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Live Nation Entertainment Reports Second Quarter 2017 Financial Results

Highlights (year-over-year):

  • Concert Tickets Sold for 2017 Shows are Over 68 Million, Up 22% through July
  • Sponsorship & Advertising Contracted Net Revenue Up Double Digits through July
  • Ticketmaster Fee-Bearing GTV at Constant Currency Up 13% through June

Live Nation Entertainment (NYSE: LYV) today released financial results for the three and six months ended June 30, 2017.

Live Nation continued growing its businesses in the second quarter, with revenue up 29%, operating income up 53% and adjusted operating income, or AOI, up 22%, while net cash provided by operating activities increased to $43 million, and free cash flow - adjusted increased to $154 million, up 42%. All three segments grew as we continued demonstrating the strength of our business model. Our concerts business is our flywheel, selling over 68 million tickets to shows this year through July, 12 million more tickets than at this point last year.

This demonstrates that we have built the industry's most scalable and unparalleled live platform, bringing over 550 million fans in 40 countries to live events each year. With key metrics in each of concerts, sponsorship and ticketing pacing double digits ahead of last year, we are confident that 2017 will be another record year of results for Live Nation.

Concerts Delivered Record Attendance

Starting with the concerts business, in the second quarter we promoted over 7 thousand shows for 24 million fans, an increase of 5.5 million fans from the second quarter last year. As a result, for the quarter we grew revenue by 34%, operating income increased to $38 million, and AOI grew by 51% to $88 million.

We extended our position as the leading promoter in the world as we delivered growth across all markets and venue types. We increased attendance in North America and internationally by over 2 million fans each; and arenas, amphitheaters, stadiums, festivals and theaters all increased attendance by double digits. As we attract more fans to concerts, we continue to focus on maximizing the revenue and profitability of each show. This starts with attracting more fans to each show, and during the quarter we increased our average show attendance by 11%, with every venue type delivering higher attendance per show.

Additionally, our food and beverage initiatives at our amphitheaters continue to improve the onsite experience, driving increased spend per fan with programs ranging from increasing the number of points of sale to improved product offerings to optimized pricing. As a result, we continue to expect to increase ancillary spend by approximately $2 per fan again this summer.

Given the strong performance of our shows to date and the pipeline of shows for the rest of the year, I expect us to grow our fan base to 80 million this year. And with these additional fans I am confident that we will deliver strong growth in our concerts results, providing the flywheel to grow our sponsorship and ticketing businesses.

Sponsorship & Advertising Delivered Continued Growth

In the sponsorship & advertising business, we again delivered strong growth this quarter, with revenue up 31%, operating income up 19%, and AOI up 21%. Live Nation's ongoing success in growing its high-margin sponsorship & advertising business is based on its unique scale and breadth in the live experience space. No other advertising platform can match our 80 million onsite engaged fans, over 550 million direct connections with fans attending events each year and over 2 billion touch points across our digital reach. From festivals to branded content to exclusive access to tickets and events, the combined Live Nation concerts and Ticketmaster platforms deliver an audience unmatched in music.

Our growth continues to be strongly driven by our strategic brand relationships, with over 50 sponsors that each spend more than $1 million with us each year, across our onsite and online platforms to reach that highly sought after millennial customer. This group accounts for over 75% of our total sponsorship, and through the second quarter their committed spend has grown by 25% to over $250 million.

Festival sponsorship continues to provide the most attractive onsite platform; in the second quarter we grew revenue in this category by 32% year-on-year, and for the full year we are tracking toward mid-teens growth across our 95 festivals with over 8 million fans.

Based on this strong start to the year, and now with over 90% of our planned sponsorship for the year under contract, I currently expect double-digit operating income and AOI growth in the low teens for this business for the full year.

Ticketmaster Marketplace Growing

Ticketmaster continues to demonstrate that it is the best marketplace for venues, teams and artists to sell tickets to fans globally, with gross transaction value, or GTV, growth on fee-bearing tickets up 8% for the quarter, at constant currency. Year-to-date, fee-bearing GTV is up 13%, and the past three quarters have been the highest transacted GTV quarters in the company's history. As a result, Ticketmaster's revenue for the quarter was up 9%. Year-to-date, revenue was up 15%, operating income was up 20%, and AOI was up 13%, with quarterly timing impacted by the shift in concert onsales to the first quarter as we discussed last quarter.

