What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-11-04 · 121 added, 284 removed, 276 unchanged (59% of the section changed)

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Executive Overview

In the third quarter, we saw a meaningful restart of our operations which was reflected in our financials and key performance indicators.

As a result, this was our best quarter in the last two years.

After nearly a year and a half of very limited events and ticket sales, shows began to play off in our key markets and on-sales for future events continue to grow.

In particular, we saw outdoor amphitheater events as well as festivals take place in the United States and United Kingdom with enthusiastic fan response.

Despite the operational challenges associated with ramping up our concerts in a compressed timeframe, increased health and safety protocols, and a generally tighter labor market, we were able to successfully deliver every planned concert, increase overall per fan profitability, and deliver our first positive operating income in two years.

This has been done with careful consideration of the safety and health of our fans, artists and employees via a mix of masking, testing and vaccination protocols.

We have seen record festival attendance at a number of our events this year and little pushback on our vaccine requirements in the United States;

in fact, recent surveys reveal an improvement to the fan experience versus 2019.

Emerging from the pandemic, our organization has streamlined its operations, reduced costs and focused its cash management strategies for future flexibility.

In the United States and United Kingdom, our reopening is well underway while other parts of the world catch up as vaccination efforts gain momentum in mainland Europe, Asia-Pacific and Latin America.

A key leading indicator of the future health of our business is transacted ticket sales and for the third quarter, our United States and United Kingdom markets had double-digit growth versus the third quarter of 2019.

Sales were notably strong for concert events in both markets and sporting events in the United States.

Our revenue increased by $2.5 billion in the third quarter, from $184 million in 2020 to $2.7 billion 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 income improved by $642 million, from a loss of $504 million in 2020 to an income of $137 million in 2021.

The improvement resulted from both increased events, ticket sales and sponsor client activation partially offset by higher selling, general and administrative expenses as we brought employees back from furlough and began hiring new roles to execute 2021 events through the remainder of the year and prepare for 2022.

For the first nine months of 2021, our revenue increased by $1.9 billion, from $1.6 billion in 2020 to $3.6 billion in 2021, which was largely due to our business re-

starting in mid-summer of this year versus operations limited to January through mid-March of 2020.

Our operating loss improved by $1.0 billion or 77%, from $1.3 billion in 2020 to $293 million in 2021.

The improvement was due to the revenue growth as well as reduced selling, general and administrative, and depreciation and amortization costs in the first nine months of this year.

For the third 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 third quarter increased by $2.0 billion, from $155 million in 2020 to $2.2 billion in 2021.

The revenue growth was a result of increased shows and fans this quarter as well as ancillary spend per fan at our events.

The number of events for the third quarter of 2021 was nearly 5,600 compared to approximately 400 events in the third quarter of last year.

The number of fans for the third quarter of 2021 was nearly 17 million compared to approximately 265 thousand in the third quarter of last year.

The first quarter of 2022 was a record start to the year for our company, a remarkable feat considering our position one year ago and the fact that many of our markets remained closed for at least some portion of the quarter.

Despite some disruption caused by COVID-19 variants, the general trend has been towards re-opening business and re-starting shows as the prevalence of COVID-19 shifts from pandemic to endemic in our larger markets.

Fan demand has never been stronger, which led to a record first quarter for our Ticketing segment and sets us up for a strong year across all three of our segments.

Even with the challenges associated with the pandemic, the conflict in Eastern Europe, supply chain issues, labor shortages and inflationary pressures, the supply and demand dynamic with artists and fans continues to strengthen.

Live shows offer a unique and uplifting experience for people of all ages – perhaps even more powerful in these times than ever before.

The appeal of live concerts and sporting events is evidenced by the ticket sales we have seen so far this year.

The first quarter of 2022 was our second highest quarter ever for transacted GTV and two of our top three transacted volume months occurred in the first quarter.

Our overall revenue increased by nearly $1.5 billion for the quarter.

All three of our segments had revenue growth in the quarter with the largest increase coming from our Concerts segment as a result of major markets re-opening for shows, most notably the United States and the United Kingdom.

We had operating income of $27 million in the first quarter of 2022 compared to an operating loss of $303 million in the first quarter of 2021, an improvement of $330 million, resulting from shows and sponsorship restarting leading to notably improved ticketing sales.

The impact of changes in foreign exchange rates did not materially impact our year-over-year variances.

Our Concerts segment revenue for the quarter increased by $968 million, from $239 million in the first quarter of 2021 to $1.2 billion in the first quarter of 2022.

The revenue growth was a result of more shows and fans coming back to venues to enjoy their favorite artists.

The number of events for the quarter was approximately 6,600 compared to approximately 670 in the first quarter of 2021.

The number of fans for the quarter was 10.8 million compared to approximately 0.5 million last year.

The growth was largely in the United States and United Kingdom.

Concerts operating loss for the third quarter improved by $249 million, from a loss of $282 million in 2020 to $33 million in 2021.

The improvement was primarily due to more shows this year as well as an increase in net ancillary spend per fan at our amphitheater and festival events.

Our amphitheater net ancillary spend per fan grew by double digits compared to 2019 as a result of higher consumption and our transition to cashless transactions.

At our major festivals that had over 100 thousand fans, we also saw robust growth in onsite spend with our ancillary per fan increasing by double-digits over 2019.

And while we have seen some adverse impacts in our operating expenses per show due to labor shortages and supply chain issues, our spend per fan metrics have outpaced the higher costs.

For the first nine months, our Concerts segment revenue increased by $1.4 billion, from $1.3 billion in 2020 to $2.7 billion in 2021.

The growth in the second and third quarters more than offset the revenue generated in January through mid-March of 2020, prior to the pandemic related shut-down.

