Good morning, welcome to the Vivid Seats fourth quarter 2022 earnings conference call. Following management's prepared remarks, we will open the call for Q&A. I would now like to turn the call over to Kate Copouls. Please go ahead. Good morning, welcome to Vivid Seats fourth quarter 2022 earnings conference call. I am Kate Copouls, Head of Investor Relations at Vivid Seats. Joining me today to discuss Vivid Seats results are Stan Chia, Chief Executive Officer, and Larry Fey, Chief Financial Officer. By now, everyone should have access to the company's fourth quarter earnings press release filed earlier this morning. We have also provided supplemental earnings slides. The press release and earnings slides are available on the investor relations page of Vivid Seats website at investors.vividseats.com. During the course of this call, management may make forward-looking statements within the meaning of Federal Securities laws. These forward-looking statements are subject to the risks and uncertainties as described in the company's earnings press release and other filings with the SEC. On today's call, we will refer to adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures that provide useful information for our investors. You will find a historical reconciliation of adjusted EBITDA and adjusted EBITDA margin to the corresponding GAAP measure in the earnings press release, supplemental earnings slides and SEC filings. Now I would like to turn the call over to Stan. Good morning, everyone, and thank you for joining us today. 2022 was a stellar year for live events and an exceptional year for Vivid Seats. Our team capitalized on strong demand, continued to innovate and expand our suite of leading marketplace products, navigated the competitive landscape with agility, and delivered on financial and strategic objectives that strengthened our business for 2023 and beyond. Larry will take you through the fourth quarter and full year 2022 financial results in detail and discuss our outlook for 2023. First, I'd like to share highlights from our first full year as a public company and discuss the progress we've made on strategic objectives. Looking first at the most recent fourth quarter, I'm proud to report that we generated $846 million of marketplace GOV, $165 million of revenues, and $34 million of adjusted EBITDA. For the full year 2022, we delivered marketplace GOVs of $3.2 billion, revenues of $600 million, and adjusted EBITDA of $113 million. At Vivid Seats, we commit as a team to achieve our goals. Over the last year, we've demonstrated our ability to leverage our robust tools and execute adeptly regardless of the environment, which became more challenging as the year progressed. We continued to set new records in 2022 with marketplace GOV and revenues both surpassing 2021's records by more than 30%. 2022 marketplace GOV and revenues also exceeded our initial guidance midpoint by 10%. Even with unprecedented competitive pressures in the second half, we delivered adjusted EBITDA within our guidance range while making deliberate investments to drive higher customer lifetime value. As we all witnessed, 2022 was a phenomenal year for the live event industry. Live events were back and then some. After seeing some cancellation impact from the Omicron variant in the first quarter, the risk of substantial disruption from COVID-19 waned throughout the year. As a result, fans were able and eager to get out and see the artists and teams they love. Among our event categories, which include concerts, sports, and theater, concerts were a particular standout, benefiting from strong demand as well as a tailwind from postponed events originally scheduled for 2020. As the year progressed, macroeconomic pressures grew, but live event demand remained resilient. We consistently raised our guidance from marketplace GOV and revenues as we capitalized on strong demand. We are hopeful that this resiliency continues in 2023, but ultimately that will depend on how the economy evolves and where consumers prioritize their spend. That said, exciting tour announcements from top artists such as Beyoncé, Madonna, Metallica, and SZA, in addition to several mega tour announcements last quarter, are promising. What's clear is that fans are passionate about their favorite artists and teams, and we continue to invest in that passion, creating exceptional experiences and enabling fans to attend more of their favorite events. Our focus on user engagement within our product ecosystem continues to be one of the pillars of our long-term strategy. In 2022, we rebranded, integrated, and enhanced Vivid Picks while continuing to grow our user base. Year-over-year, we increased both our monthly active users and new accounts created by close to 300%. In the fourth quarter, we launched in-game play capability within Vivid Picks, and now our daily fantasy sports users can place entries for contests covering the second half of the game. Whether fans are attending a live event or at home watching, fans may place entries as the game approaches and as the action evolves. This upgrade adds another level of excitement to the Vivid Picks experience as fans engage with their favorite teams and athletes, as well as with other DFS players through social elements. This is especially beneficial for cultural touchstone events like the Super Bowl. We also create exceptional experiences through our brand partnerships such as Rolling Stone. Collaborations on exclusive live events are a key component of our partnership, and for the third year, we were proud to partner on the Rolling Stone Live series and bring to life one of Super Bowl weekend's most anticipated events. Through our loyalty program, Vivid Seats Rewards, we surprised loyalty members with invitations to an exclusive live experience that expertly intersected the worlds of music, culture, and sports. Brand partnerships and exclusive events such as these bring differentiated experience and value to our buyers in addition to driving brand awareness with the right audiences. As we reflect on the past year, many of our exciting announcements focus on the buyer side of our marketplace, including our Real Rewards for Real Fans campaign and our partnerships with Bleacher Report and the New York Post. This quarter, we are pleased to share a substantial development on the seller side of our marketplace. Skybox has been the industry-leading ERP for professional sellers for years, and this quarter we are excited to announce Skybox Drive, an intelligent automation that optimizes revenue for our sellers on Skybox. Our broad swath of industry data has allowed us to develop a product that provides sellers a turnkey solution to