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WME parent boosted in Q2 by return of live events

WME parent Endeavor has reported continued growth across its portfolio in the second quarter of 2022, prompting the company to increase its full-year forecast for adjusted EBITDA.

Endeavor, which also owns sports agency IMG and the Ultimate Fighting Championship (UFC), among other properties, generated revenue of US$1.313 billion for the quarterly period ended 30 June, 2022.

Net income came to $42.2m while adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) totalled $306.4m.

The agency’s representation business (comprising WME, sports agency IMG and Endeavor Content) generated revenue of $358m for the quarter, up $29.7m or 9% compared to the second quarter of 2021.

The segment’s adjusted EBITDA was $111.2m for the quarter, up $49.5m or 80% year over year.

According to the company, the growth was primarily driven by the continued strong demand for talent, including the recovery of music and comedy touring, as well as increased corporate client spending.

WME artists include Drake, Justin Timberlake, Adele, Bruno Mars, Pearl Jam, Kendrick Lamar, the Killers, Bjork, Frank Ocean, Foo Fighters, St Vincent, Shakira and more.

Elsewhere, the Events, Experiences & Rights segment revenue was $627.9m for the quarter, up $99.2m or 19% compared to the second quarter of 2021.

“We benefited from strong growth globally across our segments in the second quarter”

Increases were primarily driven by the return of full-capacity live events including music festivals, the Masters, and the NCAA Final Four, as well as the inclusion of the Madrid Open and NCSA acquisitions.

The segment’s adjusted EBITDA was $108.1 million for the quarter, up $71.3m or 194% year over year.

Owned Sports Properties segment revenue was $331.9m for the quarter, up $73.1m or 28% compared to the second quarter of 2021.

Growth was primarily driven by an increase in media rights fees and live event, partnership, consumer product and licensing revenues at UFC, as well as higher revenues at PBR (Professional Bull Riders), and the inclusion of Diamond Baseball Holdings.

The segment’s adjusted EBITDA was $161.3m for the quarter, up $29.0m or 22% year over year.

The upswing in each segment has prompted Endeavor to slightly adjust its full-year forecast for adjusted EBITDA to a range of $1.13bn to $1.17bn, which is up from the estimate of $1.1bn to $1.15bn offered in May with Q1 results.

Revenue for 2022 is expected to be between $5.235bn and $5.475bn, as estimated in the Q1 results.

“We benefited from strong growth globally across our segments in the second quarter,” said Ariel Emanuel, CEO, Endeavor.

“While we recognise there are broader macroeconomic forces at play, given the quarter’s performance and our line of sight through the end of the year, we’ve once again raised our Adjusted EBITDA guidance. We remain focused on our long-term strategy – leveraging the diversity and scale of our businesses to drive maximum value for our shareholders, our clients and our owned IP.”

 


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HYBE reports best-performing quarter yet

HYBE (formerly Big Hit Entertainment) has published its financial results for Q2 of 2022, heralding its best-performing quarter yet.

The South Korea-based entertainment giant reported revenue of KRW 512 billion (USD 391 million) in the second quarter of 2022, up 79.7% from the first quarter of this year. While operating income hit KRW 88bn for the three months prior to 30 June.

The record-breaking revenue came from Hybe artists’ album sales, promotion, and concerts, as well as merchandise and IP licensing.

HYBE’s roster of artists includes K-pop superstars BTS, Seventeen, TXT, Enhypen, Le Sserafim, NewJeans and more.

Performances from BTS and Seventeen were major drivers in pushing HYBE’s concert revenue to KRW 85bn (USD 65m) – up 38.6% quarter on quarter.

In February, BTS brought a four-night residency, called Permission to Dance On Stage, to the 65,000-capacity Allegiant Stadium in Las Vegas.

All four dates were broadcast live at the nearby MGM Grand Garden Arena, in what was dubbed a ‘live play’ event, while the final day of their residency was streamed online worldwide.

Performances from BTS and Seventeen were major drivers in pushing HYBE’s concert revenue to KRW 85bn

Seventeen, meanwhile, helped boost HYBE’s concert revenue with two dates at Seoul’s Gocheok Sky Dome (cap. 25,000) in mid-June. These performances were also livestreamed to global audiences.

However, Hybe’s biggest revenue driver in Q2 was its ‘Artist Direct Involvement’ business, which generated revenues of KRW 326bn (USD 249m), up 153.4% year on year.

HYBE’s second biggest revenue source in Q2 was album sales, driven by releases in the quarter from the likes of BTS and Seventeen.

The company’s album sales grew 97.1% YoY, from KRW 107bn (USD 82m) in Q2 2021 to KRW 211bn (USD 161m) in Q2 2022.

HYBE revenues from merchandising and licensing also soared in Q2, by 97.2% YoY, from KRW 50bn (USD 38m) in Q2 2021, to 99 bn KRW (USD 75m) in Q2 2022.

Revenues from HYBE’s ‘Contents’ business, meanwhile, fell 22.6% YoY to KRW 71bn (USD 54m). HYBE also reveals within its investor filing that Monthly Active Users of its fan-community app WeVerse fell by 6% versus Q1 2022.

