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Item 7. Management’s Discussion and Analysis

2023-02-23 compared with 2022-02-23 · 214 added, 291 removed, 267 unchanged (65% of the section changed)

7 unchanged sentences

Executive Overview

In 2021, we saw a meaningful restart of our operations in the second half of the year which is reflected in our financials and key performance indicators.

After nearly a year and a half of very limited events and ticket sales, shows restarted in some key markets at scale during the third quarter.

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 protocols, and a tighter labor market, we were able to hold most planned concerts, increase overall per fan profitability, and improve our operating income by over $1 billion compared to 2020.

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

Even in the face of new Covid variants and regional surges, our reopening is well underway in the United States and United Kingdom, while other parts of the world catch up as vaccination efforts gain momentum and government responses evolve.

A key leading indicator of the future health of our business is transacted ticket sales and we had a record Q4 with the largest number of tickets sold in a quarter and the highest gross ticket value, excluding refunded tickets.

Our resale business also hit an historic high for us in Q4.

Our total revenue increased by $4.4 billion for the full year, from $1.9 billion in 2020 to $6.3 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 twelve months.

As a result, our operating income improved by $1.2 billion, from a loss of $1.7 billion in 2020 to a loss of $418 million in 2021.

The improvement resulted from 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 and prepare for 2022.

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

Our Concerts segment revenue for the full year increased by $3.3 billion, from $1.5 billion in 2020 to $4.7 billion in 2021.

The revenue growth was a result of increased shows and fans during the year as well as higher ancillary spend per fan and pricing at our events.

The number of events for the full year was more than 17,200 compared to approximately 8,200 events in 2020.

The number of fans for the full year was 35.1 million compared to approximately 11.1 million last year.

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

Concerts operating loss for the full year improved by $340 million, from a loss of $959 million in 2020 to $618 million in 2021.

The improvement was primarily due to more shows this year, an increase in net ancillary spend per fan at our amphitheater and festival events, and growth in pricing across all venue types.

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 growth in onsite spend with our ancillary per fan increasing by double-digits over 2019.

Compared to 2019, overall pricing on tickets also increased by double digits.

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.

Our Ticketing segment revenue for the full year increased by $946 million, from $188 million in 2020 to $1.1 billion 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 153 million fee-bearing tickets this year compared to 58 million tickets last year.

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

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

Our resale business bounced back dramatically in the second half of the year and Q4 was our highest resale gross transaction value quarter ever, at over $1 billion.

Ticketing operating income for the year improved by $782 million, from a $612 million loss in 2020 to income of $170 million in 2021.

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

Our Sponsorship & Advertising segment revenue for the full year increased by $208 million, from $204 million in 2020 to $412 million in 2021.

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.

Even with a compressed sales window, we saw strong sales for many of our larger festivals.

Operating income for the year increased by $157 million, from $45 million in 2020 to $202 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.

As ticket sales and events scale up in key markets, we continue to focus on mitigating the financial impact of the pandemic.

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 progress and momentum over the last three 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.

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 from mid-March 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 for 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 II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 2—Impact of the Global COVID-19 Pandemic.

Cash and available liquidity

We currently have approximately $569.9 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 $449.6 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 reverted back to a net leverage covenant (as defined in the agreement) as of December 31, 2021.

We believe these additional debt and equity issuances allow us the flexibility to manage our business through the disruption that we continue to experience into 2022.

As of December 31, 2021, our total cash and cash equivalents balance was $4.9 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 $569.9 million, gives us the 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 2022, we expect this number to remain above seasonally normal levels throughout the first half of 2022.

Event-related deferred revenue consists of cash held by our Concerts business for future shows, with roughly one-third of the funds associated with upcoming shows in the United States and two-thirds for international shows as of December 31, 2021.

In the United States, the funds are largely associated with shows in our owned or operated venues, notably amphitheaters and theaters and clubs, as well as festivals.

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 in 2020, we implemented salary reductions for most of our employees, with salaries for senior executives reduced by up to 60%.

Additional cost reduction efforts that began in 2020 included 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 of the end of 2021, salaries have been fully restored and furloughed employees have returned to work and, 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 filed for payroll support under the Employee Retention Credit program established as part of the CARES Act, which ended in the third quarter of 2021.

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 2022 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 the evolving nature of the pandemic makes its ultimate magnitude and duration unknown, and as a consequence, our ability to be predictive is uncertain.

Health and Safety and Planning and Executing 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 in compliance with 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 that we operate in 45 countries globally, the timelines will vary from now to not for several months or beyond and changing conditions may cause reopened markets to again close down in the future.

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.

More than twenty years of ongoing global growth demonstrates the resilience of fan demand for the live entertainment experience.

In 2022, we saw an almost full return to normal operations.

Despite the concert business not fully emerging from closures and mandated restrictions until well into the first quarter of 2022, Live Nation still had its best year ever, breaking both financial and operational records.

It was a milestone year for the Company, reinforcing the health of all three of our segments and live entertainment.

With the exception of China, all of our markets and venues were fully open by the fourth quarter of 2022.

This, coupled with our deferred revenue balances at the end of December 2022 and ongoing sales trends that suggest continued strong demand for concerts, making us hopeful for continued success in 2023.

During the year ended December 31, 2022, consolidated revenue increased by $10.4 billion, from $6.3 billion in 2021 to $16.7 billion this year.

The increase as compared to the prior year was $11.0 billion without the impact of changes in foreign exchange rates.

All three of our segments had revenue growth in the year, with the largest increase coming from our Concerts segment as discussed below.

Exceptionally strong demand for live events in the year led to record fan count and ticket sales, powering the concerts center of our business flywheel.

