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's 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 segments 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, reflecting tremendous pent-up demand. Festivals were a large part of our return to live this summer, with many of our festivals selling out in record time, and overall ticket sales for major festivals were up 10% versus 2019. Then we had a number of our tours already sell over 500,000 tickets, 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 spent 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 quickly wrap up 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 vaccination 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 its highest AOI quarter ever. Q3 was Ticketmaster's fourth highest fee-bearing GTV quarter excluding refunds, led by sports legs restarting and concert on-sales for 2022 ramping up. In addition, Ticketmaster's secondary business delivered its highest GTV month in September, showing continued growth in the segment, even as artists and content owners continued shifting more of the value to primary sales. As fans came back, so did our brand partners who continued to seek to connect to the live music fan. As a result, our sponsorship and advertising business delivered over $100 million in AOI for the quarter, the first time at this level since Q3 of 2019. The return of sponsorship and advertising has been largely driven by historic major partners, along with the addition of new brands, including Truly Hard Seltzer, as well as Coinbase and Solana in the Fintech segment. As we look forward to 2022, we are encouraged by all our leading indicators across each business. Through October, our confirmed show count across amphitheaters, arenas, and stadium shows are up double-digits relative to the point in 2019 to 2020 shows. Through mid-October, we have already sold 22 million tickets for our shows in 2022, and demand has been stronger than ever for many of these onsales, with a million tickets sold for each of the Coldplay and Red Hot Chili Peppers tours, and several other tours already selling over 500,000 tickets. Ticketmaster's onsale for 2022 is also reinforcing this demand, as we expect transacted fee-bearing GTV to be at record levels, even after already selling 65 million fee-bearing tickets for events next year. Ticketmaster also added clients represented in over 14 million net new fee-bearing tickets so far this year, further accelerating its growth on a global basis. Our Sponsorship and Advertising business had similar success, with a confirmed pipeline for 2022 up double-digits relative to this time in 2019 to 2020. At the same time, we are continuing our cost-focused efforts to deliver $200 million in structural savings from our pre-pandemic 2020 plan, making us nimbler and better positioned to invest for future growth. As we get close to turning the page in 2021, I remain more convinced than ever in the power and potential of live entertainment and the strength of our position. No industry was more impacted by the pandemic over the last two years, and no industry has proven the durability of its demand in the face of such disruption. I fully expect we will continue to have bumps in the road in the coming months, and it will take some time for international artists to mature on a truly global basis. But the fundamental strength of live entertainment and Live Nation has proven out, and I expect we will only continue to grow from here. With that, I will let Joe take you through more details on our results.

