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Vivid Seats Captures Robust Live Event Demand and Reports Record Q3 Marketplace GOV and Revenues
Source: Nasdaq GlobeNewswire / 08 Nov 2022 06:30:00 America/New_York
CHICAGO, Nov. 08, 2022 (GLOBE NEWSWIRE) -- Vivid Seats Inc. (NASDAQ: SEAT) (“Vivid Seats”, “we” or the “Company”), a leading marketplace that utilizes its technology platform to connect millions of buyers with thousands of ticket sellers across hundreds of thousands of events each year, today provided financial results for the third quarter ended September 30, 2022.
“Momentum in our business continued and we’ve now set quarterly records for both Marketplace GOV and Revenues for the last six consecutive quarters,” said Stan Chia, Vivid Seats CEO. "These results are a testament to our powerful technology platform and our team’s ability to capture industry strength while continuing to deliver both growth and profitability. We remain confident and enthusiastic that our strategy to invest in differentiated products and services will drive sustained increases in customer lifetime value. We are making targeted investments to foster brand awareness and loyalty with high-value customers and we are pleased to see our customer repeat rates trending higher across event categories, indicating that our efforts are working.”
Third Quarter 2022 Key Operational and Financial Metrics:
- Marketplace GOV of $781.8 million – up 10% from $713.1 million in Q3 2021
- Revenues of $156.8 million – up 12% from $139.5 million in Q3 2021
- Net income of $18.7 million – up from $1.8 million net loss in Q3 2021
- Adjusted EBITDA of $28.3 million – down 33% from $42.0 million in Q3 2021
"This quarter we lapped exceptional results from the third quarter of 2021, which included unique reopening dynamics. Third quarter 2022 live event demand remained robust, leading us to raise our 2022 Marketplace GOV and Revenues guidance," said Lawrence Fey, Vivid Seats CFO. “We maintain our 2022 Adjusted EBITDA guidance and will remain agile within the competitive environment while continuing to invest in what is working. We have a strong balance sheet with cash in excess of gross debt and a track record of meaningful cash generation. We utilized our robust cash balance to repurchase approximately $3 million of our common stock during the third quarter."
Key Performance Indicators ('000s)
Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Marketplace GOV(1) $ 781,834 $ 713,062 $ 2,338,789 $ 1,522,625 Total Marketplace orders(2) 2,572 2,354 7,001 4,360 Total Resale orders(3) 90 73 225 121 Adjusted EBITDA(4) $ 28,284 $ 41,965 $ 79,625 $ 82,347 (1) Marketplace Gross Order Value ("Marketplace GOV") represents the total transactional amount of Marketplace segment orders placed on our platform in a period, inclusive of fees, exclusive of taxes, and net of event cancellations that occurred during that period. Marketplace GOV was negatively impacted by event cancellations in the amount of $13.8 million and $63.3 million during the three and nine months ended September 30, 2022, respectively, and $37.8 million and $74.8 million during the three and nine months ended September 30, 2021, respectively.
(2) Total Marketplace orders represent the volume of Marketplace segment orders placed on our platform during a period, net of event cancellations that occurred during that period. During the three and nine months ended September 30, 2022, our Marketplace segment experienced 42,942 and 170,258 event cancellations, respectively, compared to 85,593 and 185,687 event cancellations during the three and nine months ended September 30, 2021, respectively.
(3) Total Resale orders represent the volume of Resale segment orders sold by our Resale team in a period, net of event cancellations that occurred during that period. During the three and nine months ended September 30, 2022, our Resale segment experienced 1,113 and 4,383 event cancellations, respectively, compared to 2,592 and 4,505 event cancellations during the three and nine months ended September 30, 2021, respectively.
(4) Adjusted EBITDA is not a measure defined under GAAP. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance. Refer to the Adjusted EBITDA section below for a reconciliation to its most directly comparable GAAP measure.
2022 Financial Outlook
Vivid Seats now anticipates Marketplace GOV, Revenues and Adjusted EBITDA for the year ending December 31, 2022 to be:- Marketplace GOV in the range of $3.05 billion to $3.20 billion (increased from $2.95-$3.15 billion)
- Revenues in the range of $580.0 million to $595.0 million (increased from $540.0-$570.0 million)
- Adjusted EBITDA in the range of $110.0 million to $117.0 million(5) (unchanged)
Additional detail around the 2022 outlook will be available on the third quarter 2022 earnings call.
