What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-07-30 · 175 added, 139 removed, 293 unchanged (52% of the section changed)

15 unchanged sentences

Executive Overview

For the third year in a row, our second quarter was a record for the Company with operating income and AOI both up 21% versus 2023.

Compared to just five years ago, we have more than doubled our second quarter revenue, operating income and AOI results.

For the second quarter of 2024, our overall revenue increased by 7% to $6.0 billion on a reported basis as compared to the same period last year.

On a constant currency basis, the growth was also 7%.

The most significant growth came from our Concerts segment as a result of market expansion in the form of increased show count, fans, and onsite spend.

Our operating income for the quarter increased by $79.4 million, or 21%, from $386.4 million in the second quarter of 2023 to $465.8 million in the second quarter of 2024 due to higher performance from all three of our major business segments, most notably our Concerts segment.

The increase in operating income was $88 million, or 23%, at constant currency.

For the first six months of 2024, our consolidated revenue increased by $1.06 billion, or 12%, compared to the same period in 2023, from $8.76 billion to $9.82 billion.

The increase was $1.1 billion, or 13%, on a constant currency basis.

We had consolidated operating income of $429 million for the first six months of 2024, compared to $529 million for the first six months of 2023, a decrease of $100 million.

Stronger operating performance in all three of our major business segments was offset by Astroworld estimated loss contingencies in our Concerts segment.

Consolidated AOI for the first six months increased by $174 million, or 19%, compared to the same period in 2023, from $909 million to $1.1 billion.

For the third quarter of 2024, the Company’s operating income decreased by 2% and AOI was up 4% versus 2023.

Revenues for the third quarter decreased by 6% to $7.7 billion on both a reported and constant currency basis as compared to the same period last year, due to the reduction in stadium show volume this year.

Our operating income for the quarter decreased by $14 million, or 2%, from $654 million in the third quarter of 2023 to $640 million in the third quarter of 2024 due to our Ticketing segment from the reduction in stadium show volume partially offset by improved performance from our Concerts and Sponsorship business segments.

The decrease in operating income was $10 million, or 2%, at constant currency.

For the first nine months of 2024, our consolidated revenue increased by $566 million, or 3%, compared to the same period in 2023, from $16.9 billion to $17.5 billion.

The increase was $651 million, or 4%, on a constant currency basis.

Based on our strong pipeline of arena, amphitheater and theater and club shows for the remainder of the year as well as ticket sales for 2024 shows pacing ahead of last year, we are optimistic for continued success in the remainder of the year even with reduced stadium activity relative to the prior year.

We had consolidated operating income of $1.1 billion for the first nine months of 2024, a decrease of $102 million compared to the first nine months of 2023.

Despite stronger operating performance in our Concerts and Sponsorship segments, these positive results were negatively impacted by the Astroworld estimated loss contingencies as well as reduced revenue in our Ticketing segment.

Consolidated AOI for the first nine months increased by $224 million, or 13%, compared to the same period in 2023, from $1.8 billion to $2.0 billion.

The increase was $250 million, or 14%, on a constant currency basis.

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

Our Concerts segment revenue for the quarter increased by $354 million, or 8%, from $4.6 billion in the second quarter of 2023 to $5.0 billion in the second quarter of 2024.

The revenue growth was partially the result of more shows and fans in North America.

The number of events for the second quarter of 2024 was approximately 14,700 compared to approximately 12,300 in the second quarter of 2023, an increase of 2,400 events or 20%.

The number of fans for the quarter was 38.9 million compared to 37.1 million last year, for growth of 1.8 million fans or 5%.

The increase in activity was largely in the United States, powered by fan count at our owned or operated venues, excluding festivals, was up 18% for the quarter.

Following the trend from the first quarter of 2024, arena activity was also very strong, with double digit growth globally, most notably in the United States and Latin America.

Some of the major acts touring in the second quarter included Olivia Rodrigo, Bad Bunny, Metallica and Noah Kahan.

Our larger festivals in the quarter included EDC Vegas, Bottlerock and Download in the United Kingdom.

With amphitheater show count up by over 25% and activity in our owned or operated venues increasing, onsite spend in our amphitheaters increased by nearly 40%.

As a result, Concerts operating income for the quarter improved by $37.1 million compared to the same period in 2023, from $78.5 million to $115.6 million.

Meanwhile, Concerts AOI for the quarter was $271 million compared to $168 million in the second quarter of 2023, for growth of $103 million or 61%.

Operating income margins increased from 1.7% in the second quarter of 2023 to 2.3% in the second quarter of 2024 while AOI margin for the second quarter of 2024 was 5.4% compared to 3.6% last year.