Our success at Ticketmaster starts with providing fans with the best solution to their ticketing needs. Building on our integration of primary and secondary tickets, we have now expanded our listings to also include secondary tickets to shows for which Ticketmaster is not the primary ticketer, all purchased through the same checkout flow. This has now increased the number of events we have listed by 35%, further leveraging the 120 million fans visiting our online sites per month.

And as we expand our inventory, we continue improving the customer purchase process, helping us increase conversion by high single digits on desktop and double digits on mobile sites. As we increase conversion on mobile sites, we also continue to see a strong shift in purchase behavior to mobile, with these sites and our apps accounting for 31% of our sales in the quarter, up 27% year-on-year.

Along with the focus on fan experience, we are also providing venues, teams and artists with the additional tools and services to more effectively price and distribute their tickets. One of the services we uniquely provide is the range of distribution partners that can sell incremental tickets for our clients. For the quarter, these off-platform sales are up 11%, and year-to-date they are up 21% to almost 7 million tickets.

On the new product road map, we are seeing great success with our Verified Fan product, which enables artists to prioritize the distribution of tickets to actual fans utilizing our proprietary Ticketmaster scoring algorithm of fan behavior. Since launching the product earlier this year, we have worked with 50 artists in the United States and Europe to sell over 1 million tickets to true fans, with a dramatic reduction in these tickets then being sold on secondary sites.

Overall, our Ticketmaster results are validating our dual strategy of delivering an effective marketplace for fans to buy tickets while providing a great software solution to venues, teams and artists looking to maximize the value of their events. By continuing to do so effectively, I expect us to again deliver high-single-digit growth in ticketing operating income and AOI this year.

Summary

2017 is on track to be another year of growth and record results for the company. Our key indicators for our businesses — concert tickets sold for shows this year, contracted sponsorship, and fee-bearing ticketing GTV — are all pacing double digits ahead of last year and as a result we expect each of our businesses to deliver record revenue, operating income and AOI this year.

The company will webcast a teleconference today at 5:00 p.m. Eastern Time to discuss its financial performance. Interested parties should visit the Events & Webcasts section of the company's website at investors.livenationentertainment.com to listen to the webcast. Supplemental statistical and financial information to be provided on the call, if any, will be available under the Reports section at the same link. A replay of the webcast will also be available on the Live Nation website.

Notice Regarding Financial Statements

The company has provided certain unaudited financial statements at the end of this press release for reference. These unaudited financial statements should be read in conjunction with the full unaudited financial statements, and the notes thereto, set forth in the company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission today and available on the SEC's website at sec.gov.

About Live Nation Entertainment

Live Nation Entertainment, Inc. (NYSE: LYV) is the world's leading live entertainment company comprised of global market leaders: Ticketmaster, Live Nation Concerts, and Live Nation Media & Sponsorship. For additional information, visit investors.livenationentertainment.com.

FINANCIAL HIGHLIGHTS – 2nd QUARTER

(unaudited; $ in millions)



Q2 2017
Reported


Q2 2016
Reported


Growth


Q2 2017
Constant
Currency


Growth at
Constant
Currency

Revenue










Concerts

$

2,249.9



$

1,681.8



34%



$

2,279.7



36%


Sponsorship & Advertising

124.6



95.2



31%



126.1



32%


Ticketing

484.6



443.3



9%



490.0



11%


Other and Eliminations

(40.4)



(41.0)



1%



(40.4)



1%



$

2,818.7



$

2,179.3



29%



$

2,855.4



31%












Operating Income (Loss)










Concerts

$

37.5



$

2.8



*



$

36.8



*


Sponsorship & Advertising

70.4



59.1



19%



71.6



21%


Ticketing

43.7



46.8



(6%)



42.8



(9%)


Other and Eliminations

(5.2)



(4.2)



(24%)



(5.2)



(24%)


Corporate

(33.0)



(30.4)



(9%)



(33.0)



(9%)



$

113.4



$

74.1



53%



$

113.0



52%












Adjusted Operating Income (Loss)










Concerts

$

88.4



$

58.4



51%



$

88.6



52%


Sponsorship & Advertising

77.1



63.8



21%



78.3



23%


Ticketing

89.1



...

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