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 2020 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.
Impact of the Global COVID-19 Pandemic
The unprecedented and rapid spread of COVID-19 and the related government restrictions and social distancing measures implemented throughout the world have significantly impacted our business. Beginning inMarch 2020 , large public events were cancelled, governmental authorities began imposing restrictions on non-essential activities, and businesses suspended activities around the world. As the impact of the global COVID-19 pandemic became clearer, we ceased allLive Nation tours and closed our venues inmid-March 2020 to support global efforts at social distancing and mitigating the virus, and to comply with restrictions put in place by various governmental entities, which has had a materially negative impact on our revenue and financial position. We are beginning to see the positive impacts of successful vaccination rollouts in many of our key markets with social distancing restrictions easing and live events resuming late in the second quarter. Operating Results The impact of the global COVID-19 pandemic to our operating results are discussed in Part I-Financial Information-Item 1. Financial Statements-Note 2-COVID-19 Impacts. Cash and available liquidity We currently have approximately$970.8 million available for future borrowings under our senior secured credit facility, including$400 million in undrawn term loan A capacity and$570.8 million in available revolver capacity, net of outstanding letters of credit. InJanuary 2021 , we issued$500 million principal amount of 3.75% senior secured notes due 2028. We will continue to evaluate future financing opportunities to further expand liquidity at reasonable costs. Additionally, our senior secured credit facility has a$500 million liquidity covenant (as defined in the agreement) until the earlier of (a)December 31, 2021 and (b) at our election, any fiscal quarter prior toDecember 31, 2021 , when we will revert to a net leverage covenant. We believe these allow us the flexibility to manage our business through the disruption that we continue to experience into 2021. As ofJune 30, 2021 , our total cash and cash equivalents balance was$4.0 billion , which included$1.1 billion of ticketing client cash. We believe this cash, net of client cash, together with our available debt capacity of$970.8 million , gives us the 25 -------------------------------------------------------------------------------- Table of Contents liquidity to fund our operations during the pandemic. Our total cash includes event-related deferred revenue for which the amount can fluctuate over the course of the year, but given the shift of shows into the second half of 2021 and 2022, we expect this number to remain above seasonally normal levels throughout 2021. Event-related deferred revenue consists of cash held by our Concerts segment for future shows, with roughly half the funds associated with upcoming shows inthe United States and half for international shows as ofJune 30, 2021 . Inthe United States , the funds are largely associated with shows in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs. Internationally, the funds held are from a combination of both shows in our owned or operated venues, as well as shows in third-party venues associated with our promoter share of tickets in allocation markets. We do not otherwise generally hold funds for concerts being held in third-party buildings. Inthe United States , venues traditionally hold all funds, and internationally either the venue holds all funds or holds the portion of funds associated with their ticket allocation. Cost and Cash Management Programs Given the uncertainty associated with the duration of current conditions globally, we have implemented a number of initiatives to reduce fixed costs and conserve cash. As part of these cost reduction efforts, we implemented salary reductions for most of our employees, with salaries for senior executives reduced by up to 60% during 2020. We began eliminating the salary reductions inJanuary 2021 and have fully restored salaries during the second quarter. Additional cost reduction efforts include hiring freezes, reduction in the use of contractors, rent re-negotiations, furloughs, termination of certain employees and reduction or elimination of other discretionary spending, including, among other things, travel and entertainment, repairs and maintenance, and marketing. We are also making use of government support programs globally. In most European and Asian markets, including theUnited Kingdom ,Germany ,Italy ,France ,Spain andAustralia , there were payroll support programs to mitigate a substantial portion of employee costs, some of which are continuing into 2021. Additionally, inthe United States , we have filed for payroll support under the Employee Retention Credit program established as part of the 2020 CARES Act. Finally, the CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount dueDecember 31, 2021 and the remaining 50% dueDecember 31, 2022 . We are further protecting our cash outflows by reducing advances in both our ticketing and concert businesses, re-assessing all capital expenditure projects and evaluating all other cash deployment activities. As a result of these initiatives and government support programs, in 2020 we achieved over$950 million in cost reductions and the elimination or deferral into 2021 of$1.6 billion in cash outflows, which primarily includes the cost reductions discussed above