Live Nation Entertainment (NYSE: LYV) reported its quarterly earnings on Thursday, and once again saw record-shattering numbers for the entertainment giant, built once again on the enormous surge on ticket prices being charged to consumers by the company and artists it sells tickets for through Ticketmaster. Tickets sold by the corporation and its ticketing subsidiary grew by “double digits” on both primary and secondary marketplaces controlled by the company, while “fee-bearing GTV” figures were up by 25%, meaning that prices are going up at at a faster rate than the company’s growth in the actual number of sold tickets.

This has been a key driver for Live Nation Entertainment, which is on a massive streak of record-shattering earnings since the emergence of live events from the pandemic-related shutdowns.

“Live music is bigger than ever, with global demand driving the industry to record levels,” says President and CEO Michael Rapino – who reportedly earned well over $100 million in compensation in 2022 – in a statement issued alongside the earnings report.  “There’s a more diverse pipeline of artists breaking from all corners of the world, and at the same time tours are going to more markets – particularly in Latin America and Asia. This was our strongest second quarter ever, with 2023 on pace to be a record year, and early indicators for 2024 giving us confidence in continued growth.”

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At the high level, Live Nation reported revenue as up by 27% to $5.7 billion, with operating income up by 21% to $386 million. It claims it has sold over 117 million tickets to Live nation shows already this year, growth of 20% compared to 2022. It touts that within a single year, it is seeing revenue growth of a whopping $40 per fan at amphitheaters, which adds up quickly with the number and scale of events under the company’s operation.

Perhaps anticipating criticism of the ever-spiraling ticket prices continuing to fuel its enormous earnings, Live Nation points out that tickets sold across its own secondary marketplaces are averaging double the prices of tickets sold across its own primary marketplaces, “showing the extent to which tickets remain priced below market value.”

It bears mentioning that the imposition of floor pricing policies, where resale prices are not allowed to go below a certain mark to keep prices above remaining primary ticket inventory that is unsold, is common for both concerts and sporting events with tickets sold on the Ticketmaster platform.

More details regarding Live Nation’s continued financial dominance of all aspects of the live event economy are available at the company’s website. The unaudited financial highlights from the earnings report are below:

FINANCIAL HIGHLIGHTS – SECOND QUARTER
(unaudited; $ in millions)

Q2 2023 Reported Q2 2022 Reported Growth Q2 2023 Constant Currency Growth at Constant Currency
Revenue
Concerts $     4,633.3        3,597.8 29% $     4,621.3 28%
Ticketing           709.3           575.3 23%           707.5 23%
Sponsorship & Advertising           302.9           263.8 15%           299.4 13%
Other and Eliminations            (14.8)              (2.7) *            (14.9) *
$     5,630.7 $     4,434.2 27% $     5,613.3 27%
Consolidated Operating Income $        386.4 $        318.7 21% $        381.0 20%
Adjusted Operating Income (Loss)
Concerts $        168.1           123.0 37% $        164.5 34%
Ticketing           292.7           230.8 27%           290.4 26%
Sponsorship & Advertising           203.1           178.3 14%           201.8 13%
Other and Eliminations            (18.2)              (2.1) *            (18.2) *
Corporate            (56.0)            (50.4) (11) %            (56.0) (11) %
$        589.7 $        479.6 23% $        582.5 21%

* Percentages are not meaningful

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FINANCIAL HIGHLIGHTS – SIX MONTHS
(unaudited; $ in millions)

