StubHub Holdings, Inc. (STUB) Q3 2026 Earnings Call Transcript

Good day, ladies and gentlemen, and thank you for standing by. Welcome to StubHub's third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. Please note that this conference call is being recorded today, November 10th, 2026. I will now turn the call over to Jonathan Schaefer, Senior Vice President, Investor Relations with StubHub. Jonathan, please go ahead.

Thank you. Good afternoon, and thank you for joining us to discuss StubHub's third quarter 2026 results. For reference, our third 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. Reconciliation of these non-GAAP measures to the most directly comparable GAAP measures are 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 remarks before opening the call to your questions. With that, I'll turn it over to Eric.

Eric, you may begin. Thanks, Jonathan, and welcome everyone joining us today. We delivered a strong third quarter. Growing GMS 7% to $2.6 billion and adjusted EBITDA 84% to $124 million at a 25% margin, our highest EBITDA margin quarter as a public company. As a result of our positive third-quarter performance, we are raising our full-year GMS outlook to 11% to 13% growth for the full year. And reiterating our adjusted EBITDA outlook of $400 to $420 million. Our Q3 results reinforce three themes that define our business. First, the continued strength of consumer demand for live experiences. Second, StubHub's leadership in the resale market. Third, improved operating efficiency at scale across the business. We operate in a very healthy end market for live events. That strength was on display in the third quarter at the World Cup, which drew extraordinary levels of fan enthusiasm, a tremendous signal for the live event consumer. The event also exemplified many of the broader trends shaping our industry and driving the growth of our end market. Some are well known. Such as the multi-decade trend of consumers increasingly allocating spending to experiences over goods. I also want to take this opportunity to call out a few dynamics that are less widely discussed. Reaching fan bases through social media has allowed artists to build larger and larger followings and allowed consumers to become fans of more types of content, like Americans' growing interest in soccer and international artists. Women's sports is another clear example. Rapidly growing fan bases are driving more events and more ticket sales, and that has translated to many first-time buyers' women's sports tickets on our platform. This has all led to more apps supporting more events at a larger scale and a major trend of globalization across the industry, which in turn has fueled a fast-growing category of event tourism. There's also significant investment in new live event content and infrastructure taking place. Everything from sports leagues expansion to new event formats and new venue construction, both here in the U.S. and around the world, all growing the number of events available to fans. This points to something broader about what fans increasingly expect across categories. The ability to find and access the events they want instantly, wherever they are. The World Cup demonstrated this at its most demanding. Fans following their team from city to city with only day's notice, which requires a deep, liquid global marketplace that can match the right fan to the right seat in the right city in real time. Consumers continue to look at StubHub as the market leader because our global reach, catalog breadth, deep liquidity, and trusted, reliable experience allow us to deliver this in a way others cannot match. As we look forward, we believe our competitive position will only strengthen over time. As we have grown this year, we have also driven meaningful efficiencies across marketing channels like Google, which have supported both margin expansion and growth. We're not seeing material traffic from AI-based referrals to date, but we do expect this to increase over time, and we believe we are well-positioned as consumers' usage of agentec technologies grows. We operate a complex marketplace that delivers a real-world product, a fan in their seat on event day. That means aggregating a vast, fragmented supply chain and standing behind every transaction with trusted fulfillment, payments, and fraud protection. This operational expertise has been built over more than two decades, functions at unmatched scale and cannot easily be replicated, positioning us well for a more agent-driven world. We're excited about the opportunity to deploy these technologies within StubHub to enhance the fan experience and drive even better outcomes. Buying a live event ticket is a considered personal purchase. Fans have real preferences that matter, where they sit, what they'll