Good day, everyone. My name is John, 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 First Quarter 2023 Earnings Conference Call. Today's conference is being recorded. 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 Forms 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. 2023 is off to a tremendous start. For the first time in three years, all of our markets are fully open. In a common theme, we are seeing around the world that live experiences are a high priority for fans. In Q1, we delivered record results across all divisions as well as record support for artists. Ticket sales to attendance and on-site spending, every sign points to incredible demand for live events. In the first quarter, 19 million fans attended our shows across 45 countries and we sold over 145 million tickets with record levels of activity across all markets. We delivered revenue of $3.1 billion and AOI of $320 million, up 73% and 53%, respectively, relative to Q1 last year. In general, all my comments will be relative to Q1 last year. This performance is indicative of a continued long-term growth and sets the stage for a record 2023 as we are more positive than ever about artists touring, bands attending concerts to see their favorite artists and our role helping make this happen. As clear as we look at our results and operating metrics, global demand for live events continues to reach new heights. Demand has been growing for a long time and is showing no signs of letting up. Talking to fans, they say that live experiences are the number one leisure activity where they expect to spend more in the future. Naturally, this is leading to record levels of activity in both our concerts and ticketing business. First in concerts, we sold nearly 90 million tickets for shows this year, tracking more than 20% ahead of this point last year. These are early sales and have been driven by a record number of stadium shows and continued strong growth in arena tours. With many major tours from Beyoncé, Drake to Bruce Springsteen, demand has been so strong that even when artists add a number of additional shows, they still aren't able to meet all of the fan demand. As a further initiative to make tickets affordable to all fans, we launched today our Summer Concert Week, with $25 tickets available to nearly 4,000 shows. When fans attend shows, they continue spending to enhance the experience. While our key outdoor season has not yet started, early reads from U.S. and European indoor venues that we operate demonstrate further growth in average per fan revenue. As we provide more elevated hospitality options for fans, we have launched Vibee, which hosts destination events centered around live music and launched this week with the sale of the U2 Sphere VIP packages selling out. We've also continued building our Venue Nation portfolio with new venues expected to host nearly 3 million fans at 1,000 shows this year, driving long-term growth and profitability across all our businesses. Our ticketing business benefits from the same structural tailwind as concerts, with further growth driven by our success in adding new clients, notably in international markets. As a result, we sold 73 million fee-bearing tickets in the first quarter, up 40% and delivered $7.7 billion in fee-bearing GTV, up 60%. We are seeing growth in both volume and pricing across our global markets. This holds true across all event types from sports to concerts and from the biggest superstars to new artists. Our brand partners recognize the passion for live music has never been greater, and Live Nation provides a unique on-site and online platform to connect with fans in meaningful ways on a global scale. In the first quarter, we continued adding partners for 2023 and beyond, including Google Pixel, PayPal and Levi's. With this, we have commitments for over 80% of our planned sponsorship of the year. Equally important, fans are embracing the value brands can provide to the concert experience, with around 70% of live music goers agreeing that brands can enhance their time at the show. Our team is the best in the industry at working with brands to develop programs that deliver value to fans, which in turn grows our brand relationships and attracts new ones. Our results for the first quarter demonstrate the success of our strategy and set us up for strong growth in 2023. We expect to host a record number of fans this year, even against a 2022 comparison which benefited from rescheduled shows attended by 20 million fans. Ticketmaster should also deliver record activity, with around 600 million tickets managed globally this year. Our sponsorship business, even after incredible growth last year, looks to be on track for double-digit AOI growth again this year. As we then look to 2024 and beyond, we have all the necessary levers to build our flywheel globally and continue to compound AOI by double-digits for the foreseeable future. With that, I will turn the call over to Joe to take you through more details.