Thanks, Michael, and good afternoon, everyone. Before getting into the details on each business, a few points of context for the quarter. First, this was primarily a U.S. and UK driven quarter. These markets accounted for 95% of our fans in Q3 versus 75% in Q3 of 2019. 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. Now let me go into more detail on the divisions. First, concerts. As Michael noted, pricing and onsite spending were up for both our amphitheaters and our major festivals in the U.S. and UK. With almost 1,200 amphitheater shows played off, these shows give us the best data set for comparing to 2019. So, I’ll give you more detail on trends for these shows, and generally, the same trends also hold for our festivals. On pricing, average ticket pricing at our amphitheaters was up 17% to $63. There are two primary drivers to this. First, ticket pricing, including more platinum and VIP tickets for shows this year, increased average ticket pricing by $7. Second, our concert week promotion and other promotions were on a 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. 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 labor costs, were up. These higher labor costs are driven by several factors: fewer shows per building, our accelerated ramp-up to open the buildings this summer, new health and safety protocols, and a tightened labor market. At the same time, as noted with increased average ticket price and higher onsite spending, we increased the contribution margin per fan, and did so to such a level that our profitability per fan, net of operating expenses, rose double digits. Turning now to Ticketmaster. As Michael said, Ticketmaster had a record AOI of $172 million for the quarter, driven by its fourth highest fee-bearing GTV quarter excluding refunds and lower cost structure from its reorganization. Along with lower ramp-up labor costs, we accelerated activity faster than the return of staff. Primary ticketing was driven substantially by concerts, which accounted for over 70% of fee-bearing GTV, while sports was the second largest category, together representing approximately 90% of all fee-bearing GTV. Geographically, North America accounted for 80% of fee-bearing GTV, as activity remained limited internationally outside the UK. In secondary ticketing, we similarly saw concerts and sports account for over 90% of fee-bearing GTV, though in this case, sports were the primary driver with the launch of new football and basketball seasons. Another contributor to our growth in ticketing is the continued signing of new clients, with over 14 million net new fee-bearing tickets added this year through the third quarter. These new client additions have been particularly strong internationally, accounting for two-thirds of our new client tickets. Finally, sponsorship AOI surpassed $100 million in the quarter for the first time in two years as it again had available ad units at scale, both on-site and online. Like our other businesses, it was largely U.S. and UK driven, together accounting for approximately 90% of total activity. As we look to Q4, we see a continuation of the same trends we had in Q3. With concerts, we expect North America and the UK to continue ramping toward historical activity levels. While the rest of Europe and other international markets have limited activity given the lead time to plan concerts. With ticketing, we expect a broader recovery as most European markets put stadium and arena tours on sale in Q4, enabling GTV levels that could approach Q4 2019 levels, despite 65 million fee-bearing tickets already being sold for 2022 events. While Q4 is typically a seasonally slower period for sponsorship, it too should benefit from concert and ticketing sales ramping up. Let us now turn to our cash and cost management. We have free cash at $1.7 billion at the end of the quarter, which includes $450 million earmarked for the OCESA acquisition. This was our first quarter since 2019 where our cash contribution margin was higher than our cash burn, contributing a net $166 million in free cash. We also added $850 million in cash in the quarter through our $400 million drawdown of our Term A loan and a $450 million equity raise for OCESA, as previously mentioned. We then had free cash reduced by $370 million, largely resulting from long-term deferred revenue shifting into short-term for shows next summer, as we previously indicated would be happening. This improved cash position was also helped by our ongoing cost and cash management program as this year, we expect to reduce costs by $900 million and cash spend by $1.5 billion relative to pre-pandemic plans, excluding OCESA. As we prepare for 2022 plans, we remain confident that we have structurally reduced our operating costs by $200 million relative to our pre-pandemic 2020 plans. A few other balance sheet items: our deferred revenue at the end of the quarter was $1.9 billion, compared to $950 million at the end of Q3 of 2019, which gives us the best like-for-like view of the demand pipeline already in place. A reminder on our debt, we continue with our liquidity covenants until we report Q4 this year, at which point we will switch to a more traditional leverage test. Given our current liquidity and expected Q4 and 2022 activity levels, we do not anticipate any covenant issues through next year and expect to continue investing in growth.

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 focused 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, the 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 a zero base in our cost structure over the past year and a half. So, 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, 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 cannot 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 are no long-term constraints for the growth. We're still able to grow it next year. In terms of the costs incurred, it's different pieces for different folks. The artist is generally responsible for their crew and their operations that they're bringing out on the road, and we are responsible for the venues that we operate.

Just to add a little texture to that, we would have been concerned in July or August that we needed to immediately hire 20,000 people for summer amphitheaters, which usually would happen way back in April. Surprisingly, we were able to fully staff all of those jobs, as Joe said. Marginal cost increased a few million dollars. 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. 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, and the theater lifestyle-type jobs. As Joe said, we had no supply chain issues. The artist gets on stage, and there are plenty of trucks, lights, staging, etc. to make the machine work on a global basis.

Thanks.

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

Hello. Thank you for taking my questions. You mentioned your quarter and the return to live events primarily in the U.S. and UK. Could you provide an update on when we might see the rest of the world return to the levels we experienced in 2019 and possibly exceed them, similar to what we've seen in the U.S. and the UK? I have a follow-up after that.

