Wall Street cheered the higher “Take Rate” and Revenue that Eventbrite generated for themselves in their Q1 2024 Report:
However, we see some fundamental problems. Starting with the drop of 8% in their tickets sold in Q1 2024 vs. Q1 2023. RunSignup & TicketSignup are seeing the opposite with an average 8% growth in doing our year to year comparison of the same events on our platform:
Additionally, Lanny stated in his remarks on their earnings call there was a drop per event of 7%.
We want to explore this in a bit more depth because it seems to imply that the vaunted Eventbrite Marketplace is actually not delivering the expected result of growing events.
Marketplace Subscription Fees
Eventbrite has instituted subscription fees in addition to their processing fees. Those subscription fees amounted to $8.5M in Q1, or about 10% of the Eventbrite Revenue.
The subscription fees provide two primary features:
- Listing on the Eventbrite site
- Metered Email limited by the size of the subscription
While there is some value in being listed on the Eventbrite site, there is a trade off. Eventbrite also lists other events in the individual event page – often competitive events. They also use event pages and event listings to sell Ads, which dilutes the value of being listed on Eventbrite.
The Email does have value. Here is a pricing chart from MailChimp:
Many event directors use MaiChimp, Constant Contact or other email systems that have similar pricing, so there is some justification for the subscription fees Eventbrite is charging.
However, competitors like TicketSignup offer unlimited contacts and unlimited sends for free. Over time, as event directors find out about the benefits of other systems, this will produce additional pricing pressure on Eventbrite (which Wall Street will not like), or will result in customers moving to other platforms. Our company will send nearly 800 Million emails for free on behalf of our customers. And our customers have uploaded 77 Million contacts into our free email system as they migrate to our platform.
Marketplace Ads
Eventbrite reported $2.5 Million in ads in Q1 of 2024, representing about 3% of total revenue. This is a nice little juice for Wall Street, but the long term effects of their ad business may wind up having a negative impact. Let’s imagine a scenario.
Beer Event A has an event page and pays a subscription for a base listing on Eventbrite. Beer Event B buys an ad. That ad appears on Beer Event A’s Event page. How does that make Beer Event A feel? Maybe they have to also buy an ad so they can be on Beer Event B’s page? Or maybe they become upset and find a new ticket vendor.
Another scenario. Beer Drinker goes to the Eventbrite page to find where they can go to their next beer event. They see an ad for Beer Event B and buy tickets. Beer Event A is getting less value from that Eventbrite listing subscription fee they are paying for.
Over time, there may be fewer events that want to list on Eventbrite, which means Beer Drinkers might convert to using something like Google, or asking a friend, or seeing an ad on Instagram. Coupled with the departure of a number of free events who object to the subscription fee, there is a potential for a long term downward cycle.
Marketplace Competitors
Yes, Eventbrite is deciding to go into competition with Google, Facebook, Instagram, Reddit, as well as event owner’s own websites and network of supporters. But Eventbrite is really only 10% of the overall ticket market according to their own S1 filing. Ticketmaster is several times their size in terms of web traffic, and there are literally hundreds of other ticket vendors. Here is just a sample of traffic from SimilarWeb:
We find their claim that people going to events find them at Eventbrite to be a stretch.
Profitability, Cost Structure and Balance Sheet
With the increased take rate, Eventbrite is moving towards profitability, and their target measure of EBITDA (earnings before interest, tax, depreciation and amortization). Net Income improved from -$12.7M to -4.5M, while EBITDA improved from $2.1M to $10.4M.
Costs were mostly flat except in Sales and Marketing, which increased 22% from $17.1M to $20.7M. Julia and Lanny discussed growing their large account sales team, as well as continuing to invest in advertising in other marketplaces like Instagram and TikTok. This runs counter to the moves they had made a couple of years ago to cut sales and focus on a self serve efficiency.
Eventbrite is making moves to take advantage of the large float they hold from their customers – a strategy that Warren Buffet has made popular in the Insurance business. Lanny describes this in the Earnings call:
“Turning to the balance sheet, cash and cash equivalents rose to $580 million at the end of the first quarter, up from $489 million at the start of the quarter. Excluding ticket sale proceeds payable to creators, the Company’s available liquidity was $378 million at the end of Q1. We have repurchased 2.6 million shares or $15 million of our stock during the first quarter. Finally, we had $358 million in long-term debt outstanding at the end of Q1.“
RunSignup & TicketSignup Comparison
Eventbrite is about 7-9X bigger than RunSignup depending on the measurement parameter. Eventbrite serves as a useful comparison for our company, which is why we follow them quarterly. We are much more efficient and profitable and have no debt, which allows our employee owned company to sleep a bit better at night.
In Q1, Eventbrite had $906M in total transaction volume, while RunSignup had $130M in transaction volume – about a 7X difference. Eventbrite sold 21M tickets and we sold 2,272,237 – about a 9.3X difference. Here is a long term comparison chart showing RunSignup’s relative growth:
We continue to see opportunity for growing with customers who like the approach we take to business and our product superiority. And we continue to see our structure as a long term employee owned company as a strategic advantage over companies who are driven by short term metrics.