Concerts operating loss for the first nine months improved by $398 million, from $723 million in 2020 to $324 million in 2021.

The improvement was driven by the return of shows and fans, higher on-site spend and ticket prices as well as lower selling, general and administrative costs.

Our Ticketing segment revenue for the third quarter increased by $394 million, from negative $20 million in 2020 to positive $374 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 49 million fee-bearing tickets in the third quarter of this year compared to 7 million tickets in the third quarter of last year.

The improvement was almost entirely driven by sales in the United States and the United Kingdom, largely for concert and sporting events.

Our resale business bounced back dramatically in the third quarter with our highest National Football League sales quarter ever and the month of September was our highest resale gross transaction value month ever.

Ticketing operating income for the third quarter improved by $312 million, from a $197 million loss in 2020 to income of $114 million in 2021.

The improvement in operating results was largely driven by increased ticket sales, strong ticket pricing and higher ancillary revenue streams.

For the first nine months, Ticketing revenue increased by $469 million, from $177 million in 2020 to $647 million in 2021.

This was mostly driven by the reduction in refunds across our global Ticketing segment as refunded tickets declined from 23 million for the first nine months of last year to 13 million for the first nine months of this year.

Excluding refunds, we sold 89 million tickets for the first nine months of this year compared to 52 million tickets for the first nine months of last year with most of these being transacted prior to the pandemic.

Operating income improved by $518 million, from a loss of $480 million in 2020 to income of $37 million in 2021.

This was largely driven by reduced ticket refunds as well as cost savings in the first nine months of this year as compared to last year.

Our Sponsorship & Advertising segment revenue for the third quarter increased by $127 million, from $48 million in 2020 to $174 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.

Even with a greatly compressed sales window, we saw strong sales for many of our larger festivals and our sponsorship revenue per fan at our United Kingdom events grew compared to 2019.

Operating income for the third quarter increased by $89 million, from $14 million in 2020 to $103 million in 2021.

The improvement was due to more sponsor and online advertising activations resulting from the restart of live events and rapidly increasing ticket sales, particularly in the United States.

For the first nine months, Sponsorship & Advertising revenue increased by $85 million, from $157 million in 2020 to $242 million in 2021.

The growth in the second and third quarters more than offset the revenue generated in January through mid-March of 2020 when our business was fully open.

Operating income for the first nine months increased by $61 million, from $41 million in 2020 to $102 million in 2021 for the same reasons discussed above.

As ticket sales return and events scale up 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 managing cash outflows associated with all our major expenditures:

Concerts operating loss for the quarter increased by $4

million, from a loss of $145 million in the first quarter of 2021 to a loss of $150 million in the first quarter of 2022.

While there were more shows and fans in the quarter, this activity was more than offset by the increase in expenses as we ramped up our staffing and infrastructure to prepare for what we expect will be our busiest summer ever.

The first quarter is typically our lightest with respect to show count and fans, but even based on the limited activity we have, we saw improvements to profit per show in the arena, theater and club events in the quarter.

So while we are seeing increases to some of our expenses such as labor and fuel, the ticket pricing and spend per fan has more than offset these cost increases.

Our Ticketing segment revenue for the quarter increased by $452 million, from $28 million in the first quarter of 2021 to $480 million in the first quarter of 2022.

The improvement resulted from an increase in ticket sales, upward pricing momentum due to higher fan demand, and higher ancillary revenue streams.

Excluding refunds, we sold 57 million fee-bearing tickets in the first quarter compared to 10 million tickets in the same period of the prior year.

The increase was largely driven by sales in the United States, the United Kingdom and the addition of OCESA.

We also started to see sales pick up in some of our other major European markets.

Pricing on our fee-bearing tickets increased by double-digits, reflecting strong consumer demand, particularly for premium seats and VIP experiences.

Platinum sales volumes and GTV have more than doubled compared to the first quarter of 2019 this quarter.

Our resale business continued its pronounced rebound in the first quarter, with our second highest resale quarter ever, and double our sales from the first quarter of 2019.

Ticketing operating income for the quarter improved by $275 million, from a $121 million loss in the first quarter of 2021 to income of $155 million in the first quarter of 2022.

The growth in operating results was largely driven by increased ticket sales, upward pricing momentum due to higher fan demand and higher ancillary revenue streams.

Our Sponsorship & Advertising segment revenue for the quarter increased by $93 million, from $23 million in the first quarter of 2021 to $116 million in the first quarter of 2022.

The improvement was due to higher activations with our marketing partners driven by more events going on sale, venues re-opening and supplying more advertising content to our clients.

Operating income for the quarter increased by $65 million, from a loss of $6 million in the first quarter of 2021 to income of $59 million in the first quarter of 2022.

The improvement was due to more sponsor and online advertising resulting from the restart of live events and rapidly increasing ticket sales, particularly in the United States.

As ticket sales and events scale up in key markets, we are balancing our ramp-up with the cost-savings initiatives we implemented across the organization and are also protecting our liquidity by 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 continues to depend on each market’s containment efforts and expeditious rollout of approved vaccines and treatments for COVID-19.

The progress and momentum over the last two quarters has made us even more optimistic about the long-term potential of our company and the unique power of live shows to unite people.

Recent Events

In September 2021, we agreed to proceed with the previously announced acquisition of an aggregate 51% interest in OCESA Entretenimiento, S.A.

and certain other related subsidiaries of Corporación Interamericana de Entretenimiento, S.A.B.

The closing of the acquisition is subject to customary closing conditions, including Mexican regulatory approvals.

We have submitted our initial concentration notice filings to, and responded to initial requests for information from, the regulatory authorities in Mexico, and we are awaiting further responses from them in connection with their review of our initial filings.

We could receive responses from the regulatory authorities by the end of November, which would allow the parties to proceed to close the transaction in the fourth quarter of 2021 if it is re-approved within that time frame .

