StubHub Holdings, Inc. Q1 FY2026 Earnings Call

Good day, ladies and gentlemen, and thank you for standing by. Welcome to StubHub's First Quarter 2026 Earnings Conference Call. Please note that this conference call is being recorded today, May 13, 2026. I will now turn the call over to Jonathan Schaffer, SVP, Investor Relations with StubHub.

Thank you. Good afternoon, and thank you for joining us to discuss StubHub's first quarter 2026 results. For reference, our first quarter 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 call will include forward-looking statements. These forward-looking statements are based on the company's current expectations and are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can make no assurance related to its expectations. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We will also refer to non-GAAP measures on today's call. Unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is contained in today's earnings release available on our Investor Relations site. All financial comparisons, unless noted otherwise, are based on the prior year period. 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 and then take questions. And with that, I'll turn it over to Eric. Eric, you may begin.

Thanks, Jonathan, and welcome, everyone, joining us today. We are off to a positive start in 2026 with solid top line growth and increased profitability. GMS increased 7% to $2.2 billion, and adjusted EBITDA margin expanded to 16%. We also generated healthy cash flow, which enabled us to further deleverage and strengthen our balance sheet. As a result, we are reiterating our full year outlook for GMS and adjusted EBITDA. On our year-end call in March, we outlined our 3 key priorities for StubHub in 2026: Growth in our core resale marketplace; increased profitability; and advancement of longer-term distribution opportunities. The quarter demonstrated our team's execution against all 3 of these objectives. Starting with growth in our core resale marketplace, we are leveraging our leadership position and scale to drive performance both in North America and globally. The live events and secondary ticketing markets remain healthy with strong consumer demand and a robust 2026 event calendar. In addition to favorable market dynamics, our resell business is also benefiting from advantages resulting from our increased scale. In 2025, we invested in our competitive position, increasing liquidity and selection and building the infrastructure to support continuous improvement to the customer experience. In 2026, we are realizing the returns on these investments in the form of superior market leadership and even greater operating advantages. We believe our leading position, combined with the inherent flywheels of our marketplace model, allow us to improve customer acquisition economics while growing the business. Of course, our market leadership is a direct result of our relentless focus on the consumer experience. StubHub's mission has always been to make it easier for fans to access live entertainment. Our resale marketplace allows fans to buy and sell tickets with choice, convenience and trust. We deliver a differentiated experience to consumers based on our scale advantages. Fans choose StubHub because we offer broad selection, trusted transactions and a simple user experience. Sellers depend on StubHub for aggregated demand at global scale. Our technology and data connect both sides of the marketplace more effectively over time. That is what makes our consumer experience unique and creates durable competitive advantages. All of this adds up to what we believe is the most recognized brand in the resale market for live events. In the first quarter, we made progress in expanding the supply side of our marketplace beyond individual and professional sellers to enterprise scale sellers, including content rights holders such as professional sports teams, artists, venues and other event organizers. We believe it is clear the market is heading in the direction of nonexclusive open distribution. The ticketing ecosystem, including consumers, stands to gain from greater optionality and competition. Fans want more access and choice, and content rights holders want to fill more seats by offering inventory through more channels. Much like airlines selling tickets across platforms, the goal for content rights holders is to sell more tickets at more efficient prices and maximize the fan experience and value of each event through event optimization. It appears the regulatory environment is also recognizing the value of nonexclusive open distribution. A recent proposal to settle an antitrust suit