customize and automate their revenue optimization strategies, seamlessly integrated into Skybox and powered by our marketplace data. Together, Skybox and Skybox Drive present a unique and unmatched offering that will further deepen our seller relationships as well as continue growing our install base. Skybox, combined with our proprietary marketing algorithms, provide us with the most complete view of the industry in real time, allowing us the ability to efficiently and effectively acquire new buyers. Recently, with unified user profiles across Vivid Seats and Vivid Picks, we have unique insights into fan preferences that power an evolving personalization engine that nurtures our relationship with sports and music enthusiasts. These capabilities continue to differentiate us in the highly competitive ticketing landscape. We continue to invest in superior product and service for both buyers and sellers to drive long-term differentiation and stickiness in our marketplace. We are seeing encouraging signs of that stickiness with a large and growing base of sellers on Skybox and increasing buyer repeat rates. In 2022, particularly in the second half, we saw competitors ramp aggressiveness in performance marketing channels, which elevated customer acquisition costs across the industry. Meanwhile, we continued to build differentiated product, drive brand affinity, and target high-value audiences with attractive repeat tendencies to create value in the long term. Loyal buyers making repeat purchases are accretive to margins, and we believe we can temper near-term cash headwinds with increased customer lifetime value as our initiatives continue taking hold. Next, I'll address some of those initiatives in more detail. 2022 was an exciting year for Vivid Seats as we used new and expanded strategies to drive engagement and grow affinity for our brand. Beyond integrating Vivid Picks, we also expanded and invigorated our social and experiential presence. These efforts included new platforms such as TikTok, expanded partnerships with influencers and creators, and new experiential activations on site at events and festivals. With unified customer profiles across Vivid Seats and Vivid Picks, we became more selective and sophisticated in targeting high-value sports and music enthusiasts. We continued to grow our suite of tools to target the right buyers in accretive channels. Regardless of channel, we communicate a proven and compelling message. Vivid Seats is the only ticketing company to offer rewards, and our rewards offer real and differentiated value. With our multifaceted brand investments in play, we are seeing traction in driving targeted brand awareness and affinity. Fans are engaging with Vivid Seats more often while expressing positive sentiment towards the brand. In fact, our net social sentiment is highest amongst our main ticketing competitors. While opportunity to optimize our marketing capabilities and continue growing brand awareness remains, we are pleased with the results we've achieved thus far with a relatively modest brand marketing budget. We are proud of our ability to drive long-term brand affinity while remaining highly profitable, and will continue to do so. Ultimately, our strategy to drive higher repeat rates is two fold. First, recruit the right buyers. Second, once inside our ecosystem, nurture each buyer with differentiated product, service, and value. We are excited that our repeat rates continue to trend higher across event categories. This includes repeat rates for new Q4 cohorts despite competitive pressures. Even in the current landscape with higher tax, momentum from our brand investments is building. As we look to the future, we expect tax to normalize, which in conjunction with brand momentum, will lead to substantial margin leverage in the medium to long term. Larry will discuss our outlook for 2023 in detail, but I want to reiterate that we are steadfast in our strategy, delivering a differentiated product with a compelling value proposition that fosters value in the long term. As the landscape eventually rationalizes, we are well-positioned to capture disproportionate growth and deliver long-term margin expansion. In the near term, we are well-equipped with a strong balance sheet and will continue to look for opportunities to accelerate growth for our current offerings as well as to expand our TAM through both organic and inorganic investments. Before I wrap up, I want to touch on the ways we are creating exceptional experiences for all of those within our ecosystem, most importantly, our people. In December, we celebrated the grand opening of our new Chicago headquarters, and it has been so energizing to bring our employees together in a state-of-the-art collaborative workspace. This is another example of our commitment to fostering talent and encouraging innovation at all levels in our business. We have been recognized for these efforts. We earned a place on Fast Company's Best Workplaces for Innovators list, and recently, we were named to four of Built In's 2023 Best Places to Work lists in both Chicago and Dallas. Lastly, we remain committed to giving back. As a marketplace that truly connects people, we understand just how much joy live events create and how they enhance the quality of life for so many. This year, we were proud to expand our CSR efforts with a partnership with Make-A-Wish, the global organization responsible for creating life-changing wishes for children with critical illnesses. Through our charitable foundation, Vivid Cheers, we are providing once-in-a-lifetime experiences by sending these children and their families to their favorite live events. With that, I will turn it over to Larry. Thanks, Dan. I'll begin with a discussion of our fourth quarter and full year 2022 results before turning to our outlook for 2023. The fourth quarter was a compelling capstone to our first year as a public company. We delivered another strong quarter, and with that, hit our revised full year guidance for each of marketplace GOV, revenues, and adjusted EBITDA. Our fourth quarter 2022 marketplace GOV of $846 million decreased 3% year-over-year, driven by a 4% decline in total marketplace orders, which was impacted by a lower than normal number of MLB Championship Series games, along with competitive dynamics. For the full year 2022, we delivered $3.2 billion of marketplace GOV, up 33% year-over-year and 40% higher than pre-pandemic levels. Fourth quarter average order size came in at $388, up slightly year-over-year and 9% above Q4 2019. Our quarterly AOS was volatile throughout 2020 and 2021 but has since returned to the 3%-4% annual CAGR we have seen historically. Our fourth