Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

“Live Nation” (which may be referred to as the “Company,” “we,” “us” or “our”) means Live Nation Entertainment, Inc. and its subsidiaries, or one of our segments or subsidiaries, as the context requires. You should read the following discussion of our financial condition and results of operations together with the unaudited consolidated financial statements and notes to the financial statements included elsewhere in this quarterly report.

Special Note About Forward-Looking Statements

Certain statements contained in this quarterly report (or otherwise made by us or on our behalf from time to time in other reports, filings with the SEC, news releases, conferences, internet postings or otherwise) that are not statements of historical fact constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, notwithstanding that such statements are not specifically identified. Forward-looking statements include, but are not limited to, statements about our financial position, business strategy, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition, the effects of future legislation or regulations and plans and objectives of our management for future operations. We have based our forward-looking statements on our beliefs and assumptions considering the information available to us at the time the statements are made. Use of the words “may,” “should,” “continue,” “plan,” “potential,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “outlook,” “could,” “target,” “project,” “seek,” “predict,” or variations of such words and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those set forth below under Part II—Other Information—Item 1A.—Risk Factors, in Part I—Item IA.—Risk Factors of our 2022 Annual Report on Form 10-K as well as other factors described herein or in our annual, quarterly and other reports we file with the SEC (collectively, “cautionary statements”). Based upon changing conditions, should any risk or uncertainty that has already materialized, worsen in scope, impact or duration, or should one or more of the currently unrealized risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not intend to update these forward-looking statements, except as required by applicable law.

Executive Overview

It was another strong quarter for the Company both financially and in our key performance indicators, setting records for revenues, operating income and AOI. The Company generated more AOI in the third quarter of this year than we did five years ago for all of 2018. We saw exceptional fan demand with double-digit growth in fans and ticket sales globally. Our overall revenue increased by $2.0 billion, or 32%, to $8.2 billion as compared to last year. Our operating income for the quarter improved by $112 million, or 22%, to $619 million in the third quarter of 2023 due to stronger performance from all three of our major business segments. Consolidated AOI for the third quarter increased by $215 million, or 35%, to $836 million this year, outpacing revenue growth.

For the first nine months of 2023, our consolidated revenue increased by $4.5 billion, or 36%, to $16.9 billion as compared to last year. Consolidated operating income and AOI for the first nine months increased by $296 million and $436 million, or 35% and 33%, to $1.1 billion and $1.75 billion, respectively, as compared to prior year.

Our event-related deferred revenue balance of $2.6 billion as of September 30, 2023 is up $730 million or over 39% growth compared to September 30, 2022. This, coupled with current ticket sales, suggests continued strong demand for concerts, making us confident for continued success in the remainder of the year and looking ahead to 2024.

All of the segment financial comments to follow are based on reported foreign currency exchange rates.

Our Concerts segment revenue for the quarter compared to the same period in 2022 increased by $1.7 billion, or 32%, from $5.3 billion to $7.0 billion. The revenue growth was the result of more fans enjoying their favorite artists and spending more money at the events to maximize their unique live experiences. Approximately 52 million fans attended our shows in the quarter, compared to approximately 44 million last year, a growth of over 8 million fans or 18%. The growth was relatively evenly distributed across our global markets with notable strength in mainland Europe, Mexico and Canada. Growth in amphitheater, stadium and arena fan count drove the majority of the increase in show attendance. Some of the larger acts touring globally in the third quarter included Beyoncé, Morgan Wallen, Drake and Karol G, reflecting the global diversified base of our artists. Our ancillary revenue spending at our United States amphitheater shows was nearly $41 per fan for the first

nine months of 2023, close to 10% growth over 2022 levels, driven by higher food and beverage spending as well as upsells. Concerts AOI for the quarter increased by $60 million, or 21%, compared to the same period in 2022, from $281 million to $341 million.

For the first nine months of 2023, Concerts revenue grew $3.8 billion, or 38%, compared to the same period in 2022, from $10.1 billion to $13.9 billion. Concerts AOI for the first nine months increased by $155 million, or 44%, compared to the same period in 2022, from $355 million to $510 million. Through the end of September 2023, our approximately 108 million fans attended our shows compared to approximately 89 million last year, a growth of 19 million fans or 21%.

Our Ticketing segment revenue for the quarter increased by $301 million, or 57%, compared to the same period in 2022 from $532 million to $833 million. The improvement resulted from an increase in ticket sales, upward pricing momentum due to higher fan demand and higher non-service fee revenue. We sold approximately 89 million fee-bearing tickets in the third quarter of 2023 compared to 73 million tickets in the same period of the prior year, an increase of 22%. With respect to GTV, North America increased by 32% on fee-bearing ticket sales while International rose by 49% compared to the same period last year. Pricing on our fee-bearing tickets increased by double-digits, reflecting strong consumer demand, particularly for premium seats and VIP experiences. Ticketing AOI for the quarter improved by $153 million compared to the same period in 2022, from $163 million to $316 million.