in the live events space included nonexclusive distribution, reinforcing the importance of giving content rights holders and consumers greater choice in how tickets are distributed, discovered and purchased. On our last call, we discussed our shift from a business development-led approach to a more product-led self-serve platform strategy. Our goal is to enable broader adoption of open distribution across rights holders by creating a seamless experience to list, manage and distribute tickets through our marketplace. In the first quarter, we announced 2 new developments that illustrate how we can use technology to access this market. The first is Distribution Manager: An AI-powered self-serve tool that allows artists, teams and venues to list and manage tickets directly through StubHub. The product is designed to remove friction for rights holders and does not require a technical team or complex integration. A partner can use a simple prompt to identify ticket types, set pricing and sales parameters and list inventory directly on StubHub. Because the tool sits on top of more than 25 years of StubHub marketplace data, it can also provide real-time pricing and demand signals to content rights holders before tickets go live. This is an early iteration of the tooling we plan to continue developing for enterprise scale content. It is designed to make distribution simpler, more flexible and more effective for rights holders while increasing access and selection for fans. We are also establishing direct connections with primary ticketing platforms. By integrating directly with StubHub, primary ticketing or access control providers can work alongside our marketplace to improve outcomes for rights holders and fans. Today, event organizers often list tickets exclusively through their primary sales channel with systems that were not designed to synchronize inventory across channels, making it difficult to expand distribution without added complexity. Open distribution, formerly known as direct issuance, changes that. By integrating directly with the ticketing platforms organizers already use, we can give rights holders access to StubHub's global demand without requiring them to change systems, disrupt their existing workflows or enter new distribution contracts. For example, in the first quarter, we announced an integration with a primary ticketing company that tickets rights holders like Stanford University Athletics, among others. Through a direct connection between the primary system and StubHub's marketplace, organizers can choose to list tickets on StubHub within their existing dashboard. Integrations like this enable all of the primary clients to activate StubHub as an additional distribution channel through a simple workflow. We also continue to develop advertising, which represents an exciting opportunity to realize additional potential of our leading marketplace platform. StubHub sits at the intersection of high intent consumer demand and live event discovery. Over time, we believe that creates opportunities to help partners reach fans in highly relevant ways while improving the overall experience on our platform. We are in the testing phase with advertising, and our focus remains on building it thoughtfully in a way that is consistent with our broader consumer-first approach. In April, we announced an integration with Anthropic's Claude that lets fans discover and browse live events. Claude users can access StubHub's global catalog of live events with up-to-the-minute price and seat level availability. The partnership builds on StubHub's ChatGPT integration announced at the end of last year. We view AI through 2 lenses: the opportunity to transform the end user product; and the ability to transform productivity internally through greater and faster innovation with higher efficiency. We have several AI initiatives underway related to post-purchase support, customer experience enhancement, product development and expanded insights, just to name a few. In conclusion, we are off to a positive start to 2026 with solid first quarter results that position us to achieve our financial outlook for the year. Our core resale marketplace continues to grow while increasing profitability. We are generating strong cash flow and strengthening the balance sheet, and we are continuing to invest in technology and distribution opportunities that we believe will expand our reach over time. We remain focused on executing in pursuit of our vision to build the global destination for consumers to access live entertainment. With that, I'll turn it over to Connie to discuss our financial results and outlook in more detail.