quarter 2022 revenues of $165 million increased 1% year-over-year, and our take rate was 16.6%. For the full year, revenues of $600 million increased 35% year-over-year, and our take rate was 16.0%. Our full year take rate, which is calculated by dividing our marketplace revenues by our marketplace GOV, was consistent with historical levels when considering the impact of our loyalty program, which is accounted for as a reduction to revenue. Some quarterly variation in our take rate is normal due to the mix of event categories. We also experienced additional quarterly take rate variation in 2022 as we refined our loyalty program assumptions throughout the year, resulting in relative take rate headwinds in the first half of the year compared to the second half. In the fourth quarter, we generated $34 million of adjusted EBITDA at a 20% adjusted EBITDA margin. For the full year 2022, we generated $113 million of adjusted EBITDA at a 19% adjusted EBITDA margin. We continued to focus on cost discipline in the fourth quarter with flat sequential G&A expense, net of EBITDA adjustments, and expect that trajectory to continue into next year. On the marketing front, we selectively targeted opportunities that provided the proper balance of volume and profitability. This resulted in sequentially higher adjusted EBITDA margins despite continued pressure in performance marketing channels throughout the quarter. We entered 2022 targeting EBITDA margins of around 21% as we returned the business to scale, layered in public company costs and made deliberate brand investments to position Vivid Seats to win in the long term. Despite marketplace GOV and revenue coming in above expectation, EBITDA margins came in at 19%, somewhat below our original target, primarily due to elevated marketing activity across the industry. We ended 2022 with $252 million of cash and $273 million of gross debt on our balance sheet. Our cash balance reflects $32 million worth of share repurchases in 2022, including $29 million worth of repurchases in Q4. As of year-end, we had repurchased 4.3 million Class A shares at a volume-weighted average price of $7.46, and $8 million remained under our repurchase authorization. Our share repurchase program reduced our total shares outstanding net of treasury stock to 196 million shares as of year-end. This share balance includes 78 million Class A shares, which are publicly traded, and 118 million Class B shares, which are held by our private equity investors and are not publicly traded. Holders of Class A and Class B shares have equivalent per share economic interest in our operating entity. The Class B holder's interest is shown as a redeemable non-controlling interest on our financial statements, and Class B shares are convertible one-for-one into Class A shares. We present consolidated financial statements, which include the entirety of our operations, and we also present earnings per share for our Class A shares only. This EPS calculation reflects the approximately 40% economic interest in our operating entity attributable to Class A shares, divided by the number of Class A shares outstanding, which is approximately 40% of total shares. Our EBITDA to cash conversion in 2022 was below typical levels due to several non-recurring items, including sales tax payments, pandemic-related store credit redemptions, and normalization of seller payables as pandemic postponements fully resolved. In aggregate, we estimate these non-recurring items represented $73 million of non-recurring reductions to cash flow in 2022. We have low levels of net interest expense and CapEx. As we grow, working capital is typically a positive contributor to cash flow. With these dynamics, we expect to see normalizing cash conversion in 2023. In addition to future cash generation, we have a sizable cash balance and low levels of debt such that we can seize on strategic opportunities that may arise in ticketing or adjacent areas. Vivid Seats is just one example of an adjacent TAM-enhancing opportunity that is complementary to our ecosystem of buyers, sellers, and partners. In addition, we will continue to evaluate all available options to optimize our capital structure and enhance long-term shareholder returns. Turning to our 2023 financial guidance. We anticipate 2023 marketplace GOV in the range of $3.0 billion-$3.3 billion, revenues in the range of $580 million-$610 million, and adjusted EBITDA in the range of $110 million-$115 million. The live event industry had a stellar 2022, with strong consumer demand and excess supply driven by postponed events originally scheduled for 2020. We believe the secondary market has grown well above the long-term trend line of 7%-10% annual growth since reopening after the pandemic. As we enter 2023, coming off several years of record demand, we currently anticipate industry growth to moderate with 2023 volumes approximating 2022 levels. Of note, postponed pandemic events, which mostly consisted of concerts, provided a one-time tailwind during the second and third quarters in 2022. This dynamic will not recur in 2023 and will offset some underlying market growth. We anticipate adjusted EBITDA will be roughly flat year-over-year. Within this steady level of profitability, we expect a continued shift in our marketing spend towards brand investments in 2023. We are excited to have multiple avenues to build long-term value, including a growing array of marketing channels, along with strategic opportunities afforded by our profitability and strong balance sheet. The day-to-day excellence and agility our team demonstrated in 2022 gives us confidence in our ability to seize opportunities in 2023. While we cannot precisely predict how and when the competitive landscape will evolve, history suggests customer acquisition costs will eventually subside. In the meantime, we will tactically balance volume, growth, and profitability while directing marketing spend to channels with attractive economics and investing for long-term stickiness on our platform. We continue to expect long-term adjusted EBITDA margins will approach or exceed 30% as the competitive landscape normalizes. Back to you, Stan. Thanks, Larry. In conclusion, it was a record 2022 for Vivid Seats and the broader live event industry, and I'm proud of what our committed and talented team achieved. I'm confident that our team, our strategy, our investments, our technology, and our balance sheet put us in an excellent strategic position to capture and deliver value both in the near and long term. With that, operator, I will open it up for questions. Thank you. Ladies and gentlemen, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In order to accommodate