What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-02-23 · 136 added, 159 removed, 322 unchanged (48% of the section changed)

7 unchanged sentences

Executive Overview

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.

In 2023, we continued to see unprecedented demand for live experience in every corner of the world with emerging and superstar acts across all genres and in venues big and small in 2023.

After a record 2022, we surpassed last year’s results by double-digits for revenue, operating income, and AOI, not only at the consolidated level but also in each of our three major reporting segments.

Our operating income has increased by 228% and AOI has doubled compared to our pre-pandemic operations in 2019 – a testament to the strength of the live industry and our place in that robust ecosystem.

We saw double-digit growth in concert fans, Ticketmaster ticket sales, and sponsorship revenues globally.

Our overall revenue increased by $6.1 billion, or 36%, to $22.7 billion as compared to last year.

The increase was $6.0 billion without the impact of changes in foreign exchange rates.

Our operating income for the year improved by $334 million, or 46%, to $1.1 billion in 2023 due to stronger performance across all of our major reporting segments.

Consolidated AOI for the year increased by $455 million, or 32%, to $1.9 billion this year.

The increase was $412 million without the impact of changes in foreign exchange rates.

Our event-related deferred revenue balance increased by $216 million, or 8%, to $2.9 billion as of December 31, 2023 compared to December 31, 2022.

This, coupled with current ticket sales for 2024, suggests ongoing strong demand for concerts, making us confident in our continued success in the year ahead.

All of the segment financial comments to follow are based on reported foreign currency exchange rates.

Our Concerts segment revenue for the year increased by $5.3 billion, or 39% compared to 2022, from $13.5 billion to $18.8 billion.

The growth in revenue was the result of more fans enjoying their favorite artists and spending more money at events to maximize their unique live experiences.

Approximately 145 million fans attended our shows in the year, our largest annual fan count ever, compared to approximately 121 million last year, for growth of 25 million or 20%.

The growth was relatively evenly distributed across our global markets with notable strength in Europe, Latin America, Asia-Pacific and Canada.

Growth in amphitheater, stadium and arena fan count drove the majority of the increase in show attendance.

In particular, stadium fan count increased by almost 11 million fans to over 29 million fans globally.

Some of the larger acts touring globally in the year included Beyoncé, Harry Styles, Karol G, The Weeknd and RBD, reflecting the global diversified base of our artists.

Concerts AOI for the year increased by $156 million, or nearly double, compared to 2022, from $170 million to $325 million.

Our ancillary revenue spending at our United States amphitheater shows was nearly $41 per fan for the year, a 10% growth over 2022, driven by higher food and beverage spending as well as increased upsells.

In our theaters and clubs across the United States and the United Kingdom, we also saw strong growth in APF revenue.

We also experienced double-digit growth with concessions, merchandise and upsells in our expanding owned or operated arena network, which includes the Moody Center arena.

Our Ticketing segment revenue for the year increased by $721 million, or 32%, compared to 2022, from $2.2 billion to $3.0 billion.

The improvement resulted from an increase in ticket sales, upward pricing momentum due to higher fan demand and higher non-service fee revenue.

We sold 329 million fee-bearing tickets in 2023 compared to 281 million tickets last year, an increase of 17%.

North America increased total fee-bearing GTV by 26% while International rose by 42% compared to last year.

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

Ticketing AOI for the year improved by $288 million, or 35%, compared to 2022, from $828 million to $1.1 billion.

We signed 21.4 million net new tickets in 2023.

16.9 million of the net new tickets, or roughly 80%, are from clients outside of North America, highlighting the significance of our international operations and our global expansion opportunity.

This gives us confidence that our ticketing platforms’ features and functionalities will continue to fuel growth going forward.

Our Sponsorship & Advertising segment revenue for the year increased by $127 million, or 13%, compared to 2022 from $968 million to $1.1 billion.

The increase was largely driven by our United States business with new strategic deals, expanded deals across our ticket access and venue assets, and the addition of the Moody Center arena in Austin.