Thank you, Eric. Good afternoon, everyone. Before turning to our first quarter results, I want to briefly reiterate the financial framework aligned to our strategic objectives that Eric discussed: Durable GMS growth; meaningful margin expansion; and continued strength in free cash flow generation. Our results in the quarter demonstrate progress in each of these areas. Beginning with GMS, our marketplace grew approximately 7% to $2.2 billion in the first quarter, reflecting contributions from all 3 drivers of our growth strategy: North American resale growth, continued market share leadership and international growth. The market share gains achieved in 2025 now provide a foundation for margin expansion as we leverage the scale, network effects and efficiency of our marketplace. International growth outpaced North America with noteworthy performance in Latin America and Asia Pacific, reflecting the continued strength of our global platform. As expected, our reported GMS for the first quarter reflects the comparability impact from the all-in pricing implementation introduced in May last year. We will fully lap that comparability period in the second quarter. Before discussing our income statement in detail, a reminder that my remarks will be on an adjusted basis, excluding stock-based compensation and nonrecurring items. Full reconciliations to comparable GAAP measures are available in our earnings release. Turning to the income statement. Revenue increased 12% year-over-year to $446 million, outpacing GMS growth in the quarter. This reflects the normalization of GMS to revenue conversion as we lap our market share investments in 2025. Now that we have moved beyond that investment period, we expect conversion to return to more typical historical levels approaching 20% for the full year. Gross margin was 85%, expanding approximately 100 basis points year-over-year and consistent with our mid-80% operating framework. The improvement reflects stronger unit economics driven by increased efficiency in customer acquisition and servicing as well as lower inventory costs. Sales and marketing expense was approximately 50% of revenue, representing a 500 basis point improvement year-over-year, reflecting increased efficiency at scale. Operations and support costs were approximately 3% of revenue, consistent with our expectations. G&A expense increased by approximately 170 basis points as a percentage of revenue, primarily driven by elevated professional fees and front-loading of payroll taxes associated with higher stock-based compensation following our IPO. We expect G&A to decrease as a percentage of revenue over the remainder of the year as the business continues to scale. Adjusted EBITDA was $72.1 million, a margin of 16%, which expanded over 400 basis points year-over-year. The margin expansion reflects both underlying business growth and improved operating efficiency. More specifically, this improvement was driven by the combined impact of normalized revenue conversion, strong gross margins and increased marketing efficiency. Each of these dynamics contributed in the quarter, resulting in the operating leverage outlined in our 2026 framework. Net income for the first quarter was $48 million. I would note that net income includes the effects of stock-based compensation, nonrecurring items, foreign exchange and derivative gains, interest income and expense and taxes, each of which can introduce variability relative to our adjusted results. We believe adjusted EBITDA helps to highlight trends in our operating results by excluding these items and the reconciliation to net income is available in our earnings release. Beyond the income statement, our cash flow performance reflects the advantages of our marketplace model. As a scaled asset-light business with gross margins above 80% and favorable working capital dynamics, we generate strong and durable operating cash flow. This is further supported by a significantly reduced interest cost burden following the repayment of over $900 million in debt in 2025. During the quarter, capital expenditures were approximately 2% of revenue, and we generated approximately $11 million of interest income. We also continue to benefit from approximately $1.2 billion of NOLs, which provide meaningful cash tax protection in the medium term. Because our business is inherently seasonal and individual quarters can reflect meaningful timing-related swings in working capital, we believe trailing 12-month free cash flow is the most appropriate lens through which to evaluate our cash generation. We generated approximately $298 million of free cash flow on a trailing 12-month basis, representing a 116% conversion of adjusted EBITDA. This includes approximately $189 million of net benefit from net inflows of buyer receipts and seller payments as well as approximately $125 million of interest costs. Excluding these items, underlying free cash flow was approximately $234 million, representing a 91% conversion of our trailing 12-month adjusted EBITDA. Turning to the balance sheet. We ended the quarter with approximately $1.5 billion of cash and cash equivalents or $508 million net of seller obligations. Net leverage improved to approximately 4x trailing adjusted EBITDA at quarter end, down from 4.5x at year-end 2025, reflecting both earnings growth and continued strength in cash generation. Our financial position provides meaningful flexibility to execute against our capital allocation priorities. We remain focused on organic investment, continued deleveraging and disciplined dilution management, while maintaining the flexibility to pursue opportunities that enhance shareholder value. Subsequent to quarter end, we repaid $100 million of our U.S. dollar term loan, further demonstrating our commitment to deleveraging and our ability to deploy free cash flow towards debt reduction. This brings total debt repayment over the last 12 months to more than $1 billion. As a result, our total outstanding debt is approximately $1.4 billion with no maturities until March 2030. Related to our capital structure, during the first quarter, $314 million of preferred equity, including our Series M, N and O shares converted into approximately 16 million shares of Class A common stock, resulting in 374 million common shares outstanding at quarter end. In May, we granted approximately 13 million RSUs under our employee incentive plan. Equity is an important component of compensation for our employees and reinforces an ownership mentality. At the same time, we are focused on dilution management. As you can see in the share count summary in our investor presentation posted to our Investor Relations website today, we had approximately 399 million fully diluted shares as of March 31, excluding performance-based RSUs and options. Based on that fully diluted share count, we expect dilution to be in the low to mid-single-digit percentage range for the remainder of 2026, excluding performance-based RSUs and options. As of today, we believe the majority of the RSU awards for 2026 have already been granted. Turning to our full year 2026 outlook. Our first quarter performance is consistent with the framework we outlined at the beginning of the year and supports our confidence in the trajectory of the business. We are reiterating our full year outlook for GMS and adjusted EBITDA. GMS of $9.9 billion to $10.1 billion or year-over-year growth in the range of 8% to 10% and adjusted EBITDA of $400 million to $420 million. We guide on an annual basis given the inherent seasonality of live events, which can vary quarter-to-quarter. We expect the first and second half contribution to full year GMS to remain broadly consistent with 2025. In closing, our first quarter results are consistent with the framework we outlined at the beginning of the year. We remain focused on executing against these priorities, driving sustainable GMS growth, expanding margins through operating discipline and generating strong free cash flow, and we look forward to reporting our progress throughout the year. With that, we will open the call for questions.

