Vivid Seats Inc 10-Q for FY2022 Q1
Vivid Seats Inc. (SEAT)
About this 10-Q
Vivid Seats Inc filed this 10-Q on May 10, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).
Headline figures
Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $130.77M
- up 442.3% from $24.11M a year earlier
- Net income
- $1.26M
- Diluted EPS
- $0.02
ma
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 30, 2022, the registrant had
table of contents
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1 |
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PART I. |
3 |
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Item 1. |
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Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 |
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Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 |
4 |
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Condensed Consolidated Statements of Deficit for the three months ended March 31, 2022 and 2021 |
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Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
Item 3. |
33 |
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Item 4. |
33 |
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PART II. |
34 |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
34 |
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Item 4. |
34 |
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Item 5. |
35 |
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Item 6. |
36 |
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forward-looking statements
This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and the future results of Vivid Seats Inc. that are based on our current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “likely,” “may,” “designed,” “would,” “future,” “can,” “could,” and other similar expressions which are predictions of, indicate future events and trends or which do not relate to historical matters, are intended to identify such forward-looking statements. These statements are based on our current expectations and beliefs and involve a number of risks, uncertainties and assumptions that are difficult to predict.
For example, we may use forward-looking statements when addressing topics such as:
1
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document, or in the case of statements incorporated by reference, on the date of the document incorporated by reference.
Factors that might cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, under the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2022, under the section entitled “Risk Factors,” in our press releases, and in our other filings with the SEC. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q or in the case of statements incorporated by reference, on the date of the document incorporated by reference. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of new information, future events, or risks. New information, future events, or risks may cause the forward-looking events we discuss in this report not to occur.
2
VIVID SEATS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data) (Unaudited)
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March 31, |
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December 31, |
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2022 |
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2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable – net |
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Inventory – net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment – net |
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Right-of-use assets – net |
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Intangible assets – net |
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Goodwill |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and shareholders’ deficit |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Deferred revenue |
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Current maturities of long-term debt – net |
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Total current liabilities |
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Long-term debt – net |
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Long-term lease liabilities |
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Other liabilities |
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Total long-term liabilities |
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Redeemable noncontrolling interests |
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Shareholders' deficit |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Shareholders' deficit |
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Total liabilities, Redeemable noncontrolling interests, and Shareholders' deficit |
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$ |
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$ |
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The accompanying notes are an integral part of these financial statements.
3
VIVID SEATS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data) (Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Revenues |
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$ |
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$ |
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Costs and expenses: |
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Cost of revenues (exclusive of depreciation and amortization shown separately below) |
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Marketing and selling |
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General and administrative |
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Depreciation and amortization |
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Income (loss) from operations |
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Other expenses: |
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Interest expense – net |
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Loss on extinguishment of debt |
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Other expenses |
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Income (loss) before income taxes |
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Income tax expense |
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Net income (loss) |
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( |
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Net loss attributable to Hoya Intermediate, LLC shareholders prior to reverse recapitalization |
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Net income (loss) attributable to redeemable noncontrolling interests |
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Net income (loss) attributable to Class A Common Stockholders |
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$ |
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$ |
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Income per Class A Common Stock(1): |
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Basic |
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$ |
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Diluted |
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$ |
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Weighted average Class A Common Stock outstanding(1): |
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Basic |
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Diluted |
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(1)
The accompanying notes are an integral part of these financial statements.
4
VIVID SEATS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands) (Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Net income (loss) |
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$ |
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$ |
( |
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Other comprehensive income (loss): |
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Unrealized gain on derivative instruments |
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Comprehensive income (loss), net of taxes |
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$ |
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$ |
( |
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Comprehensive loss attributable to Hoya Intermediate, LLC shareholders prior to reverse recapitalization |
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( |
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Comprehensive income (loss) attributable to redeemable noncontrolling interests |
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Comprehensive income (loss) attributable to Class A Common Stockholders |
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$ |
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$ |
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The accompanying notes are an integral part of these financial statements.
5
VIVID SEATS INC.
CONDENSED CONSOLIDATED STATEMENTS OF DEFICIT
(in thousands, except share/unit data) (Unaudited)
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Redeemable Senior preferred units |
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Redeemable Preferred units |
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Common units |
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Units |
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Amount |
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Units |
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Amount |
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Units |
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Amount |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive income (loss) |
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Total members' deficit |
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Balances at January 1, 2021 |
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$ |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Unrealized gain on derivative instruments |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Deemed contribution from former parent |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Accretion of senior preferred units |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Balances at March 31, 2021 |
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$ |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Class A Common Shares |
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Class B Common Shares |
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Redeemable noncontrolling interests |
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Shares |
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Amount |
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Shares |
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Amount |
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Additional paid-in capital |
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Accumulated deficit |
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Total shareholders' deficit |
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Balances at January 1, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Issuance of shares |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Deemed contribution from former parent |
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— |
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— |
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— |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Subsequent remeasurement of Redeemable noncontrolling interests |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Balances at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these financial statements.
6
VIVID SEATS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Cash flows from operating activities |
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Net income (loss) |
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$ |
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$ |
( |
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of deferred financing costs and interest rate cap |
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Equity-based compensation expense |
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Loss on extinguishment of debt |
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Change in fair value of warrants |
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Interest expense paid-in-kind |
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Amortization of leases |
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Change in assets and liabilities: |
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Accounts receivable |
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( |
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( |
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Inventory |
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( |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable |
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Accrued expenses and other current liabilities |
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( |
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Deferred revenue |
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Other assets and liabilities |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities |
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Purchases of property and equipment |
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( |
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Investments in developed technology |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities |
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Payments of June 2017 First Lien Loan |
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( |
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( |
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Proceeds from February 2022 First Lien Loan |
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Payments of deferred financing costs and other debt-related costs |
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( |
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Net cash used in financing activities |
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( |
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( |
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Net increase (decrease) in cash, cash equivalents, and restricted cash |
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( |
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Cash, cash equivalents, and restricted cash – beginning of period |
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Cash, cash equivalents, and restricted cash – end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Paid-in-kind interest added to May 2020 First Lien Loan principal |
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$ |
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$ |
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Cash paid for interest |
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$ |
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$ |
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Right-of-use assets obtained in exchange for lease obligations |
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$ |
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$ |
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The accompanying notes are an integral part of these financial statements.
7
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
1. Background and Basis of Presentation
Vivid Seats Inc. and its subsidiaries including Hoya Intermediate, LLC and Vivid Seats LLC (collectively the “Company,” “us,” “we,” and “our”), provide an online secondary ticket marketplace, that enables ticket buyers to discover and easily purchase tickets to sports, concerts, theater, and other live events in the United States and Canada. Through our Marketplace segment, we operate an online platform enabling ticket buyers to purchase tickets to live events, while enabling ticket sellers to seamlessly manage their operations. In our Resale segment, we acquire tickets to resell on secondary ticket marketplaces, including our own.
