Vivid Seats Inc.

Good morning and welcome to the Vivid Seats Fourth Quarter 2022 Earnings Conference Call. Following management's prepared remarks, we will open the call for Q&A. I would now like to turn the call over to Kate Kapos. Please go ahead.

Good morning and welcome to Vivid Seats Fourth Quarter 2022 Earnings Conference Call. I am Kate Kapos, Head of Investor Relations at Vivid Seats. Joining me today to discuss VividSeats results are Stan Chia, Chief Executive Officer, and Larry Fay, Chief Financial Officer. By now, everyone should have access to the company's fourth 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 VividSeats website at investors.vividseats.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 earnings press release and other filings with the SEC. On today's call, we will refer to adjusted EBITDA and adjusted EBITDA margins, 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 margin to the corresponding gap 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. 2022 was a stellar year for live events and an exceptional year for VividSees. Our team capitalized on strong demand continued to innovate and expand our suite of leading marketplace products, navigated the competitive landscape with agility, and delivered on financial and strategic objectives that strengthened our business for 2023 and beyond. Larry will take you through the fourth quarter and full year 2022 financial results in detail and discuss our outlook for 2023. But first, I'd like to share highlights from our first full year as a public company and discuss the progress we've made on strategic objectives. Looking first at the most recent fourth quarter, I'm proud to report that we generated $846 million of Marketplace GOV, $165 million of revenues, and $34 million of adjusted EBITDA. For the full year 2022, we delivered Marketplace GOVs of $3.2 billion, revenues of $600 million, and adjusted EBITDA of $113 million. At Vivid Seeds, we commit as a team to achieve our goals. Over the last year, we've demonstrated our ability to leverage our robust tools and execute adeptly regardless of the environment, which became more challenging as the year progressed. We continue to set new records in 2022 with Marketplace GOV and revenues both surpassing 2021's records by more than 30%. 2022 Marketplace GOV and revenues also exceeded our initial guidance midpoint by 10%. Even with unprecedented competitive pressures in the second half, we delivered adjusted EBITDA within our guidance range while making deliberate investments to drive higher customer lifetime value. As we all witnessed, 2022 was a phenomenal year for the live event industry. Live events were back, and then some. After seeing some cancellation impact from the Omicron variant in the first quarter, the risk of substantial disruption from COVID-19 waned throughout the year. As a result, fans were able and eager to get out and see the artists and teams they love. Among our event categories, which include concerts, sports, and theater, concerts were a particular standout, benefiting from strong demand as well as a tailwind from postponed events originally scheduled for 2020. As the year progressed, macroeconomic pressures grew, but live event demand remained resilient. We consistently raised our guidance from Marketplace, GOV, and revenues as we capitalized on strong demand. We are hopeful that this resiliency continues in 2023, but ultimately that will depend on how the economy evolves and where consumers prioritize their spend. That said, exciting tour announcements from top artists such as Beyonce, Madonna, Metallica, and SZA, in addition to several mega tour announcements last quarter, are promising. What's clear is that fans are passionate about their favorite artists and teams, and we continue to invest in that passion, creating exceptional experiences and enabling fans to attend more of their favorite events. Our focus on user engagement within our product ecosystem continues to be one of the pillars of our long-term strategy. In 2022, we rebranded, integrated, and enhanced VividPix while continuing to grow our user base. Year over year, we increased both our monthly active users and new accounts created by close to 300%. In the fourth quarter, we launched in-game play capability within VividPix, and now our daily fantasy sports users can place entries for contests covering the second half of the game. Whether fans are attending a live event or at home watching, fans may place entries as the game approaches and as the action evolves. This upgrade adds another level of excitement to the VividPix experience as fans engage with their favorite teams and athletes, as well as with other DFS players through social elements. This is especially beneficial for cultural touchstone events like the Super Bowl. We also create exceptional experiences through our brand partnerships, such as Rolling Stone. Collaborations on exclusive live events are a key component of our partnerships, And for the third year, we were proud to partner on the Rolling Stone Live series and bring to life one of Super Bowl weekend's most anticipated events. Through our loyalty program, Vivid Seats Rewards, we surprised loyalty members with invitations to an exclusive live experience that expertly intersected the worlds of music, culture, and sports. Brand partnerships and exclusive events such as these bring differentiated experience and value to our buyers in addition to driving brand awareness with the right audiences. As we reflect on the past year, many of our exciting announcements focus on the buyer side of our marketplace, including our Real Rewards for Real Fans campaign and our partnerships with Bleacher Report and the New York Post. This quarter, we are pleased to share a substantial development on the seller side of our marketplace. Skybox has been the industry-leading ERP for professional sellers for years, And this