Vivid Seats(SEAT) - 2023 Q4 - Annual Results

Executive Summary & Business Highlights Full Year 2023 Performance Overview Vivid Seats achieved significant top and bottom-line growth in 2023, with Marketplace GOV up 23% and revenues up 19%. Net income surged by 51%, and Adjusted EBITDA increased by 25%. The company also expanded its Total Addressable Market (TAM) through strategic acquisitions and improved repeat order mix Full Year 2023 Financial Highlights | Metric | 2023 (Millions) | 2022 (Millions) | YoY Change | | :--- | :--- | :--- | :--- | | Marketplace GOV | $3,920.5 | $3,184.8 | +23% | | Revenues | $712.9 | $600.3 | +19% | | Net income | $107.0 | $70.8 | +51% | | Adjusted EBITDA | $142.0 | $113.3 | +25% | - Expanded Total Addressable Market (TAM) through strategic acquisitions[3][4] - Mix of accretive repeat orders increased by 300 basis points[3] Fourth Quarter 2023 Performance Overview In Q4 2023, Vivid Seats continued its growth trajectory with Marketplace GOV increasing by 31% and revenues by 20%. Adjusted EBITDA also saw a 4% increase, though net income experienced a 10% decrease compared to Q4 2022 Fourth Quarter 2023 Financial Highlights | Metric | Q4 2023 (Millions) | Q4 2022 (Millions) | YoY Change | | :--- | :--- | :--- | :--- | | Marketplace GOV | $1,112.3 | $846.0 | +31% | | Revenues | $198.3 | $165.0 | +20% | | Net income | $22.4 | $24.8 | -10% | | Adjusted EBITDA | $35.1 | $33.7 | +4% | Strategic Initiatives and 2024 Outlook Vivid Seats is accelerating investments for international expansion and M&A, targeting a $63 billion global ticketing TAM. The company also authorized a new $100 million share repurchase program and provided a positive financial outlook for 2024, anticipating continued double-digit growth - Targeting a growing $63 billion global ticketing Total Addressable Market (TAM)[3] - Accelerating investments to launch in new markets, support international expansion, and M&A[3][4] - Newly authorized $100 million share repurchase program[4] - Anticipates sustained double-digit growth and long-term value[3] Key Performance Indicators Marketplace Gross Order Value (GOV) Marketplace GOV showed strong growth, increasing 23% year-over-year to $3,920.5 million for the full year 2023 and 31% to $1,112.3 million for Q4 2023. Event cancellations had a reduced negative impact in 2023 compared to 2022 Marketplace GOV (in thousands) | Period | 2023 | 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Full Year | $3,920,526 | $3,184,754 | +23% | | Q4 | $1,112,326 | $845,965 | +31% | Impact of Event Cancellations on Marketplace GOV (in millions) | Period | 2023 Impact | 2022 Impact | | :--- | :--- | :--- | | Full Year | $(43.6) | $(80.3) | | Q4 | $(9.8) | $(17.0) | Total Orders (Marketplace & Resale) Total Marketplace orders grew by 18.7% for the full year 2023 and 36.3% for Q4 2023. Total Resale orders also increased, with a 21.4% rise for the full year and 21.6% for Q4. Event cancellations for both segments significantly decreased in 2023 Total Marketplace Orders (in thousands) | Period | 2023 | 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Full Year | 10,898 | 9,183 | +18.7% | | Q4 | 2,974 | 2,182 | +36.3% | Total Resale Orders (in thousands) | Period | 2023 | 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Full Year | 380 | 313 | +21.4% | | Q4 | 107 | 88 | +21.6% | - Marketplace event cancellations decreased to 99,078 in 2023 from 199,595 in 2022[8] - Resale event cancellations decreased to 2,910 in 2023 from 5,205 in 2022[16] Adjusted EBITDA Adjusted EBITDA for the full year 2023 increased by 25% to $142.0 million, and for Q4 2023, it grew by 4% to $35.1 million, demonstrating expanding profit margins Adjusted EBITDA (in thousands) | Period | 2023 | 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Full Year | $141,982 | $113,325 | +25% | | Q4 | $35,103 | $33,700 | +4% | Consolidated Financial Statements Consolidated Balance Sheets As of December 31, 2023, total assets increased significantly to $1,550.1 million from $1,151.4 million in 2022, primarily driven by increases in goodwill and intangible assets due to acquisitions. Total liabilities also rose, while shareholders' equity shifted from a deficit to a positive balance Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2023 | Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $1,550,099 | $1,151,431 | +$398,668 | | Total Liabilities | $963,340 | $671,269 | +$292,071 | | Shareholders' Equity (Deficit) | $105,017 | $(382,698) | +$487,715 | | Cash and cash equivalents | $125,484 | $251,542 | -$126,058 | | Goodwill | $947,359 | $715,258 | +$232,101 | | Intangible assets – net | $241,155 | $81,976 | +$159,179 | Consolidated Statements of Operations For the full year 2023, revenues increased by 19% to $712.9 million, and net income grew by 51% to $107.0 million. However, Q4 2023 saw a 10% decrease in net income despite a 20% revenue increase, mainly due to higher operating expenses, particularly marketing and selling, and general and administrative costs Consolidated Statements of Operations Highlights (in thousands) | Metric | FY 2023 | FY 2022 | YoY Change (FY) | Q4 2023 | Q4 2022 | YoY Change (Q4) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $712,879 | $600,274 | +19% | $198,303 | $164,990 | +20% | | Income from operations | $81,338 | $78,105 | +4.1% | $10,096 | $24,757 | -59.3% | | Net income | $107,045 | $70,779 | +51% | $22,429 | $24,834 | -10% | | Marketing and selling (FY) | $274,096 | $248,375 | +10.4% | | | | | General and administrative (FY) | $159,081 | $127,619 | +24.7% | | | | Consolidated Statements of Cash Flows Net cash provided by operating activities significantly increased to $147.3 million in 2023 from $14.4 million in 2022. However, cash used in investing activities surged to $225.6 million, primarily due to business acquisitions, leading to a net decrease in cash, cash equivalents, and restricted cash for the year Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $147,320 | $14,375 | +$132,945 | | Net cash used in investing activities | $(225,641) | $(15,415) | -$210,226 | | Net cash used in financing activities | $(43,430) | $(236,480) | +$193,050 | | Net decrease in cash, cash equivalents, and restricted cash | $(119,856) | $(237,520) | +$117,664 | | Acquisition of business, net of cash acquired | $(206,865) | $(8) | -$206,857 | 2024 Financial Outlook Financial Guidance Vivid Seats provided its financial outlook for the year ending December 31, 2024, projecting continued growth across Marketplace GOV, Revenues, and Adjusted EBITDA. The Adjusted EBITDA outlook reflects a revision from previous guidance 2024 Financial Outlook | Metric | Range | | :--- | :--- | | Marketplace GOV | $4.2 billion to $4.5 billion | | Revenues | $810.0 million to $840.0 million | | Adjusted EBITDA | $160.0 million to $170.0 million | - The Adjusted EBITDA outlook reflects a revision from the initial outlook provided in November 2023[10] Corporate and Strategic Updates Chief Technology Officer Appointment Vivid Seats announced the appointment of Stefano Langenbacher as the new Chief Technology Officer, replacing Jon Wagner in March 2024. Langenbacher brings extensive experience in e-commerce technology leadership, which will be crucial for optimizing global platforms and supporting international expansion - Stefano Langenbacher appointed as Chief Technology Officer, effective March 2024[11] - Jon Wagner, the outgoing CTO, will serve in a technical advisor role for a smooth transition[11] - Langenbacher's expertise in optimizing global platforms and international tech stacks is expected to be invaluable for international expansion[12] Share Repurchase Program Vivid Seats authorized a new $100 million share repurchase program, demonstrating the company's commitment to returning value to shareholders and strategically deploying cash flow - A new $100 million share repurchase program has been authorized[4] - Approximately three million shares were repurchased in 2023[4] Company Information About Vivid Seats Founded in 2001, Vivid Seats is a leading online ticket marketplace connecting fans to live events. It offers a wide selection of tickets, an industry-leading rewards program, and is the official ticketing partner for major entertainment brands. The company also owns Vivid Picks, a daily fantasy sports app - Leading online ticket marketplace connecting millions of buyers with thousands of ticket sellers[2][14] - Offers one of the widest selections of events and tickets in North America and an industry-leading Vivid Seats Rewards program[14] - Official ticketing partner for brands including ESPN, Rolling Stone, and the Los Angeles Clippers[14] - Owns Vivid Picks, a daily fantasy sports app[14] Webcast Details Vivid Seats hosted a webcast on March 5, 2024, to discuss its full year and Q4 2023 financial results, business updates, and financial outlook - Webcast held on March 5, 2024, at 8:30 a.m. Eastern Time[13] - Discussed full year and fourth quarter 2023 financial results, business updates, and financial outlook[13] - Access to the live webcast and supplemental earnings presentation available on the Vivid Seats Investor Relations website[13] Forward-Looking Statements The press release contains forward-looking statements regarding future operating results, financial position, industry growth, TAM, business strategy, and the share repurchase program. These statements are subject to various risks and uncertainties, and actual results may differ materially - Forward-looking statements relate to future operating results, financial position, industry growth, TAM, business strategy, and the share repurchase program[17] - Statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions, which may cause actual results to differ materially[17] - Important factors that could cause differences include ability to generate cash flows, supply/demand of events, relationships with partners, search engine algorithms, competition, acquisitions, economic conditions, and cybersecurity risks[17] - Financial results in this press release are preliminary and subject to change prior to the filing of the Annual Report on Form 10-K[17] Non-GAAP Financial Measures Explanation of Adjusted EBITDA Adjusted EBITDA is presented as a non-GAAP financial measure to provide investors with useful information for evaluating operating results and making period-to-period comparisons. It is used internally by management for operational decisions and excludes items not reflective of core business performance - Adjusted EBITDA is a non-GAAP financial measure used by analysts, investors, and management to evaluate operating results and make period-to-period comparisons[25][26] - It excludes items outside of company control or not reflective of ongoing core business performance, such as interest expense, equity-based compensation, and changes in fair value of warrants/derivatives[25][27] - Adjusted EBITDA is not a substitute for GAAP measures and may not be comparable to similarly titled measures used by other companies[27] Reconciliation of Adjusted EBITDA to Net Income A detailed reconciliation is provided, showing the adjustments made to net income to arrive at Adjusted EBITDA for both the three months and years ended December 31, 2023 and 2022. Key adjustments include income tax benefit, interest expense, depreciation and amortization, equity-based compensation, and transaction costs Adjusted EBITDA Reconciliation (in thousands) | Adjustment | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income | $22,429 | $24,834 | $107,045 | $70,779 | | Income tax benefit | $(14,498) | $(1,784) | $(36,103) | $(1,590) | | Interest expense – net | $4,909 | $3,316 | $13,505 | $12,858 | | Depreciation and amortization | $8,575 | $2,463 | $17,178 | $7,732 | | Sales tax liability | $3,172 | $0 | $3,172 | $2,814 | | Transaction costs | $5,545 | $555 | $12,779 | $4,840 | | Equity-based compensation | $7,126 | $5,071 | $27,614 | $19,053 | | Loss on extinguishment of debt | $0 | $0 | $0 | $4,285 | | Litigation, settlements and related costs | $(45) | $1,393 | $215 | $2,477 | | Change in fair value of warrants | $20 | $(1,609) | $(971) | $(8,227) | | Change in fair value of derivative asset | $(619) | $(2,065) | $(536) | $(2,065) | | Change in fair value of contingent consideration | $0 | $1,589 | $(998) | $(2,065) | | Loss on asset disposals | $634 | $(63) | $685 | $369 | | Foreign currency revaluation gain | $(2,719) | $0 | $(2,177) | $0 | | Tax Receivable Agreement liability adjustment | $574 | $0 | $574 | $0 | | Adjusted EBITDA | $35,103 | $33,700 | $141,982 | $113,325 | - Footnotes provide detailed explanations for each adjustment, including sales tax liability, transaction costs related to acquisitions and offerings, and equity-based compensation[28][29]