On a year-to-date basis, Concerts margins are out-pacing 2019 which was our previous record year for margins.

For the first six months of 2024, Concerts revenue grew $952 million compared to the same period in 2023, from $6.9 billion to $7.9 billion.

For the first six months of 2024, our Concerts fan count was nearly 62 million compared to 56 million compared to the same period in 2023, an improvement of 6 million fans or 10%.

Onsite spending at our United States amphitheater shows for the first six months of 2024 is pacing ahead of full-year 2023 and on-track to deliver $2 more per fan for the season, driven by higher food and beverage spending.

For our larger festivals, the onsite spend growth has been even stronger.

Our Concerts segment revenue for the quarter decreased by $391 million, or 6%, from $7.0 billion in the third quarter of 2023 to $6.6 billion in the third quarter of 2024.

The revenue reduction was the result of fewer stadium shows and fans this quarter.

The total number of events for the third quarter of 2024 was approximately 12,800 compared to 12,100 in the third quarter of 2023, an increase of 700 events or 6%.

The number of fans for the quarter was 50 million compared to 52 million last year, a reduction of 2 million fans or 4%.

The decrease in activity largely resulted from the aforementioned change in stadium activity partially offset by more fans attending arena shows as well as theaters and clubs.

We saw double digit arena fan growth globally this quarter, most notably in the United States.

Some of the major acts touring in the third quarter of 2024 included Bruno Mars, Pink, Green Day, and Adele.

Our larger festivals in the quarter included Rock in Rio, Lollapalooza Chicago, Rock Werchter in Belgium and Reading and Leads in the United Kingdom.

Meanwhile, Concerts AOI for the quarter was $474

million compared to $341 million in the third quarter of 2023, for growth of $133 million or 39%.

Operating income margins increased from 3.2% in the third quarter of 2023 to 4.5% in the third quarter of 2024 while AOI margin for the third quarter of 2024 was 7.2% compared to 4.9% last year.

For the first nine months of 2024, Concerts revenue grew $561 million compared to the same period in 2023, from $13.9 billion to $14.4 billion.

For the first nine months of 2024, our Concerts fan count was nearly 112 million compared to 108 million for the same period in 2023, an increase of nearly 4 million fans or 3%.

Fan growth has been driven by more activity in arenas, our owned and operated amphitheaters as well as more theater and club content.

Onsite spending per fan at our United States amphitheater shows for same-store artists (those artists performing at least three amphitheater shows in either 2022 or 2023 compared to 2024) during the first nine months of 2024 is pacing ahead of full-year 2023 by 9%, driven by higher food and beverage and upsell spending.

For our larger festivals, the onsite spend growth has continued as well.

With roughly 85% of our festival events now played off, we have seen double-digit growth in per fan spend, driven largely by higher food and beverage and VIP sales.

Concerts AOI for the first six months increased by $105 million, or 62%, compared to the same period in 2023, from $169 million to $274 million.

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.

Our Ticketing segment revenue for the quarter increased by $21 million, or 3%, from $709.3 million in the second quarter of 2023 to $730.7 million in the second quarter of 2024.

We sold approximately 78 million fee-bearing tickets in the second quarter of 2024 compared to 79 million tickets in the same period of the prior year.

Our revenue and ticket sales were flat despite the reduction in stadium sales, reflecting strong demand for arena and amphitheater shows.

It was our fifth highest quarter ever in terms of ticket volume, both on a reported and transacted basis.

Ticketing AOI for the quarter was $293 million, essentially even with last year.

For the first six months of 2024, our Ticketing segment revenue grew by $67 million compared to the same period in 2023, from $1.4 billion to $1.5 billion.

Ticketing AOI for the first six months of 2024 increased by $13 million compared to the same period in 2022, from $564 million to $577 million.

Through the end of June 2024, our fee-bearing ticket sales were 155 million tickets, 4 million ahead of 2023.

We have signed clients with over 17 million net new tickets so far this year, of which two-thirds are in our international markets, which gives us confidence our ticketing platforms’ features and functionalities will continue to fuel growth going forward.

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.

Our Sponsorship & Advertising segment revenue for the quarter increased by $9 million, or 3%, from $303 million in the second quarter of 2023 to $312 million in the second quarter of 2024.

The improvement was largely due to strategic deals in the United States as well as the success of our international festivals.

For the first six months of 2024, our sponsorship growth has been driven by our owned or operated venues and festival assets, re-emphasizing the importance of our venues footprint and expansion strategy.

AOI for the quarter increased by $19.5 million, from $203.1 million in the second quarter of 2023 to $222.6 million in the second quarter of 2024.

