Eventbrite(EB) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides Eventbrite's unaudited condensed consolidated financial statements and management's discussion for the quarter ended June 30, 2022 Item 1. Unaudited Condensed Consolidated Financial Statements This section presents Eventbrite's unaudited condensed consolidated financial statements for the quarter ended June 30, 2022 Condensed Consolidated Balance Sheets Total assets increased slightly to $925.4 million as of June 30, 2022, driven by cash, while liabilities and equity shifted Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total current assets | $706,375 | $673,608 | | Total assets | $925,436 | $902,976 | | Total current liabilities | $398,938 | $357,966 | | Total liabilities | $766,621 | $733,076 | | Total stockholders' equity | $158,815 | $169,900 | Condensed Consolidated Statements of Operations Net revenue grew 43% to $66.0 million in Q2 2022, with the net loss slightly improving to $20.1 million Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $66,041 | $46,311 | $121,916 | $74,129 | | Gross profit | $42,999 | $28,258 | $78,901 | $42,401 | | Loss from operations | $(13,300) | $(18,229) | $(27,881) | $(44,072) | | Net loss | $(20,088) | $(20,540) | $(38,273) | $(105,431) | | Net loss per share | $(0.20) | $(0.22) | $(0.39) | $(1.13) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased to $158.8 million due to net losses, partially offset by stock-based compensation - The accumulated deficit increased from $(733.6) million at the end of 2021 to $(771.8) million as of June 30, 2022, reflecting the net losses incurred during the first half of the year[20] Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly decreased to $39.0 million for the six months ended June 30, 2022 Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $39,042 | $132,572 | | Net cash used in investing activities | $(2,893) | $(875) | | Net cash (used in) provided by financing activities | $(182) | $47,032 | | Net increase in cash, cash equivalents and restricted cash | $35,967 | $178,729 | Notes to Unaudited Condensed Consolidated Financial Statements Detailed notes cover accounting policies, COVID-19 impact, revenue recognition, debt, and legal proceedings - The company continues to be significantly impacted by the COVID-19 pandemic, which creates uncertainty and requires significant estimates related to chargebacks and refunds for cancelled or postponed events[28][29] Net Revenue by Geography (in thousands) | Region | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | United States | $48,726 | $36,219 | $91,344 | $56,356 | | International | $17,315 | $10,092 | $30,572 | $17,773 | | Total net revenue | $66,041 | $46,311 | $121,916 | $74,129 | - As of June 30, 2022, the company had $362.75 million in principal outstanding from its 2026 Notes (0.750%) and 2025 Notes (5.000%)[75] - The company settled a securities class action lawsuit (State Action) for $19.3 million, which was paid by the company and its insurers[128] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses strong revenue recovery, improved Adjusted EBITDA, and liquidity, expecting sufficient cash for the next 12 months Key Business Metrics and Non-GAAP Financial Measures Key performance indicators show strong growth in paid ticket volume and positive Adjusted EBITDA for Q2 2022 Paid Ticket Volume (in thousands) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | 21,863 | 16,016 | | Six Months Ended June 30 | 39,917 | 26,248 | Adjusted EBITDA Reconciliation (in thousands) | Period | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(20,088) | $(20,540) | $(38,273) | $(105,431) | | Adjusted EBITDA | $4,649 | $(341) | $7,024 | $(8,847) | Results of Operations Detailed analysis reveals 43% net revenue growth, improved gross margin, and reduced operating expenses due to specific factors - Net revenue growth was driven by increased paid ticket volume and a rise in net revenue per paid ticket, which grew from $2.89 in Q2 2021 to $3.02 in Q2 2022[170] - Gross margin improved from 61% to 65% in Q2 year-over-year, primarily due to better fixed cost absorption as revenue increased[176] - Sales, marketing and support expenses increased by 124% in Q2 2022 compared to Q2 2021, primarily because the prior year period included a $5.0 million reduction in the advance payout reserve, making the comparison unfavorable[183] - General and administrative expenses decreased by 18% in Q2 2022 compared to Q2 2021, mainly due to a $5.6 million accrual for a litigation settlement recorded in the second quarter of 2021[186] Liquidity and Capital Resources The company holds $670.8 million in cash, with a significant portion held for creators, and expects sufficient liquidity for 12 months - The company's cash balance of $670.8 million includes $340.8 million due to creators[201][202] - Advance payouts to creators totaled approximately $387.8 million as of June 30, 2022, exposing the company to risk if events are cancelled and creators cannot repay the funds[202][203] - Management believes that existing cash, along with cash generated from operations, will be sufficient to meet anticipated cash needs for at least the next 12 months[206] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces low interest rate risk due to fixed-rate notes and manageable foreign currency exposure from international operations - The company has no significant economic exposure to changes in interest rates because its 2025 and 2026 convertible notes are subject to fixed annual interest charges[220] - The company is exposed to foreign currency risk from its international operations, but management does not believe a 10% change in exchange rates would have a material impact on its consolidated results[221] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[223] - No changes occurred during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[224] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered equity sales, and exhibits Item 1. Legal Proceedings Legal matters include a $19.3 million securities class action settlement and an $11.0 million favorable jury verdict - For details on legal proceedings, the report refers to Note 15, "Commitments and Contingencies" in the financial statements[227] Item 1A. Risk Factors No material changes to previously disclosed risk factors, with many risks still exacerbated by the COVID-19 pandemic - There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021[228] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no sales of unregistered equity securities during the three-month period ended June 30, 2022 - There were no sales of unregistered equity securities during the three months ended June 30, 2022[230] Item 6. Exhibits This section lists exhibits filed with the report, including required officer certifications and interactive data files - The report includes standard exhibits such as officer certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL documents[233]