Live Nation Entertainment, Inc.

Good day, everyone. My name is John, and I will be your conference operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's third quarter 2022 earnings conference call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q&A. Instructions will be given at that time. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ including statements related to the company's anticipated financial performance, business prospects, new developments, and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on Forms 10-K, 10-Q, and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call, In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable gap measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release, reconciliation, and website supplement can be found under the Financial Information section on Live Nation's website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapinoe, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Good afternoon, and thank you for joining us. Live Nation delivered the biggest summer concert season in history and drove a record quarter. These results demonstrate the ongoing and increasing demand for live events globally, with attendance at events of all sizes from clubs to stadiums. Bands around the world continue prioritizing their spend on live events, particularly concerts. Despite varying economic headwinds, including inflation, we have not seen any pullback in demand as on-sales, on-site spending, advertising, all other operating metrics continue showing strong year-on-year growth. With this demand, revenue was up over 60% relative to 2019, with each division up at least 30%. and AOI up 45% to $621 million, with all divisions up at least 25%. As we expected, our performance this quarter was led by our concert business, which held 11,000 concerts for 44 million fans across 50 countries. As a result, we generated over $5 billion of revenue and $281 million in AOI for the quarter, up 67% and 44% respectively relative to 2019 Q3. Shows of all types continue having strong demand, with double-digit attendance growth across all venue types, including clubs, theaters, amphitheaters, arenas, stadiums, and festivals. Stadiums had a particularly strong quarter, with fan count more than tripling to nearly 9 million fans, driven by the global demand to top acts across a number of genres and audiences, such as Bad Bunny, The Weeknd, and Red Hot Chili Peppers. We delivered double-digit attendance growth across established and emerging markets, around the globe, from North America to Europe to South America, showing our long runway of global growth. Our venue nation division hosted more fans with attendance up 14% relative to 2019, the 19 million for the quarter, and 38 million fans year-to-date. Based on our current pacing, we expect to host more than 50 million fans at our venue nation and festival division. As we have grown attendance, we have also continued driving greater market pricing for our concerts. and now expect to transfer over $550 million of additional payments to artists this year, continuing our effort to help artists get the full value from their shows. And over the course of the summer, we continue to see strong on-site spend with no reduction in consumer buying habits. Ancillary per-fan spending is up 20% to 30% year-to-date in our operated venues across the U.S. and Europe. The consistent theme is that fans are eager to enhance their experience We continue elevating our hospitality operations to provide more premium options. We still have tremendous room to expand these high-quality experiences throughout our venue portfolio, which includes over 400 venues and festivals globally with almost 40 new venues in the pipeline. Band demand for live events was also clear in our ticketing business. We transacted $6.7 billion of fee-generating GTV on 71 million tickets. up 69% and 42% respectively relative to 2019. This demand remained strong throughout the quarter as two of the three months were amongst the top 10 transacted GTV excluded refund months ever. At this point, all top 10 months occurred within the past year. GTV growth was strong across both primary and secondary, up 61% and 132% receptively. Consumers drove 80% of the growth in primary GTV while concerts and sports together accounted for over 90% of our secondary growth. Globally, new venue clients continue to seek out Ticketmaster's service due to its effectiveness of our enterprise software platform, driving venue revenue combined with our leading online marketplace. As a result, we contracted 19 million net new tickets so far this year on a global basis. At Ticketmaster, we continue to advocate for fee transparency and live event ticketing, We advocated for all-in pricing mandate passed in New York early this year, which requires face value prices and fees to be shown upfront. And so we support the FTC mandating this nationally. We operate ticketing marketplaces in more than 30 countries around the world and have seen all-in pricing adopted successfully in many countries when mandated across the board. It's only works if all ticketing marketplaces adopt together so that consumers truly can accurately compare as they shop for tickets. Sponsorship had its biggest quarter ever following our previous record last quarter, driven by the strength of our festival and online partnerships. Our performance drove AOI of $226 million, 56% higher than 2019. Our sponsorship revenue growth has been broad-based, with North America up 48% and international up 93%. And we see strong demand both on-site and online, up 64% and 63%, respectively, this year. And our unique scale live events platforms, continue to attract new brands, and expand relationships with current partners. Festival sponsorship has been our largest growth driver to date, as we have effectively leveraged record festival attendance this year and compounded this growth with double-digit increases in per-fan sponsorship. Platform integrations have been a great growth driver with online partnerships. As we continue to drive value and monetize opportunities via Ticketmaster's purchase process, with non-service fee revenues up double digits relative to 2019. 2022 has been an incredible year of returning to live events and we expect to finish strong. Ticket sales for concerts this year were up 34% for the quarter and now stand at 115 million tickets sold for the shows this year, up 37%. And more importantly, momentum is strong with early signs pointing to continued growth in 2023 across our businesses. Ticket sales for shows in 2023 are pacing even stronger than they were heading into 2022, up double digits year over year, excluding sales from rescheduled shows. And our sponsorship business confirmed commitments for 2023 are up 30% from this time last year, showing the resiliency and long-term commitments that brands have for our business. Beyond these specific leading indicators, going into 2023, we expect we will drive growth in our concert business by adding more venues to our portfolio, continued increase in ancillary per-fan revenue, and further in our efforts to deliver market value for the shows to the artists. And in ticketing, we expect to also benefit from these market pricing trends while continuing to globally add new clients to our world-class platform. With that, I will turn it over to Joe.