along with lower capital expenditures, acquisition payments, and concert and ticketing advances. We believe this aggressive cost and cash management program, combined with a strong liquidity profile, has positioned us to manage through the global COVID-19 pandemic-related hold on show activity and provides the flexibility to scale up quickly as shows are restarting. Based on these actions and assumptions regarding the impact of the global COVID-19 pandemic, we believe that we will remain in compliance with our debt covenants throughout 2021 and be able to generate sufficient liquidity to satisfy our obligations for the next twelve months, prior to giving effect to any additional financings that may occur. Our forecasted expense management and liquidity measures may be modified as we get more clarity on the timing of events. We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our live events and the magnitude, duration and speed of the global pandemic is unknown, and as a consequence, our ability to be predictive is uncertain. Health and Safety and Implementing a Return to Business We are currently implementing steps for the health and safety of our employees as they return to work in our offices in the future, and for our artists and fans as they return to live events. We will return to work in local markets only after there is clear guidance that the time is right to do so, and then in appropriate numbers with expanded cleaning and any social distancing or other regulations. Similarly, we are resuming concerts when the time is right on a market by market basis. We recognize that as concerts have started back up, the experience at our venues has changed, and are working with medical experts and public health officials to implement safety precautions and protocols necessary for fans to return to enjoy our shows. Fan surveys indicate that the demand will be there when the shows return, with 95% of fans expecting to attend concerts again once the pandemic is over. The reopening of concerts is happening on a market by market basis, and given we operate in 46 countries globally, the timelines will vary from now to not for several months or beyond. The length and severity of the impact to live events and our related sponsorship and ticketing businesses is still uncertain. We are beginning to see the positive impacts of successful vaccination rollouts in many of our key markets with social distancing restrictions easing and live events resuming late in the second quarter. Activity levels are beginning to increase in the second half of 2021 led by outdoor events and festivals inthe United States andUnited Kingdom . We expect that most tours will resume and larger venues will reopen in the second half of 2021 and that the underlying business will begin generating operating income once again. 26 -------------------------------------------------------------------------------- Table of Contents While this disruption has had a material impact on our business, as the leading global live event and ticketing company we believe that we are well-positioned to provide the best service to artists, teams, fans and venues as business resumes. Twenty years of global growth demonstrates the resilience of fan demand for the live entertainment experience.
Executive Overview
Since the onset of the COVID-19 pandemic, we have held very few traditional concerts in order to ensure the safety of our fans, artists, and employees. Coupled with minimal sponsor engagement and ticket sales, it has been a challenging environment for our company, but one that we met with prudent cost reductions, focused cash management strategies, and a streamlined organization to overcome this unprecedented hurdle. After supporting worldwide efforts to mitigate the spread of the virus, we began to see the positive impacts of successful vaccination rollouts in key markets with social distancing restrictions easing and live shows returning by the end of the quarter. While our Concerts number of fans and events did not return to historic levels in the second quarter, we saw our major markets removing capacity limits, particularly inthe United States , where planning for live shows have resumed. Our Ticketing segment had a significant increase in ticket sales in the second quarter; a key leading indicator that fans are eager to see their favorite stars performing live in the near future. The effects of the pandemic are still impacting us, but we are taking steps towards welcoming back fans, artists and employees to our live world. With our reopening gaining traction, our revenue increased by$502 million in the second quarter, from$74 million in 2020 to$576 million in 2021. All three of our segments reported revenue growth due to more events, higher ticket sales, and increased sponsor fulfillment over the past three months. As a result, our operating loss improved by$461 million , or 78%, from$588 million in 2020 to$127 million in 2021. The improvement resulted from both increased events and ticket sales as well as reduced ticket refunds and sunk costs in the second quarter. For the first six months of 2021, our revenue decreased by$573 million , from$1.4 billion in 2020 to$867 million in 2021, which was largely due to normal pre-pandemic operations from January through mid-March of 2020 compared to a full shut-down for the first quarter of 2021. However, our operating loss improved by$331 million or 43%, from$761 million in 2020 to$430 million in 2021, despite the decrease in revenue. The increase was due to the revenue impacts that drove our