Good day everyone. My name is Hector, and I will be your conference Operator on today's call. At this time, I would like to welcome everyone to Live Nation Entertainment's Third Quarter 2021 Earnings Conference Call. Today's conference is being recorded. Following management's prepared remarks, we will open the call for Q&A. Instructions will be given at that time. Before we begin Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the Company's anticipated financial performance, business prospects, new developments, and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the Company's most recent filings on Form 10-K, 10-Q, and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided definitions of these measures and a full reconciliation to the most comparable GAAP measures in their earnings release or website supplement, which also contains other financial or statistical information to be discussed on this call. The release reconciliation and website supplement can be found under the financial information section on Live Nation website at investors. livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Good afternoon. And thank you for joining us. Live music roared back over the past quarter, driving all our business stipends to positive AOI for the first time in two years with companywide AOI of $306 million. The 2021 summer concert season rebounded quickly, with 17 million fans attending our shows in the quarter has returned to live, reflected tremendous pent-up demand. Festivals were large part of our return to live this summer with many of our festivals selling out in record time, and then overall ticket sales for major festivals was up 10% versus 2019. Then we had a number of our tours are already sell over 500, 000 tickets for tours this year, including sellout tours by Harry Styles, Chris Stapleton, and others. In addition to increasing attendance, strong demand also enabled improving pricing with average amphitheater and major festival pricing up double-digits relative to 2019, and at our shows, fans spend at record levels with onsite spending per fan up over 20% in both amphitheaters and festivals compared to 2019. We delivered these results with an operating environment that required us to wrap up quickly it's new health and safety protocols, and staff our frontline in a tight labor market. On the health and safety front, we set the industry standard by requiring proof of vaccine or testing for our shows, with no change in fan purchase behavior. More importantly, our protocols proved effective at mitigating major COVID disruptions to our business in the U.S. and UK, and allowed us to work in conjunction with local health officials to mitigate transmission risks from our events. On the labor front, we were able to set staffing requirements for our peak outdoor season without any show disruptions. We also saw strong fan demand in our Ticketmaster results. We delivered…

Thanks, Michael and good afternoon, everyone. Before getting into the detail on each business, a few points of context for the quarter, first, this is primarily a U.S. and UK driven quarter. These markets accounted for 95% of our fans in Q3 versus 75% in Q3 of 2019. And they represented 90% of fee-bearing GTV in Q3 versus 80% in Q3 of 2019. Second, our concerts activity primarily ramped up in August with 90% of our attendance for shows occurring in August and September. Let me now go into more detail on the divisions. First concerts, as Michael noted, pricing and onsite spending was up for both our amphitheaters and our major festivals in the U.S. and UK. With almost 1200 amphitheater shows played off, these shows give us the best data set for comparing to 2019. So, give you more detail on trends for these shows, and in general, the same trends also hold for our festivals. On pricing, average ticket pricing at our amphitheaters was up 17% to $63. There are 2 primary drivers to this. First, ticket pricing, including more platinum and VIP tickets for shows this year, increased average ticket pricing by $7. Secondly, our concert week promotion and other promotions were smaller-scale this year, which had an impact of $2 per ticket. Then for onsite spending, average fan spending was up 25% to $36. This growth came from a combination of more orders per fan, more items per order, and higher average spend per order. Many of our fans shifted to buying higher-priced products, which was part of our higher spend per order. And the shift to cashless also helped as card transactions have historically been larger than cash transactions, and this has held up as we shifted to 100% cashless. Finally, operating costs, including…

Thank you. At this time, we'll be conducting a question-and-answer session. Our first question comes from the line of David Karnovsky with J.P Morgan. Please proceed with your question.

Thank you. AC rob returned to target scale. What have you found about operating with a reduced cost structure, and how do you think about expense growth from here relative to pre -pandemic where I think you've noted you were just less focus as an organization on driving cost efficiencies? And then just a second question, how are you thinking about labor constraints as you ramp toward this huge wave supply coming in 2022, are there any concerns about finding out road as new crews and then to the extent costs you move up, who bears that promoter or is that kind of goes to the artist. Thanks.