We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X issued by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by GAAP for comprehensive annual financial statements. Our condensed consolidated financial statements are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 which was filed on March 15, 2022. Our condensed consolidated financial statements include all of our accounts, including those of our consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Immaterial Correction of an Error in Prior Periods
During the second quarter of 2021, we identified immaterial errors related to the classification of information technology expenses that impacted our previously issued financial statements for the three months ended March 31, 2021. Previously, we classified information technology expenses entirely within General and administrative expenses in the Condensed Consolidated Statements of Operations. We subsequently determined that a portion of our information technology expenses are directly attributable to our revenue-generating activities and should be classified within Cost of revenues. We have adjusted for these errors by revising our financial statements presented herein. The correction resulted in an increase to Cost of revenues of $
COVID-19 Update
The COVID-19 pandemic continues to have a material impact on our business and results of operations. Beginning in the second quarter of 2021, and continuing through the first quarter of 2022, we have seen a recovery in ticket orders as mitigation measures ease.
The COVID-19 pandemic is evolving, and as new variants emerge the ultimate pace and timing of recovery continues to remain uncertain. We expect uncertainties around our key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Our estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in our condensed consolidated financial statements. If economic conditions caused by the pandemic do not continue to recover, our financial condition, cash flows, and results of operations may be further materially impacted.
8
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
Betcha Acquisition
On December 13, 2021, we acquired
2. New Accounting Standards
Recently adopted accounting standards
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease) in the balance sheet. Lease liabilities are equal to the present value of lease payments, while right-of-use assets are based on the associated lease liabilities, subject to certain adjustments, such as for initial direct costs. We elected the extended transition period available to emerging growth companies and adopted Accounting Standards Codification ("ASC") 842 effective January 1, 2022 on a modified retrospective basis by applying the new standard to all leases existing at the date of initial application. We elected to present the financial statements for all periods prior to January 1, 2022 under the previous lease standard ("ASC 840"), as well as elected other options, which allow us to use our previous evaluations regarding if an arrangement contains a lease, if a lease is an operating or financing lease, and what costs are capitalized as initial direct costs prior to adoption. We also elected to combine lease and non-lease components.
Upon the adoption of the new lease standard, on January 1, 2022, we recognized right-of-use assets of $
Accounting standards issued but not yet adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities will measure credit losses for financial assets and certain other instruments that are not measured at fair value through net income. The new expected credit loss impairment model requires immediate recognition of estimated credit losses expected to occur. Additional disclosures are required regarding assumptions, models, and methods for estimating the credit losses. ASU 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, deferred the effective date for non-public companies. The standard is effective for non-public companies for fiscal years beginning after December 15, 2022. We elected the extended transition period available to emerging growth companies and are currently evaluating the effect of adoption of the standard on our condensed consolidated financial statements and related disclosures.
9
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, as modified in January 2021. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The guidance also establishes (1) a general contract modification principle that entities can apply in other areas that may be affected by reference rate reform and (2) certain elective hedge accounting expedients. The amendment is effective for all entities starting March 12, 2020 and can be adopted through December 31, 2022. We have not yet decided the date of adoption of this standard. The adoption of this standard will not have a material impact on our condensed consolidated financial statements.
3. Revenue Recognition
We recognize revenue in accordance with ASC 606. We have two reportable segments: Marketplace and Resale.
Through the Marketplace segment, we act as an intermediary between ticket buyers and sellers. We earn revenue processing ticket sales from our Owned Properties, consisting of the Vivid Seats website and mobile applications, and from our Private Label offering, which is comprised of numerous distribution partners.
Marketplace revenues consisted of the following (in thousands):
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Three Months Ended March 31, |
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2022 |
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2021 |
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Marketplace revenues: |
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Owned Properties |
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$ |
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$ |
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||
Private Label |
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Total Marketplace revenues |
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$ |
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$ |
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||
Marketplace revenues consisted of the following event categories (in thousands):
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Three Months Ended March 31, |
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|||||
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2022 |
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2021 |
|
||
Marketplace revenues: |
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Concerts |
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$ |
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$ |
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||
Sports |
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|
|
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Theater |
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Other |
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Total Marketplace revenues |
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$ |
|
|
$ |
|
||
Within the Resale segment, we sell tickets we hold in inventory on resale ticket marketplaces. Resale revenues were $
At March 31, 2022, Deferred revenue in the Condensed Consolidated Balance Sheets was $
At December 31, 2021, $
10
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
4. Segment Reporting
Our reportable segments are Marketplace and Resale. Through the Marketplace segment, we act as an intermediary between ticket buyers and sellers within our online secondary ticket marketplace. Through the Resale segment, we acquire tickets from primary sellers, which are then sold through secondary ticket marketplaces. Revenues and contribution margin are used by our Chief Operating Decision Maker (“CODM”) to assess performance of the business. We define contribution margin as revenues less cost of revenues and marketing and selling expenses.
We do not report our assets, capital expenditures, or related depreciation and amortization expenses by segment, because our CODM does not use this information to evaluate the performance of our operating segments.
The following tables represent our segment information (in thousands):
|
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Three Months Ended March 31, 2022 |
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Marketplace |
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Resale |
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Consolidated |
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|||
Revenues |
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$ |
|
|
$ |
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|
$ |
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|||
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
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Marketing and selling |
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Contribution margin |
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$ |
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$ |
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General and administrative |
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Depreciation and amortization |
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Income from operations |
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Interest expense – net |
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Loss on extinguishment of debt |
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Other expenses |
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Income before income taxes |
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$ |
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|||
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Three Months Ended March 31, 2021 |
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|||||||||
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Marketplace |
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Resale |
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Consolidated |
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Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
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Marketing and selling |
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Contribution margin |
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$ |
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$ |
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General and administrative |
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Depreciation and amortization |
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Loss from operations |
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( |
) |
||
Interest expense – net |
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Loss before income taxes |
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$ |
( |
) |
||
Substantially all of our sales occur, and assets reside, in the United States.
11
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
5. Leases
On January 1, 2022, we adopted ASC 842 using a modified retrospective transition approach that allows for a cumulative-effect adjustment in the period of adoption without revising prior period presentation. Therefore, for reporting periods beginning after December 31, 2021, the financial statements are prepared in accordance with the current lease standard (ASC 842) and we elected to present the financial statements for all periods prior to January 1, 2022 under the previous lease standard (ASC 840). We elected the practical expedient package, which permits us to not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, and any initial direct costs for any existing leases as of the effective date.
We determine if an arrangement is a lease at inception of a contract. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. As of March 31, 2022, the weighted average discount rate applied to the lease liabilities is approximately
We entered into all of our lease contracts as a lessee. We are not acting as a lessor under any of our leasing arrangements. The vast majority of our lease contracts are real estate leases for office space. All our leases are classified as operating. At March 31, 2022, we had $
Most leases have one or more options to renew, with renewal terms that can initially extend the lease term for various periods up to
In December 2021, we entered into a lease agreement for our new corporate headquarters in Chicago, Illinois. The lease commenced in the first quarter of 2022, when we obtained control of the premises, and runs through December 31, 2033 with a 5-year renewal option. The aggregate lease payments for the initial term are approximately $
The lease agreement provides for a tenant improvement allowance from the landlord in an amount equal to $
Operating and variable lease expenses for the three months ended March 31, 2022 were not material.
12
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
Cash payments for operating lease liabilities during the three months ended March 31, 2022, which are included within the operating activities section in the Condensed Consolidated Statements of Cash Flows, were not material.
