Good afternoon. My name is Joe, and I will be your conference operator today. At this time, I would like to welcome everyone to Live Nation's Second Quarter 2025 Earnings Call. I would now like to turn the call over to Ms. Amy Yong. Thank you. Ms. Yong, you may begin.

Good afternoon, and welcome to the Live Nation Second Quarter 2025 Earnings Conference Call. Joining us today is our President and CEO, Michael Rapino, and our President and CFO, Joe Berchtold. We would like 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 our earnings release. The release reconciliation can be found under the Financial Information section on Live Nation's website. With that, we will now take your questions. Operator?

Our first question comes from Stephen Laszczyk with Goldman Sachs.

Maybe to kick it off first for Michael. Given the news last week, I thought it would be a good opportunity to get your latest update on OCESA and how the evolution of the broader Lat Am strategy is playing out. I think it's clear that you've grown the business quite a bit over the last couple of years. I would just be curious if you can maybe touch on the incremental opportunity you see from here and how that strategy evolves more broadly in Latin America. And then I have a follow-up for Joe on 3Q trends.

Thank you. OCESA's been just a home run relationship from our early days and now our original acquisition and now our next piece. I think it's always a good indication when you're working with a partner as sophisticated as Alex and OCESA is that we came to great terms where they wanted to stay in longer because they see the growth and want to figure out how to monetize the growth. So we came in with a great conclusion where we can buy a bit more now to clean up the balance sheet and then let them participate in an ongoing great growth track. So I think that's the best indication. As you know, when you're in a 51-49, anytime you're dealing with that partner, when they're willing to push out their acquisition put-call to monetize what they think is going to be a bright future of growth, it's the best indication for management. So we think Mexico under Alex has continued great growth ahead of it. We've got some venue activity festivals, ticketing upgrades. It's still a long way to go on TM Mexico to get it up to speed with TM America. That alone will bring some great growth to the business from dynamic platinum pricing to better experience for the consumer. As far as larger Latin America, we're just starting to get going. We're in overall Latin America, very small market share on a macro basis. Brazil alone, we think, is another Mexico, huge, huge opportunity in Brazil. Other than Rock in Rio and some tours, we really are underdeveloped in most of Latin America. So we look at Mexico, we look at Brazil, Latin America to be as big as Mexico over time and have great growth opportunities from all the basics. The consumers' demand is blowing up, as we've talked about on a global basis, that 14-year-old wants to see Travis Scott, lots of venue development we have underway there, launching festivals. Only now just launching Ticketmaster throughout the region. So all the basics that we can put in place will the demand both and supply grow in Latin America. We think it will be a great, great continued growth opportunity for us.

Great. And then one for Joe. Just looking ahead, I'd be curious how you would encourage us to think about the concert segment as we head into the third quarter. It seems like ticket sales, deferred revenue, on-site spending all pacing up pretty nicely as we head into the back half. Any update you'd be willing to provide just on how you're thinking about supply-demand, revenue trends, margin trends as you look into 3Q, given maybe some mix in the slate and then I think some mix and timing of how this year is playing out, which I know you've called out in past periods this year.

Sure, Stephen. Thanks. So first, before we get to concerts, just as the other pieces, I think Q3 looks to be very strong. Both Ticketmaster and the sponsorship business expect double-digit AOI growth for the quarter, both of those, and then concerts continuing the growth trend we've had over the course of the year. As you said, very strong deferred revenue numbers, which gives us a high degree of confidence on where the fan count and top line is going. I think Q3 will be a very strong stadium quarter. Probably more 1/3 of our fans will be in stadiums in the third quarter as opposed to around 1/4 of them last year. So just ever-increasing volume. Kind of the areas that I'd say that have really over-delivered would be stadiums and international and then probably more of the arena and theater activity a bit later in the year, more heavily weighted to Q4 than we've had in the past. But overall, continued strong sell-through of the shows, on sales at the close and continued strong at on-site. We're seeing no changes in the past month in terms of level of consumer demand. We just had Lollapalooza playoffs last weekend, record double-digit increases in on-site spending. So real continued strength in the consumer for us.

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

I wanted to move from the focus on concerts there to Ticketmaster. And Joe, you just said Ticketmaster is going to improve in the back half of the year. But even so, there's been a real divergence between performance in ticketing and concerts the past few years, even in this big stadium year, which we expected to be a bigger year for Ticketmaster. So as we think about your business going forward, we're wondering if this is a trend that's going to continue. And I was hoping you could take a step back and tell us how to think about ticketing growth beyond 2025.

Yes. I think, as you said, we try not to get too caught up in the weeds of quarter-to-quarter. We have a year where concerts are doing very well. And sports and other activity, there's not as much of it, so that's impacting things. So rather than getting overly caught up in the quarter-to-quarter, what's our profit formula, growth formula going forward? I don't think it's changed for Ticketmaster. I think we feel very good about the growth prospects of Ticketmaster. First, I'll just keep reminding everybody, right, we're a global business. We've got great international growth. We have new markets, Michael was just talking about we're just getting started in Latin America, close to 500 million people. So tremendous opportunity in new markets, continuing to build share in other markets. We've added 20 million tickets this year, 70% of them are international. July, another strong month and continuing to add more clients. Layering on top of that is just Live Nation. Our growth, which is feeding Ticketmaster more volume, and particularly as we add more venues globally, that will continue to grow that. I think you layer on top of that, over time, probably have mid-single-digit pricing as people continue to get increasingly sophisticated about how they price all the different pieces of their events. You've got our B2B services, our pricing and marketing, which have been important components, and we expect just to continue to be more and more important, particularly in the international markets that are catching up to the U.S. in terms of deploying some of those services. And then Ticketmaster as an ad platform, which we've talked about. And you don't see all those numbers in the reported segments in Ticketmaster, but that online advertising piece is an important part of the economics of the platform, which shows up in our sponsorship business. So we don't think there is any underlying change in the ability of Ticketmaster to grow on a global basis. And think we'll continue to see quarter-to-quarter ebbs and flows, but still a very strong underlying business.

Okay. And then just following up on the future Ticketmaster. How do you guys expect AI to impact Ticketmaster's growth? Maybe what are the opportunities for you? And do you have the right talent in place to capitalize?

Yes. Clearly, AI is going to transform almost everything we do online, right? It's going to be a massive change. I think, first of all, just tactically, it drives efficiency for us, drives efficiency in customer service. We're already using AI chatbots for a large portion of our customer service. I expect that to grow rapidly over the next few years as the chatbots get better and better, frankly, probably get better than humans soon. So that will be a source of savings. On coding, absolutely using those tools. We expect that to allow us to make change faster, deploy new products and also to get savings. I think it will help in our effectiveness. I talked about the B2B services earlier, the pricing and the marketing. I expect that using AI tools, deploying those to our enterprise clients and to event organizers will help make the events more profitable and more successful for all the parties involved. And then I think the last piece, which is emerging now, and again, I expect rapid development is in the more agentic AI. And I think this is where Ticketmaster is different than some of the other ticketing businesses. I think with the agentic AI, if you're selling a commodity product, you have a problem because it will drive the lowest price. But Ticketmaster has primary tickets. That's the main business it's in. So it has a unique product. It has more leverage in terms of how it deals with the agents and the opportunity to create TM's own agent, which is more focused on how do we sell the shows for our clients and not just at the whims of somebody who's trying to scrape your site and come to the lowest price for a commodity product.

The next question comes from the line of David Karnovsky with JPMorgan.

I guess following up on secondary. The release noted a decline in GTV due to more market-based pricing. I guess, first, and calling this out, are you seeing an acceleration in this trend? And if so, what's driving that? And then can you just remind us how is Ticketmaster impacted as those sales move back to the primary market?

Yes, I believe Ticketmaster is positively affected as we revert pricing to the primary market. Ticketmaster profits from higher-priced sales, and concert organizers also gain from their share of the revenue and reduced risk in events where they’ve guaranteed the show. It's important to differentiate between secondary markets for sports and concerts, as they operate under different dynamics. Sports teams have long tried to eliminate pricing disparities and are increasingly using secondary markets for distribution, which allows them to break up season tickets. They are capable of being more sophisticated in their pricing strategies and are getting closer to secondary pricing, leading to a reduction in arbitrage, which I expect to continue. However, in sports, the combined effect of narrowing arbitrage and less appealing events has negatively impacted performance this year. In the concert sector, the focus is on price arbitrage. As we adjust the prices of the best seats to align with market value, it will affect the secondary business, which still has a significant gap to close regarding arbitrage. I anticipate this process will take time. Additionally, relying solely on brokers for inventory can present challenges. Fortunately, we have ample inventory from season ticket holders due to our team and lead deals. If your volume relies heavily on search, that coupled with broker dependency can introduce considerable volatility. Thankfully, we benefit from organic traffic and general ticket sales through Ticketmaster, which contributes to our lower volatility in both supply and demand on the secondary market compared to others in the industry.

Okay. And then Michael, traditionally, on the Q2 call, we're far enough into the year that we can finally ask you how supply trends are filling out for the following year. It would be great to get your early view on 2026? And maybe just given that FIFA is going to have a hold on a number of North America stadiums, how does that potentially impact the shape of the year, even what we might see for on sales in the fourth quarter?

Yes. We're definitely going to finish the year strong. 6 months ago to a year ago, I would have been more worried about the World Cup avails and our stadium schedule for '26. But team, because we get ahead of this so far in advance on bookings, we've been able to secure a really good '26 stadium business. So I'm very optimistic. I think '26 on a global basis will be strong again. Stadiums right now look like they're filling up well around the world. 40%, 50% of our shows booked kind of for next year already. So the pipe is strong. It probably hopefully be a bigger amphitheater arena year next year as stadiums were exceptional this year. But again, to Joe's point, you always got to step back on a global basis, while we might have a less stadiums in America because of World Cup, we're going to have a big business in Europe next year. We're going to have a big business in Latin America, Mexico. So the strength of our global portfolio, 50% of our business is outside of America. So while one summer could be strong for amphitheaters here, it could be stronger for stadiums somewhere else. So that's the great bet you're betting on Live Nation is our mass diversity on a global basis from a geographic perspective. So there's no one year that's going to really matter in terms of count. I've said that for many years. You're not going to sit here and hear us say we didn't have like the movie theaters, the blockbuster for the summer that made our year. That's not how our business is driven. We have enough scale on a global basis and enough diversity in venue types that we'll have a strong '26 next year.

Our next question comes from the line of Cameron Mansson-Perrone with Morgan Stanley.

I wanted to ask about sponsorship specifically. It seems like you guys are leaning more into festival naming rights. I'm wondering if you could talk a little bit about how you view that as an opportunity? Is this something that you're kind of testing, leaning more into or how broadly do you think about deploying that across the operated venue portfolio? And then I had a follow-up on OCESA.

Yes. I don't think there's any specific new strategy. Festivals have always been an important part of our overall sponsorship portfolio. I was at Lollapalooza this weekend. You have 115,000 people a day in downtown Chicago, incredible diverse demographic. So a great, great portfolio or platform for brands all weekend. No different than Rolling Loud, which is a different demographic to our festivals in Europe. So festivals are super key sponsorship asset, but nothing new. And whether it's sponsors on the name or sponsors on the stage or sponsors having access, we're always just being innovative with different brands on how they want to capture that moment around festivals. But festivals and venues, which we talk a lot about and why we're expanding them, those are the 2 key assets that our portfolio department spends most of their energy on to drive the highest return for. So you're always going to see ongoing innovations on name and title down to on-site ideas to keep growing the business. And we're having another good record year on sponsorship on a macro level. So we'll have a good '26 overall.

Got it. And then on OCESA, I just wanted to follow up and see if there was any update you could provide on the cash savings from one fewer put to exercise or pay for? And just in general, how you're thinking about that use of cash potentially and the trade-off between investment versus capital return more broadly.

Yes. I think broadly speaking, we're going to continue to focus on deploying the capital on the venue side, as Michael just talked about, which we're monetizing in concerts and ticketing and sponsorship as he just went through, very deep pipeline of venue investment opportunities that we still have. I think if part of your question is what does it mean, we picked up another quarter of OCESA. I think starting next year, we'll see a drop in our NCI on both the P&L and on a cash impact, expected to drop probably around $50 million in '26 from a P&L standpoint, and then you'd see a bit less from a cash impact as the business retains what it needs in terms of working capital and ongoing maintenance CapEx. So it will free up a nice chunk of cash, help a few points on our free cash flow conversion, and then we'll continue to reinvest that in more opportunities that we have.

The next question comes from the line of Peter Supino with Wolf Research.

A question that might fit for Michael and maybe one for Joe. Michael, I wondered if you'd talk about the development of venues. A question we frequently hear is whether building venues around the world is risky. Most people find it easy to imagine that your position as a developer is advantageous. But I wondered if you could talk with us a bit about edge cases, disappointments, how frequently they happen and what you've learned from them if there ever has been one. And then, Joe, I wondered if you could talk to us about, in your trending schedule, the 2-year compound annual growth rate for the first half of 2025, so summing the last 2 quarters, is about a 2% to 3% annual growth rate off of 2023. I'm just trying to strip out the year-to-year noise. I think that's below your view of normal, and I wondered if you could help us bridge that growth to normal.

On the venue risk, we really don't feel like that's a big factor. The risky part of our business is the concert, right? When you're doing a one-off show in someone else's building, that's the risk. Now with our scale and our global competency, we've been the best in the business at that. So we've mitigated through all of our years of experience. But once we kind of put our team together on a venue, I look at venue a little bit like art. These are rare commodities. And we spend a lot of time with our global, local teams. We don't go into markets unless we have local expertise and local boots on the ground. So we know exactly what's right for the market. We've dealt with all of the local developers, the local political scene. So when we're looking across our global portfolio, we have over 100 offices in 40 countries, great entrepreneurs on the ground. When they're in those markets, they know best what the market needs. Does it need a 5,000 feet venue? Does it need a new arena? Are there 2 arenas in town and is a third feasible? Do we buy 1 of the 2 and renovate it? So we're very, very diligent in looking at those businesses. But again, our secret sauce is that we have local expertise. So if I sat in L.A. and told you I was building a venue in Peru, you could be in trouble. I'm not building anything unless my local market who knows the market, done the work, is working with our L.A. development team to find the best return. And the nice part is, because we're in so many markets, we don't have to do any venue in any market that is risky. If we think the market can't take the second or third venue, if we think the location isn't right, if we think the costs are going to run too high, if it's going to take too long, we've got a lineup of great cities where we can move our focus and effort to that have less risk and higher returns. So we don't chase anything unless the return is predictable and we have enough opportunity around the world that we can be selective on picking the best options for our return.

Sure. So I'll take the question. So let me try to break up the first half of the year. And I'm going to answer some of this in the context of just what's going on with the full year, which we said a while ago, we expect to be double-digit AOI growth and which we've continued to say and say again today, we expect to have double-digit AOI growth for the year. If you look at the different segments, I think concerts for the first half of the year versus last year is up almost $100 million is up 30-odd percent. So obviously representative of a great concerts year, driving massive stadium activity and doing very well on-site at both our festivals and our other venues. In terms of sponsorship, sponsorship has been relatively low growth in the first half. But as we also note here in the release, with 95%-plus committed, we are double digits ahead of last year. So from a full-year standpoint, we continue to expect sponsorship to grow double digits. So again, you have timing issues quarter-to-quarter. We don't spend a lot of time worrying about those issues, and we try to give you guys enough information to give you confidence in what the whole year is going to be. Ticketmaster for the first half has had a few headwinds in terms of its specific numbers. One of those I'll point to is the problem of success, our deferred revenue being up 22% at Ticketmaster. So if you just took the fact that we're doing more shows in markets where we're deferring recognition or we're doing more shows in our venues, if you play out the math on that 22% growth in our average margin, I would say you've moved roughly $25 million of AOI from the first half of the year to the second half of the year. Again, it's just quarterly timing, doesn’t impact things over the course of the year. So it's just another reason why we don't obsess over the quarter. First half of the year, Ticketmaster is taking the brunt of hit from our FX headwinds, about $16 million of headwinds in that segment. And then third is we've talked a lot about the international growth. And as we've talked before, international activity in Ticketmaster is lower revenue per ticket than it is in North America. So all of those things are going to have some very tactical quarter half impact. I talked earlier to Brandon's question on why we continue to have confidence ticketing overall is still a good long-term growth business. All of those things which are somewhere between one-offs, mixes and temporal issues.

The next question comes from the line of Peter Henderson with Bank of America.

So with non-English-speaking artists now representing twice as many of your top 50 tours compared to 2019 and ticket sales tripling, can you just discuss how the profitability and unit economics of these tours compare to the traditional North American tours? And then are these like emerging international artists and shows generating comparable margins, on-site spending patterns, et cetera? And then finally, how does this dynamic impact your global sponsorship opportunity?

Yes. Thank you, Peter. There is no real difference. Artists have been global forever. And whether you're a K-pop artist playing in L.A. or whether you're Gracie Abrams and a young pop star appealing to a young demo, per heads, the margin, what you pay the artist, all of the same economics. So regardless of where the artist originated from, if you can sell an arena out or a stadium out, their agents, their manager are going to make sure they're getting market rates. So same margin, stay in business no matter where the artist is from. And the per heads, they're no different than you would imagine. If you're selling country and Chris Stapleton, you do a larger percent of beer and tequila shots than you do if you're selling to a younger demo and you might do wine and parfait and new spirits. So I think the great success we are having on site this year under our new team is we are really mixing up our menu and making sure on our segment strategy that if it's a country and you go to an amphitheater, those digital boards are going to have a very different menu than if you shop 2 days later and it's a backstreet boys playing or 3 days later if it's a young band appealing to a young demo. So we've always been adjusting and we're doing a better job now of adjusting our food and beverage on-site spend to meet the segment. But no difference because the artist is from Colombia, Mexico or Boston.

The next question comes from the line of Kutgun Maral with Evercore ISI.

I just want to follow up on Venue Nation. You provide a lot of great color and detail, but it still seems like somewhat of a hidden gold mine in the business. You talked a lot about the strong fan count growth, the pipeline. Overall, trends seem to be very robust and it certainly seems like it's becoming a primary driver of the business. So is there just any more color you could provide to help us better dissect its specific contributions to the segment, to the concert segment?

Well, it's hard to answer that question and give you specific numbers without breaking out on an exact building basis, which we're not going to do. That's why we give you what we're spending. We give you the fact that it's a 20%-plus return. That return obviously cascades across different pieces of the business. It comes, as Michael said, with sponsorship that really have, as a priority, monetizing the venue. It comes through in your on-site activity, the selling of the beer, the selling of the VIP clubs that comes through in the promotion side, and it comes through on the ticketing side from having more events to ticket, more venues that they're working with. I think you can certainly see that it's happening also in the concert side by the margin. The fact that this year, a very heavy stadium year, margins are consistent with last year, speaks to the continued benefit we're getting out of our venue portfolio and the fact that the margin is keeping up even though you have so many more events outside of our venues.

And the last question will come from the line of Benjamin Soff with Deutsche Bank.

It would be great to hear your latest thoughts on the APAC region and the opportunity you see there following the recent acquisition you did in Japan. And then a follow-up on Venue Nation. You called out a really nice increase in fans this year. Is that about the timing of new venues coming online? Is it better utilization at your existing venues? Or is it something else?

Yes, I'll take the first part. As we've said in our Annual Investor Day, we look at the whole globe as a great opportunity still. We're looking at Latin America. We're looking in the Middle East. We've had great success recently in India with Coldplay and others and all of the Asia and APAC region. So equally, we think there's opportunity all around the globe of this new young consumer with a jukebox in their hand, called that phone that want to see Travis Scott. So that's the great opportunity on a global basis. It doesn't matter pretty much every country in the world, maybe less China. But other than that, every country in the world from India onward, that consumer has been let loose with demand now and wants to see the live show, sees it on TikTok, sees it on YouTube. So you name the country from Singapore to Thailand to many other countries we're looking in, in Africa, they all know right now what culture is on the airways and want to be part of it. So it's a great, great opportunity. APAC, we've been playing in APAC a long time. We've got a strong Australian business, New Zealand. We've been in Singapore. We've been in Korea, Thailand, been in China and been in Japan, but we haven't had the big presence in Japan we needed to really help that region. And a big deal we've been working on for a long time to be in business with one of the great historical companies in Japan, which is just going to help kick our Live Nation Japan business into the next year. And kind of like all of these markets, when you enter these regions, you start small and then you hope to find one of the existing partners that has some scale and longevity that you can add your power to and build off of there. So yes, we think building our Japanese business is great on its own. Japan, one of the biggest markets in the world. So that alone, like we've talked about in Brazil or Mexico, will be a great, great growth opportunity. We're very underdeveloped there. But then it also opens up the rest of the markets to operate out of our kind of our regional hub out of Japan.

And then in terms of our operated venues, most of the activity or most of the growth this year is coming out of a combination of U.K., Europe and Latin America. Those are really the 2 primary drivers of our operated fan count growth. And you got the 2 pieces. It's a mix of existing venues and of new venues that are coming online. So Latin America, you have both a tremendous increase in show count at Estadio GNP coming out of the refurbishment last year, big growth in fan count there. And then we're opening a new stadium in Colombia, and that contributes. And then similarly, in Europe, as we've been building out our venue portfolio, adding Altice in Lisbon and others is a piece of it, but so is driving increased utilization at our existing venues. So it's really a combination of those 2. I'd expect the new venue piece of that to be picking up over the next few years as we bring more of them online into next year and into '27.

This concludes the question-and-answer session. I'd like to turn the call back to Michael Rapino for closing remarks.

Thank you, everybody, for your support. Have a great rest of the summer, and we will talk to you in the fall. Thank you.

This concludes today's conference. You may disconnect your lines at this time.