What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-02 compared with 2023-11-02 · 170 added, 229 removed, 203 unchanged (66% of the section changed)

15 unchanged sentences

Executive Overview

It was another strong quarter for the Company both financially and in our key performance indicators, setting records for revenues, operating income and AOI.

The Company generated more AOI in the third quarter of this year than we did five years ago for all of 2018.

We saw exceptional fan demand with double-digit growth in fans and ticket sales globally.

Our overall revenue increased by $2.0 billion, or 32%, to $8.2 billion as compared to last year.

Our operating income for the quarter improved by $112 million, or 22%, to $619 million in the third quarter of 2023 due to stronger performance from all three of our major business segments.

Consolidated AOI for the third quarter increased by $215 million, or 35%, to $836 million this year, outpacing revenue growth.

For the first nine months of 2023, our consolidated revenue increased by $4.5 billion, or 36%, to $16.9 billion as compared to last year.

Consolidated operating income and AOI for the first nine months increased by $296 million and $436 million, or 35% and 33%, to $1.1 billion and $1.75 billion, respectively, as compared to prior year.

Our event-related deferred revenue balance of $2.6 billion as of September 30, 2023 is up $730 million or over 39% growth compared to September 30, 2022.

This, coupled with current ticket sales, suggests continued strong demand for concerts, making us confident for continued success in the remainder of the year and looking ahead to 2024.

For the third year in a row, the first quarter was a record start to the year for the Company with strong fan demand across all our markets.

Our overall revenue increased by 21% to $3.8 billion on a reported basis, or 22% growth on a constant currency basis as compared to the same period of the prior year.

Concerts and Sponsorship both had revenue growth in excess of 20% while Ticketing had high single-digit growth.

The most significant growth came from our Concerts segment as a result of increased shows and fans.

Our operating income for the quarter decreased by $179.3 million, from an operating income of $142.8 million in the first quarter of 2023 to an operating loss of $36.5 million in the first quarter of 2024 due to higher performance from all three of our major business segments offset by Astroworld estimated loss contingencies in our Concerts segment.

The decrease in operating income was $166.4 million at constant currency.

Based on our strong pipeline of arena, amphitheater and theater and club shows for the remainder of the year, coupled with our current deferred revenue balance of $5.0 billion as of March 31, 2024, we are optimistic for continued success in the remainder of the year even with reduced stadium activity relative to the prior year.

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

Our Concerts segment revenue for the quarter compared to the same period in 2022 increased by $1.7 billion, or 32%, from $5.3 billion to $7.0 billion.

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

Approximately 52 million fans attended our shows in the quarter, compared to approximately 44 million last year, a growth of over 8 million fans or 18%.

The growth was relatively evenly distributed across our global markets with notable strength in mainland Europe, Mexico and Canada.

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

Some of the larger acts touring globally in the third quarter included Beyoncé, Morgan Wallen, Drake and Karol G, reflecting the global diversified base of our artists.

Our ancillary revenue spending at our United States amphitheater shows was nearly $41 per fan for the first

nine months of 2023, close to 10% growth over 2022 levels, driven by higher food and beverage spending as well as upsells.

Concerts AOI for the quarter increased by $60 million, or 21%, compared to the same period in 2022, from $281 million to $341 million.

For the first nine months of 2023, Concerts revenue grew $3.8 billion, or 38%, compared to the same period in 2022, from $10.1 billion to $13.9 billion.

Concerts AOI for the first nine months increased by $155 million, or 44%, compared to the same period in 2022, from $355 million to $510 million.

Through the end of September 2023, our approximately 108 million fans attended our shows compared to approximately 89 million last year, a growth of 19 million fans or 21%.

Our Ticketing segment revenue for the quarter increased by $301 million, or 57%, compared to the same period in 2022 from $532 million to $833 million.

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 approximately 89 million fee-bearing tickets in the third quarter of 2023 compared to 73 million tickets in the same period of the prior year, an increase of 22% .

With respect to GTV, North America increased by 32% on fee-bearing ticket sales while International rose by 49% c ompared to the same period 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 quarter improved by $153 million compared to the same period in 2022, from $163 million to $316 million.

For the first nine months of 2023, our Ticketing revenue grew b y $632 million, or 40%, compared to the same period in 2022, from $1.6 billion to $2.2 billion.

Ticketing AOI for the first nine month s of 2023 increased by $280 million, or 47%, compared to the same period in 2022, from $600 million to $880 million .

Through the end of September 2023, our fee-bearing ticket sales were 240 million tickets, 44 million ahead of 2022, an increase of 22%.

Overall pricing on our fee-bearing tickets for the first nine months of 2023 increased 13% compared to 2022.

Lastly, we have signed 17 million net new tickets so far this year, which gives us confidence our ticketing platforms’ features and functionalities will continue to fuel growth going forward.

