Good morning, everyone, and welcome to our next session. For those of you who are just joining us, I'm Maria Ripps, internet analyst here at Canaccord Genuity, and it's my pleasure to introduce Larry Fey, Vivid Seats CFO. Larry, thank you so much for joining us today. My pleasure. Thanks for having me. Awesome. So starting at a high level, consumer discretionary spend has been under pressure over the last couple of years, but demand for live events has remained resilient, and early indications from Live Nation suggest that 2024 is shaping up to be another strong year. Could you maybe talk about what you're seeing in terms of demand trends in the near term, and why do you think sort of the live event market has been more resilient than other discretionary categories? Yeah, I think that's one of our favorite topics. Yeah, I think there's been pretty meaningful outperformance in our category, both on the supply and the demand side, but the supply only matters if you have demand for that supply. What we've seen, I think, is an intersection of a few trends. You know, quickly on the supply side, with artists shifting from a lot of revenue from CDs to Spotify, which doesn't quite pay the bills the same way, they are compelled to put on more live events as they generate, you know, 90% plus of their income from touring. And then it also means there's more production value, right? So as we think about supply and perhaps improving supply quality, I think that is part of the story, but on the demand side, yeah, I think there's a few trends that all feel like they're intersecting. One, shift in preference from goods to experiences, that we think has been playing out for a number of years and has many years left to run. I think the second element we see a lot of is the FOMO aspect of live events, right? If your favorite football team or baseball team makes the playoffs or makes the Super Bowl, you can say it's not the right time for you to go, but it's a lot harder to request that they make the playoffs again the following year than it is to push off your, you know, European vacation or your home remodel or your new car. Similarly, you know, Taylor Swift does the Eras Tour when she does the Eras Tour, and if you wanna experience that, you, you need to find a way to attend or, or lest you, you miss it forever. And then the final one, and this is a little more of a pet theory of ours than perhaps a mainstream view. But in an era of social media and clout, yeah, you probably get some side eye if you post yourself sitting, you know, leaning against your, you know, high-end car. But if you show yourself, like, in the third row of a great event, right, it's like a socially accepted way to, to show off, right? A little bit. And so we think all of those are intersecting to this great demand trend, and I think we all had the... None of us have been through a pandemic before, and none of us knew what re-emergence from a pandemic would look like. So we all wondered if some of this shift in behavior was, temporal and pent-up demand, revenge spending, whatever phrase you wanna use. As we sit here now, you know, three-ish years after the reopening first started in earnest, and continuing to see the same strength that we saw when the opening first started, we're pretty comfortable and confident that this is revealing a fundamental shift, that we think is in the midst of playing out and has many innings left to come. Great. That's a great overview. So let's dive into some of your top strategic priorities, starting with your increasing focus on international markets. So last year, you acquired Wavedash, the leading online ticketing marketplace in Japan, and you recently talked about ramping investments in infrastructure to support sort of further expansion into additional international markets. Why are international markets an attractive investment right now, and what's the state that you're looking for when considering which markets to enter? Yeah, a lot of the same trends. You know, fortunately for us, a lot of the same secular trends that we're seeing, that I just spoke to in North America in our existing business, are not unique to North America. We're seeing meaningful growth, in particular in the concert and theater categories globally. And so you've had this dynamic, where we've always had an eye on international expansion, but everything in life is a risk-reward analysis. As the reward has continued to grow, as those markets have seen disproportionate growth by virtue of being indexed to the highest growth categories of concerts and theater, the opportunity has grown to a place where I think it's, it's become a quite compelling investment from a probability-weighted ROI standpoint. We obviously bought our way into Japan. We alluded to organic openings in some other countries, which I think, you know, probably reveals a bit around our framework, which is we're open to either. But if you're going to buy a business, there needs to be a business worth buying, right? In terms of established size, scale, and a willing seller at a price that works for us. We found that in Japan. You know, also, I think organic expansion in Japan, given the magnitude of language and cultural differences, would have been a higher barrier than some other countries that, you know, either share languages or are a little more culturally similar to what we're used to in North America. And I think those are the countries where we're looking at the organic opportunity. You know, certainly, if there are M&A targets that have meaningful scale, some unique attribute, and the price is right, we will always entertain those. But those are