We also added new marketing partners in Mexico.

Sponsorship & Advertising AOI increased by $83 million, or 14%, compared to 2022, from $592 million to $675 million.

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.

expanding our concerts platform with more shows and fans in both existing and new markets as well as improving the on-site experience for our fans by enhancing food and beverage products and premium service offerings.

We will drive ticket sales through development of innovative products for fans, with a focus on reducing friction in the ticket purchase experience and creating additional revenue opportunities.

In addition, we continue to grow our sponsorship and advertising partnerships, enabling our clients to reach customers via the powerful connection that live shows create with ardent fans.

Consolidated Results of Operations

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Depreciation and amortization 516,797 449,976 416,277 15% 8%

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

Gain on disposal of operating assets (13,927) (32,082) (1,211) (57)% *

Corporate expenses 330,817 237,834 160,428 39% 48%

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Interest expense 350,244 278,483 282,440

Loss on extinguishment of debt

Interest income (237,818) (77,620) (6,625)

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Loss (gain) from sale of investments in nonconsolidated affiliates 341 (448) (83,578)

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

Other expense, net 34,933 36,827 3,692

Income (loss) before income taxes 894,544 505,447 (611,267)

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Net income (loss) 734,317 409,193 (608,786)

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

Net income attributable to noncontrolling interests 171,037 113,207 42,118

Net income (loss) attributable to common stockholders of Live Nation $ 563,280 $ 295,986 $ (650,904)

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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.

Revenue increased $6.1 billion during the year ended December 31, 2023 as compared to the prior year driven by increased revenue in our Concerts segment of $5.3 billion, Ticketing segment of $720.9 million and Sponsorship & Advertising segment of $127.1 million as further discussed within each segment’s operating results.

Operating income

Operating income increased $334.1 million during the year ended December 31, 2023 as compared to the prior year primarily driven by increased operating income in our Concerts segment of $94.6 million, Ticketing segment of $283.9 million and Sponsorship & Advertising segment of $66.0 million as further discussed within each segment’s operating results.

These increases were partially offset by higher Corporate expenses primarily due to higher compensation expense in 2023 due to headcount growth as a result of increased operating opportunities in 2023.

Interest expense

Interest expense increased $71.8 million during the year ended December 31, 2023 as compared to the prior year primarily driven by the issuance of $1.0 billion principal amount of our 3.125% convertible senior notes due 2029 in January 2023.

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.

Interest income increased $160.2 million during the year ended December 31, 2023 as compared to the prior year primarily attributed to higher rate of return on our cash and cash equivalents in 2023 and an increase in our cash and cash equivalents.

For the year ended December 31, 2023, we had a net tax expense of $160.2 million on income before income taxes of $894.5 million compared to a net tax expense of $96.3 million on income before income taxes of $505.4 million for 2022.

In 2023, the net income tax expense consisted of $7.2 million of tax expense related to United States federal income taxes, $128.6 million of tax expense related to foreign entities and $24.4 million of tax expense related to state and local income taxes.

The net increase in tax expense of $64.0 million is due primarily to higher pre-tax income 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.

Net income attributable to noncontrolling interests increased $57.8 million during the year ended December 31, 2023 as compared to the prior year primarily due to higher operating results from certain concert businesses during 2023 as compared to the prior year.

Non-GAAP Measures

AOI is a non-GAAP financial measure that we define as consolidated operating income (loss) before certain acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation), amortization of non-recoupable ticketing contract advances, depreciation and amortization (including goodwill impairment), loss (gain) on disposal of operating assets, and stock-based compensation expense.

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.

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.

