Earnings Call: Q3 2022

Nov 8, 2022

Morning, and welcome to Vivid Seats Third Quarter 2022 Earnings Conference Call. I am Kate Copples, Head of Investor Relations at Vivintiq. Joining me today to discuss Vivintiq's results are Stan Chia, Chief Executive Officer and Larry Fye, Chief Financial Officer. By now, everyone should have access the company's Q3 earnings press release filed earlier this morning. We have also provided supplemental earnings slides. The press release and earnings slides are available on the Investor Relations page of Vivid Seats' website at investors. Vividseats.com. During the course of this call, management may make forward looking statements within the meaning of federal securities laws. These forward looking statements are subject to the risks and uncertainties as described in the company's press release and other filings with the SEC. On today's call, we will refer to adjusted EBITDA and adjusted EBITDA margin, which are non GAAP financial measures that provide useful information for our investors. You will find a historical reconciliation of adjusted EBITDA and adjusted EBITDA margin to the corresponding GAAP measure in the earnings press release, supplemental earnings slides and SEC filings. And now, I would like to turn the call over to Stan. Good morning, everyone, and thank you for joining us today. I'm excited to discuss our 3rd quarter results and another solid performance from the Vivid Seats team. The momentum we've seen in our business has continued and we've now set quarterly records for both marketplace GOV and revenues for the last 6 consecutive quarters. These results are a testament to our powerful technology platform and our team's ability to capture industry strength with agility. We continue to enhance our unique offering to reinforce our long term strategy of acquiring and retaining customers through strong product and service differentiation, while making targeted investments to foster brand awareness and loyalty. This morning, I want to share an update on the business and our strategic progress before turning it over to Larry to discuss our results and financial guidance in more detail. To begin with, I'd like to remark on our 1st year as a public company, which is a milestone we just passed this October. It has been an incredible year for Vivid Seats. We reported record quarters, capitalized on strong live event demand with strong execution and furthered our long standing track record of growth and profitability. Next, I'd like to highlight our recent brand efforts. In September, we launched a new integrated brand campaign highlighting Vivid Seats Rewards and Vivid Picks. The Real Rewards for Real Fans campaign launched with content across paid, owned and earned media and was curated for category reach and the targeted recruitment of high value audiences. This campaign highlights one of the key differentiators of our brand, Vivid Seats Rewards, connecting Vivid Seats with the number 11 and driving awareness of the key perk of the Vivid Seats rewards program, the free 11th ticket. Most notably, with this campaign, Vivid Seats is the 1st brand ever to sponsor a bonus 11th play on the iconic ESPN SportsCenter Top 10 series and features homepage takeovers with our brand partners. Our recent brand campaigns contrast to our initial brand push during the Q4 of 2021, which focused on increasing mass market brand awareness. While 20 21's brand campaign indeed corresponded with a double digit Percentage increase in awareness, we have achieved more significant and sustained increases in awareness with more targeted initiatives through many of our refined efforts and channels. In fact, fans across some of these channels have proven to be 2 times more likely to be aware of Vivid Seats and 2 to 3 times more likely to consider purchasing from Vivid Seats. As we look to drive more awareness with high value live event fans, we continue to expand our brand partnerships with category endemic media outlets, such as our recent partnership with Bleacher Report. I am also excited to announce that we have recently finalized our partnership with the New York Post and are looking forward to launching that over the next few weeks. Lastly, to target younger sports and music fans, We are building on our cultural cache through influencer marketing and collaborations. At Vivid Seats, we are focused on building customers for life and our data and ecosystem are at the center of that effort. Our dynamic marketing tech stack ingests multiple data streams, goes well beyond transactional data and creates a powerful unified customer profile. We are smarter about the customer than ever before and we surgically prospect the most valuable segments through programmatic channels and triggered communications. Consumer preferences and propensities illuminate the best action to drive lifetime value through continued engagement and purchase activity via Vivid Seats and Vivid Picks. We are pleased to report that our Customer repeat rates are trending higher across event categories indicating that our brand and loyalty efforts are working. We will retain the optionality to invest in highly