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Vivid Seats Announces Record Third Quarter 2021 Results
Source: Nasdaq GlobeNewswire / 15 Nov 2021 06:30:01 America/Chicago
CHICAGO, Nov. 15, 2021 (GLOBE NEWSWIRE) -- Vivid Seats Inc. (NASDAQ: SEAT) (“Vivid Seats”, "we" or the “Company”), a leading marketplace that utilizes its technology platform to connect millions of buyers with thousands of ticket sellers across hundreds of thousands of events each year, today provided financial results for the quarter ended September 30, 2021.
“The record-setting results we saw in the third quarter are a great way to mark our first reported results as a public company. Live events have come back stronger than expected as fans returned to support their favorite sports teams and artists. We are committed to delivering fans an exceptional experience so they can get out and do what they love,” said Stan Chia, Vivid Seats CEO.
“We are continuing on our mission to help everyone “Experience it Live.” In our third quarter, we launched our new brand coupled with new features and enhancements to our industry leading loyalty program, Vivid Seats Rewards. Every fan now earns 10% in value on every ticket purchased along with the opportunity to earn additional lucrative and unique perks. We are excited to launch our new brand and loyalty program as we enter a period where we expect a full slate of live events with significant pent-up demand ready to be unleashed,” Chia concluded.
Third Quarter 2021 Financial Summary
- Revenues of $139.5 million increased from negative $7.1 million in the third quarter of 2020
- Net loss of $1.8 million as compared to net loss of $40.2 million in the third quarter of 2020
- Marketplace Gross Order Value ("Marketplace GOV") of $713.1 million increased from negative $30.8 million in the third quarter 2020
- Adjusted EBITDA of $42.0 million increased from negative $19.5 million in the third quarter of 2020
- Highest single quarter results for Marketplace GOV, Revenues and Adjusted EBITDA in company history
Lawrence Fey, CFO of Vivid Seats, commented, “In our third quarter we carried forward our positive momentum with robust financial results and quarter-over-quarter growth for Marketplace GOV, Revenues and Adjusted EBITDA. We continued to generate cash from operations which, coupled with the proceeds from the business combination, leave us with cash in excess of debt and significant financial flexibility.”
Key Performance Indicators (000s)
Three Months Ended Nine Months Ended September 30, September 30, 2020 2021 2020 2021 Marketplace GOV(1) $ (30,778 ) $ 713,062 $ 309,308 $ 1,522,625 Total Marketplace orders(2) (72 ) 2,354 988 4,360 Total Resale orders(3) (3 ) 73 42 121 Adjusted EBITDA(4) $ (19,549 ) $ 41,965 $ (66,685 ) $ 82,347 (1) Marketplace GOV represents the total transactional amount of Marketplace segment orders placed on our platform in a period, inclusive of fees, exclusive of taxes, and net of event cancellations that occurred during that period. Marketplace GOV was negatively impacted by event cancellations in the amount of $52.7 million during the three months ended September 30, 2020 and $37.8 million during the three months ended September 30, 2021. Marketplace GOV was negatively impacted by event cancellations in the amount of $197.1 million during the nine months ended September 30, 2020 and $74.8 million during the nine months ended September 30, 2021.
(2) Total Marketplace orders represents the volume of Marketplace segment orders placed on our platform during a period, net of event cancellations that occurred during that period. During the three months ended September 30, 2020, our Marketplace segment experienced 117,290 event cancellations, compared to 85,593 event cancellations during the three months ended September 30, 2021. During the nine months ended September 30, 2020, our Marketplace segment experienced 508,994 event cancellations, compared to 185,687 event cancellations during the nine months ended September 30, 2021.
(3) Total Resale orders represents the volume of Resale segment orders sold by our Resale team in a period, net of event cancellations that occurred during that period. During the three months ended September 30, 2020, our Resale segment experienced 5,965 event cancellations, compared to 2,592 event cancellations during the three months ended September 30, 2021. During the nine months ended September 30, 2020, our Resale segment experienced 19,929 event cancellations, compared to 4,505 event cancellations during the nine months ended September 30, 2021.
(4) Adjusted EBITDA is not a measure defined under Generally Accepted Accounting Principles in the United States of America ("GAAP"). We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance. See “Use of Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measure.