participants in the question queue, we ask that you please limit yourself to questions only. Please stand by while we compile the Q&A roster. Our first question coming from the line of Stephen Ju with Credit Suisse. Your line is open. Okay. Thank you. Well, I guess, you know, concerts, as you guys mentioned, particularly strong in 2022. Can you talk about what the mix of events might look like for this year? If we're, we are indeed going to be looking at a scenario in which, you know, sports begin to index higher and concerts lower, maybe even back to what the mix was in 2019, can you talk about how your customer retention rates may change? I would imagine, there's probably greater frequency among the sports fans. I think, both you and Stan and Larry, you guys have both mentioned expectation that customer acquisition costs will otherwise normalize. You know, what gives you the confidence that we will see that perhaps even this year or maybe over the longer term? You know, not all of it's within your control, but, you know, if you can speak to what's driving that confidence, that'll be helpful. Thanks. Good morning, Stephen. Thanks for the question. You know what, you start for maybe I'll take a little bit of where we think, you know, our investments and some of the repeat rate dynamics have been, and then certainly, I'll let Larry Fey kind of talk to you about how we anticipate the full year and the mix shaking out. I think in a world where you see rising customer acquisition like we've talked about, I think it's really important that you continue to invest in the long-term sustainable things. I think what we talked about this quarter, which we're really thrilled about, is our investments are really starting to pay dividends, you know, most notably in the forms of our highest repeat rates that we've ever seen amongst our customers. You know, that's really spread across the categories, right? I think it would be different if we said we saw higher repeat rates in sports versus concerts, and we're mixing into a total higher repeat rate. You know, when we look at our investments in the loyalty program, some of our engagement protocols, what we're happy to see is that, you know, we're seeing repeat rates higher in every single category that we participate in. Beyond that, as we continue to drive that repeat behavior, we also continue to mix more profitably into a repeat segment of customers. All of that, frankly, allowing us to participate in a very CAC-intensive environment, where some of those effects might look muted at the bottom line. Internally, all of that core strength is there, which I think allows us to, one, sustain for the very long term. Two, when that environment rationalizes, you'll see a lot of leverage in terms of what we're driving into repeat users as it flows through to the bottom line. Just building on that, on the mix question. I don't think we anticipate a meaningful shift from the 2022 mix into 2023. It's been reasonably balanced. In our business, have talked about 60% between concerts and theater, 40% in sports as the pre-pandemic level, and we are almost right on top of that for 2022. Maybe a few basis points here and there of variance, but nothing that would impact overall mix in a meaningful way worth noting. Thank you. Thank you. One moment, please, for our next question. Our next question coming from the line of Ralph Schackart with William Blair. Your line is open. Good morning. Thanks for taking the question. First question, just curious, you know, now that you're almost through Q1, how is the quarter trending, I guess, after coming off of 2022? As you think about 2023, can you just remind us what we expect for seasonality through the year? I have a follow-up, please. Thanks, Ralph. The seasonality I would say is pretty similar to what we've historically pointed to, 23%-24% of our full year GOV in each of quarters one, two, and three. The balance, coming in Q4, which we expect will remain our strongest quarter of the year. Against that, I'd say we've seen robust performance and demand continue into Q1, which we're excited to see. When you think about the year-over-year comparison that we're lapping, last Q1, and this will hopefully be the last time we ever say this, we were fighting COVID, the Omicron variant, which impacted the January volumes, and then we had abnormal cancellations for non-COVID reasons, the MLB issues, Celine Dion, Foo Fighters. We have not seen those recur. You did see Justin Bieber cancel. In general, much lower cancels than prior year. No COVID impact. I think we are expecting a pretty healthy year-over-year Q1 performance. The other part I'd note is we've been a little lighter on some of our marketing efforts out of the gate in Q1 to make sure we have powder dry as we get in the back half of the year with the full sports season. May actually see some margins above full year levels in the quarter. Great. Stan, you talked about brand investments helping repeat rates. Maybe just kind of help us think through those investments for 2023 and, you know, how they could continue to, I guess, benefit the repeat rates to potentially offset some of the higher levels of CAC that you're seeing. Yeah, sure thing, Ralph. You know, I think we've seen a lot of success, you know, when we look at our loyalty program, the components of that driving increased repeat, right? I think, you know, whether we're building that into the economics of our buy 10, get one free program, whether it's the experiential components, I think we continue to look to innovate along those dimensions. Can we find new things that drive differentiated value to users? I think you'll see us continue to drive integrated and innovative play options through Vivid Seats. You know, we've talked about having our user base there on that platform just grow 300% on a year-over-year basis, where we can then, you know, use those two ecosystems to drive engagements where, you know, where we're looking at that with, you know, now I think on average, close to 15 entries per month on that. When you put together, you know, kind of innovation in the loyalty program itself, combined with an engagement vehicle with 15 entries per month, I think we feel pretty good about the ability to continue to drive increased engagement and loyalty to our collective ecosystem and platform. Great. Thanks, Stan. Thanks, Larry. Thank you. Our next question coming from the line of Maria Ripps from Canaccord. Your line is open. Great. Thanks so much for taking my questions. First, appreciate all the color around the 2023 outlook. Can you maybe just talk about how sort of competitor marketing spend has been trending so far this year? What is