(5) We calculate forward-looking non-GAAP Adjusted EBITDA based on internal forecasts that omit certain information that would be included in forward-looking GAAP net income (loss), the most directly comparable GAAP measure. We do not attempt to provide a reconciliation of forward-looking non-GAAP Adjusted EBITDA guidance to forward-looking GAAP net income (loss) because forecasting the timing or amount of items that have not yet occurred and are out of our control is inherently uncertain and unavailable without unreasonable efforts.
Webcast Details
The Company will host a webcast at 8:30 a.m. Eastern Time today to discuss the third quarter 2022 financial results, business updates and financial outlook. Participants may access the live webcast and supplemental earnings presentation on the events page of the Vivid Seats Investor Relations website at https://investors.vividseats.com/events-and-presentations.About Vivid Seats
Founded in 2001, Vivid Seats is a leading online ticket marketplace committed to becoming the ultimate partner for connecting fans to the live events, artists, and teams they love. Based on the belief that everyone should “Experience It Live,” the Chicago-based company provides exceptional value by providing one of the widest selections of events and tickets in North America and an industry leading Vivid Seats Rewards program where all fans earn on every purchase. Vivid Seats has been chosen as the official ticketing partner by some of the biggest brands in the entertainment industry including ESPN, Rolling Stone, and the Los Angeles Clippers. Vivid Seats also owns Vivid Picks, a daily fantasy sports app. Through its proprietary software and unique technology, Vivid Seats drives the consumer and business ecosystem for live event ticketing and enables the power of shared experiences to unite people. Vivid Seats is recognized by Newsweek as one of America’s Best Companies for Customer Service in ticketing. Fans who want to have the best live experiences can start by downloading the Vivid Seats mobile app, going to vividseats.com, or calling 866-848-8499.Forward-Looking Statements
Certain statements made in this press release are "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this press release may be forward-looking statements. Forward-looking statements in this press release include, but are not limited to, statements regarding our future results of operations and financial position, including our expectations regarding Marketplace Gross Order Value, revenues and Adjusted EBITDA and the impact of our investments; our expectations with respect to live event industry growth; our competitive positioning; our business strategy; and the plans and objectives of management for future operations. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of our control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include the continuing impact of the COVID-19 pandemic, the timing and manner of the resumption of large-scale sporting events, concerts and theater shows, our relationships with buyers, sellers and distribution partners, changes in Internet search engine algorithms or changes in marketplace rules, competition in the ticketing industry, the willingness of artists, teams and promoters to continue to support the secondary ticket market, and our ability to maintain and improve our platform and brand or develop successful new solutions and enhancements or improve existing ones, the impact of potential unfavorable legislative developments, the success of our acquisition of Betcha Sports, Inc., our launch of Vivid Picks, the effects of a recession and inflation, our ability to obtain subsequent debt refinancing, the impact of system interruption and the lack of integration and redundancy in our systems and infrastructure, the impact of cyber security risks, data loss or other breaches of our network security, our being a controlled company, and other risks and uncertainties described in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.Contacts:
Investors
Kate Copouls
Kate.Copouls@vividseats.comMedia
Julia Young