Our Sponsorship & Advertising segment revenue for the quarter increased by $24 million, or 7%, compared to the same period in 2022 from $343 million to $367 million.

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

We also added new marketing partners in Mexico, including a new banking client that sponsored an inaugural festival and other local events.

Sponsorship & Advertising AOI for the quarter increased by $24 million, or 11%, compared to the same period in 2022, from $226 million to $250 million.

For the first nine months of 2023, our Sponsorship & Advertising revenue grew $117 million, or 16%, compared to the same period in 2022, from $723 million to $840 million.

Sponsorship & Advertising AOI for the first nine month increased by $75 million, or 16%, compared to the same period in 2022, from $474 million to $549 million.

Our Concerts segment revenue for the quarter increased by $598 million, or 26%, from $2.3 billion in the first quarter of 2023 to $2.9 billion in the first quarter of 2024.

The revenue growth was largely the result of more shows and fans both domestically and in our International markets.

The number of events for the first quarter of 2024 was approximately 11,200 compared to approximately 9,900 in the first quarter of 2023, an increase of approximately 1,300 events or 13%.

The number of fans for the quarter was 22.9 million compared to approximately 18.9 million last year, for growth of 4.0 million fans or 21%.

The increase was largely in the United States, Canada and Mexico.

Arena shows fueled the improvement with fan count up nearly 40% in these venues.

Some of the notable acts touring in the first quarter included Coldplay, Pink, Bad Bunny and Madonna.

Our festivals in Latin America included Estereo Picnic in Bogota, Lollapalooza in Sao Paulo and EDC Mexico in Mexico City.

Combined, our festivals in these markets had three quarters of a million fans.

Concerts AOI for the quarter was $3 million compared to $1 million in the first quarter of 2023.

Our Ticketing segment revenue for the quarter increased by $45 million, or 7%, from $678 million in the first quarter of 2023 to $723 million in the first quarter of 2024.

The improvement resulted from an increase in ticket sales, notably in Europe and Latin America.

We sold approximately 77 million fee-bearing tickets in the first quarter of 2024 compared to 72 million tickets in the same period of the prior year, an increase of 6%.

This was our highest first quarter ever for fee-bearing ticket sales driven by double-digit growth in Europe, Asia-Pacific and Latin America.

It was our highest first quarter for GTV as well.

In the first quarter, we signed 7 million net new tickets of which 70% came from our International markets – one of our best leading indicators regarding the future success of our Ticketing business.

Ticketing AOI for the quarter improved by $13 million, from $271 million in the first quarter of 2023 to $284 million in the first quarter of 2024.

The combination of record ticket sales, GTV and the expansion of our resale business resulted in our strongest Ticketing AOI ever for the first quarter.

Our Sponsorship & Advertising segment revenue for the quarter increased by $41 million, or 24%, from $170 million in the first quarter of 2023 to $211 million in the first quarter of 2024.

The improvement was largely due to our festivals in Latin America.

It was our inaugural year consolidating the Estero Picnic festival in Colombia as well as Lollapalooza in Brazil.

These two events, along with a number of well attended festivals in Mexico, led to significant revenue and AOI growth for Sponsorship & Advertising.

AOI for the quarter increased by $34 million, from $96 million in the first quarter of 2023 to $130 million in the first quarter of 2024.

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 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

Three Months Ended September 30, % Change

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

(in thousands)

Revenue $ 8,152,019 $ (143,572) $ 8,008,447 $ 6,153,535 32% 30%

Operating expenses:

Direct operating expenses 6,330,465 (109,569) 6,220,896 4,707,848 34% 32%

Selling, general and administrative expenses 974,150 (14,590) 959,560 805,910 21% 19%

Depreciation and amortization 130,653 (3,500) 127,153 102,093 28% 25%

Gain on disposal of operating assets (1,583) (1) (1,584) (35,285) (96)% (96)%

Corporate expenses 99,802 6 99,808 66,720 50% 50%

Operating income 618,532 $ (15,918) $ 602,614 506,249 22% 19%

Operating margin 7.6% 7.5% 8.2%

Interest expense 86,215 70,514

Interest income (78,107) (25,809)

Equity in losses (earnings) of nonconsolidated affiliates (5,382) 14,283

Other expense, net 19,251 7,960

Income before income taxes 596,555 439,301

Income tax expense 55,874 41,898

Net income 540,681 397,403

Net income attributable to noncontrolling interests 57,186 36,001

Net income attributable to common stockholders of Live Nation $ 483,495 $ 361,402

* 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 $2.0 billion during the three months ended September 30, 2023 as compared to the same period of the prior year due to increased revenue in our Concerts segment of $1.7 billion, Ticketing segment of $301.0 million and Sponsorship & Advertising of $23.8 million as further discussed within each segment’s operating results.

Gain on disposal of operating assets

Gain on disposal of operating assets decreased $33.7 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily driven by nonrecurring sales of artist catalog rights in 2022.