Sure. Just on operating with a reduced cost structure, we had the benefit if you will, of really 0 base in our cost structure over the past year and a half, so -- and we've talked through at various points, a lot of it around Ticketmaster's globalization and how we revised our approach on the concert side. So, we're not seeing any issues in terms of operating with this renewed cost structure because it's been a pretty methodical laid out approach to how we want to run the business. And then I think as we move forward and we continue to grow the business, our expectations are that the incremental profitability of our business is as good or better than it's ever been, and that there continues to be a long runway to do so. In terms of the labor constraint as we talked, we were able to put on all of our shows this year without any issues. Looking forward to next year at the end of probably -- we don't think that there's any issue in terms of getting back to the level of activity that we've had, or the level of activity that we're talking about, in terms of our pipeline of shows. Ultimately, that is what the short-term constraining is in terms of why we won't be doing 45 mega tours, where you can't have 80% growth in a given year. It does have to do with some of the short-term ability to get your buses or to get your staff, but there's no long-term constraints for the growth. And we're still able to grow it in next year. In terms of the costs incurred, it's different pieces for different folks that the artist is generally responsible for their crew and their operations that they're being out on the road and we're responsible for the venues that we operate.

Just to add a little -- just to add texture to that, we would have absolutely in July or August with the idea that we had to instantly hire 20,000 people for summer amphitheaters usually would happen way back in April, we would've had concern but we surprisingly we're able to fully staff all of those jobs, as Joe said. Marginal cost increased a few million dollars. So, we did see that the part-time seasonal workforce that needed to come back to help make the machine work were eager to get back. So, we didn't have that challenge. I think we're going to keep looking at how we do a better job of attracting and retaining them in today's environment, but we don't see that as a cost challenge, we think it's an exciting category so a lot of people like coming to work at the amphitheater, the club, the theatre, the lifestyle type job, and then as Joe said, we had no supply chain issues. The artist gets on stage, there's plenty of trucks, lights, staging, etc. to make the machine work on a global basis.

Thanks.

Our next question comes from the line of Q - Brandon Ross with LightShed Partners. Please proceed with your question.

Hello. Thanks for taking the questions. Just -- you talked about your quarter and how the return to lives has been predominantly in the U.S. and UK. Wondering if you could give an update on when I know it's a big world out there, but when we can expect the rest of the world to get back to those 2019 levels and beyond that we've seen in the US and the UK. And then I have a follow-up.

Yeah, I'll jump in and Joe can jump. We've -- we had a global call yesterday this week with all of our different presidents. We're feeling very confident, obviously Canada, U.S., UK are fully open. Europe will be fully open by the end of the year. So, we'll have most of the main markets open into January. Pacific Rim, Latin America, all looks positive in terms of being open fully for international artists by April. We think internationally, on a global basis by April the world will be moving around again. It doesn't overly affect our business short-term because most of the outdoor stadium festival business is summer time, so that will be all fully up and rolling. We have Lollapalooza starting in April in Latin America and Australia festivals. So, we think we'll be open for prime season, and we'll be rolling around indoors in the main markets of U.S., Europe, Canada, and the UK between now and April.

Right, and I wanted to focus a little on your O&O business. You talked about that prime season starting into April, and you extended your AMP season and festival season this year as the summer got off to a late start, do you plan on keeping that summer season extended going forward? Is that a way for you to own more of the fans?

Yeah. It's a great point, right. You just forced yourself in this last 2 years to think differently and extract more value from your base, and we absolutely look at it now and see specially in most of Southern America we can stay open much longer than we historically have. So yes, we will look to extend the seasons in those markets for sure.

Great. And then Michael, I saw on your social that you invested in some new international venues. Can you maybe explain to us what your new venue strategy is going forward, what you're trying to accomplish in other parts of the world?

I always think we underestimate bragging about our venue portfolio. We are ready well over 200 venues that we operate somewhere in the world, amphitheaters, theaters, clubs, arenas in Dublin, Holland, etc. So, we know that the venue when we go vertical is a high-margin business for us. And I consider festivals almost venues, because you get to own the real estate for the weekend, you're owning all the revenue streams. So anytime that we can put a show in our festival or our venue on ticketed by Ticketmaster's, have our sponsorship able to use the asset and count all the revenue streams, it's our highest margin business. What we've seen over time now is, in the last 5 years, is there has been a new real estate boom around the world where every major city in the world looks at live entertainment much like they used to look at movie theatres as being this incredible tenant in their development. So, we are talking ongoing to multiple developers around the world who are building something and they wanted 2,000-seat, a 5,000-seat, a 7,000-seat, maybe an arena than anchor into one of their developments. So, we've really ramped up that division over the last 2 years and we see great opportunity around the world of continuing to expand our venue portfolio in these prime markets. I mean, Austin's an example where there's no arena. We're going to open that arena in the next couple of years. It's going to be a monster of a return for us as a great single venue in the Austin market right now, for live shows to complement our club, our theater, our amphitheater portfolio. So, we'll continue to be very opportunistic in the markets around the world where there's an opening for a live venue of any size.

