Vivid Seats Inc. Q1 FY2024 Earnings Call

Good morning, and welcome to the Vivid Seats' First Quarter 2024 Earnings Conference Call. Following management's prepared remarks, we will open the call for Q&A. I would now like to turn the call over to Kate Africk.

Good morning, and welcome to Vivid Seats' First Quarter 2024 Earnings Conference Call. I'm Kate Africk, Head of Investor Relations at Vivid Seats. Joining me today to discuss Vivid Seats' results are Stan Chia, Chief Executive Officer, and Larry Fey, Chief Financial Officer. By now, everyone should have access to our first quarter earnings press release, which we released earlier this morning. The press release as well as supplemental earnings slides are available on the Investor Relations page of Vivid Seats' website at investors.vividseats.com. During the course of today's call, management may make forward-looking statements within the meaning of Federal Securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our most recent annual report on Form 10-K, and our other filings with the SEC. On today's call, we will refer to adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures that provide useful information for our investors. To the extent reasonably available, a reconciliation of these non-GAAP financial measures to their corresponding GAAP measures can be found in our earnings press release and supplemental earnings slides. And now, I would like to turn the call over to Stan.

Good morning, everyone, and thank you for joining us today. We're off to a great start in 2024 with strong financial results and substantial progress made on key strategic initiatives. These results are a testament to our strong market position, superior and differentiated offering, as well as the consistent execution of our talented team to keep raising the bar. Today, I'll walk you through our financial highlights and then provide an update on our strategic initiatives. Then Larry will speak to our financial results in more detail. In the first quarter, we delivered over $1 billion of marketplace Gross Order Value (GOV) for the second quarter in a row, along with $191 million in revenues and $39 million in adjusted EBITDA. The strength of our business has continued and we are proud to have delivered 20% top line growth and strong adjusted EBITDA margins that exceeded 20%. We saw widespread demand strength continue in the quarter, with fans across categories wanting to experience it live with their favorite artists and teams. Following quarter end, the industry reached an exciting and important milestone for women's sports. After the Indiana Fever selected Caitlin Clark with the first pick in the WNBA draft, a women's sports team was the top selling performer on our platform for the first time ever. We are excited to see the continued growth in women's sports and believe this demonstrates one example of the broad-based strength we are seeing across the live events landscape. As the live event industry continues to benefit from long-term tailwinds and as we continue to unlock leverage from our recent investments, we look forward to driving sustained double-digit growth on both the top and bottom line for years to come. Through our loyalty program and brand initiatives, we reached nearly 60% mix of repeat orders in 2023. Repeat orders are highly accretive to our margin profile, and Vivid Seats Rewards is one of many mechanisms that we employ to retain users within our ecosystem. Game Center is another key mechanism that attracts both existing and new customers to our platform. Whether it's winning free tickets, competing with friends, or scoring promo codes, the engagement and retention of customers has been excellent. In fact, customers that have earned promo codes have on average engaged with our platform 26 times before earning their first code. The repeated brand exposure and high intent engagement create many more opportunities for players to browse tickets and make repeat purchases, all the while providing us with more information to personalize our offerings to each user. Last quarter, we announced that we were accelerating our international expansion timeline. And I want to take a moment to highlight the excellent progress we are making. As we focus on internationalizing our platform so that it scales efficiently across geographies, we are pleased to report that we are on track to launch internationally by the end of the year. While the platform cost of international expansion is now embedded in our financial profile, upside from international revenues and contribution is still to come. As we look abroad, we continue to see favorable market conditions and believe our differentiated value proposition will be well-received by international consumers. We have also made substantial progress with our recent acquisition of Vegas.com. The integration of this business is going well, and we are already driving revenue synergies. We are now selectively cross-listing and optimizing ticket listings from Vivid Seats, such as for top concerts and sporting events on our Vegas.com property. This is driving incremental revenues as high intent live event fans traveling to Vegas browse an even more comprehensive offering of live event listings on Vegas.com. Our optimization efforts are ongoing, and we look forward to ramping cross-listed volumes. As we said before, we see great potential and multiple avenues for synergies with Vegas.com. Las Vegas, which is already a key market for us, is also the home of the recently announced College Basketball Crown, a new postseason tournament beginning in 2025. We are thrilled to be the tournament's official ticketing provider, and we'll be the exclusive home for tickets across all games in the tournament. This is a first for Vivid Seats and an example of how we are leveraging the power of our industry-leading technology platform in new ways. With this unique and innovative partnership, we will provide fans with a new turnkey end-to-end ticketing experience, while simultaneously elevating our brand awareness nationally through another high-profile event in the entertainment capital of the United States. In summary, we are pleased with the great progress we are making on our strategic initiatives on the buyer side of our marketplace. As always, our focus is on driving long-term stickiness with both buyers and sellers. Shifting to the seller side of our business, we are proud to share that SkyBox remains the leading ERP for professional sellers. Building on our leading position, we've strengthened our seller product lineup further and look forward to launching SkyBox Drive, our new automated pricing tool, later this year. We continue to expect strong adoption from sellers for this tool, which is plugged directly into SkyBox and will leverage robust data from our marketplace. As mentioned on previous calls, we have gone to new lengths to drive innovation and optimization in our marketplace, launching new products for both buyers and sellers, expanding internationally, and strengthening our tech stack. These efforts have resulted in Vivid Seats being recognized among the world's greatest innovators. We are proud to share that we have recently been named on Fast Company's list of the World's Most Innovative Companies of 2024. This prestigious list shines a spotlight on businesses that are shaping both industry and culture through innovation and setting new standards. With that, I will turn it over to Larry for a more detailed review of the quarter.

Thanks, Stan. In the first quarter, our business continued to perform well amidst ongoing end market strength, which we were pleased to translate to solid financial results. In the first quarter, we generated more than $1 billion of marketplace GOV, which increased 20% year-over-year and was driven by increased total marketplace orders. Average order size was $358 in the first quarter of 2024 versus $376 in the first quarter of 2023, with the delta driven by the impact of acquisitions that bring a different Average Order Size profile. We delivered $191 million in revenues in the first quarter, an 18% year-over-year increase. Our take rate was 15.6%, consistent with expectations of 15.5% or higher for full year 2024. In the first quarter, we delivered $39 million of adjusted EBITDA and a 20% adjusted EBITDA margin, while making incremental investments to develop our international platform capabilities. As a reminder, our results from the first quarter of 2023 included $8 million of nonrecurring timing benefits, which will impact year-over-year comparisons. Turning to cash flow, we generated $39 million of cash from operations in the first quarter, bringing our cash balance to $154 million and our net leverage to 0.7x forward adjusted EBITDA. We continue to expect strong cash generation and adjusted EBITDA to cash conversion in 2024 and beyond. After announcing a new $100 million share repurchase authorization on our fourth quarter earnings call, we repurchased 715,000 shares for an average price of $5.74 in March, leaving $96 million remaining under the authorization at quarter end. At these price levels, we believe repurchasing our stock is an attractive use of our robust cash flow. With the strong start to the year, we continue to expect 2024 marketplace GOV in the range of $4.2 billion to $4.5 billion, 2024 revenues in the range of $810 million to $840 million, and 2024 adjusted EBITDA in the range of $160 million to $170 million. Our guidance calls for double-digit growth on both the top and bottom line for 2024, and we expect to deliver double-digit growth on a sustained basis as we capture continued live event growth in North America and expand abroad. With a long history of operating leverage in our business, we believe our recent investments will augment both growth and profitability, and support adjusted EBITDA margin improvement of 50 basis points per year in the coming years. Back to you, Stan.

Thanks, Larry. Before we conclude and turn to Q&A, I'd like to highlight the progress we have made on our ESG initiatives. Last week we published our 2024 environmental, social, and governance fact sheet, providing new and updated performance metrics. Sustainability and corporate responsibility play a vital role in our business strategy, and we are pleased to share the progress we have made in 2023. On the environmental front, we measured and disclosed our Scope 1 and 2 greenhouse gas emissions to better understand our impact, enhance transparency, and benchmark future progress. And on the governance front, we will have a majority independent board of directors with fully independent board committees by November 2024. We continue to demonstrate our commitment to enabling exceptional experiences for all stakeholders through the ongoing support of our employees, customers, and communities. To conclude, we are building upon an excellent 2023, where we delivered nearly 25% top and bottom line growth, and we are making significant progress thus far in 2024 on multiple strategic initiatives, while delivering great financial results and increasing shareholder value. We look forward to making continued progress throughout the year towards our international launch and harnessing synergies from our Vegas.com acquisition. We are confident that our long-term strategy sets us up for double-digit growth again in 2024 and sustainably thereafter. With that, operator, let's open it up for questions.

Our first question comes from Ryan Sigdahl with Craig-Hallum Capital Group.

I want to start with guidance. So you mentioned accelerating international expansion timeline. I guess, is that different from what your expectation was a couple of months ago or just relative to the past kind of few years' strategy? And is $10 million still the right cost assumption in that guidance? And then kind of lastly, on guidance, I guess you'd be nicely on Q1, reiterated the year. Any other puts, takes besides international in there?

Yes. Thanks, Ryan. Yes, I think international is progressing well. I don't think you should interpret that as a change in our philosophy. We are still not assuming within our guidance any revenue or contribution margin beyond the G&A investment. If we get to a point where kind of conviction and certainty on timing shifts to a level where it's prudent to include it, we'll let you know, but we're not at that point yet, but we're trending well to be able to go live before the end of the year. No changes on the investment amount. I'd say that's all trending consistent with expectations. And then if you look at Q1 relative to full year guidance, obviously, I think off to a nice start, but still early in the year with a lot to play out. So felt prudent to maintain the targets where they are.

Can you provide more details about the AEG partnership for the College Baseball Crown, specifically its uniqueness and how you plan to distribute primary tickets exclusively? Why do AEG and AXS see the need for Vivid, and are there any other similar opportunities available?

Yes. Hello, Ryan. Look, I think we're really excited about being their partner on this new tournament. I think as we've continued to demonstrate, we have looked to use our technology across multiple vehicles where the uniqueness of what we do combined with abilities that we have allow us to serve as wonderful sources of distribution for partners and ultimately create value for fans and sellers. We've got a great relationship with AEG, AXS through this. And I think when we've looked at, I think what we do well and what they were looking for in a partner, this looks like a fantastic opportunity, and we're really excited to see how it plays out next year.

Our next question comes from the line of Curtis Nagle with BofA.

Maybe, Stan, one for you, so currently here in terms of Vegas.com, it seems like that's wrapping nicely, synergy starting to come through. Any more, I guess, metrics or in terms of just a framework of kind of what potential lift we could see from cross-selling or integrating that asset in a fulfilling way into the platform?

Yes. Hello, Curtis. Thank you for the question. We were excited when we acquired Vegas.com, and now that it's been about four or five months, we're even more enthusiastic about what we're experiencing. We see it as a crucial component of our marketplace business, and our initial expectations are continuing to come true. It's proving to be a great source of customer acquisition that we can integrate with our other marketplace brands. Additionally, we are not only monetizing the traffic incrementally but also enhancing the selection available through Vegas.com, adding events and options that they previously didn't have from the Vivid Seats supply side. We remain very optimistic about this and believe it will continue to gain momentum for the rest of the year.

Could you provide an update on the competition in the U.S., which is currently your primary market? How do you see that evolving by the end of the year and through the quarter? While I understand you haven't provided guidance for the year or the quarter, you've shown impressive GMV, indicating strong execution. Is there anything specific to highlight regarding the competitive landscape with your larger competitors and how you anticipate it developing over the year?

Yes. In previous quarters, you've mentioned flow language and indicated that in the latter half of last year, we were generally on the higher side of normal bandwidths. This trend continued into Q1 without significant changes. It's important to note that when comparing Q1 '24 to Q1 '23, Q1 '23 felt less competitive compared to the rest of that year. Currently, it seems we are more on the higher end of competitiveness. However, overall, both periods reflect a similar balance that we've observed in the past.

Our next question comes from Dan Kurnos with The Benchmark Company.

Let me follow up on that, Larry, and Stan, considering the strong reengagement and stickiness metrics you've shared amidst the competitive landscape. I know you often find unique ways to approach the market. What are your thoughts on attracting new customers more aggressively while others are trying to navigate their marketing strategies?

Yes. Hello, Dan. Look, I think, as you said, we have always focused on the things that we control and look to build on products and platforms that allow acquisition and stickiness to be strong, right? We spent some time talking about Vegas.com. I think that is a very unique source for new customer acquisitions. If you look at that Crown basketball challenge tournament that we announced with AEG, we're really bullish on that, right? When you look at the fundamental basis for doing that deal, that will be a very, I think, strong source of customer acquisition and retention that will be unique to us and our ability to retain that within our ecosystem, right? So while we always talk about, undoubtedly, this is a competitive environment, the reality is I think we are very focused on the things that we control and have great confidence in the investments that we're making to drive both better acquisition and, as always, I think, much stronger retention, which we see through our engagement vehicles, our repeat rates, our loyalty program.

It's clearly showing the numbers, Stan. I guess, the follow-up, I guess, on the AEG stuff, I mean what is your appetite for further primary rather than secondary? Or is this, as you said, more just a unique customer acquisition play?

Yes. I think the appetite is always there for great deals that are accretive to us and wins for our partners, right? So I don't know that I'd look at it as primary or secondary. I think I'd look at this as we bring great marketplace technology to the ecosystem with an ability to drive value to those who need distribution, as well as being able to allow sellers and fans to participate greatly. And I think we found a great partner in AEG, who is willing to construct that deal in a way that made sense for both us and them, and wherever those opportunities exist, we'll be really aggressive in pursuing them.

Our next question comes from the line of Maria Ripps with Canaccord.

First, I wanted to follow up on international. Could you provide more details about the key components of your international infrastructure investment? What are some of the more intensive aspects of the investment cycle? Additionally, any insights you can share about the potential markets you are considering?

I believe it's quite an achievement to internationalize the platform, and I'm genuinely excited and proud of the progress the team has made this year. As you pointed out, there are essential components that need to be developed and invested in to successfully launch across different markets. This includes language capabilities integrated into the platform for both buyers and sellers, ensuring an understanding of currency processes for transactions, and being able to handle payments effectively. Additionally, we must comprehend the local regulatory environment and maintain compliance across the platform. Viewing these as vital building blocks is crucial for ensuring the platform can scale, and this also entails significant investment. Furthermore, we need to tailor our approach to the specific markets where we plan to launch. So far, we are very enthusiastic about our progress and remain on track to achieve this by the end of the year. As we evaluate the market landscape, we see a great opportunity across various regions, and we look forward to discussing this more as we commence our launches.

And then secondly, sort of with generally stronger-than-expected Q1, how should we think about the seasonality of GOV and revenue sort of this year in context of your full year guidance?

Yes. I think no significant shifts in how we think about the year. But I would highlight some of those exogenous reasons that we tend to shy away from giving precise quarterly guidance. Did appear in Q1, for example, pretty good Super Bowl dynamic with Las Vegas as the destination, pretty robust ticket prices corresponding to that, a pretty good college football playoff match-up, a lot of heightened interest around the NCAA tournament. So some of those, particularly in sports, call it exogenous match-up driven elements fell our way. And so in the spectrum of Q1 relative to the full year, we probably came in a little bit more robust than if those have gone the other way.

Our next question comes from the line of Matt Farrell with Piper Sandler.

Congrats on the strong start of the year. Really exciting to hear about the momentum in women's sports here at the end of Q1. I guess maybe as we think about the rest of the year and moving forward, how should we be thinking about the tailwind of women's sports more broadly, and maybe even hitting out maybe some of the second-tier sports as well and just growth you're seeing in those on the platform?

Thank you, Matt. To start, sports make up just under 40% of our total gross online value. Within that segment, we have several major categories including professional leagues, college basketball, college football, soccer, as well as other sports. If we look at this in terms of key areas of our business, those sports represent around 40%. Each category can account for mid-to-high single digits of our overall gross online value. We've noticed significant growth, especially in soccer, as well as some impact from fighting sports like UFC, along with wrestling and women's sports. These trends are likely contributing to growth rates that exceed the overall market averages. However, it's important to consider the share each league holds in our sportsbook, which is a small part of our overall gross online value. While these trends are positive, I wouldn’t base a financial model solely on them. Yes. I'd say in both instances, we acquired businesses that were, I think, run on the lean side of the spectrum. There are definitely pockets here and there where we're able to consolidate some functions and capabilities, drive some efficiency, drive some shared learnings, bring vendors together, ready to get some bundling benefits just from our scale. But I would characterize those as clearly secondary to the strategic and revenue opportunities that we've articulated.

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

First off, just as we think about the mix of GOV across categories for Vivid, obviously, there's a lot of moving parts this year with the business integration. But I'd love to know, looking forward to '25 and beyond, just how do you guys think about where that mix evolves over time? And which verticals in your mind are the stronger, more attractive growth vectors long-term for Vivid? Whether that's from a GOV growth perspective or better or worse take rate opportunity perspective, we'd just love to hear your thoughts on how you think about that medium-long term. And then, Larry, following up on your comments around the kind of expectation for margin improvement over time, just curious also how you guys think about that strategically and why 50 basis points is maybe the right cadence or if it's not the 50 basis points necessarily? Because I'm sure that you're not running it long-term for any specific target necessarily and the competitive environment has a lot to do with this. But just how do you think about the trade-offs in terms of the margin trajectory over time? I would love to hear.

Yes. Thanks, Cameron. Starting with the segments. Generally, we have come to the belief that the secular trends are probably the most robust in concerts in particular, and driving that as you've got really robust demand dynamics, you don't have the same capacity constraints that you have in sports. So if you were to pick on the major professional leagues, baseball, football, hockey, basketball, in most years, it's the same teams playing in the same stadiums, on the same schedule, same playoff opportunity, and growth will typically come from price and then the episodic expansion of a playoff series, insertion of in-season tournaments, right? In NFL, they're talking about Week 18 or an 18th game. But those types of ability to drive the number of events are a bit more limited within the existing major sports, whereas in concerts, many venues, especially the largest venues are well short of 100% capacity utilization. And in our Chicago example, they drive by Soldier Field, 65,000 person stadium, and I think it's full 20 days a year, right? So the opportunity for artists to trade up, and you can extend that right across United Center and a number of the other large stadiums. It's much more robust in concerts, which I think underpins a nice secular growth tailwind. We touched on some of the, call it, secondary sports that have really bolstered the existing pillars that I think help the sports growth rate. But even with that, I'd point that the fundamental trends underpinning concerts are probably a bit more robust. The last piece, there's not dramatic differences in take rates. There are not dramatic differences in repeat rates across the categories. But they're not identical, right? You can imagine someone who goes to baseball games, and there's just so many games in a year. The proclivity to repeat is probably slightly higher than when you see Taylor Swift and she doesn't come back into your city for 5 years. And so you see that span the category, so slightly different take rates, slightly different repeat rates, perhaps an opportunity over time as we continue driving engagement, driving platform comfort that we can shift concert behavior to look a little bit more like sports, but that's a very long-term opportunity. And shifting to the margins, it's always a little bit of the balance. We're speaking in aggregate at the P&L and what we're hoping at some of the series of micro decisions will roll up to the year-after-year. But ultimately, underpinning that, when you decompose those margin commentaries, it's a series of risk reward and ROI evaluations across innumerable opportunities. And so it's properly calibrating where you want to draw the line, what you're saying yes to, what you're saying no to with the background music being that we've knowingly made some pretty significant investments into some loyalty and brand initiatives and have committed to driving leverage against those. And I think that impacts kind of the marginal decisions to make sure that we're adhering to that overall ROI profile and ensuring that we're delivering proper returns on the investments we've made.

Our next question comes from the line of Thomas Forte with Maxim Group.

Congrats on the quarter. I joined late, so I apologize if someone asked something like this earlier in the queue. In the earnings release, you indicated you were confident in your ability to grow top and bottom line by double digits for the long-term. First, are those organic growth rates reflective of assumptions on future strategic M&A? And then second, while we're on that topic, can you talk about your current capital allocation priorities between investing in the existing business, strategic M&A, and buybacks?

Thank you, Tom. Regarding capital allocation, I believe you've covered the three areas where we would like to invest. We primarily focus on organic investments in the business, as we generate significant profitability and cash flow. We haven't restricted our investments in the business at all. Tying this to my earlier points, we see many opportunities. We accept some and decline more, constantly assessing them through a risk-reward and ROI lens. At no point have we rejected long-term beneficial options for short-term gains. As we generate profitability and cash flow, we face the question of how to use that on our strong balance sheet. The top two strategies we see are pursuing strategic and accretive acquisitions and buying back our stock at attractive prices. However, many of these opportunities are beyond our control, so we assess what is available when the time comes. Similarly, we don't dictate our share price movement. Our share repurchase program indicates we think it's a good time to reinvest in ourselves, setting a standard for acquisitions. They must stand out in terms of absolute and relative returns. We will keep doing this. Regarding the double-digit growth profile, due to the sporadic nature of M&A, we won't factor it into our core growth plans. If such opportunities arise, they can complement our targets, but we won't include them in the base case.

Our next question comes from the line of Andrew Marok with Raymond James.

You mentioned some of the top line synergies related to Vegas.com that you've started to realize. Have you observed any significant synergies or opportunities for buyers of events on Vegas.com? For instance, if someone from Detroit is visiting for a conference and buys a show ticket, have you seen an increase in sales when you offer them a Tigers ticket upon their return to Detroit?

Yes. Thank you, Andrew. Look, I think that your exact example is a really strong thesis under which we acquired the business. And I think we're excited by the early signs we've seen there. We are certainly underway in that campaign. We believe it's a really strong opportunity for us around those who come to Vegas and go home and the ability to market them into the Vivid Seats brand that has all of that selection rewards tied to the home market that they're in. I think those campaigns have launched. We're really encouraged by what we see. And I think given the kind of lower frequency of this industry in general, I think we still need some time to play out. But as we always talk about, our repeat rates on a cohort basis continue to trend as high as they've ever been. And I think we are really excited about the ability to, in fact, accelerate that through the Vegas.com synergies that we see on that set.

Maybe one more, if I could, kind of on the breadth of your customer base, obviously really strong indicators of demand both on the industry and for you guys in terms of order volumes and things like that with AOS kind of continuing to creep up. It's not new that we've heard concerns around discretionary budgets and things like that. I guess maybe speaking to the breadth of your customer base, is it still like the same large pool of customers who are maybe more willing to spend on more expensive events and experiences? Or is it maybe a smaller group of more dedicated buyers who you're really getting these benefits from?

Yes. Andrew, I would say I don't think I've seen anything that would point to change. When we looked in the past at the demographic profile of our customers, I think it's pretty reflective of what you had anticipated, right, balance across almost any way you slice it, geographic, gender, income, age, obviously reflective of these event costs money, right? So there's going to be some skew towards affordability. But beyond that, it's been very broad-based across interests that are almost by definition quite broad. And nothing we've seen suggesting at the broad level, any weakening in consumer interest in attending these types of events and going more precise than that, I haven't seen any meaningful shifts across those groups.

Yes, bringing it back to what we were just discussing, there are two key points. First, regarding the category and industry trends we have previously mentioned, we remain optimistic and all indicators suggest sustained interest. As demographics transition to newer generations with increasing purchasing power, it’s clear this category will continue to be a priority in their spending. Secondly, on the Vivid Seats side, our investments are focused on effectively capturing and retaining customers across different demographics. Interest in the category stays strong and may even strengthen as we reach these new demographics, and our platform is designed to engage and retain users based on this understanding.

Our next question comes from the line of Ralph Schackart with William Blair.

Just on the macro environment, just curious maybe what you're observing, as we sit here today, as you progress through the year, and just a reminder, what's factored into the guidance for the macro? And maybe just a follow-up, switching gears to SkyBox Drive. You've been in beta here for a little while. Just maybe if you can provide an update on what you're hearing from the beta and maybe thoughts longer-term on the ability to monetize it on a longer-term basis.

Thank you, Ralph, for your question. SkyBox Drive is trending positively and is on track for launch later this year. We are cautious as this platform is crucial for sellers to manage their entire business. As we prepare to market it, we want to ensure it effectively supports a vital aspect of their operations. I can share that our waitlist has grown significantly, now reaching triple digits and continuing to increase. As our beta program expands, so does the waitlist at an even faster rate. While our guidance anticipates no additional contribution from SkyBox Drive, it's worth noting that in the industry, it's rare to find a free pricer. Therefore, if we choose to monetize this product in the future, it would align with industry standards.

On the macro question, we previously indicated our views on long-term industry growth in North America, which we estimate to be in the high single digits to low double digits. Following a couple of years of exceptional performance where the industry grew well above those levels, we have adjusted our perspective to align with the lower end of that range. This acknowledges that there are a couple of hundred basis points of headwinds due to Taylor and Beyonce not touring in 2024. Overall, nothing has significantly changed regarding this situation. It's worth noting that sports are performing somewhat better than we anticipated, attributed to some favorable external factors at the beginning of the year. Additionally, regarding the timing of concerts, the headwinds we're experiencing will primarily impact the first seven months of the year and are expected to ease somewhat in the latter half. Therefore, while we face challenges with concerts at the moment, I expect these challenges to lessen as the year progresses.

Thank you. I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.