Your first question comes from the line of Eric Sheridan with Goldman Sachs.

Maybe a two-parter, if I can. In terms of what you're calling out in terms of leveraging the market share gains from last year in terms of this year's operating performance, can you talk to us a little bit about where we are in terms of baseball innings in terms of seeing that in the financials today and what the scope is for that leverage to play out as scale is built through the year? And the second part of the question would be if you were to build that sort of scale in the leverage and it will be at or above maybe your guided range for adjusted EBITDA as the year goes on, how do you think about investing some of those gains back into the business or outperforming philosophically adjusted EBITDA as a guide.

Great to hear from you, Eric. Thanks so much for the question. I appreciate that. Before handing over to Connie on some of the financial details, we'll say, we had set out and we decided to take our leadership position and use that to continue to grow while inflecting our margins, and we're glad to report that that is indeed what is happening. It's very exciting, and we continue to grow and build on our leadership position. Obviously, that's the whole underlying basis that as you do that, you should get more operating leverage over time, which we've talked about before, and we're very excited about that. With that, I'll hand it over to Connie.

Yes. Thanks, Eric, and appreciate Eric dialing in today. I think there are a couple of elements to your question on operating leverage and then perhaps how we think about phasing for the remainder of the year. So I'll take those in two parts here. To your point, and as Eric mentioned, our whole intent this year was delivering on what we said we were going to do, which is top line growth and expanding margins. We know that the scale that we got to this year off the back of the investments from the prior year positioned us well, and that's exactly why you are seeing that operating leverage. In terms of how we see this playing out in regards to phasing over the year, I'd point you to 2025 as a good guide for top line GMS as you think about H1 versus H2 split. And then in relation to profitability, as the business scales throughout the year because of the fundamentals in relation to our business model, you're naturally going to get incremental operating leverage as the business grows. So I'd expect there to be slightly more profitability flowing through towards the second half.

Your next question comes from the line of Doug Anmuth with JPMorgan.

Can you talk more about the drivers of increased marketing efficiency? And Eric, just kind of your view on industry growth and degree of share gains for StubHub? And then on open distribution, where do you stand on the kind of self-serve and AI-enabled platform build out? And if you could kind of give us some sense of pipeline around potential partners.

