Annual report pursuant to Section 13 and 15(d)

SEGMENTS AND REVENUE RECOGNITION

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SEGMENTS AND REVENUE RECOGNITION
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
SEGMENT DATA SEGMENTS AND REVENUE RECOGNITION
Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising. We use AOI to evaluate the performance of our operating segments and define AOI as operating income (loss) before certain acquisition expenses (including ongoing legal costs stemming from the Ticketmaster merger, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation), amortization of non-recoupable ticketing contract advances, depreciation and amortization (including goodwill impairment), loss (gain) on disposal of operating assets, and stock-based compensation expense. We also exclude from AOI the impact of estimated or realized liabilities for settlements or damages arising out of the Astroworld matter that exceed our estimated insurance recovery, due to the significant and non-recurring nature of the matter. Ongoing legal costs associated with defense of these claims, such as attorney fees, are not excluded from AOI. AOI assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results.
Revenue and expenses earned and charged between segments are eliminated in consolidation. Our capital expenditures below include accruals for amounts incurred but not yet paid for, but are not reduced by reimbursements received from outside parties such as landlords and noncontrolling interest partners or replacements funded by insurance proceeds.
We manage our working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, our management to allocate resources to or assess performance of our segments, and therefore, total segment assets and related depreciation and amortization have not been presented.
There were no customers that individually accounted for more than 10% of our consolidated revenue in any year.
The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”) and evaluates the operating performance of our operating segments based on AOI. The CODM uses segment AOI for evaluating performance of each segment and for making decisions on allocating capital and other resources to each segment. We have not identified any segment expenses that are considered significant and segment expenses are not regularly provided to the CODM. Other segments items are direct operating expenses and selling, general and administrative expenses (excluding acquisition expenses, amortization of non-recoupable ticketing contract advance, Astroworld estimated loss contingencies and stock-based compensation expense) which is the difference between each operating segment’s revenue and AOI.
Concerts
Our Concerts segment involves the promotion of live music events globally in our owned or operated venues and in rented third-party venues, the production of music festivals, the operation and management of music venues, the creation or streaming of associated content and the provision of management and other services to artists. This segment generates revenue from the promotion or production of live music events and festivals in our owned or operated venues and in rented third-party venues, artist management commissions and the sale of merchandise for music artists at events. As a promoter and venue operator, we earn revenue primarily from the sale of tickets, concessions, merchandise, parking, ticket rebates or service charges on tickets sold by Ticketmaster or third-party ticketing platforms, and rental of our owned or operated venues. As an artist manager, we earn commissions on the earnings of the artists and other clients we represent, primarily derived from clients’ earnings for concert tours. Over 97% of Concerts’ revenue, whether related to promotion, venue operations, artist management or artist event merchandising, is recognized on the day of the related event. The majority of consideration for our Concerts segment is collected in advance of or on the day of the event. Consideration received in advance of the event is recorded as deferred revenue or in long-term liabilities if the event is more than twelve months from the balance sheet date. Any consideration not collected by the day of the event is typically received within three months after the event date.
Ticketing
Our Ticketing segment involves the management of our global ticketing operations, including providing ticketing software and services to clients, and consumers with a marketplace, both online and mobile, for tickets and event information, and is responsible for our primary ticketing website, www.ticketmaster.com. Ticket fee revenue is generated from convenience and order processing fees, or service charges, charged at the time a ticket for an event is sold in either the primary or secondary markets. A significant portion of our service charges are payable to the venue and credit card vendors. The Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients, which include venues, concert promoters, professional sports franchises and leagues, college sports teams, theater producers and museums. This segment records revenue arising from convenience and order processing fees, regardless of whether these fees are related to tickets sold in the primary or secondary market, and regardless of whether these fees are associated with our concert events or third-party clients’ concert events. We do not record the face value of the tickets as revenue. Ticket fee revenue is recognized when the ticket is sold for third-party clients and secondary market sales, as we have no further obligation to our client’s customers following the sale of the ticket. For our concert events where our concert promoters control ticketing, ticket fee revenue is recognized when the event occurs because we also have the obligation to deliver the event to the fan. The delivery of the ticket to the fan is not considered a distinct performance obligation for our concert events because the fan cannot receive the benefits of the ticket unless we also fulfill our obligation to deliver the event. The majority of ticket fee revenue is collected within the month of the ticket sale. Revenue received from the sale of tickets in advance of our concert events is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date. Reported revenue is net of any refunds made or committed to and also the impact of any cancellations of events that occurred during the period and up to the time of filing these consolidated financial statements.
Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to our clients pursuant to ticketing agreements and are reflected in prepaid expenses or in long-term advances if the amount is expected to be recouped or recognized over a period of more than twelve months. Recoupable ticketing contract advances are generally recoupable against future royalties earned by the client, based on the contract terms, over the life of the contract. Royalties are typically earned by the client when tickets are sold. Royalties paid to clients are recorded as a reduction to revenue when the tickets are sold and the corresponding service charge revenue is recognized. Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives occasionally paid by us to certain clients to secure the contract and are typically amortized over the life of the contract on a straight-line basis as a reduction to revenue. At December 31, 2024 and 2023, we had ticketing contract advances of $158.1 million and $143.9 million, respectively, in prepaid expenses and $128.9 million and $135.6 million, respectively, in long-term advances. We amortized $88.7 million, $83.7 million and $79.0 million for the years ended December 31, 2024, 2023 and 2022 respectively, related to non-recoupable ticketing contract advances.
Sponsorship & Advertising
Our Sponsorship & Advertising segment manages the development of strategic sponsorship programs in addition to the sale of international, national and local sponsorships and placement of advertising such as signage, promotional programs, rich media offerings, including advertising associated with live streaming and music-related content, and ads across our distribution network of venues, events and websites. This segment generates revenue from sponsorship and marketing programs that provide its sponsors with strategic, international, national and local opportunities to reach customers through our venue, concert and ticketing assets, including advertising on our websites. These programs can also include custom events or programs for the sponsors’ specific brands, which are typically experienced exclusively by the sponsors’ customers. Sponsorship agreements may contain multiple elements, which provide several distinct benefits to the sponsor over the term of the agreement, and can be for a single or multi-year term. We also earn revenue from exclusive access rights provided to sponsors in various categories such as ticket pre-sales, beverage pouring rights, venue naming rights, media campaigns, signage within our venues, and advertising on our websites. Revenue from sponsorship agreements is allocated to the multiple elements based on the relative stand-alone selling price of each separate element, which are determined using vendor-specific evidence, third-party evidence or our best estimate of the fair value. Revenue is recognized over the term of the agreement or operating season as the benefits are provided to the sponsor unless the revenue is associated with a specific event, in which case it is recognized when the event occurs. Revenue is collected in installment payments during the year, typically in advance of providing the benefit or the event. Revenue received in advance of the event or the sponsor receiving the benefit is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date.
At December 31, 2024, we had contracted sponsorship agreements with terms greater than one year that had approximately $1.5 billion of revenue related to future benefits to be provided by us. We expect to recognize, based on current projections, approximately 41%, 29%, 16% and 14% of this revenue in 2025, 2026, 2027 and thereafter, respectively.
The following table presents the results of operations for our reportable segments for the years ending December 31, 2024, 2023 and 2022:
Concerts Ticketing Sponsorship
& Advertising		 Other & Eliminations Corporate Consolidated
  (in thousands)
2024
Revenue $ 19,024,302 $ 2,988,685 $ 1,195,019 $ (52,381) $ —  $ 23,155,625 
% of Consolidated Revenue 82.2% 12.9% 5.2% (0.3)%
Other Segment Items 18,494,554 1,865,097 431,242 (24,121) 242,955  21,009,727 
AOI $ 529,748 $ 1,123,588 $ 763,777 $ (28,260) $ (242,955) $ 2,145,898 
Intersegment revenue $ 29,633 $ 22,220 $ 528 $ (52,381) $ —  $ — 
Capital expenditures $ 491,691 $ 87,925 $ 24,507 $ — $ 33,508  $ 637,631 
2023
Revenue (1)
$ 18,740,913 $ 2,959,477 $ 1,095,217 $ (69,290) $ —  $ 22,726,317 
% of Consolidated Revenue 82.5% 13.0% 4.8% (0.3)%
Other Segment Items 18,420,516 1,819,344 420,080 (29,716) 214,974  20,845,198 
AOI (2)
$ 320,397 $ 1,140,133 $ 675,137 $ (39,574) $ (214,974) $ 1,881,119 
Intersegment revenue $ 17,773 $ 51,517 $ — $ (69,290) $ —  $ — 
Capital expenditures $ 346,392 $ 68,991 $ 18,250 $ — $ 35,118  $ 468,751 
2022
Revenue $ 13,494,100 $ 2,238,618 $ 968,146 $ (19,610) $ —  $ 16,681,254 
% of Consolidated Revenue 80.9% 13.4% 5.8% (0.1)%
Other Segment Items 13,319,260 1,425,904 376,174 (5,061) 167,882  15,284,159 
AOI (2)
$ 174,840 $ 812,714 $ 591,972 $ (14,549) $ (167,882) $ 1,397,095 
Intersegment revenue $ 12,821 $ 8,643 $ — $ (21,464) $ —  $ — 
Capital expenditures $ 277,133 $ 70,739 $ 19,383 $ (17) $ 9,680  $ 376,918 
___________________
(1)
Prior period revenue was revised as further discussed in Note 2 – Correction of Errors in Previously Reported Consolidated Financial Statements. For the year ended December 31, 2023, the revision decreased our Concerts segment revenue by $22.8 million.
(2)
Prior period AOI was revised as further discussed in Note 2 – Correction of Errors in Previously Reported Consolidated Financial Statements. For the years ended December 31, 2023 and December 31, 2022, the revision decreased our Concerts segment AOI by $5.1 million and increased AOI by $5.1 million, respectively. For the years ended December 31, 2023 and December 31, 2022, the revision increased our Ticketing segment AOI by $23.8 million and decreased AOI by $15.2 million, respectively.
The following table sets forth the reconciliation of consolidated AOI to operating income for the for the years ended December 31, 2024, 2023 and 2022:
2024 2023 2022
(in thousands)
AOI (1)
$ 2,145,898  $ 1,881,119  $ 1,397,095 
Acquisition expenses 128,513  93,664  68,078 
Amortization of non-recoupable ticketing contract advance 88,717  83,693  79,043 
Depreciation and amortization 549,923  516,797  449,976 
Gain on sale of operating assets (11,015) (13,927) (32,082)
Astroworld estimated loss contingencies 454,902  —  — 
Stock-based compensation expense 110,348  115,959  110,049 
Operating income (1)
$ 824,510  $ 1,084,933  $ 722,031 
___________________
(1) For the years ended December 31, 2023 and December 31, 2022, the revision increased our AOI and operating income by $18.7 million for 2023 and decreased our AOI and operating income by $10.1 million for 2022, respectively. See further discussion in Note 2 – Correction of Errors in Previously Reported Consolidated Financial Statements.
Deferred Revenue
The majority of our deferred revenue is typically classified as current and is shown as a separate line item on the consolidated balance sheets. Deferred revenue that is not expected to be recognized within the next twelve months is classified as long-term and reflected in other long-term liabilities on the consolidated balance sheets. At December 31, 2024, 2023 and 2022, we had current deferred revenue of $3.7 billion, $3.4 billion and $3.1 billion, respectively.
The table below summarizes the amount of prior year current deferred revenue recognized during the years ended December 31, 2024 and 2023:
December 31,
2024 2023
(in thousands)
Concerts $ 3,046,474  $ 2,757,149 
Ticketing 176,901  142,940 
Sponsorship & Advertising 96,988  126,530 
$ 3,320,363  $ 3,026,619