few and far between, and so we were happy and excited to buy our way into Japan. We'll be disciplined, but always seeking to be opportunistic if there are more of those in other jurisdictions. Got it. And then could you maybe spend a minute talking about Wavedash more specifically, and was there anything unique, so to that platform or the Japanese market that attracted you? And then how has the integration been sort of progressing so far? Yeah, the Wavedash allure, you know, the Japanese market and, you know, like everything, it's similar but different, right? There, if you were to think about just the process of buying a ticket, there's a lot of similarities. But sports, I'd say, are quite a bit less prevalent in Japan than in North America, so perhaps the biggest difference is the event mix. A lot more concerts and theater as a percentage, but baseball is fairly popular, but not to the same stature or standing as MLB, and then a pretty meaningful drop-off in your, you know, soccer, volleyball, but no, you know, baseball, hockey, basketball of comparable size to what you see in North America. The second major difference, which I believe is a result of that structure, a more rationalized competitive landscape, right there. Wavedash is the clear market leader based on our diligence. You know, it's really a 2.5-player market. And so we found that dynamic. It's a fairly well-established, fairly mature, competitive dynamic. You know, the excitement around being able to buy in with market leadership, with demonstrated profitability, with cash flow align quite well. And then as we think about integrating that into our broader international strategy, what gets very exciting is, the ability to test any tools that we're taking into new countries in Japan. But if that tool doesn't work, we know they have a working fallback, so we can very quickly, you know, pull back any mistakes and use that as a really nice, you know, R&D environment as we prepare to go elsewhere. Got it. That makes sense. So, let's shift next to the Vegas.com acquisition, which is enabling you to capitalize on the ongoing sort of evolution of Las Vegas as a sports and entertainment epicenter. Maybe talk to us about some of the trends you were seeing that attracted you to that market, and how should we think about sort of about the extent to which Vegas.com expands your TAM? Yeah, I think, it's a great example of Vegas.com was a fine enough, good business on its own, without Vivid Seats, but it's a clear example where I think it is a better business as part of Vivid Seats. And so, you know, that, that excitement where, yeah, you buy what is already a good, established, profitable, cash-flowing business, and you can clearly make it better because it aligns so well with your strategic paradigm, is sort of the goal and the dream of strategic M&A. So what do I mean by that, right? If you go to Vegas.com, think about when people arrive in Vegas, it's a very transient market. People come from all over the country, generally are going with an eye on being entertained. So anyone who is going to Vegas.com has declared: "We're traveling, we have free time, we want to go do things that are entertaining." So it's really the, like, crème de la crème of selected market. And then, you know, if you're staying at, say, the Bellagio, the Bellagio will do a great job of making sure you're aware of all the entertainment options in the Bellagio, but there's a lot of other entertainment options in Las Vegas, and they aren't as, you know, incented to help you find all of the other options outside of their their experience. And so that's where the Vegas.com kind of meta experience really comes in, right? I'm in Vegas. There's a lot of entertainment, arguably a overwhelming amount of entertainment. Where can I go to understand everything that's out there and make my decisions on, on what I want to attend and, and why? That's been the role Vegas has played. It's expanding our TAM in terms of its current business because they are getting their inventory direct from venues, right? So historically, Vivid Seats was exclusively resale inventory. Now, we've added Vegas, where we're getting inventory directly from the venue, so it's the initial transaction. Mm-hmm. So purely additive to TAM in that regard. But you can imagine if all of your inventory is coming direct from the venue, when events sell out and when resale shines, you don't have that inventory. So Vivid Seats is able to provide Adele, Garth Brooks, Super Bowl, Formula 1, all these events that are selling out, and it really rounds out that meta experience. So now you go to Vegas.com, and you want to see all of the entertainment Vegas has to offer. As the Vivid Seats resale inventory appears alongside the Vegas venue direct inventory, we can truly deliver that experience. Mm-hmm. And you sort of touched on this, but what are some other opportunities for revenue synergies here between two platforms? Maybe talk about that, as it relates to the user side. Yeah. So certainly one aspect is taking Vivid Seats inventory, rounding out the Vegas experience. I think the other part that is called going the other way, people travel to Vegas. They don't stay in Vegas or rarely they stay in Vegas. Only the things you aren't allowed to talk about stay in Vegas, and then everyone goes home. We view it as a profitable customer acquisition mechanism, which is quite exciting, right? The Vegas model, historically, right, if you have a great experience on Vegas.com and then you go home to New York, well, you're not gonna pull up Vegas.com if you're not in Las Vegas. That was, call it, a customer acquisition that