Ticketmaster parent company Live Nation Entertainment (LYV 1.77%) reported second-quarter results Thursday evening. Bumping up against a difficult year-over-year comparison, the live-events arranger and ticket vendor posted single-digit sales growth but lower bottom-line profits.
Live Nation's Q2 results: The raw numbers
|
Metric |
Q2 2018 |
Q2 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$2.87 billion |
$2.68 billion |
7.1% |
|
Net income attributable to shareholders |
$69.4 million |
$81.5 million |
(15%) |
|
GAAP earnings per share (diluted) |
$0.24 |
$0.29 |
(17%) |
Data source: Live Nation Entertainment.
Live Nation also tracks a non-GAAP metric known as adjusted operating income (AOI). It's based on the company's operating income, backing out line items such as stock-based compensation, amortization and depreciation, and losses or gains from asset sales. Other companies might refer to a similar metric as adjusted EBITDA, but Live Nation prefers AOI. This figure pops up often in management's discussion of the business.
For the record, AOI posted a 24% increase in the previous quarter, and management expected the figure to stay in the double digits throughout 2018. In the second quarter, Live Nation stayed on track for that goal with an 18% year-over-year AOI boost that landed at $260 million.
What happened with Live Nation this quarter?
- With pre-sold concert attendance up to roughly 70 million fans so far in 2018, Live Nation is tracking 4% ahead of its progress at the same point in 2017. The company expects to arrange 32,000 concerts this year.
- Business was especially solid in amphitheater shows this quarter, showing a double-digit attendance boost. Profit margins are also widening in this category thanks to Live Nation's current focus on more and better on-premise vending of food and souvenirs.
- All told, concert activities collected $2.4 billion of top-line revenues, a 6% increase over the year-ago period.
- Ticketing services offered faster growth at a 13% clip, driven by Ticketmaster's expanding market reach and a 34% year-over-year increase in mobile ticket sales. The ticket distribution effort goes far beyond Live Nation's own events, serving sports arenas and independent entertainment events for a total of 280,000 scheduled Ticketmaster-powered events for the full year.
- Live Nation also saw a 12% gain in advertising and sponsorship revenue. Brands are connecting to fans through Ticketmaster's and Live Nation's wide marketing reach and powerful ad-placement opportunities at live events. The preferred event format for these efforts is found in festivals, where fans stay exposed to the prepared environment for a longer time.
What management had to say
President Joe Berchtold wanted to remind investors that this report's year-over-year comparisons match up with the strongest growth period in Live Nation's history. That didn't stop the company from posting a solid performance, but all-time records were out of reach because the comparison bar was set quite high.
"We're now comping against Q2 2017, which was our highest AOI growth quarter ever, with $40 million or 22% overall AOI growth, including 51% concerts AOI growth and 21% sponsorship AOI growth," Berchtold said, according to a Seeking Alpha transcript. "Against that backdrop, this quarter was our third-largest AOI growth quarter ever, with AOI up another 18%."
Image source: Getty Images.
Looking ahead
Live Nation continues to expect double-digit percentage growth in full-year AOI profits. Management says it also aims for "strong gains" in revenue and free cash flows, without committing to firm number targets.
In the third quarter, AOI should rise by a low double-digit percentage as compared to the year-ago period. Ticketing's profit growth is seen stopping in the high single digits, while the other two segments surge ahead at higher velocities.
In the long run, the Ticketmaster division is building a digital ticketing system that should simplify and speed up the transaction experience both for venues and for fans. Live Nation hopes to reach 60 million fans through this system in 2019.
