Live Nation Entertainment, Inc. ($LYV)

Okay. I'm happy to have back from Live Nation Entertainment, Joe Berchtold, President and CFO. Joe, thanks for being here.

Thank you.

I'll start with this. So when we look at the tailwinds that have driven live music for 5 or 10 years or longer, trends like the experience economy, social media, subscription services, global supply do you see these trends is just as relevant today and on a go-forward basis?

No, 100%. I think when we talk about the macro trends in our business, I think, first of all, we're very fortunate. We've got great macro demand trends, truly global demand now for our music. You've seen it in the explosion of just how much these major international or everywhere now -- you've also seen it because historically, Regional X, KPop, Latin country are now truly global. So because of the distribution of Spotify and Apple Music, they can get the music everywhere, they TicToc, YouTube, Instagram, they discover the artists, they go viral. . And then on the supply side, nothing's changed in the sense that artists are making their living on the road. It's back before recorded music was the big jump. So you put the supply and demand together, those dynamics I think, are as strong as ever, will only get stronger over time. And it's really our job to figure out how do we help bring that supply and demand together.

There's a view that work from home flexibility has increased our leisure time and AI will compound it. Is that relevant for you? Is it easier to schedule a concert on a Thursday night if people think they don't have to be in the offices on Friday?

Yes. I don't think we have any great data on it yet. But for sure, I think that if the standard is now worked from the office, Tuesday, Wednesday, Thursday, well, that makes Thursday and Sunday night really easy and it makes Wednesday, the new Thursday. So I think that you continue to have more flexibility, means more opportunities. I think even more importantly, what's going on with all the work from home with digitization, with the time people spend staring at their screens is you have only more so that need together right? If I'm not gathering at the office for lunch at the water cooler during the break, where am I socially gathering. And I think that live events concerts are amongst the highest forms of social gathering, the pure celebration, the excitement, you don't go to a concert alone. You go to concert with friends. You go to be social. You got to hang out, to have fun -- so the more time that you spend in your digital world by yourself, having the greater the need to go have that high-level social experience. And I think we fit that to a again, another trend that I think is only continuing and will continue to be a tailwind for us for a long time.

So macro has been a topic at this conference. Obviously, as it relates to rising energy prices and the read-through to consumers. Joe, how are you seeing demand trends? And is there any update to the 107 million tickets sold that you disclosed to Q1 earnings?

Yes. We're notwithstanding some of the recent press that I think I've talked about has been very anecdotal and misleading. We're continuing to see exceptionally strong demand throughout -- in the past 3 weeks, just to give you the updated numbers. So you have the -- I don't have my life 3 weeks at a time, but I know people like numbers. So I think we're at about 119 million tickets sold so far. This year, we've sold 11.5 million tickets in the past 3 weeks. That's more than we sold over that 3-week period last year. So we're continuing to track double digits ahead in ticket sales from where we were last year. So on the most macro basis, continuing to look strong. But look, we're paranoid. So we look at every single aspect of the numbers, all the more so when the press starts to report about softness and we've looked at it and just isn't there. We continue to have sell-through of our shows that's every bit as strong as it was last year. Clearly, the volume of tickets substantially exceeds where we were last year. At this point, we're tracking double digits ahead in ticket sales in stadiums, in arenas, in amphitheaters. So consistently for all the major venue types, we're selling tickets effectively. So we're not seeing any issues at all on a macro basis, on a trend basis, cancellation rates continue to trend in line with historical 1 to 2% that you would have seen over time. So there's continued great demand for all the reasons that I just talked about. And I think we under $50 to 30% more between 50 and 100, only 10% or over $250. We're very, very focused on making sure that we are keeping the bulk of tickets as affordable as possible so that every fan can get in into a show. And obviously, artist obsessed with this as well. Our debt in price is $34, $35 on average in the U.S. across all of our shows. That's up about 18% from 2019, while inflation is up 30%. So again, people like saying, "Oh, 40 years ago, I got a ticket for $20. Well, there's been a lot of inflation over the last 40 years. I seem to recall a few years of that period with high inflation. So people again, like using miscelladium headlines to fit a narrative as opposed to looking at macro facts to understand what's really going on.

Maybe just staying on demand. It'd be great to hear any updates also on how the AMP season is shaping up and what you're seeing on ancillary per caps. I know the sample size is pretty small at this point. And then just as it relates to the O&O venues, any kind of key initiatives you'd highlight for summer season?