Great, thanks so much.

Our next question comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your question.

Great, thank you. I appreciate all the detail you provided on the pricing and spending trends in the quarter. I was just wondering if you could maybe talk a little bit more about how durable you think those trends will be into next year, especially now that you have the vantage point of seeing these trends play out across an entire summer conversely. And then, now that we're getting closer to 2022, and the slate's taking more shape, I was wondering if you could talk a little bit about the cadence of shows that you expect in 2022 and how that might compare to a normal year? Thank you.

Sure. This is Joe. I'll start on the pricing and the per-caps. I think we believe this is structurally a level of spend that we're seeing from the consumer now on the pricing, heavily driven by the front of the house, the best seats where we've long known there's this arbitrage because of the size and continued growth of the secondary market even as we've been pricing and moving more money to the artists over the past several years. So, this year that trend continued. More VIP, more platinum tickets, getting that money to the artist. And we're seeing a relatively strong inelasticity on the demand for those best tickets. And then on the onsite, I think because we're seeing it come from a number of fronts, we are confident that it's staying. So, we talked about it in the comments, right. Moving from cash to cashless just opens up increase spend. It's been a long existing difference between those 2 moving to a 100% cashless, just raises the average because instead of being half of each. And then we're seeing again structural trends people are going to a bit higher quality in terms of some of the alcohol, some of our product offerings are making more of a deal for people to take higher price point products. All of those we think are a continuation of the trends that we've seen over the past several years and have no reason to expect that that would be any different going forward. In terms of the cadence for shows next year in general, and Michael talked about this a bit. You'll see similar where Q2 and Q3 will continue to be our strongest quarters. That's when we'll have a great stadium next year. It looks to be far and away the largest stadium we've ever -- we've had. That will be primarily in those Q2, Q3 outdoor months. Obviously, our amphitheaters and festivals, largely those months. And even the arena certainly here in the U.S. you just have more avails in those months because of the timing of the sport season. So, there's no reason not to expect similar seasonality in general as we've had historically.

Great. Thank you.

Our next question comes from the line of Stephen Glagola with Cowen, please proceed with your question.

Yes. Thank you. Joe on the ticketing segment that you had another great quarter, margins were at 46% on AOI. I know you said prior the Q2 is 40% margin shouldn't be extrapolated. And I know you love talking about margins, but I just wanted to see if you had an update on that mid-single-digit margin expansion that you talked about prior on annualized basis. Is that still how we should be thinking about the ticketing business coming out of the pandemic or are we talking about something higher than that now?

Well, I think we absolutely believe you'll continue to expect to see higher than historical margins because of the cost reductions. This year you've -- this quarter you've got the particular benefit of a few things, one being that we ramped up our activity faster than we ramped up our staff. As we said, we were doing from our cost management so we pushed our people and extracted more from that side. And secondly, as we also talked, this is much more of a U.S. driven, and then secondly UK driven, and we've talked historically about the fact that the U.S. market is a higher service fee and therefore generally a higher margin market than internationally. So, some of that mix shift will convert back next year. I don't think we're ready to give exact numbers, but we certainly do think that the ticketing margin will improve relative to historical.

Okay. Thank you.

Our next question comes from the line of David Katz with Jefferies. Please proceed with your question.

Hi, evening everyone, and thanks for taking my question. With everything going as well as it has, and the numbers starting to materialize, I wanted to ask a little bit longer term, like 2023, And if there's any evidence to support the trajectory continuing to move up. In 2023, I think Joe, you may have used the phrase at one point, there's no air pocket out there. Any help there would be welcome.