For the first six months of 2024, our Sponsorship & Advertising revenue grew $50.5 million compared to the same period in 2023, from $473.0 million to $523.5 million.

Sponsorship & Advertising AOI for the first six months increased by $54 million compared to the same period in 2023, from $299 million to $353 million.

Concerts AOI for the first nine months increased by $238 million, or 47%, compared to the same period in 2023, from $505 million to $743 million.

Operating income margins decreased from 1.5% for the first nine months of 2023 to 0.8% for the first nine months of 2024, which was impacted by the Astroworld estimated loss contingencies.

AOI margin for the first nine months of 2024 was 5.1% compared to 3.6% last year.

Our Ticketing segment revenue for the quarter decreased by $144 million, or 17%, from $838 million in the third quarter of 2023 to $694 million in the third quarter of 2024.

We sold approximately 83 million fee-bearing tickets in the third quarter of 2024 compared to 89 million tickets in the same period of the prior year.

Our revenue and ticket sales declined due to the unprecedented volume of stadium sales last year.

Despite the venue mix change, the third quarter was our fourth highest ever in terms of sales volume and our third highest ever with respect to GTV.

International Ticketing also had its single biggest sales day ever in September 2024 driven by outstanding demand for Coldplay tickets in Europe.

Ticketing AOI for the quarter was $236 million compared to $352 million last year for a reduction of $116 million or 33%.

For the first nine months of 2024, our Ticketing segment revenue declined by $72 million compared to the same period in 2023, from $2.2 billion to $2.1 billion.

Ticketing AOI for the first nine months of 2024 decreased by $92 million compared to the same period in 2023, from $904 million to $812 million.

For the first nine months of 2024, our fee-bearing ticket sales were 238 million tickets, 2 million behind 2023.

We have signed clients with over 24 million net new tickets so far this year, of which two-thirds are in our international markets, which demonstrates that our ticketing platforms’ features and functionalities continue to fuel growth.

Our Sponsorship & Advertising segment revenue for the quarter increased by $24 million, or 6%, from $367 million in the third quarter of 2023 to $390 million in the third quarter of 2024.

The improvement was largely due to growth in festival sponsorship income for Europe, Canada and Brazil where we hosted the Rock in Rio event this year.

For the first nine months of 2024, our sponsorship growth has been driven by new and expanded ticket access deals both in North America and in our international markets as well as from onsite sponsorships.

AOI for the quarter increased by $25 million, from $250 million in the third quarter of 2023 to $275 million in the third quarter of 2024.

For the first nine months of 2024, our Sponsorship & Advertising revenue grew $74 million compared to the same period in 2023, from $840 million to $914 million.

Sponsorship & Advertising AOI for the first nine months increased by $79 million compared to the same period in 2023, from $549 million to $628 million.

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

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Consolidated Results of Operations

Three Months Ended June 30, % Change

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

Three Months Ended September 30, % Change

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

(in thousands)

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Interest income (36,067) (78,107)

Equity in earnings of nonconsolidated affiliates (5,376) (5,558)

Other income, net (20,742) (6,599)

Equity in losses (earnings) of nonconsolidated affiliates 13,987 (5,382)

Other expense (income), net (12,268) 19,251

Income before income taxes 585,912 631,681

6 unchanged sentences

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 $392.7 million during the three months ended June 30, 2024 as compared to the same period of the prior year due to increased revenue in our Concerts segment of $353.7 million, Ticketing segment of $21.3 million and Sponsorship & Advertising segment of $9.4 million as further discussed within each segment’s operating results.

Revenue decreased $503.5 million during the three months ended September 30, 2024 as compared to the same period of the prior year primarily due to decreased revenue in our Concerts segment of $391.2 million and in our Ticketing segment of $143.9 million, partially offset by a $23.5 million increase in our Sponsorship & Advertising segment as further discussed within each segment’s operating results.

Operating income

Operating income increased $79.4 million during the three months ended June 30, 2024 as compared to the same period of the prior year primarily driven by increased operating income in our Concerts segment of $37.1 million, Ticketing segment of $2.2 million and Sponsorship & Advertising segment of $28.8 million as further discussed within each segment’s operating results.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $40.6 million during the three months ended June 30, 2024 as compared to the same period of the prior year primarily due to higher operating results from certain concert businesses.

Operating income decreased $14.1 million during the three months ended September 30, 2024 as compared to the same period of the prior year primarily driven by a $116.5 million decrease in our Ticketing segment partially offset by increased operating income in our Concerts segment of $70.2 million and Sponsorship & Advertising segment of $27.1 million as further discussed within each segment’s operating results.