Future lease payments at March 31, 2022 are as follows (in thousands):
|
|
Operating Leases |
|
|
Remainder of 2022 |
|
$ |
|
|
2023 |
|
|
|
|
2024 |
|
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|
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2025 |
|
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2026 |
|
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2027 |
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Thereafter |
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|
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Total remaining lease payments |
|
|
|
|
Less: Imputed interest |
|
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|
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Less: expected tenant improvement allowance |
|
|
|
|
Present value of lease liabilities |
|
$ |
|
|
|
|
Operating Leases |
|
|
2022 |
|
$ |
|
|
2023 |
|
|
||
2024 |
|
|
|
|
2025 |
|
|
|
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2026 |
|
|
|
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Thereafter |
|
|
|
|
Total remaining lease payments |
|
$ |
|
|
6. Goodwill and Intangible Assets
Definite-lived intangible assets includes developed technology and customer relationships, which had a net carrying amount of $
Our goodwill is included in our Marketplace segment.
The net changes in the carrying amounts of our intangible assets and goodwill were as follows (in thousands):
|
|
Definite-lived Intangible Assets |
|
|
Trademark |
|
|
Goodwill |
|
|||
Balance at January 1, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Capitalized development costs |
|
|
|
|
|
|
|
|
|
|||
Amortization |
|
|
( |
) |
|
|
|
|
|
|
||
Balance at March 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
13
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
|
|
Definite-lived Intangible Assets |
|
|
Trademark |
|
|
Goodwill |
|
|||
Balance at January 1, 2021 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Capitalized development costs |
|
|
|
|
|
|
|
|
|
|||
Amortization |
|
|
( |
) |
|
|
|
|
|
|
||
Balance at March 31, 2021 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
We had recorded $
Amortization expense on our definite-lived intangible assets was $
7. Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following (in thousands):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
Recovery of future customer compensation |
|
$ |
|
|
$ |
|
||
Insurance recovery asset |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
Recovery of future customer compensation represents expected recoveries of compensation to be paid to customers for event cancellations or other service issues related to previously recorded sales transactions. The increase in the recovery of future customer compensation costs increased by $
8. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
Accrued marketing expense |
|
$ |
28,213 |
|
|
$ |
27,304 |
|
Accrued taxes |
|
|
5,588 |
|
|
|
9,332 |
|
Accrued customer credits |
|
|
119,070 |
|
|
|
119,355 |
|
Accrued future customer compensation |
|
|
78,306 |
|
|
|
73,959 |
|
Accrued contingencies |
|
|
12,686 |
|
|
|
12,686 |
|
Other current liabilities |
|
|
28,842 |
|
|
|
38,520 |
|
Total accrued expenses and other current liabilities |
|
$ |
272,705 |
|
|
$ |
281,156 |
|
14
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
Accrued taxes decreased due to a change in our process for collecting and remitting sales tax. Historically, we did not collect sales tax from ticket buyers, and instead accrued the expense in jurisdictions where we expected to remit sales tax payments. Starting in the second half of 2021, we began collecting sales tax directly from ticket buyers for remittance to the relevant jurisdictions. The majority of accrued taxes as of March 31, 2022, represents our exposure to sales taxes for transactions preceding the new tax remittance process, reduced by abatements received. Refer to Note 11, Commitments and Contingencies, for further discussion of the accrued tax expense.
Accrued customer credits represent credits issued and outstanding for event cancellations or other service issues related to recorded sales transactions. The accrued amount is reduced by the amount of credits estimated to go unused, which is recognized in proportion to the pattern of redemption for the customer credits. During the three months ended March 31, 2022, $
Accrued future customer compensation represents an estimate of the amount of customer compensation due from cancellation charges in the future. These provisions are based on historic experience, revenue volumes for future events, and management’s estimate of the likelihood of future event cancellations and are recognized as a component of Revenues in the Condensed Consolidated Statements of Operations. The expected recoveries of these obligations are included in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. This estimated accrual could be impacted by future activity differing from our estimates, the effects of which could be material. During the three months ended March 31, 2022 and 2021, we recognized a net increase in revenue of $
Other current liabilities decreased $
9. Debt
Our outstanding debt is comprised of the following (in thousands):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
June 2017 First Lien Loan |
|
$ |
|
|
$ |
|
||
February 2022 First Lien Loan |
|
|
|
|
|
|
||
Total long-term debt, gross |
|
|
|
|
|
|
||
Less: unamortized debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Total long-term debt, net of issuance costs |
|
|
|
|
|
|
||
Less: current portion |
|
|
( |
) |
|
|
|
|
Total long-term debt, net |
|
$ |
|
|
$ |
|
||
15
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
June 2017 Term Loans
On June 30, 2017, we entered into a $
The June 2017 First Lien Loan was held by third-party financial institutions and was carried at the outstanding principal balance, less debt issuance costs and any unamortized discount or premium. The fair value was estimated using quoted prices that are directly observable in the marketplace, therefore, the fair value is estimated on a Level 2 basis. At December 31, 2021, the June 2017 First Lien Loan had a fair value of $
February 2022 First Lien Loan
On February 3, 2022, we entered into an amendment which refinanced the remaining June 2017 First Lien Loan with a new $
The terms of the February 2022 First Lien Loan specified a secured overnight financing rate (“SOFR”) based floating interest rate and revised the springing financial covenant under the June 2017 Term Loans to require compliance with a first lien net leverage ratio when revolver borrowings exceed certain levels. All obligations under the February 2022 First Lien Loan are unconditionally guaranteed by Hoya Intermediate and substantially all of Hoya Intermediate’s existing and future direct and indirect wholly owned domestic subsidiaries. It requires quarterly amortization payments of $
Our February 2022 First Lien Loan is held by third-party financial institutions and is carried at the outstanding principal balance, less debt issuance costs and any unamortized discount or premium. The fair value was estimated using quoted prices that are directly observable in the marketplace, therefore, the fair value is estimated on a Level 2 basis. At March 31, 2022, the February 2022 First Lien Loan had a fair value of $
We are subject to certain reporting and compliance-related covenants to remain in good standing under the February 2022 First Lien Loan. These covenants, among other things, limit our ability to incur additional indebtedness, and in certain circumstances, create restrictions on the ability to enter into transactions with affiliates; create liens; merge or consolidate; and make certain payments. Non-compliance with these covenants and failure to remedy could result in the acceleration of the loans or foreclosure on the collateral. As of March 31, 2022, we were in compliance with all of our debt covenants related to the February 2022 First Lien Loan.
Due to the refinancing of the June 2017 First Lien Loan with the February 2022 First Lien Loan, we incurred a loss of $
16
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
May 2020 First Lien Loan
On May 22, 2020, we entered into a $
10. Financial Instruments
In Connection with the Merger Transaction, we issued warrants to purchase
Our Hoya Intermediate Warrants are exercisable for Hoya Intermediate common units, which allow for a potential cash redemption at the discretion of the unit holder. Hence, the Hoya Intermediate Warrants are classified as a liability in Other liabilities on our Consolidated Balance Sheets. Upon consummation of the Merger Transaction, we recorded a warrant liability of $
The following assumptions were used to calculate the fair value of the Hoya Intermediate Warrants and Option Contingent Warrants:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
Estimated volatility |
|
|
% |
|
|
% |
||
Expected term (years) |
|
|
|
|
|
|
||
Risk-free rate |
|
|
% |
|
|
% |
||
Expected dividend yield |
|
|
% |
|
|
% |
||
For the three months ended March 31, 2022, we recognized a $
Other financial instruments, including accounts receivable and accounts payable, are carried at cost, which approximates their fair value because of the short-term nature of these instruments.