We are optimistic about the long-term potential of our company and are focused on the key elements of our business model:

expanding our concerts platform and improving the on-site experience for our fans, driving conversion of ticket sales through development of innovative products to sell more tickets, and developing unique marketing and content programs for top brands.

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 significantly impacted our business through the first half of this year.

Late in the second quarter, however, we began to see the positive impacts of successful vaccination rollouts in many of our key markets, mainly the United States and United Kingdom, with social distancing restrictions easing and live events resuming.

In the third quarter, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom.

The restart of our operations has been executed with careful consideration of the safety and health of our fans, artists and employees through a mix of masking, testing and vaccination protocols at our events, venues and offices around the world.

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 $571.3 million available for future borrowings under our senior secured credit facility, net of outstanding letters of credit.

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028 and in September 2021, we elected to draw down the $400 million term loan A under the amended senior secured credit facility and completed the public offering of 5,239,259 shares of common stock for $449.4 million of net proceeds.

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 to December 31, 2021, when we will revert to a net leverage covenant.

We believe these additional debt and equity issuances, along with our liquidity covenant, allow us the flexibility to manage our business through the disruption that we continue to experience into 2021 and fund the acquisition of 51% of the capital stock of OCESA.

As of September 30, 2021, our total cash and cash equivalents balance was $4.6 billion, which included $1.3 billion of ticketing client cash.

We believe this cash, net of client cash, together with our available debt capacity of $571.3 million, gives us the liquidity to fund our operations during the pandemic and as our markets begin reopening.

Our total cash includes event-related deferred revenue the amount of which can fluctuate over the course of the year, but given the shift of shows into 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 approximately half the funds associated with upcoming shows in the United States and half for international shows as of September 30, 2021.

In the 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.

Cost and Cash Management Programs

In response to the impacts the COVID-19 pandemic has had and continues to have on our business globally, we have implemented a number of initiatives to reduce fixed costs and conserve cash while our business was shut down.

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 in January 2021 and 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.

As our business scales back up, we are beginning to reinvest in our growth while continuing to closely monitor our cash flow and liquidity.

We continue to make use of government support programs globally.

In most European and Asia-Pacific markets, including the United Kingdom, Germany, Italy, France, Spain and Australia, there were payroll support programs to mitigate a substantial portion of employee costs.

Additionally, in the United States, we have filed for payroll support under the Employee Retention Credit program established as part of the 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 due December 31, 2021 and the remaining 50% due December 31, 2022.

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 and profitability 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 leverage, liquidity and profitability 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 are returning to work in local markets 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.

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.

In the markets where we have reopened, cancellation rates are declining back to historical levels prior to the pandemic.

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.

The global COVID-19 pandemic significantly impacted the business of our Concerts, Ticketing and Sponsorship & Advertising segments from mid-March 2020 through the first half of 2021.

In the third quarter of 2021, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom.

As we moved into 2022, more of our larger markets began resuming shows with the exception of some of our Asia-Pacific markets which continued to experience disruptions from COVID-19 variants.

As discussed above and in our segment operating results below, the impact of the resumption of shows has resulted in significant improvement in both revenue and operating income in the first quarter of 2022 when compared to the same period of the prior year.

We believe the measures we took in 2020 and 2021 to expand our liquidity along with the cost-savings initiatives implemented during the global COVID-19 pandemic provided us the flexibility to manage our business through the disruption that we experienced while our operations were shut down.

We will continue to evaluate future financing opportunities to further expand liquidity at a reasonable cost as we continue to resume concerts across all our markets and pursue growth opportunities through strategic acquisitions or investments.

Segment Overview

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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.

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.

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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

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.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in thousands except estimated events)

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(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.

This 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 5.8 million and 5.2 million tickets for the three months ended September 30, 2021 and 2020, respectively, and 12.9 million and 23.2 million tickets for the nine months ended September 30, 2021 and 2020, respectively.

These metrics are net of any refunds requested and any cancellations that occurred during the period, which may result in a negative number.

Fee-bearing tickets sold above are net of refunds of 5.2 million and 3.0 million tickets for the three months ended March 31, 2022 and 2021, respectively.

Non-GAAP Measures

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(in thousands)

Three Months Ended September 30, 2021

Concerts $ (32,762) $ 14,226 $ (1,098) $ 59,541 $ — $ 19,671 $ 59,578

Ticketing 114,270 3,310 (66) 32,040 21,700 500 171,754

Sponsorship & Advertising 102,755 1,290 — 7,166 — — 111,211

Other and Eliminations 25 — — 10 (1,214) — (1,179)

Corporate (47,143) 8,492 16 2,478 — 473 (35,684)

Total $ 137,145 $ 27,318 $ (1,148) $ 101,235 $ 20,486 $ 20,644 $ 305,680

Three Months Ended September 30, 2020

Concerts $ (281,625) $ 39,635 $ 208 $ 65,794 $ — $ 2,603 $ (173,385)

Ticketing (197,407) 5,422 (1) 42,565 9,178 (1,693) (141,936)

Sponsorship & Advertising 13,755 2,533 — 6,634 — — 22,922

Other and Eliminations (4,781) — 1 2,192 (2,471) — (5,059)

Corporate (34,383) 9,105 — 2,753 — 746 (21,779)

Total $ (504,441) $ 56,695 $ 208 $ 119,938 $ 6,707 $ 1,656 $ (319,237)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Concerts $ (149,601) $ 25,675 $ 1,868 $ 61,163 $ — $ 11,729 $ (49,166)

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Total $ 27,060 $ 49,241 $ 1,665 $ 100,469 $ 18,527 $ 12,077 $ 209,039

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Concerts $ (145,359) $ 17,475 $ 138 $ 62,886 $ — $ (9,679) $ (74,539)

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Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2021 2020 2021 2020

(in thousands) (in thousands)

(in thousands)

Revenue $ 1,207,825 $ 239,416 *

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Depreciation and amortization 61,163 62,886 (3)%

Loss (gain) on disposal of operating assets (1,098) 208 * (988) 896 *

Loss on disposal of operating assets 1,868 138 *

Operating loss $ (149,601) $ (145,359) (3)%

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* Percentages are not meaningful.