Interest income

Interest income decreased $42.0 million during the three months ended September 30, 2024 as compared to the same period of the prior year primarily attributed to lower rate of return on our cash and cash equivalents in 2024 and a decrease in our cash and cash equivalents balance.

Other expense (income), net

For the three months ended September 30, 2024, we had other income, net of $12.3 million which includes net foreign exchange rate gains of $12.1 million.

For the three months ended September 30, 2023, we had other expense, net of $19.3 million which includes net foreign exchange rate losses of $35.3 million, partially offset by mark to market adjustments for certain investments in nonconsolidated affiliates of $18.8 million.

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

Consolidated Results of Operations

Six Months Ended June 30, % Change

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

Nine Months Ended September 30, % Change

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

(in thousands)

11 unchanged sentences

Interest income (123,749) (174,872)

Equity in earnings of nonconsolidated affiliates (5,460) (9,665)

Equity in losses (earnings) of nonconsolidated affiliates 8,527 (15,047)

Other expense (income), net (110,064) 24,235

7 unchanged sentences

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 $1.1 billion during the six months ended June 30, 2024 as compared to the same period of the prior year driven by increased revenue in our Concerts segment of $951.9 million, Ticketing segment of $66.8 million and Sponsorship & Advertising segment of $50.5 million as further discussed within each segment’s operating results.

Revenue increased $566.4 million during the nine months ended September 30, 2024 as compared to the same period of the prior year driven by increased revenue in our Concerts segment of $560.7 million and Sponsorship & Advertising segment of $74.1 million, partially offset by a decrease in the Ticketing segment of $72.1 million, as further discussed within each segment’s operating results.

Operating income

Operating income decreased $99.8 million during the six months ended June 30, 2024 as compared to the same period of the prior year primarily driven by decreased operating income in our Concerts segment of $175.1 million partially offset by increased operating income in our Ticketing segment of $11.8 million and Sponsorship & Advertising segment of $63.3 million, as further discussed within each segment’s operating results.

Operating income decreased $102.5 million during the nine months ended September 30, 2024 as compared to the same period of the prior year primarily driven by decreased operating income in our Concerts segment of $104.6 million and Ticketing segment of $93.4 million partially offset by increased operating income in our Sponsorship & Advertising segment of $90.5 million as further discussed within each segment’s operating results.

Interest income

Interest income decreased $51.1 million during the nine months ended September 30, 2024 as compared to the same period of the prior year primarily attributed to lower rate of return on our cash and cash equivalents in 2024 and a decrease in our cash and cash equivalents balance.

Equity in losses (earnings) of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates was losses of $8.5 million during the nine months ended September 30, 2024 as compared to earnings of $15.0 million for the comparable period of the prior year due to lower operating results from certain nonconsolidated affiliates.

Other expense (income), net

For the six months ended June 30, 2024, we had other income, net of $97.8 million which includes mark to market adjustments for certain investments in nonconsolidated affiliates of $88.8 million.

For the six months ended June 30, 2023, we had other expense, net of $5.0 million which includes net foreign exchange rate losses of $29.8 million partially offset by mark to market adjustments for certain investments in nonconsolidated affiliates of $26.5 million.

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

For the nine months ended September 30, 2024, we had other income, net of $110.1 million which primarily includes mark to market adjustments for certain investments in nonconsolidated affiliates of $94.7 million and net foreign exchange rate gains of $14.7 million.

For the nine months ended September 30, 2023, we had other expense, net of $24.2 million which includes net foreign exchange rate losses of $65.1 million partially offset by mark to market adjustments for certain investments in nonconsolidated affiliates of $45.3 million.

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

Income tax expense

For the six months ended June 30, 2024, we had a net tax expense of $115.6 million on income before income taxes of $459.6 million compared to a net tax expense of $65.5 million on an income before income taxes of $441.0 million for the six months ended June 30, 2023.

For the six months ended June 30, 2024, the income tax expense consisted of $96.5 million related to foreign entities, $2.7 million related to United States federal taxes, and $16.4 million related to state and local income taxes.

The net increase in tax expense of $50.1 million was primarily due to profits in certain non-United States jurisdictions.

For the nine months ended September 30, 2024, we had a net tax expense of $191.4 million on income before income taxes of $1.0 billion compared to a net tax expense of $127.1 million on an income before income taxes of $1.1 billion for the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, the income tax expense consisted of $167.4 million related to foreign entities, $4.6 million related to United States federal taxes, and $19.4 million related to state and local income taxes.

