Vivid Seats Inc.

Good morning and welcome to the Vivid Seats second quarter 2023 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 Africk.

Good morning and welcome to Vivid Seats second quarter 2023 earnings conference call. I am Kate Africk, head of investor relations at Vivid Seats. Joining me today to discuss Vivid Seats results are Stan Chia, Chief Executive Officer, and Larry Fay, Chief Financial Officer. By now, everyone should have access to our second quarter earnings press release, which we released earlier this morning. The press release, as well as supplemental earnings slides, are available on the Investor Relations page of Vivid Seats website at investors.vividseats.com. During the course of today's call, management may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to risks and uncertainties, including those described in our 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 margins to their corresponding gap measures in our 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 share our strong second quarter 2023 results with you. On top of excellent growth and profitability, our investments have continued to drive increased consumer affinity as demonstrated by increasing repeat rates and strong brand sentiment. We have also entered into several accretive and unique strategic partnerships that further differentiate our platform. And just yesterday, we announced our planned expansion into the Asia Pacific region, entering into a definitive agreement to acquire Wavedash, the leading secondary ticketing marketplace in Japan. I'll address each of these exciting developments after walking through highlights from the quarter. Then I'll turn it to Larry, who will walk through our financials and outlook in more detail. Building on a stellar first quarter, we delivered yet another record quarter in Q2, generating 954 million marketplace GOV, 17% higher year-over-year, we delivered 165 million of revenues and 31 million of adjusted EBITDA, also higher year over year, while we continue to invest to strengthen our product and brand to cultivate loyal users on both sides of our marketplace. With an outstanding performance in the first half, we are raising our 2023 guidance for the second time. After another quarter of record-breaking GOV, it is clear consumers continue to prioritize live event experiences. Demand strength was widespread across categories and performers, but the Taylor Swift Eros Tour, complete with unprecedented demand and fandom, stands out. Furthermore, a number of large tours, such as Aerosmith, were announced outside of the typical window and contributed to additional upside in the quarter. Beyond the robust demand that we are seeing in 2023, secular trends for live events are strong and should provide tailwinds to the industry for years to come. To capture that strength, our strategic marketing campaigns foster targeted brand awareness of our differentiated fanned experience that is underpinned by Vivid Seats Rewards, the only rewards program in our industry. This unique and industry-leading platform offers fans more rewards the more they buy, a win-win for our loyal buyers and for us. For frequent live event enthusiasts, rewards accumulate to compelling values that drive them back to Vivid Seats to complete more purchases for tickets to their favorite live events. The value of our loyalty program is so much more than the free 11th tickets. We are truly differentiating the live event experience itself with exclusive perks for our users, like surprise upgrades and unique experiences, rewarding fans with even more value. One way we are accomplishing that is through multifaceted partnerships with professional sports teams. Through these partnerships, we craft unique and premium experiences that drive differentiation while also increasing both targeted brand awareness and brand affinity with high-value audiences. Two exciting updates to this strategy focus on Major League Baseball teams. First, Vivid Seats is now the official ticket marketplace of the Los Angeles Dodgers. As part of this partnership, Dodgers fans now have access to the Vivid Seats Speak Easy and Vivid Seats Elite Seats. These newly branded experiential areas are exclusively available on Vivid Seats and will offer fans premium experiences and perks, such as craft cocktails, complimentary food and beverage options, and luxury seating. Second, we are now the official ticket marketplace of the Colorado Rockies. This partnership will feature naming rights to the Vivid Seats club level, offering extensive opportunities to prominently display our brand and elevate the consumer experience for hundreds of thousands of fans each year. Selected Vivid Seats club level fans will also have the once-in-a-lifetime opportunity to throw the first pitch before select games throughout the season. In addition to Major League Baseball teams, we have also expanded our list of National Football League team partners. Joining our existing partnership roster with the Indianapolis Colts, Cleveland Browns, and San Francisco 49ers, we are excited to become the proud partner of the Los Angeles Chargers. enabling fans to access one of the most unique experiences in Southern California sports, the Perch Suites at SoFi Stadium, complete with a private DJ and surprise visits from Chargers legends. Ultimately, we expect team partnerships such as these to be accretive to repeat rates as fans return to vivid seats seeking an elevated experience. Lastly, we are excited to now offer fans additional payment options by partnering with PayPal Pay Later starting in September. We look forward to integrating this new partnership as consumers continue to look for more flexibility and as we continue to focus on ways to make it even easier for them to attend their favorite events. As we have discussed, all of our initiatives, whether through strategic partnerships or marketing channels, are designed to cultivate targeted brand awareness and lasting affinity for our platform. Our results show that this is working. Since our loyalty program refresh just two years ago, more and more repeat buyers are getting to their free 11th ticket, a key moment in their loyalty journey. Loyal buyers then repeat on our platform are highly accretive to margins, and we are proud to share that our repeat rates reached new highs in Q2. Last quarter, we announced our first free-to-play product available within the Vivid Seats app. The product, now branded as Game Center, is fully live and fans are showing very strong engagement. With Game Center, users play daily challenges and winners of these contests are rewarded with free tickets to events or ticket credits for future purchases. Since soft launching our product in mid-June, we are proud to already have accumulated over 70,000 unique players in the first 60 days. Game Center is yet another example of the ways in which we are innovating and differentiating our product, all while rewarding fans and increasing engagement between ticket purchases. Our focus is also on continuing to innovate on behalf of our sellers. Our industry-leading Skybox ERP continues to onboard new sellers and give them access to best-in-class tools and technology. Skybox is already the ERP of choice for the majority of professional sellers and we are excited to further differentiate our platform. Skybox Drive is continuing to ignite excitement as we progress through our beta phase and we are looking to increase the number of beta users as we move towards a full launch later in the year. Next, I'll turn to our planned acquisition of Wavedash. We are excited to grow our TAM by expanding internationally with a market leading business. Wavedash is the leader in the Japanese secondary ticketing market with a large and growing customer network supported by robust technology and compliance capabilities. With approximately 35 million of revenues during its last fiscal year ended March 31st, 2023 and accretive EBITDA margins, The acquisition of Wavedash is both financially and strategically compelling. We expect to close the transaction in the third quarter, utilizing approximately $61 million of balance sheet cash. We are well-equipped with a strong balance sheet and ongoing cash generation that will enable us to seize other accretive and TAM-expanding opportunities, both organically and inorganically. As we expand our footprint internationally, we remain grounded in our core principles, which are to drive strong growth, strong profitability, and strong cash flow, while cultivating loyalty in our marketplace and innovating to be on the forefront of what's next. Another recent example of this innovation is the launch of the first live events plugin for OpenAI's ChatGPT, which we announced just last month. And industry first, this plugin makes event discovery more exciting, easier, and faster. After fans have all their live event questions answered by the chatbot, this generative AI shopping experience then links to our website for ticket purchase. To conclude, Q2 2023 was an exciting quarter for Vivid Seats with strong financial results stacked with strategic partnerships and investments that further differentiate our marketplace and support continued momentum for our business. With that, I will turn it over to Larry.