6 Months 2023 Reported 6 Months 2022 Reported Growth 6 Months 2023 Constant Currency Growth at Constant Currency
Revenue
Concerts $     6,914.5 $     4,805.6 44 % $     6,949.3 45 %
Ticketing        1,387.1        1,055.7 31%        1,391.9 32%
Sponsorship & Advertising           473.0           379.5 25 %           469.2 24 %
Other and Eliminations            (16.5)              (3.8) *            (16.5) *
$     8,758.1 $     6,237.0 40 % $     8,793.9 41 %
Consolidated Operating Income (Loss) $        529.1 $        345.8 53 % $        529.1 53 %
Adjusted Operating Income (Loss)
Concerts $        168.9 $          73.8 * $        167.1 *
Ticketing           563.7           437.0 29%           561.8 29%
Sponsorship & Advertising           298.7           248.0 20 %           297.8 20 %
Other and Eliminations            (26.1)              (6.5) *            (26.1) *
Corporate            (95.8)            (63.7) (50) %            (95.8) (50) %
$        909.4 $        688.6 32% $        904.8 31%

* Percentages are not meaningful

Reconciliation of Adjusted Operating Income to Operating Income (Unaudited)

Q2 2023 Q2 2022 6 Months 2023 6 Months 2022
(in millions)
Adjusted Operating Income $             589.7 $             479.6 $             909.4 $             688.6
Acquisition expenses                  24.8                    9.5                  38.2                  21.6
Amortization of non-recoupable ticketing contract advances                  21.2                  21.9                  41.6                  40.4
Depreciation and amortization                136.5                115.9                251.7                216.4
Loss on sale of operating assets                   (7.0)                    1.1                   (6.5)                    2.7
Stock-based compensation expense                  27.8                  12.5                  55.3                  61.7
Operating income $             386.4 $             318.7 $             529.1 $             345.8

KEY OPERATING METRICS
(unaudited)

Q2 2023 Q2 2022 6 Months 2023 6 Months 2022
(in thousands except estimated events)
Concerts (1)
Estimated events:
North America            8,111            8,057          14,420          12,793
International            4,130            4,491            7,726            6,469
Total estimated events          12,241          12,548          22,146          19,262
Estimated fans:
North America          18,474          17,427          26,131          24,255
International          18,599          16,415          29,842          20,484
Total estimated fans          37,073          33,842          55,973          44,739
Ticketing (2)
Estimated number of fee-bearing tickets          78,879          71,966        151,145        123,529
Estimated number of non-fee-bearing tickets          71,236          67,847        144,436        127,730
Total estimated tickets sold        150,115        139,813        295,581        251,259

 

_________

  • Events generally represent a single performance by an artist. Fans generally represent the number of people who attend an event. Festivals are counted as one event in the quarter in which the festival begins, but the number of fans is based on the days the fans were present at the festival and thus can be reported across multiple quarters. Events and fan attendance metrics are estimated each quarter.
  • The fee-bearing tickets estimated above include primary and secondary tickets that are sold using our Ticketmaster systems or that we issue through affiliates. This includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur. The non-fee-bearing tickets estimated above include primary tickets sold using our Ticketmaster systems, through season seat packages and our venue clients’ box offices, along with tickets sold on our “do it yourself” platform. These ticket metrics are net of any refunds requested and any cancellations that occurred during the period, which may result in a negative number.

Reconciliation of Certain Non-GAAP Measures to Their Most Directly Comparable GAAP Measures (Unaudited)

Reconciliation of Free Cash Flow  Adjusted to Net Cash Provided by Operating Activities

($ in millions) Q2 2023 Q2 2022
Net cash provided by operating activities $                 491.0 $                 349.1
Less: Changes in operating assets and liabilities (working capital)                     34.7                     78.5
Free cash flow from earnings $                 525.7 $                 427.6
Less: Maintenance capital expenditures                    (36.1)                    (21.3)
          Distributions to noncontrolling interests                    (82.7)                    (27.1)
Free cash flow — adjusted $                 406.9 $                 379.2
Net cash used in investing activities $               (239.4) $               (129.7)
Net cash used in financing activities $               (152.2) $                 (62.6)

Reconciliation of Certain Non-GAAP Measures to Their Most Directly Comparable GAAP Measures (Unaudited)

 Reconciliation of Free Cash Flow — Adjusted to Net Cash Provided by Operating Activities