Yeah, I'll jump in and Joe can jump. We had a global call this week with all of our different presidents. We're feeling very confident; obviously, Canada, U.S., and UK are fully open. Europe will be fully open by the end of the year. We'll have most of the main markets open into January. The Pacific Rim and Latin America all look positive in terms of being open fully for international artists by April. We think that 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 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 in 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 these last two years to think differently and extract more value from your base, and we absolutely look at it now and see that especially 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 operate well over 200 venues somewhere in the world, including amphitheaters, theaters, clubs, arenas in Dublin, Holland, etc. We know that the venue, when we go vertical, is a high-margin business for us. I consider festivals almost venues because you get to own the real estate for the weekend and all the revenue streams. So, anytime that we can put a show in our festival or our venue ticketed by Ticketmaster, 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 five years, there has been a new real estate boom around the world, where every major city looks at live entertainment as being an incredible tenant in their development. So, we are talking ongoing with multiple developers around the world who are building something, and they wanted 2,000-seat, 5,000-seat, or even 7,000-seat venues to anchor their developments. We are ramping up this division over the last two years and see great opportunity around the world to continue to expand our venue portfolio in these prime markets. Austin is 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 return for us as a great single venue in the Austin market right now for live shows to complement our club, theater, and amphitheater portfolio. 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, 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. We're seeing a relatively strong inelasticity on the demand for those best tickets. On the onsite spending, I think because we're seeing it come from a number of fronts, we are confident that it will continue. We talked about it in the comments, right? Moving from cash to cashless just opens up increased spending. It’s a long-existing difference between those two; moving to 100% cashless raises the average because instead of being half of each. We're also seeing structural trends where people are opting for higher quality in terms of some of the alcohol and product offerings, making it more attractive for people to take higher price point products. All of these trends are ones we think will continue over the next several years and have no reason to expect they would be any different going forward. In terms of the cadence for shows next year in general, Michael talked about this a bit. You'll see similar patterns where Q2 and Q3 will continue to be our strongest quarters. That is when we'll have a great stadium next year; it looks to be the largest stadium we've ever had, and it will be primarily in those Q2 and Q3 outdoor months. Obviously, our amphitheaters and festivals will largely occur over those months. Even the arenas will certainly be more available in those months because of the timing of the sports season. So, there's no reason not to expect similar seasonality to what we've historically seen.

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, you had another great quarter. Margins were at 46% on AOI. I know you said prior the Q2 40% margin shouldn't be extrapolated. 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 an 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 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. Secondly, as we've also talked, this is much more U.S. driven, and then secondly, UK driven. 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 expect that the ticketing margin will improve relative to historical figures.

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 pockets out there. Any help there would be welcome.

Yes. I think to Joe's point, 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 self-regulates itself. You're never going to have a bunch of tours on the same weekend piled on. This means we have a more inventory to spread into '22, '23, and we're talking '24 now. We have a backlog that needs to still work through the system in '22 and '23, which will be incredibly strong years. We continue to see double-digit growth in the live entertainment space ongoing. We project this to continue both on pricing and global volume as demand and supply continue 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 was 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 pipeline; we'll 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 has 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 with two-thirds of them being international? Finally, are these exclusive taking partners? Any color there would be great.

Sure. As you said, two-thirds of them international, I think is indicative of the particularly strong leadership position Ticketmaster has with a lot of the investments we've been making over the past five years. So, digital ticketing, as you said, 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. 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, or have a high-volume ticket business with complex season owners and regular tickets, it’s a complex business to do at scale. Many of our customers, sometimes we may lose a customer; they end up coming back. I just want to remind you that 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—it's a complex model to manage the 10 AM onsale with booms and all the pressures on your system. So, when at the core, our enterprise platform is really good, we end up just being ultimately winning the business because we are the best at it. We see that with clients who may leave but then come back because the functionality that we provide is superior to others. We noticed this in the Brooklyn arena last week, where a competitor was trying to do a presale that broke down—that's pretty basic stuff. So, I want to remind everyone we are the best at what we do on a global basis. That's why clients choose us. Opening up all our technology to a global base is a great runway for us moving forward.

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 as you move further out?

I think every month for us, we continue to see ongoing growth in the reopening, so it would be hard to separate out Delta specifically versus reopening in general. Everything that we saw was more fans going to more shows consistently, contrary to some of the press; we observed very low no-show rates and low single-digit increases in terms of no-shows as a result of the pandemic. It seems that the people who want to go to the shows are going to the shows, and that just continues to grow as a portion of the fan base out there.

To Joe's point, I would just add that you also notice it’s all different genres and ages. This isn't just young kids going to shows because they're not scared; the Eagles just had a wildly successful arena tour that is finishing up this week in Seattle. The Grateful Dead tour is filling full stadiums. Harry Styles is doing indoors with record business, as well as our amphitheater business. 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 and in all markets. So, there’s a 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.