I'm Justin Patterson. I lead the internet research team at KeyBanc. I'm really excited to have Lanny Baker, the CFO of Eventbrite, with us here this morning. Lanny, welcome to Vail. Well, thank you. It's great to be here. Thank you so much for having us. It's a really cool conference. You've been inviting us in the past, glad to be past COVID and here in person. Yeah, I'm glad it worked out. We're past COVID. The weather's nice, no thunderstorms today. Yeah. it's a good day for meetings. Perhaps to just kick things off, let's talk a little bit about the TAM. Oftentimes, with Eventbrite, you say the TAM is in the ticket. What exactly does that mean, and what does that speak to the opportunity ahead? Sure. We get asked all the time about the total addressable market opportunity. Our events are small and dynamic and entrepreneurial and local. They're the kind of things that you use to fill up your calendar, looking ahead a week or two and three, and people often ask, "Well, how big is that marketplace?" There is about a $3.2 billion ticketing market opportunity around the world for supporting local live events of our nature, so there's a huge opportunity just in processing tickets. But when we say the TAM is in the ticket, we're really focusing on what we hear from our customers, and when our customers tell us the single thing that they need after the ticketing technology's in place, is additional attendees for their events, additional awareness for their franchise, additional students for their classes. And they spend... Most creators spend maybe a little bit less than 10% of the face value of their ticket on the ticketing technology. They then turn around and they spend somewhere between 20 and 50% of the face value of the ticket marketing that event. When we say the TAM's in the ticket, what we're really saying is there is two to five times as much opportunity as we've already tapped, sitting right next door with customers who are asking us all the time, "Can you put us at the top of the page? Can you put us in your newsletter? Can you find us new attendees? Who else is going to magic shows in Los Angeles?" That's an opportunity that we're very, very focused on. We see this wonderful opportunity to serve more of our creators' needs, where they actually spend more money. for investors, one of the neat things about that opportunity is the margins in doing so are 20 points at least higher than they are in the core ticketing business. Great. Let's stick with that theme, just the creator, solving some of their pain points. I think one of the really interesting things about Eventbrite is just this transformation you've been going on, really since COVID. I believe you and Julia sat down with the rest of leadership, made a strategic roadmap for the next three years or so, back in 2020. Talk about just some of the pillars of that roadmap and where you are today. Sure. simplifying it, kind of condensing it, 'cause there's a lot of things that happened inside the company, I would say that we're we're three big steps: work on the foundation, work on the product for our core customers, and then take the product in a new direction. When I talk about working on the foundation, that is about improving development velocity, improving where our teams are located, how they operate in a remote and global environment. We have released 60 new product updates this year. We did 60 updates all year last year, and in the year before that, I think it was 30 releases. That work that we've done on the infrastructure over the last couple years has doubled and then doubled again our release velocity. That was, like, an absolute essential pillar of our priorities. The second one was focus on the product for our core users. People who create frequent events, and that's more than one event a month, are about 30% of our creators, and they're between 60% and 70% of the ticket volume. We really wanna make sure that the product was well-tuned for those frequent creators. Frequent creator customer retention has been better than any other cohort of creators on our franchise over the last three years, and it's steadily improving. Work that we've done to improve that frequent creator experience is just make it easier for them to launch multiple events, make it easier for them to control their marketing spending from a single dashboard, and really move from having originally been focused on how to make one event easy, to how to make a series of events easy for the creators, and that's been huge. Now we're onto the third big pillar of that, and that is demand generation, and that means, we launched a suite of marketing tools. We acquired a little marketing tool. We, we built it, baked it into the Eventbrite product. Launched that about a year and a half ago. About a, about a year ago, we launched Eventbrite Ads, which allow- which allows you to place ads to promote your listings to the top of our consumer experiences. Now we're very, very focused on expanding the reach and distribution of our business. That means all kinds of things in terms of the product experience, partnerships, and the like, to just build the distribution of events. We're at a place right now where about 27% of the tickets that are transacted on Eventbrite are originated through our demand generation funnels. About 80% of the creators on Eventbrite feel the benefit of incremental ticket sales driven by Eventbrite. That's really important. That's where we're headed. Definitely. I think there's an interesting point in there, too, of just the creators you reach with these products. Traditionally, you were only monetizing with just a paid creator in there, so paid ticket sales. Talk about just how this has engaged a broader creator set for you, these demand gen products. Yeah, that's an interesting point. One thing that is that's been really kind of a latent opportunity at Eventbrite that we've, we've long thought about how do we position ourselves for, is we have, there's really two types of events on our platform: paid events, where you pay a door price to get in the door. We also ticket free events, and that's a place where somebody might want to have a ticket, but there's not a price of admission. A great example would be, like, a beer festival, where they might say, "We're gonna sell beer behind the