StubHub Holdings, Inc. Q3 FY2025 Earnings Call

Good day, ladies and gentlemen, and thank you for standing by. Welcome to StubHub's Third Quarter 2025 Earnings Conference Call. Please note that this conference call is being recorded today, November 13, 2025. I will now turn the call over to Clinton Hooks with StubHub.

Thank you for joining us to discuss StubHub's Third quarter 2025 results. For reference, our third quarter 2025 earnings release and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com. Before we begin, please note that today's discussion will include forward-looking statements within the meaning of federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from our expectations. We assume no responsibility for updating these statements. Therefore, please exercise caution in relying on them. For detailed risk factors, please refer to our SEC filings. We'll also discuss certain non-GAAP measures, which we believe are useful to investors for evaluating our performance. These measures should not be considered in isolation or as substitutes for GAAP results. Full reconciliations to GAAP measures are available in our earnings release. Unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA. Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Connie James, our Chief Financial Officer. They will provide opening remarks, then take questions. With that, I'll turn it over to Eric.

Good afternoon, everyone, and thank you for joining us for our first earnings call as a public company. I want to welcome all our investors, both those who supported us throughout our private journey and those who are new to the StubHub story. We're grateful for your trust and partnership as we embark on this next chapter together. Today, I'll focus primarily on the progress we've made in establishing StubHub as a leading live event ticketing marketplace and on our strategic initiatives. I'll then hand it over to Connie to speak to our third quarter financial performance. While we won't be providing detailed 2026 guidance on today's call, we look forward to sharing our outlook during our next earnings call in early 2026. With that said, I want to begin by stepping back and discussing the business that we have built over the last two decades and share the long-term vision of where we are going, one that continues to be defined by a customer-focused and relentless drive to make live entertainment accessible to everyone everywhere. The past few years have been transformative for our business. We completed the StubHub acquisition, navigated the pandemic, fully rebuilt StubHub's technology stack, restored StubHub as the clear category leader, and have now entered the public market. Our thesis for the acquisition was to restore StubHub's market leadership in North America and create a unified global ticketing marketplace. Our business today is the result of the successful execution of that thesis, and we are very proud of the asset that exists as a result. Today, StubHub operates what we believe is the largest global secondary ticketing marketplace for live event tickets, selling over 40 million tickets annually across more than 200 countries and territories from over 1 million sellers all over the world. Our many years of leadership in the resale market have created brands synonymous with the category, resulting in moats around our business and durable competitive advantage through customer loyalty and trust, organic traffic and superior acquisition and conversion. We maintain what we believe is the most comprehensive operations and supply chain capabilities in our category, the largest event catalog in the world, and the capability to fulfill virtually any ticket across any category, all through a single global marketplace. Our business produces a huge data asset as tens of millions of people interact with our product services on what we believe is the largest floating price marketplace for live events in the world. This data on supply, demand, pricing, user behavior, etc., provides structural advantage through differentiated product innovation, marketing optimization, and pricing intelligence. Finally, this is all built on a single, modern, globally deployed technology stack, allowing us to rapidly innovate across our product surface and nimbly deploy features using new technologies, something becoming increasingly important as AI development shapes the future of digital commerce. Our business has built a rare combination of best-in-class financial attributes that create exceptional value at scale with proven durability. First, we are growing rapidly with nearly 20% GMS growth over the last 12 months. Second, our marketplace models operate with enduring economics, consistent take rates and high margins. Third, we built a profitable customer acquisition engine that allows us to grow and take market share while generating profits through our performance marketing channels. Fourth, our asset-light business model and the natural flow generated by our marketplace dynamics result in exceptional cash conversion. Fifth, we've demonstrated remarkable resilience through economic cycles, consistently growing nearly every year since inception. And finally, we operate in a large and expanding core global secondary ticketing market with durable long-term tailwinds. In addition, we have opportunities for significant TAM expansion through accessing the broader ticketing ecosystem. We believe you would be hard-pressed to find many other companies to check these boxes. That said, we are most excited about leveraging these assets to realize our vision to become the global destination for consumers to access live entertainment. We believe that buyers want one destination where they can purchase any ticket for any event in their language and currency. Sellers want to optimize revenue and attendance through broad distribution and pricing intelligence. We believe we can service these needs by building a single product that puts the world's live entertainment at fans' fingertips and services their needs throughout their entire journey. This is not something that exists in our category today. This is a product and service that can only be built by applying technology and relentless customer focus to eliminate friction around the live event experience. Technology businesses innovating on behalf of consumers have reimagined access to many products and services, information, music, video, food, but not yet for live entertainment. This is exactly what StubHub is, a business with a core competency in technology development focused on applying its expertise to revolutionize the way consumers interact with live event commerce. With this context, we can turn to some of the topics I think are top of mind regarding recent developments in our operating environment. First, we wanted to discuss some recent developments in our core resale market. Restoring StubHub's market share in North America was the key tenet of our acquisition thesis. Following our acquisition of StubHub in 2020 and the completion of the technology migration in 2022, we have consistently gained share in the North American market, transforming StubHub from a business that was roughly comparable in size to the nearest competitor in 2022 to one that is now approximately 4x larger than that same competitor based on GMS and comparable metrics. This momentum in share gains and the subsequent positive impacts of relative share we observed led us to invest in accelerating this dynamic via disciplined customer acquisition and conversion levers, specifically take rates and performance marketing, which continued in the most recent quarter. I want to highlight one specific downstream impact of this share gain, our growing share of the point-of-sale market. In our market, the point-of-sale is a software product used by power sellers to manage the listing, pricing, distribution, and fulfillment of their ticket portfolios. Sellers build their operational workflows around the software infrastructure, which becomes sticky as a result, like many enterprise software products. For many years, the technology was provided by one of our competitors, whose product had the majority share of the market. We recently launched our own product called ReachPro. As our relative market share of sales volume has increased, we've seen rapid adoption of our technology. We have benefited from a powerful network effect. As our marketplace captures a larger share of sellers' sales, these sellers are increasingly willing to migrate their operations to what we believe is our far superior technology, backed by our