We had consolidated operating income of $732 million in 2022, compared to a loss of $418 million in 2021, an improvement of $1.1 billion, resulting from fans returning to our shows at levels far exceeding one year ago when show activity was largely limited to the United States and the United Kingdom.

Consolidated AOI for the year increased by $1.1 billion, from $324 million in 2021 to $1.4 billion this year.

The increase as compared to the same period of the prior year was $1.1 billion without the impact of changes in foreign exchange rates.

With the United States dollar notably strengthening over the past nine months, it has adversely impacted both our revenues and adjusted operating income from international operations.

Having provided the foreign currency exchange impacts for the organization overall and in light of their relative materiality, all of the segment financial comments to follow are based on reported foreign currency exchange rates.

In certain circumstances, we have included a comparison to 2019, our last full year of operation prior to the global COVID-19 pandemic.

Our Concerts segment revenue grew by $8.8 billion, from $4.7 billion in 2021 to $13.5 billion in 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 year was approximately 43,600 compared to 17,400 in 2021.

The number of fans for the year was approximately 121 million compared to 35 million last year.

This was our highest annual fan count ever, powered by growth across our major divisions, the addition of the OCESA business in Mexico as well as the impact of rescheduled shows.

All of our large venue types had double-digit attendance growth this year compared to 2019.

In particular, stadium fan count more than doubled to over 18 million fans globally.

Some of the top acts in the year included Coldplay, Harry Styles, Bad Bunny and Billie Eilish.

And our nearly 150 festivals attracted over 13 million fans globally, powered by global brands including Lollapalooza, Electric Daisy Carnival and Rock in Rio Brazil.

Concerts AOI for the year increased by $391 million, from a loss of $221 million in 2021 to income of $170 million in 2022.

Along with the increased number of fans, we saw very strong ancillary per fan spend across all of our venue types.

Since 2019, APF has increased by over 25% at our owned and operated amphitheaters, driven by higher food and beverage spending and the shift to cashless transactions.

In our Theaters and Clubs across the United States and the United Kingdom, we are also seeing double-digit percentage growth in APF.

Lastly, at our festivals, we have also seen growth in APF, with concessions, camping, and, in particular, VIP sales all increased substantially at our marquee events.

The increases to APF, along with ticket price increases for those seats highest in demand and continued sponsorship growth, have outpaced higher labor and materials costs at our venues and festivals this year.

Our Ticketing segment revenue grew by $1.1 billion, from $1.1 billion in 2021 to $2.2 billion in 2022.

Ticketing AOI for the year increased by $407 million, from $421 million in 2021 to $828 million in 2022.

Along with an increase in ticket sales, upward pricing momentum and revenue generated from non-service fee sources, while direct costs rose to support higher operations and enterprise growth.

Our fee-bearing ticket sales for the year were a record breaking 281 million, over 50 million higher than our previous best year.

Our resale business continued to grow, with nearly $4.5 billion dollars in gross transaction value for 2022, more than doubling resale gross transaction value in 2019.

It was our highest resale year ever, powered by both Concerts and all the major sports leagues.

Overall pricing on our fee-bearing tickets for the year is up 20% compared to 2019 as consumer demand for premium seats and VIP experiences has continued unabated, occasionally outstripping supply.

Lastly, we signed nearly 23 million net new tickets this year, generating a net renewal rate of 128%.

Of these, 16 million of these tickets, or roughly 70%, are from clients outside of North America, highlighting the significance of our international operations and our global expansion opportunity.

This is a reflection of the quality of the Ticketmaster platform and its continued popularity with clients across the globe, giving us confidence that the Ticketmaster features and functionality will continue to fuel growth going forward.

Our Sponsorship & Advertising segment revenue grew by $556 million, from $412 million in 2021 to $968 million in 2022.

The improvement was due to additional revenue from purchase path integrations with various new partners, our biggest ever festival season and the addition of the Mexico market to our portfolio.

The 2022 festival season included the Rock in Rio event in Brazil that occurs every two years that generates significant sponsorship revenue and will not occur again until 2024.

Sponsorship & Advertising AOI for the year increased by $350 million, from $242 million in 2021 to $592 million in 2022.

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 with more shows and fans in existing and new markets as well as improving the on-site experience for our fans by optimizing pricing and introduce enhancing food and beverage products.

We will drive conversion of ticket sales through development of innovative products like Verified Fan that protects our fans.

Our digital sales platforms have reduced friction in the ticket purchase experience and created new and unique opportunities.

As a result, we continue to grow our sponsorship and advertising partnerships and our clients are able to reach their customers via the powerful connection that live shows creates with music lovers.

Consolidated Results of Operations

Year Ended December 31, % Change

2022 vs 2021 % Change

2022 2021 2020

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

(in thousands)

Revenue $ 16,681,254 $ 610,793 $ 17,292,047 $ 6,268,447 $ 1,861,178 * * *

Operating expenses:

Direct operating expenses 12,337,524 474,418 12,811,942 4,355,989 1,402,400 * * *

Selling, general and administrative expenses 2,955,884 87,167 3,043,051 1,754,822 1,524,342 68% 73% 15%

Depreciation and amortization 449,976 9,534 459,510 416,277 485,025 8% 10% (14)%

Loss (gain) on disposal of operating assets (32,082) (246) (32,328) (1,211) 503 * * *

Corporate expenses 237,834 80 237,914 160,428 102,100 48% 48% 57%

Operating income (loss) 732,118 $ 39,840 $ 771,958 (417,858) (1,653,192) * * 75%

Operating margin 4.4% 4.5% (6.7)% (88.8)%

Interest expense 278,483 282,440 226,832

Interest income (77,620) (6,625) (11,737)

Equity in losses (earnings) of nonconsolidated affiliates (10,571) (2,520) 5,458

Loss (gain) from sale of investments in nonconsolidated affiliates (448) (83,578) 1,727

Other expense (income), net 36,827 3,692 (18,807)

Income (loss) before income taxes 505,447 (611,267) (1,856,665)

Income tax expense (benefit) 96,254 (2,481) (28,875)

Net income (loss) 409,193 (608,786) (1,827,790)

Net income (loss) attributable to noncontrolling interests 113,207 42,118 (103,255)

Net income (loss) attributable to common stockholders of Live Nation $ 295,986 $ (650,904) $ (1,724,535)

* Percentages are not meaningful.