** See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Concerts revenue increased $2.0 billion during the three months ended September 30, 2021 as compared to the same period of the prior year primarily due to the resumption of shows and festivals in major markets including the United States and United Kingdom 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 $248.9 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily driven by the resumption of shows and festivals in 2021 discussed above.

Concerts revenue increased $1.4 billion during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to the resumption of shows and festivals in major markets including the United States and United Kingdom late in the second quarter of 2021 as compared to revenue generated in January through mid-March of 2020 when our business was fully open prior to the global COVID-19 pandemic.

** See “—Non-GAAP Measures” above for the definition of AOI and AOI margin as well as reconciliation of AOI.

Concerts revenue increased $968.4 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to the resumption of shows and festivals in major markets including the United States and United Kingdom as compared to the lack of events during the same period in 2021 driven by the global COVID-19 pandemic.

Concerts had incremental revenue of $131.0 million during the three months ended March 31, 2022 from acquisitions, including OCESA.

Operating results

Concerts operating loss decreased $398.1 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily driven by the resumption of shows and festivals during 2021 discussed above.

In addition, we recorded $15.3 million of impairment charges in the first nine months of 2020 primarily associated with revenue-generating contracts and client/vendor relationships intangible assets.

There were no significant impairments recorded in the first nine months of 2021.

Concerts operating loss increased $4.2 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily driven by an increase in selling, general and administrative expenses due to higher compensation costs resulting from increased headcount and higher venue-related costs as shows and festivals resumed in 2022.

This decline was partially offset by improved results from the resumption of shows and festivals discussed above.

Concerts operating results during the three months ended March 31, 2022 include net operating losses of $25.2 million related to acquisitions and new venues.

Our Ticketing segment operating results were, and discussions of significant variances are, as follows:

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2021 2020 2021 2020

(in thousands) (in thousands)

(in thousands)

Revenue $ 480,399 $ 28,322 *

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* Percentages are not meaningful.

** See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Ticketing revenue increased $394.1 million during the three months ended September 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 third quarter of 2021, strong ticket pricing and lower ticket refunds in 2021.

Operating results

Ticketing operating income for the three months ended September 30, 2021 was $114.3 million as compared to an operating loss of $197.4 million for the same period of the prior year primarily driven by the increased ticketing activity discussed above along with lower ticket refunds in 2021.

Ticketing revenue increased $469.1 million during the nine months ended September 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.

** See “—Non-GAAP Measures” above for the definition of AOI and AOI margin as well as reconciliation of AOI.

Ticketing revenue increased $452.1 million during the three months ended March 31, 2022 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 starting in the second quarter of 2021 and upward pricing momentum due to higher fan demand.

Ticketing had incremental revenue of $27.5 million during three months ended March 31, 2022 due to the OCESA acquisition.

Operating results

Ticketing operating income for the nine months ended September 30, 2021 was $37.4 million as compared to an operating loss of $480.5 million for 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.

Ticketing operating income for the three months ended March 31, 2022 was $154.8 million as compared to an operating loss of $120.7 million for the same period of the prior year primarily driven by the increased ticketing activity discussed above partially offset by higher selling, general and administrative expenses driven by increased compensation expenses from increased headcount as operations have resumed.

Sponsorship & Advertising

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Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2021 2020 2021 2020

(in thousands) (in thousands)

(in thousands)

Revenue $ 115,689 $ 22,647 *

2 unchanged sentences

Depreciation and amortization 8,225 7,164 15%

Operating income $ 102,755 $ 13,755 * $ 101,640 $ 40,764 *

Operating income (loss) $ 59,007 $ (6,441) *

Operating margin 51.0 % (28.4) %

2 unchanged sentences

* Percentages are not meaningful.

** See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Sponsorship & Advertising revenue increased $126.5 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily due to increased activity in national sponsorship programs, festival sponsorships and online advertising in North America due to the resumption of concert events and festivals in the third quarter of 2021.

Operating results

Sponsorship & Advertising operating income increased $89.0 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily driven by higher sponsorship activity discussed above.

Sponsorship & Advertising revenue increased $85.1 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to increased activity in national sponsorship programs, festival sponsorships and online advertising in North America due to the resumption of concert events and festivals in the second quarter of 2021.

** See “—Non-GAAP Measures” above for the definition of AOI and AOI margin as well as reconciliation of AOI.

Sponsorship & Advertising revenue increased $93.0 million during the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to increased activity in national and local sponsorship programs, festival sponsorships and online advertising in North America due to the resumption of concert events and festivals starting in the second quarter of 2021.

Sponsorship & Advertising had incremental revenue of $24.0 million during three months ended March 31, 2022 from acquisitions, including OCESA.

Operating results

Sponsorship & Advertising operating income increased $60.9 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily driven by the higher sponsorship activity discussed above.

Sponsorship & Advertising operating income for the three months ended March 31, 2022 was $59.0 million as compared to an operating loss of $6.4 million for the same period of the prior year primarily driven by higher sponsorship activity discussed above along with incremental operating income from acquisitions including OCESA.