Operating income

Operating income increased $112.3 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily driven by increased operating income in our Ticketing segment of $151.1 million and Sponsorship & Advertising segment of $14.9 million partially offset by a decrease in operating income in our Concerts segment of $18.4 million as further discussed within each segment’s operating results.

These increases were partially offset by higher acquisition transaction expenses due to more accretion expense in the third quarter of 2023.

Interest income

Interest income increased $52.3 million during the three months ended September 30, 2023 as compared to the same period of 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.

Equity in losses (earnings) of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates was earnings of $5.4 million during the three months ended September 30, 2023 as compared to losses of $14.3 million for the comparable period of the prior year due to higher operating results from certain nonconsolidated affiliates.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $21.2 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses.

expanding our global concerts platform to connect artists and fans, bringing more shows to fans in 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 operate the world’s leading ticketing software and marketplace, tailored to achieving the goals of content owners, venues and sports teams.

We expect to drive conversion of ticket sales through development of innovative products that support selling tickets to fans.

Our ticket marketplaces have reduced friction in the ticket purchase experience and created additional revenue opportunities.

In addition, 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 ardent fans.

Consolidated Results of Operations

Nine Months Ended September 30, % Change

Three Months Ended March 31, % Change

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

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Depreciation and amortization 132,594 115,185 15%

Gain on disposal of operating assets (8,092) 15 (8,077) (32,555) (75)% (75)%

Loss (gain) on disposal of operating assets (651) 504 *

Corporate expenses 76,077 63,015 21%

Operating income 1,147,679 $ (15,942) $ 1,131,737 852,008 35% 33%

Operating income (loss) (36,507) 12,902 (23,605) 142,776 * *

Operating margin (1.0)% (0.6) % 4.6%

2 unchanged sentences

Interest income (43,257) (40,313)

Equity in losses (earnings) of nonconsolidated affiliates (15,047) 8,040

Other expense, net 24,235 22,398

Equity in earnings of nonconsolidated affiliates (84) (4,107)

Other expense (income), net (77,054) 11,583

Income before income taxes 3,197 68,032

Income tax expense 35,414 23,840

Net income 916,210 576,824

Net income (loss) (32,217) 44,192

Net income attributable to noncontrolling interests 14,516 47,361

Net income attributable to common stockholders of Live Nation $ 774,008 $ 499,020

Net loss attributable to common stockholders of Live Nation $ (46,733) $ (3,169)

* Percentages are not meaningful.

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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 $4.5 billion during the nine months ended September 30, 2023 as compared to the same period of the prior year driven by increased revenue in our Concerts segment of $3.8 billion, Ticketing segment of $632.4 million and Sponsorship & Advertising of $117.3 million as further discussed within each segment’s operating results.

Gain on disposal of operating assets

Gain on disposal of operating assets decreased $24.5 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily driven by sales of nonrecurring artist catalog rights in 2022.

Revenue increased $672.1 million during the three months ended March 31, 2024 as compared to the same period of the prior year driven by increased revenue in our Concerts segment of $598.2 million, Ticketing segment of $45.4 million and Sponsorship & Advertising of $41.2 million as further discussed within each segment’s operating results.

Operating income

Operating income increased $295.7 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily driven by increased operating income in our Concerts segment of $87.5 million, Ticketing segment of $276.8 million and Sponsorship & Advertising segment of $38.4 million, as further discussed within each segment’s operating results.

These increases were partially offset by higher Corporate expenses and greater accretion expense in 2023.

Interest expense

Interest expense increased $51.7 million during the nine months ended September 30, 2023 as compared to the same period of the prior year, primarily driven by the issuance of our 3.125% convertible senior notes due 2029 in January 2023.

Interest income

Interest income increased $128.3 million during the nine months ended September 30, 2023 as compared to the same period of 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.

Equity in losses (earnings) of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates was earnings of $15.0 million during the nine months ended September 30, 2023 as compared to losses of $8.0 million for the comparable period of the prior year due to higher operating results from certain nonconsolidated affiliates.

Operating income decreased $179.3 million during the three months ended March 31, 2024 as compared to the same period of the prior year primarily driven by increased operating losses in our Concerts segment of $212.2 million partially offset by higher operating income in our Sponsorship & Advertising segment of $34.6 million and Ticketing segment of $9.6 million as further discussed within each segment’s operating results.

Other expense (income), net

For the three months ended March 31, 2024, we had other income, net of $77.1 million which includes mark to market adjustments for certain investments in nonconsolidated affiliates of $88.7 million, partially offset by net foreign exchange rate losses of $11.8 million.

For the three months ended March 31, 2023, we had other expense, net of $11.6 million which includes net foreign exchange rate losses of $9.5 million.