Thanks, Michael, and good afternoon, everyone. Building on 2022, we started out this year with a record Q1, our highest first quarter revenue, AOI, fan count and ticket sales. All of our markets are fully open, selling tickets, hosting tours and connecting brands with fans. Our reported revenue of $3.1 billion for the quarter was $1.3 billion better than Q1 2022, an increase of 73%. On a constant currency basis, our revenue was $3.2 billion for the quarter. So there was roughly a 2% unfavorable impact due to the slight strengthening of the U.S. dollar, primarily against the Canadian and Australian dollars. Given the limited FX impact on our numbers, the rest of my comments will just be reported currency. Our reported AOI of $320 million for the quarter was $111 million better than 2022, up 53%, with an improvement of $65 million in ticketing, $50 million in concerts and $26 million in sponsorship. Over half of our AOI growth came from our Asia Pacific and Latin America markets, where we are expanding our global touring activity and diversifying our historical seasonality. We converted roughly 59% of this AOI to adjusted free cash flow of $190 million, which is significantly higher than our 43% conversion in Q1 2022. In our deferred revenue, a key leading indicator of growth, ended this quarter at $4.4 billion, up 28% from this point last year. Let me give a bit more color on each division. First, in concerts, we had the highest concert attendance ever for Q1 with 19.5 million fans attending our shows, up 79% compared to 2022 when we had approximately 11 million fans. Show count was 9,600 events, up 43% compared to 2022, with more fans per show due to a heavier mix of stadium and arena events and stronger than historical average attendance levels. As a result, our concerts revenue for the year grew by 89% to $2.3 billion, while we delivered $1 million in AOI, a $50 million improvement over Q1 2022. This is the beginning of what we see as a very solid year for our concert segment, including margin expansion relative to last year. Looking a bit deeper at our fan metrics, we had strong growth across the board. Stadium attendance more than quadrupled to 3.3 million fans this quarter, up from 800,000 fans in 2022. This growth primarily came from our Asia Pacific and Latin American markets. Arena attendance was 6.7 million fans for the quarter, up 3 million or almost 80% from 2022, largely as a result of growth in Europe and Australia touring. Theater and fan club count was up 45%. And while it's not a large quarter for festivals, we did see festival fan count grow by 50% from our Mexico and Australia and New Zealand expansion. Overall, our international markets drove fan count growth, accounting for over 90% of our increase versus 2022. This was due in part to the closures still in effect in Q1 2022. That said, we expect continued strength across all global markets through 2023, along with some seasonal shift towards Q1 activity. Last year, we discussed the various cost headwinds at our operated venues and festivals. Thus far this year, cost pressures are declining and our operational cost per fan is down across our indoor buildings, and we are forecasting that cost increases will remain below general inflation levels for our festivals and amphitheaters. As a result of these improved conditions, we expect overall profitability per fan will again increase this year as cost increases are more than mitigated by increasing average revenue per fan, pricing and on-site sponsorship. Next, in ticketing, where our numbers reflect growing fan demand for live experiences. In Q1 2023, we sold 72.6 million fee-bearing tickets, up 21 million tickets or 41% compared to 2022. Nearly two-thirds of the growth was driven by concert tickets as North America concert ticket sales increased by 35%, while international concert ticket sales increased even more by 65%. With this increased ticket volume, GTV for the quarter was $7.7 billion, up 60% compared to 2022. At peak sales times during the quarter, Ticketmaster sold 15,000 tickets per minute in North America with more than 20 million fee-bearing tickets sold each month globally. In Q1, over 99.9% of all TM transactions were processed without any issues. While secondary ticketing volume grew at a similar rate, ours continues to be largely a primary ticketing business with secondary ticketing accounting for only a mid-teens percent of our overall GTV. With these growing ticket sales, revenue for the quarter was $678 million and AOI was $271 million, delivering a margin of 40%. It's hard to compare these margins to Q1 of last year, given the geographic mix shift and increased cost of ramping our staff back up over the course of last year. But these margins are ahead of our full year 2022 numbers, and we expect margins for the full year to continue being in the high 30s. On the pricing front, average ticket prices on primary tickets rose by 16% compared to Q1 of 2022, driven by fan demand for the best seats, particularly at concerts. Average secondary ticket prices remain close to double that of primary ticketing, continuing to show the extent to which concerts and other live events remain priced below market value. We also saw revenue from non-service fees grow double digits as we further build ancillary revenue streams, including insurance, upgrades, and other upsells. Lastly, so far this year, we have signed clients accounting for nearly 8 million net new tickets, up 15% compared to this point last year, positioning us for ongoing growth. Finally, in our sponsorship business, top line revenue improved by $54 million or 47% to $170 million in Q1. Our AOI for this high-margin business was $96 million, up 37%. Sponsorship's growth during the quarter was driven by the reopening of international markets that were closed in Q1 of last year, the increase in high-profile artists on sales that attract premium marketing partners, and the expansion of our venue network. We had double-digit growth in both on-site and online sponsorship with on-site sponsorship representing most of our AOI growth year-over-year. From a geographic perspective, our international markets delivered 54% growth in the quarter while North America had 26% growth. Contributing to our sustained growth since last year has been our strategic sponsors generating over $1 million of revenue in the year. Relative to Q1 of last year, our number of strategic sponsors grew by 15%, while the revenue from those partners rose by over 20%. These marketing partnerships now account for 85% of our total sponsorship revenues. Sponsorship margins were slightly lower than average during the quarter as we had higher variable expenses due to artist activation costs for A-list talent presales with tickets sold for these key sponsor programs four times that of last year. As timing plays out, we anticipate that for the full year, variable expenses and margins will be in line with 2022. A few other points on 2023. We continue to project that CapEx will be approximately $450 million this year, with two-thirds on revenue-generating projects, including new venue builds and renewals as well as other organic investments to support growth. The remaining one-third is on maintenance CapEx as we catch up on deferred 2020 and 2021 maintenance. We ended the quarter with $2.4 billion of available liquidity between free cash and untapped revolver capacity, giving us ample flexibility to continue investing in growth. We're comfortable with our leverage, particularly given the AOI growth ahead with approximately 87% of our debt at a fixed rate with an average cost of debt of roughly 4.7%. In addition, the majority of our debt is long dated and nothing is maturing within the next 18 months. The only notable change to our below-the-line guidance from Q1 is on accretion due largely to impressive growth above previous projections; we estimate that accretion will be approximately 40% higher in 2022, and this should be factored into your EPS estimates. At this point, we don't expect any material FX impact on revenue or AOI for the year. With that, let me open the call for questions.

