Live & Touring

Live Nation revenue down 84% as stock hits new high

Whether it’s optimism over the future return to live concerts or testimony to CEO Michael Rapino’s sales skills, Live Nation stock hit a ew high Thursday despite reporting an 84% drop in revenue.

Live Nation [LYV] stock closed Thursday at $87.22, up from as low as $33.97 last spring when the pandemic stopped all live music almost overnight.

Yesterday Live Nation reported the results of the fourth fiscal quarter, as well as full-year results for 2020.

Live Nation filings reveal the full extent of the impact of the coronavirus on the concert-giant’s bottom line, with the company reporting a decline in revenue of 92% to $237.3 million for the quarter.

Live Nation’s ticketing division took the largest hit for 2020 with quarterly revenue sliding by 98% to just $10.9 million. Revenue from concerts fell precipitously as well, declining to $178.4 million for the quarter, a change of 92% year-over-year.

Sponsorship took a hit as well during the final quarter of 2020, off by 68% year-over-year to $47.1 million.

For the fourth quarter, Live Nation posted an adjusted operating income loss of $244.3 million, driven by the concerts division which recorded a loss of $166 million.

For the full year, Live Nation notched up just 1.8 billion in revenue, down by 84% overall. As with the quarterly results, ticketing weighed the heaviest on Live Nation’s bottom line, reporting annual revenue of just 188.4 million, down 88% year-over-year.

Concerts generated $1.4 billion for Live Nation in 2020, but revenue for the division declined by 84% year-over-year. The sponsorships division reported revenue of $203.7 million, down by 65% from the previous year’s results.

Live Nation’s financial filings also revealed how sharp a drop off in live events the live events sector experienced in 2020. According to Live Nation, they staged just 5,270 concerts in North America and 8,117 shows worldwide in 2020, down from 28,407 in North America and 40,237 estimated events worldwide in 2019.

According to Live Nation, they have managed to weather what appears to be the worst of the storm and the company reported its cash reserves of $2.5 billion, which includes $674 million in ticketing client cash and $643 million in free cash, as of December 31st. Live Nation said it expects its cash reserves to tide them over until the expected return of concerts in the summer of 2021, preceded by ticket sales earlier in the year.

Despite the sharp downturns for 2020, Live Nation President and CEO Michael Rapino sounded optimistic tones about the company’s prospects going into the 2021 concert season, noting that the vaccine rollout in North America is off to a promising start.

“It appears that the timing to release the pent-up supply and demand is now approaching. Vaccine distribution is accelerating and declines in Covid cases throughout most of the world gives us even more confidence that a safe and meaningful return to shows will soon be possible. For both the U.S. and U.K., projections indicate that everyone who wants to get vaccinated will be able to do so by May or June, with Europe and most other markets following a few months later. Given the massive social and economic toll that the lockdown has had on the public, we believe there will be strong momentum to reopen society swiftly as soon as vaccines are readily available. And we believe outdoor activities will be the first to happen,” he said.

Mr. Rapino went on to note that the company’s extensive cost-saving measures implemented in the early days of the pandemic, creating cost-savings of $200 million for Live Nation in 2020.

“Over the last year, leaders across all our business lines of Concerts, Ticketing and Sponsorship have been analyzing ways to improve their businesses. Some of our key initiatives include: Re-organizing to become more nimble while also reducing our cost structure by $200 million; Building concert streaming and direct to consumer businesses to expand our revenue streams; Advancing our technology initiatives globally while accelerating the shift to digital tickets to meet changing needs of fans, venues and artists; and reinforcing our balance sheet to endure this period, while maintaining a strong position to build our business for the future and act on opportunities as we identify them, such as our recent acquisition of the streaming platform Veeps and a continued pipeline of bolt-on acquisitions throughout the globe,” Rapino said.

He also highlighted what he described as “substantial tailwinds” for the live entertainment sector as customers are able to safely return to shows.

“The supply-demand fundamentals of the concerts business remain strong, with artists ready to get back on the road and fans eager to reconnect at events. All our data continues to show that there is substantial pent-up demand for concerts on the consumer demand side. The $2.4 trillion projected surplus in savings in the U.S. alone by June is a key indicator of consumer spending potential. At the same time, surveys demonstrate the high demand for concerts globally, with 95% of fans likely to attend a show when restrictions are lifted. This is proving out in fan behavior as well, with 83% of fans continuing to hold onto their tickets for rescheduled shows,” he said.

To support those views, Live Nation released data that indicates that 83% of fans have held on to tickets for postponed shows instead of seeking refunds and 95% of fans are likely to return to concert halls when restrictions are lifted.

The company also estimated that consumers had accumulated $2.4 trillion projected savings surplus across U.S. as of June 2020, which may well translate into increased spending as the pandemic fades.

On the artist side, Live Nation said almost twice as many touring artists are looking to be on the road in 2022 with about 45 major tours in the works versus the 25 major tours in a typical year.

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