quarter, we are excited to announce Skybox Drive, an intelligent automation that optimizes revenue for our sellers on Skybox. Our broad swath of industry data has allowed us to develop a product that provides sellers a turnkey solution to customize and automate their revenue optimization strategies, seamlessly integrated into Skybox and powered by our marketplace data. Together, Skybox and Skybox Drive present a unique and unmatched offering that will further deepen our seller relationships as well as continue growing our install base. Skybox, combined with our proprietary marketing algorithms, provide us with the most complete view of the industry in real time, allowing us the ability to efficiently and effectively acquire new buyers. And recently, with unified user profiles across VividSeats and VividPix, We have unique insights into fan preferences that power an evolving personalization engine that nurtures our relationship with sports and music enthusiasts. These capabilities continue to differentiate us in the highly competitive ticketing landscape. We continue to invest in superior product and service for both buyers and sellers to drive long-term differentiation and stickiness in our marketplace. We are seeing encouraging signs of that stickiness with a large and growing base of sellers on Skybox and increasing buyer repeat rates. In 2022, particularly in the second half, we saw competitors ramp aggressiveness in performance marketing channels, which elevated customer acquisition costs across the industry. Meanwhile, we continue to build differentiated product, drive brand affinity, and target high value audiences with attractive repeat tendencies to create value in the long term. Loyal buyers making repeat purchases are accretive to margins, and we believe we can temper near-term CAC headwinds with increased customer lifetime value as our initiatives continue taking hold. Next, I'll address some of those initiatives in more detail. 2022 was an exciting year for VividSeeds as we used new and expanded strategies to drive engagement and grow affinity for our brand. Beyond integrating VividPix, we also expanded and invigorated our social and experiential presence. These efforts included new platforms such as TikTok, expanded partnerships with influencers and creators, and new experiential activations on-site at events and festivals. With unified customer profiles across VividSeats and VividPix, we became more selective and sophisticated in targeting high-value sports and music enthusiasts. We continue to grow our suite of tools to target the right buyers in accretive channels. Regardless of channel, we communicate a proven and compelling message. Vivid Seats is the only ticketing company to offer rewards, and our rewards offer real and differentiated value. With our multifaceted brand investments in play, we are seeing traction in driving targeted brand awareness and affinity. Fans are engaging with Vivid Seats more often while expressing positive sentiment toward the brand. In fact, our net social sentiment is highest amongst our main ticketing competitors. While opportunity to optimize our marketing capabilities and continue growing brand awareness remains, we are pleased with the results we've achieved thus far with a relatively modest brand marketing budget. We are proud of our ability to drive long-term brand affinity while remaining highly profitable and will continue to do so. Ultimately, our strategy to drive higher repeat rates is twofold. First, recruit the right buyers. Second, once inside our ecosystem, nurture each buyer with differentiated product, service, and value. We are excited that our repeat rates continue to trend higher across event categories. This includes repeat rates for new Q4 cohorts despite competitive pressures. Even in the current landscape with higher tax, momentum from our brand investments is building. As we look to the future, we expect CAC to normalize, which in conjunction with brand momentum will lead to substantial margin leverage in the medium to long term. Larry will discuss our outlook for 2023 in detail, but I want to reiterate that we are steadfast in our strategy, delivering a differentiated product with a compelling value proposition that fosters value in the long term. As the landscape eventually rationalizes, we are well positioned to capture disproportionate growth and deliver long-term margin expansion. In the near term, we are well equipped with a strong balance sheet and will continue to look for opportunities to accelerate growth for our current offerings, as well as to expand our TAM through both organic and inorganic investments. Before I wrap up, I want to touch on the ways we are creating exceptional experiences for all of those within our ecosystem Most importantly, our people. In December, we celebrated the grand opening of our new Chicago headquarters, and it has been so energizing to bring our employees together in a state-of-the-art collaborative workspace. This is another example of our commitment to fostering talent and encouraging innovation at all levels in our business. We have been recognized for these efforts. We earned a place on Fast Company's Best Workplaces for Innovators list, and recently we were named to four of Builtin's 2023 Best Places to Work lists in both Chicago and Dallas. Lastly, we remain committed to giving back. As a marketplace that truly connects people, we understand just how much joy live events create and how they enhance the quality of life for so many. This year, we were proud to expand our CSR efforts with a partnership with Make-A-Wish, the global organization responsible for creating life-changing wishes for children with critical illnesses. Through our charitable foundation, Vivid Cheers, we are providing once-in-a-lifetime experiences by sending these children and their families to their favorite live events. With that, I will turn it over to Larry.