Consolidated Results of Operations

Three Months Ended September 30, % Change

Three Months Ended March 31, % Change

As Reported Currency Impacts At Constant Currency** As Reported As Reported At Constant Currency**

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Depreciation and amortization 100,469 950 101,419 108,876 (8)% (7)%

Loss (gain) on disposal of operating assets (1,148) — (1,148) 208 * *

Loss on disposal of operating assets 1,665 (2) 1,663 138 * *

Corporate expenses 32,410 20 32,430 27,948 16% 16%

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Interest income (7,564) (1,149)

Equity in losses (earnings) of nonconsolidated affiliates (7,025) 2,615

Gain from sale of investments in nonconsolidated affiliates (30,633) (2,514)

Other expense (income), net 12,441 (8,463)

Income (loss) before income taxes 93,288 (559,362)

Income tax expense (benefit) 6,421 (16,904)

Net income (loss) 86,867 (542,458)

Net income (loss) attributable to noncontrolling interests 39,989 (13,556)

Net income (loss) attributable to common stockholders of Live Nation $ 46,878 $ (528,902)

* Percentages are not meaningful.

** See “—Non-GAAP Measures” above for the definition of constant currency.

Gain from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates increased $28.1 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily due to the sale of certain cost basis investments during the three months ended September 30, 2021.

Other expense (income), net

Other expense (income), net was a loss of $12.4 million during the three months ended September 30, 2021 and includes net foreign exchange rate losses of $11.6 million.

Other expense (income), net was income of $8.5 million during the three months ended September 30, 2020 and includes net foreign exchange rate gains of $5.7 million.

The net foreign exchange rate gains and losses result primarily from revaluation of certain foreign currency denominated net assets held internationally.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests was net income of $40.0 million during the three months ended September 30, 2021 as compared to a net loss of $13.6 million for the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses in North America during the third quarter of 2021 due to the resumption of events in the third quarter of 2021.

Nine Months Ended September 30, % Change

As Reported Currency Impacts At Constant Currency** As Reported As Reported At Constant Currency**

(in thousands)

Revenue $ 3,565,277 $ (46,575) $ 3,518,702 $ 1,623,795 * *

Operating expenses:

Direct operating expenses 2,346,998 (28,853) 2,318,145 1,199,126 96% 93%

Selling, general and administrative expenses 1,098,676 (22,695) 1,075,981 1,243,307 (12)% (13)%

Depreciation and amortization 313,758 (6,562) 307,196 364,785 (14)% (16)%

Loss (gain) on disposal of operating assets (1,038) (4) (1,042) 897 * *

Corporate expenses 100,195 (30) 100,165 80,858 24% 24%

Operating loss (293,312) $ 11,569 $ (281,743) (1,265,178) 77% 78%

Operating margin (8.2) % (8.0) % (77.9) %

Interest expense 210,146 162,781

Interest income (3,953) (9,712)

Equity in losses (earnings) of nonconsolidated affiliates (4,608) 6,656

Gain from sale of investments in nonconsolidated affiliates (83,580) (2,479)

Equity in earnings of nonconsolidated affiliates (4,288) (581)

Loss (gain) from sale of investments in nonconsolidated affiliates 132 (55,933)

Other expense (income), net 9,267 (6)

Loss before income taxes (37,260) (316,333)

Income tax expense (benefit) 15,095 (49,417)

Income tax expense 11,696 6,389

Net loss (48,956) (322,722)

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** See “—Non-GAAP Measures” above for the definition of constant currency.

Interest expense

Interest expense increased $47.4 million, or 29%, during the nine months ended September 30, 2021 as compared to the same period of the prior year due to additional interest costs from the issuance of our 2.0% convertible senior notes in February 2020, the issuance of our 6.5% senior secured notes in May 2020 and the issuance of our 3.75% senior secured notes in January 2021.

Gain from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates increased $81.1 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to the sale of certain cost basis investments during the first nine months of 2021.

Other expense (income), net

Other expense (income), net was a net loss of $19.9 million during the nine months ended September 30, 2021 and includes net foreign exchange rate losses of $14.0 million.

Other expense (income), net was net income of $9.0 million during the nine months ended September 30, 2020 and includes net foreign exchange rate gains of $4.6 million.

The net foreign exchange rate gains and losses result primarily from revaluation of certain foreign currency denominated net assets held internationally.

Income tax expense (benefit)

For the nine months ended September 30, 2021, we had a net tax expense of $15.1 million on a loss before income taxes of $431.2 million compared to a net tax benefit of $49.4 million on a loss before income taxes of $1.4 billion for the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, the income tax expense consisted of $9.2 million related to foreign entities, $5.0 million related to United States federal taxes, and $0.9 million related to state and local income taxes.

The net increase in tax expense of $64.5 million was primarily due to profits in certain non-United States jurisdictions and other discrete tax benefits recorded in the first nine months of 2020.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests was net income of $9.7 million during the nine months ended September 30, 2021 as compared to a net loss of $82.8 million for the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses in North America during the first nine months of 2021 due to the resumption of events in 2021.

Loss (gain) from sale of investments in nonconsolidated affiliates

Loss (gain) from sale of investments in nonconsolidated affiliates during the three months ended March 31, 2022 was a loss of $0.1 million as compared to a gain of $55.9 million for the same period of the prior year primarily due to the sale of certain cost basis investments during the first three months of 2021.

Income tax expense

For the three months ended March 31, 2022, we had a net tax expense of $11.7 million on a loss before income taxes of $37.3 million compared to a net tax expense of $6.4 million on a loss before income taxes of $316.3 million for the three months ended March 31, 2021.

For the three months ended March 31, 2022, the income tax expense consisted of $9.5 million related to foreign entities, $1.9 million related to United States federal taxes, and $0.3 million related to state and local income taxes.

The net increase in tax expense of $5.3 million was primarily due to profits in certain non-United States jurisdictions.