** 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.

Revenue increased $10.4 billion during the year ended December 31, 2022 as compared to the prior year driven by increased revenue in our Concerts segment of $8.8 billion, Ticketing segment of $1.1 billion and Sponsorship & Advertising segment of $556.2 million on as further discussed within each segment’s operating results.

Gain on disposal of operating assets

Gain on disposal of operating assets increased $30.9 million during the year ended December 31, 2022 as compared to the prior year primarily driven by sales of artist catalog rights in 2022.

Corporate expenses

Corporate expenses increased $77.4 million, or 48%, during the year ended December 31, 2022 as compared to the prior year primarily due to increased compensation expense driven by headcount growth and incentive compensation as a result of the increased operating results in 2022.

Operating income (loss)

Operating income during the year ended December 31, 2022 was $732.1 million as compared to an operating loss of $417.9 million for the prior year primarily driven by increased operating income in our Concerts segment of $460.2 million, Ticketing segment of $453.1 million and Sponsorship & Advertising of $324.6 million as further discussed within each segment’s operating results partially offset by higher Corporate expenses as discussed above.

Interest income

Interest income increased $71.0 million during the year ended December 31, 2022 as compared to the prior year primarily attributed to higher rate of return on our cash and cash equivalents in 2022.

Gain from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates was $0.4 million during the year ended December 31, 2022 as compared to $83.6 million in the prior year primarily due to the sale of certain cost basis investments during 2021.

Other expense, net

Other expense, net increased $33.1 million during the year ended December 31, 2022 as compared to the prior year primarily due to increased net foreign exchange rate losses during 2022.

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

For the year ended December 31, 2022, we had a net tax expense of $96.3 million on income before income taxes of $505.4 million compared to a net tax benefit of $2.5 million on losses before income taxes of $611.3 million for 2021.

In 2022, the net income tax expense consisted of $6.9 million tax expense related to United States federal income taxes, $83.3 million tax expense related to foreign entities and $6.1 million tax expense related to state and local income taxes.

The net increase in tax expense of $98.7 million is due primarily to higher pre-tax income or lower pre-tax losses in taxable jurisdictions.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $71.1 million during the year ended December 31, 2022 as compared to the prior year primarily due to higher operating results from certain concert and festival promotion businesses during 2022 as compared to limited activity in 2021 due to the resumption of events late in the second quarter of 2021.

Segment Overview

Information regarding our use of AOI to evaluate the performance of our operating segments can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 12 – Segments and Revenue Recognition.

Revenue and related costs for events are generally deferred and recognized when the event occurs.

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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.

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.

To judge the health of our Ticketing segment, we primarily review the GTV and the number of tickets sold through our primary and secondary 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, and the overall number of customers in our database.

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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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.

Non-GAAP Measure

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.

Key Operating Metrics

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Fee-bearing tickets sold above are net of refunds of 19.7 million and 21.0 million tickets for the years ended December 31, 2022 and 2021, respectively.

Non-GAAP Measures

The following table sets forth the reconciliation of AOI to operating income (loss):

(loss) Stock-

expense Loss (gain)

on disposal of

assets Depreciation

amortization Amortization of non-recoupable ticketing contract advances Acquisition

(in thousands)

Concerts $ (618,486) $ 115,976 $ (1,162) $ 243,439 $ — $ 38,895 $ (221,338)

Ticketing 170,343 33,753 (67) 133,227 81,592 1,697 420,545

Sponsorship & Advertising 202,177 12,120 — 27,942 — — 242,239

Other and Eliminations 180 — — 43 (7,186) — (6,963)

Corporate (172,072) 47,488 18 11,626 — 2,320 (110,620)

Total $ (417,858) $ 209,337 $ (1,211) $ 416,277 $ 74,406 $ 42,912 $ 323,863

Concerts $ (958,975) $ 68,805 $ 505 $ 266,255 $ — $ (15,436) $ (638,846)

Ticketing (612,002) 13,395 (1) 169,921 54,692 (568) (374,563)

Sponsorship & Advertising 44,873 6,420 — 30,617 — — 81,910

Other and Eliminations (13,440) — (1) 6,684 (6,721) — (13,478)

Corporate (113,648) 28,269 — 11,548 — 2,916 (70,915)

Total $ (1,653,192) $ 116,889 $ 503 $ 485,025 $ 47,971 $ (13,088) $ (1,015,892)

Concerts $ (53,463) $ 12,935 $ (2,490) $ 239,682 $ — $ 45,659 $ 242,323

Ticketing 231,958 6,268 116 156,894 85,844 1,276 482,356

Sponsorship & Advertising 330,270 2,744 — 33,084 — — 366,098

Other and Eliminations (1,114) — — 364 (5,542) — (6,292)

Corporate (182,807) 26,838 1 13,967 — 26 (141,975)

Total $ 324,844 $ 48,785 $ (2,373) $ 443,991 $ 80,302 $ 46,961 $ 942,510

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.

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.

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 present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

Segment Operating Results

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* Percentages are not meaningful.

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

Concerts revenue increased $3.3 billion during the year ended December 31, 2021 as compared to 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.

Concerts had incremental revenue of $42.9 million during 2021 from acquisitions, primarily from OCESA.