11. Commitments and Contingencies
Litigation
From time to time, we are involved in various claims and legal actions arising in the ordinary course of business, none of which, in the opinion of management, could have a material effect on our business, financial position or results of operations other than those matters discussed herein.
17
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
We are a co-defendant in a class action lawsuit in Canada alleging a failure to disclose service fees prior to checkout, which we have settled. On January 5, 2022, we issued coupons to certain members of the class. Other members will be notified in 2022 that they are eligible to submit a claim for a coupon. As of March 31, 2022 and December 31, 2021, a liability of $
We received multiple class action lawsuits related to customer compensation for cancellations, primarily as a result of COVID-19 restrictions. A final order approving settlement of one of the lawsuits was entered by the court on
Other
In 2018, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair Inc., which overturned previous case law that had precluded states from imposing sales tax collection requirements on retailers without a physical presence in the state. In response, most states have adopted laws that attempt to impose tax collection obligations on out-of-state companies. We have registered, or are in the process of registering, where required by statute. There remains a degree of uncertainty as to our obligations in jurisdictions where our registration is still in progress due to the complex laws that govern secondary ticket sales. Pending discussions, it is more likely than not that some jurisdictions could assess taxes and that assessed amounts may differ materially from amounts currently accrued. It is also possible that some jurisdictions may provide for a later start date for sales tax collection, which could provide a material reduction in amounts currently accrued. In either case, we will adjust the recorded liability to reflect the new information, with a portion of the adjustment impacting orders placed in prior periods.
We have recognized a liability for this potential tax of $
12. Related-Party Transactions
Vivid Cheers Inc. (“Vivid Cheers”) was incorporated as a non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code. Vivid Cheers’ mission is to support causes and organizations dedicated to healthcare, education, and support of workers in the live events industry during times of need. We have the right to elect the board of directors of Vivid Cheers, which is currently formed by the Company’s executives. We do not have a controlling financial interest in Vivid Cheers, and accordingly, do not consolidate Vivid Cheers’ statement of activities with our financial results. We made charitable contributions of $
18
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
13. Income Taxes
We evaluate the need for deferred tax asset valuation allowances based on a more-likely-than-not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each applicable tax jurisdiction. We have evaluated all evidence, both positive and negative, and determined that our deferred tax assets are not more-likely-than-not to be realized. In making this determination, numerous factors were considered including our cumulative losses in recent years.
For the three months ended March 31, 2022, we recorded a $
Prior to the Merger Transaction in the fourth quarter of 2021, we were structured as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, the taxable income and losses were passed through to and included in the taxable income of its members. Accordingly, amounts related to income taxes were zero prior to the Merger Transaction, and we did not incur material amounts of income tax expense or have material income tax liability or deferred tax balances in 2021.
14. Equity Based Compensation
The 2021 Incentive Award Plan ("2021 Plan") was approved and adopted in order to facilitate the grant of equity incentive awards to our employees and directors. The 2021 Plan became effective on October 18, 2021 upon closing of the Merger Transaction.
Restricted Stock Units ("RSUs")
On March 11, 2022, we granted
We account for forfeitures of outstanding, but unvested grants, in the period they occur. At March 31, 2022, there were approximately
For the three months ended March 31, 2022 and 2021, equity-based compensation expense related to RSUs was $
19
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
Stock options
On March 11, 2022, we granted
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Interest rate |
|
|
% |
|
Dividend yield |
|
|
% |
At March 31, 2022, there were approximately
For the three months ended March 31, 2022 and 2021, equity-based compensation expense related to stock options was $
20
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
15. Earnings Per Share
Class B common stock does not have economic rights in the Company and as a result, is not considered a participating security for basic and diluted income (loss) per share. As such, basic and diluted income (loss) per share of Class B common stock has not been presented.
Numerator—basic: |
|
|
|
|
|
Net income |
|
|
$ |
|
|
Less: Income attributable to redeemable noncontrolling interests |
|
|
|
|
|
Net income attributable to Class A Common Stockholders—basic |
|
|
|
|
|
Denominator—basic: |
|
|
|
|
|
Weighted average Class A common stock outstanding—basic |
|
|
|
|
|
Net income per Class A common stock—basic |
|
|
$ |
|
|
|
|
|
|
|
|
Numerator—diluted: |
|
|
|
|
|
Net income attributable to Class A Common Stockholders—basic |
|
|
$ |
|
|
Net income effect of dilutive securities: |
|
|
|
|
|
Noncontrolling interests |
|
|
|
|
|
Effect of Exercise Warrants |
|
|
|
|
|
Effect of RSUs |
|
|
|
— |
|
Net income attributable to Class A Common Stockholders—diluted |
|
|
|
|
|
Denominator—diluted: |
|
|
|
|
|
Weighted average Class A common stock outstanding—basic |
|
|
|
|
|
Weighted average effect of dilutive securities: |
|
|
|
|
|
Noncontrolling interests |
|
|
|
|
|
Effect of Exercise Warrants |
|
|
|
|
|
Effect of RSUs |
|
|
|
|
|
Weighted average Class A common stock outstanding—diluted |
|
|
|
|
|
Net income per Class A common stock—diluted |
|
|
$ |
|
|
Potential shares of common stock are excluded from the computation of diluted net income per share if their effect would have been anti-dilutive for the period presented or if the issuance of shares is contingent upon events that did not occur by the end of the period.
The following table presents potentially dilutive securities excluded from the computation of diluted net income per share for the three months ended March 31, 2022:
RSUs |
|
|
|
|
|
Stock options |
|
|
|
|
|
Class A Warrants |
|
|
|
|
|
Exercise Warrants |
|
|
|
|
|
Hoya Intermediate Warrants |
|
|
|
|
21
Vivid Seats INC.
NOTES to the CONDENSED Consolidated Financial Statements
(UNAUDITED)
We analyzed the calculation of income (loss) per share for periods prior to the Merger Transaction and determined that it resulted in values that would not be meaningful to the users of the condensed consolidated financial statements. Therefore, income (loss) per share information has not been presented for periods prior to the Merger Transaction.
16. Subsequent events
We evaluated subsequent events and transactions that occurred after the balance sheet date through May 10, 2022, the date that the financial statements were issued. We did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
22
VIVID SEATS INC.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our discussion and analysis is intended to help the reader understand our results of operations and financial condition and is provided as an addition to, and should be read in connection with, our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the “Risk Factors” section of our 2021 Form 10-K and other factors set forth in other parts of this Quarterly Report on Form 10-Q and our filings with the SEC.
Overview
We are an online ticket marketplace that utilizes our technology platform to connect fans of live events seamlessly with ticket sellers. Our mission is to empower and enable fans to Experience It Live. We believe live events deliver some of life’s most exciting moments. Our platform provides ticket buyers and sellers with an easy-to-use and trusted marketplace experience that enables fans to purchase tickets to live events and create new memories. We believe we differentiate from competitors by offering extensive breadth and depth of ticket listings at a competitive value. During the three months ended March 31, 2022 and 2021, our revenues were $130.8 million and $24.1 million, respectively, and Marketplace Gross Order Value ("Marketplace GOV") was $742.1 million and $116.5 million, respectively. Our net income was $3.1 million and net loss was $20.3 million for the three months ended March 31, 2022 and 2021, respectively.
