and that has absolutely been helping us drive our penetration, if you want, on a per fan basis. That will continue, and our expectation is we'll continue to build our fan base in North America.
I would now like to turn the floor back over to Michael for any closing comments.
Thank you, everyone, and we'll look forward to talking to you in the summer.
Ladies and gentlemen, that does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.