unmatched data and insights. In the secondary market, the installation of ReachPro naturally produces higher relative market share. When sellers use our tool, they tend to index their behavior around our marketplace, ensuring competitive pricing and high standards of fulfillment, leading to structural advantage and benefits for our buyers. It also provides valuable data insights, which can be used to improve the quality of our products and a strategic product development surface to launch advertising products and innovate with features that will serve large sellers even at enterprise scale. Q3 was both our largest relative market share quarter to date and the largest quarter of new seller adoption for ReachPro. We believe we have line of sight into becoming the largest provider of this product in the medium term, a durable and strategic asset created in part via our relative market share investments. This brings us to the next topic, direct issuance, which we believe will be a major innovation to original issuance ticketing distribution that will promote competition and improve the fan experience while improving economics for ticket issuers. As I mentioned earlier, we believe buyers want a single platform that offers access to all the world's live entertainment. At the same time, sellers maximize revenue and attendance by accessing the broadest possible distribution with the smartest pricing intelligence. Our strategy to unlocking this value proposition is through what we call direct issuance. Generally speaking, there are three seller types in the market: individuals, power sellers, and enterprise sellers. StubHub and viagogo began as platforms to service individual sellers, season ticket holders, concert goers whose plans change, and so on. As liquidity of the market grew, market makers developed. Power sellers sell large quantities of tickets through the marketplace on a regular basis, and we ultimately developed products such as ReachPro to allow these sellers to manage the listing, pricing, and fulfillment of tickets seamlessly. For our business, direct issuance simply refers to expanding the supply side of our platform once again to allow enterprise sellers, content rights holders like teams, arts, and venues to access our marketplace through a frictionless technology-enabled experience as any individual or power seller does. We believe simultaneous multichannel or open distribution using data-backed pricing intelligence is the future of ticket distribution, as it will maximize value for fans and content. To be clear, this is a very different model from legacy primary ticketing companies. The core service of primary ticketing companies is to provide access control to venues. Secondarily, they provide a retail web storefront with limited or no marketing. Content today, for the most part, sells inventory through antiquated distribution methods. They often sell tickets, expiring products that drive huge economics exclusively through these access control providers. The result is an opaque market with huge inefficiency, narrow distribution, lack of pricing intelligence, and ultimately, unsold seats and tremendous value loss for content, not to mention a lack of competition leading to a terrible experience for fans. We are not competing with this model, and we are not providing access control technology. We offer something new, the ability for content to access StubHub's distribution engine through a variety of options that do not require them to switch their access control provider. We make our distribution available to content rights holders with no exclusivity requirement, broadening their distribution and empowering them with robust data insights from our scaled floating price marketplace to make informed pricing and utilization decisions. This means content rights holders can access our marketplace, distribution, data, and customers in the same way individuals and power sellers can. They can list tickets multichannel across retail outlets at whatever price points they choose to optimize their utilization and yield, and we compete to sell inventory as we do today. We're actively making investments to grow this business and demonstrate the benefits of open distribution to content and are excited about the progress we are making. We recently signed a partnership with Major League Baseball, a great example of one of the world's premier sports properties endorsing open distribution. MLB momentum has continued, and more teams are continuing to become sellers on StubHub, several of which are doing so without any additional economic incentive or protection from us. They're selling just as any other seller on our platform does. We have also had success with the music festival category, adding Peachtree Entertainment, one of the largest independent promoters in the Southeast, and LED Presents, an independent EDM promoter on the West Coast. These promoters combined put on dozens of events attended by hundreds of thousands of fans annually. We have also continued to add talent to lead this initiative. Shaun Stewart, who spent much of his career building supply chain for travel businesses such as Expedia and Airbnb, joined us as VP of Direct Issuance. Shaun will be reporting to Raj Beri, who was instrumental in building Uber Eats' APAC business and recently joined StubHub as Chief Business Officer to oversee all global supply. Direct issuance represents an addressable market opportunity well in excess of $100 billion, a transformative growth vector that we believe will drive substantial long-term growth and value creation for our business and shareholders for years to come. The other business we are in the early stages of developing is advertising, which we believe can be a large and profitable business for us as it has been for many other marketplaces. We are pursuing two advertising models initially. First, sponsored listings, where sellers can bid for premier placement on event pages to dramatically increase exposure. For any given event, we may be merchandising hundreds, even thousands of tickets on our event pages. These are expiring products, meaning that sellers receive nothing if the ticket does not sell. With the sponsored listing offering, sellers can bid for higher visibility among competing inventory, improving the likelihood of a buyer seeing and ultimately purchasing their ticket. Conversations with sellers on our platform have demonstrated tremendous interest in features such as sponsored listings as an additional and powerful tool for sellers on our marketplace. As ReachPro has gained users and market share, we've also established a ready-made distribution platform for sponsored listings, as we can build access to the feature directly into ReachPro's user workflow without the heavy lift of a sales force. The second advertising model is through more traditional corporate advertising partnerships with businesses in adjacent product categories that can be additive to the customer experience. One example of this is Booking.com. Event tourism is a rapidly growing category, and we know that many of our customers are purchasing tickets for events outside of where they live. Our partnership with Booking.com is a great example of how we can monetize post-purchase real estate in our product to deliver a travel offering to customers. And it is also a great example of a high-quality business recognizing the value of our customer base and paying us for access. We believe this will extend to other categories adjacent to sports, music, and live event attendance. We are very excited about the potential for advertising on our platform. Of course, as with everything we do, our number one priority is ensuring that we do not adversely impact the customer experience. Therefore, introducing advertising thoughtfully and methodically remains our focus. We recognize investors are eager for more details on direct issuance and advertising. We intend to provide a more fulsome update on the long-term opportunity on our call early next year. To close, StubHub is a business that is growing fast at scale while generating profits and cash flow. StubHub is a global category leader with the data, technology, and customer focus to continue capturing share of the global ticketing market. Indeed, we are very proud of all that we have accomplished to date. However, the real goal for us is to reimagine our market to create an unprecedented experience for fans and an asset of tremendous value in the process. That is what is really exciting. With that, I'll turn the call over to Connie to discuss our financial results.