Our Business Model
We operate our business in two segments, Marketplace and Resale.
Marketplace
Through our Marketplace segment, we act as an intermediary between ticket buyers and ticket sellers. We earn revenue processing ticket sales from our Owned Properties, consisting of the Vivid Seats website and mobile applications, and from our Private Label offering, which comprises numerous distribution partners. Using our online platform, we process customer payments, coordinate ticket deliveries, and provide customer service to ticket buyers.
A key component of our platform is Skybox, a proprietary enterprise resource planning tool used by many of our ticket sellers. Skybox is a free-to-use system that helps ticket sellers manage ticket inventories, adjust pricing, and fulfill orders across multiple secondary ticket marketplaces.
We primarily earn revenue from service and delivery fees charged to ticket buyers. We also earn referral fee revenue by offering event ticket insurance to ticket buyers, using a third-party insurance provider. We do not hold ticket inventory in the Marketplace segment. We incur costs for developing and maintaining our platform, providing back-office and customer support to ticket buyers and ticket sellers, processing payments, and shipping tickets. We also incur substantial marketing costs, primarily related to online advertising.
Resale
In our Resale segment, we acquire tickets to resell on secondary ticketing marketplaces, including our own. Our Resale segment also provides internal research and development support for Skybox and our ongoing efforts to deliver best-in-class seller software and tools.
23
Key Business Metrics and Non-GAAP Financial Measures
We use the following metrics to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions. We believe that these metrics provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team.
The following table summarizes our key business metrics and non-GAAP financial measure (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
|
|
|
|
|
||
Marketplace GOV(1) |
|
$ |
742,138 |
|
|
$ |
116,473 |
|
Total Marketplace orders(2) |
|
|
2,019 |
|
|
|
293 |
|
Total Resale orders(3) |
|
|
68 |
|
|
|
13 |
|
Adjusted EBITDA(4) |
|
$ |
21,012 |
|
|
$ |
4,187 |
|
Marketplace GOV
Marketplace GOV is a key driver of our Marketplace segment’s revenue. Marketplace GOV represents the total transactional amount of Marketplace orders in a period, inclusive of fees, exclusive of taxes, and net of event cancellations that occurred during that period. Marketplace GOV reflects our ability to attract and retain customers, as well as the overall health of the industry.
Our Marketplace GOV is impacted by seasonality, and typically sees increased activity in the fourth quarter when all major sports leagues are in season and we experience increases in order volume for theater and concert events during the holiday season. Quarterly fluctuations in our Marketplace GOV result from the number of cancellations, the popularity and demand of performers, tours, teams, and events, and the length and team composition of sports playoff series and championship games.
24
Our Marketplace GOV increased during the three months ended March 31, 2022 as a result of higher orders processed.
Total Marketplace Orders
Total Marketplace orders represent the volume of Marketplace segment orders placed on our platform in a period, net of event cancellations. An order can include one or more tickets and/or parking passes. Total Marketplace orders allow us to monitor order volume and better identify trends within our Marketplace segment. Total Marketplace orders increased during the three months ended March 31, 2022 as a result of higher orders processed.
Total Resale Orders
Total Resale orders represent the volume of Resale segment orders sold in a period, net of event cancellations. An order can include one or more tickets and/or parking passes. Total Resale orders allow us to monitor order volume and better identify trends within our Resale segment.
Adjusted EBITDA
We present Adjusted EBITDA, which is a non-GAAP measure, because it is a measure frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Further, we believe this measure is helpful in highlighting trends in our operating results because it excludes the impact of items that are outside the control of management or not reflective of ongoing performance related directly to the operation of our business segments.
Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting. Moreover, we believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance and highlighting trends in our operating results.
The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, net income (loss) (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
3,138 |
|
|
$ |
(20,251 |
) |
Income tax expense |
|
|
76 |
|
|
|
— |
|
Interest expense |
|
|
3,942 |
|
|
|
16,319 |
|
Depreciation and amortization |
|
|
1,385 |
|
|
|
295 |
|
Sales tax liability(1) |
|
|
922 |
|
|
|
2,261 |
|
Transaction costs(2) |
|
|
1,402 |
|
|
|
3,546 |
|
Equity-based compensation(3) |
|
|
3,597 |
|
|
|
1,091 |
|
Loss on extinguishment of debt(4) |
|
|
4,285 |
|
|
|
— |
|
Litigation, settlements and related costs(5) |
|
|
(14 |
) |
|
|
641 |
|
Severance related to COVID-19(6) |
|
|
— |
|
|
|
285 |
|
Change in fair value of warrants(7) |
|
|
2,279 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
21,012 |
|
|
$ |
4,187 |
|
25
Impact of COVID-19
On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Almost immediately, mitigation measures implemented or recommended by governmental authorities and private organizations restricted attendance at live events throughout North America producing large-scale event cancellations and meaningfully reduced activity on our platform. Beginning in the second quarter of 2021, and continuing into the first quarter of 2022, we have seen a recovery in ticket orders as mitigation measures ease. The COVID-19 pandemic is evolving, and the ultimate pace and timing of recovery is uncertain. If economic conditions caused by the pandemic were to worsen, our financial condition, cash flows, and results of operations may be further materially impacted.
Key Factors Affecting our Performance
There have been no material changes from the “Key Factors Affecting Our Performance” in the Management’s Discussion and Analysis section disclosed in our 2021 Form 10-K. Our financial position and results of operations depend to a significant extent on those factors.