Thanks, Michael, and good afternoon, everyone. As with last quarter, 2019 is the best comparison for us in terms of understanding our results, so most of our discussion will be relative to Q3 of 2019. For the company, our reported revenue of $6.2 billion for the quarter was $2.4 billion better than Q3 2019 or an increase of 63%. On a constant currency basis, our revenue was $6.4 billion for the quarter So there was roughly a 3% impact due to strengthening of the U.S. dollar. This was a record quarter for revenue for the second quarter in a row and bested our Q2 figure by 39%. And our reported AOI of $621 million for the quarter was $194 million better than 2019, up 45%, and led by an improvement of over $86 million in concerts and $81 million in sponsorships. On a constant currency basis, our Q3 AOI was $645 million. The FX impact of negative $24 million, or 4%, was largely driven by the devaluation of the euro and the pound. In year-to-date, we have converted roughly 76% of this AOI to adjusted free cash flow of $996 million. Let me give a bit more color on each division, then I will give you more on leading indicators. First, in concerts, Our AOI was $281 million for the quarter, which compares to $194 million in Q3 of 2019, an improvement of 44%. It was concert's strongest quarter ever, far surpassing the previous record of $200 million AOI in Q3 of 2018. It was a stellar summer season for concerts. We had over 44 million fans in the quarter, the most ever, growing 40% compared to Q3 of 2019 when we had close to 32 million fans. Looking a bit deeper at our fan metrics, stadium attendance more than tripled to 8.7 million fans in Q3 of this year, and festival attendance was 6.5 million fans in the quarter, up nearly 40% from Q3 of 2019, with premier events including Rock in Rio, Rock Verter, Reading, and Lollapalooza. Pricing has been a key part of our strategy in 2022, capturing market pricing for the best tickets while maintaining an affordable entry point for all fans. For tickets sold to shows at our amphitheaters, arenas, and stadiums globally this year, front-of-house pricing increased for each by double digits relative to 2019, while starting prices for all shows in the U.S. rose just 6% and remain under $35 on average. And giving you more details on ancillary per-fan revenue by venue type, in our U.S. amphitheaters, ancillary per-fan revenue was $38, an increase of $8 per fan over 2019 levels, or close to 30% growth. At our major festivals globally, increased spending on concessions, camping, and VIP experiences drove ancillary per fan revenue up by nearly 30%. And at our theaters and clubs in the U.S. and the U.K., ancillary per fan revenue increased by over 20%, driven by higher concession sales, fast lane entry, night of show upgrades, and the move to cashless payments. On the cost side, as indicated before, increases continue to impact us primarily in the venues we operate, amphitheaters, theaters and clubs, and festivals. But in all cases, we are delivering double-digit growth in profitability per fan due to increased ticket sales and ancillary revenue. Next, ticketing had another successful quarter, delivering $163 million in AOI, nearly 30% higher than Q3 of 2019. Q3 was our top quarter ever in terms of reported ticket sales in GTV, and it was our second highest quarter ever in terms of transacted ticket sales in GTV, behind only Q2 of this year. When we look at the year-to-date performance of our ticketing business, the numbers reflect the incredible demand we've had. Through September 30th, we have sold 197 million fee-bearing tickets, up 38 million tickets, or 24%, compared to 2019. GTV for the first nine months is $19 billion, up $6.3 billion, or 49%, compared to 2019. As a result, revenues are close to $1.6 billion for the first nine months of the year, which is up almost $500 million, or 45%, compared to 2019. And with all this, we drove AOI to $600 million, up 71%, as we deliver strong operating leverage. Across both sporting and concert events, ticket