Thanks, Eric. Before I discuss our third quarter financial performance, I'd like to share our financial philosophy that guides our decision-making, and ultimately, how we look to drive long-term shareholder value. To that end, the foundation of our value creation approach rests on three financial principles. First, we prioritize driving sustainable market share growth by strategically investing in our marketplace ecosystem. Second, we are committed to long-term margin expansion through operational discipline and the natural leverage in our marketplace model. Third, we focus relentlessly on cash flow generation. Our business model efficiently converts adjusted EBITDA into free cash flow, providing us the financial flexibility to reinvest in the business and optimize our capital structure. With that context, let's turn to our third quarter results, beginning with our key marketplace metrics, gross merchandise sales, or GMS. GMS represents the total economic value flowing through our platform and directly drives the network effects that make StubHub increasingly valuable to both buyers and sellers. Our GMS reached $2.4 billion in the third quarter, representing 11% growth from the prior year period. This performance demonstrates the fundamental strength of our marketplace even as we navigated the anticipated impact of the federally mandated all-in pricing in the United States earlier this year. As expected, the transition has reduced conversion rates as customers adjusted to the new pricing format. Based on our internal estimates previously disclosed, we believe the implementation of all-in pricing had an estimated 10% one-time impact on the size of the North American secondary ticketing market. We expect this transition effect will continue to influence year-over-year comparisons through May 2026 as we cycle through the full 12-month period following the May 2025 implementation date. Even with this temporary growth headwind, our results demonstrate the resilience of our business model and our ability to continue to gain market share in this dynamic environment. Beyond the impact of all-in pricing, we believe our GMS growth reflects a more fundamental trend, sustained share gains across the North America secondary ticketing market, where we continue to outpace the overall market, as well as continued international expansion. When excluding the outsized impact of Taylor Swift's Eras Tour from the prior year period, our GMS grew 24% year-over-year with broad-based strength across our platform and categories. Revenue for the third quarter was $468 million, up 8% compared to last year. The performance was primarily driven by our GMS growth, offset by two factors worth highlighting. First, as Eric discussed earlier, we made the strategic decision to further invest in market share expansion, in part through a reduction in take rates, resulting in our revenue as a percentage of GMS declining slightly to 19% this period compared to 20% in the prior year period. This measured reduction in take rates reflects our deliberate approach to balancing near-term results with long-term market leadership. Second, we experienced a reduction in inventory revenue as we strategically phased out the use of minimum guarantees for direct issuance sellers. This move is aligned with our long-term marketplace strategy of building sustainable, scalable relationships with content rights holders. Unless otherwise noted, the following discussion of our results will be on an adjusted basis to exclude stock-based compensation and other one-time costs. Full reconciliations to GAAP figures are available in our press release. Our adjusted gross margin was 84% during the quarter, up from 82% last year. The improvement primarily reflects a reduction in ticket substitution and replacement costs. Adjusted sales and marketing expenses were $255 million or 54% of revenue compared to $221 million or 51% of revenue last year. The increase as a percentage of revenue was driven by the reduction in take rates to drive relative market share gains in the North America secondary market. Adjusted operations and support expenses were $17 million or 3.5% of revenue during the quarter compared to $16 million or 3.6% of revenue last year. Adjusted G&A was $52 million or 11% of revenue during the quarter compared to $62 million or 14% of revenue last year. As we look forward, we do anticipate a modest amount of investment in technology resources. On the profitability front, we delivered adjusted EBITDA of $67 million, representing 14% of revenue, up 21% compared to $56 million or 13% of revenue in the same period last year. Finally, I want to highlight a one-time item on the income statement. Our GAAP results for the quarter include a nonrecurring noncash expense of $1.4 billion related to stock-based compensation granted prior to our IPO. The expense was triggered by the completion of our IPO. Accounting standards require recognition of these previously granted rewards in the quarter when the IPO-related performance conditions are satisfied. To be clear, all stock-based compensation, including this one-time expense is excluded from our adjusted EBITDA calculations. Additionally, this accounting recognition has no impact on our cash flow or cash position as it represents a noncash expense. Turning to cash flow. Before diving into our performance, I want to provide some context on how we view operational cash generation in our business. Our marketplace model has inherent favorable cash flow characteristics. We collect cash from buyers at the time of purchase, but remit payments to sellers at a later date, often after the event occurs. These cash balances show up on our balance sheet as payments due to sellers. With this timing difference, we earn a yield on these proceed balances. To illustrate, on a trailing 12-month