Vivid Seats Inc. (SEAT) Earnings Call Transcript & Summary

All right. Great. Let's get started with our next session today. Thank you, everyone, for taking time to join us. My name is Stephen Laszczyk, and I'm the lead analyst for the music, sports and live event sector here at Goldman Sachs. We’re excited to welcome for the first time in Communacopia Stan Chia and Larry Fey, CEO and CFO of Vivid Seats. Stan and Larry, thank you for being with us today.

Yes, you got it. Thanks for having us.

Great. So Vivid Seats is still a relatively new company, coming public. I think less a year ago, starting -- for those who are newer to the story, perhaps give us a high-level overview of the company's strategy and how that compares to the live events and companies that we would be out there?

Yes, sure, Stephen. Yes. So we had the good fortune of hitting the public markets last October. So I think we've now been public for almost a year, like you said, but the company has been around for almost 20 years with its roots being really oriented around the professional sellers on the marketplace side. So the founders were professional sellers for the first 10 years of the business. And I'd say, in the early 2010 through now, they've made that pivot to being a marketplace. And when you look at the marketplaces that -- or the competitors in the space, I think, singularly, we are clearing cognizant in our role as a marketplace connecting constituents to each other that participate in the industry. And I think I can humbly although slightly biased to say, I think across those constituents, we happen to have, I think, the best products as well. On the consumer side, we remain the only marketplace that offers a rewards program that rewards our users, both economically as well as experientially. We also have the best customer service in the business now. I think Newsweek has awarded us at 3 years in a row. And then on the sell side, our continued commitment to developing technology on both sides of the marketplace. We have our SkyBox platform that has over 50% of the professional sellers on that with every single competitor only having, I'd say, single-digit share there. So I think across that space, I think we've continued to invest in products. We've continued to invest in growing. And I think we sit at a point now where we've continued to deliver record performance across the last few years, and we're certainly excited about the future.

You mentioned Skybox. Can you give a little bit more background on the Skybox platform? How it creates a leverage for you? How you leverage across your business platform?

Yes, sure. So when you think about sellers in this space, not dissimilar to anybody else, as you start to sell the product, in this case, tickets, you require a platform that allows you to manage that inventory. So every seller, regardless of size, essentially needs an ERP point of sale, you pick the term to manage price, distribute and fulfill that inventory. Uniquely, in our space, you have every marketplace or every -- I should say every ERP essentially owned and operated by a marketplace. And so our push to move Skybox as the premier destination for sellers has been one first rooted in, I think, technology. So when you look at performance, reliability, scalability, I think we've distinguished ourselves there. When you look at the features and interoperability with third-party technology, how we've constructed APIs, I think, again, we're best in class there. And then I think coming out of COVID, too, I think we invested value-added services that are part of the platform, such as our fulfillment service. If you think about when the pandemic was happening, operating expense around fulfillment of tickets, there were no live events, most sellers cut that. We said at scale, let's launch a fulfillment service and tie that to Skybox. We've seen great adoption there. And then, of course, we keep Skybox as an economically free product. So across, I'd say, the competitive landscape, is it free? Is it best-in-class scalable technology? Does it offer value-added services that sellers desire? I think we check all those boxes, which continues to do that. And as we get scale that allows us to build deeper relationships with the sellers that then translate into either inventory advantages on the pricing side and certainly on the data side. When you think about the industry, 80% of the industry being professional sellers, over 50% of the professional sellers on our platform, that then gives us insight in real-time and historically, the 40% of the entire industry flowing through our infrastructure. So I think we're quite happy, I think, with Skybox and continue to push to get more adoption.

That's great. I want to dig deeper into your strategy. But first maybe a little bit of the time on the industry as a whole for the secondary ticketing has grown quite nicely over the last decade. Could you perhaps take us through some of the secular drivers in more detail, both on the volume and price side of the equation?

I have a good question for Larry. Larry, do you want to say anything? Larry [ say to you ], let's go.

