Live Nation Entertainment Inc (LYV) 2017 Q3 法說會逐字稿

Good afternoon. My name is Melanie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Live Nation Entertainment Third Quarter 2017 Conference Call. Today's conference is being recorded. (Operator Instructions)

Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ, including statements related to the company's anticipated financial performance, business prospects, new developments and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on Forms 10-K, 10-Q and 8-K for a discussion of risks and uncertainties that could impact the actual results.

Live Nation will also refer to some non-GAAP measures on this call. In accordance with SEC Regulation G, Live Nation has provided a full reconciliation of the most comparable GAAP measure in their earnings release. The release, reconciliations and other financial or statistical information to be discussed on this call can be found under the Investor Relations tab on investors.livenationentertainment.com.

It is now my pleasure to turn the call over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment.

Good afternoon, and welcome to our third quarter 2017 conference call. Live Nation had its best third quarter ever and 2017 is on track to deliver another record year of results across revenue, AOI and free cash flow.

For the quarter, revenue was up 12%, AOI up 10%. For the 9 months to date, revenue was up 19%, AOI was up 16% and free cash flow was up 15%. All our divisions, concerts, ticketing and advertising, each delivered their strongest quarterly AOI results ever.

Our concerts business is our flywheel, attracting over 30 million fans to shows globally in the quarter, which then drove record results in our on-site ticketing and advertising business. Through October, we have sold 80 million tickets for concerts in 2017, up 20% year-on-year. With our strength in concert attendance growth, we are also seeing similar success in on-site sponsorship and ticketing businesses, giving us confidence that 2017 will be another year of record results for Live Nation overall and for each of its divisions.

Digging deeper into concerts. Strong global demand for concerts in the third quarter drove a 16% increase in attendance to 65 million fans at our 20,000 shows in 40 countries. While growing our show count, we have increased the revenue generated by each show. We do this, first, by growing attendance per show, which is up 6% overall, so far this year. Again, led by arenas, stadiums each delivering strong increases in fans per show.

And secondly, we work with artists to better align the pricing for their best tickets with market value - this yielded an average 9% increase in front of the house ticket prices across our amphitheaters, arena and stadium shows, so far this year. This summer, we also saw the benefits from on-site initiatives at our amphitheaters, increasing our average revenue per fan by 9% to almost $24. This is now a nearly 20% increase over the past 2 years as we have driven substantial improvement across food and beverage, VIP and parking.

With the success of the concert flywheel, we're promoting more shows for more fans, more effectively pricing and selling tickets and delivering a better experience than ever. As a result, we will spend over $5 billion producing concerts this year, making Live Nation, far and away, the largest financial partner to musicians.

With this, we expect to deliver record results in our concerts business this year. This growth in concert demonstrates the power of live across the globe, as more fans are attending live shows and making it a top entertainment choice and the only non-duplicable music option.

In our high-margin sponsorship business, we have continued double-digit growth this year with revenue up 20% and AOI up 15% year-to-date, as we delivered our best quarterly results ever for our sponsorship business. With over 1,000 sponsors across our on-site and online platform, Live Nation is the global leader in music sponsorship, providing brands with opportunities to reach our core audience.

On-site sponsorship continues to be a key growth driver, and year-to-date, our festival sponsorship is up 20%, while our sponsorship per fan is up 8%, as we continue to find innovative ways at scale to connect brands with over 8 million fans attending 95 festivals worldwide.

Our other key growth initiative continues to be deepening and broadening our strategic brand relationships, with over 50 sponsors each spending more than $1 million on our platform from on-site to fan direct engagement. Collectively, the committed spend by this group is up 24% to over $275 million for the year, accounting for approximately 80% of our overall sponsorship and advertising. With 95% of our expected advertising revenue for the year now contracted, we expect full year AOI growth in the low teens for the business.

Ticketmaster continues to build its position as the global ticket marketplace leader with 14% growth year to date in global fee-bearing GTV. Ticketmaster will deliver almost 500 million tickets worth approximately $28 billion in GTV across 29 countries this year, making it the world's largest such marketplace.

And the success of the marketplace is stronger than ever as all 3 quarters in 2017 have been amongst our top 10 quarters ever. Underlining this growth is our product innovation, and this has been an important quarter for us as we have scaled our Verified Fan product and announced our first league-wide conversion to digital ticketing. Ticketmaster's Verified Fan has developed a proprietary process leveraging algorithms which separates true fans from bots and delivers the tickets to fans to drive a 90% reduction in the number of tickets ending up on the secondary market.