gate, but we have to make sure that everybody's ticketed so that we control age and the like." The free tickets on our platform are two to three times as numerous as the paid tickets on our platform. It has been a tremendous moat around our business to have this huge surface area of free events on our platform. It gives us a ton of visibility, it gives us great page rankings in the search engines because we're so ubiquitous. It extends our brand, it drives customer acquisition. As we've moved now into demand generation, historically, we've said, "If you're using our platform for free events, we're not gonna charge you for those free events. You can host free events on our platform for free." Now that we've introduced marketing tools, it's a very different model. For the marketing tools, we're saying, "For demand generation, if you want access to our customers, those are paid products." What we're seeing is between 25% and 30% of the creators who are adopting our paid marketing tools are coming from that very, very large base of free creators. Because the free creators are selling merchandise or food and beverage or memberships or supplies or something else beyond the gate of those free events. We've, we've just introduced. We're in the process right now of introducing a brand-new monetization dynamic around listing your events on Eventbrite. I think it's gonna be pretty big, and it applies to free events as well as paid events. We're just now, as the demand generation gets strong, this is a value proposition that appeals to both free and paid, and it's, it's kinda lighting up the economics in a way. Definitely. That organizer fee you just alluded to, I believe that kicks off in September or so. Talk about just how that broadens the number of users you can potentially monetize within there, and I know it's really early in there, but how should we kinda think about phasing of that philosophically over the next few years? Well, let me, let me go back just one sec, from the, from the finance of it to the nuts and bolts. Yep 'cause it's really about the value proposition. Last quarter, we had 33 million unique buyers of tickets on our platform. That's an all-time record. Our mobile app users are growing almost 40% year over year. The number of paid events on our platform last quarter was an all-time record, and the heart of our franchise is really strong, and the consumer side of our business is growing at a great rate right now. We have this opportunity to move from being a platform to much more of a marketplace. As we move in the marketplace direction, we wanna develop a business model that's marketplace-centric, i.e., there's some fees that are charged to creators, and there's some fees that are charged when a transaction occurs. If you think about listing an item on, like Etsy or listing a vacation property on Airbnb, there's customarily a fee to list your property, and then there's a transaction fee at the time of the transaction. Well, because Eventbrite now has such a strong consumer dynamic and so many of the tickets are coming from our marketplace, we're now introducing a listings fee, whereby to publish an event on Eventbrite, after these listings fees scale with the size of your event, smaller events, less than 25 people, will be, will be able to list on our platform for free. Larger events, it's a pretty small fee. It starts at $10; it scales up to about $50 on, based on the size of your event. But it will be a fee associated with the demand proposition that Eventbrite really stands for. I think the thing I would say about this, you can run the math on it, and it's an exciting opportunity for us. I think strategically, there's something that's really critical, and that is in our history, when we've been, when we've been competing primarily as a ticketing platform, there are a lot of very specialized ticketing providers, that maybe somebody's built the best ticketing tool for high school sports, or they built the best ticketing tool for charity auctions. There are features for each one of these different customer sets that people can build for. When we talk to creators, what they tell us is, "Your platform works great for us across all these different categories, and the number 1 thing we want you to do is drive demand." When we turn around and look at the demand generation opportunity, Eventbrite's footprint, its scale, its ticket volume, its brand name, its search engine rankings, its mobile app traffic is five times bigger than the next five competitors combined. What we're trying to do is really change the competitive playing field for being about feature, functionality of the product, which will still be very important to the size of the marketplace. We have a huge home field advantage to exploit on that side of the marketplace, 'cause there really isn't any other ticketing platform that people are downloading the app and getting the tickets and going to multiple events on. Our introduction of listings fees is really about capitalizing on this, you know, very unique value proposition we have that we think is very, very differentiated. And it I may have lost a little track from what, what you asked me about, but we're pretty excited about where we're going. No, no, that's helpful. It was more, kind of how do we think about the potential impact over time? I, I think the point you just articulated there is, with this marketplace transaction, you're following a pretty proven playbook like the Airbnbs, the Etsys, of let's grow with the customer, versus, say, the Ticketmaster model of let's just charge a, a higher take rate without actually delivering extra value to that provider. Yeah, 20% of the events on our platform get half their tickets from Eventbrite-driven demand. If you wanna talk about switching cost, seeing half your attendees struggling to figure out where you get half your attendees is a really big switching cost. As I said earlier, 80% of the events on the platform are seeing at least one ticket driven by Eventbrite, overall, it's almost 30% of the tickets that are being driven. That's a really big advantage for us. I think with the introduction of listings fees, last quarter, we had 1.6 million events on the platform, and, you know, it's early days. We're just introducing this. We'll know a lot more at the