targeted brand channels to amplify the initial traction that we are seeing. Ultimately, we expect higher repeat rates to yield significant margin leverage. That said, live events are a low frequency category and it will take time for new cohorts of loyal customers to make repeat purchases and drive leverage. On the seller side of our marketplace, we continue to attract and retain sellers with our industry leading technology offerings and excellent customer service. Professional ticket sellers use an ERP to manage their inventory and we are proud that Skybox is their most widely adopted ERP. Professional sellers continue to migrate to Skybox with over 110 sellers added thus far in 2022. Our first party Skybox data offers VIVIT seats a uniquely thorough and real time picture of the live event industry. We utilize our data advantages to fuel our marketing engines and power our marketplace flywheel. Moving on to the consumer, we continue to see healthy demand across categories and it's clear that live events are resonating with consumers as they continue to shift wallet share from goods to experiences. In sports, Minor League Baseball has enjoyed a family friendly resurgence and our Minor League Baseball gross order value is now 8 times 2017 levels. In music, festivals appear more popular than ever. And so far in 2022, Vivid Seats has already helped fans attend nearly 150 more festival events than in 2019. To capitalize on this trend, this year we launched the Lucky Roller, an interactive Vivid Seats brand experience at popular music festivals like Coachella, Bottle Rock, Lollapalooza and Austin City Limits. We continue to see encouraging changes in consumer purchasing patterns. Specifically, MLB disclosed that 2022 regular season baseball attendance was down 6% versus 2019. Meanwhile, Vivid Seats MLB orders have increased significantly. This data is supportive of more inventory flowing to the secondary ticketing market as the consumer preference continues to shift from season ticket packages to more flexible buying. As we look to 2023, we are seeing positive indications of a robust concert calendar. Artists often announce their tours for the following year during Q4. In the 3rd and 4th quarters to date, we've already had citing tour announcements from top artists including Taylor Swift, George Strait, Ed Sheeran, Blink-one hundred and eighty two and Dead and Company. On the product side, in the Q3, we continued to expand our offerings to engage with and reach new live event fans. We introduced new sports categories within the Vivid Picks app, including WNBA, Tennis, UFC and F1. We are currently in the midst of our 1st NFL and NBA season with an integrated VividPix product and are still early in unlocking Its value across our platform. Shortly after the Q3 ended, we reached an exciting milestone To support the ongoing growth of our business and to attract, retain and foster talent, we moved our headquarters to the historic Marshall Field Building in Downtown Chicago. The new headquarters is not just an investment in Chicago's growing tech sector, it's an investment in Vivity's current and future employees, which will support a scaled workforce and hybrid work model with shared and collaborative workspaces. As a business, We are passionate about enabling fans to experience it live and we are intent on doing the same for our employees with our new office. Turning to the competitive environment. Throughout the year, we have continued to see ramping and now unprecedented pressure from competitors eager to regain past position or obtain scale, putting near term pressure on margins. We remain confident and enthusiastic that our strategy to invest in differentiated products and services such as VividPix, Skybox and our award winning customer service increases customer lifetime value and where we see unique opportunities to enhance our strategy, We intend to continue making investments that maximize the long term value of our customer relationships. Our focus remains on driving long term shareholder value by making both the right short and long term investments and strategic decisions. One of those strategic decisions was to become a public company and augment the levers available to us. Beyond increased customer trust and brand awareness inherent to a publicly traded company, we gained an invaluable investor and partner in Todd Foley, who has continued to provide significant strategic benefits to our business with his connections in both music and sports, including Rolling Stone, DraftKings, the Dodgers, the Lakers and now Chelsea within the English Premier League. Importantly, we also strengthened our balance sheet to a position Where cash exceeded gross debt and we're able to immediately deploy equity capital to expand into an adjacent category, daily fantasy. Being public with a healthy balance sheet continues to provide the flexibility to increase growth and make investments that drive long term shareholder value. A year later, it's clear that the strength of our business reflects the power of our differentiated model and our unique value proposition. Our ability to capitalize on the strength of the live