During the third quarter, we substantially scaled the product and have now worked with over 60 artists and Broadway shows, including Taylor Swift, Harry Styles, Hamilton and Bruce Springsteen on Broadway. As a result, by the end of the year, I expect we will deliver 3 million tickets to Verified Fans, saving them $100 million relative to buying on secondary sites after bots got the tickets first.

We also announced our digital ticketing rollout with the NFL in September. And starting next season, all NFL game tickets will be digital. This will allow us to identify the fans attending the games, understand in much greater detail the behavior of these fans, reduce fraud and frustrated fans, and work with our clients to create new profit streams in ticketing.

As importantly, these products come as we have a continued success on our core operations. Our mobile and desktop platforms continue to provide an improved online experience, with 34% growth in mobile ticket sales this year and double-digit improvements in conversion on both mobile and desktop. And at the same time, our open strategy continues selling more tickets for clients off-platform, up 20% year-to-date, with almost 10 million tickets sold.

Overall, Ticketmaster's results are validating our dual strategy of delivering a great marketplace for fans to buy tickets while providing the greatest value to venues, teams and artists looking to control their tickets and maximize the value of their events. By continuing to do both effectively, I expect us to deliver high single-digit growth in ticketing AOI this year.

As we approach the end of 2017, we are confident that our strong performance will deliver another year of record top line, AOI and free cash flow. All of our businesses, concerts, advertising and ticketing, have delivered growth year-to-date. And based on key operating metrics, we expect each to deliver record revenue and AOI for the full year. As we look forward, we see tremendous opportunity to continue to see global consolidation of our concerts and ticketing business, and for further growth in advertising and ticketing from the concerts flywheel.

With that, I will turn it over to Joe to take you through additional details on divisional performance.

Thanks, Michael. Looking at our business segments. First, concerts. Live Nation Concerts revenue in the third quarter was up 11% and AOI was up 18%. This growth was driven by a 10% increase in show count and almost 30 million fans attending our events in the quarter. So far this year, we have had 65 million fans attend our concerts, up 9 million from this time last year.

Our international markets have been particularly strong this year, adding 5.5 million fans, while the U.S. has grown by 3.5 million. Arenas and stadiums have driven much of this growth globally adding 7 million fans, while festivals and theaters and clubs also contributed to these increases.

Underlying this growth is an expanding group of artists touring with us, many of whom are now touring across multiple markets or globally, including 6 artists who have each performed in front of over 1 million fans so far this year: U2, Coldplay, Guns N' Roses, Depeche Mode, Bruno Mars and Metallica, all of whom we worked with globally. Given ticket sales through October for shows this year, we're now expecting to have almost 85 million fans attend 29,000 shows in 2017, tremendous growth from our 71 million fans last year.

Turning to our Sponsorship & Advertising business. Sponsorship & Advertising revenue for the third quarter grew by 16% and AOI was up 13%. Our growth for the year has been well-balanced between sponsorship and online advertising, with both parts of the business growing revenue and AOI in the double digits year-to-date.

From a geographic perspective, both North America and international markets delivered similar AOI growth, with international markets delivering the majority of sponsorship growth and North America accounting for much of the online advertising growth.

Finally, Ticketmaster. For the quarter, Ticketmaster revenue was up 17% and AOI was up 4%. Global GTV was up 6% for the quarter and 5% year-to-date, driven by fee-bearing GTV, which was up 19% and 14% for the quarter and year-to-date, respectively.

Primary GTV, which accounts for approximately 90% of overall fee-bearing GTV, was up 18% for the quarter and 14% year-to-date. Approximately 75% of this GTV growth is driven by concerts, much of which is Live Nation shows. Most of the remaining growth is from the arts segment, driven by the touring of Hamilton and other highly in-demand shows.

Secondary GTV was up 29% for the quarter and is now up 15% year-to-date. Here, again, concerts and the arts are the greatest drivers of our growth, together accounting for about 75% of the increase year-to-date.

Overall, our Ticketmaster marketplace is performing well for fans, as Michael noted. More specifically, our marketplace continues to attract more fan visits, up 36% for the quarter and 28% year-to-date to almost 4 billion visitors this year.

