Vivid Seats Inc.

Good morning, and welcome to Vivid Seats' third quarter 2022 earnings conference call. Following management's prepared remarks, we will open the call for Q&A. I will now turn the call over to Kate Koppels.

Good morning, and welcome to Vivid Seats' third quarter 2022 earnings conference call. I am Kate Koppels. Head of Investor Relations at Vivid Seats. Joining me today to discuss Vivid Seats results are Stan Chia, Chief Executive Officer, and Larry Say, Chief Financial Officer. By now, everyone should have access to the company's third quarter earnings press release filed earlier this morning. We have also provided supplemental earnings slides. The press release and earnings slides are available on the Investor Relations page of Vivid Seats website at investors.visitseats.com. During the course of this call, management may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to the risks and uncertainties as described in the company's press release and other filings with the SEC. On today's call, we will refer to adjusted EBITDA and adjusted EBITDA margin. which are non-GAAP financial measures that provide useful information for our investors. You will find a historical reconciliation of adjusted EBITDA and adjusted EBITDA margins to the corresponding GAAP measure in the earnings press release, supplemental earnings slides, and SEC filings. And now, I would like to turn the call over to Stan.

Good morning, everyone, and thank you for joining us today. I'm excited to discuss our third quarter results and another solid performance from the VividSees team. The momentum we've seen in our business has continued, and we've now set quarterly records for both Marketplace GOV and revenues for the last six consecutive quarters. These results are a testament to our powerful technology platform and our team's ability to capture industry strength with agility. We continue to enhance our unique offerings to reinforce our long-term strategy of acquiring and retaining customers through strong product and service differentiation while making targeted investments to foster brand awareness and loyalty. This morning, I want to share an update on the business and our strategic progress before turning it over to Larry to discuss our results and financial guidance in more detail. To begin with, I'd like to remark on our first year as a public company, which is a milestone we just passed this October. It has been an incredible year for Vivid Seats. We reported record quarters, capitalized on strong live event demand with strong execution, and furthered our longstanding track record of growth and profitability. Next, I'd like to highlight our recent brand efforts. In September, we launched a new integrated brand campaign highlighting Vivid Seats Rewards and Vivid Picks. The Real Rewards for Real Fans campaign launched with content across paid, owned, and earned media and was curated for category reach and the targeted recruitment of high-value audiences. This campaign highlights one of the key differentiators of our brand, Vivid Seats Rewards. connecting Vivid Seats with the number 11 and driving awareness of the key perk of the Vivid Seats Rewards Program, the free 11th ticket. Most notably, with this campaign, Vivid Seats is the first brand ever to sponsor a bonus 11th play on the iconic ESPN SportsCenter Top 10 series and features homepage takeovers with our brand partners. Our recent brand campaigns contrast to our initial brand push during the fourth quarter of 2021, which focused on increasing mass market brand awareness. While 2021's brand campaign indeed corresponded with a double digit percentage increase in awareness, we have achieved more significant and sustained increases in awareness with more targeted initiatives through many of our refined efforts and channels. In fact, Fans across some of these channels have proven to be two times more likely to be aware of Vivid Seats and two to three times more likely to consider purchasing from Vivid Seats. As we look to drive more awareness with high-value live event fans, we continue to expand our brand partnerships with category-endemic media outlets, such as our recent partnership with Bleacher Reports. I'm also excited to announce that we've recently finalized our partnership with the New York Post and are looking forward to launching that over the next few weeks. Lastly, to target younger sports and music fans, we are building on our cultural cachet through influencer marketing and collaborations. At Vivid Seats, we are focused on building customers for life, and our data and ecosystem are at the center of that effort. Our dynamic marketing tech stack ingests multiple data streams, goes well beyond transactional data, and creates a powerful unified customer profile. We are smarter about the customer than ever before, and we surgically prospect the most valuable segments through programmatic channels and triggered communications. Consumer preferences and propensities illuminate the best action to drive lifetime value through continued engagement and purchase activity via vivid seats and vivid picks. We are pleased to report that our customer repeat rates are trending higher across event categories, indicating that our brand and loyalty efforts are working. We will retain the optionality to invest in highly targeted brand channels to amplify the