Yes. I think to Joe's point, I think we've said it before. The good news is '22 is going to probably be a record year, but there's only so many Fridays and Saturdays and artists are pretty smart about how they route their tours and how they look at the world and find their right positioning. So, it’s kind of self-regulates itself. You're never going to have a bunch of tours on the same weekend piled on. So that just meant we have a more inventory to spread into '22, '23, and we're talking '24 now. So, I would say we have a backlog that needs to still work through the system in '22, '23. which will be incredibly strong years. And then we continue to get back to regular -- we've had over the year, double-digit growth in the live entertainment space ongoing. We project that to continue both on pricing and global volume as demand and supply continues to grow around the world.

Thank you for that. And if -- Michael, if I may just follow-up on the prospective deal front. I think when we last spoke, activity in terms of potential acquisitions were starting to ramp up again and become more active. Any update there that's worth sharing?

If you follow my Twitter, or what we're up to, we've been pretty active. We're back with our backlog of 30 to 40 things around the world. We're looking at that can keep propelling our business and growing our scale. So good pipe -- good pipeline will continue to be very aggressive at growing our global market share and then monetizing products on top of it.

Thank you very much. I appreciate it.

Our next question comes from the line of Ryan Sundby with William Blair, please proceed with your question.

Hey, Michael. Hi, Jeff. Thanks for taking my question. If you look at the 14 million net new fee-bearing customers that Ticketmaster’s added this year so far, what's been the primary drivers for growing that business? Are they looking for digital ticketing? Was there a change and particularly during COVID and then with 2/3 of them being international and finally, are these exclusive taking partners any color there would be great.

Sure. as you said, 2/3 of them international, I think is indicative of particularly in the international markets. Just what a strong leadership position Ticketmaster has with a lot of the investments we've been making over the past 5 years. So digital ticketing, as you said, is -- overnight goes from being a nice feature to a critical part of it because you're moving away from contactless of any sort, you need a digital ticket, and our leadership there is a big differentiator, we've been investing for a long time, we're not trying to play catch-up. And these tickets are a mix of where we have the full allocation in some markets and other markets, we have a partial allocation. But in aggregate it's adding 14 million tickets to the portfolio.

William, I would just add I don't want to ever forget that Ticketmaster is incredibly great at what they do on a global basis. If you're -- if you own a stadium, an arena, high-volume ticket business with complex season owners and regular tickets -- it's a complex business to do at scale. So, a lot of our customers, sometimes we may lose a customer, they end up coming back. So, one, I just want to remind you, we've been investing in this platform for the last few years. Our enterprise platform is a world-class platform. The U.S. ticket market is the most complicated market in the world. Reserved seats equal season seats are a complex model to manage the 10 AM on on-sale with box and all the things that pressure your system so when at the core enterprise platform is really good. So, we're more out competing for that offering. We end up just being ultimately winning the business because we are the best at it. And we see that because we see the clients that may leave. But end up coming back because the functionality that we provide is superior to others. We're seeing this in a Brooklyn arena last week where the competitor was trying to do a presale that broke and that's a pretty basic stuff. So, I just remind people we are in a global basis, the best of what we do. That's why clients pick us. And then we happen to be global and opening up all of our technology to a global base is going to be our great runway for the next while.

Got it. That makes a lot of sense. And then just sequencing at this past quarter, it didn't sound like you called out a big impact from Delta here. Did you feel? And did you see a rebound then I guess as you move, pass it further out?

I think every month for us, we continue to see ongoing growth in the reopening, so it'd be hard to separate out Delta specifically versus reopening in general. But everything that we saw was more fans going to more shows consistently, contrary to some of the press I've seen very low no show rates, low to low single-digit increases in terms of no-shows as a result of the pandemic. So, it seems that the people that want to go to the shows are going to the shows. And that's just continue to grow as a portion of the fan base out there.

That's good to hear. Thanks for the questions.

And to Joe's point, I would just add what you also noticed is the -- it's all different genres in ages. So, this isn't just young kids are going to shows because they're not scared but the Eagles just had a wildly successful on arena tour that's going to finish up this week in Seattle. The Grateful Dead route doing full stadiums. Harry Styles obviously doing indoors to just record business as well as our amphitheater business. So, we did -- we weren't sure going into the market what segment or what age demo would react differently, or if there would be a difference, and we saw huge demand across the board at all ages, all demos, all markets. So strong rebound back as we've seen with the early on sales going forward.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session, and this concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.