LIVE NATION ENTERTAINMENT, INC. "Live Nation" (which may be referred to as the "Company," "we," "us" or "our") meansLive Nation Entertainment, Inc. and its subsidiaries, or one of our segments or subsidiaries, as the context requires. You should read the following discussion of our financial condition and results of operations together with the unaudited consolidated financial statements and notes to the financial statements included elsewhere in this quarterly report. Special Note About Forward-Looking Statements Certain statements contained in this quarterly report (or otherwise made by us or on our behalf from time to time in other reports, filings with theSEC , news releases, conferences, internet postings or otherwise) that are not statements of historical fact constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, notwithstanding that such statements are not specifically identified. Forward-looking statements include, but are not limited to, statements about our financial position, business strategy, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition, the effects of future legislation or regulations and plans and objectives of our management for future operations. We have based our forward-looking statements on our beliefs and assumptions considering the information available to us at the time the statements are made. Use of the words "may," "should," "continue," "plan," "potential," "anticipate," "believe," "estimate," "expect," "intend," "outlook," "could," "target," "project," "seek," "predict," or variations of such words and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those set forth below under Part II-Other Information-Item 1A.-Risk Factors, in Part I-Item IA.-Risk Factors of our 2019 Annual Report on Form 10-K, as well as other factors described herein or in our annual, quarterly and other reports we file with theSEC (collectively, "cautionary statements"). Based upon changing conditions, should any risk or uncertainty that has already materialized, such as, for example, the risks and uncertainties posed by the global COVID-19 pandemic, worsen in scope, impact or duration, or should one or more of the currently unrealized risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not intend to update these forward-looking statements, except as required by applicable law.
Executive Overview
Due to the global COVID-19 pandemic, we ceased all Live Nation tours and closed all our venues beginning in mid-March to support global efforts to mitigate the spread of the virus. To ensure the safety of our artists, fans, and employees, we held no traditional events in the second quarter and had minimal ticket sales. As a result, our overall revenue for the quarter decreased by 98%, from$3.2 billion to$74 million on a reported basis. On a constant currency basis, our second quarter revenue was$80 million , which represents a 97% reduction compared to last year. The revenue reduction was largely in our Concerts and Ticketing segments as a result of almost no shows occurring globally in the quarter and ticket sales for future shows sharply declining given the uncertainty around when live events will return. Our Ticketing revenue was also impacted by refunds for cancelled and postponed events. The pandemic led to an operating loss for the quarter of$588 million compared to operating income of$172 million for the second quarter of last year. For the first six months of 2020, our total revenue decreased by$3.4 billion , or 71%, on a reported basis as compared to last year. The change was the same without the impact of foreign exchange rates. The revenue impact of the global COVID-19 pandemic for the first six months was partially offset by normal operations from January through mid-March, when it appeared we were on track for another record year. Our year-to-date operating loss of$761 million was partially mitigated by the results for the first two and a half months of the year plus our cost savings initiatives, which began at the end of March and generated over$275 million of fixed cost savings for the second quarter compared to our plan just prior to the onset of the global COVID-19 pandemic. While the unparalleled disruption of the pandemic has had a material impact on our business, as the leading global live event and ticketing company, we still firmly believe that we are well-positioned to provide the best service to artists, teams, fans and venues once business resumes. Twenty years of global growth demonstrates the resilience of fan demand for the live entertainment experience. We are actively taking steps to ensure that when the time is right for us to do so, we will be ready to ramp back up and once again connect audiences to artists at the concerts they are looking forward to. Our Concerts segment revenue for the quarter decreased by$2.5 billion , or 95%, on a reported and constant currency basis as compared to last year. The unfavorable results were almost entirely due to the impact of the global COVID-19 pandemic. Show count for the quarter was down 99% compared to last year to 131 events, which included a few socially 30 -------------------------------------------------------------------------------- Table of Contents distanced club shows inEurope andAsia and some drive-in concert events inDenmark . A total of 49 thousand fans attended these shows. Concerts operating loss increased for the quarter largely due to lost business resulting from the global COVID-19 pandemic and from sunk costs, such as advertising expenses, associated with shows cancelled or rescheduled to 2021 due to the pandemic. For the first six months, our Concerts segment revenue decreased by$2.8 billion , or 71%, on a reported and constant currency basis. By the end of the second quarter of 2020, Concerts had cancelled nearly 3,900 concerts impacted by the stoppage of events starting in mid-March of this year, equating to approximately 12 million