buyers continue to prioritize purchasing the best seats available, driving a 17% average price increase in the primary market year-to-date relative to 2019. Secondary pricing has risen by 10% on average, with sales volume up as well. With these increases, the average secondary ticket price in the U.S. remains almost twice that of a primary ticket, demonstrating additional opportunities for market-based pricing as well as a large buffer from any demand shifts. For those of you focused on margins, as we have indicated previously, it's difficult to evaluate based on a single quarter. Q3 margins were impacted by our mix of clients and shows along with technology investments. All of this is as expected. and align with our full-year margin expectations in the high 30s as we have been indicating over the past few quarters. Finally, growth in our high-margin sponsorship business continued this quarter with revenue up 59% relative to Q3 2019 and now up 64% year-to-date. We once again had high growth in both on-site and online sponsorship, driving record Q3 AOI of $226 million today. 56% higher than our Q3 2019 AOI. Looking back at sponsorships growth through the first nine months, we have seen our festival business nearly double and our platform integrations more than double. Our strategic multi-year, multi-asset sponsors now generate three-quarters of a billion dollars in revenue for us. Back in 2017, we have 56 such clients representing approximately two-thirds of our total sponsorship revenue. Today that number has grown to over a hundred such partners that account for 80% of our revenue growth in both the number of partners and the level of their spend, which demonstrates the value we deliver and the importance they place on our unique onsite and online scale platforms. As we look to the remainder of 2022, starting with our leading indicators through late October, all relative to 2019, Concert ticket sales are over 115 million tickets for events this year, up 37% and 20% higher than our full year 2019 fan count. Second, ticketing has sold over 200 million primary fee-bearing tickets for events this year, up 27% relative to 2019 at this point. Of these, 135 million tickets are for concert events, which is 38% higher than 2019. Related to this, we had $1.9 billion in event-related deferred revenue, consistent with our levels in Q3 of 2021, despite the deferred shows in last year's numbers. Excluding the deferred shows from last year's numbers, we would be up 35% year-on-year. A few other points on 2022. Given our presence in the UK and mainland Europe, we've experienced FX headwinds, and through the end of September, our AOI has been negatively impacted by $47 million. This was almost entirely in the second and third quarters as the US dollar strengthened significantly against the Euro and British pound. Based on current forward rates, we expect a 4% impact to AOI in the final quarter of this year. Due to some delays in construction projects as a result of supply chain disruptions, our 2022 capital expenditures forecast is now approximately $300 million, with roughly two-thirds allocated to revenue generating projects. We expect the key revenue generating projects, which are delayed, will still be completed early next year, so don't anticipate any impact next year on the return from these projects. We expect free cash flow conversion from AOI to be in the mid to high 50s for the full year. We ended Q3 with $2.6 billion of available liquidity between free cash and untapped revolver capacity giving us sufficient flexibility to continue investing in growth. We are comfortable with our leverage with over 85% of our debt at a fixed rate, and our average cost of debt is roughly 4.5%, positioning us well in this interest rate environment. In addition, the majority of our debt is long dated with only our 2023 convertible debt maturing within the next two years. We will continue to optimize our capital structure based on market conditions. With that, let me open the call for questions. Operator?