The shift to mobile continues its rapid progress, now accounting for 34% of tickets sold in the third quarter. And as part of the shift to mobile, we increased our installed base of apps to over 40 million, up 38% from this time last year, which positions us well for a shift to digital ticketing. As Michael said, for the full year, we expect ticketing AOI growth in the high single digits. And while margins move around from quarter-to-quarter, excluding one-off legal fees, we expect full year margins in line with last year.

In summary, we're confident that 2017 will be another year of record revenue and AOI results overall and for each of our businesses. We also expect to grow our free cash flow, enabling us to continue investing in the businesses for ongoing growth. On FX, Q3 revenue and AOI were positively impacted by about 1% with the strengthening of the euro and Canadian dollar against the U.S. dollar. In terms of seasonality, we expect Q4 as a percent of full year AOI to be a little less than it was last year.

I'll now turn the call over to Kathy to go through more on our financial results.

Thanks, Joe, and good afternoon, everyone. Starting with our results for the third quarter. Revenue was up 12% to $3.6 billion and AOI increased 10% to $335 million. Free cash flow adjusted for the quarter was up 4% to $253 million. As of the end of the third quarter, our concerts-related deferred revenue was $774 million, up from $417 million at the same time last year and includes tickets sold for shows next year.

The majority of our revenue growth in the third quarter was driven by concerts, with revenue up 11% from higher show count and attendance globally across arenas, stadiums and theaters and clubs. Ticketing revenue was up 17% from increased ticket volumes, driven by the high demand for concerts. And lastly, Sponsorship & Advertising revenue was up 16%.

AOI growth for the quarter was driven by an 18% increase in concerts AOI from improved operating results of arenas and stadiums. Sponsorship & Advertising AOI increased 13% from new sponsorship programs and higher online advertising. And ticketing AOI was up 4% driven by increased ticket sales for concerts. Operating income in the third quarter was $201 million, a 5% increase over last year, driven by AOI growth in sponsorship and concerts.

Net income was $136 million, up 23% from $111 million in the third quarter last year, driven by the growth in our AOI. Acquisition expenses increased by $18 million in the quarter due to changes to the fair value of acquisition-related contingent consideration. And income tax expense increased by $12 million for the quarter from our earnings growth internationally.

Now the results for the 9 months. Revenue was up 19% to $7.8 billion and AOI increased 16% to $648 million. Free cash flow adjusted for the 9 months was $434 million, up 15% from prior year. Revenue growth in the 9 months was driven by concerts from increased show count and attendance in stadiums, arenas and theaters and clubs.

Ticketing revenue was up 16% from increased primary and resale ticket volume driven by concerts, and Sponsorship & Advertising grew by 20%. AOI growth for the 9 months was driven by double-digit growth in AOI across all 3 business segments, with the largest part of the increase driven from higher concert show activity. Operating income was $293 million compared to $232 million last year, and net income for the 9 months was $185 million compared to $104 million last year due to our improved operating results.

Income tax expense increased $16 million as we continue to grow our international business profitability. For the 9 months, our net foreign exchange rate gains included in other income increased by $8 million compared to 2016. For the quarter, we recorded $21 million of accretion of redeemable noncontrolling interests, which affects the calculation of earnings per share. For the full year, we currently estimate that this accretion will be approximately $75 million. And diluted earnings per share for the quarter and the 9 months were $0.53 and $0.62, respectively, the highest for each time period in the history of the company.

Moving to our balance sheet. As of September 30, we had total cash of $1.8 billion, including $640 million in ticketing client cash and $513 million in net concert event-related cash, leaving a free cash balance of $648 million. Our free cash increase is due to the growth in AOI along with timing of acquisition activity in 2017 so far.

Cash flow from operations for the first 9 months was $417 million compared to $120 million in 2016, driven by our higher AOI, increased deferred revenue for future events and the timing of payment of liabilities. Free cash flow adjusted for the 9 months as a percentage of AOI is in line with last year. The conversion of AOI to free cash flow for the quarter is off a bit due to bad debt expense last year that reduced AOI, but didn't impact free cash flow.

Our total capital expenditures through September 30 were $172 million with 52% spent on revenue-generating items. We currently expect total capital expenditures for 2017 to be approximately $220 million, with roughly half on revenue-generating CapEx. As of September 30, our total net debt was $2.3 billion and our weighted average cost of debt was 3.9%. We also recently received an upgrade from Moody's on our corporate rating from B1 to Ba3, and on our senior secured facility and bonds to Ba1 and B1, respectively.

Thank you for joining us today, and we will now open the call for questions. Operator?