pay, the specific experience that they want. We see a real opportunity to build rich, AI-augmented experiences to help fans search for and discover event tickets. We believe our proprietary domain-specific data uniquely positions us to deliver this in the future and makes it one of the most exciting areas of innovation ahead for StubHub. The regulatory environment remains constructive across key markets. We continue to operate within a generally favorable status quo that supports open-functioning resale markets across jurisdictions. We believe regulators are generally focused on expanding fan access to live experiences, making it easier, more transparent, and more trustworthy to buy and sell tickets. We share this aim, and we've been encouraged that price caps have not advanced in key markets, including in California, where price cap legislation failed to move forward in August, following New York's decision earlier this year not to advance a similar proposal. We believe this reflects a growing recognition among lawmakers that price caps actually reduce consumer access and drive activity into less transparent channels. It is also important to recognize that in most instances, proposed legislation carves out sizable portions of the market, including sporting events and larger venues. Our diversification across event type and categories provides us with a level of insulation from potential regulatory changes related to any single subset of the market. As we've discussed previously, the specific subsegment we believe regulators are focused on, resellers listing large quantities of inventory for very high-demand concerts at prices significantly above the original sale price, represented approximately 10% of our global GMS in 2025 across all jurisdictions. Beyond our core resale business, we continue to advance our TAM expansion initiatives, open distribution, and advertising on our platform. Open distribution works to ensure broad, transparent access to live events for fans with greater choice than where they discover and purchase tickets. Rights holders benefit from expanded distribution and access to StubHub's global demand and pricing data. We're encouraged by the momentum on the supply side, with breadth growing across categories, venues, and events as more partners join the ecosystem, and we expand our integrations with primary ticketing providers. We are also making progress with advertising on our platform as we build on the existing engagement across StubHub's marketplace. Sponsored listings provide sellers another lever to compete on the marketplace and sell inventory that becomes increasingly time sensitive as an event approaches. It also helps fans discover relevant inventory more effectively. Adoption and engagement continue to build, and we've begun testing the offering with fan sellers in addition to our professional point of sale users. Together, open distribution and advertising represent attractive long-term opportunities to expand our addressable market and further monetize activity across our marketplace, and we look forward to sharing more as they develop. In closing, we're in track to deliver a year of double-digit top-line growth with significant margin expansion resulting from our market leadership and scale advantages. Consumers continue to prioritize live events, and we are seeing greater globalization of content that reinforces the importance of our global reach as a competitive advantage. We continue to invest in opportunities that enhance the fan experience through greater access and transparency, and to build on the engagement already taking place across our platform. Our vision is to be the global destination for fans to access live entertainment, and we look forward to reporting to you on our progress and to discussing our expectations for the coming year when we report our fourth quarter results. Before I turn it over to Connie, we also announced today a CFO transition plan. Connie will be stepping down as CFO early next year, and Mike Noonan will join us from his current role as CFO of TripAdvisor. Mike brings extensive finance and capital markets experience and a proven track record as CFO of Branded Consumer Companies. We are excited to welcome Mike to StubHub in January. I want to thank Connie for leading our finance organization and several capital markets transactions for the company. She brought real discipline to how we manage our balance sheet and position the business for long-term growth. Today, StubHub is stronger than ever, generating healthy profit margins with a well-capitalized balance sheet. I sincerely appreciate her partnership and contributions to StubHub, and we wish her well in her future endeavors. With that, I'll turn it over to Connie to discuss our financial results and outlook in more detail.