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

Income tax expense

For the nine months ended September 30, 2023, we had a net tax expense of $121.4 million on income before income taxes of $1.0 billion compared to a net tax expense of $85.6 million on an income before income taxes of $662.4 million for the nine months ended September 30, 2022.

For the nine months ended September 30, 2023, the income tax expense consisted of $113.4 million related to foreign entities, $3.6 million related to United States federal taxes, and $4.4 million related to state and local income taxes.

For the three months ended March 31, 2024, we had a net tax expense of $35.4 million on income before income taxes of $3.2 million compared to a net tax expense of $23.8 million on income before income taxes of $68.0 million for the three months ended March 31, 2023.

For the three months ended March 31, 2024, the income tax expense consisted of $28.0 million related to foreign entities, $1.3 million related to United States federal taxes, and $6.1 million related to state and local income taxes.

The net increase in tax expense of $11.6 million was primarily due to profits in certain non-United States jurisdictions.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $64.4 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily due to higher operating results from certain concert businesses during the first nine months of 2023 as compared to the prior year.

Net income attributable to noncontrolling interests decreased $32.8 million during the three months ended March 31, 2024 as compared to the same period of the prior year primarily due to lower operating results from certain concert businesses during the first three months of 2024 as compared to the prior year.

Non-GAAP Measure

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 also exclude from AOI the impact of estimated or realized liabilities for settlements or damages arising out of the Astroworld matter that exceed our estimated insurance recovery, due to the significant and non-recurring nature of the matter, which involved multiple fatalities and injury claims.

Ongoing legal costs associated with defense of these claims, such as attorney fees, are not excluded from AOI.

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 to consolidated AOI for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

(in thousands)

Operating income (loss) $ (36,507) $ 142,776

Acquisition expenses 30,557 13,311

Amortization of non-recoupable ticketing contract advances 24,080 20,363

Depreciation and amortization 132,594 115,185

Loss (gain) on disposal of operating assets (651) 504

Astroworld estimated loss contingencies 185,915 —

Stock-based compensation expense 31,402 27,571

AOI $ 367,390 $ 319,710

Segment Overview

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Concerts direct operating expenses include artist fees, event production costs, show-related marketing and advertising expenses, along with other costs.

To judge the health of our Concerts segment, we primarily monitor the number of confirmed events and fan attendance in our network of 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 operated venues and festivals, we monitor ancillary revenue per fan and premium ticket sales.

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 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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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, and the per ticket non-service fee revenue streams.

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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Sponsorship & Advertising direct operating expenses include fulfillment costs related to our sponsorship programs, along with other costs.

To judge the health of our Sponsorship & Advertising segment, we primarily review the revenue generated through sponsorship arrangements and online advertising, the percentage of expected revenue under contract, and what portion of our sponsorship business is driven by large multi-element, multi-year relationships.

To judge the health of our Sponsorship & Advertising segment, we primarily review the revenue generated through sponsorship arrangements and online advertising, and the percentage of expected revenue under contract.

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands except estimated events)

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Events and fan attendance metrics are estimated each quarter.

(2) North America refers to our events and fans within the United States and Canada.

(3) The fee-bearing tickets estimated above include primary and secondary tickets that are sold using our Ticketmaster systems or that we issue through affiliates.

This includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur.

This metric includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur.

The non-fee-bearing tickets estimated above include primary tickets sold using our Ticketmaster systems, through season seat packages and our venue clients’ box offices, along with tickets sold on our “do it yourself” platform.

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

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.

Segment Operating Results

1 unchanged sentence

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2023 2022 2023 2022

(in thousands) (in thousands)

(in thousands)

Revenue $ 2,879,375 $ 2,281,212 26%

2 unchanged sentences

Depreciation and amortization 90,363 70,528 28%

Gain on disposal of operating assets (1,584) (33,983) (95)% (8,143) (31,057) (74)%

Operating income $ 224,948 $ 243,377 (8)% $ 219,007 $ 131,532 67%

Loss (gain) on disposal of operating assets (712) 115 *

Operating loss $ (296,607) $ (84,422) *

Operating margin (10.3) % (3.7) %

3 unchanged sentences

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

Concerts revenue increased $1.7 billion during the three months ended September 30, 2023 as compared to the same period of the prior year primarily due to higher revenues for increased shows and fans globally.

In the United States, the growth was driven by stadium, arena and amphitheater activity while in Europe, stadium shows drove the increase.

Concerts had incremental revenue of $118.4 million during the three months ended September 30, 2023 from acquisitions and new venues.

Operating results

Concerts AOI increased $60.1 million and operating income decreased $18.4 million for the three months ended September 30, 2023 as compared to the same period of the prior year.

The increase in AOI was primarily driven by increases in revenue associated with the higher number of shows discussed above as well as higher ancillary sales including on-site food and beverage and upsell spend.