(Operator Instructions) We will take our first question from Brandon Ross with BTIG.

Joe, I know you don't like to talk about margin percentages, but I'm going to start off with the question on that. For the quarter, you had pretty huge top line growth there. AOI growth was about 4%. You said for the year to expect flattish margins, can you just speak to what kind of pressure that margin percentage in the quarter? You, I think, alluded to legal fees in the supplemental, can you just kind of tell us if that's going to be something that's ongoing? And on concerts, I think your biggest AOI dollar contributor in the quarter came from there. And you've always kind of said margin growth isn't something to count on in the concerts division, but it's something that's clearly been happening. If you strip out the per cap expansion, are you growing margin dollars -- AOI margin dollars through some of those initiatives that you mentioned such as pricing the house? And is that an opportunity for margin dollars going forward or is that just contributing to the overall flywheel?

Sure. I'll take it on reverse order. So on the concerts side, yes, obviously, as you said, the per cap growth are the largest contributor to the margin increases on the concerts side. I think when you look at the other initiatives, which is both more people at the concert and higher pricing, obviously, since those flow-through more directly, they are going to be beneficial to the margin. I think the point that I've always made on the concert business is just when you start with a 90-10 with the artist, you're constrained on what those margins can get to, not that we don't continually work and strive to improve them. And so I think in the concert side, you're seeing this year, this quarter, the fruit of a lot of work that's been going on for a while that continue to prove the economics of that business.

And also just the mix of -- we think the concert business has got a great flywheel - on-site, hospitality, huge part of how we're going to keep growing the company. But we also keep growing the business overall on the touring and the concerts side, which is the 90-10 part of the equation. So as you're growing your high-margin on-site beer, food and beverage, no matter how much you grow that, if you do the U2 tours of the world and that grows, when you put those two together, it's hard to move the overall net concert margin. So we just always wanted to be realistic that we're going to continue to grow the on-site, monetize the concert business and lots of runway left. But as you're also growing the global concert ticket revenue gross, you won't see it so much in margin as you will in AOI / cash flow over time.

And was Artist Nation a contributor -- has that been a contributor positively for you guys this year since you don't kind of break it out? I'm just curious.

Yes.

Yes. I mean, it's just a high margin in theory business because it's got no real costs, so it's a higher-margin business. It's been a fairly stable contributor of AOI to the business.

And then Brandon, on ticketing, again, first the context, we've long said we don't try to micromanage the results of each division on a quarterly basis. We think that is not in our shareholders' best interest. We absolutely look at it on a full year basis. This quarter, we had a handful of things going on, some mix as it relates to international versus North America, some mix within specific customers that were particularly active. And then as I said, the one-off legal fees. But again, to reiterate, the guidance that I gave is that for the full year, absent the one-off legal fees, we expected our margins would be flat year-on-year. So I wouldn't have characterized it as you did in terms of the pressure or decline. Those one-off legal fees are associated with the lawsuit that we have underway with Songkick that has been somewhat in the press and disclosed, and we expect to, hopefully, to get that resolved and move on. But in the near term, there is a bit of cost associated with that.

Great. Could you size that very quickly? And then I'm done.

No. We're not going to give specific numbers on it.

But the structural -- the question that Brandon has asked are on structural, right? We're growing the business incredible margin. There's nothing that happened this quarter that's structurally going to change our margin business over time. We continue to renew, drive the business. And overall, we'll meet our margin expectations for the year, given a quarter one-off here and there.

And we'll go next to David Karnovsky with JPMorgan.

Just a few questions on the recent NFL deal. The release said that Ticketmaster would validate tickets on other NFL license marketplaces. Is this something where you'd expect to get a fee for every ticket validated? And then can you walk through how this deal impacts the sale of primary tickets both for NFL games and then for concerts at NFL stadiums?

Yes. Joe will take you through the -- I mean, Joe will take you through the overall Ticketmaster strategy for the last two years we've been outlining and how this is a fulfillment of that.