Yes, I think we think of the drivers of the market overall as having 3 components. More events happening, the ability to take price and then greater adoption of secondary tickets relative to primary tickets. So taking those in parts. More events, particularly true on concerts, really the core of the Live Nation thesis. But do you have an intersection where you have a lot more supply coming online because artists no longer make the good money they used to make selling CDs, Spotify rates aren't cutting it, so they make about 90% of their annual income from touring. So you have a ton of supply coming consistently from artists, running into a favorable demand environment where you have people prioritizing experiences, social gatherings over material goods. And that's really been the Live Nation story for the last 5, 10 years and is expected to be the story on that side for another 5 to 10. So we think even growth in concerts will be a 5%, 6%, 7% a year driver. Counterbalance that was sports. The NFL is generally not adding teams, games. That's true across all the major sports, but you do see MLS growing in prominence. There's more UFC fights. F1 came on to the scene this year. That's probably 1% to 2% event growth on the sports side. So overall, 3% to 4% growth in the number of events happening. We think it's an inflation plus category on the average order size up until the current environment, we would have said 3% to 4% a year on average order size that may be if this stuff continues. But that's a 15-year trend of slightly outpacing GDP and inflation what people willing to pay more for these bets. And then the last part of the increasing adoption, I think a recent example that really drives home the point. MLB ticket sales are down this year, 5%. Our ticket sales in MLB are up this year. Why are they down 5%? Well, they specifically called out season ticket packages being down. I think our view is very few of us actually want to go to 81 baseball games in a year. If you do, bless your heart, but not for most of us. And what you're seeing is people realizing, “I can buy tickets to the games. I want to go to when I want to buy it, get the seats I want for that game, that event. And if I have to pay a little bit more for that one, it's more than offset by not paying the freight on games I didn't want to go to or plans change, et cetera.” And so I think you're seeing a continued shift in behavior where you've got a fundamental disconnect between when teams and artists want to sell the ticket to offset their cost and liabilities when consumers want to buy the ticket and more comfort on the consumer side and buying via platforms like ours.

Let's talk a little bit about that last component when the teams and rights holders want to sell their ticket. And perhaps how that relates to one of the main risks that investors bring up most often for the secondary market, which is the rest that primary rights holders eventually for savvy about pricing their primary market price in that market place than before this specific event, you mentioned [ different orders have to sell ] ahead of time. How do you convince investors that [ Rightster ] is getting more aggressive to price tickets more efficiently, isn't a risk that they should be overly concerned about?

I can go first. I mean I'd start with you tell me the market price. And if it were consistent, then yes, like they should price it at that consistent known market price, and that would be their optimal outcome. I think there's a bunch of reasons why that is not feasible, tick on the most extreme example. What's the value of a price -- it's probably a bad example. What's the value of a Cardinal's ticket in September? Knowing that the year before is really hard. How good are they? Is Pool Holds playing his last game? Is it a nice day, et cetera? So when you say, well, the Cardinal should optimize the price they're selling that ticket at. There's a huge amount of uncertainty on what that market price will be and the market value will fluctuate. And in a world where they need to set their pricing, they're in a conundrum where there's only so much that they can ever really capture with their set pricing. I think the other big piece, particularly on the artist side. There are other considerations than maximizing the last dollar. And one of the great examples is Taylor Swift concert. She was one of the first users of the Ticketmaster revenue optimization product. Taylor Swift didn't sell out. That was a huge problem for Taylor Swift and her brand. So if you're building a brand where you've got decades of future experience coming. And you want people to feel like you're in demand, in vogue, you'll prefer or prioritize selling out over nicking that last dollar because you're trying to get the exact market price at that exact moment in time. The last thing is, this is not a new thing, I always chuckle when you listen to Live Nation, we're going to increase price. They've been doing this for a long time. And so this idea that the new thing is, I think...

I think the biggest thing, maybe just to add on to that is when we hear the fears and certainly my own is not -- I'd say lack of understanding of the industry as a consumer or outside person in is the fear on the primary is how do the tickets actually get into the secondary? And can they check that off. And I think the Larry example, if you put it slightly differently, is the rights holders are the ones who are actually putting the inventory into the secondary by shifting, call it, season ticket holder demand that isn't out there into professional sellers who will now actually absorb that risk. They'll hedge that and they'll give the rights holder liquidity upfront. Same exact same example Larry gave you on the Cardinals. So when they're faced when the Cardinals are faced with, how many tickets am I going to sell for this year? Steve, the professional ticket seller came over and said, “How about in February of this year, Cardinal, I give you $50 million right now for your inventory.” And because it could be Pool's last game, I'll give you $0.80 on the dollar. Every single team is going to say yes to that deal at some variation of price and quantum because they will take the cash upfront, offload the risk. And look, if it's a great year, the seller takes that upside. If it's not, the seller took the risk. And so the teams, I think, want that. And so back to they kill that strategy if they start preventing inventory from reaching the secondary. So I come back to a lot of the industry actually flows around and is created because rights holders can't time distribution, price and demand perfectly. And I think that's what allows a secondary, and that will continue to allow the secondary to exist in perpetuity.