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

Concerts revenue increased $8.8 billion during the year ended December 31, 2022 as compared to the prior year primarily due to more shows and festivals in all of our major markets in 2022.

During 2021, shows did not meaningfully resume until pandemic restrictions were lifted late in the second quarter and only then in the United States and the United Kingdom.

In addition, Concerts had incremental revenue of $710.3 million during the year ended December 31, 2022 from acquisitions and new venues.

Operating results

Concerts operating loss decreased $340.5 million during the year ended December 31, 2021 as compared to the prior year primarily driven by the resumption of shows and festivals during 2021 discussed above.

Included in depreciation and amortization in 2020 are $23.2 million in impairment charges of intangible assets due to the impacts from the global COVID-19 pandemic.

Included in depreciation and amortization in 2019 are $21.2 million in impairment charges primarily associated with revenue-generating contract intangible assets.

Concerts operating results for the year ended December 31, 2021 include net operating losses of $19.6 million related to acquisitions and new venues.

Concerts AOI increased $391.1 million and operating loss improved $460.2 million for the year ended December 31, 2022 as compared to the prior year.

The increase in AOI was primarily driven by increases in revenue associated with the higher number of shows and festivals discussed above.

These increases were partially offset by higher compensation expenses due to increased headcount in our existing business along with acquisitions and new venues of $27.3 million.

The increase in operating income outside of AOI of $69.2 million is attributable to lower stock-based compensation of $80.0 million and gains on disposals of operating assets of $29.6 million during 2022, which was partially offset by higher accretion of contingent payments due to improved results of $23.7 million and depreciation and amortization expenses of $16.8 million due to recent acquisitions for the year ended December 31, 2022.

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

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Depreciation and amortization 109,778 133,227 169,921 (18)% (22)%

Loss (gain) on disposal of operating assets (67) (1) 116 * *

Gain on disposal of operating assets (197) (67) (1) * *

Operating income (loss) $ 623,477 $ 170,343 $ (612,002) * *

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* Percentages are not meaningful.

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

Ticketing revenue increased $945.9 million during the year ended December 31, 2021 as compared to 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 margin.

Ticketing revenue increased $1.1 billion during the year ended December 31, 2022 as compared to the prior year primarily due to an increase in North America primary and secondary ticket fees driven by more events on sale and upward pricing momentum due to higher fan demand in 2022 as compared to 2021.

Ticketing had incremental revenue of $102.8 million during the year ended December 31, 2022 due to acquisitions.

Operating results

Ticketing operating income for the year ended December 31, 2021 was $170.3 million as compared to an operating loss of $612.0 million for 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 participation in government support programs globally.

Ticketing AOI increased $407.4 million and operating income increased $453.1 million during the year ended December 31, 2022 as compared to the prior year.

The increase in AOI was primarily driven by increased ticketing activity discussed above as well as incremental operating income from acquisitions of $57.6 million.

These increases were partially offset by higher direct operating expenses to support the increased operations and enterprise growth as well as higher selling, general and administrative expenses attributable to increased compensation expenses from increased headcount as operations have resumed.

Operating income outside of AOI increased $45.8 million is attributable to lower stock-based compensation of $29.4 million and depreciation and amortization expense of $23.4 million primarily due to the retirement of certain office locations during 2021.

Sponsorship & Advertising

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* Percentages are not meaningful.

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

Sponsorship & Advertising revenue increased $208.2 million during the year ended December 31, 2021 as compared to 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 margin.

Sponsorship & Advertising revenue increased $556.2 million during the year ended December 31, 2022 as compared to the prior year primarily due to increased activity in national and local sponsorship programs, festival sponsorships and purchase path integration largely in the United States as a result of the resumption of concert events and festivals starting late in the second quarter of 2021.

Sponsorship & Advertising had incremental revenue of $133.2 million during the year ended December 31, 2022 from acquisitions.

Operating results

Sponsorship & Advertising operating income increased $157.3 million during the year ended December 31, 2021 as compared to the prior year primarily driven by the higher sponsorship activity discussed above.

Consolidated Results of Operations

Year Ended December 31, % Change

2021 vs 2020 % Change

2021 2020 2019

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

(in thousands)

Revenue $ 6,268,447 $ (43,985) $ 6,224,462 $ 1,861,178 $ 11,547,969 * * (84)%

Operating expenses:

Direct operating expenses 4,355,989 (26,407) 4,329,582 1,402,400 8,467,182 * * (83)%

Selling, general and administrative expenses 1,754,822 (20,327) 1,734,495 1,524,342 2,145,486 15% 14% (29)%

Depreciation and amortization 416,277 (6,483) 409,794 485,025 443,991 (14)% (16)% 9%

Loss (gain) on disposal of operating assets (1,211) 4 (1,207) 503 (2,373) * * *

Corporate expenses 160,428 (21) 160,407 102,100 168,839 57% 57% (40)%

Operating income (loss) (417,858) $ 9,249 $ (408,609) (1,653,192) 324,844 75% 75% *

Operating margin (6.7)% (6.6)% (88.8)% 2.8%

Interest expense 282,440 226,832 157,521

Interest income (6,625) (11,737) (14,406)

Equity in losses (earnings) of nonconsolidated affiliates (2,520) 5,458 (5,457)

Loss (gain) from sale of investments in nonconsolidated affiliates (83,578) 1,727 (1,119)

Other expense (income), net 3,692 (18,807) 3,201

Income (loss) before income taxes (611,267) (1,856,665) 185,104

Income tax expense (benefit) (2,481) (28,875) 66,892

Net income (loss) (608,786) (1,827,790) 118,212

Net income (loss) attributable to noncontrolling interests 42,118 (103,255) 48,323

Net income (loss) attributable to common stockholders of Live Nation $ (650,904) $ (1,724,535) $ 69,889

* Percentages are not meaningful.