26
Results of Operations
Comparison of the Three Months Ended March 31, 2022 and 2021
The following table sets forth our results of operations (in thousands, except percentages):
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
||||
Revenues |
|
$ |
130,772 |
|
|
$ |
24,114 |
|
|
$ |
106,658 |
|
|
|
442 |
% |
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
|
|
32,164 |
|
|
|
3,925 |
|
|
|
28,239 |
|
|
|
719 |
% |
Marketing and selling |
|
|
54,228 |
|
|
|
7,955 |
|
|
|
46,273 |
|
|
|
582 |
% |
General and administrative |
|
|
29,275 |
|
|
|
15,871 |
|
|
|
13,404 |
|
|
|
84 |
% |
Depreciation and amortization |
|
|
1,385 |
|
|
|
295 |
|
|
|
1,090 |
|
|
|
369 |
% |
Income (loss) from operations |
|
|
13,720 |
|
|
|
(3,932 |
) |
|
|
17,652 |
|
|
|
449 |
% |
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense – net |
|
|
3,942 |
|
|
|
16,319 |
|
|
|
(12,377 |
) |
|
|
(76 |
)% |
Loss on extinguishment of debt |
|
|
4,285 |
|
|
|
— |
|
|
|
4,285 |
|
|
|
100 |
% |
Other expenses |
|
|
2,279 |
|
|
|
— |
|
|
|
2,279 |
|
|
|
100 |
% |
Income (loss) before income taxes |
|
|
3,214 |
|
|
|
(20,251 |
) |
|
|
23,465 |
|
|
|
116 |
% |
Income tax expense |
|
|
76 |
|
|
|
— |
|
|
|
76 |
|
|
|
100 |
% |
Net income (loss) |
|
|
3,138 |
|
|
|
(20,251 |
) |
|
|
23,389 |
|
|
|
115 |
% |
Net loss attributable to Hoya Intermediate, LLC shareholders prior to reverse recapitalization |
|
|
— |
|
|
|
(20,251 |
) |
|
|
20,251 |
|
|
|
100 |
% |
Net income attributable to redeemable noncontrolling interests |
|
|
1,879 |
|
|
|
— |
|
|
|
1,879 |
|
|
|
100 |
% |
Net income (loss) attributable to Class A Common Stockholders |
|
$ |
1,259 |
|
|
$ |
— |
|
|
$ |
1,259 |
|
|
|
100 |
% |
Revenues
The following table presents revenues by segment (in thousands, except percentages):
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketplace |
|
$ |
110,516 |
|
|
$ |
21,993 |
|
|
$ |
88,523 |
|
|
|
403 |
% |
Resale |
|
|
20,256 |
|
|
|
2,121 |
|
|
|
18,135 |
|
|
|
855 |
% |
Total revenues |
|
$ |
130,772 |
|
|
$ |
24,114 |
|
|
$ |
106,658 |
|
|
|
442 |
% |
Total revenues increased $106.7 million, or 442% for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase, which occurred in both our Marketplace and Resale segments, resulted from an increase in new orders processed resulting from the resumption of live events. The pandemic and resulting mitigation measures had a significant adverse effect on order volume and event cancellations during the three months ended March 31, 2021. In the second quarter of 2021, most local governments began to lift large scale restrictions on live events such that there was a significant increase in live events held in the first quarter of 2022 as compared to the first quarter of 2021.
27
Marketplace
The following table presents revenues in our Marketplace segment by event category (in thousands, except percentages):
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Concerts |
|
$ |
58,673 |
|
|
$ |
7,014 |
|
|
$ |
51,659 |
|
|
|
737 |
% |
Sports |
|
|
38,915 |
|
|
|
14,138 |
|
|
|
24,777 |
|
|
|
175 |
% |
Theater |
|
|
12,615 |
|
|
|
783 |
|
|
|
11,832 |
|
|
|
1,511 |
% |
Other |
|
|
313 |
|
|
|
58 |
|
|
|
255 |
|
|
|
440 |
% |
Total Marketplace revenues |
|
$ |
110,516 |
|
|
$ |
21,993 |
|
|
$ |
88,523 |
|
|
|
403 |
% |
Marketplace revenues increased $88.5 million, or 403% during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase in Marketplace revenues resulted primarily from an overall increase in new orders processed on our Marketplace platform.
Total Marketplace orders increased 1.7 million, or 589%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase in orders resulted from the increase in events held after restrictions on fan attendance due to the COVID-19 pandemic were reduced or lifted. These increases occurred across all event categories.
Cancellation charges, which are recognized as a reduction to revenues, were $16.0 million for the three months ended March 31, 2022, compared to $1.4 million for the three months ended March 31, 2021. Cancellation charges for the three months ended March 31, 2022 were higher than the three months ended March 31, 2021 due to an overall increase in volume, MLB cancellations due to the now settled labor dispute, and other large concert tour cancellations.
Marketplace revenues by business model consisted of the following (in thousands, except percentages):
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Owned Properties |
|
$ |
83,666 |
|
|
$ |
18,196 |
|
|
$ |
65,470 |
|
|
|
360 |
% |
Private Label |
|
|
26,850 |
|
|
|
3,797 |
|
|
|
23,053 |
|
|
|
607 |
% |
Total Marketplace revenues |
|
$ |
110,516 |
|
|
$ |
21,993 |
|
|
$ |
88,523 |
|
|
|
403 |
% |
The increases in revenue from both Owned Properties and Private Label during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 resulted primarily from the increase in order volume as COVID-19 restrictions were lifted and more events occurred with larger audiences.
28
Resale
Revenue for our Resale segment increased $18.1 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase resulted primarily from higher order volume. Total Resale orders increased 0.1 million, or 423%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Cancellation charges, classified as a reduction of revenue, negatively impacted Resale revenue by $0.2 million and $1.1 million for the three months ended March 31, 2022 and 2021.
Cost of Revenues (exclusive of Depreciation and Amortization)
The following table presents cost of revenues by segment (in thousands, except percentages):
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
||||
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketplace |
|
$ |
16,409 |
|
|
$ |
2,700 |
|
|
$ |
13,709 |
|
|
|
508 |
% |
Resale |
|
|
15,755 |
|
|
|
1,225 |
|
|
|
14,530 |
|
|
|
1,186 |
% |
Total cost of revenues |
|
$ |
32,164 |
|
|
$ |
3,925 |
|
|
$ |
28,239 |
|
|
|
719 |
% |
Total cost of revenues increased $28.2 million, or 719%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase to total cost of revenues resulted from higher order volume in both our Marketplace and Resale segments.
Marketplace
Marketplace cost of revenues increased $13.7 million, or 508%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase in cost of revenues is consistent with the increase in total Marketplace orders, which increased by 1.7 million orders, or 589%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
Resale
Resale cost of revenues increased $14.5 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase resulted from an increase in total Resale orders of 0.1 million orders, or 423%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase in Resale cost of revenues is not consistent with the increase in Resale revenues due to lower margins and cancellations in 2022 compared to 2021. Cancellation charges, classified as a reduction of cost of revenues, were not material for the three months ended March 31, 2022 and 2021.
Marketing and Selling
The following table presents marketing and selling expenses (in thousands, except percentages):
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
||||
Marketing and selling: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Online |
|
$ |
49,850 |
|
|
$ |
7,789 |
|
|
$ |
42,061 |
|
|
|
540 |
% |
Offline |
|
|
4,378 |
|
|
|
166 |
|
|
|
4,212 |
|
|
|
2,537 |
% |
Total marketing and selling |
|
$ |
54,228 |
|
|
$ |
7,955 |
|
|
$ |
46,273 |
|
|
|
582 |
% |
29
Marketing and selling expenses, which are entirely attributable to our Marketplace segment, increased $46.3 million, or 582%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase in expenses primarily resulted from greater spending on online advertising during the three months ended March 31, 2022. Our spending on online advertising increased by $42.1 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. As restrictions on the attendance of live events were reduced or lifted, we increased our spending on marketing to capitalize on the increase in live event attendance. In addition, in the first quarter of 2022, we continued our increased marketing efforts which started in the fourth quarter of 2021 with offline channels, including broadcast TV and radio, as part of our brand awareness efforts.
General and Administrative
The following table presents general and administrative expenses (in thousands, except percentages):
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
||||
General and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Personnel expenses |
|
$ |
19,737 |
|
|
$ |
6,671 |
|
|
$ |
13,066 |
|
|
|
196 |
% |
Non-income tax expenses |
|
|
1,239 |
|
|
|
2,362 |
|
|
|
(1,123 |
) |
|
|
(48 |
)% |
Other |
|
|
8,299 |
|
|
|
6,838 |
|
|
|
1,461 |
|
|
|
21 |
% |
Total general and administrative |
|
$ |
29,275 |
|
|
$ |
15,871 |
|
|
$ |
13,404 |
|
|
|
84 |
% |
Total general and administrative expenses increased $13.4 million, or 84%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to an increase in personnel expenses of $13.1 million. The increase was due to a higher employee headcount and an increase in costs for our outsourced customer service provider.