And the first question comes from David Karnovsky with JPMorgan.

Michael, Joe, we've seen a couple of bills introduced in Congress to address ticketing practices and contracts. So wondering first, how you think some of these items might impact your business, assuming they were fully enforced. And then just based on meetings you've had, do you think these bills largely meet the primary concerns of lawmakers as you've come to understand?

Yes, we're kind of watching what's going on. And we believe that through all of the noise, most people are ending up in the industry and politics at exactly where we are and the principles of what the FAIR Act is, whether it's all in pricing, cleaning up deceptive practices and the secondary market, giving artists more tools; those seem to be all the common themes coming out in all of these different bills, which we're fully supportive of. Having our own build of the FAIR Act, we know Senator Cantwell and Cruz introduced theirs. Neil has got a bill coming in with Senator Klobuchar and Cornyn. These are all in the same vein and the same thematic around helping the artist control their tickets, get them in the hands of fans, and be aware of some of the practices in the secondary market, spec selling deceptive sites, hopefully better protection on bots, and we've always supported all-in pricing. This is not Live Nation versus any of these. We are aligned with all of these bills. We think all of these bills, we've said continually for a long time, are better for our business because it helps us deliver a better on-sale and fan experience. So right now, it's the Wild West, we're doing our best, but any bills of this nature that start putting some better regulations and controls around the experience will help our overall business.

I was hoping you could provide more details about Vibee. Can you explain the opportunity? Is this something you intend to develop mainly for your major festivals and residencies, or do you see a broader opportunity across your promotional activities? I'm also curious about what influenced the choice to develop this internally instead of seeking an external events partner.