2021 Financial Guidance
The Company maintained the following full-year 2021 guidance:
- Marketplace GOV to be in the range of $2,225,000,000 to $2,325,000,000
- Revenues to be in the range of $420,000,000 to $435,000,000
- Adjusted EBITDA to be in the range of $102,000,000 to $107,000,000(5)
(5) Adjusted EBITDA is not a measure defined under GAAP. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance. We calculate forward-looking non-GAAP Adjusted EBITDA based on internal forecasts that omit certain amounts that would be included in forward-looking GAAP net income (loss). We do not attempt to provide a reconciliation of forward-looking non-GAAP Adjusted EBITDA guidance to forward looking GAAP net income (loss) because forecasting the timing or amount of items that have not yet occurred and are out of our control is inherently uncertain and unavailable without unreasonable efforts. Further, we believe that such reconciliations would imply a degree of precision and certainty that could be confusing to investors and could have a substantial impact on GAAP measures of financial performance.
Webcast Details
The Company will host a webcast at 8:30 a.m. Eastern Time today to discuss the third quarter 2021 financial results. Participants may access the live webcast and supplemental earnings presentation on the events page of the Vivid Seats Investor Relations website at https://investors.vividseats.com/events-and-presentations.
About Vivid Seats
Founded in 2001, Vivid Seats is a leading online ticket marketplace committed to becoming the ultimate partner for connecting fans to the live events, artists, and teams they love. Based on the belief that everyone should “Experience It Live”, the Chicago-based company provides exceptional value by providing one of the widest selections of events and tickets in North America and an industry leading Vivid Seats Rewards program where all fans earn on every purchase. Vivid Seats has been chosen as the official ticketing partner by some of the biggest brands in the entertainment industry including ESPN, Rolling Stone, and the Los Angeles Clippers. Through its proprietary software and unique technology, Vivid Seats drives the consumer and business ecosystem for live event ticketing and enables the power of shared experiences to unite people. Vivid Seats is recognized by Newsweek as America’s Best Company for Customer Service in ticketing. Fans who want to have the best live experiences can start by downloading the Vivid Seats mobile app, going to vividseats.com, or calling at 866-848-8499.
Forward-Looking Statements
Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this press release may be forward-looking statements. Forward-looking statements in this press release include but are not limited to statements regarding our future results of operations and financial position, including our Marketplace Gross Order Value, revenues and adjusted EBITDA outlook; business strategy; and plans and objectives of management for future operations. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Vivid Seats’ control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include:
the COVID-19 pandemic has had, and is likely to continue to have, a material negative impact on the Company’s business and operating results; the Company’s business is dependent on the continued occurrence of large-scale sporting events, concerts and theater shows and on relationships with buyers, sellers and distribution partners and any change in such occurrence or relationships could adversely affect the Company’s business; changes in Internet search engine algorithms or changes in marketplace rules; intense competition in the ticketing industry; the willingness of artists, teams and promoters to continue to support the secondary ticket market; the Company’s ability to maintain and improve its platform and brand or develop successful new solutions and enhancements or improve existing ones; the occurrence of extraordinary events or factors affecting concert, sporting and theater events; the Company’s success in potential future acquisition endeavors; Risks related to the seasonality of the Company’s business; the Company’s ability to retain, motivate or integrate the senior management team or other skilled personnel; the processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or applications of privacy regulations; the impact of potential unfavorable legislative outcomes, or outcomes in legal proceedings in which the Company may be involved; the impact of System interruption and the lack of integration and redundancy in our systems and infrastructure; the impact of cyber security risks, data loss or other breaches of our network security; the Company’s ability to adequately protect or enforce its intellectual property rights; potential liability and expense for legal claims