events category, which is benefiting from both near term and long term tailwinds and demonstrating resiliency to recessionary factors continues to drive our success. With that, I will turn it over to Larry. Thank you, Stan. I'll begin with a discussion of our Q3 trends and results before turning to our updated outlook for the remainder of 20 This quarter, we lapped very strong results from the Q3 of 2021, where we set multiple records by capturing exuberant reopening demand. During the Q3 of 2022, The live event demand environment remained healthy and we are proud that Vivintheets continued to set new records for 3rd quarter marketplace GOV and revenues and once again achieved our highest quarterly total marketplace orders ever. Meanwhile, Vivid Seats remained highly profitable and generated $28,000,000 of adjusted EBITDA, while continuing to invest in our differentiated platform. Our Q3 2022 marketplace GOV of $782,000,000 increased 10% year over year, driven by a 9% increase in total marketplace orders, while average order size of $304 increased slightly. We view 2019 as a better baseline than 2021 for trend line AOS due to pandemic impacts throughout last year. In the first half of twenty twenty two, AOS increased 12% relative to the first half of twenty nineteen, in line with the 3% to 4% annual CAGR we have seen historically. And in the Q3 of 2022, AOS increased 7% versus Q3 2019, with the deceleration primarily driven by strong growth in select lower AOS categories, resulting in some mix shift. Later MLB playoff timing with the playoffs primarily occurring in Q4 this year also contributed. We continue to see robust consumer demand this quarter with AOS for our top 50 artists by GOB up 14% versus Q3 2019 and our ALS for top 20 artists up 19%. Our Q3 2022 revenues of $157,000,000 increased 12% year over year and our take rate was 16.7%. Our take rate, which is calculated by dividing our marketplace revenues by our marketplace GOB, was consistent with historical levels when considering the impact of our loyalty program, which has accounted for as a reduction of revenue. Meanwhile, cancellations The 3rd quarter were roughly flat on a sequential basis and substantially lower year over year. We generated $28,000,000 of adjusted EBITDA in the 3rd quarter at an 18% adjusted EBITDA margin. Adjusted EBITDA margins were lower on a sequential and year over year basis due to higher marketing expense as we met increased competition in performance marketing channel. In tandem, we ramped targeted brand investments to retain users and increase lifetime value. Meanwhile, marketplace gross margins were stable and G and A expense, net of EBITDA adjustments, was sequentially steady despite revenue growth. Exceptional margins from the Q3 of 2021 benefited from a lean pandemic sized cost structure and competitors who are slower to seize upon the reopening. After returning to scale, incurring public company costs and making deliberate brand investments, Our Q3 2022 margin performance should be contemplated within the context of our full year 2022 adjusted EBITDA margin guidance provided last quarter, which was approximately 20%. We closed out the Q3 of 2022 with $274,000,000 of cash on our balance sheet, which slightly exceeded our gross debt balance. Cash from operations has been slightly positive year to date, which is less than our normal EBITDA to cash conversion due to several non recurring items previously discussed, including sales tax payments, pandemic store credit redemptions and the normalization of seller payables as postponed events finally occurred. We expect our business to return to meaningful cash generation in 2023. As a reminder, we have low levels of interest expense and CapEx. And as we grow, working capital is typically a positive contributor to cash flow as we receive payments from our buyers before remitting corresponding payments to ticket sellers. During the Q3, we deployed approximately $3,000,000 to buy back roughly 400,000 of our shares at a volume weighted average price of $7.65 As of the end of Q3, approximately $37,000,000 remained under our buyback authorization. We may continue to selectively repurchase shares when that is an attractive use of capital, while balancing the need to maintain sufficient trading flow. We view our sizable cash balance as a significant asset that provides us flexibility to make strategic investments in ticketing and adjacent areas as compelling Turning to our 2022 financial guidance. After raising our marketplace GOV and revenue guidance After both our first and second quarter results, we are raising our guidance again this quarter. The midpoint of our new marketplace is more than 10% above our initial guidance. Healthy demand that we saw earlier in 2022 has continued and downside scenarios for COVID variant resurgences or decreased consumer discretionary wallets have not materialized in our business. We now anticipate 2022 Marketplace GOV to be in the range of $3,050,000,000 to 3,200,000,000 and 2022 revenues to be in the range of $580,000,000 to $595,000,000 with both metrics more than 30% higher year over year at the point. Our 2022 adjusted EBITDA