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 2023 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

For the third year in a row, our second quarter was a record for the Company with operating income and AOI both up 21% versus 2023. Compared to just five years ago, we have more than doubled our second quarter revenue, operating income and AOI results.

For the second quarter of 2024, our overall revenue increased by 7% to $6.0 billion on a reported basis as compared to the same period last year. On a constant currency basis, the growth was also 7%. The most significant growth came from our Concerts segment as a result of market expansion in the form of increased show count, fans, and onsite spend. Our operating income for the quarter increased by $79.4 million, or 21%, from $386.4 million in the second quarter of 2023 to $465.8 million in the second quarter of 2024 due to higher performance from all three of our major business segments, most notably our Concerts segment. The increase in operating income was $88 million, or 23%, at constant currency.

For the first six months of 2024, our consolidated revenue increased by $1.06 billion, or 12%, compared to the same period in 2023, from $8.76 billion to $9.82 billion. The increase was $1.1 billion, or 13%, on a constant currency basis. We had consolidated operating income of $429 million for the first six months of 2024, compared to $529 million for the first six months of 2023, a decrease of $100 million. Stronger operating performance in all three of our major business segments was offset by Astroworld estimated loss contingencies in our Concerts segment. Consolidated AOI for the first six months increased by $174 million, or 19%, compared to the same period in 2023, from $909 million to $1.1 billion. The increase was $193 million, or 21%, on a constant currency basis.

Based on our strong pipeline of arena, amphitheater and theater and club shows for the remainder of the year as well as ticket sales for 2024 shows pacing ahead of last year, we are optimistic for continued success in the remainder of the year even with reduced stadium activity relative to the prior year.

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

Our Concerts segment revenue for the quarter increased by $354 million, or 8%, from $4.6 billion in the second quarter of 2023 to $5.0 billion in the second quarter of 2024. The revenue growth was partially the result of more shows and fans in North America. The number of events for the second quarter of 2024 was approximately 14,700 compared to approximately 12,300 in the second quarter of 2023, an increase of 2,400 events or 20%. The number of fans for the quarter was 38.9 million compared to 37.1 million last year, for growth of 1.8 million fans or 5%. The increase in activity was largely in the United States, powered by fan count at our owned or operated venues, excluding festivals, was up 18% for the quarter. Following the trend from the first quarter of 2024, arena activity was also very strong, with double digit growth globally, most notably in the United States and Latin America. Some of the major acts touring in the second quarter included Olivia Rodrigo, Bad Bunny, Metallica and Noah Kahan. Our larger festivals in the quarter included EDC Vegas, Bottlerock and Download in the United Kingdom. With amphitheater show count up by over 25% and activity in our owned or operated venues increasing, onsite spend in our amphitheaters increased by nearly 40%. As a result, Concerts operating income for the quarter improved by $37.1 million compared to the same period in 2023, from $78.5 million to $115.6 million. Meanwhile, Concerts AOI for the quarter was $271 million compared to $168 million in the second quarter of 2023, for growth of $103 million or 61%. Operating income margins increased from 1.7% in the second quarter of 2023 to 2.3% in the second quarter of 2024 while AOI margin for the second quarter of 2024 was 5.4% compared to 3.6% last year. On a year-to-date basis, Concerts margins are out-pacing 2019 which was our previous record year for margins.

For the first six months of 2024, Concerts revenue grew $952 million compared to the same period in 2023, from $6.9 billion to $7.9 billion. For the first six months of 2024, our Concerts fan count was nearly 62 million compared to 56 million compared to the same period in 2023, an improvement of 6 million fans or 10%. Onsite spending at our United States amphitheater shows for the first six months of 2024 is pacing ahead of full-year 2023 and on-track to deliver $2 more per fan for the season, driven by higher food and beverage spending. For our larger festivals, the onsite spend growth has been even stronger. With roughly 40% of our festival events now played off, we have seen double-digit growth in per fan spend, driven largely by higher food and beverage and VIP sales. Concerts AOI for the first six months increased by $105 million, or 62%, compared to the same period in 2023, from $169 million to $274 million.