went nowhere. Whereas with Vivid Seats, we're now introducing folks who have a positive experience with Vegas into the Vivid Seats ecosystem. We'll certainly explore ways, you know, we have the Vivid Seats loyalty program and ways to connect, you know, those user profiles, and make it a seamless experience as you transact in Vegas, then go home, and we, we wanna make that a continuous path so that you can become our sought-after repeat customer, that we are orienting our, our business strategy around. Got it. So let's talk about your core marketplace next. So we've talked about this in the past, but your loyalty program appears to be resonating nicely with a lot of consumers. Is there anything you can maybe share on how consumers are engaging with your loyalty program, especially now that sort of the new format has been in market for a couple of years and supported by brand messaging? And is there, I guess, any data that shows that more consumers are coming to Vivid to take advantage of the loyalty program, and that those consumers are returning at higher, sort of, at higher rates than other cohorts? Yeah, I mean, I start with one of our overarching beliefs, which is that, you know, one of the key tenets of a successful and thriving e-commerce model are having customer retention, right? Can you profitably acquire and create a reason to retain, right? If you can't do both of those, right, you probably have a problem. Vivid has long prided itself on being able to acquire customers in a way that's first transaction profitable, and the opportunity we as we saw it was to increase the frequency and the number of folks who repeat and the frequency at which they repeat. And central to that is offering value proposition across multiple dimensions that compels that behavior. One of the core tenets is our loyalty program. It's a buy 10 ticket, get one free approach. Emphasis on tickets, right? Typically, when people buy, it's three, four tickets at a time, so you're talking two or three transactions typically before someone earns a reward. But ultimately, if that is working, what you would see is a higher percentage of our orders are coming from customers who are repeating. And what we've seen is really strong performance on that regard. If you go back to pre-COVID, about 48% of our orders were from repeat customers. Fast-forward a few years, in 2023, that number was 59%, just shy of 60. So, north of 1,000 basis points of shift towards repeat users in an era when we almost doubled our GOV, right? So it's not like we're in some mature, stable phase and we're slightly edging in. Business is growing dynamically, and you're seeing favorable mix shift towards repeat users. Within the cohorts, we don't break out, you know, cohort by cohort. Unfortunately, COVID kind of destroyed our cohort reporting ability with, some meaningful disruption for a year or two. But we track them internally, and we've spoken to it a few times, but, we've seen recent cohorts, post-loyalty cohorts, growing to all-time highs, each cohort better than the last, which we think is indicative of a program and a value proposition that's really resonating. That makes sense. I also wanted to briefly touch on Skybox. I think later this year, you're planning on fully launching and automating pricing tool for sellers within Skybox. What has adoption sort of of the tool been like by sellers during the beta phase, and is this tool sort of largely intended to improve the seller experience and attract more professional sellers to Skybox? Yeah. Yeah, as we view ourselves as a two-sided marketplace, and I think there's a good reason, the natural gravity towards thinking about the buyer or consumer side of the ticketing marketplaces. But a lot of the Vivid Seats DNA and pedigree is having differentiation on the seller side of the marketplace. You know, Skybox is the leading tool used by professional sellers by a pretty healthy margin, right? Over 50% of professional sellers use the Skybox tool. And so, within our DNA is, how can we offer more tools that make lives of sellers easier, better, more profitable, right? We're aligned with helping sellers thrive. The Skybox Drive is the latest iteration in a long series of those types of developments. You know, during the pandemic, we had rolled out, or coming out of the pandemic, I should say, Skybox Fulfillment, right? So you sell the ticket, now you need to get the ticket in the hands of the consumer. We figured we could offer that capability at a better cost than many sellers, particularly smaller sellers, could do themselves. That has played out, so we now have a number of sellers that are using our fulfillment function. And so Skybox Drive, helping sellers price their inventory, is a natural evolution in helping sellers improve their business, maximize their revenue, and whatnot. And I think it is a fully integrated offering, right? So if you have Skybox. You need to have Skybox in order to get Skybox Drive, but if you have Skybox, it's a single-click, fully integrated capability. It will offer you access to the Vivid Seats marketplace, right? So, you're pricing relative to $4 billion worth of transactions, whereas many of the incumbent tools are anchoring off of much smaller marketplaces. So we think it gives an ease of use, a relevance that other competing tools do not. And so it should be a reason to use Skybox. It should help sellers succeed. Ultimately, our view is, if it helps sellers do their job better, we will benefit. But step one is help them benefit, and the benefit that flows to us comes secondary. ... Go ahead. So let's, let's turn to marketing for a few minutes next. Over