basis, you will see $41 million of interest income on our income statement. Additionally, we are asset-light with only $26 million of CapEx over the trailing 12-month period. We also benefit from over $1 billion of NOLs, resulting in minimal cash taxes in the medium term. Over the same trailing 12-month period, our cash tax amount was only $17 million. This allows us to consistently convert cash at a rate roughly 100% of our adjusted EBITDA. In relation to free cash flow, we measured on a trailing 12-month basis to reduce the lumpiness created by quarterly timing differences between when we collect cash from buyers and when we remit payments to sellers, which is impacted by seasonality and event mix. For the 12-month period ending September 30, free cash flow was $6 million, which included $120 million of net cash outflows due to the change in our payments due to buyers and sellers. This amount was impacted by an atypical concentration in seller proceed outflows occurring in the fourth quarter of '24 following the final leg of Taylor Swift's North American tour. Our trailing 12-month free cash flow also included $153 million in cash interest costs during the period. Excluding those items, we generated $279 million in free cash flow conversion of approximately 100% of TTM adjusted EBITDA. Taking a step back, I want to frame our results within the broader context of our 2025 objectives. This year, our priorities have been clear: to grow market share in North America, to expand internationally, and to lay the groundwork for long-term TAM expansion through disciplined and focused investment. From the outset, we anticipated that 2025 would present a more challenging growth environment for our market. There were two notable but temporary factors shaping this year's comparisons. First, we are lapping the unprecedented Taylor Swift Eras Tour; and second, the industry transitioned to all-in pricing, which took effect in May. In addition, we are lapping the historic Yankees-Dodgers World Series as well as an unusually high concentration of major on-sales that occurred in last year's fourth quarter. This year, we are observing some shifts in the timing of these on-sales. Several large tours that would typically go on sale in the fourth quarter occurred earlier in late September. It remains to be seen how this concert on-sale timing dynamic plays out in November and December. Even with these temporary market dynamics in 2025, we are executing well against the objectives within our control, driving strong operational performance and expanding our leading market share position. And as we look ahead to 2026, the Taylor Swift comparison will be behind us, and we will lap the implementation of all-in pricing in May. Fan demand for live events remains strong, and we're excited about what is shaping up to be another robust year for live entertainment. Let me now address our thoughts on guidance as we navigate our early stages as a public company. We are focused on operating the business for long-term value creation. Of course, we want to provide our investors with transparency so they can track our progress and execution against our long-term goals. While we are not providing specific guidance today, we plan to share annual guidance for our 2026 expectations when we report our fourth quarter and full year 2025 results early next year. Turning to the balance sheet. Our capital structure philosophy centers on maintaining flexibility and optionality to position our business for long-term success. This approach guided our capital markets activity during the quarter, which was designed to enhance our financial strength by prioritizing a reduction in our leverage, something that will continue to be a key priority. During the quarter, we successfully executed two transactions that collectively raised approximately $1 billion. First, we raised $224 million through our Series O preferred equity, which will convert into common equity at the expiration of the lockup. Next, we completed our $800 million IPO, raising net proceeds of approximately $758 million after deducting underwriting discounts and commissions. The influx of capital provided us with the opportunity to significantly improve our balance sheet by reducing leverage and lowering our debt service costs while maintaining strong liquidity. Specifically, we reduced our total debt by approximately 30%, retiring $750 million of our U.S. dollar-denominated term loan, bringing our total debt down to $1.7 billion. As a result, we ended the quarter with $1.4 billion of cash and cash equivalents or $623 million, net of our payments due to sellers, and $1.1 billion of net debt. The ratio of our net debt to TTM adjusted EBITDA was 3.9x at quarter end. Importantly, the interest rates on our remaining term loans are hedged via interest rate swaps through February 2027, resulting in a fixed, blended interest rate of 5.8%. Over the last 12 months, our debt service cost between cash interest and required amortization was $174 million. Today, our annual debt service requirement is $99 million, a reduction of $75 million, or 43%. Given the excess cash amounts we are holding, we intend to make additional debt repayments in the near term, which will reduce this cost even further. We also increased our revolver capacity by $440 million during the quarter from $125 million to $565 million, expanding our available liquidity and ability to respond quickly to any short-term capital need. Our strengthened balance sheet not only supports disciplined growth, but also reduces the interest burden, directly enhancing free cash flow generation. This creates a virtuous cycle that enables continued disciplined investment in organic growth and further deleveraging, both of which remain central to our capital allocation priorities in the near and intermediate term.

