Eventbrite(EB) - 2019 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Interim Condensed Consolidated Financial Statements Eventbrite's unaudited interim condensed consolidated financial statements detail financial position, operational results, and cash flows, highlighting revenue growth, net loss, and debt repayment Condensed Consolidated Balance Sheet Data (in thousands) | Account | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total current assets | $576,865 | $545,704 | | Total assets | $866,808 | $836,884 | | Total current liabilities | $401,546 | $308,204 | | Total liabilities | $445,628 | $421,662 | | Total stockholders' equity | $421,180 | $415,222 | Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $82,052 | $73,628 | $244,136 | $215,696 | | Gross profit | $48,707 | $42,151 | $149,200 | $126,272 | | Loss from operations | $(22,906) | $(13,054) | $(47,584) | $(29,365) | | Net loss | $(30,176) | $(35,516) | $(55,007) | $(51,096) | | Net loss per share | $(0.36) | $(1.24) | $(0.68) | $(2.15) | Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $42,759 | $23,786 | $100,491 | $72,785 | | Net cash provided by (used in) investing activities | $(3,538) | $(5,395) | $(11,375) | $1,439 | | Net cash provided by (used in) financing activities | $(52,768) | $231,633 | $(41,101) | $244,848 | - The company adopted ASC Topic 606 on January 1, 2019, with no material impact on net revenues[44][47] - In September 2019, the company fully repaid its $62.2 million term loans, incurring a $1.7 million loss on debt extinguishment, and has no outstanding debt as of September 30, 2019[89][90] - The company is involved in securities class action lawsuits and a lawsuit against MF Live, Inc. for the cancelled Roxodus festival, for which $4.0 million in refunds were issued, with the company believing claims are without merit[103] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion highlights Q3 2019 revenue growth driven by increased paid ticket volume, a net loss, rising operating expenses, and the full repayment of outstanding debt Paid Ticket Volume (in thousands) | Period | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30 | 26,897 | 23,896 | 12.6% | | Nine Months Ended Sep 30 | 80,461 | 70,593 | 14.0% | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(30,176) | $(35,516) | $(55,007) | $(51,096) | | Adjusted EBITDA | $(6,517) | $11,214 | $(629) | $21,238 | - Q3 2019 net revenue increased by $8.4 million (11.4%) year-over-year, driven by a 12.6% growth in paid ticket volume, while net revenue per paid ticket slightly decreased[166][167] - Q3 2019 sales, marketing, and support expenses increased by $7.4 million (34.8%) year-over-year, primarily due to $4.6 million in creator-related expenses, including $4.0 million for the Roxodus festival refunds[171][190] - In September 2019, the company fully repaid its $62.2 million outstanding principal on New Term Loans, resulting in no outstanding debt as of September 30, 2019[159][206] - As of September 30, 2019, the company held $485.2 million in cash and cash equivalents, including $367.3 million due to creators[202] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk disclosures indicate minimal interest rate risk due to no variable-rate debt and immaterial foreign currency impact from exchange rate fluctuations - The company's interest rate risk is low due to no outstanding variable-rate debt as of September 30, 2019, with a 10% interest rate change having no material effect[234] - Eventbrite faces foreign currency risk from significant ticket sales in foreign currencies, but a 10% exchange rate fluctuation is not expected to materially impact consolidated results[235] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[236] - No material changes occurred in the company's internal control over financial reporting during the quarter[237] PART II. OTHER INFORMATION Item 1. Legal Proceedings Eventbrite faces consolidated securities class action lawsuits and seeks to recover $4.0 million in Roxodus festival refunds, believing all claims against it are without merit - The company is defending against putative securities class action complaints in federal and state courts, alleging misrepresentations in IPO documents, and believes these actions are without merit[241] - Eventbrite filed lawsuits against MF Live, Inc. and its principal to recover $4.0 million in refunds issued for the cancelled Roxodus music festival[241] Item 1A. Risk Factors The company outlines key business risks including international expansion, payment processor reliance, live event market vulnerability, chargebacks, legal proceedings, and privacy law compliance - International expansion risks include currency fluctuations, compliance with diverse local laws, and platform adaptation to local preferences[244] - The company relies on third-party payment providers and is re-evaluating its partnership with Square, a primary online payment processing partner[246] - The business is susceptible to chargebacks and losses from fraudulent or cancelled events, exemplified by the $4.0 million Roxodus festival refunds[251] - The business will be subject to the California Consumer Privacy Act (CCPA) starting January 1, 2020, potentially increasing compliance costs and liability[255] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued 369,140 restricted shares of Class A common stock in July 2019 for an asset purchase and confirms no material change in IPO proceeds use - In July 2019, the company issued 369,140 restricted shares of Class A common stock for an asset purchase agreement[258] - There has been no material change in the planned use of proceeds from the company's IPO[259] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications - The report includes an index of filed exhibits, such as CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002[261][265]