The net increase in tax expense of $64.3 million was primarily due to higher income in certain non-United States jurisdictions.

Non-GAAP Measure

AOI is a non-GAAP financial measure that we define as consolidated operating income (loss) before certain acquisition expenses (including ongoing legal costs stemming from the Ticketmaster merger, 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.

Consolidated AOI

Consolidated AOI is a non-GAAP financial measure that we define as consolidated operating income (loss) before certain acquisition expenses (including ongoing legal costs stemming from the Ticketmaster merger, 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.

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thus, AOI 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 and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

The following table sets forth the reconciliation of consolidated operating income to consolidated AOI for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

As Revised As Revised

(in thousands)

Operating income (1)

$ 639,525 $ 653,658 $ 1,063,954 $ 1,166,409

Acquisition expenses 94,565 40,968 95,087 79,108

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Stock-based compensation expense 25,712 30,572 85,450 85,905

AOI $ 716,231 $ 589,697 $ 1,083,621 $ 909,407

Consolidated AOI (1)

$ 909,831 $ 871,189 $ 1,988,569 $ 1,764,200

(1) For the three and nine months ended September 30, 2023, the restatement increased our operating income and consolidated AOI by $35.1 million and $18.7 million, respectively.

See further discussion in Part I — Financial Information—Item 1.—Financial Statements—Note 9 – Correction of Errors in Previously Reported Consolidated Financial Statements.

Segment Overview

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Revenue related to ticketing service charges is recognized when the ticket is sold for our third-party clients.

For our own events, where our concert promoters control ticketing, revenue is deferred and recognized when the event occurs.

For our own events, where our concert promoters or venues control ticketing, revenue is deferred and recognized when the event occurs.

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.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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

This metric includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters or venues 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.

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Three Months Ended

Change Six Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

As Revised As Revised

(in thousands) (in thousands)

Revenue $ 4,987,039 $ 4,633,291 8% $ 7,866,414 $ 6,914,503 14%

$ 6,580,595 $ 6,971,830 (6)% $ 14,447,009 $ 13,886,333 4%

Direct operating expenses (2)

5,464,732 5,968,297 (8)% 11,943,821 11,696,081 2%

Selling, general and administrative expenses 733,459 695,257 5% 2,125,152 1,756,135 21%

1 unchanged sentence

Gain on disposal of operating assets (3,974) (1,584) * (5,466) (8,143) (33)%

Operating income (loss) $ 115,605 $ 78,481 47% $ (181,002) $ (5,941) *

Operating income (3)

$ 295,171 $ 224,948 31% $ 109,286 $ 213,907 (49)%

Operating margin 4.5 % 3.2 % 0.8 % 1.5 %

AOI $ 270,694 $ 168,058 61% $ 273,766 $ 168,890 62%

$ 474,053 $ 340,904 39% $ 742,936 $ 504,694 47%

AOI margin 7.2 % 4.9 % 5.1 % 3.6 %

* Percentages are not meaningful.

Concerts revenue increased $353.7 million during the three months ended June 30, 2024 as compared to the same period of the prior year primarily due to increased shows and fan growth across the United States.

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

Concerts had incremental revenue of $90.4 million during the three months ended June 30, 2024 from acquisitions and new venues.

See further discussion in Part I — Financial Information—Item 1.—Financial Statements—Note 9 – Correction of Errors in Previously Reported Consolidated Financial Statements.

For the three and nine months ended September 30, 2023, the restatement decreased revenue by $2.5 million and $2.5 million, respectively.

For the three and nine months ended September 30, 2023, the restatement decreased direct operating expenses by $2.5 million and increased direct operating expenses by $2.6 million, respectively.

For the nine months ended September 30, 2023, the restatement decreased operating income and AOI by $5.1 million.

Concerts revenue decreased $391.2 million during the three months ended September 30, 2024 as compared to the same period of the prior year primarily due to fewer stadium shows partially offset by more arena shows.

Concerts had incremental revenue of $104.0 million during the three months ended September 30, 2024 from acquisitions and new venues.

Operating results

Concerts AOI increased $102.6 million and operating income increased $37.1 million for the three months ended June 30, 2024 as compared to the same period of the prior year.

The increase in AOI was primarily driven by increases 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 remaining change in operating income outside of AOI of $65.5 million is primarily associated with Astroworld estimated loss contingencies of $94.0 million and higher depreciation and amortization of $19.7 million related to capital expenditures incurred to support the increased operations partially offset by lower acquisition expense of $54.4 million for costs incurred related to contingent considerations changes.