It sounds like the institutional ticket brokers are taking portfolio strategy and the risk on the [ inventory ] side.

100%. Yes. Nobody just takes the Cardinal. They're probably taking a bunch of teams to hedge it and some musician and some concert tickets as well.

So maybe while pricing increases and the goal of pricing efficiently, is it new, something that I think has been more new over the last few years has been the advent of digital ticketing. What trends are you seeing in terms of ticket transferability, resell values? And how is that impacting the secondary market?

Yes. I think certainly back to -- when you think about catalysts for things, I think COVID catalyzed food delivery, I think that spiked up. In our industry, it catalyzed the shift from physical tickets to electronic tickets, I think when you saw that. So certainly, as a percentage of, I'd say, tickets, electronic tickets in '19 were certainly not the majority category. They are the majority category now. I think that provides, I think, users with a good experience when they think about having enable to do everything within their devices. And then I'd say in terms of trends that we've seen, and I think the pretty favorable trend or the question that we get a lot is, what does that mean for the ecosystem. And again, if you come back to you, can rights holders and impose or can primary ticket providers impose like a walled garden around that. I think what we've seen is actually a lot of favorability in opening that up. So we've seen on the regulatory side, where maybe 3 years ago, I -- that was the one question that would keep me up at night. What happens if tickets only get kept within Ticketmaster's ecosystem? I think it's actually moved really far in the other direction where you've got states now legislating that you must allow frictionless ticket transferability. You've got New York, New Jersey, Connecticut, Illinois, you can -- there's a bunch of local states. And then there's a federal act now, I think, that's out there, the BOSS act by representative of Pascal from New Jersey, no pun intended, had an issue with Bruce Springsteen decided that he'd be funny and it's the better oversight over secondary sales act that's getting federal traction for the exact same purpose. So I think we've continued to see transferability as it looks like it's going to be a better experience for consumers and frankly, it's actually going to be regulatorily favorable for the secondary as well.

Good overview. I want to talk a little bit more about the demand side of the industry. And I think you spoke about a little of the key points earlier on, but there's been a lot right around the demand side of the experiential economy. There's demographics, [ humor ] preferences, social media, et cetera. Could you maybe touch on some of the few trends that you think are going to be most impactful over the next number of years?

Yes. I think maybe 2 to 3 things, if you stay on pricing, I think being a marketplace, again, we sit in a nice spot where I'd say the average order size in our marketplace is probably a good reflection of the demand-supply imbalance, because we don't actually set the pricing. The pricing is market set by the sellers. And when you think about their needs to distribute and sell through their inventory, they're going to keep that in line. Historically, what we've always seen pre-COVID, is this is a very steady right in line with GDP. Again, average order size would go 3% on a year-over-year basis. Last year, I think, very representative of probably the pent-up demand being released. We saw 30-plus percent average order size increase versus '19. And so this year, when we look in our view has always been, let's assume stabilization. So let's compare to '19, again versus comparing to a crazy year last year. We're still seeing, I think, in our second quarter, 12% average order size increase. So I think continuing to see a lot of demand there versus supply as we talked about, I think folks really looking to get to events more in time and that shift to spending on experiential versus materialistic possessions. I think the other thing that's really interesting that we track to is how far are people willing to travel to go to events because we can see the data in terms of where you are and where the event is. And we continue to surprisingly, I think, see that start to continue going up as well. I think users are traveling on average more than 21 miles now to go to their events. So I think we continue to see really favorable trends as users are, again, getting back to live and the shift to where they'd like to spend.

You mentioned some of the step-up in demand and pricing that we've seen coming out of the pandemic. How sustainable do you think that is heading into next year?