Thank you, sir. At this time, we will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Brandon Ross with Light Shed Partners. Please proceed with your question.

Hey, everyone. At this point, most investor focus is on 2023, so I wanted to dig a little more there. And I know it's hard to determine the demand side for the full year, but can you speak maybe quantitatively and qualitatively about the supply side for next year? I think last year you gave that kind of top touring axe for the year ahead and what that looked like year over year. How's that trending? And then what's your view on the quality of the supply next year versus this current year?

I'll start on the quality. We're seeing a really good pipe for next year. I would say there would be no difference in 23 to 22 in terms of quality. If you were a stadium act, a large-selling arena act, you probably debated whether you went out in 22 or you went out in 23. So lots of great artists in the pipe from clubs to stadiums to arenas. It'll look like a similar year in terms of quality.

Yeah, just a few other specifics. As Michael said, our sales for next year are up double digits. And if you want to take these to be so-called quality references and We're most up in stadiums, which by their definition can be the largest artists that can sell the most tickets. So that would indicate we're off to a good quality start. The other is if we look at tickets sold per show that we have on sale for next year from amps, arenas, stadiums, festivals, in all cases, our tickets sold at the on sales are up relative to what they were at this point last year for 2022 shows. So I think those are all good indicators of both the breadth and the depth of the supply that's going out.

Great. And then keeping on 23, you said your book sponsorship is, I think, up 30% year over year. And that's kind of a different story than we're hearing across the ad and sponsorship universes. Have you seen any recent slowdown there, and why generally do you think your trends in sponsorship are different than what we're seeing?

Yeah, we haven't seen any slowdown. I think it's different pools of money. It's a different strategy. The sponsorship relationships with us are not decided week to week, month to month, based on what they're trying to get out of performance marketing. These are long-term commitments by major brands. Michael gave you the stats. It's really being driven by these big multi-year, multi-asset, multi-million dollar relationships. So we're up 30% with over half our book of business for next year already filled and not seeing any slowdown. So we're feeling very comfortable with it.

You know, Brandon, for comparison, you know, if the NFL was a public company or NBA, I'm sure Goodell would be reporting record sponsorship also. So, you know, we can't put ourselves in that league, right? He's not having any pullback. If you've got a scarce commodity like a Beyonce tour or an NFL game, those are still very rare pieces of business that you want to be associated with, and they have longevity to them. So we haven't seen any slowdown. Talking to the NBA and NFL, we haven't seen it over there either. So I think those are the comparables for you.

Okay. And then just finally, on the regulatory front, there's noises, kind of there always is. What would, I know you went on the offensive on the ticketing transparency, but what would be the fallout if there are changes to that law for you? And is there any other potential pressures, regulatory pressure that you're seeing or otherwise contending with right now?

Yeah, we don't believe there would be any impact whatsoever if there was a nationwide mandate for all-in pricing. We think it makes sense. It just has to be done collectively at the same time. And if you look back and you listen to the comments, the comments were all about transparency, which is really all-in pricing. The commentary was not about fee levels or any of the other issues that some people have brought up. That's been looked at, and we feel comfortable with what our business model is in that regard. So I think that we'll work with the FTC, we'll work with the DA and the state of New York, and we're very supportive of that and some other shifts to make ticketing more transparent and a better consumer experience.