Yes. So I mean, as we've been talking for a while, Ticketmaster's job is twofold: first and foremost, to provide venues, teams, artists with the great software as a service platform; and secondly, they have a marketplace which is the best place to sell tickets. And as part of that, our open strategy, which is making sure on behalf of those teams and artists, to the extent the tickets aren't selling on our platform, that they're selling connected to Ticketmaster in a way that we can still benefit from some of the economics. So the big thing with the NFL deal is that it's the first move to all digital ticketing. So for the first time, every ticket that's done for an NFL game will be a digital ticket, which means we can understand who the fans are, we can understand how those tickets trade, we can start to monetize what happens on other marketplaces, which hasn't historically been done. So I think the way that we think about it is that, first and foremost, when the other licensed marketplaces of the NFL have a secondary sale, there are economics that come to the NFL and Ticketmaster for validating those tickets. That's part of what we've always talked about in the past in terms of that money sitting outside of content and Ticketmaster's P&L, and the desire to start to shift some of that money so that those who are spending to put on the games and other events to start to benefit from it. So that's really the underlying piece of it. In terms of primary, our expectation is that every primary ticket continues to be available on Ticketmaster. To the extent that we can sell incremental tickets and the teams are looking for other avenues to sell incremental tickets, then Ticketmaster will absolutely work with other platforms on an open basis to make it available for -- some of the tickets available for sale on those platforms as well. And to be clear, the deal with the NFL is around the NFL games. And so as we're talking about the validation or anything with primary, those are the events that we're talking about.

Okay. And then just shifting a bit, on your ancillary spend, can you say where you are with on-site per fan at your festivals or even how that's tracked year-to-date relative to your amphitheaters?

Yes. Festival sales per fan continues to do well. It's much more fragmented and differentiated. As we've said for a while, our first focus is really getting the amphitheaters, which tend to be a more consistent set of 40-odd buildings that we control with one food and beverage provider and similar -- towards similar experiences across the portfolio. So that's been our primary focus over the past couple of years in terms of driving the numbers. Because our festivals are much more spread geographically, genre, whether the audience is over 21, under 21, more distributed in terms of how the food and beverage is provided, the numbers don't flow as easily. And as we're getting the amphitheaters further along, we're turning more of our attention to festivals. But we're happy with how they've been progressing in the recent years, given what we've been able to do with them.

And we'll go next to John Tinker with Gabelli.

I noticed that the international fans is particularly strong. Are there any countries which are really sort of kicking in right now or is it evenly distributed? Or are you focusing on any one particular market?

No. I think it's -- the numbers suggest -- our thesis on why this business will do well continually is it's a global business now. And artists, superstar artists can travel most countries in the world and sell out arenas or stadiums. So whether you have U2 deep in South America selling out stadiums to artists in the east and Asia selling out. So I just think it's a continuation of an artist global unlocked fan base and a global growth on an international basis we'll see for years to come as artists continue now to look, not just to the U.S., but to the entire globe to monetize their tour.

Okay. And this is a slightly delicate question. With some of the terrible events that have been happening, what does this do to your potential liability or cost of insurance? How are you thinking about managing it?

Yes. The reality of our business over the years is that there's been incidents like this in the big picture, global number of shows that happen every day. It's still 1% of the business if you want to look in terms of scale. So I think we're continually -- whether it was Manchester or certain events over time, the industry, in general, has gotten better and better at whether it's on-site security, you see it in arenas, you see it in stadiums. I think the industry, in general, has been doing a better job over the last 5 years of upgrading its on-site. For us, as horrible as Vegas was, the business is very resilient. We're seeing increased ticket sales since September. We've seen no effect at all in the business from the day on -- the day after. Again, because we are a global business, we have such diversity. That on a global basis, we didn't see any effect. Now we're going to continue to make sure we're the best in terms of security on-site, something we always are investing in. We think the digital ticket is an important piece because we think it's going to become more and more important that we know exactly who is at that show and that we have a means to talk to them. So as the barcode goes away and we have a digital ticket, we can -- we have a much better chance to figure out who is going to the show, how to have a faster response time. So we think technology will help a lot of ways bring even more high sophisticated ways to secure and bring safety to the events. We don't assume that we're going to see any change in the consumer or artists' perspective on the show to date, and we'll keep investing in overall security. But we don't see any bottom line change to our cost structure insurance or revenue in terms of demand at this point.

(Operator Instructions) We'll go next to David Joyce with Evercore.

A couple of questions emanating from the NFL deal. First, on Presence as an upgrade to the platform. What should we think about in terms of the rollout until you get all digital on ticketing, first, in North America and then how far that can go internationally? And what's involved from an investment perspective to do that from here? And then, secondly, with this new -- the agreement with NFL, it seems like you have the ability to share data on the end user. Is that something that could be applicable to other platforms that might tap into your API like Amazon, do you think you can have some sort of mutually beneficial deal?