end of this coming quarter, our assumption going in is that probably somewhere in the neighborhood of 40% of the events will be paying the listings fees. Some will be smaller, below that 25 person threshold, and some of the bigger events will be more in subscription packages and things like that, so we'll be paying on a, on a per-event basis. We're really excited about it, and, and the point of it is not just to monetize this, it's to put more fuel in the tank to continue to grow the consumer experience and continue to build that audience lead that we have over every other platform in the business. Right. Right. We've focused a lot on just the creator side of the business so far. It's a marketplace. There's two sides. We'd love to touch a little bit more on the consumer. What actions are you taking right now to really improve the consumer experience, improve discoverability of events on Eventbrite? Right. Well, just I would go back to the thing I started... You asked a question about, like, the strategic pillars that we laid out. I said there were really three: the foundations, the creator product, and the third was demand generation. We're in the early days of really focusing on the consumer product experience on Eventbrite, and these are fun early days, because a little bit of effort yields a lot of benefit. We think about the search and discovery experience on Eventbrite. How can we make the events be more compelling, more engaging? Just in the first half of this year, we added video to the listings page. I mean, I think every single event should have video of the event to market itself. We're still, you know, sort of teens% of the events have video on them, but those events that have added video are seeing 70%+ uplift in traffic and purchase activity coming through those pages. The next is turning to the consumer side and personalizing the experience. We know what you've been to. We know what you've searched for. We know where you live. We can tell probably whether you have kids or whether you're a road racer and programming what the page looks like, what the newsletters look like, what the push notifications look like. As we've started to do that, we've been able to drive increases in page views to listings by 60%. There's a lot of work that we can do in our consumer product. We have historically, it's been an important part of our franchise, but it hasn't been the central area of development. Earlier this year, we undertook a reorganization in the company with the specific objective of operating the core creator-side ticketing platform more efficiently, and we moved about 8% of our roles. We, we moved about 8% of our roles, saving probably $13 million-$14 million, and we're reinvesting that money now to further drive that consumer experience. It's about personalization, search, discovery, what the pages look like, how the checkout works, all those very classic consumer e-commerce things that on Eventbrite, I would say today, are good, and they're gonna be great, and as they get to be great, you know, the, the consumer numbers will just keep going. Got it. I do wanna come back to those cost savings you mentioned. Mm-hmm. In there, with that consumer experience, just kinda sticking with that theme for a second, how do you see opportunity to deploy AI to further improve the discoverability of the site? Yeah, well, the... I think that Eventbrite has this neat opportunity to use AI at a scale that our creators are just very unlikely to have access to. The primary place where we're trying to think about is, how can we make things faster for them, easier for them, more precise for them? Two great examples. One, for, for the history of Eventbrite, about 17% of the creators have listed their event and not bothered to type in what category of an event it is. Is it a food event? Is it a racing event? Is it a metallurgy event? We used AI, and in the course of three days, we were able to take that 17% of untagged events down to zero. When you go back to search and discovery, it's very hard to discover an event that doesn't have any tags on it. We're using AI to help boost, just within Eventbrite ecosystem, the visibility of those events. We've also introduced AI for ad copy creation for the creators. When they sit down, you know, if you can imagine, a creator who's not really marketed their event on social media before, that blinking cursor could be kind of intimidating. Well, we're using AI to populate what that ad might look like based on their event and our knowledge of what works well. It's helping them, you know, publish ad copy or even improve the listings blurb that they write on their event, improve the quality of it, improve the efficacy of it, and do it in, you know, like, a third the time that it had taken them before. We're really looking at how can we use AI to promote the visibility of the events and save the creator time, and those are probably the two biggest opportunities for us. Got it. Oh, which sounds like something that further just drives that differentiation versus all the other platforms, and feeds right back into the value add you're providing. It does. Yeah. Yeah. Great. you know, one more consumer question. You let off talking about COVID. We've had all sorts of changing consumer behaviors over the past few years. What type of activity are you seeing from the demand side right now, as you come off a record-setting quarter and then look into the back half of the year? You know, if you go to the tip-top of the funnel, and look at, like, search activity on search engines for live events to the traffic numbers that, I, you know, our-- as I said, our mobile app was up 39% year- over- year in MAUs to 33 million transacting consumers in the quarter, an all-time record, to we put free tickets and paid together, all-time record in North America, in the United States. We're seeing really strong consumer demand. There's a lot of interest in food and, food and drink, nightlife, music, performing arts, kinda little bit hedonistic, like, "Let's get back out and have a party," type stuff. We're also seeing, just recently, the business and professional categories for business conferences, job fairs, training courses, which really were pretty dead there through COVID. They're starting to come back as well. It's really pretty