Good afternoon, everyone. Thanks, Eric, to you and the board. It has been a rewarding experience working with the entire StubHub team. We've built a very talented group, and I look forward to ensuring a seamless transition. Now, turning to the quarter. In the third quarter, we delivered GMS of $2.6 billion, an increase of 7% year-over-year, while driving significant margin expansion through greater operating efficiency. Adjusted EBITDA margin expanded to 25%, an increase of 10 percentage points year-over-year and 6 percentage points compared to the second quarter. In addition, we further strengthened our balance sheet by repaying $100 million of debt in July and subsequently extending the maturities of our term loans by three and a half years to October 2033, while also reducing borrowing costs. Our net leverage was further reduced by half a turn to two and a half times at quarter end. Turning to the income statement, my remarks are on an adjusted basis, excluding stock-based compensation and non-recurring items. Full reconciliations to the comparable gap measures are available in our earnings release. Revenue for the third quarter increased 7% year-over-year to $502 million. GMS to revenue conversion was 19%, comparable to the prior year and up more than 60 basis points from the second quarter, due in part to the conclusion of the World Cup, which had impacted our overall pricing and catalog mix. Gross margin increased to 85%, up 2 percentage points year-over-year, and 3 percentage points compared to the second quarter, including the benefit of lower fulfillment costs following the World Cup. Sales and marketing expense was 45% of revenue, an improvement of 9 percentage points year-over-year. Our market leadership and resulting scale have enabled us to drive continued customer acquisition efficiency following last year's sales and marketing investments. Operations and support costs were 3% of revenue, consistent with prior periods, and inclusive of continued investment in customer support. G&A expense was 13% of revenue, an improvement of approximately 2 percentage points from the second quarter. This was in line with our expectations and reflects lower advocacy and other operating costs in the third quarter. Adjusted EBITDA increased 84% year-over-year to $124 million. Adjusted EBITDA margin was 25%, representing expansion of 10 percentage points year-over-year and more than 6 percentage points compared to the second quarter. Net income for the third quarter was $34 million. Net income includes stock-based compensation expense, as well as non-recurring items, foreign exchange and derivative gains and losses, interest, income, and expenses, and taxes, all which can introduce variability relative to our adjusted results. We believe Adjusted EBITDA helps highlight trends in our operating results by excluding these items, and the reconciliation to net income is available in our earnings release. As a scaled asset-light business with favorable working capital dynamics, we generate strong and durable operating cash flow. We collect cash from buyers at the time of transaction and remit to sellers at a later date, typically after the event occurs. This generates a natural float between collection and payment and can occasionally result in quarters of lumpy net inflows or outflows. This is visible in our year-to-date results. We collected $472 million of cash inflows net of our fees in the first half of the year, due in large part to the World Cup. These inflows were then remitted to sellers during the third quarter, resulting in significant networking capital outflow of $447 million. 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 $192 million of free cash flow on a trailing 12-month basis, representing a 53% conversion of our trailing 12-month adjusted EBITDA. This includes $1 million of net benefit from our timing of buyer receipts and seller payments, and approximately $89 million of interest costs. Excluding these items, we generated $280 million of free cash flow, representing 77% conversion of our trailing 12-month adjusted EBITDA. During the quarter, capital expenditures were approximately $11 million, or 2% of revenue, which was partially offset by $9 million of interest income. We also continue to benefit from approximately $1.2 billion of NOLs. Please see slide 14 in the earnings presentation posted on our IR website for information on our cash flow conversion. Turning to the balance sheet, we entered the quarter with approximately $1.2 billion of cash and cash equivalents, or approximately $417 million net of seller obligations. Net leverage was two and a half times, trailing 12-month adjusted EBITDA at quarter end, compared with four and a half times at year-end 2025, reflecting both earnings growth and continued strength in cash generation. In September, Moody's rating upgraded the corporate family rating of StubHub from B3 to B2, and in October, we announced the extension of our senior credit facilities. As part of the transaction, we extended the maturities of our USD and Euro Term Loan B by three and a half years to October 2033. We reduced our borrowing cost on the term loans by 25 basis points and strengthened our foreign exchange risk profile by increasing the USD term loan and reducing the euro term loan. The transaction follows a period of significant deleveraging, including repayment of $100 million of our U.S. dollar term loan in July, which followed $100 million in debt reduction in May. Total debt repayment since our IPO stands at $1.1 billion. Total outstanding gross debt at the quarter end was approximately $1.3 billion, with no maturities until October 2033 as a result of the recent extension. We are maintaining meaningful balance sheet flexibility to execute against our capital allocation priorities, including organic investment, continued deleveraging, and disciplined dilution management. Turning to our full year 2026 outlook. We are raising our GMS guidance and reiterating our adjusted EBITDA outlook, reflecting our positive third quarter results and anticipated performance for the remainder of the year. We are increasing our full-year GMS guidance to a range of $10.175 billion to $10.375 billion, representing year-over-year growth of 11% to 13% versus our prior expectations of 10% to 12%. We are reiterating our full-year adjusted EBITDA outlook in the range of $400 million to $420 million. Our full-year outlook reflects a range of scenarios for when 2027 concerts go on sale, and we will provide an update when we report our fourth-quarter results. In closing, we delivered third-quarter GMS and revenue growth of 7%, with significantly expanded margins. These results demonstrate the operating leverage in our marketplace model as we benefit from our market leadership and scale while investing in long-term growth. With that, we are ready to take your questions. Operator.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead.

Thanks so much for taking the questions, and thanks for all the detail in the results, and Connie, wishing you the best going forward. Thanks for all the help since before the public listing. Maybe two-parter, if I can. You've seen a lot of marketing leverage this year, which I think was really an output of lapping some of the dynamics from a year ago. How should we be thinking about the ability to continue to drive marketing leverage through the business over the medium to long term when measured against your growth goals? And the second part of the question would be, clearly there's a lot of volatility in the consumer internet space right now around SEO and changes with respect to the search product canvas. How do you think about planning for those types of broad industry changes and how they might inform the priorities of your marketing spend against the first part of the question, elements of creating either leverage or deleverage on marketing overall? Thanks so much.

Thanks for the question, Eric. Appreciate it. Maybe let me frame how I would think about it a bit, and then I'll hand it over to Connie. So the first question you have is about, yes, thanks for recognizing the leverage we've gotten in sales and marketing and how that's become more efficient. I think if you recall, that is what we had set out to do. And we made investments a while back to create the leadership position that we have, more liquidity, better product, et cetera, with the belief that that allows you in a marketplace business to then grow while continuing to inflect and increase your margins. And so we see that really happening. Again, that happens when you become, again, more efficient, when you have these scale advantages through channels, as well as when you have people coming directly and more people using your repeat. So those are, we're very happy to see the fruits of our labor coming through, and we think that those are a great, great durable setup. I think your second question, if I understand it, is around there's a lot of things going on with AI, particularly people talking about what does that mean for search and Google and the trends on that. So the first thing I want to say, just everybody, our Google channels remain extremely healthy. Our efficiency has improved on that channel as we go for many of the reasons we talked about. And again, we're unique in that we're a commerce platform fulfilling a very complex real-world transaction. So tickets got to be delivered with trust and fulfillment behind it. It's very different than if you're aggregating information or content and creates a different dynamic, I would imagine, for people who are using that channel. So I think the way we do see it, though, is as things continue down a path of people using agents and agentic, it's really creating more opportunities at the top of the funnel. They're bringing more people in. There's more competition for that. And again, we really think that the key thing is if you're the leader, there's a huge incentive for people to direct to the best place to fulfill these transactions. That's why we work so hard to build our position, and we're very proud that we have it. Connie?

Yeah, I just build on what you said in relation to the sales and marketing efficiency. What we know to be true is that in marketplace businesses, once you reach that, call it a key scale, being clearly the market leader, you naturally start to see some of these benefits that Eric outlined. We were really intentional this year when we outlined our key financial objectives, growing the top line. Again, really excited to be able to lift the guide by a point while continuing to expand margins. Clearly, our sales and marketing efficiency is a key element of that. You would have seen it expand in nine percentage points year over year. And for all the reasons that Eric mentioned, we're really pleased with that momentum, and we think there's some real structural benefits having reached, again, this clear market leadership position.

Great. Thank you.

Your next question comes from the line of Mark Mahaney with Evercore ISI. Your line is open. Please go ahead.

Okay, I just wanted to ask one question on advertising revenue, and if you could just drill down on that a little bit more, goals maybe over the next year or two, where you think you can get advertising intensity, where you think you're seeing particular pockets of interest in advertising on StubHub, where you are in terms of the ad formats that you think can be optimal for marketers and advertisers. Thank you very much.

Hey, thanks for the question, Mark. Appreciate it. Touching on advertising. And again, as we've said, just to level set for everyone, we really believe that consistent with if you have a very passionate audience like we do in a scale marketplace, that there are a lot of ways to harness that for people to reach that audience over time. And we think, as we've mentioned before, Mark, that one of the easiest or most value accretive in all respects is sponsored listings, which is the concept that when sellers have expiring inventory, they're going to want to get that in front of the right consumer in the right way. And as long as you do that and you present the correct listing to the consumer in the right format, that creates value for them as well. That being said, as we've said before, we're really focused on optimizing the auction mechanics, the price and conversion rates, the user experience. We have a pretty high bar for then ramping that up. In terms of what that means beyond this year, again, we said this year was really about getting it right, trying to get the fit right, which we're very encouraged by. I think that's going in the right direction. But respectfully, we'll talk about 2027 and beyond when we have our next phone call. Connie, do you have anything to add?

Yeah, no, I think that's right. Again, we mentioned it would be an immaterial amount, call it in the tens of millions of dollars. All that continues to be on track. The most important thing is really focusing on the product. And as Eric mentioned, the good news is we're seeing some real positive signs. So more to come on future outlook in relation to the financial opportunity.

Okay, thank you.

Your next question comes from the line of Doug Anmuth with J.P. Morgan. Your line is open. Please go ahead.

Oh, hi, this is Neeraj on for talk. Thanks for taking the questions. I have a couple. So first is just, you know, if you could talk about what you're seeing in terms of consumer demand in 4Q, you know, the on sale activities since September, and how much of the impact on 4Q revenue was from the, you know, shortest small market world series. And the second one is just like if you think about the framework for 2027, how should we think about the normal industry growth ex-World Cup and you know how to compare that. Thanks.

Thank you for the question. Appreciate it. And I'll take a first crack at it and then let Connie add. I think if I understand the two questions you had, one is understanding sort of Q4 demand and growth and how do we think about that with various things that have gone on. And then you had some questions about 27. So I think when you look at Q4 and obviously what is implied, we have a full year guide, of course, not a quarterly guide. Again, as we always say, you need to understand our business. We think of it on an annual basis because you have the seasonality of the events calendar and a lot of consumer spending shifts and things that can happen. So the backdrop is we have a very healthy, robust market. We see people loving to go live events. It's been great. But there are, and I think you may have alluded to, a few of what we call supply-side comp dynamics in Q4. One is the World Cup, which is the first general release of World Cup tickets took place in December last year. So at the end of the quarter, we'll have a comp on that. The second, which I meant to say that you did mention, is the MLB playoffs. So the MLB playoffs this past year was really between two very small market teams. And so when you looked at the league championship series in each league, outside the Dodgers, the other three clubs that were playing, Cleveland, Milwaukee, and Tampa, are on the very bottom of the size of market demand spectrum in general. And the World Series itself was between the two smallest market teams, and unlike a seven-game series between the Blue Jays and the Dodgers last year, it was only five games. Again, that's just sort of a structural issue with that. And in terms of the last thing that happens on the calendar, sort of the concert on sales that happened in the fourth quarter. So generally, that is the second half of November into December, and we'll see what the big concert on sales are. So while we believe there's a very robust pipeline of tours coming, we don't control when they go on sale. And Live Nation and other promoters may put them on sale before the beginning of the year, or they may not. And we will see. So that's really the way we think about it. Very strong, strong underlying growth in live events, but with the things that I mentioned sort of impacting what we're talking about. And the underlying growth, I think, if you looked at it, X the World Cup on sale lapping and the MLB comparison factors would be in the high single digit. So it's still a nicely growing market. In terms of going forward, as I said to the other question, you know, we'll talk about 2027 specifically on our next call. But generally, we see, you know, we believe, again, we have a very healthy backdrop with tailwinds. Things continue to grow nicely. We are very fortunate and glad that we are in the live events market. So we're excited about it. Connie?

Yeah, I just echo a couple things again. As we look at the fourth quarter, the great news is we're seeing really healthy underlying growth. To Eric's point, you know, I just call it high single digits. We know there can be some variability quarter to quarter, just given various prompts. That's why, again, we try and get folks to really think about our business on an annualized basis. You can see that when we started this year, we said we wanted to ensure we have really healthy top-line growth. Again, pleased that we were able to lift the GMS guide to 11% to 13%, growth while, importantly, continuing to expand margins. So the good news is underlying demand healthy and really pleased with the outlook.

Thanks, Bill.

Your next question comes from Jed Kelly with Oppenheimer. Your line is open. Please go ahead.

Hey, great. Thanks for taking my question. Just can you kind of touch on how we should be thinking about the normalized take rate? I think, you know, you called out 20% last quarter. Does that still hold up? And then can you give us an update on the health of the consumer? You know, I think Live Nation, you know, they just had their investor day. Sounds like, you know, their trends seem pretty healthy. So can you give us an update there? Thank you.

Sure. Thank you for the question, Chad. I'll take a first crack at sort of the high level before giving it to Connie again. So in terms of the health of the consumers, you put it, look, we only have our perch for our industry and our marketplace and live events business. As I say, people are as a passion about live events, spending money on live events, want to go to live events. As I've said many times before, I don't know where people may decide to make certain cuts or not in their budget. But generally, if you are a big Chicago Bears fan, I think you're going to the Chicago Bears. You can give up a lot of things before you cut that. So from where we sit, again, we can only comment on the strength of our consumers, so to speak. It's all very positive, and we would echo it looks good and not surprised at what you said, Live Nation said about what they're seeing. And then I'll let Connie talk a bit about take rate and how that works.

Yeah, thanks, Eric, and appreciate being on call, Judd. If you step back and look at our business, I'll call it over a longer term, you can see that it typically hovers over this 20% range. What we know to be true is that when we had the World Cup, we expected a little bit of what I'll call temporary compression on the take right last quarter. I think it was about 18 and a half. You can see it clicked over 19% for this quarter. And to the point, I think we were specific about saying we expected that to approach 20% for the full year. And, you know, we would, I'd call out, you know, that's probably still consistent with what we see today. We know that, again, there can be this mixed variability, a great highlight of that was the World Cup that can call it tweak that a little bit upwards or downwards from time to time, but it naturally, again, nears this 20% range.

Thank you, and good luck, Connie, and thanks for all your help.

Yeah, thanks.

Appreciate it. Your next question is from Justin Post with Bank of America. Your line is open. Please go ahead.

Great. Thanks for taking my questions. Live Nation mentioned some scalping efforts, anti-scalping efforts. Any impact on your business or is that just something not really affecting secondary? And then can you tell us anything about international versus U.S. trends in third quarter? Thank you.

Sure, Justin, thank you for your questions. Appreciate it. Give you a couple things. First, in terms of whatever things they're talking about, no, we see no impact on our business at all. So that's an easy question to answer. I guess in terms of international, Connie can comment a little bit further, but as we've always said, international is a huge opportunity. You can see sort of people traveling more for live events. The tour is going international. I think speaking of Live Nation, I think they did mention, if I recall, the booming international aspect of business, which also was not surprising to us. But with that backdrop, I will hand over to Connie.

Yeah, thanks, and thanks, Justin, for joining us. As we think about international, as Eric mentioned, it continues just to be a huge opportunity for us. We've seen significant growth year to date, and as we look forward, we expect that to be a tremendous opportunity. So overall, we're really well positioned not only for North America growth, but also international expansion over the medium term.

Great. Thank you.

Your next question is from Shweta Kajuria with Wolf Research. Your line is open. Please go ahead.

Excuse me, thank you for taking my question. Could you please talk to the guidance for the full year, so you raised the GMS guide, but not the EBITDA guide, just what the composition is in terms of how you're thinking about it? And then my follow-up question is, from your vantage point, how is the concert schedule looking like? It sounds like the demand is holding up nicely. How does the schedule look compared to a year ago? Thank you very much.

Sure. Thanks for the question, Shweta. Let me give a couple comments to start here. First, I think asking about the concert schedule. So I think, again, as we mentioned before, what's important, we look at it annually and the timing. And one of the things with concert on sales is that it's too early in the quarter for us to know exactly how the timing will play out. Let me explain what I mean by that for those who don't get the benefit of living in this world all the time. When these artists are going out, Live Nation, AEG, whoever the promoter may be, decides when they want to put these tickets on sale. They oftentimes will put these tickets on sale in the second half of November, December for a lot of big tours. But last year, they actually waited and put stuff on sale in January and in the first quarter. We just don't. It's not our choice. We have no better information than you do in terms of when those will go on sale. What we do know is that we believe there's a very robust pipeline. Consumers are very excited about it. And whenever it does go on sale, it's going to be very vibrant, robust, and we're very excited about the opportunity we can capture and all the different fans that we can serve. What it does mean, though, which I think is part of your question, is that when we have to come forward and say, hey, what's the rest of the year? How are we guiding you? We want to take an approach of just what we believe is in our control and what we know. So this is just something that we're just telling you what we know. We'll know what you do when they decide what does and doesn't go on sale. And that really impacts, I think, both the GMS and obviously can also impact some of the EBITDA stuff. But I'll let Connie address that.

Yeah, thanks. Again, I kind of step back and look at the overall guide, and we can talk into the fourth quarter, as you mentioned, again, healthy top-line growth, and when you look at it on a year-over-year basis, really substantial EBITDA margin. As Eric mentioned, there are a couple knowns that will happen in the quarter against some of these lapping elements, but the key unknown is really in relation to these concert on sales and the timing associated with it, hence why we've kind of given you a bit of a larger range than perhaps you're traditionally used to in the fourth quarter as we're sitting here today. That being said, what I can tell you is when you look at the fundamentals of the business, as we've talked about on the call already, healthy underlying growth, we continue to see an opportunity to look at sales and marketing efficiency when you look at a year-over-year comparative and the rest of the metrics relatively in line. So, again, overall, really pleased with the financial profile. It plays right into, again, the commitments that we've made for the full year.

Okay. Thanks, Connie. Thanks, Eric.

Your next question is from Lloyd Walmsley with Mizuho. Your line is open. Please go ahead.

Thanks. I'm wondering if you can just give us an update around open distribution efforts. Are you guys spending more time looking to sort of expand deeper into teams within an existing sport? Are you looking to more expand in the new sports or ticketing types? What's the latest on the go-to-market there, and where do you see the most opportunity over the next couple years there? Thanks.

Thanks for the question, Lloyd. Appreciate it. On open distribution, and again, just the level set, you know, this is the concept. We believe that content owners should be able to sell directly over subhub on a non-exclusive basis. We don't charge them, and they can use our data and distribution, therefore reaching more customers, pricing more effectively, and filling seats. As I think we've mentioned prior, we realized it's really about trying to get the product fit so that it's self-serve as much as possible and it's easy to use. Because what we realize is it really works across the board for almost anybody, whether you're the Dodgers all the way down to smaller folks. And we think that the market is inevitably heading in this direction of non-exclusive open distribution. It just benefits everyone across the board, and we're seeing that happen. So what we have been shifting on this year, rather than trying to just drive GMS and Topline through it, is using the partnerships we have to experiment, to see how we can make this more self-serve, to improve the product, and to do that, as well as some of those things to mention is there, and I think we've announced a number of these things, working on integrations with different primary ticketing providers, not Ticketmaster, but other people to show how seamless it can be and how easy for the content owners. And so that's how we really look at it to get that surface. We are also going to be announcing a partnership with the Big 12 Conference, where we'll be servicing their football and basketball events. But again, it's really in a mode where the focus has been to get the fit right, get the product right, make sure we have it right before we scale. And obviously, we'll talk more about what the future looks like on our next call.

All right. Thank you. Thanks for all your help, Connie.

Thanks so much.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad now to raise your hand. Your next question is coming from Ryan Sigdahl with Craig Hallam. Your line is open. Please go ahead.

Hey, good afternoon, Eric Connie. Staying on open distribution, the NFL announced an open distribution initiative allowing season ticket alerts to sell tickets across a larger number of marketplaces. StubHub, I don't believe, was included in that. Here's how you think about the cost of something like that for the incremental supply opportunity.

Oh, sure. Thank you for your question, Ryan. Appreciate it, I think. So the NFL, I think this is a great example. First off, we talk about open distribution. So what the NFL has basically done is embraced open distribution. It's really a big thing. People probably years ago wouldn't have thought this just happened, but they're going to say, look, what's best for our season ticket or what's best for our fans is to have this distributed to as many marketplaces as possible, to reach people, to use data, et cetera. So first thing I just want to say, we were, you know, kudos to the NFL for really, again, stepping up to do this type of thing and to further open up as they join folks that have done it. So we think this is a great, great proof point for open distribution. In terms of the specifics of their economics and whether or not we'll, you know, how we think about joining or not joining their specific proposal, you know, that's really just a matter of, of course, we always evaluate and speak with partners like that to see if the fit is right for our users and our fans. So we'll see how that plays out. But I just want to be very clear that we are, I certainly, and I think all of us over here at Team StubHub, we're very excited to see that the National Football League, which is arguably, you know, the premier sports property in North America, came out and actually embraced open distribution. So we think that's a phenomenal day. How it works out that we do or don't work specifically with the NFL, I'll have to leave for a later date.

Helpful. Just one quick follow-up from a balance sheet standpoint. Payments due to sellers, net of buyer fees, it decreased $447 million sequentially. I know big kind of World Cup impact on that, but can you quantify what the World Cup was and then anything else in there?

Yeah, thanks, Ryan. And first, if we just step back, the good news about our business is we generate a tremendous amount of free cash flow. Again, there can be variability quarter to quarter, which is why we get folks to really look at it on an annualized basis. But to your point, in the first half, we did see about $472 million of inflows. And then in the third quarter, we had $447 million of outflows. Again, the World Cup, a key driver. I think what's important to note is on a TTM basis, we generated close to $200 million of free cash flow, a 53% conversion. And just stepping back, if you think about the fundamentals of this business and why it accretes so much cash, just remember we've got healthy top-line growth. We've got expanding margins. We're asset-light. CapEx, you can see, was only $11 million in the quarter. Call it 2% of revenue. And then our interest income of $9 million in the quarter nearly offset that. And lastly, we've got over $1.2 billion of NOL. So all of that, again, continues to ladder up to robust cash generation.

Thanks, Eric, Connie. Good luck, guys.

Thank you.

And your final question is coming from Andrew Boone with Citizens. Your line is open. Please go ahead.

Thanks so much for taking the questions. Eric, you mentioned earlier direct traffic and repeat traffic increasing. Can you double click on that and maybe talk about loyalty and building cohorts on the platform and what you guys are seeing there? And then, Connie, this may be a tough question in terms of kind of walking away from the business. But how do we think about uses of capital going forward? You guys have done a great job of deleveraging the balance sheet. How do we think about the potential for that to start to transition maybe towards the equity side in the future? Thank you.

Sure. Thank you for the questions, Andrew. I appreciate it. I think the two things you had are around repeat usage and cohorts and our customers and all that, and how that relates to marketing, and then some capital application questions. I'll take my first stab at them and let Connie come in as well. So, yes, what I think I was saying and want to come back to you, when you look at, we've obviously made huge improvements in sales and marketing, and we had made investments, as everyone knows, to claim the leadership position to sort of get that flywheel going so that we'd be the leading firm out there in our market. The belief was always that once you do that, you can have a very durable position where you can grow while increasing your margins. And I think what I was trying to say is, and again, because we don't break everything out to a certain level, but one could imagine that if you're going to get that type of efficiency, it's usually a combination of two things. One is you just have to be more efficient on the money that you're spending, which means you convert better. You're better at targeting people and doing all of that. That's number one. Number two is generally you're able to get people who are coming direct and repeating and using your site. Those generally would be the two levers that would lead to that, I believe. And as you can see, the proof is how much we've improved sales and marketing. We're seeing very positive effects across the board. And that's probably the extent to which I can delineate it right now for you. On your second question around capital allocation, before I hand it to Connie, I'll give you a sense. I think the way we think about it, again, I'm trying to drive free cash flow per share over the medium to long term and maximize that. In order to do that, obviously, in the numerator is cash flow and the denominator is shares. If you're going to increase your cash flow, you either need to be investing in the business that generates tremendous increase your operating cash flow or reduce your debt so that you're not having money go out the door of the banks. And on the bottom, obviously, which you alluded to, is if you can even shrink the share count, maybe look at stock buybacks. So the best I could explain it is obviously, and I appreciate it, as you know, we've extended our debt and reduced it tremendously. I think, as Connie pointed out, I think about a billion won of debt, the net leverage down to two and a half times, which puts us in a world where we can start thinking about the full menu. So we're always going to try and be as logical and analytical as possible, but it means that we can think about everything across the board and try and determine what is going to be in the best interest of our shareholders and what is going to be in the best interest of generating maximal cash flow per share over the long haul. So that's how we think about it. Hopefully that's helpful, and I'll hand it over to Connie.

Yeah, just echo what Eric said, and as you pointed out, we've just had tremendous balance sheet transformation, and the business is incredibly well-positioned today, and that creates a lot of flexibility. At the top of the list, we know what creates long-term value is investing in the business, and so that continues to be top of mind. And we've significantly de-leveraged, so pleased to be able to report that two and a half times, again, two terms set down from the full year. And then also, I'll just call out, because I do think it actually even provides incremental opportunity, but we were able to extend our death by another three and a half years with no maturities now due until October 2033. I will call out to the point, you know, Eric's North Star is this free cash flow per share. We've been really focused on how do we manage dilution. We've mentioned before this year, we expect that to be in the low to mid single digits that remains on track. And then as we look forward, that to be called in the low single digits. So, again, tremendous opportunity. We're well positioned. The business is in a great place. So, more to come on how we think about all of those priorities in the next year.

Thank you.

At this time, we have reached the end of the Q&A session. I will now turn the call back over to Eric Baker, founder, chairman, and CEO, for closing remarks.

Thanks, everyone, for joining today's call. We're pleased to have delivered another quarter of growth and significant margin expansion through greater operating efficiency, and it's clear that our market leadership and scale are delivering returns for our business. We're also excited about the progress we've made in further strengthening our balance sheet. Fans love live events, and we'll keep working to expand access around the world. We look forward to advancing our strategic objectives and reporting our progress in the new year. Thank you all, and have a good night.

This concludes today's call. Thank you for attending. You may now disconnect.