tickets, and have refunded or are in the process of refunding these tickets. In addition, we had nearly 6,400 shows, equating to approximately 22 million tickets, that have been postponed and rescheduled into 2021 or were in the process of being rescheduled at the end of the second quarter. Our Ticketing segment revenue fell below zero for the quarter as a result of refunds being processed for tickets that were sold in previous quarters. Second quarter revenue was$(87) million , compared to$371 million for the second quarter last year on a reported and constant currency basis. Before refunds, our fee-bearing tickets were 2.0 million for the quarter, a reduction of 51.3 million tickets, or 96%, compared to last year. A total of 10.7 million tickets were refunded in the quarter, amounting to just slightly over$1.1 billion of gross transaction value. The decline in operating results for the quarter was largely driven by the lack of ticket sales as well as refunds processed for cancelled and rescheduled events. For the first six months, our Ticketing segment revenue fell by$0.5 billion , or 72%, on a reported and constant currency basis. Before refunds, we had sold 44.7 million fee-bearing tickets year-to-date, a reduction of 57% compared to the first half of 2019. A total of 17.2 million tickets have been refunded year-to-date, amounting to nearly$1.8 billion of gross transaction value. Our Sponsorship & Advertising segment revenue for the quarter decreased by$133 million , or 88%, on a reported and constant currency basis as compared to last year. For the first six months, our Sponsorship & Advertising segment revenue decreased by$118 million , or 52%, on a reported basis as compared to last year, or$116 million , a 51% decrease, on a constant currency basis. After a very strong performance for the first 10 weeks of the year, there has been a significant reduction to Sponsorship & Advertising revenue and operating results due to the lack of shows and ticket sales resulting from the global COVID-19 pandemic. We are currently focused on the welfare of our employees and mitigating the financial impact of the shutdown. We have undertaken cost-savings initiatives across the organization, including salary reductions, hiring freezes, furloughs, as well as eliminating costs for consultants, travel and entertainment and repairs and maintenance for our facilities. We are also protecting our liquidity by tightly managing cash outflows associated with all of our major expenditures: operating expenses, capital expenditures, acquisitions, and advances in both our ticketing and concert businesses. The length and severity of the impact to live events and our related sponsorship and ticketing businesses is still uncertain. Currently, we do not anticipate a significant change in activity levels through the remainder of the year. The magnitude and pace of the recovery will depend on each market and their containment efforts, the nature of the events being held, and ongoing efforts to develop effective treatments and/or vaccines for COVID-19. We remain optimistic about the long-term potential of our company and the unique power of live shows to unite people. We believe our aggressive cost-savings and cash management programs, combined with a strong liquidity profile, position Live Nation to manage through the global COVID-19 pandemic and its impact on live events and provides us the flexibility to scale up quickly when our shows resume. Our History We were incorporated inDelaware onAugust 2, 2005 in preparation for the contribution and transfer byClear Channel Communications, Inc. of substantially all of its entertainment assets and liabilities to us. We completed the separation onDecember 21, 2005 , and became a publicly traded company on theNew York Stock Exchange trading under the symbol "LYV." OnJanuary 25, 2010 , we merged withTicketmaster Entertainment LLC and it became a wholly-owned subsidiary of Live Nation. Effective with the merger,Live Nation, Inc. changed its name toLive Nation Entertainment, Inc. Segment Overview Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising. Concerts Our Concerts segment principally involves the global promotion of live music events in our owned or operated venues and in rented third-party venues, the operation and management of music venues, the production of music festivals across the world, the creation of associated content and the provision of management and other services to artists. While our Concerts segment operates year-round traditionally, we experience higher revenue during the second and third quarters due to the seasonal nature of shows at our outdoor amphitheaters and festivals, which primarily occur from May through October. Due to the unprecedented stoppage of our concert events globally beginning in mid-March due to the global COVID-19 pandemic, we do not expect that any quarter in 2020 will follow our typical seasonality trend. Revenue and related costs for events are 31 -------------------------------------------------------------------------------- Table of Contents generally deferred and recognized when the event occurs. All advertising costs incurred during the year for shows in future years are expensed at the end of the year. If a current year event is rescheduled into a future year, all advertising costs incurred to date are expensed in the period when the event is rescheduled. Concerts direct operating expenses include artist fees, event production costs, show-related marketing and advertising expenses, along with other costs. To judge the health of our Concerts segment, we primarily monitor the number of confirmed events and fan attendance in our network of owned or operated and third-party venues, talent fees, average paid attendance, market ticket pricing, advance ticket sales and the number of major artist clients under management. In addition, at our owned or operated venues and festivals, we monitor ancillary revenue per fan and premium ticket sales. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates. Ticketing Our Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients and retains a portion of the service charges as our fee. Gross transaction value ("GTV") represents the total amount of the transaction related to a ticket sale and includes the face value of the ticket as well as the service charge. Service charges are generally based on a percentage of the face value or a fixed fee. We sell tickets through websites, mobile apps, ticket outlets and telephone call centers. Our ticketing sales are impacted by fluctuations in the availability of events for sale to the public, which may vary depending upon scheduling by our clients. We also offer ticket resale services, sometimes referred to as secondary ticketing, principally through our integrated inventory platform, league/team platforms and other platforms internationally. Our Ticketing segment manages our online activities including enhancements to our ticketing websites and product offerings. Through our websites, we sell tickets to our own events as well as tickets for our clients and provide event information. Revenue related to ticketing service charges is recognized when the ticket is sold for our third-party clients. For our own events, where our concert promoters control ticketing, revenue is deferred and recognized when the event occurs. Ticketing direct operating expenses include call center costs and credit card fees, along with other costs. To judge the health of our Ticketing segment, we primarily review the GTV and the number of tickets sold through our ticketing operations, the number of clients renewed or added and the average royalty rate paid to clients who use our ticketing services. In addition, we review the number of visits to our websites, cost of customer acquisition, the purchase conversion rate, the overall number of customers in our database, the number and percentage of tickets sold via mobile and the number of app installs. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates. Sponsorship & Advertising Our Sponsorship & Advertising segment employs a sales force that creates and maintains relationships with sponsors through a combination of strategic, international, national and local opportunities that allow businesses to reach customers through our concert, festival, venue and ticketing assets, including advertising on our websites. We drive increased advertising scale to further monetize our concerts platform through rich media offerings including advertising associated with live streaming and music-related content. We work with our corporate clients to help create marketing programs that support their business goals and connect their brands directly with fans and artists. We also develop, book and produce custom events or programs for our clients' specific brands, which are typically experienced exclusively by the clients' consumers. These custom events can involve live music events with talent and media, using both online and traditional outlets. We typically experience higher revenue in the second and third quarters, as a large portion of sponsorships are associated with shows at our outdoor amphitheaters and festivals, which primarily occur from May through October. Due to the unprecedented stoppage of our concert events globally beginning in mid-March due to the global COVID-19 pandemic, we do not expect that any quarter in 2020 will follow our typical seasonality trend. Sponsorship and Advertising direct operating expenses include fulfillment costs related to our sponsorship programs, along with other costs. To judge the health of our Sponsorship & Advertising segment, we primarily review the revenue generated through sponsorship arrangements and online advertising, and the percentage of expected revenue under contract. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates. 32 --------------------------------------------------------------------------------
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Key Operating Metrics
Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
(in thousands except estimated events)
Concerts (1)
Events:
North America 24 7,213 4,787 12,888
International 107 3,039 2,419 5,571
Total estimated events 131 10,252 7,206 18,459
Fans:
North America 8 15,844 5,727 24,810
International 41 11,178 4,714 17,136
Total estimated fans 49 27,022 10,441 41,946
Ticketing (2)
Fee-bearing tickets (8,765) 53,185 27,444 103,211
Non-fee-bearing tickets 6,386 53,749 61,645 120,864
Total estimated tickets (2,379) 106,934 89,089 224,075
_________
(1)Events generally represent a single performance by an artist. Fans generally
represent the number of people who attend an event. Festivals are counted as one
event in the quarter in which the festival begins, but the number of fans is
based on the days the fans were present at the festival and thus can be reported
across multiple quarters. Events and fan attendance metrics are estimated each
quarter.
(2)The fee-bearing tickets estimated above include primary and secondary tickets
that are sold using our Ticketmaster systems or that we issue through
affiliates. This metric includes primary tickets sold during the period
regardless of event timing, except for our own events where our concert
promoters control ticketing which are reported when the events occur. The
non-fee-bearing tickets estimated above include primary tickets sold using our
Ticketmaster systems, through season seat packages and our venue clients' box
offices, along with tickets sold on our "do it yourself" platform. These
ticketing metrics are net of any refunds requested and any cancellations that
occurred during the period and up to the time of reporting of these financial
statements. Fee-bearing tickets include refunds of 10.7 million and 17.2 million
for the three and six months ended June 30, 2020 , respectively.