Just a couple of points to jump on. We tend to do better as regulation comes into play in this space. A lot of our business has been chasing the secondary business for years that We would love spec selling to be outlawed. We'd love better rules on bought ticketing. We'd love all-in pricing. We're adhering to all-in pricing in New York right now. I think we're probably the only ticketing company actually adhering to those regulations right now. So we like sunlight coming to the business. The most part of the business has been unregulated, and most of the noise is generated from the secondary business. So we love regulation. It puts us on an equal footing ground. Right now in our secondary business, we don't do spec selling. That's probably 30% to 40% of what inventory sits on secondary sites. We don't price below face value. So we actually operate at a disadvantage right now because we are operating at a higher standard. So we'd love more transparency. We'd love to have the fees more transparent up front. all in pricing. We just have to make sure everybody plays by the same rules. But we're going to leave those pieces. As far as the fees, just to remind you, it's the venues that set the fee and take most of the fees. So I think if you build a multi-hundred million dollar arena or stadium, I think it's your prerogative to decide what is the fee you want to charge on your sports and music tickets. We get a piece of that. But those are set by the venue and monetized by the venue. So just kind of some of the ongoing transparencies of the business, we've got to do a better job explaining. Great. Thank you.

Our next question comes from the line of David Karnovsky with J.P. Morgan. Please proceed with your question.

Thanks. Maybe I'll flip Brandon's first question around and push on the demand side, but you've been able to maintain AOI growth in a low double digit range over a long period. And you've done that in markets, even at times where fan attendance has been down. And I know you just spoke to the supply, but given that uncertain demand environment, how do you think about some of the other factors in your control on revenue, but costs that can kind of keep you in that historical range?

I'm going to let Joe jump in, but I just want to make sure don't, don't discount the supply side, right? That, you know, that's like, talking to Disney and saying, if you only have Marvel movies, how's your demand going to be? It's going to be great. Supply and content drives the demand. So if you've got a lot of great, great quality supply, the demand is a little easier. So I don't want you to discount that. We're very proud that we work with the best artists in the world. We're the best global platform for those artists and attract them to our platform. That's what you have to make sure you first have. So we have the blockbusters top to bottom. That's going to drive the demand and Now Joe will take over in terms of explaining the demand strength so far we've seen.

Yeah. So, again, just to repeat the numbers, which are the mix of supply and demand, which is that our tickets sold for the shows that we have on sale for next year are up consistently across all venue types relative to a year ago. So the demand is absolutely coming for the supply that's showing up. Now, on a broader basis, you're right. We've consistently, if you looked at 2010 to 2019, we've consistently grown our business double-digit AOI. 2011, we grew our business double-digit AOI while fan attendance was down. So we do have a number of other levers and Michael spoke to those as part of his commentary. We're continuing to grow our venue base and fans that go to shows in our venues are much more profitable than others. We continue to have Increased on-site spend. We continue to have pricing as a lever, which drives through both our concerts business and our ticketing business. Continuing to add globally Ticketmaster clients. And then I've given you the numbers on sponsorship, which we think continues to be a double-digit growth business into the future. So all of those levers on top of the supply-demand dynamic is what gives us confidence as we continue to look to our future of the growth potential.

And, Joe, just to jump in on that, I just want to jump in on the demand in terms of how the demand is spread. There's certain theses that like to get spread. Our demand is, you know, overall a concert ticket is still a really affordable ticket. Most majority of the tickets are sold are $50 to $75. So although we have a great premium business that does attract a high-end customer or someone that's a rapid fan, our business is split significantly. from clubs to theaters to stadiums, we're seeing demand strong on all levels, whether it's a $19 ticket that's filling up the clubs or the premium at the stadiums and arenas. So we do think we have something for everyone. It is a very accessible ticket, even in a pullback time. And we're seeing that the demographic of our buyer is very, very wide and split across all sizes.

Yeah, Michael, sorry just to jump back in on you. Again, counter to some of the commentary that I've heard out there, we're not dependent on acts that have been around for a long time. If you look at how vibrant the new artists are, I mean, I look at our top artists that we've had this year, the Harry Styles, Dua Lipa, Billie Eilish, Bad Bunny, Morgan Wallen, The Weeknd, Olivia Rodrigo. These are all artists that are at the early stages of their career. across, as Michael talked about, all genres. Most of those are obviously in arenas and stadiums. But these are tremendous talents that are just showing the breadth of supply that we have in our business.