Yes, we look at this segment overall. If you look at what we've been talking about on our Investor Day for the last few years, the premium business is a huge opportunity for us. I think I've said anytime this is an industry that has done a great job of being scaled general admission, but not done a great job of providing a premium experience for customers. The sports and new arenas and stadiums are doing a great job on that. But as an industry, like Live Nation and the music industry has not done that. We think there's a great opportunity overall to launch more products and services that can provide a better premium experience for the customer. So this would just be an extension and a continual strategy towards what we call the premium experience. We've got a company called VIP Nation. We'll do about 1,000 of those events this year. Those are based around the concert and the tour and going to a sound check or early experience or a meet-and-greet. So we've been the leader in that space and expanding that. Ticketmaster is launching Ticketmaster Travel, looking at ways we can put both the ticket and an airline or hotel together and take advantage of that scale, and we've been testing that in the UK with great success. Vibee is another product where we looked at Poland and we looked at on-location events like CID and others that were doing it. The difference is we have the scale, but we already have been doing it. We have the expertise. We looked at our Insomniac team and built up the launch with the U2 experience sold out with close to $20 million in ticket sales around a high-end premium experience. So we have the in-house expertise, and this is another product in our ongoing strategy, whether it's clubs, premium memberships, premium clubs, subscriptions, all the ways we're going to continue to look to say how do we from general admission into a premium experience product. I know there's also the challenge of some of these other companies having the expense part about doing this is the rights, and we don't have that problem. When you're chasing the Olympic rights or chasing a business for premium, it's a little harder unless you're in-house. So I'm sure our location does fabulous with their UFC experiences, and we don't have to pay rights. These are our rights. So we can do it in-house. We don't have to outsource it and split any of that upside with anyone else but our own businesses.

And the next question comes from the line of Brandon Ross with LightShed Partners.

One on your fundamentals and then a follow-up to David's question on the sales and Congress. Actually, I'll start with that one. I think the Klobuchar bill very specifically attacks your venue exclusivity. Can you kind of just respond to that bill? And how important is the venue exclusivity model for you in North America? And then kind of on the fundamentals, last year was obviously a pretty depressed year in terms of constant margins. I know you take the word margins, Joe, but we'll go with it anyway. Should we see a real bounce back in that and continuing type of growth from 2030 and beyond into future years?

First of all, on the exclusivity point, I think the first point I should make is congratulations on the birth of your daughter. Glad to hear everybody is doing well. But to the exclusivity point, I always start with, these are the venue rights. The venues have been figuring out over time how do they best monetize certain rights they have. What they have determined is the best way to monetize those rights in the U.S. is by auctioning them off for exclusivity. So I think it's, frankly, primarily, if there were any changes in exclusivity, it would be venues that would be hurt the most because they would lose the ability to fully maximize their rights. We're very confident with the quality of our systems, its ability to handle on sales in a way that no other system can do has been shown both by the clients that we've been adding as well as you've seen in the press issues that other systems have with very modest on-sales. So we're very confident in our ability to deliver. I think it's uncertain any bill, in today's Congress, not just this one, but any bill that doesn't have bipartisan support out of the gate has its challenges. But more fundamentally, I think that you'd see the venues respond to that and probably push back because they would be hurt a lot more than we would. In terms of the performance of the business, I tried to give a lot of details in there. I think that, as you know, first of all, we look more at the cash profitability of the business, where that is, how that's operating on a basis, which, as I said, we expect to continue to grow this year. I also noted, I think, in the concert side, last year was a bottom tick in terms of our margins. We expect it to be coming back this year. We don't assess over margins because, for instance, this year, we expect to be having a great stadium and arena year, as you could tell by the numbers we already gave for that's inherently going to be a lower-margin business than one of our amphitheater customers. We're still going to pursue that business, it's still a great business, but it impacts technically the margin while generating cash profitability. So I think that we're on an upward trajectory. I think '23 is going to be great. And very early signs we have for '24 show continued success.