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Non-GAAP Measures
The following table sets forth the reconciliation of AOI to operating income
(loss):
Stock- Loss (gain) Amortization of
Operating based on disposal of Depreciation non-recoupable
income compensation operating and ticketing contract Acquisition
(loss) expense assets amortization advances expenses AOI
(in thousands)
Three Months Ended June 30, 2020
Concerts $ (279,851) $ 24,381 $ 561 $ 64,342 $ - $ (20,128) $ (210,695)
Ticketing (267,193) 4,066 (1) 44,313 14,724 221 (203,870)
Sponsorship & Advertising (11,217) 1,802 - 7,620 - - (1,795)
Other and Eliminations (6,783) - (1) 4,385 (1,409) - (3,808)
Corporate (23,023) 8,289 - 2,107 - 938 (11,689)
Total $ (588,067) $ 38,538 $ 559 $ 122,767 $ 13,315 $ (18,969) $ (431,857)
Three Months Ended June 30, 2019
Concerts $ 60,701 $ 3,148 $ (210) $ 54,219 $ - $ 14,899 $ 132,757
Ticketing 64,131 1,611 109 39,513 18,184 256 123,804
Sponsorship & Advertising 91,363 699 - 6,374 - - 98,436
Other and Eliminations (240) - - 138 (1,154) - (1,256)
Corporate (44,369) 6,263 - 3,582 - 1 (34,523)
Total $ 171,586 $ 11,721 $ (101) $ 103,826 $ 17,030 $ 15,156 $ 319,218
Six Months Ended June 30, 2020
Concerts $ (440,982) $ 26,741 $ 688 $ 136,558 $ - $ (21,872) $ (298,867)
Ticketing (283,053) 5,797 1 82,489 34,944 943 (158,879)
Sponsorship & Advertising 27,009 2,674 - 15,132 - - 44,815
Other and Eliminations (8,253) - - 4,438 (2,818) - (6,633)
Corporate (55,458) 15,058 - 6,230 - 1,348 (32,822)
Total $ (760,737) $ 50,270 $ 689 $ 244,847 $ 32,126 $ (19,581) $ (452,386)
Six Months Ended June 30, 2019
Concerts $ 1,568 $ 6,631 $ (355) $ 105,580 $ - $ 24,746 $ 138,170
Ticketing 106,746 3,105 107 76,903 36,897 450 224,208
Sponsorship & Advertising 123,544 1,309 - 13,448 - - 138,301
Other and Eliminations (344) - - 259 (2,630) - (2,715)
Corporate (83,791) 13,881 - 6,548 - 1 (63,361)
Total $ 147,723 $ 24,926 $ (248) $ 202,738 $ 34,267 $ 25,197 $ 434,603
Adjusted Operating Income (Loss)
AOI is a non-GAAP financial measure that we define as operating income (loss)
before certain stock-based compensation expense, loss (gain) on disposal of
operating assets, depreciation and amortization (including goodwill impairment),
amortization of non-recoupable ticketing contract advances and acquisition
expenses (including transaction costs, changes in the fair value of accrued
acquisition-related contingent consideration obligations, and
acquisition-related severance and compensation). We use AOI to evaluate the
performance of our operating segments. We believe that information about AOI
assists investors by allowing them to evaluate changes in the operating results
of our portfolio of businesses separate from non-operational factors that affect
net income (loss), thus providing insights into both operations and the other
factors that affect reported results. AOI is not calculated or presented in
accordance with GAAP. A limitation of the use of AOI as a performance measure is
that it does not reflect the periodic costs of certain amortizing assets used in
generating revenue in our business. Accordingly, AOI should be considered in
addition to, and not as a substitute for, operating income (loss), net income
(loss), and other measures of financial performance reported in accordance with
GAAP. Furthermore, this measure may vary among other companies; thus, AOI as
presented herein may not be comparable to similarly titled measures of other
companies.
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AOI Margin
AOI margin is a non-GAAP financial measure that we calculate by dividing AOI by
revenue. We use AOI margin to evaluate the performance of our operating
segments. We believe that information about AOI margin assists investors by
allowing them to evaluate changes in the operating results of our portfolio of
businesses separate from non-operational factors that affect net income (loss),
thus providing insights into both operations and the other factors that affect
reported results. AOI margin is not calculated or presented in accordance with
GAAP. A limitation of the use of AOI margin as a performance measure is that it
does not reflect the periodic costs of certain amortizing assets used in
generating revenue in our business. Accordingly, AOI margin should be considered
in addition to, and not as a substitute for, operating income (loss) margin, and
other measures of financial performance reported in accordance with GAAP.