Depreciation and Amortization
Depreciation and amortization expenses increased $1.1 million, or 369%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to the intangibles acquired as part of the Betcha acquisition during the fourth quarter of 2021.
Other Expenses
Interest expense – net
Interest expense decreased $12.4 million, or 76%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. We paid off the May 2020 First Lien Loan and made a partial payment of the outstanding principal on the June 2017 First Lien Loan in the fourth quarter of 2021. In addition, we further reduced our outstanding debt balance and effective interest rate on February 3, 2022 when we refinanced the June 2017 First Lien Loan with the February 2022 First Lien Loan.
Loss on extinguishment of debt
Loss on extinguishment of debt was $4.3 million during the three months ended March 31, 2022 due to the refinancing of the June 2017 First Lien Loan with the February 2022 First Lien Loan.
Other expenses
Other expenses were $2.3 million during the three months ended March 31, 2022 primarily due to the fair value remeasurement of the Hoya Intermediate Warrants.
30
Liquidity and Capital Resources
We have historically financed our operations primarily through cash generated from our operating activities. Our primary short-term requirements for liquidity and capital are to fund general working capital, capital expenditures, and debt service requirements. Our primary long-term liquidity needs are related to debt repayment and potential acquisitions.
Our primary sources of funds are cash generated from operations and proceeds from borrowings, including our term loans. In response to the COVID-19 pandemic, we borrowed $50.0 million under our revolving credit facility in March 2020 and subsequently entered into the May 2020 First Lien Loan (defined below). We received $251.5 million in net cash proceeds from the May 2020 First Lien Loan, which we used to repay the $50.0 million in outstanding borrowings under the revolving credit facility in May 2020 and to fund our operations. As noted in the “Liquidity and Capital Resources—Loan Agreements” section below, we repaid the May 2020 First Lien Loan in connection with, and using the proceeds from, the Merger Transaction and the private investment in public equity financing (“PIPE Subscription”). Our existing cash and cash equivalents are sufficient to fund our liquidity needs for the next 12 months.
As of March 31, 2022, we had $314.1 million of cash and cash equivalents. Cash and cash equivalents consist of interest-bearing deposit accounts, money market accounts managed by financial institutions, and highly liquid investments with maturities of three months or less. For the three months ended March 31, 2022, we generated positive cash flows from our operating activities.
Loan Agreements
In response to the COVID-19 pandemic, we borrowed $50.0 million under the Revolving Facility in March 2020. We then entered into the May 2020 First Lien Loan, which resulted in $251.5 million in net cash proceeds. We used the net cash proceeds from the May 2020 First Lien Loan to immediately repay the $50.0 million in outstanding borrowings under the Revolving Facility and to fund our operations. The Revolving Facility was terminated in full simultaneously with the repayment in May 2020.
The May 2020 First Lien Loan, which is pari passu with the June 2017 First Lien Loan, carries a variable interest rate of LIBOR plus an applicable margin of 9.50%, or a base rate plus an applicable margin of 8.50%. The May 2020 First Lien Loan matures in May 2026, subject to an earlier springing maturity date of June 30, 2024 if the June 2017 First Lien Loan, or a refinancing thereof with scheduled payments of principal prior to June 30, 2024, remains outstanding as of that date. The effective interest rate on the May 2020 First Lien Loan, which fluctuates based on certain paid-in-kind elections, was 11.50% per annum as of December 31, 2020. We made no payments during 2020 on the May 2020 First Lien Term Loan. Interest incurred under the May 2020 First Lien Loan was capitalized into the principal quarterly in August and November 2020, resulting in an outstanding principal of $275.7 million as of December 31, 2020. Additional interest was capitalized into the principal in the first nine months of 2021, resulting in an outstanding principal of $304.1 million as of September 30, 2021. On October 18, 2021, we repaid this loan in full in connection with, and using the proceeds from, the Merger Transaction and the PIPE Subscription and incurred a $28.0 million prepayment penalty.
We had an outstanding loan balance of $465.7 million under the June 2017 First Lien Loan as of December 31, 2021. In the three months ended March 31, 2022, we repaid $190.7 million of the outstanding June 2017 First Lien Loan. On February 3, 2022, we entered into an amendment which refinances the remaining June 2017 First Lien Loan with a new $275.0 million February 2022 First Lien Loan with a maturity date of February 3, 2029, adds a new revolving credit facility in an aggregate principal amount of $100.0 million with a maturity date of February 3, 2027, replaces the LIBOR based floating interest rate with a term SOFR based floating interest rate and revises the springing financial covenant to require compliance with a first lien net leverage ratio when revolver borrowings exceed certain levels. The February 2022 First Lien Loan requires quarterly amortization payments of $0.7 million. The Revolving Facility does not require periodic payments. All obligations under the February 2022 First Lien Loan are secured, subject to permitted liens and other exceptions, by first-priority perfected security interests in substantially all of our assets. The February 2022 First Lien Loan will carry an interest rate of SOFR plus 3.25%. The SOFR rate for the February 2022 First Lien Loan is subject to a 0.5% floor.
31
As of March 31, 2022, we are only party to one credit facility, the February 2022 First Lien Loan.
Tax Receivable Agreement
In connection with the Merger Transaction, we entered into a Tax Receivable Agreement with the existing Hoya Intermediate shareholders that will provide for payment to Hoya Intermediate shareholders of 85% of the amount of the tax savings, if any, that we realize (or, under certain circumstances, is deemed to realize) as a result of, or attributable to, (i) increases in the tax basis of assets owned directly or indirectly by Hoya Intermediate or its subsidiaries from, among other things, any redemptions or exchanges of Hoya Intermediate common units (ii) existing tax basis (including depreciation and amortization deductions arising from such tax basis) in long-lived assets owned directly or indirectly by Hoya Intermediate and its subsidiaries, and (iii) certain other tax benefits (including deductions in respect of imputed interest) related to Hoya Intermediate making payments under the Tax Receivable Agreement.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Net cash provided by operating activities |
|
$ |
23,534 |
|
|
$ |
30,761 |
|
Net cash used in investing activities |
|
|
(3,441 |
) |
|
|
(1,726 |
) |
Net cash used in financing activities |
|
|
(195,568 |
) |
|
|
(1,603 |
) |
Net increase (decrease) in cash and cash equivalents |
|
$ |
(175,475 |
) |
|
$ |
27,432 |
|
Cash Provided by Operating Activities
Net cash provided by operating activities was $23.5 million for the three months ended March 31, 2022 due to $3.1 million in net income, non-cash charges of $12.4 million, and net cash inflows from a $8.0 million change in net operating assets. The net cash inflows from the change in our net operating assets were primarily due to the increase in operations as COVID-19 mitigation measures continue to ease.
Net cash provided by operating activities was $30.8 million for the three months ended March 31, 2021 due to $20.3 million in net loss, non-cash charges of $13.3 million, and net cash inflows from a $37.7 million change in net operating assets. The net cash inflows from the change in net operating assets were primarily due to a $37.9 million increase in accounts payable. The increase in accounts payable resulted primarily from an increase in amounts payable to ticket sellers as sales increased in the first quarter of 2021.