The following table sets forth the reconciliation of consolidated operating income (loss) to consolidated AOI for the years ended December 31, 2023, 2022 and 2021:

2023 2022 2021

(in thousands)

Operating income (loss) $ 1,066,203 $ 732,118 $ (417,858)

Acquisition expenses 93,664 68,078 42,912

Amortization of non-recoupable ticketing contract advance 83,693 79,043 74,406

Depreciation and amortization 516,797 449,976 416,277

Gain on sale of operating assets (13,927) (32,082) (1,211)

Stock-based compensation expense 115,959 110,049 209,337

AOI $ 1,862,389 $ 1,407,182 $ 323,863

Segment Overview

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To judge the health of our Concerts segment, we primarily monitor the number of confirmed events and fan attendance in our network of owned or operated and third-party venues, talent fees, average paid attendance, market ticket pricing, advance ticket sales and the number of major artist clients under management.

In addition, at our owned or operated venues and festivals, we monitor ancillary revenue per fan and premium ticket sales.

In addition, at our owned or operated venues and festivals, we monitor APF and premium ticket sales.

For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

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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.

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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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.

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.

Segment Operating Results

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Depreciation and amortization 320,680 260,238 243,439 23% 7%

Loss (gain) on disposal of operating assets (30,810) (1,162) 505 * *

Gain on disposal of operating assets (10,804) (30,810) (1,162) (65)% *

Operating loss $ (63,615) $ (158,243) $ (618,486) 60% 74%

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** 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.

Concerts revenue increased $5.3 billion during the year ended December 31, 2023 as compared to the prior year primarily due to increased fan growth which was evenly distributed across our global markets with notable strength in Europe, Latin America, Asia-Pacific and Canada.

In addition, Concerts had incremental revenue of $578.5 million during the year ended December 31, 2023 from acquisitions and new venues.

Operating results

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.

Concerts AOI increased $155.8 million and operating loss improved $94.6 million for the year ended December 31, 2023 as compared to the prior year primarily driven by an increase in revenue discussed above as well as incremental revenue from acquisitions and new venues of $23.2 million.

These increases were partially offset by increased direct operating expenses to support increased fan growth at events and increased selling general and administrative expenses primarily related to increased headcount and compensation expenses.

The remaining change in operating income outside of AOI of $61.1 million is primarily attributable to higher depreciation and amortization expenses of $60.4 million for additional capital expenditures incurred to support the increased operations as well as from acquisitions and new venues.

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

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Depreciation and amortization 105,256 109,778 133,227 (4)% (18)%

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

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

Loss (gain) on disposal of operating assets 39 (197) (67) * *

Operating income $ 907,345 $ 623,477 $ 170,343 46% *

Operating margin 30.7% 27.9% 15.0%

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** 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.

Ticketing revenue increased $720.9 million during the year ended December 31, 2023 as compared to the prior year.

This increase is primarily due to higher primary and secondary sales volumes driven by more events on sale and upward pricing momentum due to more fan demand and artist mix in 2023 as compared to 2022.

Operating results

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.

Ticketing AOI increased $288.4 million and operating income increased $283.9 million during the year ended December 31, 2023 as compared to the prior year primarily driven by increased ticketing activity discussed above.

Sponsorship & Advertising

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** 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.

Sponsorship & Advertising revenue increased $127.1 million during the year ended December 31, 2023 as compared to the prior year due to expanded deals across our ticket access and venue assets, the addition of the Moody Center arena in Austin and new partnerships in Mexico.

Sponsorship & Advertising had incremental revenue of $36.0 million during the year ended December 31, 2023 from acquisitions of new venues.

Operating results

Sponsorship & Advertising AOI increased $83.2 million and operating income increased $66.0 million during the year ended December 31, 2023 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.

These increases were primarily due to higher sponsorship revenue discussed above.

These increases were partially offset by increases in direct operating expenses, including higher artist activation costs, and selling, general and administrative expenses primarily related to increased headcount and compensation expenses.

The remaining change in operating income outside of AOI of $17.2 million was primarily due to an increase in depreciation and amortization related to assets utilized to support higher activity levels as compared to the prior year.

Liquidity and Capital Resources

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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, 2023 with approximately 87% of our debt at a fixed rate.