second quarter improvement as well as lower fixed costs in the first half of this year. For the second quarter and year-to-date, the impact of changes in foreign exchange rates did not materially impact our year-over-year variances. Our Concerts segment revenue for the second quarter increased by$145 million , from$142 million in 2020 to$287 million in 2021. The revenue growth was a result of increased shows and fans this quarter. The number of events for the second quarter of 2021 was over 1,600 compared to approximately 100 events in the second quarter of last year. The number of fans grew from approximately 50,000 in the second quarter of 2020, to 1.3 million in the second quarter of 2021. The growth was largely inthe United States and ourAsia-Pacific markets. Concerts operating loss for the second quarter improved by$134 million , from$280 million in 2020 to$146 million in 2021. The improvement was primarily due to more shows this year as well as sunk costs recorded in the second quarter of last year for advertising expenses and other costs associated with shows cancelled or rescheduled due to the pandemic. For the first six months, our Concerts segment revenue decreased by$609 million , from$1.1 billion in 2020 to$526 million in 2021. The growth in the second quarter was more than offset by the revenue generated in January through mid-March of 2020 when our business was fully open. Despite the decline in revenue, Concerts operating loss for the first six months improved by$149 million , or 34%, from$441 million in 2020 to$292 million in 2021. This was partially driven by the sunk cost impact in the second quarter of 2020 as well as lower fixed costs in the first six months of 2021 compared to the first six months of 2020. Our Ticketing segment revenue for the second quarter increased by$331 million , from negative$87 million in 2020 to positive$244 million in 2021. The improvement resulted from an increase in ticket sales, stronger pricing, and a reduction in ticket refunds this year. Excluding refunds, we sold 30 million tickets in the second quarter of this year compared with 2 million tickets in the second quarter of last year. The improvement was almost entirely driven by sales inthe United States , largely for concert and sporting events. Refunded tickets declined from 11 million in the second quarter of last year to 4 million in the second quarter of this year. Ticketing operating income for the second quarter improved by$311 million , from a$267 million loss in 2020 to income of$44 million in 2021. The improvement in operating results was largely driven by increased ticket sales, strong ticket pricing, reduced ticket refunds, and lower fixed costs. For the first six months, Ticketing revenue increased by$75 million , from$197 million in 2020 to$272 million in 2021, an improvement of 38%. This was mostly driven by the reduction in refunds across our global Ticketing segment. Refunded tickets declined from 18 million for the first six months of last year to 7 million for the first six months of this year. Operating loss improved by$206 million , or 73%, from$283 million in 2020 to$77 million in 2021. This was largely driven by reduced ticket refunds as well as cost savings in the first six months of this year as compared to last year. Our Sponsorship & Advertising segment revenue for the second quarter increased by$26 million , from$18 million in 2020 to$45 million in 2021. The improvement was due to higher activations with our marketing partners due to more events going on sale, venues re-opening, and supplying more advertising content to our clients. Operating income for the second quarter increased by$17 million , from a loss of$11 million in 2020 to income of$5 million in 2021. The improvement was due 27 -------------------------------------------------------------------------------- Table of Contents to more sponsor and online advertising activations resulting from the restart of live events and rapidly increasing ticket sales, particularly inthe United States . For the first six months, Sponsorship & Advertising revenue decreased by$41 million , from$109 million in 2020 to$67 million in 2021. The growth in the second quarter was more than offset by the revenue generated in January through mid-March of 2020 when our business was fully open. Operating income for the first six months decreased by$28 million , from$27 million of income in 2020 to a loss of$1 million in 2021 for the same reason. Even as we begin to see sales returning and events happening in key markets, we continue to focus on mitigating the financial impact of the shutdown. We are balancing our ramp-up with the cost-savings initiatives we implemented across the organization and are also protecting our liquidity by tightly managing cash outflows associated with all our major expenditures: operating expenses, capital expenditures, acquisitions, and advances in both our ticketing and concert businesses. The pace of the recovery will depend on each market's containment efforts and expeditious rollout of approved vaccines and treatments 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, positionLive Nation to manage out of the global COVID-19 pandemic and its impact on live events and provides us the flexibility to scale up quickly as shows resume. Segment Overview Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising. Concerts Revenue and related costs for events are 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 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. 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. We use GTV to evaluate changes in ticket fee revenue that are driven by the pricing of our service charges. 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 Revenue related to sponsorship and advertising programs is recognized over the term of the agreement or operating season as the benefits are provided to the sponsor unless the revenue is associated with a specific event, in which case it is recognized when the event occurs. Sponsorship & 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 28 -------------------------------------------------------------------------------- Table of Contents 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. 29 --------------------------------------------------------------------------------