alleging that the operation of the Company’s business infringes intellectual property rights of third parties; the Company’s payments system depends on third-party providers; risks associated with the agreements governing our indebtedness impose restrictions on us that limit the discretion of management in operating our business; the Company’s ability to generate sufficient cash flows or raise the additional capital necessary to fund our liquidity needs; the Private Equity Owner controls the Company, and its interest may conflict with the Company’s interests in the future; the Company’s only material asset is our direct and indirect interests in Hoya Intermediate; the Tax Receivable Agreement requires the Company to make cash payments to Hoya Topco; and other risks and uncertainties described in the section titled “Risk Factors” in the Company’s Quarterly Report on Form 10-Q filed with the United States Securities and Exchange Commission (the “SEC”) on November 15, 2021 and in the Company’s subsequent filings with the SEC. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Contacts:
Investors
Ashley DeSimone, ICR
Ashley.DeSimone@icrinc.comBrett Milotte, ICR
Brett.Milotte@icrinc.comMedia
Julia Young, ICR
Julia.Young@icrinc.com
HOYA INTERMEDIATE, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data) (Unaudited)December 31, September 30, 2020 2021 Assets Current assets: Cash and cash equivalents $ 285,337 $ 488,467 Accounts receivable - net 35,250 54,034 Inventory - net 7,462 17,122 Prepaid expenses and other current assets 80,066 96,760 Total current assets 408,115 656,383 Property and equipment - net — 664 Intangible assets - net 67,024 72,102 Goodwill 683,327 683,327 Other non-current assets 664 579 Total assets $ 1,159,130 $ 1,413,055 Liabilities and members’ deficit Current liabilities: Accounts payable $ 62,769 $ 206,250 Accrued expenses and other current liabilities 256,134 340,127 Deferred revenue 5,956 20,523 Current maturities of long-term debt - net 6,412 6,412 Total current liabilities 331,271 573,312 Long-term debt - net 870,903 897,855 Other liabilities 510 602 Total long-term liabilities 871,413 898,457 Commitments and contingencies (Note 11) Redeemable Preferred Units Redeemable Senior Preferred Units - $0 par value; 100 units authorized, issued, and outstanding at December 31, 2020 and September 30, 2021 (aggregate involuntary liquidation preference of $214,008 and $234,489 at December 31, 2020 and September 30, 2021, respectively) 218,288 234,489 Redeemable Preferred Units - $0 par value; 100 units authorized, issued, and outstanding at December 31, 2020 and September 30, 2021 9,939 9,939 Members’ equity (deficit) Common Units - $0 par value; unlimited authorized, 100 units issued and outstanding at December 31, 2020 and September 30, 2021 — — Additional paid-in capital 755,716 742,986 Accumulated deficit (1,026,675 ) (1,046,128 ) Accumulated other comprehensive loss (822 ) - Total members’ equity (deficit) (271,781 ) (303,142 ) Total liabilities, redeemable preferred units, and members’ equity (deficit) $ 1,159,130 $ 1,413,055 HOYA INTERMEDIATE, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except unit and per unit data) (Unaudited)Three Months Ended September 30, Nine Months Ended September 30, 2020 2021 2020 2021 Revenues $ (7,082 ) $ 139,538 $ 33,682 $ 279,150 Costs and expenses: Cost of revenues (exclusive of depreciation and amortization shown separately below) 379 30,475 22,310 54,386 Marketing and selling 1,511 50,371 35,092 104,748 General and administrative 12,854 42,509 53,452 87,486 Depreciation and amortization 80 711 48,057 1,506 Impairment charges — — 573,838 — (Loss) income from operations (21,906 ) 15,472 (699,067 ) 31,024 Other expenses: Interest expense – net 18,310 17,319 41,076 50,477 Loss on extinguishment of debt — — 685 — Net loss $ (40,216 ) $ (1,847 ) $ (740,828 ) $ (19,453 ) Other comprehensive loss Unrealized gain on derivative instruments $ 2,248 $ 309 $ 887 $ 822 Comprehensive loss $ (37,968 ) $ (1,538 ) $ (739,941 ) $ (18,631 ) Net loss per unit attributable to Common Unit holders, basic and diluted $ (426,080 ) $ (44,050 ) $ (7,555,420 ) $ (356,540 ) Weighted average Common Units outstanding, basic and diluted 100 100 100 100 HOYA INTERMEDIATE, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (Unaudited)Nine Months Ended September 30, 2020 2021 Cash flows from operating activities Net loss $ (740,828 ) $ (19,453 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 48,057 1,506 Amortization of deferred financing costs and interest rate cap 2,583 4,120 Loss on disposal of long-lived assets 169 - Equity-based compensation expense 3,475 3,471 Loss on extinguishment of debt 685 - Interest expense paid-in-kind 7,807 25,117 Impairment charges 573,838 - Change in assets and liabilities: Accounts receivable (31,022 ) (18,784 ) Inventory (1,199 ) (9,660 ) Prepaid expenses and other current assets (67,738 ) (16,694 ) Accounts payable (5,762 ) 143,481 Accrued expenses and other current liabilities 178,813 87,339 Deferred revenue (881 ) 14,567 Other assets and liabilities 1,019 252 Net cash (used in) provided by operating activities (30,984 ) 215,262 Cash flows from investing activities Purchases of property and equipment (341 ) (689 ) Purchases of personal seat licenses — (76 ) Investments in developed technology (6,039 ) (6,558 ) Net cash used in investing activities (6,380 ) (7,323 ) Cash flows from financing activities Payments of June 2017 First Lien Loan (4,253 ) (4,809 ) Proceeds from May 2020 First Lien Loan 260,000 - Proceeds from Revolving Facility 50,000 - Payments of Revolving Facility (50,000 ) - Payments of deferred financing costs and other debt-related costs (8,479 ) - Distributions (120 ) - Net cash provided by (used in) financing activities 247,148 (4,809 ) Net increase in cash and cash equivalents 209,784 203,130 Cash and cash equivalents – beginning of period 81,289 285,337 Cash and cash equivalents – end of period $ 291,073 $ 488,467 Supplemental disclosure of cash flow information: Paid-in-kind interest added to May 2020 First Lien Loan principal $ 7,807 $ 28,463 Cash paid for interest $ 27,433 $ 21,143 Use of Non-GAAP Financial Measures
We present Adjusted EBITDA, which is a non-GAAP measure, because it is a measure frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Further, we believe this measure is helpful in highlighting trends in our operating results, because they exclude the impact of items that are outside the control of management or not reflective of ongoing performance related directly to the operation of our business segments.
Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting. Moreover, we believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance and highlighting trends in our operating results.
The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, net loss for each of the periods indicated (in thousands):
Three Months Ended Nine Months Ended September 30, September 30, 2020 2021 2020 2021 Net loss $ (40,216 ) $ (1,847 ) $ (740,828 ) $ (19,453 ) Interest expense 18,310 17,319 41,076 50,477 Depreciation and amortization 80 711 48,057 1,506 Sales tax liability(1) 488 21,574 4,959 34,561 Transaction costs(2) - 1,428 359 8,837 Equity-based compensation(3) 1,099 1,197 3,475 3,471 Loss on extinguishment of debt(4) - - 685 - Litigation, settlements and related costs(5) 492 1,583 837 2,662 Impairment charges(6) - - 573,838 - Loss on asset disposals(7) - - 169 - Severance related to COVID-19(8) 198 - 688 286 Adjusted EBITDA $ (19,549 ) $ 41,965 $ (66,685 ) $ 82,347 (1) These expenses relate to sales tax liabilities incurred during the periods presented. We incur sales tax expenses in jurisdictions where we expect to remit sales tax payments. We are in the process of upgrading our IT infrastructure to enable us to collect sales tax from ticket buyers going forward. We expect these upgrades to be complete by December 31, 2021.
(2) Transaction costs incurred during the three and nine months ended September 30, 2020 and 2021 consist primarily of transaction and transition related fees and expenses incurred in relation to completed and attempted acquisitions. Transaction costs consist of legal, accounting, tax and other professional fees, as well as personnel-related costs, which consist of severance and retention bonuses. Transaction costs consist of personnel costs associated with the integration of an acquiree. Transaction costs reflected above were incurred in the first 12 months following the completed acquisition of Fanxchange Ltd. in 2019. Transaction costs were recognized in 2021 related to the merger transaction with Horizon, to the extent they were not eligible for capitalization. We do not believe these acquisition-related costs to be representative of normal, recurring, cash operating expenses.
(3) We incur equity-based compensation expenses, which we do not consider to be indicative of our core operating performance.
(4) Losses incurred resulted from the retirement of the revolving credit facility in May 2020.
(5) These expenses relate to external legal costs and settlement costs incurred, which were unrelated to our core business operations.
(6) We incurred impairment charges triggered by the effects of the pandemic. The impairment charges resulted in a reduction in the carrying values of our goodwill, indefinite-lived trademark, definite-lived intangible assets, and other long-lived assets.
(7) We incurred losses on asset disposals, which are not considered indicative of our core operating performance.
(8) These charges relate to severance costs resulting from significant reductions in employee headcount due to the effects of the pandemic.