Just one quick follow-up to that comment. I think there's concern about lapping the supply side for next year. Do you feel good about the supply side coming out of the '22 and '23? I know you get asked this question every year as things grow. But do you feel confident with what you're seeing so far? That's all.

Yes, we have been navigating through the challenges, and I believe the previous fall was focused on the uncertainty regarding the number of shows in 2023. I hope we've addressed those concerns. This isn't related to pent-up demand or COVID-related rescheduling, as that was resolved in 2022. We're returning to regular business operations. I'm excited that we're now looking at a comparable year to last year, despite essentially combining almost 1.5 years of shows into this one due to all the rescheduled events, with around 20 million attendees. Being able to present higher numbers than last year demonstrates the global strength of our business, from amphitheaters to stadiums, clubs, and festivals. Every region globally is performing well. We are witnessing exciting talent on tour now, not just legacy acts like The Rolling Stones. Six of the top ten artists are newcomers. Festivals like Lollapalooza and Coachella are showcasing artists like Bad Bunny, Carol G, Rosalía, BLACKPINK, BTS, and Billie Eilish. There is a continuous influx of exceptional new talent each year. For instance, we didn't anticipate Luke Combs selling out stadiums this year two years ago, nor did we predict Bad Bunny would be the top-selling artist last year. Our supply and demand strategy looks very promising. More artists are currently creating in studios and sharing on platforms like TikTok, and they aim to achieve the same success as Bad Bunny. Additionally, we've noticed a positive shift in the supply landscape. For many years, we mainly saw US or UK artists dominating the charts and stadiums, with most other talent remaining local. This year marks a significant change, as the consumer market has become truly global. Artists from Latin America and Korea are now emerging as global superstars, something that hasn't been seen in the last 30 years when the industry was heavily US or UK-centric. We believe this shift will enhance the supply chain for the next decade, bringing young talent from places like India and South Africa, all of whom will rapidly find platforms on TikTok, Spotify, and others to become global stars capable of filling arenas and stadiums in their respective markets.

And the next question comes from the line of Stephen Laszczyk with Goldman Sachs.

Maybe for Michael, on underlying contract demand, setting aside the stadium and arena tours for the moment. Can you maybe talk about how demand for the average or even smaller amphitheater or club show is trending compared to what we saw for those types of shows last year? I think there's some concern that maybe the top shows are performing well this year, but it's perhaps coming at the expense of the smaller ones. So just love to hear your thoughts on how those smaller and average-sized shows are performing.

Yes, Stephen. Just to give you the feel on that, we don't have a lot of amphitheaters yet just in the first quarter. But if you look at our theaters and clubs, which tend to be pretty strong at this point of the year, they're tracking around 8% ahead in terms of average attendance per show. We're doing that with also increased pricing and lower cost structure on a per fan basis. So those shows are performing very well for us.

To add to what Joe mentioned, our model is different from that of movie theaters; we’re not solely reliant on major hits. We operate as a scaled business. While top artists like Beyoncé will certainly achieve impressive numbers, our festivals, including the well-known Lollapalooza and over 200 others ranging from Bonnaroo to smaller local events, are all thriving. There’s significant demand across all types of festivals and performances, from smaller venues to large stadiums, both in the U.S. and internationally. Sales are strong across the board, not just at the top level, indicating consistent interest from clubs to stadiums, from Pittsburgh to Milan.

Great. And then maybe just one on the venues business. You called out in the press release, I think you expect to host 3 million incremental fans at new Live Nation venues this year. I'm curious, maybe for Joe, if you look at ambitions on the venue side, how many incremental fans or shows you think you can add to the flywheel over the next couple of years, maybe just given how the venue pipeline stands today?

Yes. I think this year would be typical in what we would hope to add in the low millions per year from our own venues with a mix of some new amphitheaters, new arenas at the larger end, while continuing to build out the club and theater portfolio. So it continues to be a meaningful part of it and more robust. As I said earlier, you can scale the stadiums and arenas faster. But over time, we've learned we can deliver a very accretive return for our shareholders by operating and being able to count the beer money and the sponsorship money as well.