guidance is unchanged at $110,000,000 to $117,000,000 With less than 2 months remaining in 2022, our updated guidance range reflects our policy to remain agile within the competitive environment. With continued strong demand supporting an increase in marketplace GOV and revenue guidance, we are maintaining adjusted EBITDA guidance as we continue to invest for the long term. Specifically, where we see opportunities to continue winning customers, we will do so. Unlike competitors with heavy debt loads or subscale reach, Vivint can afford to be both profitable and opportunistic. Our scale, clean balance sheet and Cash Generation as well as our differentiated value proposition to buyers and sellers give us a right to win in the long term and we will continue making the necessary investments to ensure long term success. Our guidance range continues to contemplate potential scenarios for demand. While our record results through the Q3 would imply recession resiliency, live events are nonetheless a consumer discretionary category that may be Packages of consumer wallets are stretched further. Similar to Stan, I'd like to reflect on what our team has accomplished in the last year since becoming a publicly traded company. Vivid Seats scaled rapidly to capture pent up demand coming out of the pandemic and delivered record results. We accelerated our trajectory through excellent customer service to both buyers and sellers and opportunistically utilized our digital marketing prowess capture industry strength. We are seeing initial traction on our brand and loyalty investments with higher repeat rates across event categories. We look forward to what we can accomplish as a team during our 2nd year as a public company. Even so, after an exceptional 1st year, It would be prudent to expect reversion towards our longer term growth trend line, particularly in the face of an uncertain macro environment. To recap, demand for live events remained healthy and resilient in the Q3 and Viviteats converted industry strength to strong results while remaining highly profitable. With that, I will hand it back to Stan for closing remarks. Thanks, Larry. In conclusion, Vivid Seats continued to set records this quarter and I'm proud of what our talented and committed team accomplished. We are well positioned and confident that we have the right people, product, technology, scale and balance sheet to win in the long term. We look forward to discussing our strategy and outlook for 2023 on our Q4 call. And with that, operator, I will open it up for questions. Thank you. Our first question comes from Maria Ripps with Canaccord Genuity, your line is open. Good morning and thanks for taking my questions and congrats on strong results here. Can you maybe just talk about what kind of sort of macro backdrop and consumer behavior is embedded in your Q4 outlook? And have you seen any signs of deceleration so far in Q4 from what you sort of saw in Q3? And then I have a quick follow-up. Yes. I think from a guidance philosophy standpoint, nothing's changed where we're trying to capture Potential range of scenarios, I think the prospects of a COVID related Meaningful slowdown has certainly diminished now that we've had a number of unaffected quarters in a row. Alongside that, I think the prospects for potential impact of consumer softening feel like they're increasing, Despite not having seen it in the numbers to date, as we think about that overlay on Q4, I'd say a couple of things. One, we're now through the MLB season with MLB playoffs having a pretty meaningful impact On our Q4 GOV, there were technically more games because of the shift in format to adding More games in the wildcard round, but there were many fewer than normal championship series games. And so there is a bit of a headwind in the MLB world. And then beyond that, I think November December are really important months in the concert realm As you track on sales, while there have been a couple of encouraging ones and there are some rumors swirling, at this point, I think it's a little Well, it's early to call and that will be a big determinant on where things shake out for the quarter. Got it. That's very helpful. And can you maybe talk about any early takeaways from the latest brand campaign as well as additional color on the 11 influencers Yes, sure. Hey, Maria. Look, I think we're really excited. I think when you think about the things that we control and the things that we've invested in, you start with our loyalty program, our brand campaigns, and I I think we're really pleased to note across the board we've seen higher repeat rates across every category, which gives us a lot of enthusiasm that both offer is really resonating with consumers. As you then look out through the capabilities that we continue to build on that side, we're seeing significant sustained increases in both Retention and repurchase, especially when we hit high value audiences through some of our more targeted vehicles. We're also looking at, I think as you look through the new partners that we launched, we talked about the New York Post today. We certainly also in the quarter Launch collaborations