Our weighted-average cost of debt for short-term borrowings outstanding at December 31, 2023, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.1%.

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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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 approximately $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.

The proceeds were used to pay fees of $7.7 million and repay $75.0 million aggregate principal amount of our senior secured term loan B facility, leaving approximately $417.3 million for general corporate purposes, including acquisitions and organic investment opportunities.

In November 2023, we amended our senior secured credit facility and now have a $1.3 billion revolving credit facility in addition to the existing $950 million term loan B facility.

The new $1.3 billion revolving credit facility refinanced our existing $630 million revolving credit facilities and we drew down $370 million at closing to repay in full our outstanding $367.5 million delayed draw term A loan facility and related accrued interest and fees.

The delayed draw term A loan facility was permanently retired upon being repaid in full.

On February 9, 2024, we repaid $250 million of principal related to our revolving credit facility.

In February 2023, we amended our senior secured credit facility.

The amendments provides for, among other things:

(i) replacement of the benchmark reference rate of the Eurodollar Rate (as defined in the Credit Agreement) with the Term SOFR Rate for borrowings denominated in United States Dollars and for each Alternative Currency (as defined in the Credit Agreement), a corresponding reference rate, as set forth in the Amended Credit Agreement, (ii) deletion of the provisions regarding Canadian bankers’ acceptances, and (iii) the addition of our ability to draw letters of credit in Canadian Dollars.

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 at a cost of $75.5 million, paid debt issuance costs of $15.0 million, with any remaining proceeds available for general corporate purposes.

In December 2022, we entered into a $126.7 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 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.

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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

Information regarding our amended senior secured credit facility can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

6.5% Senior Secured Notes Due 2027

Information regarding our 6.5% senior secured notes due 2027 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

3.75% Senior Secured Notes Due 2028

Information regarding our 3.75% senior secured notes due 2028 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

4.75% Senior Notes Due 2027

Information regarding our 4.75% senior notes due 2027 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

4.875% Senior Notes Due 2024

Information regarding our 4.875% senior notes due 2024 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

5.625% Senior Notes Due 2026

Information regarding our 5.625% senior notes due 2026 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

3.75% Senior Secured Notes Due 2028

Information regarding our 3.75% senior secured notes due 2028 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

2.5% Convertible Senior Notes Due 2023

Information regarding our 2.5% convertible senior notes due 2023 can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

2.0% Convertible Senior Notes Due 2025

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.

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.

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

Debt Instruments

Information regarding our various debt instruments can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt.

Debt Covenants

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During 2023, we completed various acquisitions for total consideration, net of cash acquired, of $17.5 million, including business acquisitions accounted for as asset acquisitions.

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

This includes acquisitions of businesses for which we assumed debt of $278.9 million.

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 multiple festival promotion businesses located in the United States and Brazil.

Capital Expenditures

Venue and ticketing operations are capital intensive businesses, requiring investment in our existing venues and ticketing systems in order to address fan and artist expectations, technological industry advances and various federal, state and/or local regulations.

Venue and ticketing operations require ongoing investment in our existing venues and ticketing systems to address fan and artist expectations, technological industry advances and various federal, state and/or local regulations.

We categorize capital outlays between maintenance capital expenditures and revenue generating capital expenditures.

Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices.

Revenue generating capital expenditures generally relate to the construction of new venues, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements.

Revenue generating capital expenditures generally relate to the construction of new venues to expand our global footprint, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements.

Revenue generating capital expenditures can also include smaller projects whose purpose is to increase revenue and/or improve operating income.

Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices.

Capital expenditures typically increase during periods when our venues are not in operation since that is the time that such improvements can be completed.

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Total capital expenditures $ 453,751 $ 364,560 $ 170,566

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.

Revenue generating capital expenditures for 2023 increased from the same period of the prior year primarily due to enhancements at our amphitheaters and theaters in North America.