embedded in your outlook in terms of expectations for competitor marketing activity? Then I have a quick follow-up. Yeah, thanks, Maria. I think throughout 2022, we saw a fairly consistent trend where competitor intensity was increasing, with a particular shift upward starting in early Q3. That intensity continued through Q4. I'd say for the large part, it's continued into Q1. We have presumed that that persists throughout the year in our guidance. Yeah, I think we've alluded to it before, we continue to be of the mindset that one can only lose money for so long before gravity catches you. We don't wanna predict the when with too much precision, it does feel like the current environment that has persisted into Q1, feels unsustainable given some of our understanding of some of the profitability implications of those decisions for others. Got it. That makes sense. Thanks, Larry. Secondly, there's been a lot of sort of increased regulatory scrutiny on the music industry of late, with the Justice Department sort of having recently opened an antitrust investigation into Live Nation. Would love to hear your view on the government potentially taking some form of action to promote increased competition, and how might that impact your business and the secondary ticketing market, more broadly? Yeah, sure. Hey, Maria. look, you know, I think it starts from just fundamentally, you know, a belief that, you know, I think we have strongly that promoting competition is a good thing. When fair competition exists, you see platforms like Vivid Seats, you know, continue to innovate on behalf of fans with, you know, as we talk a lot about here, you know, best-in-class customer service, a loyalty program that continues to drive differentiated value, Vivid Picks. That all exists when there's fair competition. You know, I would say, you know, rather than comment directly on what they're doing, I think, you know, look, a bunch of senators recently reviewed the industry, and I think the focus and the perspective of that investigation is fairly clear. I think when you have large, vertically integrated players who potentially leverage their advantages to stifle competition, you know, I think the end result for that is that anyone who plays by the rules is gonna benefit. In our space, you know, I think about things which have great momentum, like legislated ticket transferability, transparency into real supply and demand, transparency into pricing, where in particular our lean cost structure always allows us to be competitive. You know, I look at that and say, as there continues to be scrutiny, anything that promotes fair competition, in this space, I think Vivid Seats is well poised to take advantage of, and we look forward to seeing how that plays out. Great. Thank you very much. Thank you. Our next question coming from the line of Thomas Forte with D.A. Davidson. Your line is now open. Great. Thanks. First off, Stan Chia and Larry Fey, congrats on the quarter and year. I have two compare and contrast questions. I'll ask one and then the second is a follow-up. First, can you compare and contrast the sales and profitability of performance marketing versus brand marketing? I'd say, as we've experiment... There's a little bit of a time longitudinal answer, Thomas. As we've gone deeper into brand marketing, one of our tenets has been, we don't wanna put too much gas on the fire until we feel like we've at a minimum replicated the lifetime economics. As we've talked about some of our experimenting and trying to unlock that brand marketing angle, that was part of the journey. With some of the experiments that we've been able to complete throughout 2022, we feel pretty good that we've achieved that and that the economics on the brand side will at least replicate what we've been able to deliver on the performance marketing side. Within that, there may still be different timing, where you spend some of the brand dollars up front with a little more of a lag before you get the return relative to performance marketing that's more immediate feedback. Alongside that, we think a customer acquired through brand channels likely has higher repeat, higher longevity, higher LTV. On a dollar and percentage term basis, we think it'll be at least equal, and the data we're seeing now actually suggests it may be better. Great. For my second question, can you compare and contrast consumers returning to live events, from influences, historical influences like fear of missing out versus a reflection of COVID-19, not unlike revenge travel? Yeah, I can take a first crack at that. You know, I think as we've looked at, our guide for the year, there's a combination of both order volume and AOS dynamics that could tie into a pent-up demand thesis. I think our view has been that average order size side of things, it looks like that's largely normalized and we exited 2022 at what I'd consider our historical trend line. On the orders side, you know, similarly, sports is now entering its third year of being reopened, I think we're well through that. We did, I think, express some caution relative to, you know, perhaps other perspectives out in the market on what the concert vibrancy may look like this year. Overall, you know, in a world where we think 7%-10% annual long-term growth is where this industry fits, and we were up 40% in 2022 relative to 2019. Having 2023 as a flattish year kind of touches the up to trend line and in no way changes our expectation of trend line. Maybe I think we alluded to a few, you know, doses of caution around exactly what the lack of postponed concerts can do to overall industry volumes. A little bit of caution around what competitor posture may look like. That's not to say there's not opportunity for outperformance on both of those metrics. Thank you. Thank you. Our next question coming from the line of Jason Bazinet from Citi. Your line is open. I know there's a little complexity analyzing this, sales and marketing costs as a percentage of revenue. I say complexity just given the impact of the loyalty being booked as contra revenue. The sales and marketing as a percentage of your revenue seems like, you know, it's been bouncing around between 40% and 42% over the last four quarters. It doesn't sound as bad as your rhetoric about the higher competitive intensity and higher CAC. I was just wondering if you could just un-unpack that a little bit, or maybe I'm looking at the wrong metrics. Yeah. No, I think it's an astute question. You know, when we make our comments around some of our agility and the levers that we have to pull, I think that's exactly what we're speaking to. It's, you know, in Q4, as an example, I think we made a conscious