These increases were partially offset by related costs, including increased compensation expenses due to increased headcount from more shows compared to the prior period.

The remaining change in operating income outside of AOI of $78.5 million is primarily associated to lower gains on disposals of operating assets of $32.4 million, higher depreciation and amortization of $23.1 million for additional capital expenditures incurred to support the increased operations, and higher acquisition expense of $19.0 million for costs incurred related to contingent considerations changes and legal matters.

Concerts revenue increased $3.8 billion during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily due to more shows in the United States and Europe as well as the Asia Pacific market, which was largely closed during the first six months of 2022.

Concerts had incremental revenue of $417.6 million during the nine months ended September 30, 2023 from acquisitions and new venues.

Concerts revenue increased $598.2 million during the three months ended March 31, 2024 as compared to the same period of the prior year, primarily due to increased shows and fan growth across the United States and international markets.

In particular, higher arena shows and fan count contributed to the increase in revenue.

Concerts had incremental revenue of $59.2 million during the three months ended March 31, 2024 from acquisitions and new venues.

Operating results

Concerts AOI increased $155.2 million and operating income increased $87.5 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily driven by an increase in revenues from the number of shows discussed above partially offset by increased direct operating expenses to support these 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 $67.7 million is primarily related to higher depreciation and amortization of $32.8 million for additional capital expenditures incurred to support the increased operations, higher acquisition

expense of $25.3 million for costs incurred related to contingent considerations changes and legal matters, and lower gains on disposals of operating assets of $22.9 million.

Concerts AOI increased $2.2 million for the three months ended March 31, 2024 as compared to the same period of the prior year primarily driven by an increase in revenue discussed above partially offset by higher direct operating expenses to support increased shows and fan growth at events and higher selling, general and administrative expenses related to additional headcount and compensation expenses.

The increase in operating losses of $212.2 million and remaining change in operating loss outside of AOI of $214.4 million is primarily associated with Astroworld estimated loss contingencies of $185.9 million during the current year and higher depreciation and amortization of $19.8 million for additional capital expenditures incurred to support the increased operations.

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

Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2023 2022 2023 2022

(in thousands) (in thousands)

(in thousands)

Revenue $ 723,178 $ 677,741 7%

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Depreciation and amortization 23,514 25,084 (6)%

Loss (gain) on disposal of operating assets — — * 34 (196) *

Loss on disposal of operating assets 44 374 (88)%

Operating income $ 230,531 $ 220,931 4%

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

Ticketing revenue increased $301.0 million during the three months ended September 30, 2023 as compared to the same period of 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 $153.3 million and operating income increased $151.1 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily driven by increased ticketing activity discussed above.

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 compared to the prior year.

Ticketing revenue increased $632.4 million during the nine months ended September 30, 2023 as compared to the same period of the prior year.

Ticketing revenue increased $45.4 million during the three months ended March 31, 2024 as compared to the same period of the prior year.

This increase is primarily due to higher sales volumes in international markets driven by more events on sale due to more fan demand in 2024 as compared to 2023.

Operating results

Ticketing AOI increased $280.0 million and operating income increased $276.8 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily driven by increased ticketing activity discussed above.

Ticketing AOI increased by $13.1 million and operating income increased $9.6 million during the three months ended March 31, 2024 as compared to the same period of the prior year.

These increases was primarily driven by increased ticketing activity discussed above.

These increases were partially offset by higher direct operating expenses to support the increased operations and enterprise growth.

Sponsorship & Advertising

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Three Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2023 2022 2023 2022

(in thousands) (in thousands)

(in thousands)

Revenue $ 211,277 $ 170,118 24%

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Depreciation and amortization 15,740 16,242 (3)%

Loss on sale of operating assets 17 — 100%

Operating income $ 111,691 $ 77,137 45%

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AOI margin ** 61.5 % 56.2 %

* Percentages are not meaningful.

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

Sponsorship & Advertising revenue increased $23.8 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily driven by new and expanded sponsorships across all of our platforms as well as our expanded footprint.

Sponsorship & Advertising revenue increased $41.2 million during the three months ended March 31, 2024 as compared to the same period of the prior year primarily driven by increased sponsorship activity from our festivals in Latin America.

Operating results

Sponsorship & Advertising AOI increased $24.0 million and operating income increased $14.9 million for the three months ended September 30, 2023 as compared to the same period of the prior year.

Sponsorship & Advertising AOI increased $34.4 million and operating income increased $34.6 million for the three months ended March 31, 2024 as compared to the same period of the prior year.

These increases were primarily due to increased revenues from higher sponsorship activity discussed above.

The increases were partially offset by increases in selling, general and administrative expenses.

Sponsorship & Advertising revenue increased $117.3 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily due to new and expanded sponsorships across all of our platforms as well as our expanded footprint.

Sponsorship & Advertising had incremental revenue of $27.8 million during the nine months ended September 30, 2023 from acquisitions of new venues.