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

Corporate expenses increased $58.3 million, or 57%, during the year ended December 31, 2021 as compared to the prior year primarily due to increased compensation expense driven by headcount growth and incentive compensation as a result of the increased operating results during 2021.

During 2020, cost reduction efforts due to the COVID-19 pandemic included salary reductions, hiring freezes, reduction in the use of contractors, furloughs, and reduction or elimination of other discretionary spending, including, among other things, travel and entertainment and repairs and maintenance.

Interest expense

Interest expense increased $55.6 million, or 25%, during the year ended December 31, 2021 as compared to 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, the issuance of our 3.75% senior secured notes in January 2021 and the draw down of our term loan A under the amended senior secured credit facility.

Our debt balances, excluding unamortized debt discounts and issuance costs, were $5.8 billion and $5.0 billion as of December 31, 2021 and 2020, respectively.

Loss (Gain) from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates was $83.6 million during the year ended December 31, 2021 as compared to a loss of $1.7 million in the prior year primarily due to the sale of certain cost basis investments during 2021.

Other expense (income), net

Other expense (income), net was a net loss of $3.7 million during the year ended December 31, 2021 and includes net foreign exchange rate losses of $20.6 million offset by $15.4 million in mark to market adjustments for certain investments.

Other expense (income), net was a net income of $18.8 million during the year ended December 31, 2020 and includes net foreign exchange rate gains of $9.0 million.

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

For the year ended December 31, 2021, we had a net tax benefit of $2.5 million on losses before income taxes of $611.3 million compared to a net tax benefit of $28.9 million on losses before income taxes of $1.9 billion for 2020.

In 2021, the net income tax benefit consisted of $7.5 million tax expense related to United States federal income taxes, offset by $8.8 million tax benefit related to foreign entities and $1.2 million tax benefit related to state and local income taxes.

The net increase in tax expense of $26.4 million is due primarily to higher pre-tax income or lower pre-tax losses in taxable jurisdictions.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests was an income of $42.1 million during the year ended December 31, 2021 as compared to loss of $103.3 million in the prior year primarily due to higher operating results from certain concert and festival promotion businesses in North America during 2021 due to the resumption of events in 2021.

Sponsorship & Advertising AOI increased $349.7 million and operating income increased $324.6 million during the year ended December 31, 2022 as compared to the prior year.

These increases were primarily due to higher sponsorship activity revenues discussed above as well as incremental operating income of $35.7 million from acquisitions, and were offset by increases in direct costs and selling, general and administrative expenses to support higher activity levels during 2022.

The decrease in operating income outside of AOI of $25.1 million is primarily due to higher depreciation and amortization expenses of $32.4 million due to recent acquisitions for the year ended December 31, 2022.

Liquidity and Capital Resources

In response to the impact that the global COVID-19 pandemic has had on our business, and the uncertainty of the duration of current conditions globally, 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 2022.

Our cash is centrally managed on a worldwide basis.

Our primary short-term liquidity needs are to fund general working capital requirements, capital expenditures and debt service requirements while our long-term liquidity needs are primarily related to acquisitions and debt repayment.

from cash flows from operations, long-term bank borrowings and other debt or equity financings.

Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our amended senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financings.

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 $5.6 billion at December 31, 2022 and $4.9 billion at December 31, 2021.

Included in the December 31, 2021 and 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.

Included in the December 31, 2022 and 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.

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Our balance sheet reflects total net debt of $5.9 billion and $5.7 billion at December 31, 2022 and 2021, 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 December 31, 2021.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.7% at December 31, 2022 with approximately 86% of our debt at a fixed rate.

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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To date, we have experienced no loss or lack of access to our cash and cash equivalents;

however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets, including those resulting from the global COVID-19 pandemic.

however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

For our Concerts segment, we often receive cash related to ticket revenue in advance of the event, which is recorded in deferred revenue until the event occurs.

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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.

We view our available cash as cash and cash equivalents, less ticketing-related client cash, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaid expenses.

This is essentially our cash available to, among other things, repay debt balances, make acquisitions, pay artist advances and finance capital expenditures.

This is essentially our cash available to, among other things, repay debt balances, make acquisitions, and finance capital expenditures.

Our intra-year cash fluctuations are impacted by the seasonality of our various businesses.

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See “—Seasonality” below.

We believe that we have sufficient financial flexibility to fund these fluctuations and to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this will be the case, and capital could be less accessible and/or more costly given current economic conditions, including those resulting from the global COVID-19 pandemic.

We expect cash flows from operations and borrowings under our amended senior secured credit facility, along with other financing alternatives, to satisfy working capital requirements, capital expenditures and debt service requirements for at least the succeeding year.

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The lenders under our revolving loans and counterparty to our interest rate hedge agreement consists of banks and other third-party financial institutions.

While we currently have no indications or expectations that such lenders will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be impacted by adverse conditions in the financial markets, including those resulting from the global COVID-19 pandemic.

Should an individual lender default on its obligations, the remaining lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future borrowings, but would remain obligated to fund their own commitments.

Should the counterparty to our interest rate hedge agreement default on its obligation, we could experience higher interest rate volatility during the period of any such default.

Fourth Quarter Results of Operations (Unaudited)

(in thousands)

Revenue $ 2,703,170 $ 237,383

Operating loss $ (124,546) $ (388,014)

Net loss $ (162,471) $ (463,826)

Net loss attributable to common stockholders of Live Nation $ (194,924) $ (443,332)

Basic net loss available to common stockholders of Live Nation $ (210,485) $ (436,197)

Diluted net loss available to common stockholders of Live Nation $ (210,485) $ (436,197)

Basic and diluted net loss per common share available to common stockholders of Live Nation (0.96) (2.04)

Sources of Cash

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In September 2021, we elected to draw down the $400 million term loan A under the amended senior secured credit facility prior to expiration of the drawdown period on October 17, 2021.