Liquidity and Capital Resources

In response to the impact that the global COVID-19 pandemic has had and continues to have on our business, we have taken certain actions to strengthen our liquidity position and preserve our capital resources.

In April 2020, we amended our senior secured credit facility to provide an incremental $130 million revolving credit facility.

We further amended our senior secured credit facility in July 2020, which, among other things, substitutes our net leverage covenant with 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 to December 31, 2021.

In February 2020, we issued $400 million principal amount of 2.0% convertible senior notes due 2025 and in May 2020, we issued $1.2 billion principal amount of 6.5% senior secured notes due 2027.

As a result, we believe these amendments and additional debt and equity issuances will allow us the flexibility to manage our business through the disruption we continue to experience into 2021 and fund the acquisition of 51% of the capital stock of OCESA.

Our cash is centrally managed on a worldwide basis.

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We may from time to time engage in open market purchases of our outstanding debt securities or redeem or otherwise repay such debt.

Our balance sheet reflects cash and cash equivalents of $4.6 billion at September 30, 2021 and $2.5 billion at December 31, 2020.

Included in the September 30, 2021 and December 31, 2020 cash and cash equivalents balances are $1.3 billion and $673.5 million, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash.

Our balance sheet reflects cash and cash equivalents of $5.9 billion at March 31, 2022 and $4.9 billion at December 31, 2021.

Included in the March 31, 2022 and December 31, 2021 cash and cash equivalents balances are $1.5 billion and $1.3 billion, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash.

We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to clients on a regular basis.

Our foreign subsidiaries held approximately $991.2 million in cash and cash equivalents, excluding client cash, at September 30, 2021.

Our foreign subsidiaries held approximately $1.8 billion in cash and cash equivalents, excluding client cash, at March 31, 2022.

We generally do not repatriate these funds, but if we did, we would need to accrue and pay United States state income taxes as well as any applicable foreign withholding or transaction taxes on future repatriations.

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If the original maturity of these borrowings is 90 days or less, we present the borrowings and subsequent repayments on a net basis in the statement of cash flows to better represent our financing activities.

Our balance sheet reflects total net debt of $5.7 billion and $4.9 billion at September 30, 2021 and December 31, 2020, respectively.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.2% at September 30, 2021.

Our balance sheet reflects total net debt of $5.8 billion and $5.7 billion at March 31, 2022 and December 31, 2021, respectively.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.3% at March 31, 2022.

Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in our operating accounts and invested cash.

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When an event is cancelled, any cash held in deferred revenue is reclassified to accrued expenses as those funds are typically refunded to the fan within 30 days of event cancellation.

In certain markets, we are offering fans an incentive to receive a voucher for a future ticket purchase to one of our events in lieu of receiving a refund for a cancelled event.

Where a fan has elected to receive the incentive voucher, the cash from the original ticket purchase remains in deferred revenue.

When a show is rescheduled, fans have the ability to request a refund if they do not want to attend the event on the new date, although historically we have had low levels of refund requests for rescheduled events.

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Sources of Cash

During 2020, we amended our senior secured credit facility, issued $1.2 billion principal amount of 6.5% senior secured notes due 2027 and issued $400 million principal amount of 2.0% convertible senior notes due 2025.

A portion of the proceeds were used to pay transaction fees of $35.5 million, leaving approximately $1.6 billion for general corporate purposes.

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028.

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We intend to use the proceeds from the drawdown for general corporate purposes.

In September 2021, we completed the public offering of 5,239,259 shares of common stock.

A portion of the gross proceeds of $455.3 million were used to pay estimated fees of $5.9 million, leaving approximately $449.4 million of net proceeds.

We intend to use the net proceeds to fund the acquisition of 51% of the capital stock of OCESA and use any remaining proceeds for general corporate purposes.

We also completed the public offering of 5,239,259 shares of common stock.

A portion of the gross proceeds of $455.3 million were used to pay fees of $5.7 million, leaving $449.6 million of net proceeds.

We used the net proceeds to fund the acquisition of 51% of the capital stock of OCESA and any remaining proceeds for general corporate purposes.

Amended Senior Secured Credit Facility

In April and July 2020, we amended our senior secured credit facility and now have (i) a $400 million term loan A facility, (ii) a $950 million term loan B facility, (iii) a $500 million revolving credit facility and (iv) a $130 million incremental revolving credit facility.

In addition, subject to certain conditions, we have the right to increase such facilities by an amount equal to the sum of (x) $425 million during the Restricted Period and $855 million after the Restricted Period, (y) the aggregate principal amount of voluntary prepayments of the term loan A and term loan B and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) except during the Restricted Period, additional amounts so long as the senior secured leverage ratio calculated on a pro-forma basis (as defined in the agreement) is no greater than 3.75x.

At March 31, 2022, our senior secured credit facility consists of (i) a $400 million term loan A facility, (ii) a $950 million term loan B facility, (iii) a $500 million revolving credit facility and (iv) a $130 million incremental revolving credit facility.

In addition, subject to certain conditions, we have the right to increase such facilities by an amount equal to the sum of (x) $855 million, (y) the aggregate principal amount of voluntary prepayments of the term loan A and term loan B and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) additional amounts so long as the senior secured leverage ratio calculated on a pro-forma basis (as defined in the agreement) is no greater than 3.75x.

The combined revolving credit facilities provide for borrowings up to $630 million with sublimits of up to (i) $150 million for the issuance of letters of credit, (ii) $50 million for swingline loans, (iii) $300 million for borrowings in Dollars, Euros or British Pounds and (iv) $100 million for borrowings in those or one or more other approved currencies.

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The interest rates per annum applicable to the term loan B are, at our option, equal to either Eurodollar plus 1.75% or a base rate plus 0.75%.