Operating results

Sponsorship & Advertising AOI increased $74.7 million and operating income increased $38.4 million during the nine months ended September 30, 2023 as compared to the same period of the prior year.

These increases were primarily due to higher sponsorship activity revenues discussed above.

The increases were partially offset by increases in direct operating expenses, including higher artist activation costs.

The remaining change in operating income outside of AOI of $36.3 million was primarily due to depreciation and amortization related to assets utilized to support higher activity levels as compared to the prior year.

The increases were partially offset by higher direct operating expenses due to additional fulfillment costs to support the growth in sponsorship activity.

Liquidity and Capital Resources

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

Our balance sheet reflects cash and cash equivalents of $5.9 billion at September 30, 2023 and $5.6 billion at December 31, 2022.

Included in the September 30, 2023 and December 31, 2022 cash and cash equivalents balances are $1.3 billion and $1.5 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.

Our balance sheet reflects cash and cash equivalents of $6.5 billion at March 31, 2024 and $6.2 billion at December 31, 2023.

Included in the March 31, 2024 and December 31, 2023 cash and cash equivalents balances are $1.4 billion and $1.5 billion, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash.

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

Our foreign subsidiaries held approximately $2.4 billion in cash and cash equivalents, excluding client cash, at September 30, 2023.

Our foreign subsidiaries held approximately $3.1 billion in cash and cash equivalents, excluding client cash, at March 31, 2024.

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

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

Our balance sheet reflects total net debt of $6.6 billion and $5.9 billion at September 30, 2023 and December 31, 2022, respectively.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.8% at September 30, 2023, with approximately 87% of our debt at fixed rates.

Our balance sheet reflects total net debt of $6.2 billion and $6.6 billion, respectively, at March 31, 2024 and December 31, 2023.

Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.6% at March 31, 2024 with approximately 93% of our debt at a fixed rate.

Our weighted-average cost of debt for short-term borrowings outstanding at March 31, 2024, 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.

Cash held in non-interest-bearing and interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits.

The invested cash is in interest-bearing funds consisting primarily of bank deposits and money market funds for which we earn interest based on prevailing market rates which is recorded in interest income in our consolidated financial statements.

For the three and nine months ended September 30, 2023, the amount of interest income we earned rose more than interest expense for the same period.

The invested cash is in interest-bearing funds consisting primarily of bank deposits and money market funds.

While we monitor cash and cash equivalents balances in our operating accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail.

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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.

In the United States, this cash is largely associated with events in our operated venues, notably amphitheaters, festivals, theaters and clubs.

Internationally, this cash is from a combination of both events in our operated venues, as well as events in third-party venues associated with our promoter’s share of tickets in allocation markets.

In the United States, this cash is largely associated with events in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs.

Internationally, this cash is from a combination of both events in our owned or operated venues, as well as events in third-party venues associated with our promoter’s share of tickets in allocation markets.

With the exception of some upfront costs and artist advances, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event.

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We may make significant acquisitions in the near term, subject to limitations imposed by our financing agreements and market conditions.

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

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.

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Sources of Cash

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 our 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.

Amended Senior Secured Credit Facility

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

The amendments provide 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 the Company’s ability to draw letters of credit in Canadian Dollars.

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

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

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

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

The interest rates per annum applicable to revolving credit facility loans and term loan A under the amended senior secured credit facility are, at our option, equal to either Term Benchmark Loans or RFR Loans (as defined in the Credit Agreement) plus 2.25% or a base rate plus 1.25%.

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

Our senior secured credit facility provides for borrowings of up to $1.3 billion with a $250 million sublimit for the issuance of letters of credit and a $100 million for swingline borrowings.

The revolving credit facility allows for a $780 million sublimit for borrowings in U.S.

Dollars, Euros, or Sterling, and a $260 million sublimit for borrowings in those or one or more other approved non-U.S.

The revolving credit facility will be available to us and, if designated in the future, certain of our foreign subsidiaries.

The Amended Credit Agreement provides for the right, subject to certain conditions, to increase the term B loan and revolving facilities by an amount not to exceed an amount equal to the sum of (x) $1.625 billion, (y) the aggregate principal amount of voluntary prepayments of the term B loans and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) additional amounts so long as the senior secured leverage ratio, on a pro-forma basis after giving effect to such increase, is no greater than 4.50x.

Our obligations under the Amended Credit Agreement will continue to be guaranteed by the majority of our direct and indirect domestic subsidiaries, subject to certain exceptions, and the obligations of the foreign subsidiary borrowers, if any, will be guaranteed by us, the majority of our direct and indirect domestic subsidiaries, and by certain of our wholly-owned foreign subsidiaries.

The obligations under the Amended Credit Agreement and the guarantees will continue to be secured by a lien on substantially all of our tangible and intangible personal property and the domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries and, if there are any foreign borrowers, by certain of the assets of such foreign borrowers and certain foreign subsidiaries, subject to limited exceptions.