Sure. Doug, thank you for the question. I appreciate it. A couple of different things hit on here. In terms of growth and efficiency, which really hits on being able to grow the business while inflecting margins and how that works: fundamentally, when you have the leadership position in a marketplace business, you get more liquidity, you get more data, and you can manage your sellers more effectively. That flows through in improved economics. In terms of growth, we think of growth on an annual and multiyear basis. The live events industry is a great place to be. People love live events. There are more events and increasing geographic scope, which drives underlying growth. As the largest player in the market, we feel there's tremendous opportunity to build on our leadership position. On open distribution, we're very excited. Many developments point toward more optionality and competition being best for consumers. We are focused on productizing it and making it turnkey and not business development oriented. That's the focus for this year. We have announced Distribution Manager, an AI-powered self-service tool for artists, teams and venues to list and manage tickets directly through StubHub. We are also building primary integrations so organizers can list to StubHub from their existing systems. We've had some announcements, including work with Stanford Athletics and others. We're excited about where this is going and focused on building out the product this year. I'll pause there and hand it to Connie.

I just echo what Eric mentioned, which is the great news is we're now the clear market leader. There's a healthy backdrop in relation to the live events calendar ahead of us, and all of that allows us to continue to drive efficiency while growing the business. We're really well positioned.

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

I'll ask about advertising and then a little bit more on international. I know you mentioned advertising is one of the newer growth initiatives. It sounds like you're still in testing phase. Any more color than that? Any more advertisers that you brought on to the network? Should we expect materiality to begin in 2027? So any more color on that? And then international seemed like an area of strength. You mentioned Asia Pac and LatAm. What drove it? Was it more activity with your current rights holders, or were you able to bring in more rights holders? A little more color on that international growth would be helpful.

Thank you, Mark. In advertising, this remains an exciting opportunity. We've seen similar opportunities in other marketplaces. We're testing sponsored listings and other formats to be additive for users while helping sellers and partners. We're focused on optimizing auction mechanics, pricing, and the user experience to ensure conversion is preserved or improved. We'll comment when it becomes material. On international, it is a global business and a growth opportunity. Many tours and events are increasingly international, and there is growing demand in Latin America and Asia Pacific. When you have a leadership position and a global platform, those benefits accrue. We're excited about it. Connie, anything to add?

Yes, I'd just add we're continuing to make sure we have the right talent and focus on building out the international business. We have a legacy in international jurisdictions, and given more live events globally, there's a huge opportunity given our clear market-leading position internationally as well.

Okay. Eric, I think that first game is against the 49ers so that may be a tough start, but the rest of the season should be fine.

We support anyone who wants to attend even if they're misguided on their fan support, but I appreciate that.

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

Connie, I wanted to ask about your first-half, second-half phasing. It would seem the second half would be larger this year just due to the impact of all-in pricing last year in the comps. So I would love your thoughts there. And then second question: the World Cup — I'd love to hear your thoughts on how impactful that could be and how you think about your share in that market this year?

Thanks, Justin. In regards to phasing, you're right. Live events scale throughout the year. We have the World Cup mid-June to mid-July, concerts building across the summer, and the major sports leagues toward the end of the year. The business will naturally scale closer toward the second half. I point you to 2025's shape, which was a bit more back-half weighted. Regarding the World Cup, we view it as a Tier 1 event and are excited about the opportunity. We expect more meaningful contribution in Q2 and Q3 following matchups, and we believe we'll have an outsized portion of that share given our scale leadership.

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

It's Logan Whalley on for John. Maybe first on your POS system, could you update us on progress there with ReachPro and how should we think about its ability to drive more volume on the platform and maybe also how your share looks there versus the largest competitor? And then on the regulatory front, could you update us on regulatory developments in the U.K. specifically as they relate to potential price cap proposals?

In terms of our POS system, ReachPro is progressing as we articulated previously. We continue to grow our share and bring people on board. Our goal is to be the leader in that over the medium term, and that remains unchanged. Becoming the operating system for sellers gives them a better experience and data advantages that help them sell more tickets, which we believe drives more sales on StubHub. On the U.K. and price caps: occasionally jurisdictions look into price caps, but when implemented they have not worked well. They can reduce access to events, increase black market prices and fraud. Our studies have shown more fraud in markets with such restrictions. They are also impractical to enforce given dynamic pricing in primary markets. We focus on educating regulators and legislators about why these measures don't work for consumers. In the U.K., the King's Speech did not include price cap legislation; even if it had, it would have initiated a multiyear process. Today, that timeline has been pushed further down the road. We remain engaged in educating stakeholders.