And I think we laid that out in our November Investor Day, probably on a more macro level. We wanted to remind investors we've been doing this for a long time. We have a large venue portfolio; we don't see that strategy changing. It's not incrementally different than it's been year after year. We bolt on and continue to look around the world at opportunistic markets where there's a great return, and we keep adding a venue, club, theater, arena, if we can find the right market like Austin, where it's a big return. So we'll continue that strategy over time. I think we laid out in November clearer in terms of how many and what numbers we look to subscribe to over time.

And the next question comes from the line of Jason Bazinet with Citi.

I just had a question about your cash balance. It seems like it used to run, I don't know, $0.5 billion or something and it's been 4x that or something over the last year. Do you just think that in the spirit of being cautious, it just makes sense to have more cash on hand? Or do you think there's some flexibility to deploy it in one way or another?

No, I think just to make sure you have the cash numbers right, I think those cash numbers included untapped revolver capacity, right? So from that metric, it's probably not quite that extreme, but we continue to see a very strong set of opportunities to continue growing the business. We just talked about the venue business, which we've been in, but we think on a global basis has a lot of great opportunities to continue to build out the portfolio. And we think even within our existing portfolio, there's a lot of things that we can do to enhance the fan experience as Michael was talking about. So at the moment, we're maybe being a little conservative coming out of COVID, but looking to continue to grow the business, and we'll continue to assess it and see what the right options are.

Can I just ask one follow-up? One of the more interesting things to me, looking at your stock price is, it seems so depressed relative to the fundamentals you guys have been putting up for the last year or so part of the DOJ-related part of it fears of sort of pent-up demand. But I was just surprised that you guys didn't sort of take advantage of that seeming disconnect with share repurchases.

Yes. On one hand, share repurchases can be seen as a tactical move. However, many companies that engage in share buybacks may signal to the market that they lack new growth strategies. We have a strong array of growth opportunities that we want to ensure are not misinterpreted. Additionally, investing in growth can yield compounded returns over time. While you might receive attractive returns from a stock during certain market shifts, focusing on growth investments provides greater long-term benefits. As I mentioned, we will continue to explore all options moving forward, but our current mindset reflects this approach.

And the next question comes from the line of Stephen Glagola with TD Cowen.

Thank you for the question, Michael and Joe. I have two specific inquiries regarding the proposed legislation and its potential impact on your business. First, regarding the prohibition of ticketing and exclusivity agreements with venues, could you elaborate on Ticketmaster's competitive position in the international markets where you operate on a nonexclusive model? I'm looking to understand how this might provide insights into trends in the U.S., including aspects like renewals and new business. Secondly, concerning the Junk Fee Protection Act, I understand that the FTC has the authority to determine if mandatory ticketing fees are excessive. How might fee caps affect your service fee revenue? Would these caps have a greater impact on what the venue collects or on what the primary ticketing service collects?

I think you need to go to some of the interviews. It will help you. The venue drivers, as Joe said, this is the venue business. I know everyone wants to subscribe at the end demand. Most of the service fee kind of do the auction for the ticket. Again, we think that the venue that's built the billion-dollar arena or the multibillion-dollar stadium in that market, I think he's going to continue to be pretty strong and vocal about his rights and returns on what companies he can hire exclusively or not to service his business, so whether it's Microsoft or CRM or Salesforce or Ticketmaster. I think they're going to look at all their options for their best return for their business. So we look at that from that perspective. We look at Europe just because we've always thrown out lightly that international as an allocation in the U.S. is here. Just kind of for the trend, International is moving more towards an exclusive model than away from it as new buildings are being built over there and you're building your arena, which really had been underdeveloped. It was mostly a soccer business or football. But as the new buildings are getting built, they are looking over here and realizing that this is another revenue stream that they should be leveraging. So I look at international probably moving closer to the U.S. model, and the U.S. model moving to the international model because I think they're now realizing that they've been undervaluing their exclusive ticketing rights for their venues. Now we do really well over there because we always will do well in an open market with the best technology. We sell more tickets than the competitor. So if you're in an open allocated market and you're going to allocate to us and others, we're going to do really, really well because we're going to be the one that probably sells the most tickets for you, so you'll end up allocating more to us. But we don't think that model probably ends up here, more driven by the venue agenda than the ticketing agenda.