With that, we will now open the call to Q&A. Operator?

And our first question comes from Doug Anmuth with JPMorgan.

Eric, during 2025, you've made some substantial investments in core resale market share and also direct issuance. Can you just talk about the returns you're seeing on those two areas of spending and whether you expect those to continue in '26? And then, I know there's some noise as Eric mentioned in the 4Q on sales versus last year, but just curious on the thought process in not providing a 4Q guide in that you're halfway through the quarter.

Sure. Thanks for the question, Doug. I appreciate it. I believe you raised several points regarding our market share investments, our outlook for the business, and our approach. As we mentioned in our opening remarks, we are focused on the long-term, which is why we are not providing guidance; we will discuss 2026 in our next call. That said, let me address your concerns. First, as you've noted and as we've discussed, we've emphasized this year on investing to gain market share in a systematic manner, and we are very pleased with the results. In the last quarter, we saw this trend continue, and our relative market share is approximately four times higher. The developments in the market have been very positive. What is particularly exciting is that we are establishing lasting advantages in how businesses operate. I mentioned in the opening our point-of-sale system, which has been quickly gaining market share ahead of schedule, positioning us dominantly. This not only enhances our data collection and leads to a more durable share as businesses use the POS, but it also strengthens our advertising business and sponsored listings. We are very enthusiastic about these developments. As Connie pointed out, the market for live events is exceptionally strong, and while there have been shifts in sales timing, everything is progressing well as we look ahead.

And our next question comes from the line of Eric Sheridan with Goldman Sachs.