The interest rates per annum applicable to the revolving credit facility under the amended senior secured credit facility are, at our option, equal to either Term SOFR plus 1.75% or a base rate (as defined in the Credit Agreement) plus 0.75%.

The interest rates per annum applicable to the term loan B are, at our option, equal to either Term Benchmark Loans or RFR Loans (as defined in the Credit Agreement) plus 1.75% or a base rate plus 0.75%.

We have an interest rate swap agreement that ensures the interest rate on $500 million principal amount of our outstanding term loan B does not exceed 3.445% through October 2026.

The agreement was amended in February 2023 along with the transition from LIBOR to SOFR.

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

We are required to pay a commitment fee of 0.5% per year on the undrawn portion available under the revolving credit facility, 1.75% per year on the undrawn portion available under the incremental revolving credit facility and variable fees on outstanding letters of credit.

For the term loan A, we are required to make quarterly payments of $5.0 million with the balance due at maturity in October 2024.

For the term loan B, we are required to make quarterly payments of $2.4 million with the balance due at maturity in October 2026.

Both the existing and incremental revolving credit facilities mature in October 2024.

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

As of September 30, 2023, the outstanding principal amount of our term loan A facility is $367.5 million and term loan B facility is $839.1 million.

There were no borrowings under the revolving credit facilities as of September 30, 2023.

Based on our outstanding letters of credit of $46.1 million, $583.9 million was available for future borrowings from revolving credit facilities.

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

We are required to pay a commitment fee of 0.35% per year on the undrawn portion available under the revolving credit facility and variable fees on outstanding letters of credit.

Based on our outstanding letters of credit of $31.5 million, $1.27 billion was available for future borrowings from our revolving credit facility as of March 31, 2024.

The revolving credit facility matures on November 16, 2028, provided, that if (x) any of the term loan B, our 6.5% Senior Secured Notes due 2027, or our 4.75% Senior Notes due 2027 remain outstanding on the date that is ninety-one days prior to the stated maturity thereof in an aggregate principal amount in excess of $500 million and (y) our consolidated free cash on such date is less than the sum of such outstanding principal amount plus $500 million, then the maturity date of the amended senior secured credit facility will instead be such date.

During the three months ended March 31, 2024, we repaid $370 million of principal related to our revolving credit facility.

No material gain or loss was recorded as a result of this repayment.

Debt Covenants

As of September 30, 2023, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes.

As of March 31, 2024, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes.

We expect to remain in compliance with all of these covenants throughout 2024.

During the nine months ended September 30, 2023, we completed various acquisitions that resulted in cash acquired, net of cash paid, of $29.2 million.

This includes acquisition of businesses for which we assumed debt of $271.3 million.

During the three months ended March 31, 2024, we completed various acquisitions that resulted in cash acquired, net of cash paid of $10.0 million.

Capital Expenditures

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.

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

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.

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

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

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Total capital expenditures $ 97,965 $ 66,068

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

We currently expect capital expenditures to be approximately $450 million for the full year of 2023 as we continue catching up on projects delayed due to supply chain constraints and further expand our global platform, with approximately two-thirds of this capital expenditure to be for revenue generating projects.

Nine Months Ended

September 30,

Revenue generating capital expenditures during the first three months of 2024 increased from the same period of the prior year primarily due to enhancements at our theaters and amphitheaters in the United States.

We expect capital expenditures to be approximately $600 million for the year ending December 31, 2024 with approximately 75% of the capital expenditures on revenue generating projects.

Three Months Ended

(in thousands)

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Operating Activities

Cash provided by operating activities decreased $165.9 million for the nine months ended September 30, 2023 as compared to the same period of the prior year primarily due to lower accounts payable, accrued expenses and other liabilities from the timing of payments and higher prepaid expenses and other assets due to timing of shows.

This was partially offset by

an increase in 2023 operating results as discussed within each segment’s operating results as well as higher deferred revenue from timing of events on sale.

Cash provided by operating activities decreased $167.0 million for the three months ended March 31, 2024 as compared to the same period of the prior year primarily due to higher mark-to-market gains on certain investments in nonconsolidated affiliates combined with an overall decrease in 2024 operating results as discussed within each segment’s operating results partially offset by changes in operating assets and liabilities from timing of events on sale, payments and receipts.

Investing Activities

Cash used in investing activities increased $104.2 million for the nine months ended September 30, 2023 as compared to the prior year primarily due to an increase of $98.9 million in purchases of property, plant and equipment in 2023 for revenue generating and maintenance capital expenditures and $71.2 million in higher advances of notes receivable.

This was partially offset by cash acquired from acquisitions, net of cash paid of $29.2 million during the current year whereas the prior year was cash paid for acquisitions, net of cash acquired of $38.8 million.