And the next question comes from the line of David Katz with Jefferies.

Thanks for including covered a lot, but I was hoping you could just talk about the secondary ticketing market, which seems to be an area of growth for new smaller entities, other approaches, technologies, etc. And I know you've talked about in the past how what their impact is on the market. What's new with respect to that? What can you do about it to protect yourselves better? And I'd just love an update there, please, if you could.

I'll jump in and then Joe will follow. I just want to remind what we said earlier, of all the legislative noise, we've been swirling around for 6 months. The common theme in all of this legislation that you're seeing come forward is around limiting and putting some handcuffs around the scalpers and the business. We do see a lot of this legislation moving forward is going to help the primary ticket, the content holder, do a better job on that front. It will be harder for the scalper or the bots, deceptive websites, spec selling, a lot of practices, drip selling, etc. Overall, we think that this market right now, legislatively, is moving against the secondary business in general, not going to ban it, not going to cap it, but some of the cleanup legislation does help primary hurts secondary. That's a big move that hasn't happened in the last 10, 15 years.

Yes. I think the other piece is you have to remember that secondary for sports is very different than secondary in concert. Secondary and sports is often used as a distribution platform where you sell the season ticket to the scalpers, they disaggregate it and they're performing a function for the sports teams of guaranteeing them some upfront funding that has value to the teams, the value to the fans. You don't have that in concerts. The concerts, the issue is that they're using illegal and deceptive practices to get tickets with the sole objective of increasing the price and selling them to the fans. So I think what you're seeing is because the artists don't have the same sort of collective central power that a league does today, they can set up an NFL ticket exchange. You need to give the power back to the artists. So it's very clear that they can be the decision-maker. And then it becomes the onus of the secondary players to figure out how they're adding value. Like any other business today, you have to survive and adapt and grow because you're adding value to others in your ecosystem. That hasn't been what how the scalpers have done it in music over the past several years, and it's finally gotten to the point where you're getting the pushback now from the artists, and that's being fully understood by our politicians.

Thank you. And to say next quarter would be understating beating by $100 million.

And the next question comes from the line of Ben Swinburne with Morgan Stanley.

Two questions. Michael, you also mentioned, I think, in your prepared remarks that the secondary prices are running about 2x primary. Last year, I think it was last year, sort of that Bruce Springsteen moment about market pricing expectations that more artists would embrace that. I was wondering if you could just sort of update us today on sort of the trend in market pricing on primary and sort of pricing back house, front of house the right way and where you feel the industry is and the business is today? And then secondly, you guys are always thinking pretty far ahead around technology. What are your thoughts on AI as an opportunity for Live Nation? Just broadly, it's obviously a huge topic these days. So would love to hear what you think.

Perfect. On pricing, I think we've been saying it for the last few years. The great transparency and sunlight of secondary has really helped the artists and the management team look at their pricing models. Historically, it was fairly static pricing, with maybe three different price points, same price points all across the country. It mattered if there was a Friday in New York or a Tuesday in Pittsburgh. The business has gotten really, really sophisticated with our PriceMaster and different dynamic models that artists can now use. We see that there are still years away between where the artist markets, the price, and what the market is willing to pay. The artist is one of the few products in the world that's worth more than it's sold, but they do that for their brand and accessibility. I think that will continue. But I do think we've seen the artists looking at their ticket price and the whole manifest and how do we bring the prices down in the back, bring the prices up in the front, so we can sell out and make sure everyone gets a ticket at an affordable price, but let's not let secondary run away with the front row. We think that we're still dramatically underpriced versus demand, and you see that every day on the secondary. We think that's probably going to live for the next 5 to 10 years as the artist moves closer to market, probably never gets to market. But between here and where they feel comfortable, we think there's years of upside that they'll continue to look at. AI, Joe, you can talk about the Ticketmaster.