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

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

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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.

In December 2022, we entered into a $120.4 million Euro denominated note due in 2024 with a floating interest rate of three month Euribor plus 3.0% per annum related to an asset acquisition in Europe.

In January 2023, we issued $1.0 billion principal amount of 3.125% convertible senior notes due 2029.

In conjunction with this issuance, we used approximately $485.8 million of the net proceeds to repurchase $440.0 million aggregate principal amount of the 2.5% convertible senior notes due 2023, entered into capped call transactions of approximately $75.5 million, paid debt issuance costs of $15.0 million and any remaining proceeds for general corporate purposes.

Amended Senior Secured Credit Facility

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Information regarding our 2.0% convertible senior notes due 2025 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

Extinguishment of Debt

Information regarding extinguishment of our debt in October 2019 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 6—Long-Term Debt.

3.125% Convertible Senior Notes Due 2029

Information regarding our 3.125%% convertible senior notes due 2029 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 16 – Subsequent Events.

Debt Covenants

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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 2022, we completed various acquisitions for total consideration, net of cash acquired, of $315.0 million, including business acquisitions accounted for as asset acquisitions.

During 2021, we used $384.3 million of cash primarily for the acquisition of OCESA.

Information regarding our acquisitions can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 3—Business Acquisitions.

During 2020, we used $41.1 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 $77.4 million of cash on th eir balance sheets, primarily related to deferred revenue for future events.

Information regarding our acquisitions can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 2 – Acquisitions.

Purchases and Sales of Noncontrolling Interests, net

In 2020, we used $106.2 million of cash primarily for the acquisitions of the remaining or additional interest in festival promotion businesses located in the United States and Brazil.

In 2020, we used $106.2 million of cash primarily for the acquisitions of the remaining or additional interest in multiple festival promotion businesses located in the United States and Brazil.

Capital Expenditures

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(in thousands)

Maintenance capital expenditures $ 68,148 $ 65,111 $ 150,896

Revenue generating capital expenditures $ 237,603 $ 102,418 $ 126,445

Maintenance capital expenditures 126,957 68,148 65,111

Total capital expenditures $ 364,560 $ 170,566 $ 191,556

Maintenance capital expenditures for 2021 increased from the same period of the prior year primarily due to leasehold improvements of certain venue-related projects.

Revenue generating capital expenditures for 2021 decreased from 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.

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

Maintenance capital expenditures for 2022 increased from the same period of the prior year primarily due to venue-related and technology-related projects.

For the years ended December 31, 2022, 2021 and 2020, $12.4 million, $5.9 million and $17.9 million, respectively, of insurance proceeds and landlord or noncontrolling interest partner reimbursements have been excluded from capital expenditures in the table above.

We currently expect capital expenditures to be approximately $375 million for the year ending December 31, 2022.

We expect capital expenditures to be approximately $450 million for the year ending December 31, 2023 as we continue catching up on projects delayed due to supply chain constraints and further expand our global platform.

Year Ended December 31,

2022 2021 2020

(in thousands)

Cash provided by (used in):

Operating activities $ 1,832,063 $ 1,780,568 $ (1,083,388)

Investing activities $ (784,691) $ (566,962) $ (224,062)

Financing activities $ (143,340) $ 1,171,332 $ 1,350,082

Operating Activities

Cash provided by operating activities increased $51.5 million for the year ended December 31, 2022 as compared to the prior year primarily due to an increase in 2022 operating results compared to limited activity in 2021 due to the resumption of events late in the second quarter of 2021.

The increase in operating results was partially offset by decrease in deferred revenue during 2022 from the timing of events compared to the buildup of events in 2021 from the COVID-19 pandemic as well as increase in prepaid expenses due to the timing of event-related payment costs.

Investing Activities

Cash used in investing activities increased $217.7 million for the year ended December 31, 2022 as compared to the prior year primarily due to higher purchases of property, plant and equipment in 2022 for revenue generating and maintenance capital expenditures.

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

Financing Activities

Cash used in financing activities was $143.3 million for the year ended December 31, 2022 as compared to cash provided by financing activities of $1.2 billion for the prior year primarily due to higher net proceeds in 2021 from debt and equity issuances.

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

Contractual Obligations and Commitments

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As of December 31, 2022 and 2021, we guaranteed the debt of third parties of approximately $19.5 million and $20.8 million, respectively, primarily related to maximum credit limits on employee and tour-related credit cards, obligations of a nonconsolidated affiliate and obligations under a venue management agreement.

Year Ended December 31,

2021 2020 2019

Fourth Quarter Results of Operations (Unaudited)

(in thousands)

Cash provided by (used in):

Operating activities $ 1,780,568 $ (1,083,388) $ 469,783

Investing activities $ (566,962) $ (224,062) $ (691,000)

Financing activities $ 1,171,332 $ 1,350,082 $ 328,889

Operating Activities

Cash provided by operating activities was $1.8 billion for the year ended December 31, 2021 as compared to cash used in operating activities of $1.1 billion for 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.

Investing Activities

Cash used in investing activities increased $342.9 million for the year ended December 31, 2021 as compared to the prior year primarily due to the OCESA acquisition.

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

Financing Activities

Cash provided by financing activities decreased $178.8 million for the year ended December 31, 2021 as compared to 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.

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

Revenue $ 4,290,737 $ 2,703,170

Operating loss $ (119,890) $ (124,546)

Net loss $ (167,631) $ (162,471)

Net loss attributable to common stockholders of Live Nation $ (203,034) $ (194,924)

Basic net loss available to common stockholders of Live Nation $ (252,081) $ (210,485)

Diluted net loss available to common stockholders of Live Nation $ (252,081) $ (210,485)

Basic and diluted net loss per common share available to common stockholders of Live Nation (1.11) (0.96)

Information regarding the seasonality of our business can be found in Part II—Financial Information—Item 8.—Financial Statements and Supplementary Data—Note 1 – The Company and Summary of Significant Accounting Policies.