($ in millions) 6 Months 2023 6 Months 2022
Net cash provided by operating activities $              1,646.8 $              1,547.4
Less: Changes in operating assets and liabilities (working capital)                  (867.6)                  (977.9)
Free cash flow from earnings $                 779.2 $                 569.5
Less: Maintenance capital expenditures                    (44.7) $                 (35.1)
          Distributions to noncontrolling interests                  (137.6)                    (66.1)
Free cash flow — adjusted $                 596.9 $                 468.3
Net cash used in investing activities $               (299.2) $               (244.7)
Net cash provided by (used in) financing activities $                   73.5 $               (137.6)

Reconciliation of Free Cash to Cash and Cash Equivalents

($ in millions) June 30,
2023
Cash and cash equivalents $                       7,128.9
Client cash                        (1,381.1)
Deferred revenue — event-related                        (4,330.1)
Accrued artist fees                           (230.9)
Collections on behalf of others                             (66.2)
Prepaid expenses — event-related                          1,209.0
Free cash $                       2,329.6

 Forward-Looking Statements, Non-GAAP Financial Measures and Reconciliations:

Certain statements in this press release, including the Supplemental Information that follows, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to statements the regarding the company’s anticipated prospects for a record 2023 and continued growth into 2024, with record number of fans and Ticketmaster sales expected for 2023; anticipated double-digit attendance growth for the third quarter of 2023; early indications for growth in the company’s Concerts pipeline for 2024; the company’s pacing to invest over $12 billion in putting on artists’ shows in 2023; current expectations for fee-bearing ticket sales in 2023; the company’s sponsorship and advertising segment’s operating income and adjusted operating income growth pace for 2023; current full-year margin expectations for each of the company’s operating segments; expectations for double-digit fan count growth at the company’s operated venues in 2023; continued growth in the company’s venue and festival pipeline; the company’s current expectations for capital expenditures for 2023; the company’s global M&A pipeline; projected free cash flow—adjusted conversion for 2023; anticipated accretion from OCESA; and the company’s current expectation that there will be no material foreign exchange impacts on revenue, operating income or adjusted operating income for 2023.

Live Nation wishes to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, including but not limited to operational challenges in achieving strategic objectives and executing on the company’s plans, the risk that the company’s markets do not evolve as anticipated, the potential impact of any economic slowdown and operational challenges associated with selling tickets and staging events.

Live Nation refers you to the documents it files from time to time with the U.S. Securities and Exchange Commission, or SEC, specifically the section titled “Item 1A. Risk Factors” of the company’s most recent Annual Report filed on Form 10-K, and Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, which contain and identify other important factors that could cause actual results to differ materially from those contained in the company’s projections or forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date on which they are made. All subsequent written and oral forward-looking statements by or concerning Live Nation are expressly qualified in their entirety by the cautionary statements above. Live Nation does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable GAAP financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided herein.

Adjusted Operating Income (Loss), or AOI, is a non-GAAP financial measure that we define as operating income (loss) before certain stock-based compensation expense, loss (gain) on disposal of operating assets, depreciation and amortization (including goodwill impairment), amortization of non-recoupable ticketing contract advances and acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation). We use AOI to evaluate the performance of our operating segments. We believe that information about AOI assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, AOI should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

Constant Currency is a non-GAAP financial measure when applied to a GAAP financial measure. We calculate currency impacts as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior period’s currency exchange rates. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

Free Cash Flow — Adjusted, or FCF, is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities less changes in operating assets and liabilities, less maintenance capital expenditures, less distributions to noncontrolling interest partners. We use FCF among other measures, to evaluate the ability of operations to generate cash that is available for purposes other than maintenance capital expenditures. We believe that information about FCF provides investors with an important perspective on the cash available to service debt, make acquisitions, and for revenue generating capital expenditures. FCF is not calculated or presented in accordance with GAAP. A limitation of the use of FCF as a performance measure is that it does not necessarily represent funds available for operations and is not necessarily a measure of our ability to fund our cash needs. Accordingly, FCF should be considered in addition to, and not as a substitute for, net cash provided by (used in) operating activities and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, FCF as presented herein may not be comparable to similarly titled measures of other companies.