decision to let some volume that was of unattractive profitability go in favor of maintaining profitability and holding the line on that marketing efficiency. I think the other thing that we've seen is a shift in terms of our customer mix towards repeat customers and away from fishing in the free agent pool that has gotten particularly expensive. It gets us really excited again, without trying to predict exactly which quarter it happens, but with a strong sense that eventually it happens. When the CAC normalizes, I think we expect to really see that benefit in the new customer acquisition where we've pulled back a bit. I got it. That's super helpful. Thank you. Thank you. One moment for our next question. Our next question coming from the line of Benjamin Black from Deutsche Bank. Your line is open. Hey, good morning. Thank you for the question. Larry, I think you alluded to this earlier, on Live Nation's earnings call, they mentioned no signs of a slowdown. In fact, you know, they expect even more robust trends into 2023, yet saying that 2023 growth should be more muted. It'd be great if you could sort of bridge that disconnect there. Then, Stan, in your prepared remarks, you highlighted Skybox Drive. I'd be curious to hear your perspective on how that new offering has been received or what the early results have demonstrated so far, and how should it impact the P&L going forward longer term? Thank you. I'll take the first part on Live Nation. We certainly saw what they said. I think in some ways we've seen similar to them, and then there's places where we diverge in terms of comparability. They quoted a lot of metrics on January to mid-February performance being quite robust. I think we alluded to it, but we can confirm that we are seeing directionally similar trends in terms of very strong year-over-year performance in the year-to-date period. Where I think we perhaps diverge a bit, is one, just having a slightly more cautious view of what the impact of postponed events not recurring being at the exit of Q2 and Q3 on the concert side. I think they are overweight concerts when you look at their business overall, whereas concerts are half of our business. If you believe there's a more muted growth outlook in sports, that'll pull it down a little bit. The last variable is, yeah, I think they alluded to international being quite strong, international reopening a little bit later. I think there's a little bit of a handoff between global strength in the first couple months in their guidance and then international perhaps carrying a little bit higher growth the back half of the year relative to what we anticipate seeing in North America. I'll take the second part, Ben. You know, I think we were really excited to announce Skybox Drive, right? I think when we announced that early last week, you know, I'd say early signs of interest is through the roof. You know, I think we're very proud of the platform that we've built on Skybox, and Skybox Drive is, you know, an additional kind of product line that we're launching next to that to further help the seller community as a turnkey solution to Skybox, I think has received tons of interest. You know, we are in our beta period. I would say the minute we announced and opened the beta, we were oversubscribed within the first, you know, two minutes to how many people wanted to participate. I think if that's a good indicator, I think that would underlie the fact that, you know, I think there's gonna be a lot of demand and interest in the product that we're building. As we continue to do on all of our lines, you know, that I think we're gonna evaluate what the right economics are. You know, if there's an opportunity to make sure there's value that we can derive from that product line, I think we'll do so. We're probably a little too early to talk about long-term P&L impact of Skybox Drive right now. Great. Thank you very much. Thank you. Our next question coming from the line of Logan Reich from RBC. Your line is open. Hey, good morning. Thanks for taking the question. It's Logan on for Brad Erickson. Just another one on marketing spend. What's your guys' philosophy? I know you said you guys pulled back a little bit on the performance marketing spend in Q4. As you go forward into 2023 on the full year, what's your expectation for competitive marketing intensity and what is your philosophy on kind of matching that versus pulling back a bit on the less profitable orders for the full year? Thanks. Yeah, I'd say embedded in our guidance, we have assumed current environment persists throughout the year, i.e., intensity above what we believe is long term sustainable. We're certainly hoping that that cracks, but didn't wanna build that into the baseline. We'll see what comes from there. I think, you know, maybe the right way to hone this too, you know, as we think about the timing impact, which I think is front of everybody's mind, which we just don't know how long it persists. I think the right question, which we've certainly oriented around, is, you know, when you spend, whether that's in the form of, you know, marketing, whether that's in the form of degraded take rate, all the things that, you know, we're seeing now in the industry, the question is just when you stop spending that and when you stop degrading your take rate, does that volume remain? If that volume doesn't remain, then all of that acquisition is just unsustainable. Our perspective has always been, you know, we are in this for the long haul, and as we've prioritized, you know, I think making sure that we are diligent and smart about how we invest to both remain profitable, drive growth, and continue to grow our cash balance for potential offensive inorganic activities. You know, I think what you see is continued investment in the sustainable cohorts of customers that we continue to reap benefit from both now and we think even more so in the long term. Just to wrap it up, I think we need to strike a balance, right? We're not gonna roll over and let competitors take heaps of volume without a fight. Similarly, we're not going to follow them down what we think is a somewhat short-sighted path. Finding the balance between those two and the pockets where you can pursue the most economic volume, the most economic customers in terms of lifetime value, that's where, you know, we feel like a lot of our commentary around our unique data and some of our agility and marketing capabilities can really show itself. Great. Thanks for the color. Thank you. Our next question coming from the line of Daniel Kurnos with Benchmark. Your line is now open. Yeah, thanks. Good morning. I know you guys just tried to kind of put an exclamation