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As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations.

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

Our foreign operations reported an operating loss of $323.9 million for the year ended December 31, 2022.

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Consolidation

Our consolidated financial statements include all of our accounts, including our majority owned and controlled subsidiaries and VIEs for which we are the primary beneficiary.

Intercompany accounts among the consolidated businesses have been eliminated in consolidation.

Net income (loss) attributable to noncontrolling interests is reflected in the statements of operations.

Typically, we consolidate entities in which we own more than 50% of the voting common stock and control operations and also VIEs for which we are the primary beneficiary.

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Investments in nonconsolidated affiliates in which we own less than 20% of the voting common stock and do not exercise significant influence over operating and financial policies are accounted for at fair value unless the investment does not have a readily determinable fair value in which case the investment is accounted for at cost less any impairment.

Intercompany accounts among the consolidated businesses have been eliminated in consolidation.

Net income (loss) attributable to noncontrolling interests is reflected in the statements of operations for consolidated affiliates.

Business Combinations

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Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items.

We classify intangible assets as definite-lived or indefinite-lived.

Definite-lived intangibles include revenue-generating contracts, client/vendor relationships, trademarks and naming rights, technology, non-compete agreements, and venue management and leasehold agreements, all of which are amortized either on a straight-line basis over the respective lives of the agreements, typically 3 to 10 years, or on a basis more representative of the time pattern over which the benefit is derived.

We periodically review the appropriateness of the amortization periods related to our definite-lived intangible assets.

These assets are stated at cost or fair value at the date of acquisition.

Indefinite-lived intangibles consist of trade names which are not subject to amortization.

Our amortization expense is presented as a separate line item, with depreciation expense, in the statements of operations.

There is no amortization expense included in direct operating expenses, selling, general and administrative expenses or corporate expenses.

We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which could indicate that the carrying amount of the asset may not be recoverable.

We test for possible impairment of indefinite-lived intangible assets on at least an annual basis.

Based on facts and circumstances, we perform either a qualitative or a quantitative assessment for impairment.

If a qualitative assessment is performed, and the existence of events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired, we perform the quantitative impairment test by comparing the fair value with the carrying amount.

When performing quantitative assessments for impairment of our definite-lived and indefinite-lived intangible assets, we compare the estimated undiscounted future cash flows related to the asset or asset group to the carrying amount of those assets or asset group.

If the carrying value is greater than the estimated undiscounted future cash flows, the cost basis of the asset or asset group is reduced to reflect the current fair value.

We use various assumptions in determining the current fair value of these definite-lived and indefinite-lived intangible assets, including future expected cash flows, discount rates and royalty rates as well as other fair value measures.

Our impairment loss calculations require us to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.

If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results of operations.

We currently have six reporting units with goodwill balances:

International Concerts, North America Concerts, Artist Management and Artist Services (non-management) within the Concerts segment;

Sponsorship & Advertising;

and Global Ticketing.

We test goodwill for impairment in any period when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount or when we change our reporting units.

If indicators exist, we compare the estimated undiscounted future cash flows related to the asset to the carrying value of the asset.

If the carrying value is greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value.

Any such impairment charge is recorded in depreciation and amortization in the statements of operations.

For the years ended December 31, 2022 and 2021, there were no significant impairment charges.

For the year ended December 31, 2020, we recorded impairment charges of $23.6 million primarily related to intangible assets for revenue-generating contracts, venue management and leaseholds and client/vendor relationships in the Concerts segment primarily as a result of the expected impacts from the global COVID-19 pandemic where the useful life of the definite-lived intangible asset was expiring within the near term.

See Item 8.—Financial Statements and Supplementary Data—Note 7 – Fair Value Measurements for further discussion of the inputs used to determine the fair values.

We test for possible impairment of indefinite-lived intangible assets at least annually.

Depending on facts and circumstances, qualitative factors may first be assessed to determine whether the existence of events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired.

If it is concluded that it is more likely than not impaired, we perform a quantitative impairment test by comparing the fair value with the carrying amount.

When specific assets are determined to be impaired, the cost basis of the asset is reduced to reflect the current fair value.

The impairment loss calculations require management to apply judgment in estimating future cash flows, expected future revenue, discount rates and royalty rates that reflect the risk inherent in future cash flows.

For the years ended December 31, 2022, 2021 and 2020, there were no significant impairment charges.

We review goodwill for impairment annually, as of October 1, using a two-step process.

The first step of the process is a qualitative evaluation as to whether it is more likely than not that the fair value of any of our reporting units is less than its carrying value using an assessment of relevant events and circumstances.

We also test goodwill for impairment in other periods if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount or when we change our reporting units.

The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of our reporting units is less than its carrying value using an assessment of relevant events and circumstances.

Examples of such events and circumstances include historical financial performance, industry and market conditions, macroeconomic conditions, reporting unit-specific events, historical results of goodwill impairment testing and the timing of the last performance of a quantitative assessment.

We also considered changes in discount rates, market multiples, carrying value and forecast since the last quantitative test.

If any reporting units are concluded to be more likely than not impaired, or if that conclusion cannot be determined qualitatively, a second step is performed for that reporting unit.

Regardless, it is our policy that all reporting units undergo a second step at least once every five years to support our annual qualitative first step.

This second step, used to quantitatively screen for potential impairment and measure the impairment, if any, compares the fair value of the reporting unit with its carrying amount, including goodwill.

Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including our interpretation of current economic indicators and market valuations, and assumptions about our strategic plans with regard to our operations.