with brands like Doritos, Snapchats, and we're in early stages on collegiate NIL deals too. So when you look across that spectrum of I think programs that we offer with consumers combined with capabilities that we're investing in on the retention and brand marketing Koppels. We continue to be really enthusiastic about the results that we're seeing. Great. That's very helpful. Thank you very much. Thank you. One moment for our next question. And our next question comes from Stephen Ju with Credit Suisse. Your line is open. Hi. Thanks, guys. So I think the resale came in pretty strong on a nominal dollar basis. So I'm just kind of wondering what's driving that strength. Is it just the general environment Or are you doing something from a product perspective with SkyVoss? And I guess it might be a little bit early, I thought I'd lop in this question anyway. So just wondering if you can update us on how the change for Becca to Vivid Thanks, guys. And whether you're starting to see any early signs of synergies? Thanks. Yes. On the resale side of things, I would say consistent with the raising of guidance On the top line that we've seen, it has been a pretty healthy overall market and frankly has come in above Our expectations over the course of the year, and as a representative seller, our retail group is no exception to that strength. Nothing fundamental has shifted in the underlying strategy there. So it's really been a story of riding tide more than anything. Yes. On the VividPick side, I think we are excited about what we continue to see there. As we mentioned, we've introduced new categories within the VividPick App, including the WNBA, Tenet, USC, F1, we're still early in unlocking value there. But certainly, I think As we look at some of the early stage fully integrated products and email campaigns and CRM activities, Those activities are looking to be some of our highest performing campaigns. So I think we're early in what we expect to be a very busy quarter on the PivotPix side, but Pulse 9 is very positive on our side. Thank you. Thank you. One moment for our next question. Our next question comes from Ralph Schackart with William Blair. Your line is now open. Great. Thanks for taking the question. Stan, just on the brand campaign, I think in the prepared remarks, you talked about a little bit more focus or More targeting on this campaign versus the other. Maybe couple of specific examples about what's resonating, guessing it's the loyalty program, but any color you could add there? And then I have a follow-up, please. Yes, sure. Hey, Ralph. Yes, I think a lot of what we learned and as you look at some of the creative that we've launched in I think we're really proud of what we're doing around the 3.11 ticket is that fans with high intent and high kind of category awareness, really the rewards program resonates strongly with them. So when you look at the things that we've done to reinforce that, whether it is that iconic ESPN Top 10 Series 11th play or some of the homepage takeovers. We've seen those messages resonate really strongly there. As we also then look across some of our partners, so there again it is ESPN, Rolling Stone, some of those folks. As we look at again audiences that they serve and what we're able to do there, We found that those audiences tend to be 2 times more likely to be aware of Vivid Seats and really from a consideration perspective 2 to 3 times more likely to buy from us. And so as we look at channel diversification, as we look at channels that yield economic benefit while driving our messaging to fans. I think we look at the creative and we look at the channel and we feel really good about the partners that we found in that space. Great. Thanks. And then just a follow-up just on the competition that you called out on margins. Just curious, was that broad based? Was it a larger competitor? Was it Smaller road competitor, just kind of want to get a sense of the competitive nature that you're seeing. Thank you. Yes, I think we've seen It's fairly widespread across the competitive side. I think there's certainly a lot of competition now for what looks to be a fairly resilient Industry. And I think when we look at what we do again versus everyone else, I think we are really confident in our strategy of unique product differentiation, Better service, better rewards, a new product offering in VividPicks is our way to continue winning in the long term versus potentially Spending overspending on marketing channels are potentially driving too much take rate pressure. Great. Thanks, Tim. Thank you. One moment for our next question. Our next question comes from Benjamin Black with Deutsche Bank. Your line is now open. Hi, this is Ishan on for Ben Black. Thanks for taking our question. So just thinking on the supply side, how is broker side faring with high inflation rising rate? Have you seen any kind of softness on the supply side given high cost of capital? Yes. Look, I think on the sell side, and I stress again in our business, I think being a Marketplace business, the sellers are managing both their costs and certainly what the dynamics of demand and supply are. We've