Cash Used in Investing Activities
Net cash used in investing activities for the three months ended March 31, 2022 was $3.4 million and was primarily related to capital spending on development activities related to our platform.
Net cash used in investing activities for the three months ended March 31, 2021 was $1.7 million related to capital spending on development activities related to our platform.
32
Cash Used in Financing Activities
Net cash used in financing activities for the three months ended March 31, 2022 was $195.6 million and was due to the repayment of the June 2017 First Lien Loan in connection with the refinancing.
Net cash used in financing activities for the three months ended March 31, 2021 was $1.6 million related to payments on our June 2017 First Lien Loan.
Critical Accounting Policies and Estimates
Accounting policies and estimates are considered critical when they require management to make subjective and complex judgments, estimates and assumptions about matters that have a material impact on the presentation of our financial statements and accompanying notes. For a description of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. During the three months ended March 31, 2022, there were no material changes to our critical accounting policies from those discussed in the 2021 Form 10-K.
Recent Accounting Pronouncements
Refer to Note 2, New Accounting Standards, to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a description of recently adopted accounting pronouncements and issued accounting pronouncements not yet adopted.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the potential loss from adverse changes in interest rates, foreign exchange rates, and market prices. Our primary market risk is interest rate risk associated with our long-term debt. We manage our exposure to this risk through established policies and procedures. Our objective is to mitigate potential income statement, cash flow, and market exposures from changes in interest rates.
Interest Rate Risk
Our market risk is affected by changes in interest rates. We maintain floating-rate debt that bears interest based on market rates plus an applicable spread. Because our interest rate is tied to market rates, we will be susceptible to fluctuations in interest rates if we do not hedge the interest rate exposure arising from our floating-rate borrowings. A hypothetical 1% increase or decrease in interest rates, assuming rates are above our interest rate floor, would not have a material impact on interest expense based on amounts outstanding under the June 2017 First Lien Loan and February 2022 First Lien Loan during the three months ended March 31, 2022.
Item 4. Controls and Procedures
Limitations on Effectiveness of Disclosure Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
33
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective at reasonable assurance levels as of March 31, 2022 due to the reasons described below.
Material Weakness
In connection with the audit of our consolidated financial statements as of December 31, 2021, we identified a material weakness in our internal control over financial reporting related to the implementation of segregation of duties as part of our control activities, establishment of clearly defined roles within our finance and accounting functions and the number of personnel in our finance and accounting functions with an appropriate level of technical accounting and SEC reporting experience, which in the aggregate, constitute a material weakness.
Remediation Activities
As part of our plan to remediate this material weakness, we are performing a full review of our internal control procedures. We have implemented, and plan to continue to implement, new controls and new processes. We have begun to hire and plan to continue to hire additional qualified personnel and establish more robust processes to support our internal control over financial reporting, including clearly defined roles and responsibilities and appropriate segregation of duties.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II - Other Information
Item 1. Legal Proceedings
Refer to Note 11, Commitments and Contingencies, in our notes to the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed under Part I, Item 1A, “Risk Factors” in our 2021 Form 10-K. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes from the risk factors disclosed in our 2021 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
34
Item 5. Other Information
None.
35
Item 6. Exhibits
|
|
Incorporated by Reference |
|
|||
Exhibit Number |
Description |
Form |
Exhibit |
Filing Date |
Filed / Furnished Herewith |
|
2.1 |
S-4 |
2.1 |
5/28/2021 |
|
||
2.2 |
S-4 |
2.2 |
5/28/2021 |
|
||
2.3 |
10-Q |
2.3 |
11/15/2021 |
|
||
3.1 |
8-K |
3.1 |
10/22/2021 |
|
||
3.2 |
|
|
|
* |
||
3.3 |
8-K |
3.2 |
10/22/2021 |
|
||
4.1 |
8-K |
10.7 |
10/22/2021 |
|
||
4.2 |
Specimen Class A Common Stock Certificate of Vivid Seats Inc. |
10-K |
4.2 |
3/15/2022 |
|
|
4.3 |
10-K |
4.3 |
3/15/2022 |
|
||
36
10.1† |
8-K |
10.1 |
2/7/2022 |
|
|
31.1 |
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a). |
|
|
|
* |
31.2 |
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a). |
|
|
|
* |
32.1 |
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350. |
|
|
|
** |
32.2 |
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350. |
|
|
|
** |
101.INS |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
|
|
|
* |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
* |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
* |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
* |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
* |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
* |
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
* |
* Filed herewith.
** Furnished herewith.
† Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). We agree to provide a copy of all omitted exhibits and schedules to the SEC upon its request.
37
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Vivid Seats Inc. |
|
|
|
|
|
|
|
By: |
/s/ Stanley Chia |
|
|
|
Stanley Chia |
|
|
|
Chief Executive Officer |
|
|
|
May 10, 2022 |
|
|
|
|
|
|
By: |
/s/ Lawrence Fey |
|
|
|
Lawrence Fey |
|
|
|
Chief Financial Officer |
|
|
|
May 10, 2022 |
38
Exhibit 3.2
First Amendment
to THE
AMENDED AND RESTATED
Bylaws of
Vivid Seats Inc.
A delaware corporation
(Adopted as of February 3, 2022)
The Amended and Restated Bylaws (the “Bylaws”) of Vivid Seats Inc., a Delaware corporation (the “Corporation”), adopted as of October 18, 2021, are hereby amended, effective as of February 3, 2022, to change the Registered Agent and the Registered Office of the Corporation from (i) The Corporation Trust Company to Cogency Global Inc. and (ii) the office of the registered agent in the State of Delaware from 1209 Orange Street, Wilmington, New Castle County, Delaware 19801 to 850 New Burton Road, Suite 201, Dover, Kent County, Delaware 19904.
Except to the extent amended by this First Amendment, the Bylaws of the Corporation shall remain in full force and effect.
[Remainder of Page Left Blank]
CERTIFICATE OF OFFICER
I, the undersigned, do hereby certify:
(a) That I am duly elected and acting Chief Executive officer and President of the Corporation;
(b) That the Amended and Restated Bylaws of the Corporation, as amended by the First Amendment on February 3, 2022, constitute the Bylaws of the Corporation; and
(c) That the foregoing amendment was approved by resolutions of the Board of Directors of the Corporation.
IN WITNESS WHEREOF, I have hereunto subscribed my name as of this 3rd day of February, 2022.
/s/ Stanley Chia
Stanley Chia, Chief Executive
Officer and President
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Stanley Chia, certify that:
Date: May 10, 2022 |
|
By: |
/s/ Stanley Chia |
|
|
|
Stanley Chia |
|
|
|
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lawrence Fey, certify that:
Date: May 10, 2022 |
|
By: |
/s/ Lawrence Fey |
|
|
|
Lawrence Fey |
|
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Vivid Seats Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley Chia, Chief Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: May 10, 2022 |
|
By: |
/s/ Stanley Chia |
|
|
|
Stanley Chia |
|
|
|
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Vivid Seats Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lawrence Fey, Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: May 10, 2022 |
|
By: |
/s/ Lawrence Fey |
|
|
|
Lawrence Fey |
|
|
|
Chief Financial Officer |