We have an interest rate swap agreement that ensures the interest rate on $500.0 million principal amount of our outstanding term loan B does not exceed 3.397% through October 2026.

The interest rates per annum applicable to the incremental revolving credit facility are, at our option, equal to either Eurodollar plus 2.5% or a base rate plus 1.5%.

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We are also required to make mandatory prepayments of the loans under the amended credit agreement, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events.

There were no borrowings under the revolving credit facilities as of September 30, 2021.

There were no borrowings under the revolving credit facilities as of March 31, 2022.

Based on our outstanding letters of credit of $66.9 million, $563.1 million was available for future borrowings from revolving credit facilities.

3.75% Senior Secured Notes Due 2028

In May 2020, we issued $1.2 billion principal amount of 6.5% senior secured notes due 2027.

Interest on the notes is payable semi-annually in cash in arrears on May 15 and November 15 of each year and the notes will mature on May 15, 2027.

We may redeem some or all of the notes, at any time prior to May 15, 2023, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a “make-whole” premium.

We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to May 15, 2023, at a price equal to 106.5% of the aggregate principal amount, plus accrued and unpaid interest thereon, if any, to the date of redemption.

In addition, on or after May 15, 2023 we may redeem some or all of the notes at any time at redemption prices starting at 104.875% of their principal amount, plus any accrued and unpaid interest to the date of redemption.

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028.

Interest on the notes is payable semi-annually in cash in arrears on January 15 and July 15 of each year and began on July 15, 2021, and the notes will mature on January 15, 2028.

We may redeem some or all of the notes, at any time prior to January 15, 2024, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium.

We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to January 15, 2024, at a price equal to 103.75% of the aggregate principal amount, plus accrued and unpaid interest thereon to the date of redemption.

In addition, on or after January 15, 2024 we may redeem some or all of the notes at any time at redemption prices specified in the notes indenture, plus any accrued and unpaid interest to the date of redemption.

We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control.

The notes are secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

3.75% Senior Secured Notes Due 2028

Information regarding our 3.75% senior secured notes due 2028 can be found in Part I — Financial Information — Item 1.— Financial Statements — Note 5 —Long-Term Debt.

2.0% Convertible Senior Notes Due 2025

In February 2020, we issued $400 million principal amount of 2.0% convertible senior notes due 2025.

Interest on the notes is payable semiannually in arrears on February 15 and August 15, at a rate of 2.0% per annum.

The notes will mature on February 15, 2025.

The notes will be convertible, under certain circumstances, until November 15, 2024, and on or after such date without condition, at an initial conversion rate of 9.4469 shares of our common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 50.0% conversion premium based on the last reported sale price for our common stock of $70.57 on January 29, 2020 prior to issuing the notes.

Upon conversion, the notes may be settled in shares of common stock or, at our election, cash or a combination of cash and shares of common stock.

Assuming we fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 3.8 million.

We may redeem for cash all or a portion of the notes, at our option, on or after February 21, 2023 and before the 41st scheduled trading day before the maturity date, if the sales price of our common stock reaches specified targets as defined in the indenture.

The redemption price will equal 100% of the principal amount of the notes plus accrued interest, if any.

If we experience a fundamental change, as defined in the indenture governing the notes, the holders of the notes may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest.

Debt Covenants

Our amended senior secured credit facility contains a number of restrictions that, among other things, require us to satisfy a financial covenant and restrict our and our subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase our stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners).

Certain of these restrictions are further limited temporarily by the July 2020 amendment.

Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the credit facility becoming immediately due and payable.

The amended senior secured credit facility agreement has one covenant, measured quarterly, that relates to net leverage.

The July 2020 amendment substitutes the consolidated net leverage ratio covenant with a liquidity covenant (as defined in the agreement) that requires our consolidated liquidity be at least $500 million until the earlier of (a) December 31, 2021 and (b) at our election, any fiscal quarter ending prior to December 31, 2021 so long as such election is made during the last month of such fiscal quarter or within 30 days following the end of such fiscal quarter.

The July 2020 amendment also requires the liquidity covenant to be measured monthly beginning January 31, 2021 until the earlier of (x) November 30, 2021 and (y) the last day of the month before the consolidated net leverage ratio covenant applies.

For fiscal quarters after resumption of the consolidated net leverage covenant, we will be required to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the amended credit agreement) for the trailing four consecutive quarters of 6.75x with step downs to 6.25x after four quarters, 5.75x after eight quarters, 5.50x after twelve quarters and 5.25x after fourteen quarters through maturity, except that calculations of consolidated EBITDA (as defined in the agreement) for the first three fiscal quarters after resumption of the covenant will be substituted with an annualized consolidated EBITDA (as defined in the agreement).

For the avoidance of doubt, the consolidated net leverage covenant will resume for the quarter ended December 31, 2021 at the latest.

We are required to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the amended credit agreement) for the trailing four consecutive quarters of 6.75x through September 30, 2022 with step downs to 6.25x on December 31, 2022, 5.75x on December 31, 2023, 5.50x on December 31, 2024 and 5.25x on June 30, 2025 through maturity, except that calculations of consolidated EBITDA (as defined in the agreement) will be substituted with an annualized consolidated EBITDA (as defined in the agreement) through June 30, 2022.

The indentures governing our 6.5% senior secured notes, 3.75% senior secured notes, 4.75% senior notes, 4.875% senior notes and 5.625% senior notes contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to us, merge, consolidate or sell all of our assets, create certain liens, and engage in transactions with affiliates on terms that are not on an arms-length basis.

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They also have financial covenants including minimum consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt service, maximum consolidated debt to consolidated EBITDA and minimum liquidity, all as defined in the applicable debt agreements.

As of September 30, 2021, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes.

As of March 31, 2022, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes.