Yes. I think -- as you said, I think we've had about 5% of our amps play off at this point. So I'll refrain from giving any exact numbers, but just say that thus far, the per cap spending, the on-site spending is up. So we have the absence of a negative. I feel fine. I feel good. There's -- there's no warning signs flashing off of that first set of shows that we've had. We're continuing to see a very strong response on our premium. We're rolling out a number of in rooms, rolling out various other premium activations at our amphitheaters. We're seeing good uptake in that. We've introduced a couple of new food concepts that we're feeling good about in terms of giving additional choice of some good food opportunity in our amphitheaters. Premium alcohol continues to do very well. So we're not seeing a trade down or budget focus when people get to the amphitheaters. And I think that's consistent with what we've seen in our theaters and clubs over the -- a little more data with them over the past 4 years or sorry, 4 months. And again, not seeing any issues or signs of pullback in spend there.

Maybe just staying on the summer season with regards to festivals, though, there seems to be a fundamental challenge in that one or multiple strong headliners are required for financial viability to festival. But obviously, there's a lot of touring options for artists. So the fees can run high and you've seen cancellations. How does Live Nation approach that issue?

Yes. I think the festival business is very different today than it was 10 years ago. And like everything else in life, you have to embrace the change that you can't control and figure out how do you evolve your business model accordingly. There are a handful of festivals that are above who's the specific headline in a given year because they have a soul, they have a feeling to them, they have an audience built in, independent, but that's the rare ones. Most of them our headline are driven. And the reality is the headliners have seen that the amount of money they can make in an arena or stadium has increased over the past 10 years, well, so is their fee to perform at a festival. So what we're seeing now is the festivals are really getting the economics of a festival generally speaking, are getting driven by 2 things. One is sponsorship; and 2 is your premium opportunities. And fortunately, for us, that's an area where you focused a lot on investing in our capabilities. Russell and the team, I think, are absolute world class at selling sponsorship for our festivals. They've grown that business tremendously over time. And we've talked to me, I don't know, at least 5 years now obsessed over premium experiences, which runs both the venues we operate as well as our festival. So -- we feel good about how we've evolved it. But absolutely, if you're trying to run the same playbook in festivals as you ran 10 years ago, you're going to feel like everything has gotten expensive. I can't make as much money.

And within the premium, right, there's always a lot of segmentation that goes on thinking about that in different ways.

Yes. Again, I think our job and is to figure out there are different segments. There are different people that want different types of experiences. And our job is to figure out how to eliminate friction and make it easy for them to have the experience they want. And whether that's the young couple who want to just go and sit on the lawn and being able to have a cheap Saturday night out that doesn't cost more than going to dinner, that should be an option. The person who wants to spend a ton of money to spoil his wife on their anniversary and have an incredible experience at a festival. And they should be able to do that. So we're trying to figure out, historically, the music industry hasn't segmented hasn't given those opportunities. And we're trying to do that so that we can attract more people. Obviously, we can afford them to pay the artists more we can put on more events generally expands output in the industry and has been a successful way to do it so far.

Joe, you've noted frequently that you see the majority of Live Nation's future growth is coming from international. Maybe can you spend a moment talking to the company's current position in Europe, LatAm and APAC and what the relative opportunity set is in these markets.

Yes. I think in general, we've done this a few times at our Investor Day. If you look at the penetration of attendance at concert events in the U.S. and the U.K. to be your 2 most highly penetrated areas relative to the rest of the world, even Western Europe. You've got 2x, 3x, 4x growth, you can still get in those markets. We've seen tremendous expansion in Latin America over the past 5 or 6 years using cesses, our beachhead, a lot of activity that you've read about continuing to add our to our promoter mix to our venue mix in Latin America. But we've just scratched the surface there. I mean that's -- it's a massive population that is very orientated to music. We think tremendous growth there. I'd say Asia is generally speaking, even less penetrated certainly by us in terms of what the opportunity can be. We've made some great strides with Japan. We brought in KORA with the HIP acquisition. We're very focused now. And I think you'll see a lot more activity being driven into Japan. And Western Europe, despite all folks saying, well, isn't that a mature market? No, we continue to find like the U.S. for the past decade where we followed a hyper local focus. We're seeing that same opportunity in Europe, which we're aggressively pursuing now.

And then with Venu Nation, how do you think about the international TAM, right, of music demand is truly global. Does that mean any city above a certain population and lacking a viable venue is reasonable for you to expand to?

No, 100%. I'll give you a couple of ways that we think about it. One is, if I just -- if I look at the top 75 cities outside the U.S. 47 out of those 75 are either lacking an arena of any kind of modern form or underpenetrated. It could be a huge market that could easily handle a couple of them. So that's your starting opportunity right? I mean again, that's just your top 75, which I think we probably go to the top couple hundred. So -- but that gives you a focus list to say, "All right, let's -- those are going to be your biggest, easiest markets in the sense that you know you'll have a fan base. So let's focus on which ones can we do something there. Another way I look at it is the experience we've talked about with Mexico, last year, doing 30-odd secure dates, we ended up doing stadium shows in 10 cities. And I think that was a real point of awareness on even the OCESA guys going, wow, we really -- the hyper local in Mexico. Wow, we're not really just Mexico City. Well, there is enough that we can structurally look at 9 other cities in Mexico. I mean, we just put in a venue into Guadalajara. What are the opportunities that we have to go to all of those markets to put in venues. So it's a tremendous global opportunity for venues. I think we talk in terms with our strategic plan on 5-, 6-year periods. But even as we accelerate over the next several years on our venue strategy, I have no problems or still going to be standing here 5 years from now saying, "Wow, look at the global TAM. We're just going to get smarter about what it is as we roll out what we have in the pipeline now.

And Joe, you've had a lot of success renovating venues. It would be great if you could spend a moment describing a location like Estadio GMP run through the playbook there. And then I guess if you look at your various regions, how much room is there to partner kind of with existing real estate owners or sports teams that need capital and concerts for their venues.

Yes. Estadio GMP, these guys are just world class. It's a great venue. It is the highest attendant music venue in the world. I think they'll have something like 3 million fans attended shows there last year. So it's just -- it's an incredible venue. And the renovation came down, I think, primarily to a couple of things, premium and sponsorship. What are the opportunities that you have to substantially increase the premium experience and how is it that we can far better activate our sponsorship opportunities that had a massive return paid for itself within a couple of years to do that. Now it's a better venue, more profitable and a fast return on that. I mean, broadly speaking, we love the opportunity of partnering with folks who have the real estate to get the venues, right? Every sports team in the U.S. is now focused on how do I create that entertainment district around my stadium arena, they don't come to us because they need capital. These are some of the richest people in the country. To get more -- but what they want is they want to have a flow of concert so they want to partner with somebody, he knows how to build the venue. And we've got great design team, development team now. So they know what do we need in that market, what capacity? How do we build it? -- what's the design look like? So -- and then -- and obviously, they care about, let's then have a flow of concerts. So we know because these guys are focused and have a demonstrated track record of coming into markets, expanding the marketplace, bringing in more shows and delivering that. So we're absolutely in conversations with every owner in the U.S. who's looking at that. And then internationally, any time we can do an athletic Madrid opportunity where we can partner with somebody who has a stadium, hey, we also want to build an arena, let's work together. We've got the land. We have local relationships. We'll get through the permitting process faster. We can accelerate the build. Again, they come to us because they say, you know how you know what a music arena should look like. We take it for granted now, but it's actually a relatively rare skill to really understand that. And then again, we expect that once you have a world-class venue in Madrid, which is one of the hottest cities in the world, certainly in Europe that you're going to be able to bring a lot of concerts to that market.

And then with the venue opportunity, kind of what ultimately governs the pace at which you fill the pipeline? And how do you think about the gating factors like financing, construction delays or just execution risk around the different projects?

Yes. I think it's just -- it's an organic growth of our capabilities. We've got 20-odd venues right now, either in construction or fully permitted and ready to go into construction that's grown a lot over time. And certainly, probably about 10 of them would be at a large arena, amphitheater, or arena level. So I think as we continue to build the team, we now have a development team in U.S., Latin America, Asia, Europe. So we've got each team as they get up to speed, as they build out their staff as we continue to build out our design team. I mean we say no to most projects, right? Because we have a pretty high threshold of economic return. We want to make sure we're going to go into a situation that the market needs and wants that expansion. But as we continue to build the team, we'll incrementally take on more. It's not the thing you're going to leap and add 10 in 1 year, but you're going to add a few a year. We're using M&A to acquire some things that give us -- to help us move faster, different time lines, you intend to build faster in Latin America than in Canada Europe or U.S. So we tend to just try to layer and say, how do we have this as a ramp. So we know we're going to have more activity each year over the next few years.