Julia.Young@vividseats.comVIVID SEATS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data) (Unaudited)September 30, December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 273,889 $ 489,530 Restricted cash 511 280 Accounts receivable – net 40,494 36,124 Inventory – net 14,123 11,773 Prepaid expenses and other current assets 35,028 72,504 Total current assets 364,045 610,211 Property and equipment – net 8,843 1,082 Right-of-use assets – net 8,249 — Intangible assets – net 81,600 78,511 Goodwill 715,258 718,204 Other non-current assets 2,526 787 Total assets $ 1,180,521 $ 1,408,795 Liabilities and shareholders’ deficit Current liabilities: Accounts payable $ 165,355 $ 191,201 Accrued expenses and other current liabilities 203,557 281,156 Deferred revenue 33,631 25,139 Current maturities of long-term debt 2,750 — Total current liabilities 405,293 497,496 Long-term debt – net 265,405 460,132 Long-term lease liabilities 13,741 — Other liabilities 16,133 25,834 Total long-term liabilities 295,279 485,966 Commitments and contingencies Redeemable noncontrolling interests 905,412 1,286,016 Shareholders' deficit Class A common stock, $0.0001 par value; 500,000,000 shares authorized at September 30, 2022 and December 31, 2021; 82,041,142 and 79,091,871 issued and outstanding at September 30, 2022 and December 31, 2021, respectively 8 8 Class B common stock, $0.0001 par value; 250,000,000 shares authorized, 118,200,000 issued and outstanding at September 30, 2022 and December 31, 2021 12 12 Additional paid-in capital 601,784 182,091 Treasury stock, at cost, 397,551 shares at September 30, 2022; no shares at December 31, 2021 (3,050 ) — Accumulated deficit (1,024,217 ) (1,042,794 ) Total Shareholders' deficit (425,463 ) (860,683 ) Total liabilities, Redeemable noncontrolling interests, and Shareholders' deficit $ 1,180,521 $ 1,408,795 VIVID SEATS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands) (Unaudited)Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues $ 156,818 $ 139,538 $ 435,284 $ 279,150 Costs and expenses: Cost of revenues (exclusive of depreciation and amortization shown separately below) 37,617 30,475 102,203 54,386 Marketing and selling 66,323 50,371 179,963 104,748 General and administrative 30,239 42,509 95,721 87,486 Depreciation and amortization 2,158 711 5,269 1,506 Change in fair value of contingent consideration (1,220 ) — (1,220 ) — Income from operations 21,701 15,472 53,348 31,024 Other (income) expense: Interest expense – net 2,901 17,319 9,542 50,477 Loss on extinguishment of debt — — 4,285 — Other income (65 ) — (6,618 ) — Income (loss) before income taxes 18,865 (1,847 ) 46,139 (19,453 ) Income tax expense 118 — 194 Net income (loss) 18,747 (1,847 ) 45,945 (19,453 ) Net loss attributable to Hoya Intermediate, LLC shareholders prior to reverse recapitalization — (1,847 ) — (19,453 ) Net income attributable to redeemable noncontrolling interests 11,084 — 27,368 — Net income attributable to Class A Common Stockholders $ 7,663 $ — $ 18,577 $ — VIVID SEATS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (Unaudited)Nine Months Ended September 30, 2022 2021 Cash flows from operating activities Net income (loss) $ 45,945 $ (19,453 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 5,269 1,506 Amortization of deferred financing costs and interest rate cap 819 4,120 Equity-based compensation expense 13,982 3,471 Loss on extinguishment of debt 4,285 — Change in fair value of warrants (6,618 ) — Interest expense paid-in-kind — 25,117 Amortization of leases 1,591 — Loss on asset disposals 63 — Change in fair value of contingent consideration (1,220 ) — Change in assets and liabilities: Accounts receivable (4,292 ) (18,784 ) Inventory (2,350 ) (9,660 ) Prepaid expenses and other current assets 37,778 (16,694 ) Accounts payable (26,737 ) 143,481 Accrued expenses and other current liabilities (73,938 ) 87,339 Deferred revenue 8,492 14,567 Other assets and liabilities (1,680 ) 252 Net cash provided by operating activities 1,389 215,262 Cash flows from investing activities Purchases of property and equipment (2,727 ) (689 ) Purchases of personal seat licenses (165 ) (76 ) Investments in developed technology (8,988 ) (6,558 ) Cash adjustment in acquisition (8 ) — Net cash used in investing activities (11,888 ) (7,323 ) Cash flows from financing activities Payments of June 2017 First Lien Loan (465,712 ) (4,809 ) Proceeds from February 2022 First Lien Loan 275,000 — Payments of deferred financing costs and other debt-related costs (4,856 ) — Payments of February 2022 First Lien Loan (1,375 ) — Distributions to non-controlling interests (4,918 ) — Repurchase of Common Stock as Treasury Stock (3,050 ) — Net cash used in financing activities (204,911 ) (4,809 ) Net increase (decrease) in cash, cash equivalents, and restricted cash (215,410 ) 203,130 Cash, cash equivalents, and restricted cash – beginning of period 489,810 285,337 Cash, cash equivalents, and restricted cash – end of period $ 274,400 $ 488,467 Use of Non-GAAP Financial Measures
We present Adjusted EBITDA, which is not a measure defined under U.S. Generally Accepted Accounting Principles (“GAAP”), because it is a measure frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Further, we believe this measure is helpful in highlighting trends in our operating results, because it excludes the impact of items that are outside the control of management or not reflective of ongoing performance related directly to the operation of our business segments.
Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting. Moreover, we believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance and highlighting trends in our operating results.
Adjusted EBITDA is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. Further limitations of Adjusted EBITDA are that it does not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and may exclude costs that are recurring, such as interest expense, equity-based compensation, litigation, settlements and related costs and change in value of warrants. In addition, other companies may calculate Adjusted EBITDA differently than us, thereby limiting its usefulness as a comparative tool. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from Adjusted EBITDA.
The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, net income (loss) (in thousands):
Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income (loss) $ 18,747 $ (1,847 ) $ 45,945 $ (19,453 ) Income tax expense 118 — 194 — Interest expense – net 2,901 17,319 9,542 50,477 Depreciation and amortization 2,158 711 5,269 1,506 Sales tax liability(1) (118 ) 21,574 2,814 34,561 Transaction costs(2) 538 1,428 4,285 8,837 Equity-based compensation(3) 5,073 1,197 13,982 3,471 Loss on extinguishment of debt(4) — — 4,285 — Litigation, settlements and related costs(5) 89 1,583 1,084 2,662 Severance related to COVID-19(6) — — — 286 Change in fair value of warrants(7) (65 ) — (6,618 ) — Change in fair value of contingent consideration(8) (1,220 ) — (1,220 ) — Loss on asset disposals(9) 63 — 63 — Adjusted EBITDA $ 28,284 $ 41,965 $ 79,625 $ 82,347 (1) We have historically incurred sales tax expense in jurisdictions where we expected to remit sales tax payments but were not yet collecting from customers. During the second half of 2021, we began collecting sales tax from customers in the required jurisdictions. The sales tax liability presented herein represents the tax liability for sales tax prior to the date we began collecting sales tax from customers reduced by abatements received, inclusive of any penalties and interest assessed by the jurisdictions. The aforementioned liability was fully paid in October 2022.
(2) Transaction costs consist of legal; accounting; tax and other professional fees; personnel-related costs, which consist of retention bonuses; and integration costs. Transaction costs recognized in 2022 were related to the merger transaction with Horizon Acquisition Corporation (the "Merger Transaction"), the acquisition of Betcha Sports, Inc. ("Betcha" rebranded as "Vivid Picks"), refinancing of the remaining June 2017 First Lien Loan with a new February 2022 First Lien Loan and our offering to the holders of our outstanding public warrants to receive shares of Class A Common Stock in exchange for each outstanding public warrant tendered by the holder. Transaction costs recognized in 2021 were related to the Merger Transaction, to the extent they were not eligible for capitalization.
(3) We incur equity-based compensation expenses for profits interests issued prior to the Merger Transaction and equity granted according to the 2021 Incentive Award Plan ("2021 Plan"), which we do not consider to be indicative of our core operating performance. The 2021 Plan was approved and adopted in order to facilitate the grant of equity incentive awards to our employees and directors. The 2021 Plan became effective on October 18, 2021.
(4) Losses incurred resulted from the extinguishment of the June 2017 First Lien Loan in February 2022.
(5) These amounts relate to external legal costs, settlement costs and insurance recoveries, which were unrelated to our core business operations.
(6) These charges relate to severance costs resulting from significant reductions in employee headcount due to the effects of the COVID-19 pandemic.
(7) This relates to the revaluation of Hoya Intermediate Warrants following the Merger Transaction.
(8) This relates to the revaluation of Vivid Picks cash earnouts.
(9) This relates to asset disposals, which are not considered indicative of our core operating performance.