seen no softness on either side of the market yet. And I think as we continue to grow our base on Skybox, which I think we've talked about having over 110 Sellers added here to date on the platform, we continue to see strength in the sellers being able to grow their businesses as well in the current environment. Thank you. Thank you. One moment for our next question. And our next question comes from Brad Erickson with RBC Capital Markets. Your line is now open. Good morning, guys. I guess first question on the marketing spend as you can kind of deal with that competitive pressure you mentioned. How sensitive are you in terms of Sort of drawing a line on ROI thresholds, you're not willing to go beyond versus just being more set on holding market share. Maybe just remind us on sort of what your broad philosophy is around that? And then I have a follow-up. Yes. Hey, Brad. I start by saying, I think we have historically had a target where we would look to on the acquisition of a customer, the first transaction blend to being profitable. But we've always been aware that there's some meaningful slack in that chain when you look at the lifetime value of the average new customer you bring in. And so as we look at the current competitive environment where we are seeing across a few different strategies, what I'd characterize as increasing investment in some incremental strain on some of those historical bounds. We definitely have pushed to move beyond what I would characterize as a historical threshold and something that we're We are actively looking at day to day on where that right line should sit in light of everything that's happening in the competitive side. Got it. That's helpful. Thanks. And then I think just stepping back maybe, I think you've gotten some benefit here and the market certainly has gotten some benefit this year from Kind of the COVID catch up on concerts in particular, how should we think about the cadence of concerts into next year relative Some of the year over year comps you're facing as well as just from a capacity perspective. Thanks. Yes. I think certainly when you look at the Live Nation commentary, it looks like they expect another Robust year, when you look at the lineup of names that have either already announced tours or are rumored to be announcing tours in the near future. So folks have already announced Ed Sheeran, THINK 182, Luming, Taylor Swift, Beyonce, Those are some really large names. And so I think that is evidence that not everyone was able to get out in 2022. Getting alongside that though, you had a dynamic in 2022 where you saw a number of postponed events and Perhaps higher utilization of arena and event capacity than you would normally see, because you are condensing both a normal slate of new shows and some catch up from postponed events. So perhaps more Tuesday night, Wednesday night type shows than in a normal year. So I think that, to delve into details on is this coming year a growth year on an all in basis Or is there a little bit of pressure on an all in basis relative to how you think about that post vote event calendar. But overall, I think we expect to be another very healthy year, probably less year over year growth than we saw this year, just given how robust the past year was, but no, she's going to think it'll Be a meaningful decline in the number or quality of shows. Yes, that's great. Understood. Thanks guys. Thank you. One moment for our next question. Our next question comes from Koppels. Quereta Cajuria with Evercore ISI. Your line is now open. Okay. Thank you. Let me try 2, please. What could you stand please provide some color on where you're investing when it comes to product and service? You highlighted that in your Prepared remarks, understood you're also investing in brand awareness efforts, but if you could give details on product and service investments, that would be great. And then second, also for Stan, how do you define high value audience, whether it is Through engagement or dollar spend, how should we think about that? Thank you. Sure. Hey, Sweta. Good morning. Look, I think on the product and service side, I think I almost go down the path of we remain bullish about The two areas in particular that are differentiated, I think we think about our rewards program and continuing to drive increased differentiation through that as a vehicle that we can continue to drive increased purchase patterns and behavior, as well as retention, with our brand and our site. Kind of in parallel with that, which I think we feel again is a strong differentiator, our Vividbrick product, which enables our users continued ways to engage with us beyond ticket transactions between ticket purchases. And I think as you look at the offerings that we build there, as we've mentioned in today's remarks, we continue to enhance The number of categories and games, I think we see the ability there to engage consumers and keep them within our ecosystem where we can then utilize Our marketing capabilities has really a strong demonstration of our investment in kind of our product suite, but also Our product differentiation. On the service side, our work within