Joe, with your outlook that growth will be majority driven by international I'm just going to assume this extends to ticketing. So in some regions like Brazil or Japan, where you've built a physical presence, Ticketmaster is still pretty nascent. So how big is the opportunity to establish more robust ticketing operations in these markets?

It's a massive opportunity. As you said, we'll follow the same playbook that we followed in Germany, which has been very successful, which is we established the promoter business first. And then around that, we built on the sponsorship capability. We built on the Ticketing business, using the strength of the concerts to drive that the Ticketmaster business. So doing the exact same thing. Latin America is very fragmented. We think there's the opportunity for us to come in and be a major player on the ticketing side, using the strength of the concerts and the festivals down there. . And then similarly in Asia, again, very fragmented across the different markets. We've said we expect to be able to be in Japan before long, doing ticketing as we're doing concerts -- we'll follow the playbook using the presales to establish the business, build it out from there. So as we look over the next several years at the opportunity for Ticketmaster, you hit the 2 key ones. Exactly Latin America and Asia.

And then you've had a new Ticketmaster president in place since late 2025. I think he brings more of a product background to the role than we've seen previously I assume part of the focus is on international, but what else would you highlight about where his priorities are?

Yes, you're right. We have someone now who has a technology and product focus history, skill set -- so he's obsessed with product. Number 1 is continuing to improve the fan experience. And a lot of that is the high demand on sale. And a lot of that is how do you continue to fight box? How do you continue to try to make sure that you're getting every possible ticket to a fan instead of a bot who's trying to cheat and it's tough because there's a lot of money at stake, and they have a huge incentive to figure out how to cheat the system. . And so it's a back and forth thing, but we're rolling out globally a lot more tools to try to get more tickets in the hands of fans to make that a better experience, and he's moving pretty fast on that. Continue to develop new tools for the venues, the sports teams, the artists. Again, he's just -- he's got a product mindset. So he's continuing to ask, what are the pain points of all of those providers and then on a broader platform basis, he's moving much faster in terms of getting the Ticketmaster platform deployed in new markets. So as I said, historically, Japan. Japan would be -- let's talk about our 3-year plan to get there. And we say, "No, we have 1 year. We're selling tickets by the end of the year. Maybe it won't be perfect, maybe it will be limited to these things, but we're selling tickets in a year. And how are we breaking our historical approaches. He's obviously been making some changes organizationally. He's streamlining he's changing the way in which product development occurs using a lot of AI tools to help to help break down some of those historical barriers. But I think you'll see a lot more faster now.

So staying on ticketing at earnings, you highlighted fee-bearing tickets transacted through April, up 9%; GTV up 15%. Again, it'd be great to hear any update here and any associated color on concerts, families for within that mix?

Yes. I'm going to -- I'm probably going to hesitate to give every weekly updates on ticket sales. But as goes concert, so goes ticket. So your 2 drivers of ticketing growth at the end of the day are what are the new clients you're adding? And really how are concerts, not just for us, but as we saw last year, for the industry at large, how is the concert volume of activity moving because your sports volume is -- you can grow a bit based on tournaments, it will grow a bit as leaks expand, but it's not fundamentally changing generally the number of games that people are playing. So the vast majority of growth comes from concerts. You tend to have a slow growth rate of sports, particularly from the addition of new clients. Families up and down, but I would say that the concerts and sports make up the bulk of the business. And again, so they're off to a great start this year because the concert business is off to a great start. They're getting a little more complicated on some of their recognition because they deferred the recognition of tickets and venues that we operate as we operate more venues, that's going to create a little more complexity. But you'll see that in the deferred revenue. So for all you guys who were trying to model, right? It's just the timing of when that profitability gets recognized.

So ticketing AOI was up 1% in Q1. There were some bespoke items that are impacting results, changes in the secondary market, legal expenses related to the FTC case. Maybe just help us better understand kind of the underlying growth at the moment, how some of these items are going to play out through the year?

Yes. And you left out our high 20s growth in deferred revenue, representing over $5 billion of GTV. I mean -- so I think the underlying is even more robust than you're laying out there. This is going to be a strong year for Ticketmaster because it's going to be a strong year on our concert side. We've got a few onetime headwinds, changes that we made in the secondary business to tighten that down. Some of the reorganizational things that have severance that we talked about, a few legal issues. But fundamentally, I think the Ticketmaster business is in the best shape it's ever been in. It is the premier global product we're continuing to see exceptionally high renewal rates and pace of adding new clients. I think our -- we lay out every year, our kind of 5-year plan that shows that we expect in is a base case continued at least mid-single-digit growth at Ticketmaster as we expand globally. So we're very bullish on the business. We continue to think it's the best-in-class.

Joe, it's probably a credit to Russell Wallick and his team that everyone put sponsorship at the end of these conference Q&As. But maybe I'll try to be unique here. Tying this back to international and venue nation, does that change the growth drivers of sponsorship relative to the past? And there are adjustments that need to be made on your part?

Yes. As you said, it's the most warning business in the world. When I sit here in May and say, "Hey, we're 85% to 90% sold for the year. So don't worry. Russell and that team have done a magnificent job of just year in, year out, delivering double-digit growth. I think for sure, over the next 5 years, you'll see an evolution of where that growth comes from. They've done a great job with festivals over the last 10 years, done a great job on the checkout, the credit card companies, the presales technology firms. I think that they have laid the foundation and built the relationships with such a massive set of tremendous brands. But now as we really focus on the venue side, that puts them in a great position when we're talking about how are we getting the sponsorship and monetizing the venues. A lot of our growth in the next 5 years will come from the venue expansion because there are so many responsible assets from the naming rights to the clubs to a number of pieces throughout the venue, and that will tie in with the premium experiences. So they'll reinforce each other. But no question. A lot of that's going to come from whether Latin America, Europe will come from the venue side. It's audio GMP is a great example, right? That's a foundational piece of what we did in Mexico steady with the old -- for hole.

So Joe, last week, you updated on the process as it relates to the antitrust trial unless there's been any changes, I don't think we need to necessarily rehash it unless you want to. I did want to ask about your settlement with the DOJ and some of the items that were published in the term sheet. There are some potentially new market dynamics around nonexclusive contracts. Ticketmaster offering venues a back-end system. So can you speak to the potential impact from the changes here? And what would that look like from a consumer?

Yes. I mean I think the changes to Ticketmaster are grounded in a fundamentally different point of view that we have versus the Department of Justice had in terms of why is -- Ticketmaster been so successful? And our view has been, well, it's the best ticketing platform. It's the most effective 1 to sell tickets and venues want exclusivity. They want to deal with the simplicity of a single provider, particularly if that single provider is the best 1 in the industry at doing what they do. They thought, no, you lock out competition. You have these exclusive contracts, you're not fair. So we said, "You know what, let's let the market decide. We're fine with that. So we will relax that exclusivity. We'll push to have some non-exclusivity and then the venues will be in a place and we'll make it super easy from a technology standpoint, so that if another ticketing provider is distributing tickets, we'll validate those tickets. We'll use our back end to make it simple. So we'll find out who's right. We continue to believe that most venues are going to want exclusivity, and they're going to want that exclusivity to be with us. But if the others are right who think that we've been controlling it, we'll find that out as well and our focus is really going to be on let's build the best product there is. And we think that on a global basis, we will continue to be very effective by just building the best product there is. That's what's going to drive it, right? You continue to have 20% to 30% of tickets unsold on a typical event. So what really matters to us is how do we sell more of those tickets. And I think we sell more of those tickets whether or not we have some venues decide that they want to have some of their tickets go through other primary ticketing marketplaces. That's not going to be the determinant of our success.

And then with regards to certain O&O amps, you've agreed to open those up to other promoters. Those promoters can in turn utilize outside ticket vendors up to, I think, 50% of the inventory. This is more of a 2027 event. But how could this potentially impact the utilization of your buildings?

Yes. I think the great news is that Jordan and the team have been so effective in the last decade of driving our per outs, right? I mean we would say, when we were $16 per cap different, it's very different than when you're in year $46 per cap business. So a large portion of the economics of the amphitheaters is now coming from operating the venues. So opening the venues and having third-party promoters will may reduce a bit the number of shows that we do on the content side, but it will obviously directly benefit our amphitheater operations, where we'll make a lot of money on an incremental basis. . So we're confident that opening them makes sense. We've said publicly before, we think that we were on a path and considering it. But then we got caught up in the last couple of years of Lego Mara. So we never really went deep into it to figure it out, then we decided, okay, as part of the settlement, and we'll do that. We're comfortable that -- it makes sense for the industry and it will be fine for us.

And to be clear, the reduction would be on the promotion side, but the buildings themselves would come out a positive right? Got it.

Yes.

Joe, with that, we're about out of time. Thanks so much for being here.

Thank you. Appreciate it.