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

Maybe two broader ones. First, unlike last year and this year, we've already seen roughly a dozen concert tours canceled. What do you think is really driving this outside of maybe some of the unexpected health issues? We are seeing some buzz around consumer concerns on higher ticket prices. I'd love to get your thoughts on that. And then the macro has changed noticeably since we last spoke two months ago. Have you observed any indication that fans may be trading down to lower-priced seats or reducing the frequency of event attendance? Any thoughts there would be helpful.

Thank you for the questions, Brian. On cancellations, we have not seen anything relevant to our business or on our radar. Connie can add from a flash financials perspective.

That's right. We ran the flash financials yesterday and there is no slide. Q2 continues to progress really well.

On the macro and consumer behavior, we have not seen impacts. The live events sector has been extremely resilient through multiple cycles over 26 years. Fans are passionate and often prioritize attending live events. We offer various price points; historically, about half of all tickets on StubHub trade at less than $100, and that diversity helps maintain demand. From where we sit today, we see continued resilience and no reason to expect a material change.

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

I have two follow-ups on some of the prior questions. One is on macro: when we saw prior inflationary pressure and mix shift in wallet spend towards necessities, how did StubHub perform in terms of demand trends historically? Second, a follow-up on the World Cup impact. It is a Tier 1 event— is it fair to assume the impact is comparable to, say, a Taylor Swift type contribution to your financials?

On the macro: based on our lived experience over 26 years, StubHub and the live events industry have proven resilient through multiple cycles, including 9/11, the financial crisis, and recent inflationary periods. Attendance and demand have consistently rebounded and grown over time. The company's historical performance during those cycles gives us confidence in demand resilience.

On the World Cup, we evaluated the opportunity and view it as Tier 1, but it is not comparable to Taylor Swift—she is one of a kind. Our marketplace benefits from diversity across segments and geographies, so we are not single-threaded on any specific event to achieve our outlook. As of now, Q2 is tracking well and we reiterated our guide.

Your next question comes from the line of Andrew Boone with Citizens.

I wanted to ask about the potential of the antitrust settlement that you mentioned earlier. Can you give us an idea of the spectrum of either operational or financial outcomes that may become available depending on which way things swing — whether something more favorable is really important to you guys or whether this doesn't really materially move the needle? And then I wanted to ask about your adoption of AI chatbots. Can you help us understand what that looks like in the future? I understand it's small today, but what's the bigger-picture vision as you start to integrate with AI chatbots?

On the antitrust settlement: everything we're doing and our guidance does not hinge on any outcome from the DOJ or Ticketmaster. That said, anything that pushes more toward open distribution, which increases optionality and competition and is better for consumers, would be an upside for us. Whether or not those specific remedies are implemented, our strategy and conviction remain unchanged. On AI chatbots and integrations: we want to be wherever consumers are and meet them across channels. We've integrated with ChatGPT and Claude. These channels are not material today, but we view them as complementary and potentially important distribution and discovery channels in the future. Our goal is to use our data and product to provide the best experience across any channel.

Your next question comes from the line of Jed Kelly with Oppenheimer.

Getting back to concerts and open distribution: is that more of a conversation with promoters? If you're able to reach a couple of promoters, can that scale relatively quickly? Or is it with the venues? And then as a follow-up, how should we think about fee caps in individual states in the U.S.?

Open distribution is for anyone who issues tickets: it could be a promoter, a venue, or the artist themselves. We're indifferent to which entity it is; the goal is to make the product simple and seamless so that listing on StubHub is a no-brainer. On fee caps, we've addressed why they tend not to work well for consumers. The important regulatory focus historically has been on transparency, such as all-in pricing, which we supported. Transparency is good for consumers and competition, and that's generally the constructive outcome we support.