customer service, we continue to do that. We continue to invest in making sure that across the board, We have the best service there. But beyond that, we also look for experiential service components where we look at activating on-site, whether it's at festivals, whether it's at marquee events. And we also talked about the Lucky Roller, which we have as a unique activation event with users where they see us in cities with events where they can then engage with the brand, where they can then win rewards and prizes, which then brings them into our ecosystem, provides them a tremendous experience and also buttresses our brand investments. So across those two elements, I think we feel really, really strongly about our investments there. On the high value audience side, I think We continue to learn as we look at the, call it, ocean of consumers that are interested in attending live events. Are you an event goer who is Looking for that once in a lifetime experience, are you an event goer who is a category specific user? And as we learn more about users, I think Our definition certainly of high value audiences are audiences where we believe we can maximize lifetime value through that. And so as we look at the channels, as we've mentioned, We are very focused on the marketing side and making sure that as we segment users into the highest LTV consumers that our channels correspondingly Our focus on targeting those users and bringing them into our ecosystem. Okay. Thank you, Stan. Thank you. One moment for our next question. And our next Question comes from Thomas Forte with D. A. Davidson. Your line is open. Great. Thanks. So Stan, Larry and Kate congrats on the quarter. One question and one follow-up. Sir, I wanted to know if you could talk about how inflation impacts your results. On the pro side, are you seeing a flow through from higher prices? And on the con side, are you seeing any kind of demand destruction? Yes. I think on the pricing side, continue to have a little bit of a mixing bowl effect of You know, pent up demand perhaps having peaked in prior quarters alongside that you have an inflation trend line That's all mixing into our AOS, but I think over the intermediate term, our view is that there's no reason that tickets wouldn't behave on a Similar path to other consumer expenditures. So I think we're insulated. There's going to be some noise in oscillation depending on That's a heads up demand and broader supply demand dynamic, but overall feel very well protected should inflation persist On the revenue side, had not seen us hit demand, right, to the extent that consumer Should be getting stretched at this point, which I think is many thesis we've seen. We haven't seen it hit our category yet. We have our own hypotheses on why, but we certainly haven't seen it hit the numbers yet. And then the last piece of the inflation consideration is on the Cost side, we've generally seen certainly some pressure in the labor world as we're not immune to the dynamics affecting And others, but all within normal balance of expectation. And just given the nature of our cost structure, we found that I think inflation has not been a meaningful impact to our costs in aggregate. Great. And then for my follow-up, I wanted to ask about VIVID PIX, which you've already got a lot of great questions on VIVID PIX. So I'm down to, is there an opportunity as it pertains to World Cup for Velvetechs. Hey, Tom. Yes, I think it's a great question. I think a lot of our current activities are focused on domestic gains and products. So I think We haven't necessarily looked there, but we're happy to evaluate it as an opportunity. Great. Thank you. Thank you. One moment for our next question. Our next question comes from Andrew Marik with Raymond James. Your line is now open. Thank you for taking my questions. Can you just remind us about the quarterly Seasonality of the business, just maybe asking the guidance question in a different way. I think in the past you've talked about 4Q being seasonally strong with 3 of the 4 big sports in season, Christmas events, etcetera. But the guidance kind of calls for revenue to be down Q over Q at the midpoint. I guess Just talk a little bit more about the conservatism being baked in along that axis or has the thinking changed on seasonality? Yes. Nothing has changed structurally. I think Q4 has some Persistent reasons why it on average outpaced the 1st 3 quarters, namely all the sports are in season, Coupled with concert on sales happening, it appears that the concert announcement schedule will hold with prior years. So that's more a question of magnitude than will it happen. Yes, I think as we think about this year, I'd say 2 things. 