Quarterly report pursuant to Section 13 or 15(d)

SEGMENTS AND REVENUE RECOGNITION

v3.24.3
SEGMENTS AND REVENUE RECOGNITION
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
SEGMENTS AND REVENUE RECOGNITION 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.
The following table presents the results of operations for our reportable segments for the three and nine months ended September 30, 2024 and 2023:
Concerts Ticketing Sponsorship
& Advertising		 Other & Eliminations Corporate Consolidated
(in thousands)
Three Months Ended September 30, 2024
Revenue $ 6,580,595 $ 693,704 $ 390,345 $ (13,557) $ —  $ 7,651,087 
% of Consolidated Revenue 86.0% 9.1% 5.1% (0.2)%
Intersegment revenue $ 7,268 $ 6,289 $ — $ (13,557) $ —  $ — 
AOI $ 474,053 $ 235,704 $ 275,329 $ (7,073) $ (68,182) $ 909,831 
Three Months Ended September 30, 2023
Revenue (1)
$ 6,971,830 $ 837,624 $ 366,822 $ (21,713) $ —  $ 8,154,563 
% of Consolidated Revenue 85.5% 10.3% 4.5% (0.3)%
Intersegment revenue $ 5,698 $ 9,501 $ — $ (15,199) $ —  $ — 
AOI (2)
$ 340,904 $ 351,574 $ 250,265 $ (6,818) $ (64,736) $ 871,189 
Nine Months Ended September 30, 2024
Revenue $ 14,447,009 $ 2,147,559 $ 913,856 $ (34,392) $ —  $ 17,474,032 
% of Consolidated Revenue 82.7% 12.3% 5.2% (0.2)%
Intersegment revenue $ 19,671 $ 14,546 $ 175 $ (34,392) $ —  $ — 
AOI $ 742,936 $ 812,352 $ 627,926 $ (22,453) $ (172,192) $ 1,988,569 
Nine Months Ended September 30, 2023
Revenue (1)
$ 13,886,333 $ 2,219,667 $ 839,799 $ (38,163) $ —  $ 16,907,636 
% of Consolidated Revenue 82.1% 13.1% 5.0% (0.2)%
Intersegment revenue $ 9,896 $ 12,681 $ — $ (22,577) $ —  $ — 
AOI (2)
$ 504,694 $ 904,014 $ 548,935 $ (32,899) $ (160,544) $ 1,764,200 
(1) Prior period revenue was restated as further discussed in Note 9 – Correction of Errors in Previously Reported Consolidated Financial Statements. For the three and nine months ended September 30, 2023, the restatement decreased our Concerts segment revenue by $2.5 million and $2.5 million, respectively. For the three months ended September 30, 2023, the restatement increased our Ticketing segment revenue by $5.0 million.
(2) Prior period AOI was restated as further discussed in Note 9 – Correction of Errors in Previously Reported Consolidated Financial Statements. For the nine months ended September 30, 2023, the restatement decreased our Concerts segment AOI by $5.1 million. For the three and nine months ended September 30, 2023, the restatement increased our Ticketing segment AOI by $35.1 million and $23.8 million, respectively.
The following table sets forth the reconciliation of consolidated AOI to operating income for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
(in thousands)
AOI (1)
$ 909,831  $ 871,189  $ 1,988,569  $ 1,764,200 
Acquisition expenses 94,565  40,968  95,087  79,108 
Amortization of non-recoupable ticketing contract advances 16,996  16,921  62,237  58,518 
Depreciation and amortization 137,001  130,653  407,324  382,352 
Gain on sale of operating assets (3,968) (1,583) (5,398) (8,092)
Astroworld estimated loss contingencies —  —  279,915  — 
Stock-based compensation expense 25,712  30,572  85,450  85,905 
Operating income (1)
$ 639,525  $ 653,658  $ 1,063,954  $ 1,166,409 
(1) For the three and nine months ended September 30, 2023, the restatement increased our AOI and operating income by $35.1 million and $18.7 million, respectively. See further discussion in Note 9 – Correction of Errors in Previously Reported Consolidated Financial Statements.
Contract Advances
At September 30, 2024 and December 31, 2023, we had ticketing contract advances of $185.6 million and $143.9 million, respectively, recorded in prepaid expenses and $125.1 million and $135.6 million, respectively, recorded in long-term advances on the consolidated balance sheets.
Sponsorship Agreements
At September 30, 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 11%, 36%, 27% and 26% of this revenue in the remainder of 2024, 2025, 2026 and thereafter, respectively.
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.
The table below summarizes the amount of the preceding December 31 current deferred revenue recognized during the three and nine months ended September 30, 2024 and 2023:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2024 2023 2024 2023
(in thousands)
Concerts $ 1,032,868  $ 814,504  $ 2,885,696  $ 2,629,546 
Ticketing 50,140  37,124  165,463  133,365 
Sponsorship & Advertising 6,626  17,432  93,300  125,359 
$ 1,089,634  $ 869,060  $ 3,144,459  $ 2,888,270