Yes. I'd start with -- I think the pandemic is actually a really interesting validation of the long-term demand trends because we basically all were forced to live without experiences, and we all had our own individual reactions. I know I came away from it realizing that I really appreciate sporting events on TV because when there's nothing on, it's like torture. From what we've seen in the numbers, a lot of people have voted with their feet saying, “I actually value being able to go to see my favorite artists or my favorite team, perhaps more than I thought before.” But if there was a sense that, “Well, maybe this like this trend has gotten ahead of itself.” Breaking the habit of going would have been the great reset. And I think you would have seen it in a pretty meaningful way already where people said, “No, it actually is not part of my life, [ my life is what I ] really value.” The pent-up demand question, so more of the near-term oscillation. I think if you look at our average order size and we view that as a parameter of demand relative to supply. You saw a really unique spike in Q2 of '21 as the event world reopened. We all recall, variance were not a thing. There was euphoria. We've made it through the pandemic. It's done, never coming back, but great. Come August variance, all right, maybe this isn't over just yet, and you saw average order size come down quite a bit. And then Q4 bounced back to the middle. So you saw a lot of oscillations. But what we've seen this year, average order size is up 12%, 13% relative to 2019, which actually puts you pretty darn close to the 3% to 4% historical trend line. It actually matches with what inflation plus has been over that time frame, a bit of a weird couple of years. But nonetheless, I think other than the Q2 pop, our general sense is that demand environment is reflective of a pretty consistent trend. And maybe there's a little bit of plus in there, but for the most part, that normalized.

They're not breaking above trend. We're just getting back up to the long-term trend line initial economy.

Shifting a little bit and talking about market shares. Vivid Seats has been a share taker of secondary GOV over the last decade. What do you need to do to keep gaining market share? And where do you think that market share can come from?

Yes. I think -- as we started with, I think this industry, when you think about the people that participate, the actual inventory is fairly commoditized. So I think when you look at sellers distributing, they distribute everywhere. So pick your marketplace when you look, it's fairly likely that it's the same inventory that's out there. Our approach on the consumer side has really been to invest in differences that can, I think, bring brand loyalty, increase LTV through, call it, components like repeat rate, acquisition. So if you start with just on the core ticketing side, we'd invested in a loyalty program in customer service. So again, we've got a loyalty program where when you think about currency, if you're shopping around and you think, "Wow, this guy has got a loyalty program and somebody else doesn't.” Hopefully, we'd had the propensity to convert a first user better. And once you actually spend, you then have currency entrenched with us, which, again, on a subsequent order, if you've got currency here, why would you go somewhere else? Beyond that, I think DraftKings is an investor in us and a commercial partner. So we continue to provide free DraftKings benefits to our users as well as experiential ones. And then when you look at the category as a whole, the low-frequency category. You don't go to a live event, generally, you don't every single week. It's high average order size, low frequency. So I think the other thing that we've been thinking about was, how do you keep users engaged in your ecosystem when it's such a low-frequency category? And so we've taken the approach that how do you build content around that. In December of last year, we purchased a company called Betcha Sports. It's a real money daily fantasy company. I think we were really excited. It was a nascent product, very, very intuitive in terms of how users play. And as of 2 to 3 weeks ago, we unveiled our fully integrated product, Vivid Picks, where you can play real money daily fantasy as well as by tickets all within one app ecosystem. And the benefit of that is our Picks users are on average placing 10 entries a month. And the way the games work are at least 2 players from 2 different teams. When you think about 20 entries, and you can certainly add that, we have at least 20 data points on interest there from a user. When you then combine that with to make sure we're regulatorily compliant, we have to know exactly where the user is. So in a unique mechanism, we have 10 points of engagement per month that nobody else has. And every one of those engagement points gives us insight into user preferences and location, which then allow us, I think, the propensity to cross-sell you a lot more. So I look at that and say, I think when you look at every other competitor out there who is literally just selling a ticket and saying, “Thanks for buying the ticket, I really hope you come back again.” We've said, “Here's your ticket. Here's value for you to come back. And here's actually a mechanism for you to continue engaging with us that's monetizable for us through the next transaction.”

You mentioned frequency category. I'm curious beyond your Vivid Picks, any other ideas in terms of how you can maybe go about doing that and keep your user base interacting with you in between perhaps infrequent purchase points of live events tickets?