For the first nine months of 2023, our Ticketing revenue grew by $632 million, or 40%, compared to the same period in 2022, from $1.6 billion to $2.2 billion. Ticketing AOI for the first nine months of 2023 increased by $280 million, or 47%, compared to the same period in 2022, from $600 million to $880 million. Through the end of September 2023, our fee-bearing ticket sales were 240 million tickets, 44 million ahead of 2022, an increase of 22%. Overall pricing on our fee-bearing tickets for the first nine months of 2023 increased 13% compared to 2022. Lastly, we have signed 17 million net new tickets so far this year, which gives us confidence our ticketing platforms’ features and functionalities will continue to fuel growth going forward.

Our Sponsorship & Advertising segment revenue for the quarter increased by $24 million, or 7%, compared to the same period in 2022 from $343 million to $367 million. The increase was largely driven by our United States business with new strategic deals, expanded deals across our venue, festival and digital assets, and the addition of the Moody Center arena in Austin. We also added new marketing partners in Mexico, including a new banking client that sponsored an inaugural festival and other local events. Sponsorship & Advertising AOI for the quarter increased by $24 million, or 11%, compared to the same period in 2022, from $226 million to $250 million.

For the first nine months of 2023, our Sponsorship & Advertising revenue grew $117 million, or 16%, compared to the same period in 2022, from $723 million to $840 million. Sponsorship & Advertising AOI for the first nine month increased by $75 million, or 16%, compared to the same period in 2022, from $474 million to $549 million.

We are optimistic about the long-term potential of our Company and are focused on the key elements of our business model: expanding our concerts platform with more shows and fans in both existing and new markets as well as improving the on-site experience for our fans by enhancing food and beverage products and premium service offerings. We will drive ticket sales through development of innovative products for fans, with a focus on reducing friction in the ticket purchase experience and creating additional revenue opportunities. In addition, we continue to grow our sponsorship and advertising partnerships, enabling our clients to reach customers via the powerful connection that live shows create with ardent fans.

Consolidated Results of Operations

Three Months

			Three Months Ended September 30,																								% Change
			2023																		2022
			As Reported						Currency Impacts						At Constant Currency**						As Reported						As Reported						At Constant Currency**
			(in thousands)
Revenue			$	8,152,019					$	(143,572)					$	8,008,447					$	6,153,535					32%						30%
Operating expenses:
Direct operating expenses			6,330,465						(109,569)						6,220,896						4,707,848						34%						32%
Selling, general and administrative expenses			974,150						(14,590)						959,560						805,910						21%						19%
Depreciation and amortization			130,653						(3,500)						127,153						102,093						28%						25%
Gain on disposal of operating assets			(1,583)						(1)						(1,584)						(35,285)						(96)%						(96)%
Corporate expenses			99,802						6						99,808						66,720						50%						50%
Operating income			618,532						$	(15,918)					$	602,614					506,249						22%						19%
Operating margin			7.6%												7.5%						8.2%
Interest expense			86,215																		70,514
Interest income			(78,107)																		(25,809)
Equity in losses (earnings) of nonconsolidated affiliates			(5,382)																		14,283
Other expense, net			19,251																		7,960
Income before income taxes			596,555																		439,301
Income tax expense			55,874																		41,898
Net income			540,681																		397,403
Net income attributable to noncontrolling interests			57,186																		36,001
Net income attributable to common stockholders of Live Nation			$	483,495																	$	361,402

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*			Percentages are not meaningful.
**			Constant currency is a non-GAAP financial measure. We calculate currency impacts as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior period’s currency exchange rates. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

Revenue

Revenue increased $2.0 billion during the three months ended September 30, 2023 as compared to the same period of the prior year due to increased revenue in our Concerts segment of $1.7 billion, Ticketing segment of $301.0 million and Sponsorship & Advertising of $23.8 million as further discussed within each segment’s operating results.

Gain on disposal of operating assets

Gain on disposal of operating assets decreased $33.7 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily driven by nonrecurring sales of artist catalog rights in 2022.

Operating income

Operating income increased $112.3 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily driven by increased operating income in our Ticketing segment of $151.1 million and Sponsorship & Advertising segment of $14.9 million partially offset by a decrease in operating income in our Concerts segment of $18.4 million as further discussed within each segment’s operating results. These increases were partially offset by higher acquisition transaction expenses due to more accretion expense in the third quarter of 2023.

Interest income

Interest income increased $52.3 million during the three months ended September 30, 2023 as compared to the same period of the prior year, primarily attributed to higher rate of return on our cash and cash equivalents in 2023 and an increase in our cash and cash equivalents.

Equity in losses (earnings) of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates was earnings of $5.4 million during the three months ended September 30, 2023 as compared to losses of $14.3 million for the comparable period of the prior year due to higher operating results from certain nonconsolidated affiliates.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $21.2 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses.

Consolidated Results of Operations

Nine Months

			Nine Months Ended September 30,																								% Change
			2023																		2022
			As Reported						Currency Impacts						At Constant Currency**						As Reported						As Reported						At Constant Currency**
			(in thousands)
Revenue			$	16,910,132					$	(107,757)					$	16,802,375					$	12,390,517					36%						36%
Operating expenses:
Direct operating expenses			12,610,832						(79,557)						12,531,275						9,045,893						39%						39%
Selling, general and administrative expenses			2,533,066						(3,233)						2,529,833						2,048,305						24%						24%
Depreciation and amortization			382,352						(9,046)						373,306						318,489						20%						17%
Gain on disposal of operating assets			(8,092)						15						(8,077)						(32,555)						(75)%						(75)%
Corporate expenses			244,295						6						244,301						158,377						54%						54%
Operating income			1,147,679						$	(15,942)					$	1,131,737					852,008						35%						33%
Operating margin			6.8%												6.7		%				6.9%
Interest expense			257,425																		205,722
Loss on extinguishment of debt			18,366																		—
Interest income			(174,872)																		(46,565)
Equity in losses (earnings) of nonconsolidated affiliates			(15,047)																		8,040
Other expense, net			24,235																		22,398
Income before income taxes			1,037,572																		662,413
Income tax expense			121,362																		85,589
Net income			916,210																		576,824
Net income attributable to noncontrolling interests			142,202																		77,804
Net income attributable to common stockholders of Live Nation			$	774,008																	$	499,020

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*			Percentages are not meaningful.
**			Constant currency is a non-GAAP financial measure. We calculate currency impacts as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior period’s currency exchange rates. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

Revenue

Revenue increased $4.5 billion during the nine months ended September 30, 2023 as compared to the same period of the prior year driven by increased revenue in our Concerts segment of $3.8 billion, Ticketing segment of $632.4 million and Sponsorship & Advertising of $117.3 million as further discussed within each segment’s operating results.

Gain on disposal of operating assets

Gain on disposal of operating assets decreased $24.5 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily driven by sales of nonrecurring artist catalog rights in 2022.

Operating income

Operating income increased $295.7 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily driven by increased operating income in our Concerts segment of $87.5 million, Ticketing segment of $276.8 million and Sponsorship & Advertising segment of $38.4 million, as further discussed within each segment’s operating results. These increases were partially offset by higher Corporate expenses and greater accretion expense in 2023.

Interest expense

Interest expense increased $51.7 million during the nine months ended September 30, 2023 as compared to the same period of the prior year, primarily driven by the issuance of our 3.125% convertible senior notes due 2029 in January 2023.

Interest income

Interest income increased $128.3 million during the nine months ended September 30, 2023 as compared to the same period of the prior year, primarily attributed to higher rate of return on our cash and cash equivalents in 2023 and an increase in our cash and cash equivalents.

Equity in losses (earnings) of nonconsolidated affiliates

Equity in losses (earnings) of nonconsolidated affiliates was earnings of $15.0 million during the nine months ended September 30, 2023 as compared to losses of $8.0 million for the comparable period of the prior year due to higher operating results from certain nonconsolidated affiliates.

Income tax expense

For the nine months ended September 30, 2023, we had a net tax expense of $121.4 million on income before income taxes of $1.0 billion compared to a net tax expense of $85.6 million on an income before income taxes of $662.4 million for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, the income tax expense consisted of $113.4 million related to foreign entities, $3.6 million related to United States federal taxes, and $4.4 million related to state and local income taxes. The net increase in tax expense of $35.8 million was primarily due to profits in certain non-United States jurisdictions.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $64.4 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily due to higher operating results from certain concert businesses during the first nine months of 2023 as compared to the prior year.

Segment Overview

Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising.

Concerts

Revenue and related costs for events are generally deferred and recognized when the event occurs. All advertising costs incurred during the year for shows in future years are expensed at the end of the year. If a current year event is rescheduled into a future year, all advertising costs incurred to date are expensed in the period when the event is rescheduled.

Concerts direct operating expenses include artist fees, event production costs, show-related marketing and advertising expenses, along with other costs.

To judge the health of our Concerts segment, we primarily monitor the number of confirmed events and fan attendance in our network of operated and third-party venues, talent fees, average paid attendance, market ticket pricing, advance ticket sales and the number of major artist clients under management. In addition, at our operated venues and festivals, we monitor ancillary revenue per fan and premium ticket sales. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

Ticketing

Revenue related to ticketing service charges is recognized when the ticket is sold for our third-party clients. For our own events, where our concert promoters control ticketing, revenue is deferred and recognized when the event occurs. GTV represents the total amount of the transaction related to a ticket sale and includes the face value of the ticket as well as the service charge.

Ticketing direct operating expenses include call center costs and credit card fees, along with other costs.

To judge the health of our Ticketing segment, we primarily review the GTV and the number of tickets sold through our ticketing operations, the number of clients renewed or added and the average royalty rate paid to clients who use our ticketing services. In addition, we review the number of visits to our websites, cost of customer acquisition, the purchase conversion rate, and the per ticket non-service fee revenue streams. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

Sponsorship & Advertising

Revenue related to sponsorship and advertising programs 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.

Sponsorship & Advertising direct operating expenses include fulfillment costs related to our sponsorship programs, along with other costs.

To judge the health of our Sponsorship & Advertising segment, we primarily review the revenue generated through sponsorship arrangements and online advertising, the percentage of expected revenue under contract, and what portion of our sponsorship business is driven by large multi-element, multi-year relationships. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

Non-GAAP Measure

AOI Margin

AOI margin is a non-GAAP financial measure that we calculate by dividing AOI by revenue. We use AOI margin to evaluate the performance of our operating segments. We believe that information about AOI margin 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. AOI margin is not calculated or presented in accordance with GAAP. A limitation of the use of AOI margin as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, AOI margin should be considered in addition to, and not as a substitute for, operating income (loss) margin, and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI margin as presented herein may not be comparable to similarly titled measures of other companies.

Key Operating Metrics

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
			(in thousands except estimated events)
Concerts (1)
Estimated events:
North America			9,080						8,267						23,500						21,060
International			3,010						2,960						10,736						9,429
Total estimated events			12,090						11,227						34,236						30,489
Estimated fans:
North America			34,192						29,187						60,323						53,442
International			18,085						15,217						47,927						35,702
Total estimated fans			52,277						44,404						108,250						89,144
Ticketing (2)
Estimated number of fee-bearing tickets sold			89,300						73,378						240,445						196,907
Estimated number of non-fee-bearing tickets sold			66,083						61,933						210,519						189,663
Total estimated tickets sold			155,383						135,311						450,964						386,570

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(1)Events generally represent a single performance by an artist. Fans generally represent the number of people who attend an event. Festivals are counted as one event in the quarter in which the festival begins, but the number of fans is based on the days the fans were present at the festival and thus can be reported across multiple quarters. Events and fan attendance metrics are estimated each quarter.

(2)The fee-bearing tickets estimated above include primary and secondary tickets that are sold using our Ticketmaster systems or that we issue through affiliates. This includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur. The non-fee-bearing tickets estimated above include primary tickets sold using our Ticketmaster systems, through season seat packages and our venue clients’ box offices, along with tickets sold on our “do it yourself” platform. These metrics are net of any refunds requested and any cancellations that occurred during the period, which may result in a negative number.

Segment Operating Results

Concerts

Our Concerts segment operating results were, and discussions of significant variances are, as follows:

			Three Months Ended September 30,												% Change						Nine Months Ended September 30,												% Change
			2023						2022												2023						2022
			(in thousands)																		(in thousands)
Revenue			$	6,974,326					$	5,292,594					32%						$	13,888,829					$	10,098,180					38%
Direct operating expenses			5,970,793						4,452,949						34%						11,693,477						8,381,689						40%
Selling, general and administrative expenses			695,257						568,481						22%						1,756,135						1,420,488						24%
Depreciation and amortization			84,912						61,770						37%						228,353						195,528						17%
Gain on disposal of operating assets			(1,584)						(33,983)						(95)%						(8,143)						(31,057)						(74)%
Operating income			$	224,948					$	243,377					(8)%						$	219,007					$	131,532					67%
Operating margin			3.2		%				4.6		%										1.6		%				1.3		%
AOI			$	340,904					$	280,809					21%						$	509,794					$	354,587					44%
AOI margin **			4.9		%				5.3		%										3.7		%				3.5		%

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*			Percentages are not meaningful.
**			See “—Non-GAAP Measure” above for the definition of AOI margin.

Three Months

Revenue

Concerts revenue increased $1.7 billion during the three months ended September 30, 2023 as compared to the same period of the prior year primarily due to higher revenues for increased shows and fans globally. In the United States, the growth was driven by stadium, arena and amphitheater activity while in Europe, stadium shows drove the increase. Concerts had incremental revenue of $118.4 million during the three months ended September 30, 2023 from acquisitions and new venues.

Operating results

Concerts AOI increased $60.1 million and operating income decreased $18.4 million for the three months ended September 30, 2023 as compared to the same period of the prior year. The increase in AOI was primarily driven by increases in revenue associated with the higher number of shows discussed above as well as higher ancillary sales including on-site food and beverage and upsell spend. These increases were partially offset by related costs, including increased compensation expenses due to increased headcount from more shows compared to the prior period. The remaining change in operating income outside of AOI of $78.5 million is primarily associated to lower gains on disposals of operating assets of $32.4 million, higher depreciation and amortization of $23.1 million for additional capital expenditures incurred to support the increased operations, and higher acquisition expense of $19.0 million for costs incurred related to contingent considerations changes and legal matters.

Nine Months

Revenue

Concerts revenue increased $3.8 billion during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily due to more shows in the United States and Europe as well as the Asia Pacific market, which was largely closed during the first six months of 2022. Concerts had incremental revenue of $417.6 million during the nine months ended September 30, 2023 from acquisitions and new venues.

Operating results

Concerts AOI increased $155.2 million and operating income increased $87.5 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily driven by an increase in revenues from the number of shows discussed above partially offset by increased direct operating expenses to support these events and increased selling general and administrative expenses primarily related to increased headcount and compensation expenses. The remaining change in operating income outside of AOI of $67.7 million is primarily related to higher depreciation and amortization of $32.8 million for additional capital expenditures incurred to support the increased operations, higher acquisition

expense of $25.3 million for costs incurred related to contingent considerations changes and legal matters, and lower gains on disposals of operating assets of $22.9 million.

Ticketing

Our Ticketing segment operating results were, and discussions of significant variances are, as follows:

			Three Months Ended September 30,												% Change						Nine Months Ended September 30,												% Change
			2023						2022												2023						2022
			(in thousands)																		(in thousands)
Revenue			$	832,584					$	531,570					57%						$	2,219,667					$	1,587,274					40%
Direct operating expenses			309,324						196,879						57%						780,561						541,056						44%
Selling, general and administrative expenses			228,746						192,398						19%						632,341						513,601						23%
Depreciation and amortization			27,005						25,900						4%						79,712						82,557						(3)%
Loss (gain) on disposal of operating assets			—						—						*						34						(196)						*
Operating income			$	267,509					$	116,393					*						$	727,019					$	450,256					61%
Operating margin			32.1		%				21.9		%										32.8		%				28.4		%
AOI			$	316,448					$	163,176					94%						$	880,184					$	600,155					47%
AOI margin **			38.0		%				30.7		%										39.7		%				37.8		%

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*			Percentages are not meaningful.
**			See “—Non-GAAP Measure” above for the definition of AOI margin.

Three Months

Revenue

Ticketing revenue increased $301.0 million during the three months ended September 30, 2023 as compared to the same period of the prior year. This increase is primarily due to higher primary and secondary sales volumes driven by more events on sale and upward pricing momentum due to more fan demand and artist mix in 2023 as compared to 2022.

Operating results

Ticketing AOI increased $153.3 million and operating income increased $151.1 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily driven by increased ticketing activity discussed above. These increases were partially offset by higher direct operating expenses to support the increased operations and enterprise growth as well as higher selling, general and administrative expenses attributable to increased compensation expenses from increased headcount as compared to the prior year.

Nine Months

Revenue

Ticketing revenue increased $632.4 million during the nine months ended September 30, 2023 as compared to the same period of the prior year. This increase is primarily due to higher primary and secondary sales volumes driven by more events on sale and upward pricing momentum due to more fan demand and artist mix in 2023 as compared to 2022.

Operating results

Ticketing AOI increased $280.0 million and operating income increased $276.8 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily driven by increased ticketing activity discussed above. These increases were partially offset by higher direct operating expenses to support the increased operations and enterprise growth as well as higher selling, general and administrative expenses attributable to increased compensation expenses from increased headcount as compared to the prior year.

Sponsorship & Advertising

Our Sponsorship & Advertising segment operating results were, and discussions of significant variances are, as follows:

			Three Months Ended September 30,												% Change						Nine Months Ended September 30,												% Change
			2023						2022												2023						2022
			(in thousands)																		(in thousands)
Revenue			$	366,822					$	343,029					7%						$	839,799					$	722,504					16%
Direct operating expenses			70,902						72,176						(2)%						171,412						142,443						20%
Selling, general and administrative expenses			48,083						45,342						6%						126,390						109,692						15%
Depreciation and amortization			15,924						8,505						87%						58,687						25,442						*
Operating income			$	231,913					$	217,006					7%						$	483,310					$	444,927					9%
Operating margin			63.2		%				63.3		%										57.6		%				61.6		%
AOI			$	250,265					$	226,234					11%						$	548,935					$	474,238					16%
AOI margin *			68.2		%				66.0		%										65.4		%				65.6		%

---

*			See “—Non-GAAP Measure” above for the definition of AOI margin.

Three Months

Revenue

Sponsorship & Advertising revenue increased $23.8 million during the three months ended September 30, 2023 as compared to the same period of the prior year primarily driven by new and expanded sponsorships across all of our platforms as well as our expanded footprint.

Operating results

Sponsorship & Advertising AOI increased $24.0 million and operating income increased $14.9 million for the three months ended September 30, 2023 as compared to the same period of the prior year. These increases were primarily due to increased revenues from higher sponsorship activity discussed above. The increases were partially offset by increases in selling, general and administrative expenses.

Nine Months

Revenue

Sponsorship & Advertising revenue increased $117.3 million during the nine months ended September 30, 2023 as compared to the same period of the prior year primarily due to new and expanded sponsorships across all of our platforms as well as our expanded footprint. Sponsorship & Advertising had incremental revenue of $27.8 million during the nine months ended September 30, 2023 from acquisitions of new venues.

Operating results

Sponsorship & Advertising AOI increased $74.7 million and operating income increased $38.4 million during the nine months ended September 30, 2023 as compared to the same period of the prior year. These increases were primarily due to higher sponsorship activity revenues discussed above. The increases were partially offset by increases in direct operating expenses, including higher artist activation costs. The remaining change in operating income outside of AOI of $36.3 million was primarily due to depreciation and amortization related to assets utilized to support higher activity levels as compared to the prior year.

Liquidity and Capital Resources

Our cash is centrally managed on a worldwide basis. Our primary short-term liquidity needs are to fund general working capital requirements, capital expenditures and debt service requirements while our long-term liquidity needs are primarily related to acquisitions and debt repayment. Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our amended senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financings. We may from time to time engage in open market purchases of our outstanding debt securities or redeem or otherwise repay such debt.

Our balance sheet reflects cash and cash equivalents of $5.9 billion at September 30, 2023 and $5.6 billion at December 31, 2022. Included in the September 30, 2023 and December 31, 2022 cash and cash equivalents balances are $1.3 billion and $1.5 billion, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash. We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to clients on a regular basis. Our foreign subsidiaries held approximately $2.4 billion in cash and cash equivalents, excluding client cash, at September 30, 2023. We generally do not repatriate these funds, but if we did, we would need to accrue and pay United States state income taxes as well as any applicable foreign withholding or transaction taxes on future repatriations. We may from time to time enter into borrowings under our revolving credit facility. If the original maturity of these borrowings is 90 days or less, we present the borrowings and subsequent repayments on a net basis in the statement of cash flows to better represent our financing activities. Our balance sheet reflects total net debt of $6.6 billion and $5.9 billion at September 30, 2023 and December 31, 2022, respectively. Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.8% at September 30, 2023, with approximately 87% of our debt at fixed rates.

Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in our operating accounts and invested cash. Cash held in non-interest-bearing and interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. The invested cash is in interest-bearing funds consisting primarily of bank deposits and money market funds for which we earn interest based on prevailing market rates which is recorded in interest income in our consolidated financial statements. For the three and nine months ended September 30, 2023, the amount of interest income we earned rose more than interest expense for the same period. While we monitor cash and cash equivalents balances in our operating accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

For our Concerts segment, we often receive cash related to ticket revenue in advance of the event, which is recorded in deferred revenue until the event occurs. In the United States, this cash is largely associated with events in our operated venues, notably amphitheaters, festivals, theaters and clubs. Internationally, this cash is from a combination of both events in our operated venues, as well as events in third-party venues associated with our promoter’s share of tickets in allocation markets. With the exception of some upfront costs and artist advances, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event. Artists are paid when the event occurs under one of several different formulas, which may include fixed guarantees and/or a percentage of ticket sales or event profits, net of any advance they have received. When an event is cancelled, any cash held in deferred revenue is reclassified to accrued expenses as those funds are typically refunded to the fan within 30 days of event cancellation. When a show is rescheduled, fans have the ability to request a refund if they do not want to attend the event on the new date, although historically we have had low levels of refund requests for rescheduled events.

We view our available cash as cash and cash equivalents, less ticketing-related client cash, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaid expenses. This is essentially our cash available to, among other things, repay debt balances, make acquisitions, and finance capital expenditures.

Our intra-year cash fluctuations are impacted by the seasonality of our various businesses. Examples of seasonal effects include our Concerts segment, which reports the majority of its revenue in the second and third quarters. Cash inflows and outflows depend on the timing of event-related payments but the majority of the inflows generally occur prior to the event. See “—Seasonality” below. We believe that we have sufficient financial flexibility to fund these fluctuations and to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this will be the case, and capital could be less accessible and/or more costly given current economic conditions. We expect cash flows from operations and borrowings under our amended senior secured credit facility, along with other financing alternatives, to satisfy working capital requirements, capital expenditures and debt service requirements for at least the succeeding year.

We may need to incur additional debt or issue equity to make other strategic acquisitions or investments. There can be no assurance that such financing will be available to us on acceptable terms or at all. We may make significant acquisitions in the near term, subject to limitations imposed by our financing agreements and market conditions.

The lenders under our revolving loans and counterparties to our interest rate hedge agreements consists of banks and other third-party financial institutions. While we currently have no indications or expectations that such lenders will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be impacted by adverse conditions in the financial markets. Should an individual lender default on its obligations, the remaining lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future borrowings, but would remain obligated to fund their own commitments. Should the counterparty to our interest rate hedge agreement default on its obligation, we could experience higher interest rate volatility during the period of any such default.

Sources of Cash

In January 2023, we issued $1.0 billion principal amount of 3.125% convertible senior notes due 2029. In conjunction with this issuance, we used approximately $485.8 million of the net proceeds to repurchase $440.0 million aggregate principal amount of our 2.5% convertible senior notes due 2023, entered into capped call transactions at a cost of $75.5 million, paid debt issuance costs of $15.0 million, with any remaining proceeds available for general corporate purposes.

Amended Senior Secured Credit Facility

In February 2023, we amended our senior secured credit facility. The amendments provide for, among other things: (i) replacement of the benchmark reference rate of the Eurodollar Rate (as defined in the Credit Agreement) with the Term SOFR Rate for borrowings denominated in United States Dollars and for each Alternative Currency (as defined in the Credit Agreement), a corresponding reference rate, as set forth in the Amended Credit Agreement, (ii) deletion of the provisions regarding Canadian bankers’ acceptances, and (iii) the addition of the Company’s ability to draw letters of credit in Canadian Dollars.

Our senior secured credit facility consists of (i) a $400 million term loan A facility, (ii) a $950 million term loan B facility, (iii) a $500 million revolving credit facility and (iv) a $130 million incremental revolving credit facility. In addition, subject to certain conditions, we have the right to increase such facilities by an amount equal to the sum of (x) $855 million, (y) the aggregate principal amount of voluntary prepayments of the term loan A and term loan B and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) additional amounts so long as the senior secured leverage ratio calculated on a pro-forma basis (as defined in the agreement) is no greater than 3.75x. The combined revolving credit facilities provide for borrowings up to $630 million with sublimits of up to (i) $150 million for the issuance of letters of credit, (ii) $50 million for swingline loans, (iii) $300 million for borrowings in Dollars, Euros or British Pounds and (iv) $100 million for borrowings in those or one or more other approved currencies. The amended senior secured credit facility is secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

The interest rates per annum applicable to revolving credit facility loans and term loan A under the amended senior secured credit facility are, at our option, equal to either Term Benchmark Loans or RFR Loans (as defined in the Credit Agreement) plus 2.25% or a base rate plus 1.25%. The interest rates per annum applicable to the term loan B are, at our option, equal to either Term Benchmark Loans or RFR Loans plus 1.75% or a base rate plus 0.75%. We have an interest rate swap agreement that ensures the interest rate on $500.0 million principal amount of our outstanding term loan B does not exceed 3.445% through October 2026. The agreement was amended in February 2023 along with the transition from LIBOR to SOFR. The interest rates per annum applicable to the incremental revolving credit facility are, at our option, equal to either Term Benchmark Loans or RFR Loans plus 2.5% or a base rate plus 1.5%. We are required to pay a commitment fee of 0.5% per year on the undrawn portion available under the revolving credit facility, 1.75% per year on the undrawn portion available under the incremental revolving credit facility and variable fees on outstanding letters of credit.

For the term loan A, we are required to make quarterly payments of $5.0 million with the balance due at maturity in October 2024. For the term loan B, we are required to make quarterly payments of $2.4 million with the balance due at maturity in October 2026. Both the existing and incremental revolving credit facilities mature in October 2024. We are also required to make mandatory prepayments of the loans under the amended credit agreement, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events. As of September 30, 2023, the outstanding principal amount of our term loan A facility is $367.5 million and term loan B facility is $839.1 million.

There were no borrowings under the revolving credit facilities as of September 30, 2023. Based on our outstanding letters of credit of $46.1 million, $583.9 million was available for future borrowings from revolving credit facilities.

Debt Covenants

As of September 30, 2023, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes. We expect to remain in compliance with all of these covenants throughout 2023.

Uses of Cash

Acquisitions

During the nine months ended September 30, 2023, we completed various acquisitions that resulted in cash acquired, net of cash paid, of $29.2 million. This includes acquisition of businesses for which we assumed debt of $271.3 million.

Capital Expenditures

Venue and ticketing operations require ongoing investment in our existing venues and ticketing systems to address fan and artist expectations, technological industry advances and various federal, state and/or local regulations.

We categorize capital outlays between maintenance capital expenditures and revenue generating capital expenditures. Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices. Revenue generating capital expenditures generally relate to the construction of new venues to expand our global footprint, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements. Revenue generating capital expenditures can also include smaller projects whose purpose is to increase revenue and/or improve operating income. Capital expenditures typically increase during periods when our venues are not in operation since that is the time that such improvements can be completed.

Our capital expenditures, including accruals for amounts incurred but not yet paid for, but net of expenditures funded by outside parties such as landlords and noncontrolling interest partners or expenditures funded by insurance proceeds, consisted of the following:

			Nine Months Ended September 30,
			2023						2022
			(in thousands)
Revenue generating			$	185,148					$	119,620
Maintenance			72,546						56,755
Total capital expenditures			$	257,694					$	176,375

Revenue generating capital expenditures during the first nine months of 2023 increased from the same period of the prior year primarily due to enhancements at our amphitheaters and theaters in North America.

We currently expect capital expenditures to be approximately $450 million for the full year of 2023 as we continue catching up on projects delayed due to supply chain constraints and further expand our global platform, with approximately two-thirds of this capital expenditure to be for revenue generating projects.

Cash Flows

			Nine Months Ended September 30,
			2023						2022
			(in thousands)
Cash provided by (used in):
Operating activities			$	762,441					$	928,357
Investing activities			$	(463,964)					$	(359,728)
Financing activities			$	44,932					$	(175,219)

Operating Activities

Cash provided by operating activities decreased $165.9 million for the nine months ended September 30, 2023 as compared to the same period of the prior year primarily due to lower accounts payable, accrued expenses and other liabilities from the timing of payments and higher prepaid expenses and other assets due to timing of shows. This was partially offset by

an increase in 2023 operating results as discussed within each segment’s operating results as well as higher deferred revenue from timing of events on sale.

Investing Activities

Cash used in investing activities increased $104.2 million for the nine months ended September 30, 2023 as compared to the prior year primarily due to an increase of $98.9 million in purchases of property, plant and equipment in 2023 for revenue generating and maintenance capital expenditures and $71.2 million in higher advances of notes receivable. This was partially offset by cash acquired from acquisitions, net of cash paid of $29.2 million during the current year whereas the prior year was cash paid for acquisitions, net of cash acquired of $38.8 million. See “—Uses of Cash - Acquisitions and Capital Expenditures” above for further discussion.

Financing Activities

Cash provided by financing activities was $44.9 million for the nine months ended September 30, 2023 as compared to cash used in financing activities of $175.2 million for the same period of the prior year primarily due to proceeds in 2023 from the issuance of our 3.125% convertible senior notes partially offset by the repurchase of our 2.5% convertible senior notes and capped call transactions in connection with such issuance, as well as higher distributions to noncontrolling interests. See “—Sources of Cash” above for further discussion.

Seasonality

Information regarding the seasonality of our business can be found in Part I—Financial Information—Item 1.—Financial Statements—Note 1 – Basis of Presentation and Other Information.

Market Risk

We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates and interest rates.

Foreign Currency Risk

We have operations in countries throughout the world. The financial results of our foreign operations are measured in their local currencies. Our foreign subsidiaries also carry certain net assets or liabilities that are denominated in a currency other than that subsidiary’s functional currency. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. We operate in certain countries that are hyper-inflationary, for example Argentina, however the impact of these currencies did not have a material impact on our statement of operations for the three and nine months ended September 30, 2023 and 2022. Our foreign operations reported an operating income of $443.0 million for the nine months ended September 30, 2023. We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating income for the nine months ended September 30, 2023 by $44.3 million. As of September 30, 2023, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso. This analysis does not consider the implication such currency fluctuations could have on the overall economic conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign entities. In addition, the reported carrying value of our assets and liabilities, including the total cash and cash equivalents held by our foreign operations, will also be affected by changes in foreign currency exchange rates.

We primarily use forward currency contracts, in addition to options, to reduce our exposure to foreign currency risk associated with short-term artist fee commitments. At September 30, 2023, we had forward currency contracts outstanding with an aggregate notional amount of $159.6 million.

Interest Rate Risk

Our market risk is also affected by changes in interest rates. We had $6.7 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of September 30, 2023. Of the total amount, we had $5.8 billion of fixed-rate debt and $835.0 million of floating-rate debt.

Based on the amount of our floating-rate debt as of September 30, 2023, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $2.1 million. This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of September 30, 2023 with no subsequent change in rates for the remainder of the period.

In January 2020, we entered into an interest rate swap agreement that is designated as a cash flow hedge for accounting purposes to effectively convert a portion of our floating-rate debt to a fixed-rate basis. The agreement was amended in February 2023 for the transition from LIBOR to SOFR. The swap agreement expires in October 2026, has a notional amount of $500.0 million and ensures that a portion of our floating-rate debt does not exceed 3.445%.

Accounting Pronouncements

Information regarding recently issued and adopted accounting pronouncements can be found in Part I — Financial Information—Item 1.—Financial Statements—Note 1 – Basis of Presentation and Other Information.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenue and expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material.

Management believes that the accounting estimates involved in business combinations, impairment of long-lived assets and goodwill, revenue recognition, and income taxes are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. These critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions are described in Part II—Financial Information**—**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2022 Annual Report on Form 10-K filed with the SEC on February 23, 2023.

There have been no changes to our critical accounting policies during the nine months ended September 30, 2023.