We expect to remain in compliance with all of these covenants throughout 2022.

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All amounts related to the use of cash for acquisitions discussed in this section are presented net of any cash acquired.

During the nine months ended September 30, 2021, we used $19.6 million of cash primarily for the acquisition of a venue in the United Kingdom and an artist management business in the United States.

During the nine months ended September 30, 2020, we used $37.3 million of cash primarily for the acquisitions of a festival promotion business and a venue management business, both located in the United States.

As of the date of acquisition, the acquired businesses had a total of $71.1 million of cash on their balance sheets, primarily related to deferred revenue for future events.

During the three months ended March 31, 2022, we used $14.0 million of cash primarily for the acquisition of a venue management business in the United States.

During the three months ended March 31, 2021, we used $6.1 million of cash primarily for the acquisition of a venue in the United Kingdom.

Capital Expenditures

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Our capital expenditures, including accruals for amounts incurred but not yet paid for, but net of expenditures funded by outside parties such as landlords and noncontrolling interest partners or expenditures funded by insurance proceeds, consisted of the following:

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

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Total capital expenditures $ 46,888 $ 17,095

Maintenance capital expenditures during the first nine months of 2021 decreased from the same period of the prior year primarily due to reductions for certain office facility and technology-related projects as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

Revenue generating capital expenditures during the first nine months of 2021 decreased from the same period of the prior year primarily due to lower spending in our amphitheater venues and a reduction in technology-related projects as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

We currently expect capital expenditures to be approximately $185 million for the full year of 2021 as we have accelerated the timing of certain projects in the second half of the year in response to the reopening of our business.

Nine Months Ended

September 30,

Maintenance capital expenditures during the first three months of 2022 increased from the same period of the prior year primarily due to leasehold improvements of certain office facilities and venue-related projects.

Revenue generating capital expenditures during the first three months of 2022 increased from the same period of the prior year primarily due to enhancements at our venues and higher investments in technology-related projects.

We currently expect capital expenditures to be approximately $375 million for the full year of 2022.

Three Months Ended

(in thousands)

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Operating Activities

Cash provided by operating activities was $1.0 billion for the nine months ended September 30, 2021 as compared to cash used in operating activities of $956.9 million for the same period of the prior year primarily due to increases in accounts payable, client accounts and accrued expenses resulting from the resumption of events in certain markets late in the second quarter of 2021 along with a reduction of net loss year over year partially offset by increases in accounts receivable.

Cash provided by operating activities increased by $1.1 billion for the three months ended March 31, 2022 as compared to the same period of the prior year primarily due to increases in deferred revenue resulting from the resumption of events in

certain markets starting late in the second quarter of 2021 and continuing into the first quarter of 2022 along with a reduction of net loss year over year.

Investing Activities

Cash used in investing activities decreased $112.8 million for the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to less cash paid for capital expenditures, along with higher proceeds from the sale of investments in nonconsolidated affiliates partially offset by an increase in investments in nonconsolidated affiliates.

Cash used in investing activities was $115.0 million for the three months ended March 31, 2022 as compared to cash provided by investing activities of $10.1 million for the same period of the prior year primarily due to more cash paid for capital expenditures along with higher proceeds from the sale of investments in nonconsolidated affiliates in 2021 that did not recur in 2022.

See “—Uses of Cash” above for further discussion.

Financing Activities

Cash provided by financing activities decreased $139.3 million for the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to higher net proceeds in 2020 from debt issuances partially offset by proceeds from the sale of common stock and lower purchases of noncontrolling interests in 2021.

Cash used in financing activities was $75.0 million for the three months ended March 31, 2022 as compared to cash provided by financing activities of $417.0 million for the same period of the prior year primarily due to higher net proceeds in 2021 from debt issuances.

See “—Sources of Cash” above for further discussion.

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Currently, we do not have significant operations in hyper-inflationary countries.

Our foreign operations reported an operating loss of $148.1 million for the nine months ended September 30, 2021.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating loss for the nine months ended September 30, 2021 by $14.8 million.

As of September 30, 2021, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar and Canadian Dollar.

Our foreign operations reported an operating loss of $45.4 million for the three months ended March 31, 2022.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating loss for the three months ended March 31, 2022 by $4.5 million.

As of March 31, 2022, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso.

This analysis does not consider the implication such currency fluctuations could have on the overall economic conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign entities.

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We also may enter into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income.

At September 30, 2021, we had forward currency contracts outstanding with a notional amount of $43.6 million.

At March 31, 2022, we had forward currency contracts outstanding with a notional amount of $93.0 million.

Interest Rate Risk

Our market risk is also affected by changes in interest rates.

We had $5.8 billion of total debt, excluding debt discounts and issuance costs, outstanding as of September 30, 2021, of which $5.0 billion was fixed-rate debt and $0.8 billion was floating-rate debt.

Based on the amount of our floating-rate debt as of September 30, 2021, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $2.0 million.

This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of September 30, 2021 with no subsequent change in rates for the remainder of the period.

We had $5.8 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of March 31, 2022.

Of the total amount, we had $5.0 billion of fixed-rate debt and $0.8 billion of floating-rate debt.

Based on the amount of our floating-rate debt as of March 31, 2022, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.9 million.

This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of March 31, 2022 with no subsequent change in rates for the remainder of the period.

In January 2020, we entered into an interest rate swap agreement that is designated as a cash flow hedge for accounting purposes to effectively convert a portion of our floating-rate debt to a fixed-rate basis.

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These critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions are described in Part II—Financial Information — Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021.

There have been no changes to our critical accounting policies during the nine months ended September 30, 2021.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Annual Report on Form 10-K filed with the SEC on February 23, 2022.

There have been no changes to our critical accounting policies during the three months ended March 31, 2022.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis