Good morning and welcome to the Vivid Seats First Quarter 2025 Earnings Conference Call. Following the management's prepared remarks, we will open the call for Q&A. I would now like to turn the call over to Emily Epstein.

Good morning and welcome to Vivid Seats first quarter 2025 earnings conference call. I'm Emily Epstein, General Counsel 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 was issued earlier this morning. The press release, as well as supplemental earnings slides, are available on the investor relations page of our website at investors.vividseats.com. During the course of today's call, we 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, adjusted EBITDA margin, and cash generation, which are non-GAAP financial measures that provide useful information for investors. To the extent reasonably available, a reconciliation of these non-GAAP financial measures to their corresponding GAAP financial 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. Today, I'll share a recap of our first quarter results, updates on key priorities, and then discuss how we are strategically investing to drive our long-term success. Then I'll turn it over to Larry to share our financial results in more detail. In the first quarter, we delivered $820 million of marketplace GOV, $164 million of revenues, and $22 million of adjusted EBITDA. Overall, it was a challenging year-over-year comparison, and we fell short of our expectations. We have continued to see robust competitive intensity while also seeing softening industry trends amidst consumer uncertainty. As we've all witnessed, economic and political volatility has impacted consumer sentiment, and this uncertainty can also impact how and when artists and rights holders go to market. I want to emphasize that we remain confident in the resiliency of our industry and are excited for the long-term tailwinds driving North American live events. Although there is pressure on the consumer, we continue to see consumers prioritizing spending on live experiences over goods, reinforcing our belief that while this is a period of volatility, the long-term opportunity and trends remain attractive. We will continue to align our near-term priorities with this current environment, while not losing sight of the long-term opportunity. As we go forward, we will continue our cost disciplined approach while making strategic and focused investments in both marketing and technology. Turning to those investments, we are focused on our product development capabilities and building on the strengths of our differentiated platform. In the coming months, we will be releasing several fan-focused experiential enhancements within our app to optimize discoverability and inspire the live event consumer. These upcoming app enhancements will focus on elevating the customer experience with key improvements to the navigation and personalization of our platform. We are also pleased with our ongoing investment in Game Center, which continues to foster significant engagement in our app. In the first quarter, we capitalized on popular culture moments with contests around tours like Beyonce and Bad Bunny, as well as our March Madness Bracket to Stack It game. These consumer engagement and experience efforts are designed to cultivate brand awareness and affinity for our platform. With limited marketing expense, we saw this in-app feature have a positive effect on our repeat rate for new customers who were acquired in the first quarter, which was 55% higher for fans that had interacted with Game Center. Similarly, GOV was 35% higher for new customers that had interacted with Game Center. Turning to the seller side of our marketplace, we continue to invest in and demonstrate the power of Vivid Seats Marketplace data through SkyBox. As we've shared, our industry-leading ERP is utilized by over half of professional sellers to run their businesses. Additionally, we are pleased with our ongoing onboarding of SkyBox Drive users. While the progress is encouraging, we look forward to seeing further meaningful increases in adoption over time. As we look at our path ahead, we remain committed to expanding our TAM and taking a coordinated and deliberate approach to building out our global business for sustainable growth. After initiating our official European launch in the fourth quarter, in the first quarter, we continued to build on and further develop the internationalization of our platform and capabilities. We will continue investing in favorable markets where we can scale our platform and look forward to international expansion supporting our growth. On our last call, we discussed our strong 2025 partnership pipeline. We look forward to launching our new partnership with United Airlines, the world's largest airline, soon. With over 130 million members, United's MileagePlus loyalty program is one of the largest loyalty programs in the world, and those many members will be able to earn miles for purchasing tickets through Vivid Seats. Partnerships like this provide an important strategic advantage and allow us to drive accretive volume through our ecosystem, and we expect this partnership to start contributing in the second half of 2025. Lastly, I'd like to provide an update on the progress we have made towards several initiatives outlined in our corporate responsibility and governance strategy since its launch in 2023. We recently published our 2024 results and are proud of the significant step forward we made in our sustainability goals this past year. These strategic practices underscore our ongoing commitment and dedication to our employees, customers, environment, and global communities. To conclude, while we are navigating a challenging environment, we will continue to focus on efficiency, sustainable unit economics, and the ability to strategically invest in our future growth regardless of macroeconomic conditions. We are confident that our operational discipline, differentiated offering, and lean cost structure will position us to perform over the long term. With that, I will turn it over to Larry for a more detailed review of the quarter and year.

Thank you, Stan. We generated $820 million of marketplace GOV in Q1, which was down 20% year-over-year. Total marketplace orders were also down 20% versus Q1 2024, while average order size was flat year-over-year. We generated $164 million of revenues in Q1, which was down 14% year-over-year. Owned property revenues were down 14%, while private label revenues declined 27%. Our Q1 2025 adjusted EBITDA was $22 million, down from $39 million in the prior year. This decline resulted from a combination of lower volume, higher marketing as a percentage of revenue, and negative operating leverage. There were unexpected changes in certain performance marketing channels during Q1, and we believe marketing efficiency will improve sequentially, while year-over-year volume declines will continue in the near term. We ended Q1 with $393 million of debt and $199 million of cash, with net debt of $194 million. Cash generation was negative during the quarter due to a combination of seasonal items such as inventory build and annual bonus payments, compounded by continued pressure on working capital due to organic volume declines. During the first quarter, we repurchased $7 million worth of shares at an average price of $2.89. In terms of outlook for the remainder of 2025, we are suspending guidance. While we previously anticipated continued competitive intensity, the additional variability across the global economy, potential consumer softness, and atypical changes across the performance marketing landscape have combined to create a particularly broad range of potential outcomes. We will start to lap easier year-over-year volume comps in the second half of the year, but expect persistent competitive intensity to drive near-term pressure. I'll now hand it back to Stan for his concluding remarks.

Thanks, Larry. Our historical approach has been to execute with disciplined rigor and focus on the things we can control. In this shifting environment, we are focused on operational discipline to manage the business for the long term. As we've said before, we realize benefits from investing in our differentiated product, service, and value, and that is where we will continue to focus in this current environment. And with that, Operator, we would like to open it up for questions.

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

I want to start with, and maybe it's kind of a two-part question, the competitive environment, but the performance marketing and atypical nature that happened in Q1. Can you elaborate exactly what's happening there? And then, as in the context of that and the continued competitive intensity, namely from one of your skilled peers, does that change your strategy? I know you talked about defending unit economics last year, but focus more on depending market share this year. If that's still the strategy.

Yeah, I will go first and get it rolling. On the performance marketing side, we saw some changes actually in the Google channel and the way they do some of their data reporting. An unannounced change caused inconsistent data across their multiple portals, which compelled folks to bid more aggressively than they normally would. It related to splitting the auctions from one per page to two per page. And so it took, I think us and the industry a while to realize that changes happen and recalibrate some of the metrics accordingly. So you had a dip in efficiency industry-wide. I think, around that. And then on top of it, I think the same song plays on repeat with the continued competitive intensity adding to your latter point. It seems like our competitor is intent on continuing to put pressure on that channel. We have to assume indefinitely, and that pressure is certainly not alleviated. And so as we look at that channel for volume, I think we are presuming it will remain under pressure for the foreseeable future and preparing to adjust accordingly.

Yeah. And then I think Ryan, as you ask, and I think the question, I think for us, I think we continue to try to invest really for the long term. Aiming to build out capabilities that, you know, ideally allow us to do both right, which is continue to drive profitable growth and disciplined unit economics while continuing to focus on, you know, I think recapturing market share at the appropriate time.

Great. For my follow-up, just curious if you've seen any change in your industry expectations from mid-single digits to flat to down. I guess is that entirely the consumer, and how much of that have you seen year to date versus just taking a more conservative approach, given all the volatility that's happening in the economy for what could happen later this year? And then, I guess secondly, have you seen any changes to either the mix or amount of concert supply that you were expecting for this year?

Yeah, I'd say, you know, we think we alluded in the last quarter to the year starting out strongly and then softening into February and March. We've actually seen a little bit of a bounce back in April, but just given the broader economic environment, we felt like it made sense to deflate expectations, even though we are continuing to see some level of choppiness month to month.

Thank you. Our next question comes from Curtis Nagle with Bank of America Merrill Lynch.

Sure. Maybe I'll just follow up on that a little bit. Maybe Stan could you extrapolate on that comment that sounds like macro uncertainty is impacting when right holders go to market? Are you actually seeing artists pull back or, you know, maybe delay planned tours? Or did I maybe misinterpret that comment?

No, hey, Curtis, yeah. Look, I think no surprise. I mean, not just our industry alone, but certainly across, you know, multiple consumer-facing segments. I think there just is a lot of volatility. I think in our industry, and when you look through, I think even others who participate, there's probably been what we see as a seasonal low in terms of what we've seen come to market. That being said, you know, I think April, as you know, I think Live Nation called out, certainly an early period of stronger on-sales, but outside of that, I would say, I think we've seen, you know, a dearth of what we would normally expect during this period. So while still early in the quarter, you know, certainly enough volatility that it could be a multitude of factors that are impacting it.

Okay, got it. And then just maybe one for you, Larry, just in terms of take rate expectations. Did those change? Right? I think we're 15.5% to 16% now, but maybe was supposed to be a little bit higher for the rest of the year. But again, maybe I misinterpreted. So just any clarification, that would be great.

Yes, I think if we zoom out a little bit, you know, when we go way back to early 2024 we had said, expect 15.5% or higher. In 2024, you know, as we were optimizing unit economics, we came above that level, but I think in prior calls alluded to, you know, perhaps we overshot the mark a little bit, so kind of drip back down to that original 15.5% or higher level as a reasonable guidance level. You know, we'll continue to be opportunistically looking to, you know, move levers where we see opportunities up or down. But I think the net was when we were getting into that 17% range. I think we were probably over prioritizing take rate relative to volume.

Our next question comes from Thomas Forte with Maxim Group.

So do you compare what you're seeing in concerts versus sporting events versus theater and comedy?

Yes, maybe start with industry level volume, and then we can move to our performance within that. The concert landscape has been particularly volatile in terms of year-over-year volume trends. I think we alluded to January being up double digits, March ended up down double digits, April back up, double digits. So I think you have in concerts that continued issue where, when you look on a monthly basis, the timing or event mix of which on-sales happen to fall in which month can lead you to a dangerous conclusion if you take the last month and assume that trend continues indefinitely. But when you blend it all together, I think concerts have been flat to up slightly year-to-date, sports have been down a bit at the industry level. There were some tough comps where we started out as an easy comp with the new college football playoff, but tough Super Bowl. We had Copa America last year. We had the Peyton Clark effect last year, and we'll have a tough World Series comp coming up later in the year. So I would expect that sports growth will lag the rest of the industry, and then theater has been quite strong at the industry level, both bolstered by a couple of pretty meaningful comedian tours, seen really nice growth in that category from folks like Shane Gillis and the like. Our performance relative to the industry, I think has been broadly similar. Maybe we slightly under-indexed on the theater outperformance, but across sports and concerts, pretty consistent relative performance to the underlying industry trend.

Great, thanks, Larry. Then for my follow-up, I know you’re suspending guidance for the full year, but can you give your current high-level thoughts on cash conversion to EBITDA? And then what your current thoughts are on capital allocation, buying back shares, strategic M&A, investing in the business?

Yes. I think as EBITDA drifts lower relative to expectations this year as GOV drifts lower relative to original expectations, you’ll have unfortunately the dual effect of continued pressure on our float and thus working capital contribution which as we talked about in a growing environment is a source, but when you’re buffering organic declines like we continue to see, it becomes the use. And then we have our interest expense, we have our CapEx, those are effectively fixed cash obligations, so the EBITDA declines, the amount of cash that comes out the bottom gets compressed as well. So having said that, sitting here today with the negative cash outflows that we saw in Q1, I think a prudent calculation for our cash generation would be fairly limited on a full year basis. So certainly well below what we had expected coming into the quarter. And then in terms of capital allocation, yes, I continue to be fully aware of our valuation and multiple trajectory. So a high bar, I believe for M&A and then you guys can we continue to have cash and flexibility to make the right investments operationally. I think subject to our view on valuation and the share price, we will continue to consider and pursue share repurchases if it makes economic sense.

Thank you. Our next question comes from Maria Ripps with Canaccord.

Can you maybe talk about expectations around your market share dynamics versus flat to down industry? And could we actually see GOV sort of returning to growth by the end of the year?

Yes, I think, you know, if you sort of map a flattish industry in Q1 against our GOV being down 20, you can get their proxy for share impact. I think that predominantly is coming out of the performance marketing channels. We see the same trajectory, if not worse, across other players in the space that are heavily indexed towards the performance marketing channels. Yes, I think we talked about last year starting to lap some easier. Sorry, we will start to lap some easier comps as we suffered additional share pressure in the second half of last year. We have some nice private label wins. But I think at this point, you know, assuming that a Q2 trajectory that’s broadly in line with Q1 is prudent and while I certainly anticipate second half looking better with what we’ve seen to date, I’d be hesitant to forecast a reversion to growth.

Got it. That’s helpful. And then, so you talked about being sort of mindful of near-term investments here. Is there a level of EBITDA margin that you would like to maintain regardless of macro dynamics and competitive environment?

Yes. I think we’ll have to continue to be dynamic. I think, frankly, the pressures that we’ve seen play out year-to-date have come in well above what we had anticipated coming into the year. And so it continues to be a fluid exercise. But yes, you know, to actively manage the trade-off of marketing efficiency and how much marketing spend to balance profitability and volume. Obviously, we’re already in a tough volume position. So the nth dollar of marketing that you pull back while it may be EBITDA accretive will further pressure volume and share. So it’s strung tight. So we’re continuing to look everywhere we can for efficiencies to retain as much EBITDA as possible, but it’s a nice fight at the moment.

Thank you. Our next question comes from Cameron Manson Perrone with Morgan Stanley.

You mentioned being excited about expanding the total addressable market. Could you provide more details about your international efforts and any progress made so far? Are there any early insights? Additionally, I would like to know more about how your involvement in performance marketing has changed and where it stands now. How would you describe your current activity and spending in this area compared to a year or two ago? Any information you can share would be appreciated. Thank you.

I will take the first one. I think on international, I think we remain pretty pleased with the early signs. Well, as you said, it’s early, I think our efforts continue to be really focused on building up scale across the multiple dimensions of the marketplace, be that supply, demand, and spinning up, you know, our infrastructure and technology across those spaces. But early reads have been pretty positive, and we continue to be excited about expanding that global reach and that TAM as well. I think on the marketing side, as you think about that, I think we continue that continues to be a large channel for us. So I’d say proportionately, we probably haven’t seen a large difference in mix. However, I think we continue to invest in diversifying that, being aware of, I would say, you know, various components of the changes in that channel, as we alluded to in the earnings component, and then building out, I think, the components of our platform that drive, you know, stickiness within that’s certainly where we’re focused for the long term.

Thank you. Our next question comes from Andrew Marok with Raymond James.

You were pretty clear on a lot of the dynamics affecting order volume and the things that are going on there. But wanted to think about the AOS variable given that there’s presumably a macro headwind, but you’re also entering a period of easier comps once you lap the Vegas.com and the Wabash impacts. Thank you.

Yes, in the first quarter, we saw our average order size hang in there and be flat. Interestingly, industry average order size was down a few points, so we skewed slightly higher than the industry on overall price point. You know, hard looking into the balance of the year to have a precise view. I do think we are likely facing a better concert environment in terms of lineup and supply than we were last year. And at least as of today, a lesser consumer environment. And so to net those two together is going to be tough to say with precision. But I think at the moment, I would say flat seems like it’s good a guess as anything.

Appreciate it. And then really quickly, another marketing question, I guess. Has there been or could there really be any response to maybe some value-based messaging like around the savings provided by the loyalty program? Could that help in any meaningful way? Or is it just the case where sometimes people get economically pressured and they say no amount of loyalty discount will help me convince me to buy tickets?

Yes, I’d say we pretty consistently see pricing impact purchase behavior. We really haven’t lived through a substantial or persistent period of consumer softness other than COVID, which I think was exceptional in a lot of ways, where I could say with any quantified confidence that elasticity increases when economic softness turns in. But we’ve always seen that there is a consumer response to value prop. So if you’re seeing it elsewhere in consumer behavior, I think it’s a reasonable hypothesis that the loyalty program could resonate a bit more. I think our task continues to be driving more awareness of that loyalty program. Folks that have it see good behavior shifts, but we need to continue to make folks aware and have them appreciate and understand how significant the value difference really is.

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

Maybe a few, I guess. Stan, I don’t think we’ve addressed some of the regulatory stuff, whether it’s the Trump executive order or the Ticket Act with the concierge component in it. So maybe start there and just give your thoughts on your impact to the industry or how you view that playing out.

Hey, Dan. Yeah, you know, I think we are and have always been, I think, really supportive of all the regulation, you know, that is targeted at providing transparency for consumers in the industry. I think, one is fundamentally a tenet that we believe in, and two, perhaps more on the competitive side, you know, we believe that our leaner cost structure as well as pricing for consumers generally tends to always be lower than the competitive set. So I think, you know, whether it is the recent executive order, the various acts that are looking at it or the FTC’s order that’s coming into play, all are really focused on price transparency. And we are quite supportive of all of that and are looking forward to a level playing field as it pertains to transparency and price to consumers.

Got it. That makes sense. And then not to sort of, you know, go on with this too much, but just in terms of the maybe the delta between the primary and secondary markets, you know, Live Nation’s demand comments were a little bit more upbeat. I hear you, particularly, Larry, on the supply challenges. Like, we’ve seen that in the marketplace. But, you know, ticket pricing being higher in the secondary market, I guess I’m just trying to figure out how much you guys are concerned about, you know, the consumer relative to it being more of a competitive issue. And if the higher secondary ticket pricing, general relative to primary has it is playing a factor on your view on the demand equation?

Yeah, I mean, I’d certainly characterize our main challenge at the moment as share. I think we continue to believe the overall industry trajectory is robust. I think it continues to prove resilient relative to other consumer-facing categories. I think we continue to believe that there’s healthy growth over a multi-year period specific to the U.S. versus Live Nation commentary. You know, I think that probably just falls more under the slight stylistic difference, right? When we look at things we’ve seen fully come out, I think we’re just probably a bit more tepid and I think again, they might know a little more than we do on what’s coming the balance of the year. But from what we’ve seen, it’s a fine lineup, right? I don’t want to suggest otherwise. But given what we saw in February and March, I think we see a couple of consecutive months of softness, albeit buttressed by strength on either side of it. With the broader uncertainty, I think just we wanted to frame that on the margin. We’re feeling more cautious, not less. And even when you look across what folks are saying in real time, I think there’s a broader diversity of perspectives on how everything is looking at the moment than you saw three, four, or five months ago.

Got it. Super helpful. And just lastly on the marketing, which a lot of people have touched on, but I guess, Stan or Larry, in terms of mix, like Social’s having kind of a moment right now, United is a huge win for you guys. Obviously, you guys have been really good with the partnership side. I mean, how do you contemplate channel mix at this point? And are you developing some, you know, kind of maybe more clever ways to work more closely with some of the players to either define your own algorithms or however it is to get even further efficiencies in a channel that had maybe a momentary tailwind but is going to probably revert to the mean in the back half of the year?

Yes, thanks for that, Dan. I think it’s actually a really astute point. I think as you see our focus on partnerships, a lot of, you know, our leverage of the distribution platform that we have has been on being able to diversify our volumetric mix away from, I would say competitively pressured marketing channels. So with deals like United, we remain very excited about the perspective of partnering with a brand that has 100 million plus loyalty users in an accretive manner that is independent of the marketing pressure. We continue to focus on finding deals like that, where also we’ll have cross branded opportunities to drive a halo into the Vivid Seats platform. And then more broadly, know, the social side, we continue to think that, too, is an area where we are making investments using, I think, AI-oriented tools to drive and scale creative in a way that wasn’t possible before. I think we look excited for the future as we lean more heavily into that channel and look for more, I would say, accretive value out of that as we invest.

Our next question comes from Ralph Schackart with William Blair.

Just on the marketing change that you called out, and Google makes changes from time to time. I’m sure you’ve kind of worked through them historically. But maybe if you could sort of frame the order of magnitude of this change versus what you’ve seen historically, and just some sense from your perspective on the workarounds or how long you and/or the industry will be able to work through this change as well. Thank you.

Yeah, I think a little bit of a dangerous topic just because it is still a lot of black box and some magic that it’s hard to know with precision what’s happening. I would say this change, as best we can tell, was not universally rolled out, but it did hit our industry and we saw kind of, you know, one of the interesting parts of our private label business. We’ll have multiple folks see multiple vantage points and quickly realize that it was impacting everyone universally. And so everyone saw a kind of correlated almost to the day erosion inefficiency that persisted for a few weeks. Ultimately, I think it was confirmed. How does this compare to other changes they’ve made? It’s hard to speak precisely on that. But, you know, it’s a little bit like piling on, right? When you’re already in a hyper-competitive performance environment. You have folks that are, I think, trying to, you know, effectively make it difficult for others to compete. When you layer on, you know, black box algorithmic changes on top of it, it just felt incrementally painful relative to the normal course variability. I think everyone, you know, for instance, we can tell recalibrated and adjusted but there is still this lagging question. You know, when you see, call it footprint, performance marketing footprint continuing to move towards competitors, is that because of efficiency that they are extracting and realizing? Is it because they continue to lean higher on spend and are accepting more volume for lower profit? Or is there an incremental change in the Google algorithm where they’re rewarding different bid types or bid behaviors relative to prior history? And it’ll take, I think, a little more time for us to get clarity across those three incremental variables beyond the specific change that I would call more of like a glitch in February.

Thank you. I’m showing no further questions at this time. This concludes the question and answer session. Thank you for your participation in today’s conference. This concludes the program. You may now disconnect.