As we turn the page on 2025, curious how you're thinking about aligning marketing investments over the medium to long term? And what signals you're getting in terms of the receptivity to marketing investments to continue to grow the user base across all the array of offerings and products you're bringing to the market? Great. Eric, thank you for the question. And I think some of that echoes what I also would follow up. And I think as Doug asked about some of the various investments, and I talked about market share, and we're seeing great traction and durability in that as we sort of see the flywheel is working, I think the other thing which we've talked about is, obviously, we're very excited about our direct issuance business. And what that for us really means open distribution. And to sort of recap what that is, is we really view it as, look, our mission backing up is that for fans. We want to give them easy access to the events they want to go to so they can access those live events and get there in a very easy, delightful fashion. We also want to assist content in making sure tickets don't go unsold, seats don't go empty, and they can maximize their revenue. And that's a real pressing issue for people. I think even Live Nation on their most recent call mentioned that 98% of their events do not sell out. And there's tons of tickets, obviously, don't sell. Sports has a similar dynamic, where they're trying to fill arenas. And so I think this ties into the direct issuance initiative, and to your question, which is that we have seen a tremendous receptivity, which is that in order to solve this issue that rights owners have in order to try and increase their revenue, increase throughput, and get people into the arenas, they see the wealth of data and distribution we have, that has sort of led to, obviously, Major League Baseball, where we're seeing great receptivity from the teams. We talked about the festival channel, where we signed up Peachtree and LED, and we've been doing a great job with that. Tying that back to your question in terms of some of the marketing spend, we also talked about as we built that out, we've made the investment to prove it. And we see rights owners and people in the queue coming on board where it does not require any financial payment for them to access our open distribution. And so similar to how teams like the Dodgers have done that, when I was speaking with Shaun and Raj just last week in New York, and we were looking at the pipeline, the majority of the pipeline, as it's transitioning, does not involve any cash payment from us. And so we think this is going in an excellent direction and tracking the way we want to see it.

And our next question comes from the line of Justin Post with Bank of America.

Wondering if you could give us any visibility on the sponsored listing ad launch, when you're thinking the timing is and how quickly that could ramp? And then second, maybe talk more about the Major League Baseball deal, are you going to get direct tickets from the league? And are you seeing more productive discussions across multiple leagues?

Thank you for the question, Justin. I appreciate it. I'll address advertising in general, including sponsored listings, and then get to your question about MLB. Our view on advertising is centered on adding value for our consumers and supporting ticket sellers in our ecosystem. There are two main aspects of our advertising strategy. The first involves partnerships, like the one we established with Booking.com, allowing us to offer travel services post-purchase for attendees of events. This has proved beneficial, especially since we have a strong international business, with many people traveling for these events. The second aspect is sponsored listings, which allow sellers on our platform to pay to have their tickets featured more prominently. This isn't a new idea, but we're excited about its potential. Sellers are offering a perishable product, so it's crucial for them to get visibility before the tickets expire. Many sellers have similarly priced tickets, making sponsored listings an attractive option, which we believe will create significant value and be beneficial for the customers. Additionally, our point-of-sale system facilitates this process by serving as a straightforward tool for sellers. As they manage their business, they can easily opt for sponsored listings with just one click, leveraging our sales force to promote their listings. We're keen to ensure that we implement this properly for both consumers and sellers, and we expect to roll it out in the second half of Q4. Now, regarding MLB, the deal involves MLB taking advantage of direct issuance for certain events they control, which is exciting. They are also assisting us in signing additional teams, alongside the Yankees and Dodgers, which has shown promising potential. These teams recognize the intrinsic value of open distribution, focusing less on payments and more on the broader benefits, creating a strong economic opportunity for us. Thank you.

And our next question comes from the line of Mark Mahaney with Evercore.

Eric, I just want to ask about the direct issuance market. And if you think about it in terms of low, medium, high-hanging fruit, if there's such an expression, where do you think the best opportunities are for StubHub in the next two to three years? Is it more international? Is it more U.S.? Is it more sports? Is it more live theater? Like what are the best opportunities to ramp up into this promising market?

Thank you, Mark. I appreciate it. What we're discussing for content applies universally. Recently, when I spoke with Shaun, we mentioned that we have a solution that provides access to more data, wider distribution, and a larger audience nonexclusively, which can help drive your revenue and increase attendance. People are very receptive to this approach. The focus of content is to consistently enhance revenue and attendance in a fan-friendly manner. We've been dedicated to this for many years, and our goal is to simplify the product and service solutions. We have a diverse pipeline, including various sports leagues in the United States and European soccer franchises. We also collaborate with several festivals, both domestic and international. We've noted the growth in MLB as well. This opportunity is appealing across the board. Additionally, it's important to mention that we are not competing with primary ticketing companies. Instead, we envision partnering with them to expand our distribution network. This collaboration can provide significant access across the globe, especially given the size of the market, which exceeds $150 billion. We are very excited about these possibilities.