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

A follow-up on Claude and OpenAI partnerships. Can you provide some color on the level of activity that you're seeing move through those channels so far? Obviously, it's a little early for Claude, but maybe for OpenAI. And how do you see those integrations evolving over time?

We want to be where consumers are and meet them across channels. Integrations with platforms like Claude and ChatGPT are part of that strategy. Activity through those channels is not material today, but we are on the front foot and view these as complementary channels to existing distribution. Over time, our scale, product, technology and data should allow us to work through any distribution channel that consumers adopt.

Your next question comes from the line of Jason Bazinet with Citigroup.

Just a question on sales and marketing. You noted that sales and marketing expenses were 50% of revenues, down from 55% a year ago. But if I go back two years it was 46% of revenues, and three years ago it was 37% of revenue. So what's going on? Why is it higher over the long term? What's the right sales and marketing intensity for this business?

If you step back, the course of our history reflects deliberate investments in 2024 and 2025 to drive market share and improve our position. Those investments were intended to create specific outcomes, and we've been pleased with the results. Now that we've reached that level of scale and clear market leadership, we can drive top line growth and expand margins. Q1 showed 7% top line growth and a 400 basis point improvement in adjusted EBITDA. As we continue scaling, we expect further efficiency gains in sales and marketing as a percentage of revenue.

Your next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.

Take rate was up over 100 basis points both year-over-year and sequentially. Curious what the main drivers of that were and if that level is sustainable going forward?

It was an intentional outcome of our strategy. In 2025 we invested to gain market share. Now that we are the clear market leader, you're seeing a more normalized level of GMS to revenue conversion. Looking forward, we expect conversion to continue to return to more typical historical levels, approaching 20% as a blended rate for the full year.

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

On the Live Nation settlements: one thing we noticed is that while the settlement allows venues to sell tickets through other platforms, it stipulates those sales can only be through other primary ticketing marketplaces. If that is implemented, does that change your open distribution or direct issuance strategy, maybe give you desire to get into traditional access control primary ticketing? And on price caps: Ontario recently went to price caps, and Toronto is a big city — maybe a decent case study. What have you seen so far there?

Regarding Live Nation, the indications point toward more open distribution and competition, which is positive. Specific definitional details will matter, and we'll see how that shakes out. Our conviction and strategy remain the same and would benefit from more open distribution. On price caps, jurisdictions have tried similar measures over the years, and they often get rolled back. At this point, there is nothing materially impacting our business from those efforts, and we'll monitor developments.

Your final question comes from the line of Lloyd Walmsley with Mizuho Securities.

This is Wayne calling for Lloyd. Congrats on the solid results. I have two quick questions. First, it's been almost half a year since you recalibrated your marketplace take rate. Things seem to be doing well. Can you give an update on vendor reception and also the industry competitive dynamics observed so far? And secondly, could you comment on the monthly GMS growth trend in the quarter and then in April? Curious how much the outsized tax return this year is helping.

Thanks for the question. The performance reflects that as the leader, we can provide strong liquidity, data and distribution for sellers and a great experience for consumers, which supports growth while improving margins. The current performance speaks to that and we expect it to continue along the lines we've discussed. I'll hand it to Connie for the quarter shape.

As we sit here today, the second quarter is shaping up in line with our expectations, which is why we reiterated our full year guide. We don't focus on monthly reports but on the full year. The building blocks are intact: North American and international growth, clear market leadership, and a healthy live events calendar. We look forward to sharing more as the year progresses.

That concludes our question-and-answer session. I will now turn the call back over to Eric Baker for closing remarks.

Thanks again, everyone, for joining us today. We're executing well against our business and financial objectives. Our focus remains on growing our top line, expanding our margins and continuing to pursue initiatives to broaden our reach. We look forward to continuing to update you on the progress in the months to come. Have a great night.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.