Due to the uncertainties associated with such estimates, actual results could differ from such estimates.

If the reporting unit’s carrying value exceeds its fair value, the excess of the carrying value over the fair value is recorded as an impairment to goodwill.

If a reporting unit’s carrying value is negative, the reporting unit passes the impairment test.

In this case, we will disclose the amount of goodwill allocated to that reporting unit and disclose which reportable segment the reporting unit is included in.

In both steps, discount rates, market multiples and sensitivity tests are derived and/or computed with the assistance of external valuation consultants.

Generally, we test for sensitivity to changes in discount rates, revenue and terminal growth rates, and market multiples.

In developing fair values for our reporting units, we may employ a discounted cash flow or a market multiple methodology, or a combination thereof.

The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit.

The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows.

The discounted cash flow methodology uses our estimates of future financial performance.

The most significant assumptions used in the discounted cash flow methodology are the discount rate and expected future revenue, which vary among reporting units.

The market multiple methodology compares us to similar companies on the basis of risk characteristics to determine our risk profile relative to those companies as a group.

This analysis generally focuses on both quantitative considerations, which include financial performance and other quantifiable data, and qualitative considerations, which include any factors which are expected to impact future financial performance.

The most significant assumptions affecting the market multiple methodology are the market multiples used on projected future cash flows and market participant acquisition premium.

A market participant acquisition premium represents the additional value a buyer would pay to obtain control of the respective reporting unit because having control would lead to higher cash flows, lower cost of capital or both.

In 2021, as part of the October 1 annual review, market multiples were not incorporated into our assessments for some reporting units where its current financial metrics do not support use of the market approach as a corroborating approach.

When these businesses stabilize, we will reincorporate the market approach into their fair value methodology.

In 2021 as part of our annual impairment test, all of our reporting units with goodwill were assessed under the initial qualitative evaluation and did not advance to the second step.

Considerations included (a) excess of fair values over carrying values in the most recent quantitative analysis performed, (b) discount rates, (c) financial results and (d) sensitivity analyses.

We also considered changes in discount rates, market multiples if applicable, carrying value and forecasts since the last time a quantitative test was performed.

Given the results of the tests performed, although we cannot predict future performance or market conditions, we do not currently believe any of our reporting units are at risk of failing the second step in the near future.

We also considered changes in discount rates, market multiples, carrying values and forecast since the last quantitative test.

If any reporting units are concluded to be more likely than not impaired, or if that conclusion cannot be determined qualitatively, a second step is performed for that reporting unit utilizing a quantitative approach.

For the years ended December 31, 2022 and 2021, as part of our annual test for impairment, all of our reporting units with goodwill were assessed under the initial qualitative evaluation and did not advance to the quantitative analysis.

No impairment charges were recorded for the years ended December 31, 2022, 2021 and 2020.

Revenue Recognition

Revenue from the promotion or production of an event is recognized when the show occurs.

Revenue from the promotion or production of an event in our Concerts segment is recognized when the show occurs.

Revenue collected in advance of the event is recorded as deferred revenue until the event occurs.

Revenue collected from sponsorship agreements, which is not related to a single event, is classified as deferred revenue and recognized over the term of the agreement or operating season as the benefits are provided to the sponsor.

Revenue from our ticketing operations primarily consists of our share of convenience and order processing fees charged at the time a ticket for an event is sold in either the primary or secondary markets.

We act as an agent on behalf of our clients and therefore do not record the face value of the tickets as revenue.

For tickets sold for our concert and festival events, where our concert promoters control ticketing, revenue is recognized when the show occurs.

Revenue for these ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs and these service charges are shared between our Ticketing and Concerts segments.

For tickets sold for events of our third-party clients and secondary market sales, this revenue is recognized at the time of the sale and is recorded by our Ticketing segment.

We account for taxes that are externally imposed on revenue producing transactions on a net basis, as a reduction of revenue.

Revenue from our ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold in either the primary or secondary markets.

For primary tickets sold to our concert and festival events, where our concert promoters control ticketing, the revenue for the associated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs and these service charges are shared between our Ticketing and Concerts segments.

For primary tickets sold for events of third-party clients and secondary market sales, the revenue is recognized at the time of the sale and is recorded by our Ticketing segment.

We account for taxes that are externally imposed on revenue producing transactions on a net basis.

Litigation Accruals

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It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.

We account for income taxes using the liability method in accordance with the FASB guidance for income taxes.

Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled.

Deferred tax assets are reduced by valuation allowances if we believe it is more likely than not that some portion or the entire asset will not be realized.

As almost all earnings from our continuing foreign operations are permanently reinvested and not distributed, our income tax provision does not include additional United States state taxes and foreign withholding or transaction taxes on those foreign earnings that would be incurred if they were distributed.

We account for income taxes using the liability method which results in deferred tax assets and liabilities based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled.

Deferred tax assets are reduced by valuation allowances if we believe it is more likely than not that some portion of or the entire asset will not be realized.

As almost all earnings from our continuing foreign operations are permanently reinvested and not distributed, our income tax provision does not include additional United States state and foreign withholding or transaction taxes on those foreign earnings that would be incurred if they were distributed.

It is not practicable to determine the amount of state and foreign income taxes, if any, that might become due in the event that any remaining available cash associated with these earnings were distributed.

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The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.

We have established a policy of including interest related to tax loss contingencies in income tax expense (benefit) in the statements of operations.

The Tax Cuts and Jobs Act (“TCJA”) enacted in December 2017 subjects a United States corporation to tax on its Global Intangible Low-Taxed Income (“GILTI”).

We have established a policy of treating the taxes due on future GILTI inclusions in United States taxable income as a current-period expense when incurred.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-K

Item 7. Management’s Discussion and Analysis