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Key Operating Metrics
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(in thousands except estimated events)
Concerts (1)
Estimated events:
North America 1,124 25 1,415 4,797
International 560 107 924 2,430
Total estimated events 1,684 132 2,339 7,227
Estimated fans:
North America 629 10 695 5,739
International 706 41 1,135 4,718
Total estimated fans 1,335 51 1,830 10,457
Ticketing (2)
Estimated number of fee-bearing tickets sold 26,345 (8,870) 32,926 27,335
Estimated number of non-fee-bearing tickets
sold 22,216 6,385 38,376 61,639
Total estimated tickets sold 48,561 (2,485) 71,302 88,974
_________
(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 year 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 consolidated financial statements,
which may result in a negative number. Fee-bearing tickets sold above are net of
refunds of 4.1 million and 10.7 million tickets for the three months ended
June 30, 2021 and 2020, respectively, and 7.1 million and 18.0 million tickets
for the six months ended June 30, 2021 and 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, 2021
Concerts $ (146,337) $ 2,469 $ (28) $ 58,450 $ - $ 1,397 $ (84,049)
Ticketing 43,825 1,072 - 34,888 19,631 - 99,416
Sponsorship & Advertising 5,326 195 - 7,507 - - 13,028
Other and Eliminations 290 - - 11 (1,524) - (1,223)
Corporate (30,389) 9,094 - 2,791 - 984 (17,520)
Total $ (127,285) $ 12,830 $ (28) $ 103,647 $ 18,107 $ 2,381 $ 9,652
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)
Six Months Ended June 30, 2021
Concerts $ (291,696) $ 19,944 $ 110 $ 121,336 $ - $ (8,282) $ (158,588)
Ticketing (76,831) 8,878 - 71,366 32,054 1,197 36,664
Sponsorship & Advertising (1,115) 2,988 - 14,671 - - 16,544
Other and Eliminations (141) - - 22 (3,326) - (3,445)
Corporate (60,674) 21,037 - 5,128 - 1,242 (33,267)
Total $ (430,457) $ 52,847 $ 110 $ 212,523 $ 28,728 $ (5,843) $ (142,092)
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)
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
2021 2020 2021 2020
(in thousands) (in thousands)
Revenue $ 286,958 $ 141,823 * $ 526,374 $ 1,135,216 (54)%
Direct operating expenses 172,176 182,217 (6)% 286,080 933,122 (69)%
Selling, general and administrative
expenses 202,697 174,554 16% 410,544 505,830 (19)%
Depreciation and amortization 58,450 64,342 (9)% 121,336 136,558 (11)%
Loss (gain) on disposal of operating
assets (28) 561 * 110 688 *
Operating loss $ (146,337) $ (279,851) 48% $ (291,696) $ (440,982) 34%
Operating margin (51.0) % * (55.4) % (38.8) %
AOI ** $ (84,049) $ (210,695) 60% $ (158,588) $ (298,867) 47%
AOI margin ** (29.3) % * (30.1) % (26.3) %
_______* Percentages are not meaningful. ** See "-Non-GAAP Measures" above for the definition and reconciliation of AOI and AOI
margin.
Three Months
Revenue
Concerts revenue increased $145.1 million during the three months ended June 30,
2021 as compared to the same period of the prior year primarily due to the
resumption of shows in major markets including the United States , Australia and
New Zealand as compared to the lack of events during the same period in 2020
driven by the global COVID-19 pandemic.
Operating results
Concerts operating loss decreased $133.5 million during the three months ended
June 30, 2021 as compared to the same period of the prior year primarily driven
by the higher revenue discussed above along with lower direct operating expenses
in the second quarter of 2021 for costs associated with shows cancelled or
rescheduled due to the global COVID-19 pandemic.
Six Months
Revenue
Concerts revenue decreased $608.8 million during the six months ended June 30,
2021 as compared to the same period of the prior year primarily due to the
revenue generated in January through mid-March of 2020 when our business was
fully open prior to the global COVID-19 pandemic as compared to the resumption
of shows in major markets including the United States , Australia and New Zealand
late in the second quarter of 2021.
Operating results
Concerts operating loss decreased $149.3 million during the six months ended
June 30, 2021 as compared to the same period of the prior year primarily driven
by cost reduction measures implemented in the second quarter of 2020 and
continuing in 2021, including salary reductions, hiring freezes, furloughs, and
reduction or elimination of other discretionary spending along with
participating in government support programs globally along with lower costs in
2021 associated with shows cancelled or rescheduled due to the global COVID-19
pandemic. In addition, we recorded $11.6 million of impairment charges in the
first six months of 2020 primarily associated with revenue-generating contract
intangible assets. There were no significant impairments recorded in the first
six months of 2021.