Cash used in investing activities increased $110.9 million for the three months ended March 31, 2024 as compared to the prior year primarily due to lower cash acquired from acquisitions, net of cash paid.

See “—Uses of Cash - Acquisitions and Capital Expenditures” above for further discussion.

Financing Activities

Cash provided by financing activities was $44.9 million for the nine months ended September 30, 2023 as compared to cash used in financing activities of $175.2 million for the same period of the prior year primarily due to proceeds in 2023 from the issuance of our 3.125% convertible senior notes partially offset by the repurchase of our 2.5% convertible senior notes and capped call transactions in connection with such issuance, as well as higher distributions to noncontrolling interests.

Cash used in financing activities was $478.4 million for the three months ended March 31, 2024 primarily due to the principal repayment of our revolving credit facility as compared to cash provided by financing activities of $225.7 million for the same period of the prior year primarily due to proceeds in 2023 from the issuance of our 3.125% convertible senior notes partially offset by the repurchase of our 2.5% convertible senior notes and capped call transactions in 2023.

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

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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.

We operate in certain countries that are hyper-inflationary, for example Argentina, however the impact of these currencies did not have a material impact on our statement of operations for the three and nine months ended September 30, 2023 and 2022.

Our foreign operations reported an operating income of $443.0 million for the nine months ended September 30, 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 nine months ended September 30, 2023 by $44.3 million.

As of September 30, 2023, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso.

Our foreign operations reported operating income of $77.3 million for the three months ended March 31, 2024.

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 three months ended March 31, 2024 by $7.7 million.

As of March 31, 2024, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso.

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

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We primarily use forward currency contracts, in addition to options, to reduce our exposure to foreign currency risk associated with short-term artist fee commitments.

At September 30, 2023, we had forward currency contracts outstanding with an aggregate notional amount of $159.6 million.

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

At March 31, 2024, we had forward currency contracts outstanding with an aggregate notional amount of $267.8 million.

Interest Rate Risk

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

We had $6.7 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of September 30, 2023.

Of the total amount, we had $5.8 billion of fixed-rate debt and $835.0 million of floating-rate debt.

Based on the amount of our floating-rate debt as of September 30, 2023, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $2.1 million.

This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of September 30, 2023 with no subsequent change in rates for the remainder of the period.

We had $6.3 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of March 31, 2024.

Of the total amount, we had $5.8 billion of fixed-rate debt and $0.5 billion of floating-rate debt.

Based on the amount of our floating-rate debt as of March 31, 2024, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.2 million.

This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of March 31, 2024 with no subsequent change in rates for the remainder of the period.

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

The agreement was amended in February 2023 for the transition from LIBOR to SOFR.

The agreement was amended in February 2023 along with the transition from LIBOR to SOFR.

The swap agreement expires in October 2026, has a notional amount of $500.0 million and ensures that a portion of our floating-rate debt does not exceed 3.445%.

Accounting Pronouncements

Accounting and Other Pronouncements

Information regarding recently issued and adopted accounting pronouncements can be found in Part I — Financial Information—Item 1.—Financial Statements—Note 1 – Basis of Presentation and Other Information.

In August 2022, the Inflation Reduction Act (IRA) was enacted in the United States, which includes health care, clean energy, and income tax provisions.

The income tax provisions amend the Internal Revenue Code to include among other things a corporate alternative minimum tax for the 2023 tax year.

The Company is still assessing the impact due to lack of United States Treasury regulations which are anticipated to be issued in 2024;

however, the IRA is not expected to have a material impact on the Company's financial statements due to net operating losses and full valuation allowances for the United States, which is our most significant jurisdiction.

We will continue to monitor to ensure our financial results and related tax disclosures are in compliance with the IRA tax legislation.

On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) released Pillar Two model rules designed to ensure large multinational enterprises (“MNE”) pay a minimum level of tax arising in each jurisdiction they operate.

Over 135 jurisdictions joined a plan to update key elements of the international tax system and provide for a coordinated system of taxation that imposes top-up tax on profits arising in a jurisdiction whenever the effective rate is below the minimum rate.

Effective January 1, 2024, many of these jurisdictions have enacted a global 15% minimum effective tax rate.

This minimum rate applies to MNE’s with consolidated revenue above €750 million.

While additional guidance is expected from the OECD in 2024, we do not expect The Pillar Two rules to have a material impact to our financial statement income or tax cash flows for the current period.

We will continue to monitor further guidance from the OECD and evaluate any impact it may have to our consolidated financial results.

Critical Accounting Policies and Estimates

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Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 Annual Report on Form 10-K filed with the SEC on February 22, 2024.

There have been no changes to our critical accounting policies during the nine months ended September 30, 2023.

There have been no changes to our critical accounting policies during the three months ended March 31, 2024.

Quantitative and Qualitative Disclosures About Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis