LYV
#Good afternoon.
Welcome to our first quarter conference call.
Live Nation has continued growing its business in 2017 with first quarter revenue up 17% and <UNK>OI up 25%, with strong operating performance across all our concert, advertising and ticketing segments.
This year we have booked more shows, sold more tickets and have more sponsorship commitments than ever before at this point of the year.
With the strength of these leading indicators, I\
Thanks <UNK>, and good afternoon, everyone.
<UNK>s I mentioned last time, we are now reporting 3 business segments starting this quarter: concerts, sponsorship & advertising and ticketing.
We have combined our previously reported <UNK>rtist Nation segment into concerts based on our view that the strategy behind artist management is to provide a full range of services related to concert promotion and to expand our concert businesses.
We have also slightly changed our definition of free cash flow this quarter, now titled free cash flow - adjusted, in order to reduce confusion with other similar measures and to recognize it as a liquidity measure tied back to cash flow from operating activity.
Our key financial highlights for the first quarter of 2017 are: revenue was up 19% to $1.43 billion, and <UNK>OI increased 25% to $92 million, both at constant currency.
Free cash flow - adjusted was $27 million.
Free cash flow would have been $29 million under our prior calculation, so the difference is not significant.
<UNK>s of March 31, our total deferred revenue related to future shows was $1.6 billion, up 34% compared to $1.2 billion last year.
Growth in concerts and ticketing drove the revenue increase for the quarter.
Concerts revenue was up 16% from higher show count at stadiums and arenas, and ticketing revenue was up 23% from the increased primary ticket volumes and GTV driven by concert events, as <UNK> outlined, all at constant currency.
<UNK>OI for the quarter was up 25% driven by strong growth at Ticketmaster, with ticketing <UNK>OI also up 25% for the quarter, and sponsorship & advertising <UNK>OI was up 10% from the increased online advertising, all at constant currency.
Operating loss in the first quarter was $21 million, an improvement of 36% from the same period last year, and net loss was $33 million compared to a loss of $45 million in the first quarter of 2016 driven by the higher <UNK>OI.
Moving to our key balance sheet items.
<UNK>s of March 31, we had total cash of $2.2 billion, including $671 million in ticketing client cash and $1.2 billion in net concert event-related cash with a free cash balance of $374 million.
Cash flow from operations was $761 million compared to $517 million in the first quarter of 2016 with the increase driven by higher event-related deferred revenue.
Free cash flow - adjusted was $27 million in the first quarter of 2017 compared to $25 million last year on the same basis.
Our total capital expenditures for the quarter were $57 million with maintenance CapEx of $25 million and revenue-generating CapEx of $33 million compared to a total of $25 million in the first quarter of 2016, with the increase driven by technology and venue enhancements.
We currently expect total capital expenditures of approximately $220 million for the full year 2017 with approximately 50% of that to be used for revenue-generating CapEx.
For the full year, we estimate we will record approximately $60 million of accretion related to redeemable noncontrolling interests.
<UNK>nd lastly, as of March 31, our total net debt was $2.3 billion, and our weighted average cost of debt was 3.8%.
Thank you for joining us today, and we will now open up the call for questions, operator.
<UNK>, on ticketing ---+ on ticketing, <UNK>, I mean, I think our numbers speak for it, we are continuing to grow our secondary business.
That's pretty much a two-way race in ticketing.
<UNK>nd as we've quoted before, Ticketmaster historically was late to this party, and we've been making ---+ the pie has been getting bigger and we've been increasing our market share continually year-over-year.
<UNK>nd we're going to continue to do that for one reason: We have incredible primary scale in our store.
So we have lots of customers that are going to come on sale, looking for a ticket in primary that for 38 years we had a closed store and now we have, most of the times, we have a secondary ticket option for that customer.
So the more inventory we keep activating at our store called tm.com is how we're going to keep growing our GTV.
More and more sports teams, venues and artists are adopting the idea of having a secondary option available in the primary purchase flow.
So we think we have more inventory to activate.
<UNK>nd the double-digit growth we've been experiencing year-over-year, we would expect secondary growth to be a strong growth driver for years to come.
Second point is we're only getting started in the European global side of the business where we're seeing great growth, where we weren't last to get to the market.
<UNK>nd in most of those cities, London ---+ U.K.'s and Germany's, we are first or it's a still very new market that we're entering.
So we think we have a lot of runway on a global basis to grow secondary business.
Of our 40 countries we promote in, we would be in about 29.
But let's call it 15 to 16 our strong ticketing markets right now for us.
So you could see that there's a great opportunity to keep driving ticketing growth through our content business in those 40 markets.
Well, in the U.K., where it has always been an allocation market.
We will be feeding them some tickets.
I think maybe 3%, 4% tickets.
Most in the U.K. allocates out to a host of retailers, so we would be doing that and allocating across multiple platforms.
Ticketmaster's still selling the large majority of the tickets, but then we allocate out to lots of retailers in the U.K. So that would be the only market where <UNK>mazon would be selling a few tickets.
In the rest of the world, we continue to look at our <UNK>PI partner strategy from Groupon to Spotify to other partners, and we'll continue to look at the right incremental partners.
<UNK>lways fun, <UNK>.
I haven't looked at their latest data.
They're very ---+ they're obviously #1 in Germany.
That would be the only place that they would be #1 in.
We would be #1 across Europe on concerts and, I would assume, total ticket sales.
But regardless, we're in 40 countries with scale, and they're a very strong German company with some market expansion through Europe.
But we're competitors.
We compete on the concert and the ticketing side.
<UNK>nd good news is the pie is growing for everybody.
So I assume they are doing well, and we think we can pick up a lot more share in Germany and the rest of the world regardless of what their activity is.
Yes, we never officially talked whether we renewed Jay or not.
There's just lots of good ---+ that's just good speculation post that was running.
But for the record, yes, we are not in the 360 business.
We haven't been for years.
We're in the long-term securing touring business, and Jay's been an incredible partner of Live Nation.
<UNK>nd we hope to be in the Jay-Z and I assume to be in the Jay-Z touring business for a long time where we both can do what we do best.
Doug, we can't really break it out since it's something we're not really providing.
<UNK>nd just remember, as we've talked about, it's really just there to drive the overall concert business and you'll see that overall impact in the full year.
But it would be ---+ wouldn't be marginally up or down to make a difference to the core numbers you're reading, Doug.
Thank you.