initial traction that we are seeing. Ultimately, we expect higher repeat rates to yield significant margin leverage. That said, live events are a low-frequency category and it will take time for new cohorts of loyal customers to make repeat purchases and drive leverage. On the seller side of our marketplace, we continue to attract and retain sellers with our industry-leading technology offerings and excellent customer service. Professional ticket sellers use an ERP to manage their inventory, and we are proud that Skybox is their most widely adopted ERP. Professional sellers continue to migrate to Skybox, with over 110 sellers added thus far in 2022. Our first-party Skybox data offers VividSeats a uniquely thorough and real-time picture of the live event industry. We utilize our data advantages to fuel our marketing engines and power our marketplace flywheel. Moving on to the consumer, we continue to see healthy demand across categories, and it's clear that live events are resonating with consumers as they continue to shift wallet share from goods to experiences. In sports, minor league baseball has enjoyed a family-friendly resurgence, and our minor league baseball gross order value is now eight times 2017 levels. In music, festivals appear more popular than ever, and so far in 2022, Vivid Seats has already helped fans attend nearly 150 more festival events than in 2019. To capitalize on this trend, this year we launched the Lucky Roller, an interactive Vivid Seats brand experience at popular music festivals like Coachella, Bottle Rock, Lollapalooza, and Austin City Limits. We continue to see encouraging changes in consumer purchasing patterns. Specifically, MLB disclosed that 2022 regular season baseball attendance was down 6% versus 2019. Meanwhile, Vivid Seats MLB orders have increased significantly. This data is supportive of more inventory flowing to the secondary ticketing market as a consumer preference continues to shift from season ticket packages to more flexible buying. As we look to 2023, we are seeing positive indications of a robust concert calendar. Artists often announce their tours for the following year during the fourth quarter. In the third and fourth quarters to date, we've already had exciting tour announcements from top artists, including Taylor Swift, George Strait, Ed Sheeran, Blink 182, and Dead & Company. On the product side, in the third quarter, we continue to expand our offerings to engage with and reach new live event fans. We introduced new sports categories within the Vivid Picks app, including WNBA, tennis, UFC, and F1. We are currently in the midst of our first NFL and NBA season with an integrated Vivid Picks product and are still early in unlocking its value across our platforms. Shortly after the third quarter ended, we reached an exciting milestone. To support the ongoing growth of our business and to attract, retain, and foster talent, we moved our headquarters to the historic Marshall Field building in downtown Chicago. The new headquarters is not just an investment in Chicago's growing tech sector. It's an investment in VividC's current and future employees, which will support a scaled workforce and hybrid work model with shared and collaborative workspaces. As a business, we are passionate about enabling fans to experience it live, and we are intent on doing the same for our employees with our new office. Turning to the competitive environment, throughout the year, we have continued to see ramping and now unprecedented pressure from competitors eager to regain past position or obtain scale, putting near-term pressure on margins. We remain confident and enthusiastic that our strategy to invest in differentiated products and services such as VividPix, Skybox, and our award-winning customer service increases customer lifetime value, and where we see unique opportunities to enhance our strategy, we intend to continue making investments that maximize the long-term value of our customer relationships. Our focus remains on driving long-term shareholder value by making both the right short- and long-term investments and strategic decisions. One of those strategic decisions was to become a public company and augment the levers available to us. Beyond increased customer trust and brand awareness inherent to a publicly traded company, we gained an invaluable investor and partner in Todd Boley, who has continued to provide significant strategic benefits to our business with his connections in both music and sports, including Rolling Stone, DraftKings, the Dodgers, the Lakers, and now Chelsea within the English Premier League. Importantly, we also strengthened our balance sheet to a position where cash exceeded gross debt and were able to immediately deploy equity capital to expand into an adjacent category, daily fantasy. Being public with a healthy balance sheet continues to provide the flexibility to increase growth and make investments that drive long-term shareholder value. A year later, it's clear that the strength of our business reflects the power of our differentiated model and our unique value proposition. Our ability to capitalize on the strength of the live events category, which is benefiting from both near-term and long-term tailwinds and demonstrating resiliency to recessionary factors, continues to drive our success. With that, I will turn it over to Larry.