Vivid Seats Inc. Q3 FY2024 earnings call

• Strategy focuses on long-term success by fostering stickiness in the marketplace. Market backdrop in 2024 is a digestion year for concert industry supply with fewer stadium tours but holding up concert ticket volumes. - Strategic partnerships like with IM Athlete to increase brand awareness. - Synergies with Vegas.com: cross-listed inventory orders run rate at ~1% of marketplace GOV, and cross-sell campaign to Vegas.com customers is showing promise. - SkyBox Drive exited beta phase with rapid demand, onboarding over 100 users. - Vivid Seats included in Newsweek's list of America's Best Customer Service 2025 for the fifth time. - Internationalization of platform underway with plans to launch in select geographies by end of 2024.

In the third quarter, Vivid Seats delivered $187 million of revenues and $34 million of adjusted EBITDA, with an 18% adjusted EBITDA margin. Marketplace GOV was $872 million, a 13% year-over-year decline, driven by an 11% YoY reduction in average order size and a 2% YoY decline in total marketplace orders. Revenues were roughly flat year-over-year despite the decline in marketplace GOV, with a 17.5% take rate, up 200 basis points YoY.

• 2024 Marketplace GOV expected to be in the range of $3.8 billion to $4.0 billion. - 2024 revenues expected in the range of $760 million to $780 million. - 2024 adjusted EBITDA expected in the range of $145 million to $155 million. These ranges incorporate challenging concert supply dynamics, continued marketing intensity in Q4, and a range of outcomes for remaining 2025 concert on sales.

• Market headwinds including reduced stadium tour activity in 2024 as a short-term headwind. - Competitive marketing intensity with certain competitors focused on growing uneconomic volume. - Uncertainty around concert supply normalization and its impact on future growth.

Q: Could you dig into the implied take rate guidance in 4Q, with 2Q and 3Q above recent trends and 4Q maybe coming back down?

A: Take rate performance in Q2 and Q3 is a combination of factors. Balancing take rate and volume is key. World Series matchup can have a deflating effect on take rates.

Q: When you're talking about '24 being a digestion year, is this a cycle of big years and a digestion year or idiosyncratic based on artist tours?

A: It's about event mix. Different categories (concerts, sports, theater) have varying dynamics. Concerts had softness due to event mix, while sports and theater have been stronger. Event mix can cause oscillation, but it's not indicative of fundamental trends.

Q: Can you talk about expectations for broader industry growth next year given potentially more robust concert supply calendar comping a weak year?

A: Bullish on secular trends. Expect return of stadium tours in strength next year. Slate for 2025 continues to unveil, and remain optimistic about prospects.

Q: Given high marketing intensity, does it make you rethink Vivid's near-term and longer-term strategy on customer acquisition?

A: Prioritize long-term value. When others take aggressive volume, we focus on long-term investments. Our loyalty program and product ecosystems help maintain focus.

Q: Where is the most success early on with SkyBox Drive?

A: Excited about pace of adoption. Over 100 people onboarded, with existing SkyBox users showing rapid adoption as it's turnkey integration for them.

Q: Thoughts on change in administration and antitrust/consolidation in the space, maintaining gap with primary, and free cash conversion dynamics?

A: Early days, hard to say on administration impact. Secondary ecosystem benefits all participants. Free cash conversion expected to return to 60%-70% in normalized growth environment, with 2024 impacted by working capital headwinds.

Q: Color on industry headwinds across channels and thoughts on Oasis tour ticket inventory resale?

A: Concerts have been soft, sports and theater strong. Performance marketing channel has pressure from aggressive competitors. Oasis tour resale is a U.K. situation, and we focus on providing secure platform for consumers.

Q: Thoughts on fast-growing emerging sports trends and capital allocation?

A: Strong growth in women's professional sports, WNBA, etc. Capital allocation focuses on strategically and financially accretive targets, considering multiple when evaluating buybacks vs. M&A.

Q: Remind on international launch and cross-sell from Vegas.com?

A: International platform launch on track by end of 2024. Cross-sell from Vegas.com has high open rates and is a profitable acquisition channel as Vegas customers are introduced to Vivid Seats in their home markets.