strong. I think geographically, Canada is doing great. The UK has been very strong. The United States has been solid. Great to hear. Yeah. Switching back over to financials, you had alluded to some of that reinvestment from this marketplace transition, you're also just coming off a quarter where you raised the full year Adjusted EBITDA, ex restructuring target, to 12%-13%, versus I think it was 10% to start the year. Talk about just how we should be thinking about that incremental margin rolling into the business, especially after these duplicative costs from that transition roll-off into next year. Let me start with the long term. Our long-term model targets are 20% annual revenue growth or better, and 20% EBITDA margins or better. Right now, last quarter, EBITDA margin was 15%. A year ago, it was 5%. The way our model works is that we figure between 25% and 50% of revenue growth drops down to the bottom line. It'll be 25% when we're investing a little bit more aggressively, it'll be 50% when we're yielding the benefit of those investments. Last quarter, it was way above 50%. We'd raised prices earlier this year, and the advertising product that we've launched has helped us certainly from a margin perspective as well. As we look forward, those are kind of like our guardrails, 20% and 20% and 25%-50% on the incremental profitability. This year, as I said, we came into 2023 and looked at the excitement that our creators were showing for our advertising products and our demand generation products. Ad revenue grew 40% quarter-over-quarter from the 1st quarter to the 2nd quarter. Annualize that, you get why we're excited about it. We wanted to go faster in the direction of improving those pages, launching ads, spreading the advertising product, getting from a CPM product to CPC. We just wanna go faster, 'cause our creators are signaling great interest. We went and really inventoried everything we're doing in the core technology platform and said: What is really mission-critical? What roles can we use automation for? Where could we maybe use AI? How can we free up resources from the core ticketing platform to go faster in the direction of marketplace? So we decided to eliminate about 8% of the positions, as I said earlier. We decided to move a large chunk of our development talent from the United States and from Argentina to Spain and to India, where there's better talent for the needs in the consumer direction and where the cost structure looks a lot better. This year, we're getting some of the initial benefit of those expense reductions. We also have a little bit of doubling of expenses. For instance, we're moving our customer support from Nashville, Tennessee, offshore, and we still have the team in the United States while we're building the team overseas. I think we've grown this headcount overseas by... we're probably at 60% of where we wanna be right now. At the end of the year, we will close down the North American operation and run forward. What's happened this year from a margin perspective is, the savings that we found have yielded everything and more. The growth from the products that we've launched has yielded what we expected and maybe a little bit more. We're a couple quarters at the very high end of our, of our expectations. That's caused us to have a higher view of margins this year. As we get into next year, you'll see the ongoing benefit of the products we're building, the pricing actions we're undertaking, and some of the sort of duplicative costs that we have this year as we reposition some of our team will fall off, and that'll drive more margin leverage. Our, you know, our long-term target is 20% or better, as I said. We're at 15 today, and we'll get to 20% inside of, you know, sometime before the end of next year. Great. I'll throw out one more before I open it up to the audience for the final few minutes. You know, as you realize that 20% margin at some quarter next year, and just the business continues to scale, you'd be throwing off a lot of cash flow. Mm. How do you think about just capital allocation as you move more toward that margin target? Well, gosh, we, we have two convertible notes: one that's due in 2025 and one that's due in 2026. The blended interest rate on the two is 3% right now, and the cash from the converts is sitting right next to it on the balance sheet, earning more money than we're paying on the converts. You know, if the yield to maturity on the converts were to go into the double digits, we might try to do something nearer term. For the time being, we're kinda content to have the capital, but we look at it every quarter, if not every month. I think as our, our free cash flow and our adjusted EBITDA should be very similar numbers. We don't have any major physical space, office complexes, or anything that we-- the capital expenditures are very, very small in the business. Looking forward, I think it's about returning that capital to shareholders if we can't find a better place to invest it in our business. On the M&A front, most of the stuff that we look at is, you know, $10 million, ±, kinda range, where it's more acqui-hire or feature and functionality build-in. You know, that's, that's, we'll-- I think we're, we'll get through this year, close out our restructuring costs, and we'll be in a great position to really start addressing some of those capital allocation questions next year. Great. Well, I think we have time for one lightning round question, if there's any takers. Do you track first-time customers? They come in, is it greenfield opportunity? Is it taking that business from someone else because of your- On the creator side, we generally acquire them from, like, they're using a spreadsheet and Constant Contact and, like, a Venmo checkout, and they're like: "This is taking up all my time. I wanna put my time into my act on stage." Eventbrite's the simple, easy platform. That's where we acquire them from on the creator side. On the consumer side, it's really about just marketing the... I mean, we have such an amazing kaleidoscope of events. There's something for everybody on our platform. It's a matter about marketing that to them to bring new creators, new, new consumers in. Awesome. With that, we are out of time. Lanny, Katherine, thanks so much for being here today. Thank you.