Vivid Seats Inc. (“Vivid Seats” or “the Company”), a leading
marketplace that utilizes its powerful technology platform to
connect millions of fans with thousands of ticket sellers across
hundreds of thousands of events each year, today released a first
quarter 2021 business and financial update. The Company’s first
quarter 2021 Marketplace Gross Order Value (“GOV”) was $116 million
and Revenues were $24 million. These figures respectively represent
a 71% and 65% year-over-year decline as Q1 2020 was not impacted by
the COVID-19 pandemic until mid-March. Vivid Seats returned to
profitability on an EBITDA basis during the first quarter of 2021
with $4 million of Adjusted EBITDA.
Stan Chia, CEO of Vivid Seats, commented, “Vivid
Seats benefitted from the return of fans to the stands,
particularly in sports, during the first quarter of 2021. Fans are
craving the opportunity to see their favorite sports, concert and
theater events and are jumping at the opportunity to book tickets
as events resume.”
“We are thrilled to see positive developments in
Q1 with more fans able to attend events and continued positive news
in April and May.” Mr. Chia added, “Our anticipated launch in the
public markets coincides in lock step with this overall
recovery.”
As announced April 22, 2021, Vivid Seats entered
into a definitive agreement with Horizon Acquisition Corporation
(“Horizon”), a publicly-traded special purpose acquisition company,
Horizon Sponsor, LLC, and certain other parties hereto, that will
result in Vivid Seats Inc. becoming a public company. A
registration statement on Form S-4 (the “Registration Statement”),
which includes a preliminary proxy statement/prospectus, has been
filed with the U.S. Securities and Exchange Commission (“SEC”) by
the Company.
Investors may listen to a conference call
regarding the first quarter 2021 business and financial update on
Friday, May 28, 2021, at 8:00 am ET. The call can be accessed by
visiting the Horizon Acquisition Corporation’s website at
https://www.horizonacquisitioncorp.com/.
Key Performance Indicators and Bridge from Net Income to
Adjusted EBITDA
|
|
Years Ended December 31, |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
2020 |
|
|
2020 |
|
|
2021 |
|
|
(in thousands) |
Marketplace gross order value
(“Marketplace GOV”)(1) |
$ |
2,279,773 |
|
$ |
347,259 |
|
$ |
403,377 |
|
$ |
116,473 |
Total Marketplace
orders(2) |
|
7,185 |
|
|
1,066 |
|
|
1,252 |
|
|
293 |
Total Resale orders(3) |
|
303 |
|
|
49 |
|
|
45 |
|
|
13 |
Adjusted EBITDA(4) |
$ |
119,172 |
|
$ |
(80,204 |
) |
$ |
1,179 |
|
$ |
4,187 |
(1) |
|
Marketplace GOV represents the total transactional amount of
Marketplace segment orders placed on the Vivid Seats platform in a
period, inclusive of fees, exclusive of taxes, and net of event
cancellations that occurred during that period. Marketplace GOV was
negatively impacted by event cancellations in the amount of $22.2
million during the year ended December 31, 2019 and $216.0 million
during the year ended December 31, 2020. Marketplace GOV was
negatively impacted by event cancellations in the amount of $52.8
million during the three months ended March 31, 2020 and $18.5
million during the three months ended March 31, 2021. |
(2) |
|
Total Marketplace orders represents the volume of Marketplace
segment orders placed on the Vivid Seats platform during a period,
net of event cancellations occurring during the period. During the
year ended December 31, 2019, the Marketplace segment had 54,961
event cancellations, compared to 549,085 event cancellations during
the year ended December 31, 2020. During the three months ended
March 31, 2020, the Marketplace segment had 141,027 event
cancellations, compared to 51,775 event cancellations during the
three months ended March 31, 2021. A Marketplace order may include
more than one ticket. |
(3) |
|
Total Resale orders represents the volume of Resale segment orders
sold by the Vivid Seats’ resale team in a period, net of event
cancellations that occurred during that period. During the year
ended December 31, 2019, the Resale segment had 1,517 event
cancellations, compared to 20,644 event cancellations during the
year ended December 31, 2020. During the three months ended March
31, 2020, the Resale segment had 9,978 event cancellations,
compared to 1,141 event cancellations during the three months ended
March 31, 2021. A Resale order may include more than one
ticket. |
(4) |
|
Adjusted EBITDA is not a measure defined under GAAP. See below for
further information about how Vivid Seats calculates adjusted
EBITDA. |
|
|
|
Adjusted EBITDA is a non-GAAP measure frequently
used by research analysts, investors and other interested parties
to evaluate companies. Vivid Seats believes that this measure is
helpful in highlighting trends in its operating results, because it
excludes the impact of items that are outside the control of
management or not reflective of its ongoing operations and
performance.