the last couple of years, you've leaned sort of further into brand building through team partnerships, premium experiences for fans, and the influencer marketing. Is there any one of these sort of channels that has yielded stronger results than, than the others? And how should we think about the sort of the intensity of brand investments in 2024 relative to maybe the last couple of years, especially given that you're investing in several other areas across the business? Yeah, I think our view on our brand investments, which we took up in a nominal way, a pretty meaningful nominal way, coming out of the pandemic, our focus has been refining the efficacy of those investments versus growing the absolute amount. And so I think you'll see that thematically play out in 2024, where the absolute quantum should be pretty stable. And thus, you're implicitly, if you're growing, getting operating leverage on those brand investments. It's certainly been a learning process as you try out all these new channels and as the world continues to remain dynamic and evolve. You know, it's hard in some sense with brand investments to ever be fully precise on what channel is driving... You know, how do you attribute the exact specific experience, a specific, "I saw this commercial, I saw this display ad, I saw you on social, I saw you associated with this influencer, and then I come and I order"? Well, those, you know, multi-touch attribution models are, I, I feel like more art than science. Great science behind it, but a lot of art. But I think the areas that we've found to date most exciting have been partnerships and premium experiences that further enhance the loyalty program, the messaging around that loyalty program, right? That's a core pillar, and everything we can do to make that pillar more differentiated, the better. The second, the pedigree of Vivid Seats is a, you know, data-rich, data-informed, fast iteration, pedigree, and so areas that I'd almost characterize as hybrid, right? It's reaching customers that you know are high-intent buyers in as many channels as possible, whether that means, you know, social, via influencers, YouTube, like, you name it. That's probably been the area that we've seen the most attributable success to and are most excited to keep pushing on. Mm-hmm. Got it. So let's touch on your operating model, for a minute. Your orders from repeat buyers continue to grow in the mix, I think reaching nearly 60% in 2023. Can you talk about maybe how much on average less expensive it is to drive a purchase from a repeat buyer versus a new buyer? And then are most of these sort of repeat buyers engaged with the loyalty program and coming back to the site organically? Yeah, so at the core of our thesis is a belief that, the most expensive transaction we'll have with the customer is the first transaction, because they are learning who we are, what our value proposition is, haven't had a good experience yet, so there's just this, you know, inherent wariness the first time you transact with any counterparty. And in subsequent interactions, fundamental shift in behavior. You know, it can be a little challenging, especially in this era with cookie deprecations underway and more coming, to perfectly track, you know, someone's not logged in, but they are a repeat user. How do you capture some of their searching behavior until the point they log in? So we always refrain a little bit from speaking too precisely on how much on average the repeat buyer costs relative to the initial transaction. But, you know, we have data that suggests it's not gonna be quite as good, but it's up to, like, a, you know, 90% reduction in marketing expense. So whether that's off by, you know, half, it's 80% reduction, very meaningful reduction to marketing intensity, and you can imagine that that means the lifetime value of the repeat orders is quite profound. And so we are seeing, we have continued to see, as you see the shift in orders moving towards repeat customers, there is this natural blend towards marketing efficiency. We think we've got a number of years of runway for that to continue to play out and drive leverage on the brand and loyalty investments we've made. Got it. So I think we have just a couple of minutes left here, so just to wrap up our session, and this is something we're asking all our panelists today: What is your one prediction about the e-commerce space as it relates to live events, that you think might surprise people over the next two or three years? Yeah, I was you know gonna say we're gonna become, like, the next AI, and people will pay anything to get into e-commerce and live events e-commerce. But I will refrain from that. I do think, you know, it feels like we are broadly e-commerce, not specific to live events, in a sector that's perhaps not the most loved at the moment. And it feels like, you know, there were some businesses that benefited from low interest rate environments up until COVID, and then some businesses that had some unique COVID behaviors, right? Spikes up, spikes down. And that we're living through, you know, seemingly the teenager years coming out of some of those perhaps unnatural dynamics. But there are a lot of really good businesses, right? We're, I think, in the process of separating, you know, wheat from chaff on businesses that offer differentiated experience, generate sustainable profitability, growth, and cash flow, and that there are brighter days ahead, on the category's perception, and the corresponding valuation. That's awesome. Well, that was a great discussion. We'll leave it there. Larry, thank you so much for joining us today. Thank you, Maria.