point on sort of your strategy. I guess the question that we get is, you know, in this environment and given the uncertainty of the consumer, you know, if you put further pressure on your competitors, would you not accelerate sort of the cutoff? Do you not think that's a possibility given how much better your balance sheet is and given, you know, look, we understand that the dynamics are somewhat like online travel, where there's a certain segment of cohorts that will be loyal to one, and then there's a certain segment of the cohort group that will probably loyal to none and just to price alone? It feels like your competitors are, A, have no tools to get better loyalty, and B, you know, are more fishing in that non-repeat rate bucket. Is there no way that you guys could put incremental pressure on them beyond just sort of striking the balance given how strong your balance sheet is right now? It's a great question, Dan, and it's a topic that we wrestle with a fair bit. You know, I think if we saw an opportunity to clearly accelerate that, we would lean into it. You know, I think the flip side is we can't speak with precision or conviction around what fundraising or capital access looks like for competitors. We're trying to take a balance where we continue to put pressure, steady pressure that gets to the end result we want, but also doesn't unduly hamper near-term performance, only to find out that they have, you know, more capital stashed away. Yeah. Dan, you know, I know, I know you sort of said, alluded to this in the remarks, but I kind of re-emphasize to a certain extent, we are doing what you're suggesting in our investments, right? As you think about it, look, everybody who repeats with us is an order that we've taken away from somebody else. Where we've seen, you know, again, the increase in repeat rates across categories for us at the highest level that's ever been, you know, I think that's certainly something we continue to drive down. Every time that happens is an incremental order since they're all increased repeat rates with a higher mix into that. We think that's actually a very strong accelerant into, call it, the sustainability of our competitors. Got it. No, I mean, that makes sense. Then just on the mix, I thought it was interesting that you guys actually spent less sequentially online in Q4 and more offline, which obviously talks to the brand spend. That you guys are pushing here, even though it seems like everybody else wants to push performance, but I get the dynamics are different here. How much of the brand is more towards Vivid Seats versus internally you're just investing on some of the gamification aspects and trying to make it your point, as you called out, Stan, more integrated into the process versus, you know, kind of just broader Vivid Seats brand awareness, just remember, hey, you know, we still have really small unaided brand awareness, and, you know, if we can bring that up, then we get people into the ecosystem that way? Yeah, you know, I'll start, Dan. You know, I mean, a couple different things. You know, I think where you've seen a lot of our honing of our brand spend is into channels that I think we're starting to see, you know, increased economic performance, right? I think if you recall, maybe in 2021, you know, we tested a lot of very heavy media-oriented channels that, you know, I think we were not as pleased with some of the kind of time horizon and returns that drive. I think we have found some great channels now as we talk about our ability to drive brand into other more programmatic areas and where we've seen a lot of success. You called out Vivid Seats. I think we're certainly excited about that. You know, I think if you looked at what we've done in the fourth quarter and certainly into first quarter and some of our more programmatic brand channels, you know, we've got our Real Rewards for Real Fans campaign, right? I think that continues to resonate with fans, that continues to drive a halo around our performance, both in normal performance channels and frankly, as a direct channel itself for acquiring users. I think we've been pleasantly surprised by the efforts on our marketing team to so quickly find, you know, a brand channel that has both driven the halo but also the performance itself. I think we've seen that resonate really around one of our core propositions, which we've invested in for a while now, which is rewards. I think the fans speak, you know, that campaign is something that matters to them and that value prop is something they'll continue to reward with purchases from us. Dan, from a dollar allocation. Go ahead, Larry. Go ahead, Larry. Say, you know, Vivid Seats at $3 billion plus of ticketing is going to command the significant preponderance of marketing, both performance and brand. You know, we are targeting Vivid Seats opportunities, particularly where it feeds into the ecosystem. you'd usually think of the significant majority of that brand spend being on the core ticketing offering. Yeah, I would've assumed that, Larry. I just didn't know if there was, like, an incremental push. That's helpful. Just something housekeeping, I guess, Larry, a little more than that on your comments. It sounds like you said free cash generation's gonna normalize in 23. I know there were some puts and takes in 22. You guys are gonna be in a firmly net cash position this year, assuming that you have your typical conversion, you know, the way that kind of plays out. How are you thinking about kind of that benefit in this environment? Do you hold onto your cash? Do you pay down your debt? Do you push share buyback more given where the stock is? Just help us think through that. I think, yeah, yes to considering all the standard possibilities. You know, we didn't touch on it much, but we did complete a significant share repurchase effort through with $32 million repurchased under our program through year-end, which I think is a testament to our willingness to repurchase shares balanced by maybe we have a little bit less float than we would like. So there's some limit in the short term on the amount of shares we can repurchase. On the debt side of things, you know, in the current interest rate environment with our cash balance approximating our debt balance, but we're effectively synthetically hedged. As rates have gone up, so our interest expense hasn't really moved commensurate. We feel like it's still a reasonable price pay for the optionality, whether it relates to the comment I just made for M&A, whether that be, adjacencies or, you know, more meaningful opportunities. I think that's something that we continue to review. We like seeing the strong, robust balance