Okay. And then I had a question on online sponsorship, which is really turning the corner. How do we think about the driver of growth here in terms of fan or traffic increases in your website or apps versus actions which are more in your control, like the platform integrations you mentioned, and then how much kind of room is there to grow some of these sponsorships?

Yeah, our focus this year has obviously been on the latter of how do we create new assets on this Ticketmaster platform that can continue to drive the economics. And then as you improve your volume of tickets or improve your site visits, then that's just additional growth on top of that. So We view it like we would view any other platform in its own way, just a counterpart to the onsite. We have people's attention through a period of time. We have them going through a purchase process. And all of that is something that we can monetize. We saw great progress on the platform integrations, particularly around the checkout this year. We think there's earlier upstream. We think there's advertising dollars that can still be significant that we can drive from it. And we're focused much more on How do we use Ticketmaster as a platform to drive its own set of non-service fee revenue streams? And we think that has a long runway.

Great. Thank you. And our next question comes from the line of Stephen Lasacek with Goldman Sachs. Please proceed with your question.

Hey, great. Thank you. Maybe one for Michael in pricing. I was wondering if you could talk a little bit about some of the advice you're giving to most artists with respect to pricing their concerts next year. Is your messaging more that maybe there's still some opportunity to take price given the strong demand that you're seeing this year? Or is maybe at 23 is a year where artists need to be a little bit more focused on selling out rather than taking price?

Yeah, I wouldn't say 23, our conversation is any different than it's been in any year. We have an incredible great pricing team, a lot of data scientists that are talking and analyzing the business with our managers and agents. So, you know, as you know, there's no one paintbrush. You're depending on what artist, where you are in your cycle, and what your demand is. So I just saw some counts this morning for Shania Twain went up for sale. Today, big, big numbers out of the box. She's an iconic artist. So you're not worried about pricing if you're talking to Shania and how she prices her tour. If you're a little baby going on tour next year, you have a younger demo, you're building your audience. Maximizing your growth isn't your priority. It's getting to as many markets and fans as you can. So I wouldn't say 23 is even in my buyers' minds right now. What is in their head is over the last few years is just better pricing dynamic strategy from day one on the market. Prices are different on a Friday than a Tuesday. The aisle seat's worth more than the middle. The front's always underpriced. We've yet to see anything get close to secondary demand yet. So most of our shows are still going to be underpriced in the front. So our job is to do what we can to upsell the front so we can lower the price in the back, get sell-through all the way through. So I wouldn't say that any artist or manager is having any panic or talking to me about demand for next year. They know the Taylor Swift ticket verified fan that went up this week that's probably going to break all records. I mean, artists are seeing the demand is there. If you price it smart, you've got the right markets. You've been out of the market maybe three, four years. We're not feeling the demand from inflation or 23 pressures that are driving strategy. It's just overall us being better at what we do today than we were last year and the year before on pricing strategy per market by artist per territory.

Got it. That's helpful. And then perhaps somewhat related to that, secondary GTV grew more than twice as fast as primary GTV in the third quarter. Could you just comment on some of the key factors driving that outsized growth in secondary? And is this something you think can continue in light of the pricing strategy you outlined?

Yeah, I think as Michael talked to you, first and foremost, our strategy is to help the artists get paid market value for their show. And we are spending more and more on having the people and the data to help them do that. That said, for a lot of reasons that he went over around how they want to build their fan base, how they want to build their brand, so they're leaving money on the table. And we're continuing to see that just almost insatiable demand in the secondary market I talked about. The average price of a secondary ticket is still almost twice that of a primary ticket. So that continues to grow, and we continue to price a little bit trying to catch up to that. So we don't see the secondary market going away anytime soon, and we're going to be active participants in it. I talked a lot last quarter about the fact that we believe the shift to secondary tickets has helped us because it's just eliminated friction to use us as the secondary platform to buy and sell the tickets as we get better and better with that Ticketmaster app. You can manage your tickets, you can sell them, you can buy them on our secondary. As all of that gets easier and easier, I think that just naturally continues to build the business with us.

Great, thank you.

And our next question comes from the line of Steven Glegola with Cowan. Please proceed with your question.