Adjusted EBITDA is a measure not defined under
GAAP. It has limitations, because it excludes certain types of
expenses and it does not reflect changes in working capital needs.
Furthermore, other companies may calculate adjusted EBITDA or
similarly titled measures differently, limiting their usefulness as
comparative measures.
Adjusted EBITDA is presented here as a
supplemental measure only. You are encouraged to evaluate each
adjustment. The following is a reconciliation of Adjusted EBITDA to
its most directly comparable GAAP measure, net loss.
|
|
|
Years Ended December 31, |
|
Three Months Ended March 31, |
|
|
|
2019 |
|
|
2020 |
|
|
2020 |
|
|
2021 |
|
|
|
|
(in thousands) |
Net loss |
|
$ |
(53,848 |
) |
$ |
(774,185 |
) |
$ |
(38,503 |
) |
$ |
(20,251 |
) |
Interest expense – net |
|
|
41,497 |
|
|
57,482 |
|
|
9,293 |
|
|
16,319 |
|
Depreciation and amortization |
|
|
93,078 |
|
|
48,247 |
|
|
23,897 |
|
|
295 |
|
Sales tax liability(1) |
|
|
10,045 |
|
|
6,772 |
|
|
4,913 |
|
|
2,261 |
|
Transaction costs(2) |
|
|
8,857 |
|
|
359 |
|
|
359 |
|
|
3,546 |
|
Equity-based compensation(3) |
|
|
5,174 |
|
|
4,287 |
|
|
1,186 |
|
|
1,091 |
|
Senior management transition costs(4) |
|
|
2,706 |
|
|
- |
|
|
- |
|
|
- |
|
Loss on extinguishment of debt(5) |
|
|
2,414 |
|
|
685 |
|
|
- |
|
|
- |
|
Litigation, settlements and related costs(6) |
|
|
2,256 |
|
|
1,347 |
|
|
34 |
|
|
641 |
|
Change to annual bonus program(7) |
|
|
2,810 |
|
|
- |
|
|
- |
|
|
- |
|
Customer loyalty program stand-up costs(8) |
|
|
3,223 |
|
|
- |
|
|
- |
|
|
- |
|
Impairment charges(9) |
|
|
- |
|
|
573,838 |
|
|
- |
|
|
- |
|
Loss on asset disposals(10) |
|
|
960 |
|
|
169 |
|
|
- |
|
|
- |
|
Severance related to COVID-19(11) |
|
|
- |
|
|
795 |
|
|
- |
|
|
285 |
|
Adjusted EBITDA |
|
$ |
119,172 |
|
$ |
(80,204 |
) |
$ |
1,179 |
|
$ |
4,188 |
|
(1) |
|
These expenses relate to sales tax liabilities incurred during the
periods presented. Vivid Seats incurs sales tax expenses in
jurisdictions where it expects to remit sales tax payments. Vivid
Seats does not currently collect sales tax from ticket buyers under
its existing IT configuration. Vivid Seats is in the process of
upgrading its IT infrastructure, which will enable it to collect
sales tax from ticket buyers going forward. The Company expects
these upgrades to be complete by the end of 2021. |
(2) |
|
Transaction costs consist primarily of transaction and transition
related fees and expenses incurred in relation to completed and
attempted acquisitions. In 2019, Vivid Seats completed the
acquisition of Fanxchange. During the three months ended March 31,
2021, Vivid Seats incurred transaction costs related to the
Transactions. Transaction and transition costs include legal,
accounting, tax and other professional fees, as well as
personnel-related costs, which consist of severance and retention
bonuses. Transition costs reflected above were incurred in the
first 12 months following the completed acquisition of
Fanxchange. |
(3) |
|
Vivid Seats incurs equity-based compensation expenses, which it
does not consider to be indicative of its core operating
performance. |
(4) |
|
During 2019, Vivid Seats incurred costs associated with the
transition to its current senior management team, including its
current Chief Executive Officer. These costs include recruiting
costs and costs to compensate Vivid Seats’ new Chief Executive
Officer for benefits forfeited at his previous employer. |
(5) |
|
Losses incurred in 2019 related to the repayment of Vivid Seats’
$40 million second lien term loan. Losses incurred in 2020 resulted
from the retirement of Vivid Seats’ revolving credit facility in
May 2020. |
(6) |
|
These expenses relate to external legal costs and settlement costs
incurred, which were unrelated to Vivid Seats’ core business
operations. |
(7) |
|
Vivid Seats restructured its employee incentive compensation plan
during 2019, which resulted in $2.8 million of incremental
costs. |
(8) |
|
During August 2019, Vivid Seats initiated the Vivid Seats Rewards
customer loyalty program. The company incurred $3.2 million of
initial stand-up costs related to the commencement of the program.
These stand-up costs consist primarily of customer incentives and
marketing costs, which are not expected to reoccur. |
(9) |
|
During 2020, Vivid Seats incurred impairment charges triggered by
the effects of the COVID-19 pandemic. The impairment charges
resulted in a reduction in the carrying values of the company’s
goodwill, indefinite-lived trademark, definite-lived intangible
assets, and other long-lived assets. See Vivid Seats’ audited
financial statements included elsewhere in this proxy
statement/prospectus for additional information. |
(10) |
|
During 2019 and 2020, Vivid Seats incurred approximately $1.0
million and $0.2 million, respectively, related to asset disposals,
which are not considered indicative of its core operating
performance. |
(11) |
|
These charges relate to severance costs resulting from significant
reductions in employee headcount during 2020 due to the effects of
the COVID-19 pandemic. |
|
|
|
About Vivid Seats
Vivid Seats provides a marketplace for tickets
to live sports, concerts and theater events along with a technology
platform and services that support the ticketing ecosystem. Founded
in 2001, the Chicago-based marketplace pairs exceptional
affordability across one of the widest selections of tickets with
its loyalty program, Vivid Seats Rewards, that enables fans to earn
rewards when they purchase tickets to their favorite events.
Selected by organizations like ESPN, Rolling Stone, the Los Angeles
Clippers and University of Tennessee to serve as official ticketing
partners, Vivid Seats supports all confirmed orders with a
dedicated, award-winning customer service team to ensure the safest
and most convenient purchase experience. Fans who want to sit
closer and see more of their favorite live events can order by
downloading the Vivid Seats mobile app, going to vividseats.com or
calling by phone at 866-848-8499.
About Horizon Acquisition
Corporation
Horizon is a blank check company formed for the
purpose of effecting a merger, share exchange, asset acquisition,
share purchase, reorganization or similar business combination with
one or more businesses. Horizon is sponsored by the Sponsor, an
affiliate of Eldridge. Horizon is led by Todd L. Boehly, the
Co-founder, Chairman and Chief Executive Officer of Eldridge.
Horizon’s securities are traded on the New York Stock Exchange (the
“NYSE”) under the ticker symbols HZAC, HZAC WS and HZAC.U. Learn
more at https://www.horizonacquisitioncorp.com/.
Additional Information about the
Business Combination and Where to Find It
In connection with the proposed business
combination, Horizon Acquisition Corporation will merge with and
into Vivid Seats Inc., which will be the surviving entity and the
going-forward public company, and filed the S-4 Registration
Statement with the SEC, which includes a proxy
statement/prospectus, and certain other related documents, to be
used at the meeting of stockholders to approve the proposed
business combination. INVESTORS AND SECURITY HOLDERS OF HORIZON
ACQUISITION CORPORATION ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS, ANY AMENDMENTS THERETO AND OTHER RELEVANT
DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT VIVID SEATS, HORIZON AND THE BUSINESS
COMBINATION. The proxy statement/prospectus will be mailed to
shareholders of Horizon Acquisition Corporation as of a record date
to be established for voting on the proposed business combination.
Investors and security holders will also be able to obtain copies
of the Registration Statement and other documents containing
important information about each of the companies once such
documents are filed with the SEC, without charge, at the SEC's web
site at www.sec.gov.
Participants in
Solicitation
Horizon and its directors and executive officers
may be deemed participants in the solicitation of proxies from
Horizon’s members with respect to the proposed business
combination. A list of the names of those directors and executive
officers and a description of their interests in Horizon is
contained in Horizon’s filings with the SEC, including Horizon’s
annual report on Form 10-K for the fiscal year ended December 31,
2020, which was filed with the SEC on March 31, 2021 and amended on
May 10, 2021, and is available free of charge at the SEC's web site
at www.sec.gov, or by directing a request to Horizon Acquisition
Corporation, 600 Steamboat Road, Suite 200, Greenwich, CT 06830.
Additional information regarding the interests of such participants
will be set forth in the Registration Statement for the proposed
business combination when available. Vivid Seats and its directors
and executive officers may also be deemed to be participants in the
solicitation of proxies from the shareholders of Horizon in
connection with the proposed business combination. A list of the
names of such directors and executive officers and information
regarding their interests in the business combination will be
contained in the Registration Statement for the proposed business
combination when available.
Forward-Looking Statements
Certain statements made in this release are
"forward looking statements" within the meaning of the "safe
harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. When used in this press release, the
words "estimates," "projected," "expects," "anticipates,"
"forecasts," "plans," "intends," "believes," "seeks," "may,"
"will," "should," "future," "propose" and variations of these words
or similar expressions (or the negative versions of such words or
expressions) are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside Vivid Seats’ or Horizon’s
control, that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements.
Important factors, among others, that may affect actual results or
outcomes include the inability to complete the business combination
(including due to the failure to receive required shareholder
approvals, failure to receive approvals or other determinations
from certain gaming regulatory authorities, or the failure of other
closing conditions); the inability to recognize the anticipated
benefits of the proposed business combination; the inability to
obtain or maintain the listing of Horizon’s shares on the NYSE
following the business combination; costs related to the business
combination; the risk that the business combination disrupts
current plans and operations as a result of the announcement and
consummation of the business combination; Horizon and Vivid Seats’
ability to manage growth; Horizon and Vivid Seats’ ability to
execute its business plan and meet its projections; potential
litigation involving Vivid Seats or Horizon Acquisition
Corporation; changes in applicable laws or regulations,
particularly with respect to gaming, and general economic and
market conditions impacting demand for Vivid Seats or Horizon
Acquisition Corporation products and services, and in particular
economic and market conditions in the
entertainment/technology/software industry in the markets in which
Vivid Seats and Horizon Acquisition Corporation operate; and other
risks and uncertainties indicated from time to time in the proxy
statement/prospectus relating to the business combination,
including those under “Risk Factors” therein, and in Horizon’s
other filings with the SEC. None of Vivid Seats or Horizon
Acquisition Corporation undertakes any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
No Offer or Solicitation
This press release does not constitute a
solicitation of a proxy, consent or authorization with respect to
any securities or in respect of the proposed transaction. This
press release also does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor will there be
any sale of securities in any states or jurisdictions in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offering of securities will be made except by
means of a prospectus meeting the requirements of section 10 of the
Securities Act of 1933, as amended, or an exemption therefrom.
Contacts:
InvestorsAshley DeSimone, ICR
Ashley.DeSimone@icrinc.com 646-677-1827
MediaJulia Young, ICR
Julia.Young@icrinc.com 646-277-1280
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