The WeVerse app, which collates content made by and for HYBE artists such as music videos, teasers, movies, merch sales and even live streams, has been cited by the company as one of the key drivers behind its success during the pandemic.

In spite of seeing its WeVerse MAUs decline, HYBE’s revenues derived from its ‘Fan club etc’ business line grew 96% YoY to KRW 17bn (USD 13m).

 


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Live Nation returns to profitability in Q2 2021

Live Nation beat its own earnings expectations in the second financial quarter of 2021, reporting a huge jump in year-on-year revenue and a return to profitability after the most difficult 16 months in the company’s history.

In the three months ending 30 June 2021, the concert giant grew its turnover from US$74.1 million to $575.9m – a more than 677% increase – posted adjusted operating income of $9.7m, or $12.4m on a constant-currency basis, reveals the company’s Q2 filing with the US Securities and Exchange Commission.

The growth, says LN, was driven by “roaring demand” for ticket sales ahead of widespread reopenings this summer and autumn, with Ticketmaster North America having its fourth-best month ever as global ticketing revenues climbed to $244m (from -$87m in Q2 2020). Ticketmaster issued 11m cost-bearing tickets in the six months leading to 30 June.

The number of shows is also up in the double digits for 2022 compared to 2019, indicating the huge “pent-up demand” for live entertainment, says Live Nation CEO Michael Rapino, and with it the value of the company’s sponsorship commitments.

“As communities reopen, we’re seeing the pent-up demand for live events play out as artists and fans are eager to reconnect in person,” Rapino comments. “In the US and UK, we are seeing strong ticket sales and the restart of our concerts and festivals, highlighted over the past weekends by Lollapalooza and Rolling Loud in the US and Latitude in the UK hosting a combined three quarters of a million fans. With vaccine roll-outs increasing throughout Canada and Europe, we expect additional markets to open more broadly in the coming months.

“All our leading indicators continue to point to a roaring era for concerts and other live events”

“The momentum for the return to live events has been building every month, with ticket sales and concert attendance pacing faster than expected, underscoring the strength and resiliency of the concert business and live events in general.

“This progress, combined with our cost discipline, has enabled us to deliver positive adjusted operating income for the second quarter, well ahead of where we thought we would for this quarter. We expect to see further ramp-up accelerate through the rest of the year, with improving operating income and all segments returning to adjusted operating income profitability for the second half of the year, setting us up for a full-scale 2022.”

“Looking forward to 2022, and now also 2023, all our leading indicators continue to point to a roaring era for concerts and other live events. Starting with our concerts division, every major venue type – arenas, amphitheaters, and stadiums – have pipelines indicating double digit growth in show count and ticket sales relative to 2019 levels,” he adds.

Live Nation’s latest financials follow comments made by Rapino in a recent interview with podcaster Bob Lefsetz, in which he said the financial markets are also preparing for a boom time for live music in 2022 and beyond.

 


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Eventbrite investors settle lawsuit over shares drop

Aggrieved Eventbrite investors have agreed to settle a lawsuit they filed against the ticketing company, given the current issues facing the live entertainment sector due to Covid-19.

Last year, the shareholders alleged that the company made misleading statements at the time of the company’s initial public offering (IPO) in September 2018, following the impact of the Ticketfly integration and subsequent decline in Eventbrite stock.

The lawsuit alleged that Eventbrite misled potential buyers in its IPO registration statement which declared that the acquisition of ticketing platform Ticketfly “had a positive impact” on net revenue growth” in the third quarter of 2017.

The claimants also stated that the company failed to disclose that, at the time of IPO, the Ticketfly migration was progressing more slowly than stated, therefore delaying integration and negatively impacting growth.

The claimants purchased Eventbrite stock in the company’s IPO at US$23 a share which started declining on 7 March 2019, upon the release of Eventbrite’s annual financial results and the admission that the Ticketfly integration “will impact revenues in the short-term”. The share price continued to drop.

“With the company’s future uncertain, the prospect that settlement class members would recover anything looked dim”

The investors filed for damages with a class-action lawsuit but have recently negotiated a $1.9 million settlement, noting that the challenges faced by Eventbrite as a result of Covid-19 reduced the prospect of a better pay-out down the line, according to Law360.

They also noted that similar litigation against Eventbrite in the Californian state courts had also been dismissed, reducing chances of winning the lawsuit.

Their legal counsel told the judge: “Dimming the prospects of any recovery, during litigation, the world was struck by the worst pandemic it suffered since 1918 – particularly bad news for a company whose business is helping customers plan live events”.

“With claims against Eventbrite dismissed in state and federal court”, they went on, “and the company’s future uncertain, the prospect that settlement class members would recover anything looked dim. Yet, lead counsel nonetheless were able to negotiate the $1.9 million settlement”.

And while a lower sum than originally hoped, that cash “will nonetheless prove meaningful for settlement class members”.

Eventbrite recently released its earnings report for the second fiscal quarter of 2020, with net revenue for the period dropping more than 90%.  The report also revealed that the company’s net revenue was just $8.4 million for the quarter, down from $80.8 million in Q2 2019.

For the same period, Eventbrite chalked up a $38.6 million net loss, up sharply from the $14.8 million loss from the previous year. Eventbrite also reported that their advanced payout balance is now $244 million, reduced by $111 million since March.

 


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