Yes. Yes. I think on AI, just to be clear, I think it's all upside for us. There's no concern that somehow AI can never replace the live experience. For us, it's an infrastructure tool for both efficiency and effectiveness. If you think about using AI on recommendations, much better marketing, much better individual recommendation in terms of making you aware of shows that you might want to go to. Clearly, we're using machine learning now to help inform models on suggesting pricing that we were just talking about. AI is just the same thing to the next level of data input through that machine learning process. It will help us automate a lot of tools, the event creation process that takes place at every venue, being able to use much better data, machine learning, whatever's going on elsewhere in the PM system will make that more efficient. All the chatbots that you have today, those will go to a whole another level of effectiveness, working with fans and be at a much lower cost than you have today. As we're fighting bots using AI to continue in our battles, to make sure we know who's a person or try to know who's a person versus who's not. It kind of runs throughout all of our infrastructure. It's a lot of places that we're using machine learning today. AI is really that next level.

And the next question comes from the line of John Healy with Northcoast Research.

I just wanted to ask a question on the pace of growth. I mean when we look at deferred revenue, I think it's up almost 30%. You talked about the concert ticket sales at this point, up 20%. Any help that you could give us just on if you think that type of pace of growth can be sustained this year. I think the message is clear; it's going to be a strong year, but would just love to get a little color and flavor about kind of the speed of what you could grow this year.

Yes. I think that you generally start the year coming out of the gate fastest when you're led by stadiums and arenas. So those are the shows that we've long talked about, put on sale earliest relative to the show date. You've got great scalability in the stadiums, which are seeing 4x the level of activity, good scalability in your arenas. So that's driving your huge increase in attendance, a strong increase in ticket sales at $90 million in your deferred revenue. I think as you get into more of the shows that take place in our buildings, across the festivals, amphitheaters to some extent, you generally have a lower level of scalability. You still have very solid growth but not the same level as you have with your stadiums and arenas. So I don't think we're ready to declare an exact number, but I think we recognize the level you have in Q1 is probably going to be the high point of the year.

I just want to add for a moment, John. What's most important to us is helping both sides understand the future in 2024 and beyond. We have faced challenges during COVID, and last year was exceptional. How do 2023 and 2024 appear? We are very hopeful. We see this year as strong, especially considering what many thought was impossible last year. We believe 2024 and beyond looks promising. Historically, we have delivered high single-digit growth in our industry and maintained strong revenue year after year. Moving forward, we aim to return to being a robust growth business annually based on our foundation. We believe the industry is larger than ever and that there are years of growth ahead. History shows that when the industry grows, we usually benefit and capture a significant portion of that growth, often performing slightly better. The industry has typically grown by about 8% or 9% annually, and we tend to outperform that. We view this as a long-term growth story once again.

Great. I have a broad question to ask. You mentioned that APAC and Latin America are contributing to growth at the beginning of the year. As you consider the long-term outlook for these regions, can we expect that as they become a larger part of the overall business, the margins will improve? I've always believed that these markets could potentially offer higher margins compared to the U.S. market, so I'm interested in your current perspective on them.

Yes. I don't think we start with thinking about it as margin. We think about them as being massive growth potential markets, probably the least developed of our major markets. So having great growth opportunities to continue driving more fans, and more obviously, highly profitable fans. As we establish more venues in those markets, I am sure that you can get some attractive margin operability as you operate, but I think more than starting with any margin focus, we're looking at just what's the volume of fans and what's the overall concerts, ticketing, sponsorship, profitability we can drive off that.

At this time, we have reached the end of the question-and-answer session. Now I would like to turn the floor back over to Michael Rapino for any closing comments.

Appreciate everyone. Thank you. We'll talk to you in the summer.

Thank you, everyone. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.