We operate the world’s leading ticketing software and marketplace, tailored to achieving the goals of content owners, venues and sports teams. We expect to drive conversion of ticket sales through development of innovative products that support selling tickets to fans. Our ticket marketplaces have reduced friction in the ticket purchase experience and created additional revenue opportunities.

Our Ticketing segment revenue for the quarter increased by $21 million, or 3%, from $709.3 million in the second quarter of 2023 to $730.7 million in the second quarter of 2024. We sold approximately 78 million fee-bearing tickets in the second quarter of 2024 compared to 79 million tickets in the same period of the prior year. Our revenue and ticket sales were flat despite the reduction in stadium sales, reflecting strong demand for arena and amphitheater shows. It was our fifth highest quarter ever in terms of ticket volume, both on a reported and transacted basis. Ticketing AOI for the quarter was $293 million, essentially even with last year.

For the first six months of 2024, our Ticketing segment revenue grew by $67 million compared to the same period in 2023, from $1.4 billion to $1.5 billion. Ticketing AOI for the first six months of 2024 increased by $13 million compared to the same period in 2022, from $564 million to $577 million. Through the end of June 2024, our fee-bearing ticket sales were 155 million tickets, 4 million ahead of 2023. We have signed clients with over 17 million net new tickets so far this year, of which two-thirds are in our international markets, which gives us confidence our ticketing platforms’ features and functionalities will continue to fuel growth going forward.

We continue to grow our sponsorship and advertising partnerships and our clients are able to reach their customers via the powerful connection that live shows creates with ardent fans.

Our Sponsorship & Advertising segment revenue for the quarter increased by $9 million, or 3%, from $303 million in the second quarter of 2023 to $312 million in the second quarter of 2024. The improvement was largely due to strategic deals in the United States as well as the success of our international festivals. For the first six months of 2024, our sponsorship growth has been driven by our owned or operated venues and festival assets, re-emphasizing the importance of our venues footprint and expansion strategy. AOI for the quarter increased by $19.5 million, from $203.1 million in the second quarter of 2023 to $222.6 million in the second quarter of 2024. For the first six months of 2024, our Sponsorship & Advertising revenue grew $50.5 million compared to the same period in 2023, from $473.0 million to $523.5 million. Sponsorship & Advertising AOI for the first six months increased by $54 million compared to the same period in 2023, from $299 million to $353 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 global platforms to connect artists and fans.

Consolidated Results of Operations

Three Months

			Three Months Ended June 30,																								% Change
			2024																		2023
			As Reported						Currency Impacts						At Constant Currency**						As Reported						As Reported						At Constant Currency**
			(in thousands)
Revenue			$	6,023,416					$	28,482					$	6,051,898					$	5,630,723					7%						7%
Operating expenses:
Direct operating expenses			4,408,209																		4,164,778						6%
Selling, general and administrative expenses			926,222																		868,595						7%
Depreciation and amortization			137,729																		136,514						1%
Gain on disposal of operating assets			(779)																		(7,013)						89%
Corporate expenses			86,216																		81,478						6%
Operating income			465,819						8,457						474,276						386,371						21%						23%
Operating margin			7.7%												7.8%						6.9%
Interest expense			79,970																		81,995
Interest income			(44,425)																		(56,452)
Equity in earnings of nonconsolidated affiliates			(5,376)																		(5,558)
Other income, net			(20,742)																		(6,599)
Income before income taxes			456,392																		372,985
Income tax expense			80,164																		41,648
Net income			376,228																		331,337
Net income attributable to noncontrolling interests			78,258																		37,655
Net income attributable to common stockholders of Live Nation			$	297,970																	$	293,682

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**			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 $392.7 million during the three months ended June 30, 2024 as compared to the same period of the prior year due to increased revenue in our Concerts segment of $353.7 million, Ticketing segment of $21.3 million and Sponsorship & Advertising segment of $9.4 million as further discussed within each segment’s operating results.