Free Cash is a non-GAAP financial measure that we define as cash and cash equivalents less ticketing-related client funds, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaids. We use free cash as a proxy for how much cash we have available to, among other things, optionally repay debt balances, make acquisitions and fund revenue generating capital expenditures. Free cash is not calculated or presented in accordance with GAAP. A limitation of the use of free cash as a performance measure is that it does not necessarily represent funds available from operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash should be considered in addition to, and not as a substitute for, cash and cash equivalents and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, free cash as presented herein may not be comparable to similarly titled measures of other companies.

LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)

June 30,
2023
December 31,
2022
(in thousands)
ASSETS
Current assets
    Cash and cash equivalents $            7,128,873 $            5,606,457
    Accounts receivable, less allowance of $66,669 and $63,294, respectively              1,889,652              1,465,383
    Prepaid expenses              1,628,578                 949,826
    Restricted cash                    7,769                    5,917
    Other current assets                 122,076                 131,939
Total current assets             10,776,948              8,159,522
Property, plant and equipment, net              1,904,020              1,487,663
Operating lease assets              1,582,873              1,571,395
Intangible assets
    Definite-lived intangible assets, net              1,118,166              1,050,622
    Indefinite-lived intangible assets, net                 378,181                 368,712
Goodwill              2,619,356              2,529,380
Long-term advances                 654,938                 568,558
Other long-term assets                 890,608                 724,989
Total assets $          19,925,090 $          16,460,841
LIABILITIES AND EQUITY
Current liabilities
    Accounts payable, client accounts $            1,670,651 $            1,791,025
    Accounts payable                 293,865                 180,076
    Accrued expenses              2,778,581              2,368,434
    Deferred revenue              5,025,871              3,134,800
    Current portion of long-term debt, net                  51,489                 620,032
    Current portion of operating lease liabilities                 146,931                 140,232
    Other current liabilities                  56,143                  68,716
Total current liabilities             10,023,531              8,303,315
Long-term debt, net              6,554,697              5,283,467
Long-term operating lease liabilities              1,659,898              1,654,525
Other long-term liabilities                 562,016                 455,971
Commitments and contingent liabilities
Redeemable noncontrolling interests                 753,519                 669,766
Stockholders’ equity
    Common stock                    2,291                    2,285
    Additional paid-in capital              2,438,660              2,698,316
    Accumulated deficit             (2,680,716)             (2,971,229)
    Cost of shares held in treasury                   (6,865)                   (6,865)
    Accumulated other comprehensive income (loss)                  59,253                 (90,076)
Total Live Nation stockholders’ equity               (187,377)               (367,569)
Noncontrolling interests                 558,806                 461,366
Total equity                 371,429                  93,797
Total liabilities and equity $          19,925,090 $          16,460,841

LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(in thousands, except share and per share data)
Revenue $        5,630,723 $        4,434,174 $        8,758,113 $        6,236,982
Operating expenses:
Direct operating expenses           4,164,778           3,267,023           6,280,367           4,338,045
Selling, general and administrative expenses             868,595             672,213           1,558,916           1,242,395
Depreciation and amortization             136,514             115,927             251,699             216,396
Loss (gain) on disposal of operating assets               (7,013)                 1,065               (6,509)                 2,730
Corporate expenses               81,478               59,247             144,493               91,657
Operating income             386,371             318,699             529,147             345,759
Interest expense               81,995               68,435             171,210             135,208
Loss on extinguishment of debt                     —                     —               18,366                     —
Interest income              (56,452)              (13,192)              (96,765)              (20,756)
Equity in earnings of nonconsolidated affiliates               (5,558)               (1,955)               (9,665)               (6,243)
Other expense (income), net               (6,599)                 5,039                 4,984               14,438
Income before income taxes             372,985             260,372             441,017             223,112
Income tax expense               41,648               31,995               65,488               43,691
Net income             331,337             228,377             375,529             179,421
Net income attributable to noncontrolling interests               37,655               40,577               85,016               41,803
Net income attributable to common stockholders of Live Nation $           293,682 $           187,800 $           290,513 $           137,618
Basic net income per common share available to common stockholders of Live Nation $                1.04 $                0.69 $                0.78 $                0.31
Diluted net income per common share available to common stockholders of Live Nation $                1.02 $                0.66 $                0.78 $                0.30
Weighted average common shares outstanding:
Basic       228,536,179       224,674,447       228,350,537       223,290,226
Diluted       243,660,186       243,634,764       230,490,937       231,367,674
Reconciliation to net income available to common stockholders of Live Nation:
Net income attributable to common stockholders of Live Nation $           293,682 $           187,800 $           290,513 $           137,618
Accretion of redeemable noncontrolling interests              (56,621)              (32,560)            (111,554)              (68,274)
Net income available to common stockholders of Live Nation—basic $           237,061 $           155,240 $           178,959 $            69,344
Convertible debt interest, net of tax               10,804                 6,365                     —                     —
Net income available to common stockholders of Live Nation—diluted $           247,865 $           161,605 $           178,959 $            69,344

LIVE NATION ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Six Months Ended June 30,
2023 2022
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $                        375,529 $                        179,421
Reconciling items:
Depreciation                           127,670                           114,119
Amortization                           124,029                           102,277
Amortization of non-recoupable ticketing contract advances                             41,597                             40,392
Amortization of debt issuance costs and discounts                               8,949                               8,224
Loss on extinguishment of debt                             18,366                                     —
Stock-based compensation expense                             55,333                             61,741
Unrealized changes in fair value of contingent consideration                             20,100                             18,010
Equity in losses of nonconsolidated affiliates, net of distributions                               9,019                             10,112
Provision for uncollectible accounts receivable                             20,120                             25,702
Loss (gain) on mark-to-market of equity investments                           (26,408)                               5,657
Other, net                               4,918                               3,928
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable                         (395,516)                         (440,290)
Increase in prepaid expenses and other assets                         (836,672)                         (607,939)
Increase in accounts payable, accrued expenses and other liabilities                           298,718                           972,906
Increase in deferred revenue                       1,801,097                       1,053,178
Net cash provided by operating activities                       1,646,849                       1,547,438
CASH FLOWS FROM INVESTING ACTIVITIES
Advances of notes receivable                         (118,973)                           (30,558)
Collections of notes receivable                               8,286                             11,074
Investments made in nonconsolidated affiliates                           (26,336)                           (46,699)
Purchases of property, plant and equipment                         (202,531)                         (130,278)
Cash acquired from (paid for) acquisitions, net of cash paid (acquired)                             69,359                           (39,854)
Purchases of intangible assets                           (35,088)                             (6,129)
Other, net                               6,077                             (2,292)
Net cash used in investing activities                         (299,206)                         (244,736)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs                           986,766                               4,009
Payments on long-term debt                         (614,030)                           (22,638)
Contributions from noncontrolling interests                             14,716                             13,448
Distributions to noncontrolling interests                         (137,609)                           (66,114)
Purchases and sales of noncontrolling interests, net                           (88,239)                           (27,138)
Payments for capped call transactions                           (75,500)                                     —
Proceeds from exercise of stock options                               4,999                             26,051
Taxes paid for net share settlement of equity awards                             (8,464)                           (41,731)
Payments for deferred and contingent consideration                             (9,440)                           (22,508)
Other, net                                   315                             (1,014)
Net cash provided by (used in) financing activities                             73,514                         (137,635)
Effect of exchange rate changes on cash, cash equivalents and restricted cash                           103,111                         (186,703)
Net increase in cash, cash equivalents, and restricted cash                       1,524,268                           978,364
Cash, cash equivalents and restricted cash at beginning of period                       5,612,374                       4,887,792
Cash, cash equivalents and restricted cash at end of period $                    7,136,642 $                    5,866,156