sheet. You know, I think it ties in a little bit to the competitive landscape and some of the comments we made about competitor P&Ls, but I think having the sort of gold-plated balance sheet alongside that gives us great confidence in our ability to come out the other side of this stronger than ever. Great. Thanks for sticking with me. Appreciate all the color, guys. Thank you. Our next question coming from the line of Shweta Khajuria from Evercore. Siya line is open. Okay, thank you. Dan, could you please provide a little bit more detail on Skybox Drive? How does that work? Understood on your commentary on economics of it, but where do you think will it have the most impact post scale launch? Thank you. Sure. Yeah, look, I think, you know, all sellers look for ways to maximize revenue. You know, I think in the auto pricing arena, there are multiple players that provide that service. What's been unique about our decision to launch Skybox Drive is we've never had a turnkey solution integrated into our Skybox platform that allows for kind of an immediate auto pricer to be turned on. We've also never allowed others to utilize You know, our industry-leading marketplace data to drive some of their revenue optimization strategies. I think those two things have strongly been in demand by the seller community, and we were happy to provide that, which again, I think nobody else will be able to provide, given that's all proprietary. In the long term, as we launch that, we remain really excited about the fact that we can grow the install base of Skybox, drive more stickiness to that, and ultimately drive more value to our sellers. In turn, all of those things feed our flywheel better data, better insight, and potentially advantaged cost structure again, that flows through from, you know, kind of an embedded revenue optimization system, that functions in real time. As you think about the economic Shweta, you know, like I said, I think it's early for us, but I think it's safe to say that, in the market, nobody gives an auto pricer away for free, so there's probably some incrementality there. But for us, I think it's still a little too early to gauge what the long-term impact's gonna be. Okay. Thanks, Dan. Thank you. Our next question coming from the line of Andrew Marok from Raymond James. Your line is open. Hi. Thanks for taking my question. It's been asked kind of a couple of times in different ways, but I kinda wanna address it directly. In, in the overall space, I mean, the consumer experience has kind of been built on trust, and there have been pretty decent repeat loyalty rates, et cetera. Have there been kind of any changes in the overall brand loyalty of a customer within the industry, with kind of the puts and takes? Obviously, you guys are seeing good progress on your loyalty and rewards program, kind of counteracted with the increased marketing spend around the industry going for that kind of free agent pool. Thank you. You know, Andrew, I think maybe two things to point to. One, you know, clearly what we can see is that our repeat rates are higher than ever. You know, I think to buttress that maybe as a point against others, you know, we track a lot of social sentiment amongst the competitive landscape, which, you know, you might argue could be a leading indicator into brand loyalty. I think what we felt really good about is that, you know, since we started looking at that every month since we've been tracking social sentiment, you know, we've always been number one or two, where historically, you know, we've not shown up, I think, in the top five, probably. I think being in the first and second position, combined with our ability and our kind of proven now increase in repeat rates, I would say we probably outindex the competitive landscape. Great. Thank you. Thank you. Our next question coming from the line of Matthew Farrell from Piper Sandler. Your line is open. Thanks, guys. Maybe just how are you thinking about the broader macro and maybe consumer spending as it relates to the full year guide? Maybe digging a little bit deeper, how do you delineate maybe the competitive pressures that you're seeing between potentially it being some softening consumer trends? Thanks. I think we continue to, you know, similar to some of our postures throughout the year last year, where we wanted to take a balanced view where we certainly reflected some awareness of risk inherent in the market, whether it be COVID or economic concerns. I think we've continued that perspective. I alluded to it, we are not seeing anything in the numbers that would suggest the consumer is weakening at the moment, but we also see all the same headlines that everyone on this call does and I think it prudence to build in some possibility or probability of that, you know, particularly in the second half of the year. Again, similar to last year, should that not manifest, that would be a positive development incremental to what we've what we contemplated. I think if you find yourself in a world where consumer and thus industry backdrop were to weaken meaningfully from where we are, I think that's a scenario where we'd long term get excited and short term there'd be a bit of pain, but I think that will really disproportionately hit competitors that are already, you know, running on the edge of a cliff. Yeah. Yeah, I think that just hones in the point, right? I think when you look at, I think what we've invested in and what we've built and the decisions that we've made, you know, What we really have is a long-term sustainable model with really great unit economics, investments that I think we believe will get a lot of leverage on in the long term, whether that's our repeat rates in our loyalty program, whether that's engagement in Vivid Picks, or even more recently, I would say, truly, long-term economically sustainable brand channels, right? I think when we look at it, we've certainly been conservative as we look at the guidance for 2023 in terms of, you know, I think as Larry said, the best way to look at it is, look, there's a lot of chatter around that. We wanna make sure we've accounted for those scenarios. Any world where any of that happens, I think we continue to have the strongest, you know, balance sheet probably out there of all the pure secondary marketplaces, along with strong unit economics and strong key indicators for sustained growth and sustained profitability. I think that ultimately is what has us excited about, you know, continuing to win in the long term. Thank you. I'm showing no further questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This does conclude your program, and you may now disconnect. Everyone, have a great day.