Yes. As far as Presence, just think Ticketmaster already is in the access control business. If you go to a Ticketmaster building today with your ticket, you're going to walk up and someone's going to scan it. And that barcode, and that's going to hook up to our back system. That currently is our system. We would be supplying those venues with those scanners and hardware, et cetera. The new Presence system is much cheaper hardware, overall, for us to implement. So as we're updating venues and providing them with scanning systems, we'll be changing that access control into our new Presence model which is, overall, cheaper for us on a fixed cost basis. Obviously, when we announce the NFL going to be digital by 2019 on stadiums in the U.S., that gives you a pretty good indication that we're ready for prime time. We'll be rolling it out next year into '18 and '19 across all major stadiums and arenas that are Ticketmaster-driven. So we're ready for a fairly aggressive rollout across America. And we think, yes, there's a whole bunch of good benefits around this. Gives the artist and the sports team much more control of the ticket. It controls how they want to price that ticket and how that ticket, ultimately, is used on-site. It gives us great data about those 4 people that went to the show versus the 1 that bought it. It gives us a way to engage with that customer on-site and ongoing. So we think that the data that Presence and the digital ticket unlocks, really now starts converting our business from, to date we're in the delivery of barcodes, Presence let's us get in the delivery of looking at each fan as a data point in itself. And with that combined enriched data, we think it helps our business immensely, drives our sponsorship business to new levels when we can really have the next level of depth around who is at these events and who they brought and have a correspondence engagement with them. So we think it's the foundation to a big piece of our future on unlocking all of those customers. And we think we have a bunch of different ways and products in the road pipe -- in the pipe on how we'll monetize that data.

And we'll take our next question from Doug Arthur with Huber Research Partners.

A couple of things. Joe, I'm trying to reconcile your guidance on tickets for the year. The show count is pretty consistent with what you've said in the past with your comment that the percentage of AOI in the fourth quarter should be a little lower than a year ago. Now, I realize you've had some big quarters here year-to-date. So is there anything unusual about the mix of shows in the fourth quarter? Or is it a function of the fact that you have had such a big year so far to date? And then I've got a follow-up.

I think it's more a function of the tremendous year we've had so far, and in particular just the great set of stadium shows, in particular, that tend to be our largest shows. So over the summer months, I think that's been a big spike as we've talked about, really driving a lot of the attendance growth. I don't think we see Q4 as being particularly different from traditional Q4s in terms of our content.

Okay. And then a question for Kathy. You mentioned an $18 million swing in acquisition expenses. Was that a reversal of prior -- I mean, I'm trying to get a handle on what that is because that -- it looks like it was a fairly significant contributor to your AOI calculation, if I look at it correctly.

Yes. Well, correct. So what that is, is just the cost of earnouts that we do on acquisitions where we have contingent consideration payments later. And so those calculations will adjust based on how those businesses are doing in projection of the future business.

So that is -- so in terms of the some of the cost of services in the segments, that would be reflected above and then you sort of reconcile it below. Is that fair?

Correct. When you're looking at the operating income for the segments, it goes into the SG&A cost and then it comes out in the AOI calc.

(Operator Instructions) We'll go next to Ryan Sundby with William Blair.

I just wanted to follow up on Verified Fan. So it sounds like you're targeting about 3 million fans this year. Where can Verified Fan ultimately go over time? And what does that ramp look like? Is there still a lot of education process that needs to go on or are artists more and more willing to kind of sign up for that process?