Furthermore, this measure may vary among other companies; thus, AOI margin as
presented herein may not be comparable to similarly titled measures of other
companies.
Constant Currency
Constant currency is a non-GAAP financial measure. We calculate currency impacts
as the difference between current period activity translated using the current
period's currency exchange rates and the comparable prior period's currency
exchange rates. We present constant currency information to provide a framework
for assessing how our underlying businesses performed excluding the effect of
foreign currency rate fluctuations.
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Segment Operating Results
Concerts
Our Concerts segment operating results were, and discussions of significant
variances are, as follows:
Three Months Ended % Six Months Ended %
June 30, Change June 30, Change
2020 2019 2020 2019
(in thousands) (in thousands)
Revenue $ 141,823 $ 2,639,531 (95)% $ 1,135,216 $ 3,957,648 (71)%
Direct operating expenses 182,217 2,186,767 (92)% 933,122 3,217,036 (71)%
Selling, general and administrative
expenses 174,554 338,054 (48)% 505,830 633,819 (20)%
Depreciation and amortization 64,342 54,219 19% 136,558 105,580 29%
Loss (gain) on disposal of operating
assets 561 (210) * 688 (355) *
Operating income (loss) $ (279,851) $ 60,701 * $ (440,982) $ 1,568 *
Operating margin * 2.3 % (38.8 %) - %
AOI ** $ (210,695) $ 132,757 * $ (298,867) $ 138,170 *
AOI margin ** * 5.0 % (26.3 %) 3.5 %
_______* Percentages are not meaningful. ** See "-Non-GAAP Measures" above for the definition and reconciliation of AOI and AOI
margin.
Three Months
Revenue
Concerts revenue decreased $2.5 billion during the three months ended June 30,
2020 as compared to the same period of the prior year primarily due to the
continued unprecedented stoppage of our concert events globally throughout the
second quarter of 2020. Due to the global COVID-19 pandemic, beginning in
mid-March 2020 we ceased all of our tours, closed our venues and cancelled or
postponed our festivals to support global efforts at social distancing and
mitigating the virus, and to comply with restrictions put in place by various
governmental entities. Concerts had incremental revenue of $26.6 million from
the acquisitions of concert promotion, venue management and merchandise
businesses.
Operating results
The decrease in Concerts operating results for the three months ended June 30,
2020 was primarily driven by the reduction in revenue related to the global
COVID-19 pandemic discussed above partially offset by cost reduction measures
implemented during the second quarter of 2020 including salary reductions,
hiring freezes, furloughs, and reduction or elimination of other discretionary
spending along with participating in government support programs globally.
Six Months
Revenue
Concerts revenue decreased $2.8 billion during the six months ended June 30,
2020 as compared to the same period of the prior year. Excluding the decrease of
$17.8 million related to currency impacts, revenue decreased $2.8 billion , or
71%, primarily due to the reduction in revenue related to the global COVID-19
pandemic discussed above. Concerts had incremental revenue of $104.2 million
from the acquisitions of concert promotion, venue management and merchandise
businesses.
Operating results
The decrease in Concerts operating results for the six months ended June 30,
2020 was primarily driven by the impact of the global COVID-19 pandemic
discussed above. Included in selling, general and administrative expenses for
the six months ended June 30, 2020 is $25.7 million of expenses related to new
acquisitions and new venues in the Concerts segment. In addition, we recorded
$11.6 million in impairment charges in the first half of 2020 primarily
associated with revenue-generating contract intangible assets as it was
determined that the estimated undiscounted cash flows associated with the
respective intangible assets were less than their carrying value as a result of
the expected impacts from the global COVID-19 pandemic. There were no
impairments of intangible assets recorded for the six months ended June 30,
2019 .
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Ticketing
Our Ticketing segment operating results were, and discussions of significant
variances are, as follows:
Three Months Ended % Six Months Ended %
June 30, Change June 30, Change
2020 2019 2020 2019
(in thousands) (in thousands)
Revenue $ (87,019) $ 370,765 * $ 197,258 $ 708,407 (72)%
Direct operating expenses 8,051 120,630 (93)% 112,464 232,379 (52)%
Selling, general and
administrative expenses 127,811 146,382 (13)% 285,357 292,272 (2)%
Depreciation and amortization 44,313 39,513 12% 82,489 76,903 7%
Loss (gain) on disposal of
operating assets (1) 109 * 1 107 *
Operating income (loss) $ (267,193) $ 64,131 * $ (283,053) $ 106,746 *
Operating margin * 17.3 % * 15.1 %
AOI ** $ (203,870) $ 123,804 * $ (158,879) $ 224,208 *
AOI margin ** * 33.4 % (80.5 %) 31.6 %
_______* Percentages are not meaningful. ** See "-Non-GAAP Measures" above for the definition and reconciliation of AOI and AOI
margin.
Three Months
Revenue
Ticketing revenue decreased $457.8 million during the three months ended
June 30, 2020 as compared to the same period of the prior year primarily due to
refunds for cancelled events for third-party clients and the lack of tickets
available for sale to the public driven by the unprecedented stoppage of
concerts, sports and other events globally during the second quarter of 2020 due
to the global COVID-19 pandemic.
Operating results
The decrease in Ticketing operating results for the three months ended June 30,
2020 was primarily due to the reduction in revenue related to the global
COVID-19 pandemic discussed above, without a proportionate reduction in direct
operating expenses as credit card fees and other costs associated with
processing refunds and responding to fan and ticketing client inquiries
continued. This decrease was partially offset by cost reduction measures
implemented during the second quarter of 2020, including salary reductions,
hiring freezes, furloughs, and reduction or elimination of other discretionary
spending along with participating in government support programs globally.
Six Months
Revenue
Ticketing revenue decreased $511.1 million during the six months ended June 30,
2020 as compared to the same period of the prior year primarily due to the
reduction in revenue related to the global COVID-19 pandemic discussed above.
Operating results
The decrease in Ticketing operating results for the six months ended June 30,
2020 was primarily driven by the impact of the global COVID-19 pandemic
discussed above.
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Sponsorship & Advertising
Our Sponsorship & Advertising segment operating results were, and discussions of
significant variances are, as follows:
Three Months Ended % Six Months Ended %
June 30, Change June 30, Change
2020 2019 2020 2019
(in thousands) (in thousands)
Revenue $ 18,372 $ 151,537 (88)% $ 108,633 $ 226,615 (52)%
Direct operating expenses 4,186 25,631 (84)% 25,722 39,017 (34)%
Selling, general and administrative
expenses 17,783 28,169 (37)% 40,770 50,606 (19)%
Depreciation and amortization 7,620 6,374 20% 15,132 13,448 13%
Operating income (loss) $ (11,217) $ 91,363 * $ 27,009 $ 123,544 (78)%
Operating margin (61.1 %) 60.3 % 24.9 % 54.5 %
AOI ** $ (1,795) $ 98,436 * $ 44,815 $ 138,301 (68)%
AOI margin ** (9.8 %) 65.0 % 41.3 % 61.0 %
_______* Percentages are not meaningful. ** See "-Non-GAAP Measures" above for the definition and reconciliation of AOI and AOI
margin.
Three Months
Revenue
Sponsorship & Advertising revenue decreased $133.2 million during the three
months ended June 30, 2020 as compared to the same period of the prior year
primarily due to a reduction in sponsorship revenue associated with our venues,
festivals and lack of online activity as ticket sales declined driven by the
unprecedented stoppage of events beginning in mid-March of 2020 due to the
global COVID-19 pandemic.
Operating results
The decrease in Sponsorship & Advertising operating results for the three months
ended June 30, 2020 was primarily driven by the reduction in revenue discussed
above partially offset by lower fulfillment costs on certain sponsorship
programs. In addition, cost reduction measures were implemented during the
second quarter of 2020, including salary reductions, hiring freezes, furloughs,
and reduction or elimination of other discretionary spending along with
participating in government support programs globally.
Six Months
Revenue
Sponsorship & Advertising revenue decreased $118.0 million during the six months
ended June 30, 2020 as compared to the same period of the prior year. Excluding
the decrease of $1.8 million related to currency impacts, revenue decreased
$116.2 million , or 51%, primarily due to the reduction in revenue related to the
global COVID-19 pandemic discussed above.
Operating results
The decrease in Sponsorship & Advertising operating income for the six months
ended June 30, 2020 was primarily driven by the impact of the global COVID-19
pandemic discussed above.
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