Operating income

Operating income increased $79.4 million during the three months ended June 30, 2024 as compared to the same period of the prior year primarily driven by increased operating income in our Concerts segment of $37.1 million, Ticketing segment of $2.2 million and Sponsorship & Advertising segment of $28.8 million as further discussed within each segment’s operating results.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $40.6 million during the three months ended June 30, 2024 as compared to the same period of the prior year primarily due to higher operating results from certain concert businesses.

Consolidated Results of Operations

Six Months

			Six Months Ended June 30,																								% Change
			2024																		2023
			As Reported						Currency Impacts						At Constant Currency**						As Reported						As Reported						At Constant Currency**
			(in thousands)
Revenue			$	9,822,945					$	35,925					$	9,858,870					$	8,758,113					12%						13%
Operating expenses:
Direct operating expenses			7,054,666																		6,280,367						12%
Selling, general and administrative expenses			1,907,781																		1,558,916						22%
Depreciation and amortization			270,323																		251,699						7%
Gain on disposal of operating assets			(1,430)																		(6,509)						(78)%
Corporate expenses			162,293																		144,493						12%
Operating income			429,312						21,359						450,671						529,147						(19)%						(15)%
Operating margin			4.4%												4.6		%				6.0%
Interest expense			160,661																		171,210
Loss on extinguishment of debt			—																		18,366
Interest income			(87,682)																		(96,765)
Equity in earnings of nonconsolidated affiliates			(5,460)																		(9,665)
Other expense (income), net			(97,796)																		4,984
Income before income taxes			459,589																		441,017
Income tax expense			115,578																		65,488
Net income			344,011																		375,529
Net income attributable to noncontrolling interests			92,774																		85,016
Net income attributable to common stockholders of Live Nation			$	251,237																	$	290,513

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**			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 $1.1 billion during the six months ended June 30, 2024 as compared to the same period of the prior year driven by increased revenue in our Concerts segment of $951.9 million, Ticketing segment of $66.8 million and Sponsorship & Advertising segment of $50.5 million as further discussed within each segment’s operating results.

Operating income

Operating income decreased $99.8 million during the six months ended June 30, 2024 as compared to the same period of the prior year primarily driven by decreased operating income in our Concerts segment of $175.1 million partially offset by increased operating income in our Ticketing segment of $11.8 million and Sponsorship & Advertising segment of $63.3 million, as further discussed within each segment’s operating results.

Other expense (income), net

For the six months ended June 30, 2024, we had other income, net of $97.8 million which includes mark to market adjustments for certain investments in nonconsolidated affiliates of $88.8 million. For the six months ended June 30, 2023, we had other expense, net of $5.0 million which includes net foreign exchange rate losses of $29.8 million partially offset by mark to market adjustments for certain investments in nonconsolidated affiliates of $26.5 million. The net foreign exchange rate losses result primarily from revaluation of certain foreign currency denominated net assets held internationally.

Income tax expense

For the six months ended June 30, 2024, we had a net tax expense of $115.6 million on income before income taxes of $459.6 million compared to a net tax expense of $65.5 million on an income before income taxes of $441.0 million for the six months ended June 30, 2023. For the six months ended June 30, 2024, the income tax expense consisted of $96.5 million related to foreign entities, $2.7 million related to United States federal taxes, and $16.4 million related to state and local income taxes. The net increase in tax expense of $50.1 million was primarily due to profits in certain non-United States jurisdictions.

Non-GAAP Measure

AOI

AOI is a non-GAAP financial measure that we define as consolidated 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.

We use AOI to evaluate the performance of our operating segments. We believe that information about 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. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI 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 should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

The following table sets forth the reconciliation of consolidated operating income to consolidated AOI for the three and six months ended June 30, 2024 and 2023:

			Three Months Ended June 30,									Six Months Ended June 30,
			2024			2023						2024			2023
			(in thousands)
Operating income			$	465,819		$	386,371					$	429,312		$	529,147
Acquisition expenses			(30,035)			24,829						522			38,140
Amortization of non-recoupable ticketing contract advances			21,161			21,234						45,241			41,597
Depreciation and amortization			137,729			136,514						270,323			251,699
Gain on sale of operating assets			(779)			(7,013)						(1,430)			(6,509)
Astroworld estimated loss contingencies			94,000			—						279,915			—
Stock-based compensation expense			28,336			27,762						59,738			55,333
AOI			$	716,231		$	589,697					$	1,083,621		$	909,407

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. We use GTV to evaluate changes in ticket fee revenue that are driven by the pricing of our service charges.

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 primary and secondary 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 overall number of customers in our database. 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, and the percentage of expected revenue under contract. 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.

Key Operating Metrics

			Three Months Ended June 30,												Six Months Ended June 30,
			2024						2023						2024						2023
			(in thousands except estimated events)
Concerts (1)
Estimated events:
North America (2)			9,990						8,111						17,167						14,420
International			4,688						4,130						8,714						7,726
Total estimated events			14,678						12,241						25,881						22,146
Estimated fans:
North America (2)			23,187						18,474						34,078						26,131
International			15,706						18,599						27,744						29,842
Total estimated fans			38,893						37,073						61,822						55,973
Ticketing (3)
Estimated number of fee-bearing tickets sold			78,470						78,879						155,048						151,145
Estimated number of non-fee-bearing tickets sold			75,125						71,236						153,557						144,436
Total estimated tickets sold			153,595						150,115						308,605						295,581

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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)North America refers to our events and fans within the United States and Canada.

(3)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 metric 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 ticketing metrics are net of any refunds requested and any cancellations that occurred during the period and up to the time of reporting of these consolidated financial statements.

Segment Operating Results

Concerts

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

			Three Months Ended June 30,												% Change						Six Months Ended June 30,												% Change
			2024						2023												2024						2023
			(in thousands)																		(in thousands)
Revenue			$	4,987,039					$	4,633,291					8%						$	7,866,414					$	6,914,503					14%
Direct operating expenses			4,114,715						3,884,238						6%						6,474,206						5,722,684						13%
Selling, general and administrative expenses			664,853						604,333						10%						1,391,693						1,060,878						31%
Depreciation and amortization			92,646						72,913						27%						183,009						143,441						28%
Gain on disposal of operating assets			(780)						(6,674)						(88)%						(1,492)						(6,559)						(77)%
Operating income (loss)			$	115,605					$	78,481					47%						$	(181,002)					$	(5,941)					*
Operating margin			2.3		%				1.7		%										(2.3)		%				(0.1)		%
AOI			$	270,694					$	168,058					61%						$	273,766					$	168,890					62%
AOI margin			5.4		%				3.6		%										3.5		%				2.4		%

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*			Percentages are not meaningful.

Three Months

Revenue

Concerts revenue increased $353.7 million during the three months ended June 30, 2024 as compared to the same period of the prior year primarily due to increased shows and fan growth across the United States. In particular, higher arena and amphitheater shows and fan count contributed to the increase in revenue. Concerts had incremental revenue of $90.4 million during the three months ended June 30, 2024 from acquisitions and new venues.

Operating results

Concerts AOI increased $102.6 million and operating income increased $37.1 million for the three months ended June 30, 2024 as compared to the same period of the prior year. The increase in AOI was primarily driven by increases in revenue discussed above partially offset by higher direct operating expenses to support increased shows and fan growth at events and higher selling, general and administrative expenses related to additional headcount and compensation expenses. The remaining change in operating income outside of AOI of $65.5 million is primarily associated with Astroworld estimated loss contingencies of $94.0 million and higher depreciation and amortization of $19.7 million related to capital expenditures incurred to support the increased operations partially offset by lower acquisition expense of $54.4 million for costs incurred related to contingent considerations changes.

Six Months

Revenue

Concerts revenue increased $951.9 million during the six months ended June 30, 2024 as compared to the same period of the prior year primarily due to increased shows and fan growth across the United States. In particular, higher arena and amphitheater shows and fan count contributed to the increase in revenue. Concerts had incremental revenue of $149.6 million during the six months ended June 30, 2024 from acquisitions and new venues.

Operating results

Concerts AOI increased $104.9 million during the six months ended June 30, 2024 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 increased shows and fan growth at events and higher selling, general and administrative expenses related to additional headcount and compensation expenses. The remaining change in operating income outside of AOI of $279.9 million is primarily associated with Astroworld estimated loss contingencies of $279.9 million and higher depreciation and amortization of $39.6 million related to capital expenditures incurred to support the increased operations partially offset by lower acquisition expense of $50.1 million related to contingent considerations changes.

Ticketing

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

			Three Months Ended June 30,												% Change						Six Months Ended June 30,												% Change
			2024						2023												2024						2023
			(in thousands)																		(in thousands)
Revenue			$	730,677					$	709,342					3%						$	1,453,855					$	1,387,083					5%
Direct operating expenses			251,089						233,080						8%						504,923						471,237						7%
Selling, general and administrative expenses			214,375						210,400						2%						429,630						403,595						6%
Depreciation and amortization			24,409						27,623						(12)%						47,923						52,707						(9)%
Loss (gain) on disposal of operating assets			2						(340)						*						46						34						35%
Operating income			$	240,802					$	238,579					1%						$	471,333					$	459,510					3%
Operating margin			33.0		%				33.6		%										32.4		%				33.1		%
AOI			$	292,533					$	292,685					—%						$	576,648					$	563,736					2%
AOI margin			40.0		%				41.3		%										39.7		%				40.6		%

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*			Percentages are not meaningful.

Three Months

Revenue

Ticketing revenue increased $21.3 million, or 3%, during the three months ended June 30, 2024 as compared to the same period of the prior year due to higher arena and amphitheater sales which was partially offset by a reduction in stadium activity.

Operating results

The increase in revenue discussed above were partially offset by higher direct operating expenses to support the increased operations and enterprise growth resulting in a decrease in AOI of $0.2 million and operating income increase of $2.2 million during the three months ended June 30, 2024 as compared to the same period of the prior year.

Six Months

Revenue

Ticketing revenue increased $66.8 million during the six months ended June 30, 2024 as compared to the same period of the prior year. This increase is primarily due to higher sales volumes in international markets driven by more events on sale in 2024 as compared to 2023.

Operating results

Ticketing AOI increased $12.9 million and operating income increased $11.8 million during the six months ended June 30, 2024 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 June 30,												% Change						Six Months Ended June 30,												% Change
			2024						2023												2024						2023
			(in thousands)																		(in thousands)
Revenue			$	312,234					$	302,859					3%						$	523,511					$	472,977					11%
Direct operating expenses			47,474						59,843						(21)%						93,011						100,510						(7)%
Selling, general and administrative expenses			44,397						42,235						5%						82,689						78,307						6%
Depreciation and amortization			17,342						26,521						(35)%						33,082						42,763						(23)%
Loss (Gain) on sale of operating assets			(1)						—						*						16						—						*
Operating income			$	203,022					$	174,260					17%						$	314,713					$	251,397					25%
Operating margin			65.0		%				57.5		%										60.1		%				53.2		%
AOI			$	222,622					$	203,139					10%						$	352,597					$	298,670					18%
AOI margin			71.3		%				67.1		%										67.4		%				63.1		%

---

*			Percentages are not meaningful.

Three Months

Revenue

Sponsorship & Advertising revenue increased $9.4 million during the three months ended June 30, 2024 as compared to the same period of the prior year primarily driven by increased sponsorship activity from our United States and international festivals.

Operating results

Sponsorship & Advertising AOI increased $19.5 million and operating income increased $28.8 million for the three months ended June 30, 2024 as compared to the same period of the prior year. These increases were primarily due to increased revenues from sponsorship activity discussed above and lower direct operating expenses due to reduced fulfillment costs.

Six Months

Revenue

Sponsorship & Advertising revenue increased $50.5 million during the six months ended June 30, 2024 as compared to the same period of the prior year primarily driven by increased sponsorship activity from our international festivals

Operating results

Sponsorship & Advertising AOI increased $53.9 million and operating income increased $63.3 million during the six months ended June 30, 2024 as compared to the same period of the prior year. These increases were primarily due to higher sponsorship activity revenues discussed above.

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 $6.4 billion at June 30, 2024 and $6.2 billion at December 31, 2023. Included in the June 30, 2024 and December 31, 2023 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 $3.1 billion in cash and cash equivalents, excluding client cash, at June 30, 2024. 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 $6.2 billion and $6.6 billion, respectively, at June 30, 2024 and December 31, 2023. Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.6% at June 30, 2024, with approximately 93% of our debt at fixed rates. Our weighted-average cost of debt for short-term borrowings outstanding at June 30, 2024, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.1%.

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. 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 owned or operated venues, notably amphitheaters, festivals, theaters and clubs. Internationally, this cash is from a combination of both events in our owned or 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 counterparty to our interest rate hedge agreement 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

Amended Senior Secured Credit Facility

Our senior secured credit facility provides for borrowings of up to $1.3 billion with a $250 million sublimit for the issuance of letters of credit and a $100 million for swingline borrowings. The revolving credit facility allows for a $780 million sublimit for borrowings in U.S. Dollars, Euros, or Sterling, and a $260 million sublimit for borrowings in those or one or more other approved non-U.S. currencies. The revolving credit facility will be available to us and, if designated in the future, certain of our foreign subsidiaries. The Amended Credit Agreement provides for the right, subject to certain conditions, to increase the term B loan and revolving facilities by an amount not to exceed an amount equal to the sum of (x) $1.625 billion, (y) the aggregate principal amount of voluntary prepayments of the term B loans 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, on a pro-forma basis after giving effect to such increase, is no greater than 4.50x.

Our obligations under the Amended Credit Agreement will continue to be guaranteed by the majority of our direct and indirect domestic subsidiaries, subject to certain exceptions, and the obligations of the foreign subsidiary borrowers, if any, will be guaranteed by us, the majority of our direct and indirect domestic subsidiaries, and by certain of our wholly-owned foreign subsidiaries. The obligations under the Amended Credit Agreement and the guarantees will continue to be secured by a lien on substantially all of our tangible and intangible personal property and the 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 and, if there are any foreign borrowers, by certain of the assets of such foreign borrowers and certain foreign subsidiaries, subject to limited exceptions.

The interest rates per annum applicable to the revolving credit facility under the amended senior secured credit facility are, at our option, equal to either Term SOFR plus 1.75% or a base rate (as defined in the Credit Agreement) plus 0.75%.

The interest rates per annum applicable to the term loan B are, at our option, equal to either Term Benchmark Loans or RFR Loans (as defined in the Credit Agreement) plus 1.75% or a base rate plus 0.75%. We have an interest rate swap agreement that ensures the interest rate on $500 million principal amount of our outstanding term loan B does not exceed 3.445% through October 2026. 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. We are also required to make mandatory prepayments of the loan, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events.

We are required to pay a commitment fee of 0.35% per year on the undrawn portion available under the revolving credit facility and variable fees on outstanding letters of credit. Based on our outstanding letters of credit of $21.9 million, $1.28 billion was available for future borrowings from our revolving credit facility as of June 30, 2024.

The revolving credit facility matures on November 16, 2028, provided, that if (x) any of the term loan B, our 6.5% Senior Secured Notes due 2027, or our 4.75% Senior Notes due 2027 remain outstanding on the date that is ninety-one days prior to the stated maturity thereof in an aggregate principal amount in excess of $500 million and (y) our consolidated free cash on such date is less than the sum of such outstanding principal amount plus $500 million, then the maturity date of the amended senior secured credit facility will instead be such date.

During the six months ended June 30, 2024, we repaid $370 million of principal related to our revolving credit facility. No material gain or loss was recorded as a result of this repayment.

Debt Covenants

As of June 30, 2024, 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 2024.

Uses of Cash

Acquisitions

During the six months ended June 30, 2024, we completed various acquisitions that resulted in cash paid, net of cash acquired of $17.6 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 revenue generating capital expenditures and maintenance capital expenditures. Revenue generating capital expenditures are primarily focused on our global venue expansion strategy as we connect more artists to their global fan base and major renovations to buildings to enhance the fan experience and drive improvements in our hospitality efforts including onsite spending and premium experiences. In addition, in Ticketing, we continue to develop 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. Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices. 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:

			Six Months Ended June 30,
			2024						2023
			(in thousands)
Revenue generating			$	258,764					$	112,906
Maintenance			49,573						44,740
Total capital expenditures			$	308,337					$	157,646

Revenue generating capital expenditures during the first six months of 2024 increased from the same period of the prior year primarily due to enhancements at our theaters and amphitheaters in the United States as well as a stadium in South America.

We expect capital expenditures to be approximately $650 million for the year ending December 31, 2024 with approximately 75% of the capital expenditures on revenue generating projects.

Cash Flows

			Six Months Ended June 30,
			2024						2023
			(in thousands)
Cash provided by (used in):
Operating activities			$	1,400,954					$	1,646,849
Investing activities			$	(434,405)					$	(299,206)
Financing activities			$	(642,976)					$	73,514

Operating Activities

Cash provided by operating activities decreased $245.9 million for the six months ended June 30, 2024 as compared to the same period of the prior year primarily due to higher mark-to-market gains on certain investments in nonconsolidated affiliates, changes in the fair value of contingent consideration as well as changes in operating assets and liabilities from timing of events on sale, payments and receipts.

Investing Activities

Cash used in investing activities increased $135.2 million for the six months ended June 30, 2024 as compared to the prior year primarily due to higher purchases of property, plant and equipment in 2024 for revenue generating capital expenditures. See “—Uses of Cash - Acquisitions and Capital Expenditures” above for further discussion.

Financing Activities

Cash used in financing activities was $643.0 million for the six months ended June 30, 2024 primarily due to the principal repayment of our revolving credit facility as compared to cash provided by financing activities of $73.5 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. 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 six months ended June 30, 2024 and 2023. Our foreign operations reported an operating income of $306.3 million for the six months ended June 30, 2024. 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 six months ended June 30, 2024 by $30.6 million. As of June 30, 2024, 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. We also may enter into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income. At June 30, 2024, we had forward currency contracts outstanding with an aggregate notional amount of $242.6 million.

Interest Rate Risk

Our market risk is also affected by changes in interest rates. We had $6.3 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of June 30, 2024. Of the total amount, we had $5.8 billion of fixed-rate debt and $462.0 million of floating-rate debt.

Based on the amount of our floating-rate debt as of June 30, 2024, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.2 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 June 30, 2024 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 and Other 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.

In August 2022, the Inflation Reduction Act (IRA) was enacted in the United States, which includes health care, clean energy, and income tax provisions. The income tax provisions amend the Internal Revenue Code to include among other things a corporate alternative minimum tax for the 2023 tax year. The Company is still assessing the impact due to lack of United States Treasury regulations which are anticipated to be issued in 2024; however, the IRA is not expected to have a material impact on the Company's financial statements due to net operating losses and full valuation allowances for the United States, which is our most significant jurisdiction. We will continue to monitor to ensure our financial results and related tax disclosures are in compliance with the IRA tax legislation.

On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) released Pillar Two model rules designed to ensure large multinational enterprises (“MNE”) pay a minimum level of tax arising in each jurisdiction they operate. Over 135 jurisdictions joined a plan to update key elements of the international tax system and provide for a coordinated system of taxation that imposes top-up tax on profits arising in a jurisdiction whenever the effective rate is below the minimum rate. Effective January 1, 2024, many of these jurisdictions have enacted a global 15% minimum effective tax rate. This minimum rate applies to MNE’s with consolidated revenue above €750 million. While additional guidance is expected from the OECD in 2024, we do not expect The Pillar Two rules to have a material impact to our financial statement income or tax cash flows for the current period. We will continue to monitor further guidance from the OECD and evaluate any impact it may have to our consolidated financial results.

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 2023 Annual Report on Form 10-K filed with the SEC on February 22, 2024.

There have been no changes to our critical accounting policies during the six months ended June 30, 2024.