Concerts revenue increased $951.9 million during the six months ended June 30, 2024 as compared to the same period of the prior year primarily due to increased shows and fan growth across the United States.

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

Concerts had incremental revenue of $149.6 million during the six months ended June 30, 2024 from acquisitions and new venues.

Concerts AOI increased $133.1 million and operating income increased $70.2 million for the three months ended September 30, 2024 as compared to the same period of the prior year.

The increase in AOI was primarily driven by lower direct operating expenses due to fewer stadium shows which were partially offset by a decrease in revenue discussed above.

The remaining change in operating income outside of AOI of $62.9 million is primarily associated with higher acquisition expenses of $58.2 million related to certain acquisition transactions.

Concerts revenue increased $560.7 million during the nine months ended September 30, 2024 as compared to the same period of the prior year primarily due to increased show count and fan growth.

In particular, higher arena and amphitheater shows and related fan count partially offset by fewer stadium shows contributed to the increase in revenue.

Concerts had incremental revenue of $257.7 million during the nine months ended September 30, 2024 from acquisitions and new venues.

Operating results

Concerts AOI increased $104.9 million during the six months ended June 30, 2024 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 increased shows and fan growth at events and higher selling, general and administrative expenses related to additional headcount and compensation expenses.

The remaining change in operating income outside of AOI of $279.9 million is primarily associated with Astroworld estimated loss contingencies of $279.9 million and higher depreciation and amortization of $39.6 million related to capital expenditures incurred to support the increased operations partially offset by lower acquisition expense of $50.1 million related to contingent considerations changes.

Concerts AOI increased $238.2 million during the nine months ended September 30, 2024 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 increased show count and fan growth at events and higher selling, general and administrative expenses related to additional headcount and compensation expenses as well as incremental loss from acquisitions and new venues of $22.2 million.

The remaining change in operating income outside of AOI of $342.9 million is primarily associated with Astroworld estimated loss contingencies of $279.9 million and higher depreciation and amortization of $45.9 million related to 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

Change Six Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

As Revised As Revised

(in thousands) (in thousands)

Revenue $ 730,677 $ 709,342 3% $ 1,453,855 $ 1,387,083 5%

$ 693,704 $ 837,624 (17)% $ 2,147,559 $ 2,219,667 (3)%

Direct operating expenses (2)

262,773 279,238 (6)% 767,696 756,731 1%

Selling, general and administrative expenses 218,826 228,746 (4)% 648,456 632,341 3%

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Operating income (3)

$ 186,089 $ 302,635 (39)% $ 657,422 $ 750,849 (12)%

Operating margin 26.8 % 36.1 % 30.6 % 33.8 %

AOI $ 292,533 $ 292,685 —% $ 576,648 $ 563,736 2%

$ 235,704 $ 351,574 (33)% $ 812,352 $ 904,014 (10)%

AOI margin 34.0 % 42.0 % 37.8 % 40.7 %

* Percentages are not meaningful.

Ticketing revenue increased $21.3 million, or 3%, during the three months ended June 30, 2024 as compared to the same period of the prior year due to higher arena and amphitheater sales which was partially offset by a reduction in stadium activity.

See further discussion in Part I — Financial Information—Item 1.—Financial Statements—Note 9 – Correction of Errors in Previously Reported Consolidated Financial Statements.

For the three months ended September 30, 2023, the restatement increased revenue by $5.0 million.

For the three and nine months ended September 30, 2023, the restatement decreased direct operating expenses by $30.1 million and $23.8 million, respectively.

For the three and nine months ended September 30, 2023, the restatement increased operating income and AOI by $35.1 million and $23.8 million, respectively.

Ticketing revenue decreased $143.9 million during the three months ended September 30, 2024 as compared to the same period of the prior year primarily due to a reduction in stadium shows partially offset by higher arena sales.

Operating results

The increase in revenue discussed above were partially offset by higher direct operating expenses to support the increased operations and enterprise growth resulting in a decrease in AOI of $0.2 million and operating income increase of $2.2 million during the three months ended June 30, 2024 as compared to the same period of the prior year.

Ticketing revenue increased $66.8 million during the six months ended June 30, 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 in 2024 as compared to 2023.

The decrease in revenue discussed above were partially offset by lower direct operating expenses due to less stadium activity resulting in a decrease in AOI of $115.9 million and operating income decrease of $116.5 million during the three months ended September 30, 2024 as compared to the same period of the prior year.

Ticketing revenue decreased $72.1 million during the nine months ended September 30, 2024 as compared to the same period of the prior year primarily due to a reduction in stadium shows partially offset by higher arena and amphitheater sales in 2024 as compared to 2023.