Yes. I think it's a new and interesting world on content. And I think to do that. So I think Picks we really like because that is, call it, explicit interaction where the user has got to come in and do it. I think when you look at what we've done with Rolling Stone. Rolling Stone is a unique exclusive partnership that we drove pre-pandemic, and we've expanded on that. We now have a component of that partnership where there is unique content coming to us from Rolling Stone. So if we know -- again, we know who your favorite artist is, I love Guns N' Roses, there might be a unique component of -- there might be an article that we work with Rolling Stones around Guns N' Roses. So we'll surface that to you through our app ecosystem knowing that you like it and then that being the source of information. So I think -- when you think about these investments, keeping people in the other way, which I think is always the aspiration for any marketplaces, we want to move up and up and up to the top of the funnel. So when you're thinking about discovery, when you're thinking about who you want, that content also drives that. And so I think we're experimenting with different ways to do that beyond the tactile engagement of Picks. We've certainly got the consumptive content angle with a great partner in Rolling Stone as well.

Marketing is another key component of your strategy to bring consumers into your ecosystem. Larry, could you maybe perhaps talk a little bit more about your marketing strategy at a high level and how you choose between allocating ad dollars between brand and performance marketing?

Yes. So -- for those who are producing our footnotes, you'll see that we break out our performance marketing at we call online our footnotes from our brand marketing because there's pretty fundamental economic differences between those 2. So we think of our performance marketing as readily trackable real-time feedback. So someone clicks a Search link on Google, someone clicks a social ad on Facebook, you can immediately track how many people clicked, how many got through the funnel, what did they spend? What was our revenue? What was the return? And you can use that to inform how much do we want to spend at what threshold and make trade-offs in real time between volume contribution, et cetera. We -- generally, if you look over time, our performance marketing spend is pretty consistent with our top line because there is a formulaic calculation and real-time feedback on where you're trending relative to your [ cattle ] TV, for lack of a better way of saying it, framework. Brand is a little bit of a stickier wicket where you're generally putting the spend in the ground. It's a fixed amount, fixed commitment over some time frame. The first time someone sees a Vivid Seats ad, I'd love it if they like, “Oh my gosh, greatest thing I've ever seen. I'm buying the Yankee ticket even though I hate the Yankees.” But chances are, it's more of like a multiple exposure. Become familiar over time, then the next time you're in the mood to consider going to an event or plan a social outing were top of mind and you're more likely to come direct to our site or you're more likely when you see us to know that we're a trusted counterparty, conversion rates go up, share traffic goes up, you have a good experience, your repeat rate goes up because we have a loyalty program that's a point of differentiation. So it's just -- we think more of a J-curve type category. So performance marketing, immediate feedback, your first transaction profitable. Brand goes negative before it goes positive. One of, I think, the benefits of our story as we've gone public. We essentially front-loaded all of that brand marketing, and that's all embedded in our numbers. But the benefit is not because we are living through the J-curve part. This is year 1, and I guess now we're in fourth quarter of this. So we're in the middle of the first year in what we think is a 2-, 3-, 4-year path to first breaking even and then delivering positive ROI. And so we certainly don't report our numbers on an adjusted-for-brand marketing basis. We have called out some of those categories. But I think it would be fair on some level to think, as we get benefit from that brand spend or for bid, we don't get benefit from the brand spend, there's upside to the numbers is currently coming out.

It was 18% back in 2019, I think it was 16% this [ most ] previous quarter. Investors should keep in mind of take rate over the next several years, whether that's what your loyalty program, the competitive environment, the mix shift within the base or any other key factors?

Yes. For the most part, take rates have been quite stable. I think more so than those numbers would suggest because we rolled out our loyalty program in the summer of '21, and that flows through as a contract revenue. Consistent you'd certainly see competitive pressures oscillating between various categories, mix shift. There's MLDs a lower take rate category than concerts. And so as things move around, you can have little bumps, but those are in the tens of bps range, not something structural. Generally, we've seen consistent pricing and take rate. I think one of the fundamental tenets of our loyalty program. I think all of us as consumers have said, we would prefer lower fees. If you behave in a way that enables us to generate similar profits without charging as much, we're happy to do it. And the predominant way is to cut out the marketing step. So if you come direct and you repeat multiple times, we make very significant margin on those repeat orders. So we're happy to share that back to you with our loyalty program. And then a 5, 10 get one-free paradigm, where our take rate is 20% we're giving to our repeat customers, half of our feedback, which absolutely works, we make more money on that if the consumer behavior maps in a way that aligns with our profitability. And so I think over the course of time, what we're aspiring is none of us benefits from enriching the Googles and Facebooks for the world by spending more on marketing. And so if consumer behavior can map towards that better paradigm, we can share that back, and that's what we're trying to encourage.

Let's talk about margins. Vivid generated contribution margins of 40% in its marketplace segment, the greatest operating leverage over the long term. You mentioned a little bit about the J-curve on brand marketing. Are there other places in the cost structure that you think of opportunity for operating leverage?

Yes. So really, the 2 theoretical categories, nothing in cost of goods is fixed, all variable performance marketing for the most part variable. So the 2 potential levers are brand marketing, as you called out, in G&A. We've long seen leverage on our G&A. Generally, we think of our G&A is growing at half the rate of our top line. One exception to that is when you go public, it may reward you with $8 million to $10 million a year of bonus cost. And so that took a time out as we went public and now we'll see the benefits, we think, going forward on that side of things. And then on the brand side, just to quickly reiterate, I think the view is we put that spend in the ground, have gotten limited benefit. And so that can only go one way. 2 pads are going that one way that can go up.

[indiscernible] Addressable marketing feel that you're doing different or rather competitive advantage on versus secondary marketplaces or primary marketplaces out there that give you confidence in extracting operating leverage over the long term?

Yes. I think you come back to -- in our case, I'll go with Vivid Picks is our example there. As if you follow as example, anybody else who does brand marketing there, feeding you with an impression, hoping that you buy a ticket. And at the time when you buy, they're hoping that the brand impression paces you. And that's probably true of any channel brand marketing using go. Is that media? Is that an influencer talking about it? Is that a billboard you see? We have a slightly different proposition now with Vivid Picks. We certainly will hit you with the normal ticketing proposition, which I think is already differentiated. And when you want to buy a ticket, here's one with loyalty and the best customer service. But beyond that, I think our brand messaging message -- our brand marketing message can also say, “By the way, here's Vivid Picks, download the app and play now.” So when you think about the time to realization of brand spend in the category, I think we have a unique opportunity again where we can probably compress that window slightly to get a user into our ecosystem. And for every user that starts playing Vivid Picks, again, that journey for us to learn more and then cross-sell you into our core ticketing business, I think, increases fairly quickly.

Got it. Let’s talk of risk that comes up on the margin front. Primary rights orders have been coming increasingly savvy in a willingness to go into the secondary market and perhaps take a cut of some of those transaction fees. I believe the NFL ticketing deal had a component of this. How much risk do you see in your cost structure from primary rights holders perhaps going after some of this margin secondary market?

Yes. I think it comes back to the right when we kick this off, Steven, the same thought. One, the -- the right holder themselves require this distribution angle to go out. And so I think as they put inventory out there, they've got to be cognizant that the balance of how much profit can they extract from that while still maintaining a viable channel for liquidity hedging. I think it's probably first and foremost. I think the second thing when you think about it is then to facilitate the distribution of the inventory, how do the marketplaces go out and compete. I'd be the first person to say, when you think about secondary dollars, secondary margins, again, I think the difference between us being a very clear-cut marketplace and for example, think about Ticketmaster or even SeatGeek as a subscale unprofitable business. Their secondary cost structure is really different from those. Regardless of whether it's the NFL dealer or not, when you're the primary ticketing provider, you have to rev share part of your secondary margin back. So if you have to rev share part of your secondary margin back versus someone like us who doesn't, again, that, I think, depletes the ability to go get marketing, eyeballs to then eventually distribute via that channel. So I think all of those things work -- again, in my opinion, I think, to benefit us as a pure-play distribution angle, I think, with product differentiation with, again, sellers on our platform, that the rights holders need distribution on. And then when it comes to actual distribution, I think we have an advantage from a margin perspective to continue fueling the distribution through this channel.

Yes, there's -- I think it's a really fundamental part of being a believer in this space or not, if you believe that it is to the benefit of teams and artists to have this vibrant ecosystem that supports what is a structural disconnect. The teams and artists want certainty. Fans want to go when they want to go and those -- there's a time gap. There's a portfolio theory gap. If you're a team, you can spend all your time thinking about like, “I'm going to go get 5% out of that secondary pot.” But you own 100% of your primary sales. And if a vibrant secondary market supports your ticket prices, the season ticket holders, 1%, 2%, you work the whole secondary market consideration. And so I think there's a really fundamental premise here that our view is that the secondary market is a huge benefit to the primary ecosystem and the ability to fully monetize those tickets. You can contrast the American system to some of the foreign countries where there's a little more of a stigma around selling tickets for a market. I'm wildly biased, but I know like I go to the U.K., and I want to go to a soccer match and they’re like, “Sorry, you can't go.” “What do you mean?” “There's no tickets available. You have to like own these things for 50 years. There's no price I can pay to get to the game. Yes, sorry, there's nothing available.” And like to me, that's just a mind-blowing proposition that the fact that your grandparents happen to buy tickets is what enables you to get them versus our paradigm, we're folks who are eager to see then that can get the tickets they want.

Let's talk about the outlook for the rest of this year and into '23. Maybe Larry, on your second-quarter results, you raised your outlook for 2022 marketplace GOV, revenue, and adjusted EBITDA. That says your guidance still implies year-over-year declines in these metrics in the back half of the year. It seems like there's a lot of tailwinds in the business. And I was curious, my question is why guide to year-over-year declines in the back half of the year? And what would it really take for year-over-year growth to continue to accelerate?

Yes. I think a couple of factors to unpack. First, a new public company, I think we want to put forward projections that reflect the spectrum of possible outcomes. And I think in our industry, we've certainly come through a choppy period with obviously, the severe downdraft in COVID within full flight force. But even the recovery with the variance. if you look at the last several quarters, Q3, we had delta variant Q4 Omicron experience. Q1 started to see COVID decline, but then we had a series of non-COVID-related cancellations, so Foo Fighters because of the drummer death, Celine Dion, [ beyond case voice ], MLP lockout, a really somewhat unprecedented sequence of bad luck for lack a better way of saying it. And so as we put together full-year numbers, I think we looked at those prior 3 quarters or 1 quarter in flight at the time, and said, “We should probably build in some probability of another variant of some level of uncertainty, especially as we're trying to build this track record.” And we don't want to say, “Well, like who could have seen a variant coming?” So now we're missing our numbers. As the years played out, I think the COVID risk has fortunately continued to decline at a consistent rate. That has come through in nice beat, particularly on the top line in the first several quarters and that's the raising to reflect that. In the meantime, I think what has emerged has been some clouds around the broader economy and consumer perspective. So I think similarly, we would hate to come out and say, “We missed because how are we supposed to know that there is consumer weakness coming?” Contrast that we actually saw in Q2, no COVID risk, consumer remains strong. So really, if it persists, the prior circumstance persist, that would be the path to at least reaching the top end of the range.

Makes sense. Maybe a final question for maybe a few minutes left. But looking back over the last year, been a public company for a year now. What are you most proud of in the first 12 months of being public? And then if you look ahead over the next 12 months, what are you most committed to executing against and accomplishing it?

Yes. I think -- maybe I'll say the last thing Larry said, which I think is important for us, it's always important I think there's been a lot of companies that have come out in the past year who have either misforecasted or didn't execute. And I think we've had the benefit of a great team behind us and I think accurate projections where I think we've come out 4 quarters now and reliably performed and exceeded expectations. So I think the whole team is extremely proud of that. I think the second thing, when you think about, I think companies coming public and being able to seize upon certainly the opportunity that having a liquid public currency, strong balance sheet does. I think we came public October of last year, we acquired Betcha Sports in December of last year with a $25 million upfront equity or at the time, 1% of our market cap. So I think when you look at, I think, our ability to perform in the public markets, I think we've had a year now where I think we've proven, we're fairly reliable know our business really well in terms of the ability to leverage our balance sheet and do things, I think, expediently that have long-term benefits. I think we've also come out and done that. So I think we sit at a point where we've got a great product in a competitive ecosystem where we're differentiated significantly. And I think we've also done a good job of establishing, I think, our track record publicly in terms of performance in execution.

Great place to end it. Stan, Larry, thank you for taking the time today.

Thanks.