For the years ended December 31, 2023, 2022 and 2021, $15.0 million, $12.4 million and $5.9 million, respectively, of insurance proceeds and landlord or noncontrolling interest partner reimbursements have been excluded from capital expenditures in the table above.

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.

We expect capital expenditures to be approximately $540 million for the year ending December 31, 2024 with approximately two-thirds of the capital expenditure on revenue generating projects and approximately one-third of the capital expenditure on four venues.

Year Ended December 31,

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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.

Cash provided by operating activities decreased $461.3 million for the year ended December 31, 2023 as compared to the prior year primarily due to changes in operating assets and liabilities partially offset by an increase in 2023 operating results as discussed within each segment’s operating results.

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.

Cash used in investing activities decreased $88.9 million for the year ended December 31, 2023 as compared to the prior year primarily due to lower cash paid for acquisitions, net of cash acquired of $239.7 million.

This was partially offset by an increase of $91.4 million in purchases of property, plant and equipment in 2023 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.

Cash used in financing activities decreased $56.1 million for the year ended December 31, 2023 as compared to the prior year primarily due to proceeds in 2023 from the issuance of our 3.125% convertible senior notes and draw down from our revolving credit facility partially offset by the repurchase of our 2.5% convertible senior notes and capped call transactions in connection with such issuance, repayment of the delayed draw term A loan facility and higher distributions to noncontrolling interests.

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

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Information regarding our minimum payments for non-cancelable contracts and capital expenditures commitments can be found in Part II—Financial Information—Item 8.—Financial Statements and Supplementary Data—Note 8 – Commitments and Contingent Liabilities as of December 31, 2023 and thus do not represent all expected expenditures for those periods.

The estimated interest payments, expected payments of contingent and deferred consideration liabilities as of December 31, 2022 are as follows:

The estimated interest payments, and expected payments of contingent and deferred consideration liabilities as of December 31, 2023 are as follows:

Payments Due by Period

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Contingent and deferred consideration 127,901 98,902 22,292 598 347 343 5,419

Uncertain income tax positions (2)

— — — — — — —

Total $ 1,065,536 $ 400,250 $ 271,868 $ 225,133 $ 118,646 $ 35,233 $ 14,406

_____________

Does not include interest on the revolving credit facility as the balance was zero as of December 31, 2022.

Does not include $0.7 million of uncertain tax positions due to the unpredictable timing of the future payments.

Guarantees of Third-Party Obligations

As of December 31, 2023 and 2022, we guaranteed the debt of third parties of approximately $19.4 million and $19.5 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.

Fourth Quarter Results of Operations (Unaudited)

(in thousands)

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.

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

Our foreign operations reported operating income of $586.0 million for the year ended December 31, 2023.

We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating income for the year ended December 31, 2023 by $58.6 million.

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

As of December 31, 2023, 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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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.

In addition, when we have acquisitions where substantially all of the fair value of assets acquired is concentrated in a single asset or group of similar assets, we account for the acquisitions as asset acquisitions.

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

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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.

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

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

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For the years ended December 31, 2023, 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.

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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 year ended December 31, 2023, as part of our annual test for impairment, one of our reporting units, which accounted for approximately 12% of our goodwill at December 31, 2023, was assessed under the quantitative analysis primarily using a discounted cash flows methodology, with a lesser weighting attributed to the market multiple approach.

The discounted cash flows methodology estimates fair value by discounting the reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profile of the reporting unit.

Under the market multiple approach, the estimated fair value of the reporting unit was estimated by applying market multiples derived from stock

prices of companies that are engaged in the same or similar lines of business as the reporting unit and that are actively traded on a free and open market.

The derived multiples are then applied to the reporting unit’s financial metrics.

The remaining reporting units with goodwill were assessed under the initial qualitative evaluation and did not advance to the quantitative analysis.

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.

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Revenue Recognition

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

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

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

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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-K

Item 7. Management’s Discussion and Analysis