Operating results

Ticketing AOI increased $12.9 million and operating income increased $11.8 million during the six months ended June 30, 2024 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 AOI decreased $91.7 million and operating income decreased $93.4 million during the nine months ended September 30, 2024 as compared to the same period of the prior year primarily driven by lower revenue discussed above.

Sponsorship & Advertising

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Three Months Ended

Change Six Months Ended

September 30, %

Change Nine Months Ended

September 30, %

2024 2023 2024 2023

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Depreciation and amortization 14,134 15,924 (11)% 47,216 58,687 (20)%

Loss (Gain) on sale of operating assets (1) — * 16 — *

Loss on sale of operating assets 23 — * 39 — *

Operating income $ 259,058 $ 231,913 12% $ 573,771 $ 483,310 19%

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* Percentages are not meaningful.

Sponsorship & Advertising revenue increased $9.4 million during the three months ended June 30, 2024 as compared to the same period of the prior year primarily driven by increased sponsorship activity from our United States and international festivals.

Sponsorship & Advertising revenue increased $23.5 million during the three months ended September 30, 2024 as compared to the same period of the prior year primarily driven by increased sponsorship activity from our international markets and onsite sponsorships.

Operating results

Sponsorship & Advertising AOI increased $19.5 million and operating income increased $28.8 million for the three months ended June 30, 2024 as compared to the same period of the prior year.

These increases were primarily due to increased revenues from sponsorship activity discussed above and lower direct operating expenses due to reduced fulfillment costs.

Sponsorship & Advertising revenue increased $50.5 million during the six months ended June 30, 2024 as compared to the same period of the prior year primarily driven by increased sponsorship activity from our international festivals

Sponsorship & Advertising AOI increased $25.1 million and operating income increased $27.1 million during the three months ended September 30, 2024 as compared to the same period of the prior year.

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

Sponsorship & Advertising revenue increased $74.1 million during the nine months ended September 30, 2024 as compared to the same period of the prior year primarily driven by increased sponsorship activity from our North America and international markets as well as from onsite sponsorships.

Operating results

Sponsorship & Advertising AOI increased $53.9 million and operating income increased $63.3 million during the six months ended June 30, 2024 as compared to the same period of the prior year.

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

Sponsorship & Advertising AOI increased $79.0 million and operating income increased $90.5 million during the nine months ended September 30, 2024 as compared to the same period of the prior year.

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

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 $6.4 billion at June 30, 2024 and $6.2 billion at December 31, 2023.

Included in the June 30, 2024 and December 31, 2023 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 $5.5 billion at September 30, 2024 and $6.2 billion at December 31, 2023.

Included in the September 30, 2024 and December 31, 2023 cash and cash equivalents balances are $1.6 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 $3.1 billion in cash and cash equivalents, excluding client cash, at June 30, 2024.

Our foreign subsidiaries held approximately $2.7 billion in cash and cash equivalents, excluding client cash, at September 30, 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 $6.2 billion and $6.6 billion, respectively, at June 30, 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 June 30, 2024, with approximately 93% of our debt at fixed rates.

Our weighted-average cost of debt for short-term borrowings outstanding at June 30, 2024, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.1%.

Our balance sheet reflects total net debt of $6.3 billion and $6.6 billion, respectively, at September 30, 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 September 30, 2024, with approximately 93% of our debt at fixed rates.

Our weighted-average cost of debt for short-term borrowings outstanding at September 30, 2024, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 3.4%.

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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Amended Senior Secured Credit Facility

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.

Our senior secured credit facility provides for borrowings of up to $1.7 billion, which was amended on November 5, 2024 (see below), 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.

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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 $21.9 million, $1.28 billion was available for future borrowings from our revolving credit facility as of June 30, 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 six months ended June 30, 2024, we repaid $370 million of principal related to our revolving credit facility.

Based on our outstanding letters of credit of $21.9 million, $1.28 billion was available for future borrowings from our revolving credit facility as of September 30, 2024.

During the nine months ended September 30, 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.

On October 31, 2024, we drew down $585 million from our senior secured revolving credit facility, and on November 1, 2024, we used these funds to repay the $575 million principal amount plus accrued interest on our 4.875% senior notes.

As a result of this drawdown, the 4.875% senior notes were classified as long-term debt as of September 30, 2024 due to utilizing our revolving credit facility for the payment which has a maturity date in 2029, as amended below.

On November 5, 2024, we amended our senior secured credit facility and entered into Amendment No.

12 (the “Amendment”) to our Credit Agreement, dated as of May 6, 2010 (as amended, restated, supplemented or modified prior to Amendment No.