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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
2021 2020 2021 2020
(in thousands) (in thousands)
Revenue $ 244,001 $ (87,019) * $ 272,323 $ 197,258 38%
Direct operating expenses 59,301 8,051 * 77,133 112,464 (31)%
Selling, general and administrative
expenses 105,987 127,811 (17)% 200,655 285,357 (30)%
Depreciation and amortization 34,888 44,313 (21)% 71,366 82,489 (13)%
Loss (gain) on disposal of
operating assets - (1) * - 1 *
Operating income (loss) $ 43,825 $ (267,193) * $ (76,831) $ (283,053) 73%
Operating margin 18.0 % * (28.2) % *
AOI ** $ 99,416 $ (203,870) * $ 36,664 $ (158,879) *
AOI margin ** 40.7 % * 13.5 % (80.5) %
_______* Percentages are not meaningful. ** See "-Non-GAAP Measures" above for the definition and reconciliation of AOI and AOI
margin.
Three Months
Revenue
Ticketing revenue increased $331.0 million during the three months ended
June 30, 2021 as compared to the same period of the prior year primarily due to
an increase in North America primary and secondary ticket fees driven by more
events on sale due to the resumption of concerts and sporting events in the
second quarter of 2021, strong ticket pricing and lower ticket refunds in 2021.
Operating results
Ticketing operating income for the three months ended June 30, 2021 was $43.8
million as compared to an operating loss of $267.2 million for the same period
of the prior year primarily driven by the increased ticketing activity discussed
above along with lower fixed costs from cost reduction measures implemented in
the second quarter of 2020 continuing into 2021, 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 increased $75.1 million during the six months ended June 30,
2021 as compared to the same period of the prior year primarily due to an
increase in North America primary ticket fees driven by lower ticket refunds in
2021 and strong ticket pricing as concert and sporting events on sales resuming
in the second quarter of 2021.
Operating results
Ticketing operating loss decreased $206.2 million during the six months ended
June 30, 2021 as compared to the same period of the prior year primarily driven
by the increased ticketing activity discussed above along with cost reduction
measures implemented in the second quarter of 2020 continuing into 2021,
including salary reductions, hiring freezes, furloughs, and reduction or
elimination of other discretionary spending along with participating in
government support programs globally.
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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
2021 2020 2021 2020
(in thousands) (in thousands)
Revenue $ 44,561 $ 18,372 * $ 67,208 $ 108,633 (38)%
Direct operating expenses 12,032 4,186 * 14,853 25,722 (42)%
Selling, general and administrative
expenses 19,696 17,783 11% 38,799 40,770 (5)%
Depreciation and amortization 7,507 7,620 (1)% 14,671 15,132 (3)%
Gain on sale of operating assets - - * - - *
Operating income (loss) $ 5,326 $ (11,217) * $ (1,115) $ 27,009 *
Operating margin 12.0 % (61.1) % (1.7) % 24.9 %
AOI ** $ 13,028 $ (1,795) * $ 16,544 $ 44,815 (63)%
AOI margin ** 29.2 % (9.8) % 24.6 % 41.3 %
_______* 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 increased $26.2 million during the three
months ended June 30, 2021 as compared to the same period of the prior year
primarily due to increased activity in online advertising and national
sponsorship programs in North America due to the resumption of concert events in
the second quarter of 2021.
Operating results
Sponsorship & Advertising operating income for the three months ended June 30,
2021 was $5.3 million as compared to an operating loss of $11.2 million in the
same period of the prior year primarily driven by higher sponsorship activity
discussed above.
Six Months
Revenue
Sponsorship & Advertising revenue decreased $41.4 million during the six months
ended June 30, 2021 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 2020 and continuing into the second
quarter of 2021 due to the global COVID-19 pandemic. As discussed above, we had
increased activity in the second quarter of 2021; however, that increase was
more than offset by the revenue generated in January through mid-March prior to
the shut down of our business.
Operating results
Sponsorship & Advertising operating loss for the six months ended June 30, 2021
was $1.1 million as compared to an operating income of $27.0 million for the
same period of the prior year primarily driven by the lower sponsorship activity
discussed above.
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