Yes. We think Verified Fan has -- is this incredible runway ahead of it for Ticketmaster. I mean, we've been working hard with Ticketmaster the last few years on some core products. Obviously, we talked well about our new platform for the venues, which is working well. We've talked about opening up the platform to give clients and ourselves flexibility. Obviously, the other piece we've talked about on addressing this, how do we make sure we really understand this whole $8 billion of dynamic dollars and how does content better capture it. Well, to capture that dollars, there's a few angles. There's no one -- not one shot at it. The first is how do you price the show better? And that's just a function of how willing the artist is to dynamically price it. But artists are more and more willing to look at a lot of our algorithms and pricing dynamic tools to price the house and capture some of it. So that's the best angle, is work with the artists on day 1 on pricing. The second piece is once you kind of figured out how to price the house better from the top to lower prices in the back, is then with the artist, how do make sure you now if that artist has committed to those price points, can you give that artist the opportunity to actually deliver those price points to the fan. That was the piece that was missing when we sat down with fans -- with artists. There is no artist that's dying to put tickets on a secondary platform as a solution. That isn't how they build their brands with their fans. What they want to do is figure out how to price it right and then make sure their fans actually have a shot to buy the ticket, not deliver it to the onsales, have the scalper buy it, and their fan lost and ends up paying 3x the price. We believe for Ticketmaster to really turn around, it's kind of business with the artists and really be artist-centric - Verified Fan was a core product development. So if you look in this last year, to be sitting here this far with Taylor Swift and Bruce Springsteen on Broadway to just announced yesterday, U2 doing its entire U.S. tour on Verified Fan, the list is just now growing by the day. I mean there is -- we have yet to meet an artist when we sit down with them and say, "Are you interested in making sure your fan can get your ticket at the price you set?" I mean, "where do I sign up" is the answer, of course. So we think we really pulled a really strategic kind of zig versus zag in the marketplace here. While everyone was obsessed with secondary business, our clients are actually obsessed with pricing the house better and then locking down that price point. We think Verified Fan and then you add on Presence from the digital perspective are a real important combination for these artists to the future, who now believe they have some shot at controlling and delivering to their fans the price point at the exact price they want. And some -- so we think this is a pivotal product -- suite of products that we've developed in Ticketmaster. It's under a new division within Ticketmaster called Artist Master where we have a new leadership team waking up every day, making sure that we can deliver artists' products so the artist can deliver their tickets to their fans at better pricing and at the price they want. So we think it's a unique proposition and lots of runway ahead and a real pivotal positioning for Ticketmaster to really look at the artist and deliver their needs. And ultimately, that's great for their business as no one else is really able, right now, to deliver that ticket at their price.

Yes. That makes a lot of sense, and it seems like the artist buy in is definitely there. Is there -- is it maybe somewhat restrictive in terms of educating the consumer about Verified Fan on how to use it? Is that where it maybe goes slower than, I guess, going forward until that education process happens?

No. We haven't seen that at all. I mean, I think our -- when you sit down with U2s and Taylor Swifts of the world, I think they're the best brand managers in the world, right? So they're very, very astute on what is the price, not what's the most I can charge. That's not how they build these global brands. It's what's the price that makes sense for the production and the cost of the show and fair to the fan, and how do I make sure that my fan has a shot to buy that ticket. The system is not perfect yet, but I'd say this was a real monumental movement where the artist has absolutely control in implementing this tool. And some of the costs of delivering a ticket directly to a fan could come at the expense of transferability. But I think that -- the artist, at times, is willing to make that trade-off to -- in terms of delivering that ticket direct to the fan. And to date, we've had great success at that. The only complaints we've seen is from the scalper, not the fan.

That's great to hear. And then I guess, just if you could reflect back on the decision to kind of open up the API. You got 10 million tickets, so far, through kind of off-platform. How would you -- I guess, where did you see that when you made that decision that it's going ahead of expectations or about where it should be? Just any color there would be great.

Well, I think we should be -- we're very proud, we're bragging on the NFL deal. I mean, Joe and I and Jared, who runs Ticketmaster should be -- can be judged on that an NFL deal. When we took over Ticketmaster, if we had stayed the exact course, that NFL deal wasn't getting renewed because the market has changed over the years. And Ticketmaster had a very closed platform for many years. And as we say was in the "no" business, and our competitors knew it. And SeatGeeks and others, that was their primary strategy to talk to content about being open. So we knew years -- a few years ago, it was fundamental that if we were in the software business for concerts and ticketing and venues and sports, we had to provide them with more flexibility. And we're thrilled that the software and the platform delivered as we wanted. And we've been able to sit down this last year and deliberate a big renewal like the NFL and a bunch of renewals this year that are all hinged on our ability to look at a venue and a sports team and give them flexibility that they may need to distribute some tickets to different partners to drive their business. We didn't want to be in the you can't, on Tuesday, when you have no -- you have a bunch of tickets leftover and you need to distribute them to a Groupon or whoever it is that we couldn't enable that. So we think that the test of is our strategy working isn't even the 10 million tickets. It's how the renewal rate of Ticketmaster excelled over the last couple of years as we've fixed -- and now fixed our software from green screen to now actually starting to deliver leading-edge technology from open source to Verified Fan. And we see it in the renewal rates on our core business is the net output of the better product.

And that will conclude today's conference. We thank you for your participation. You may now disconnect.

Thank you.