12, the “Credit Agreement” and as amended by Amendment No.

12, the “Amended Credit Agreement”).

The Amendment added a venue expansion revolving credit facility of $400 million, which resulted in a total available borrowing capacity of $1.7 billion.

The Amended Credit Agreement contains a financial covenant that requires the Company to maintain a maximum ratio of consolidated net debt to consolidated EBITDA (both as defined in the Amended Credit Agreement) that ranges from 6.75x to 5.25x, with the first step down of 0.50x occurring on March 31, 2026 and additional step downs of 0.50x occurring annually thereafter.

The new revolving credit facility matures on November 5, 2029, provided, that if (x) any of the term B loans, the Company’s 2027 senior secured notes, or the Company’s 2027 senior unsecured notes remain outstanding on the date that is ninety-one days prior to the stated maturity thereof in an aggregate principal amount in excess of $500.0 million and (y) the Company’s consolidated free cash on such date is less than the sum of such outstanding principal amount plus $500.0 million, then the maturity date of the new revolving credit facility will instead be such date.

Debt Covenants

As of June 30, 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.

As of September 30, 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 six months ended June 30, 2024, we completed various acquisitions that resulted in cash paid, net of cash acquired of $17.6 million.

During the nine months ended September 30, 2024, we completed various acquisitions that resulted in cash paid, net of cash acquired of $49.5 million.

Capital Expenditures

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

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Total capital expenditures $ 445,105 $ 257,694

Revenue generating capital expenditures during the first six 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 as well as a stadium in South America.

Revenue generating capital expenditures during the first nine 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 as well as a stadium in South America.

We expect capital expenditures to be approximately $700 million for the year ending December 31, 2024 with approximately 75% of the capital expenditures on revenue generating projects.

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Operating Activities

Cash provided by operating activities decreased $245.9 million for the six months ended June 30, 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, changes in the fair value of contingent consideration as well as changes in operating assets and liabilities from timing of events on sale, payments and receipts.

Cash provided by operating activities decreased $74.6 million for the nine months ended September 30, 2024 as compared to the same period of the prior year primarily due to lower net income, changes in the fair value of contingent consideration and higher gain on mark-to-market of investments 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 $135.2 million for the six months ended June 30, 2024 as compared to the prior year primarily due to higher purchases of property, plant and equipment in 2024 for revenue generating capital expenditures.

Cash used in investing activities increased $178.8 million for the nine months ended September 30, 2024 as compared to the prior year primarily due to higher purchases of property, plant and equipment in 2024 for revenue generating capital expenditures as well as higher cash paid for acquisitions, net of cash acquired.

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

Financing Activities

Cash used in financing activities was $643.0 million for the six months ended June 30, 2024 primarily due to the principal repayment of our revolving credit facility as compared to cash provided by financing activities of $73.5 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.

Cash used in financing activities was $692.5 million for the nine months ended September 30, 2024 as compared to cash provided by financing activities of $44.9 million for the same period of the prior year primarily due to higher proceeds from long-term debt in 2023 from the issuance of our 3.125% convertible senior notes, which was partially offset by lower payments on long-term debt during 2024 compared to 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 six months ended June 30, 2024 and 2023.

Our foreign operations reported an operating income of $306.3 million for the six months ended June 30, 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 six months ended June 30, 2024 by $30.6 million.

As of June 30, 2024, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso.

Our foreign operations reported an operating income of $523.8 million for the nine months ended September 30, 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 nine months ended September 30, 2024 by $52.4 million.

As of September 30, 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.

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 June 30, 2024, we had forward currency contracts outstanding with an aggregate notional amount of $242.6 million.

At September 30, 2024, we had forward currency contracts outstanding with an aggregate notional amount of $244.6 million.

Interest Rate Risk

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

We had $6.3 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of June 30, 2024.

We had $6.3 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of September 30, 2024.

Of the total amount, we had $5.8 billion of fixed-rate debt and $465.9 million of floating-rate debt.

Based on the amount of our floating-rate debt as of June 30, 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 June 30, 2024 with no subsequent change in rates for the remainder of the period.

Based on the amount of our floating-rate debt as of September 30, 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 September 30, 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.

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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.

The income tax provisions amend the Internal Revenue Code to include a 15% corporate alternative minimum tax effective for tax years beginning after December 31, 2022.

On September 12, 2024, the Internal Revenue Service released proposed regulations which provide guidance on the application of the corporate alternative minimum tax.

The company is assessing the impact of the proposed regulations;

however, it does not expect the IRA to have a material impact on the 2024 financial statements.

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

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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 six months ended June 30, 2024.

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