And our next question comes from the line of Brian Pitz with BMO Capital Markets.

Maybe a broader question on how StubHub is thinking about the future of Agentic search and ticket buying. Maybe you could provide us your views on how agents will impact either future take rates or advertising revenue going forward as we are hearing more and more industry discussions around Agentic capabilities in live event ticketing?

Yes. No, thank you, Brian, and thank you for the question on AI, which is obviously a very exciting topic. And so let me open by just saying, in the immediate term, everything has been business as usual with consumers using the channels that they use, and that continues. That being said, as you say, and we're always thinking long term and how this works. And I'll tell you why we're excited about the opportunities and how we think it will play out. The first thing is that any time there's top-of-the-funnel ways to reach people in competitive ways with people giving you that access top of the funnel to reach people and compete, which is traditional Google search and other methods, we believe it's extremely powerful. We believe we're extremely well positioned, and what we're seeing is that when you're looking at where you send traffic and where the agent needs to go and how they need to, they're solving for the best solution for that consumer, which naturally goes back to who has that supply chain, who has the catalog, who can be relied on for the ticket, who has the best selection, et cetera. So as we build that, we see the same way it worked even in search and everything else. That's ultimately where you need to be. Now, I think over time, what we're very excited about, Brian, is there's going to be both paid and unpaid ways to take advantage of this. We think that as we see in our dialogues with many of these companies that we talk to all the time, there may be ways where there's a paid model for them to drive traffic, but again, always with a quality score and thinking that way. And there's ways that there will be unpaid as they show. But again, the key thing is that they're going to want to drive people to the best possible outcome for consumers that's going to deliver value, and that's what we're building. So we're excited about the opportunities. That's how we see it.

And our next question comes from the line of Lloyd Walmsley with Mizuho.

You mentioned earlier the challenges to growth from all-in pricing. I'm curious if you believe you've mitigated some of that already. Is it still impacting growth at a low double-digit rate? Do you think we just need to work through it next year? Also, could you share your thoughts on how significant the World Cup might be next year? Any early signs you're seeing would be appreciated.

Thank you for the questions, Lloyd. Let me address all-in pricing and then the World Cup. As we discussed before, we believe all-in pricing presents a 10% headwind for one year, which we will lap in May of '26. We don’t see any deviation from that. It's what we expect. I want to provide some context for everyone. We focus on running our business for the long term, aiming to do right by consumers and the content. We have previously explained that we lobbied for all-in pricing for multiple years, which is a matter of public record. We were among the few in our sector to pursue this, knowing it would impact us in the short term. This hit is arithmetic; it’s 10%. However, in the long term, it leads to a much better experience for consumers, benefiting those of us who provide the best service. That's all I have on pricing. Regarding the World Cup, while we aren’t quantifying future impacts, I can share that the World Cup has always been a major event for us, dating back to viagogo, because of our international heritage. It’s a phenomenal opportunity for resale and is a global event taking place in North America with many matches, making it one of the largest sports spectacles worldwide. We are extremely excited about it and look forward to it.

And our next question comes from the line of John Blackledge with TD Cowen.

One question on take rates. Could you talk about take rates between the secondary market and the emerging direct issuance business? And do you expect them to be similar as the direct issuance bid scales? And secondly, just curious if you can unpack the 3Q '25 GMS growth between North America and international?

Thanks, John. I appreciate the question. You asked about take rates, as well as direct issuance and open distribution, along with some aspects of our international business. Let me clarify a few points, and then Connie may have additional insights. First, when discussing the open distribution-direct issuance model, the take rates are the same. Currently, based on everything we’ve observed, the take rates remain unchanged. I want to emphasize that we're not operating as a primary ticketing access control system; rather, we provide a marketplace for distribution, just as we do for fans and power sellers. That’s why we can inform sellers that when they transact with us, the marketplace charges are consistent. Regarding our international business, while I can't provide specific breakdowns, I can share that it has been growing rapidly and we’re excited about it. It's important to recognize that viagogo, which acquired StubHub, was established internationally. We're operating in 200 countries, with particularly strong performance in Asia and Latin America. As we look at event and concert schedules for 2026, we see a trend of tours becoming increasingly global and expanding into various geographies. We're very enthusiastic about this.