Hi, thanks for the question. Michael and Joe, can you maybe just update us on, you know, I know you spoke earlier around the regulatory risk and concerns around on FTC regulation and all in pricing. But I think there's also investor concerns around the DOJ still. And maybe just updating us where things stand with your consent decree and maybe also touching on in relation to that. You know, client wins on ticketing have been very strong over the last 21 months, you know, 36 million tickets. Just maybe the competitiveness of the primary ticketing market in the United States and how you see that relative to those wins and with regards to regulation.

Thanks. As regards to the consent decree, we have an ongoing discussion. We have an external monitor who we have regular dialogue with. We have an internal monitor who oversees everything. We're very happy that we've got an active dialogue now, which is what was lacking in the first 10 years post our merger. We feel good about all of those discussions. Don't think there's anything structural, substantive that we're finding that's inconsistent with the message that we send all of our people, which is these are independent decisions on promotion and ticketing and the two shouldn't be tied together. So we feel good about that process that we have with them. As we look at Ticketmaster, I think it's continuing to be successful because it's a very effective platform. I think if you look at, again, we've talked a lot over the past few quarters about because of our continually improving and high-quality platform, both for the enterprise side as well as the customer side, particularly internationally, that's differentiated and driving a lot of wins internationally. North America, where it's more a mature market, you need to be able to compete on price in addition to features. And I think our business has shown that we can continue to scale that, grow it, and do so very profitably.

Thanks, Joe. And if I just have one more follow-up here. Industry publications have reported a trend of tickets for top-tier acts seeing strong demand, and then the lesser-known and emerging artists are struggling. I know you've had some commentary today where that wasn't the case, but as you look out over the next 12 months or so, um, you know, does that, are you seeing that potentially an impact on your business or trend? And maybe you can just talk about both of those segments of artists in a recessionary environment and how they would hold up, um, you know, the high end top tier acts relative to the emerging artists and lesser known ones. Thanks.

Yeah. Just on a macro level, um, you know, this is a business that overall, um, We don't win, you know, most shows don't sell out. The majority of your shows don't sell out. Always room for a few more tickets to be sold. So although the press always talks about the expensive tickets or the sold-out ticket, that's not your real business. Your real business is, you know, night and day, theater clubs, amphitheaters, arenas, selling those tickets night by night. So most tours ultimately do well. In the end, artists make money and we make money. There are some tours, a small percentage, that just don't sell enough tickets. The demand isn't there. And the tour either gets canceled or the promoter and the artist lose money. So, I mean, I have seen some of those publications where they want to, you know, grab those six tours or some that didn't make money and then try to extrapolate something larger. I just don't see that trend. We did over 8,000 club shows last year. And, you know, 95% are going to make money and do well. And the artists will deliver those 400 tickets or 1,100 tickets as they're building their business and their costs are associated with it. You know, it was a tougher year for all of the industry as the supply chain challenges, labor, everyone getting back to work, getting the security guards. Everyone's costs were up this year. So that would have affected all artists on the road relative to their revenue. But those teams have worked their way through the system. So I don't see any trends that the emerging or younger artists are having any harder time than any young emerging artists when they're taking those risks, building their businesses on the way up. Generally, majority are going to be okay in terms of selling enough tickets, paying the bills, and building their business. So we don't see any trends in the bottom end, any new trends that would suggest that the club and the emerging artist space isn't growing. There's more clubs opening up all the time, lots of demand in every market, lots of options for artists to play online. 500 seats, 1,000 seats. We just know from our venue portfolio on the demand on opening up and building theaters and clubs is bigger than ever. So that demand wouldn't be driven if the supply wasn't there.

Thank you, Michael. Appreciate it.

And our next question comes from the line of Peter Cipino with Wolf Research. Please proceed with your question.