1, there's still pretty meaningful unique elements as we think about not only this year's performance, but also the year over year trajectories, just given some of the noise Last year with reopening dynamics, changes to the competitive landscape against those reopening dynamics, variance and whatnot. But as we look at this year and sequentially, I'd say there's certainly been a trend where as we cautioned or steadied ourselves for potential demand risk. Those have not manifested the last couple of quarters, But we've continued to abide by that strategy this year, just given the still recent scars that we hold, having lived through the COVID experience. So there could be if blue skies persist, as we said before, that would be a scenario that would point you to the higher end Of outcomes. And then just continued caution in light of what was effectively shorter MLB playoff The normal and in particular, we say every time about the championship series where there is a sweep in a 5 game Very normally you'd be in 7, 9 games more like 12. And that's meaningful and creates some cancellations and headwinds there. And then, we're still a little early, Fred. The nature of the biggest bond sales do have Meaningful impacts and as we sit here in 1st week of November, it's there's reasons to be hopeful, but we don't control it. And so we're trying to remain guarded in those views. Understood. Very helpful. Thank you. And then just kind of A semi related follow-up. As you're looking to build in those scenarios around the potential range of outcomes, Are you baking in any difference in macro resilience between sports and non sports? Is there still the Dynamic where concerts are still kind of a novel experience or are you kind of viewing them both similarly at this point? Yes. I think broadly similar, right? If you think of, I think Stan, he talked about the FOMO element in sports. And I think you saw that play out if you look at the World Series where you had Philadelphia who hasn't At a World Series or playoff run in over a decade, the excitement was really elevated. You can contract that with the Astros Where it's been regulars in the championship series and world series and while there was still strong interest, it wasn't as a buoyant as you saw in Philly. And so if you start to think about that, perhaps, gaining across sports and series, you'll almost always have teams that are cities that have been Struggling for a number of years have ascended. There's a lot of excitement around that. And so you'll always have some number of Teams that or fans that are excited to get out and don't want to miss the opportunity because I'll pick on Chicago and it's probably going to be another 106 years Koppels. There's definitely when we look at the results, sports were the first Ariat of Reopen. And so to the extent there was some reopening pent up demand or excitement to get back for now in our second Full season across all of the sports categories, so we think we're settled back in a more recurring cadence, whereas Concerts in a lot of ways this year was the 1st normal year. Last year was still a pretty easy environment with the COVID protocols and whatnot. So it feels like sports are a little ahead of concerts and settling into that normal long term trend. But by this time next I think everything will be pretty well aligned. Well, I'm a Detroit sports fan, so I know what it's like to go through a dark period here. Thank you for the color. Thank you. One moment for our next question. And our next question comes from Matthew Farrell with Piper Sandler. Your line is now open. Hey, guys. Thanks for letting me ask a question and congrats on the strong Koppels. Maybe just one for me. When you take a step back, a lot has changed across the industry and for Vivid Steve is well over the last couple of years. I guess, with the kind of economic headwinds that seem to be appearing as we enter 2023, Why is Vivid in a better position than ever to weather the storm and potentially excel in an uncertain environment? Thanks. Yes. Hey, happy to talk about that. I think the I'll start first with, I think the model that we have has continued to prove through and through, right? We are a Scaled growing marketplace and when you look at us on every line of the P and L, contribution margin positive, free cash flow positive, EBITDA positive, I think that one allows us to be able to invest as we see fit in an environment where we know a lot of the competition Does not have that dynamic. When you then couple that over to the balance sheet, we sit in a position where we've got a really strong balance sheet. We sit again net debt positive here where we're able to have both the resources and the cost structure to continue to invest in the business. And then when you then look at, I think the product and service differentiation that we've talked about, Whether that is Vivid Picks and a unique way to engage folks, a rewards program that nobody else has, industry winning customer service And then alongside on the seller side of the marketplace, the leading ERP, for the professional selling community, I think we remain really bullish that across the board with our financial prowess, our capabilities on the product side and our service differentiation that truly we are best positioned in the competitive set continue to win customers, but maybe to more directly answer your question, whether whatever foreseeable storm is ahead of us. Thanks and congrats again. Thank you. At this time, this concludes our conference call. You may now disconnect. Everyone, have a wonderful day and thank you for participating.