Yes. Nothing further to add, just to emphasize that international continues to be an area where we see consistent growth. We're also excited to have Raj on board, who's going to put some direct focus on international as well, which is super exciting. So great momentum across the board.

And our next question comes from the line of Shweta Khajuria with Wolfe Research.

The first one is on direct issuance. Could you please talk to how you're thinking about the number of teams that you expect to perhaps bring on onto the platform next year? And what level of visibility do you have in terms of the timeline? Anything you can comment on when do you need to sign them all by to benefit by the end of next year? So that's the first one. And the second one, any color on just the overall demand trends that you're seeing through the quarter through October and November that could help us out as to how we think about fourth quarter going forward?

Yes, thank you for your question. Generally speaking, I can discuss our approach to direct issuance and open distribution, as well as our view on live event demand. As we've mentioned, we're not providing guidance at this time, but we look forward to discussing next year in our next call. In direct issuance, it’s important to note that we have a vast opportunity across various leagues, festivals, and regions. The applicability of our services is quite broad, and it's essential that our product works effectively for our users. When we deliver our product correctly, it operates across multiple platforms and integrates into existing workflows. This means users don’t have to commit to a specific date or make long-term decisions; they can choose to utilize it whenever they need, enhancing flexibility without the pressure of long-term contracts. Regarding consumer demand for live events, it remains strong. We're not providing guidance here, but I can say that consumer enthusiasm for live events continues unabated. As Connie mentioned, we operate a marketplace, and the timing of ticket sales can vary. Having been in this industry for 20 to 25 years, I can attest that timing can shift; some events may go on sale in different quarters than expected. However, this timing issue does not reflect any change in the robust demand we observe from consumers eager to attend live events.

And our next question comes from the line of Jason Helfstein with Oppenheimer.

I want to revisit Shweta's question because several clients are asking about it. Connie, could you clarify how much pull forward you noticed in the third quarter that might be impacting the fourth quarter? Also, how significant is the unfavorable World Series performance compared to last year? Additionally, there’s been growing concern about Ticketmaster and Live Nation regarding speculative sellers. Can you discuss how you handle speculative selling in your business and whether it’s a significant issue we should consider, given the overall size of the business?

Yes. Great. Thanks for the question. And happy to provide some color. As we mentioned, we knew going into the fourth quarter that it would be a little bit of a tough comparison. We had the unique Taylor Swift comp as well as the World Series. And as I mentioned, we did see a little bit of timing shift in relation to September. To Eric's point, what we continue to focus on is the long term. We know that there can be timing shifts from time to time. What we continue to be focused on is capturing share. And in the third quarter, we were able to do just that. In fact, if you look at our market share, we were nearing 50%. So as we look at it, we think it's merely a timing issue more than anything else. And more broadly, I'd say the outlook for '26 continues to look really strong. And so if there's a little bit of timing, the good news is that we're well positioned to capture a significant portion of those on-sales when they do come in. So hopefully, that gives you a little bit of color. In relation to speculative ticketing, et cetera, I'll pass it over to Eric to provide some color.

Yes, thank you for the question, Jason. Sometimes when people discuss speculative ticketing, there are many in the market focused on ensuring that people receive tickets in an authentic manner. That's at the core of our business. Our priority is to minimize fraud and ensure ticket delivery. For us, it's business as usual, and there's not much to elaborate on.

And our final question comes from the line of Andrew Boone with Citizens.

This is Brianna on for Andrew Boone. Just can you share how users are currently interacting with the mobile app and how that may be different than on the web? And do you see an opportunity for the mobile app to evolve into a more comprehensive platform, whether that's through loyalty program or a different lever to drive better frequency and retention?

Thank you for the question. I appreciate it. Regarding the mobile app, we do not provide specific breakdowns in our reports. However, as you've mentioned, we are seeing more and more users returning to us. We are focused on creating an easy experience for users to identify who they are. We are enhancing our offerings through Booking and other initiatives to develop a more comprehensive product. Our goal is to lay the foundations for a complete experience, making it easier for users to know that their first stop should be StubHub, which we find very exciting. Thank you.

And ladies and gentlemen, that concludes our question-and-answer session. I will now turn the call back over to Mr. Eric Baker for closing remarks.

Thank you, everyone, for joining us for our first earnings call as a public company. We very much appreciate it. As I said at the outset, both to those who have been along with us for our many-year journey and for those who are new to the story, thank you for taking the time. We look forward to speaking to you again in the future.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.