Hi, thanks for taking the question. First, on Taylor Swift, I just want to say that my 16-year-old daughter and I are signed up for the presale and would very much appreciate your support on the 15th of the month. Moving on, in the press release, you highlighted that growth in your concert business in 23 will come from adding more venues to your operating portfolio and increasing ancillary per-fan revenue. So we didn't see any mention of fan growth. And then in the discussion today, we've obviously heard a lot of talk about a robust first half of 23. And so if you'll forgive me kind of picking at this 23 topic again, I'd love to understand how much visibility the company has into the second half of the year. I think booking cycles for the big venues are six to nine months out. So that's one question. And second one was just as strong as your fan growth has been this year, Does this change how aggressively you might go out and invest in new venues, possibly larger ones, even ones outside of the country? Thanks so much.

So just technically, Peter, just to answer your first question, I think the way that we laid out the story in the release and then Michael talked about it is first he talked about the fact that ticket sales are up. He talked about the sponsorship growth, and then he said in addition to those, there are a number of other levers that we have to continue to grow the business. So I don't think he ever said anything that said we weren't, the fan growth didn't come into this. At this point, looking at 23, yeah, we've got some of the stadiums. We talked about high growth and arenas, some of that book. It's still somewhat early for the second half of the year, but macro in terms of our pipeline and, for next year, it would account for more fans than we had going into this year. The hard part that we have is just sorting out because of the shows that were rescheduled, trying to figure out how many of those would have naturally flown into this year versus not. But we're feeling very good about the attendance levels for next year. Michael, talk about the venues.

Yeah, I think just on Joe's point, we're excited to be sitting here We knew the thesis that you could sell on was that there was an air pocket. We heard that comment a lot. 23 was an exceptional year, and it was. 22, I mean, an exceptional year. The idea that we were able to grow this business for so long on our high double digits, on our high single digits, on our fan base, and then to have a year like 22 where you blow the doors off it and now to be able to sit here and say, and we think we'll still grow on top. We're very proud of our business and our outlook here. given the headwind and the size of the gains we had this year. So we're looking into now beyond that and how we keep growing the business forward. Venues I've laid out over the last year or two, we think it's a great business. We have 300 in our portfolio. It's a great way to obviously maximize that live event fully when you're vertical. So we like our global pipeline we have right now. We're seeing a lot of white space where our content can help drive that business case from arenas to amphitheaters to big ballrooms and theaters. So you'll continually see us adding, as we have been over the last many years, to that portfolio. Thanks, Michael.

Thanks, Joe.

We have time for one final question from the line of David Katz from Jefferies. Please proceed with your question.

Made it under the wire. Thanks for taking my question. In the past, you've talked about the evolution of digital ticketing, and I know there was some commentary, I believe, in the spending to that end. An update on sort of how that's progressed, where it is, and what we might expect in the near term and longer term would be helpful, please.

Yeah, I think digital ticketing at this point is nearly ubiquitous in North America. It is grown rapidly internationally. It's still a year or two behind. I'd expect this to be pretty much there sometime between next year and maybe the year after, just depending a bit by market. And as it's gotten established, it's already helped us in a number of areas. I talked about secondary a few minutes ago, so we're seeing some direct benefits as we continue to improve the ability in terms of how fans manage their tickets. I think you'll continue to see more products get added on to the app. They continue to improve how the fans can manage their tickets. And then it sets us up for the advertising and upsells that we've been talking about. And we now have enough scale. We started doing some things this year at scale. working with sponsors who wanted to deliver value on site to our fans, working with the concert side of the business to enable direct upsells. And I think all of those features that come from having a direct connection to the people actually attending the shows will be a key focus for how we continue to drive our sponsorship business over the next few years.

And there's a sort of clear quantifiable difference you know, earnings benefit where the rubber meets the road from that, correct?

Yes. And I think, you know, you see part of that as we talk about what is our non, on Ticketmaster, what's our non-service fee revenue that we're driving and the fact that that's up double digits from 19. This is all a part of that.

Understood. Thank you.

Thank you. I would now like to turn the floor back over to Michael for closing comments.

Thank you, everyone. We'll see you at our Investor Day in Liberty in November. You can check our website for more details. Thank you.

Thank you, everyone. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.