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Live Nation Earnings: Double-Digit Growth and Milder Bottom-Line Losses

Anders Bylund, The Motley Fool

Ticketmaster parent Live Nation Entertainment (NYSE: LYV) reported fourth-quarter results last week. The event arranger and ticket distributor delivered double-digit revenue growth in all three of its operating segments during a seasonally slow period. Here's a closer look at Live Nation's results.

Live Nation's fourth-quarter results: The raw numbers

Metric

Q4 2018

Q4 2017

Year-Over-Year Change

Revenue

$2.60 billion

$2.32 billion

12%

Net income (loss) attributable to common stockholders

($17.7 million)

($97.6 million)

82%

GAAP earnings (loss) per diluted share

($0.09)

($0.48)

81%

Data source: Live Nation. GAAP = generally accepted accounting principles.

Rowdy concert audience in silhouette against yellow stage lights.

Image source: Getty Images.

What happened with Live Nation this quarter?

  • The company saw concert revenues rise 12% year over year, to $2.05 billion, while ticketing sales increased 15%, to $438 million. Sponsorship and ad sales brought in $118 million to the top line, a 20% year-over-year boost.
  • Strong ad sales are always a welcome trend since this segment is Live Nation's most profitable operation. Forty-nine percent of the incoming sponsorship and ad revenues were converted into operating profit, far ahead of ticketing's 9% operating margin and a negative contribution from concerts.
  • Live Nation's GAAP results are complicated by the 34% ownership stake held by Liberty Media (NASDAQ: FWONA). Net income before Liberty Media's direct and options-based portions, which appear on Liberty's income statement using the equity accounting method, rose from $7.77 million to $90.3 million.
  • Adjusted operating income, or AOI, swung from a $23 million loss to a $69 million profit. Live Nation's management relies on this non-GAAP metric as a direct measure of operating results that aren't colored by the company's financial structure or acquisition expenses.

What management had to say

CEO Michael Rapino provided more color on the fourth-quarter's successful sponsorship operations on the earnings call. According to Rapino:

Our top strategic sponsors have been a key driver of this growth with 75 sponsors collectively spending over $350 million to reach our fans, up 11% over 2017. Research from our Power of Live white paper indicates that over 90% of fans believe that brands can enhance the live experience and over 60% of fans believe they are more likely to connect with brands at concerts. This reinforces that our shows offer brands a truly unique opportunity to connect with fans. With over 70% of budgeted sponsorship net revenue for the year already committed, pacing double-digits ahead of last year this time, we are confident we will again deliver double-digit AOI growth for 2019.

Looking ahead

The company generally doesn't offer detailed financial guidance targets, but Mr. Rapino provided the following overview of how he expects 2019 to unfold.

I expect us to further grow our global concert position while enhancing on-site hospitality and capturing more pricing opportunities. In sponsorship, we will continue to drive double-digit growth as more brands look for that direct connection with music fans. And as ticketing continues to transform to a truly digital ecosystem, it will benefit from continued growth in concert ticket sales and further expansion of our global footprint.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Live Nation Entertainment. The Motley Fool has a disclosure policy.