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Eventbrite's Slower Than Expected Integration With Ticketfly Was Key Factor in Stock Drop

Julia Hartz
Steve Jennings/Getty Images for TechCrunch

Eventbrite President & Co-Founder Julia Hartz speaks onstage at TechCrunch Disrupt at Pier 48 on Sept. 9, 2014 in San Francisco.

Despite increased revenues and shrinking losses, Eventbrite's weak Q1 sales forecast and slow client conversion sent stock tumbling.

On first glance, Eventbrite's fourth quarter earnings report issued Thursday (March 7) had the strong top-line figures investors wanted to see from a publicly traded tech company nine months after going public.

The company's revenue was up 21 percent for the quarter and net losses were down significantly over the same period last year, indicating that chief executive Julia Hartz was making progress increasing transactions and squeezing efficiencies out of the San Francisco-based middle market leader following the acquistion of Ticketfly in 2017.

But when trading on the New York Stock Exchange opened this morning, the stock plummetted 30 percent, temporarily dropping below its $24 IPO share price before inching back some ground. As of 3 p.m. EST, the stock was down about 22.5 percent with two hours of trading left in the day. 

Three factors seem to be pushing the share price down -- first the company had lower than expected financial projections for the first quarter of 2019 (which ends in three weeks), forecasting revenues between $80-84 million, well below the consensus target of $91 million. Second was growing losses -- while Eventbrite was able to lower net losses for the quarter, losses for the year were up 66 percent despite a 45 percent increase in revenues.

Third, and perhaps most important, was news that Evenbrite had hit some "execution hurdles," explained analyst Mark Mahaney from RBC Capital Markets, noting that the company was experiencing delays as it converted Ticketfly clients onto the Eventbrite Music platform.

"[Eventbright] is facing headwinds related to the migration of (clients) from the acquired Ticketfly platform," explained Mahaney, who said he believed the May 2018 "cyber incident" that saw a hacker take down the Ticketfly network for a number of days had slowed efforts to move Ticketfly clients onto Eventbrite Music.

Hartz and chief financial officer Randy Befumo told investors on a earnings call Thursday that converting Ticketfly clients (Befumo calls them "creators") had also been complicated by creator's schedules and their complex event calendars -- many creators were having trouble finding time to make the switch.

"It's the largest acquisition we've done today and what we've learned along the way is that serving creators in the migration context just takes time," Befumo explained. "It takes a deliberate approach because your odds of maintaining the creator and their trust are heightening if you are migrating along a timeline that makes sense for their business."

Ticketfly's main clients are concert promoters, venue managers and festival organizers and many didn't have the bandwidth to make the switch in the past six months, Befumo explained. Some are busy booking and preparing their events, while some are reluctant to switch to a new platform after years of being on Ticketfly. Befumo said he recognizes that some creators might be hesistant to leave Ticketfly, but said the company has been clear that its long-term strategy has been to create a single platform.

"We could run [Ticketlfy] as a side platform and not capture any of the synergy and have better growth optics, but we believe that would fragment our development capability and dramatically reduce the rate of innovation of Eventbrite," said Befumo, explaining this was "the most critical strategic consideration for our business."

Timing activities "to align with the creators requires some patience," Befumo added. "And if you have a team that you’re asking to focus on those creators, first and foremost, there are growth consequences. They just aren’t spending as much time growing the business.”

Many of Ticketfly's largest clients still have not made the switch to Eventbrite Music. Jam Productions Chicago venues like the Riviera Theatre and Park West are still on Ticketfly, as are the three venues that make up the Mercy Lounge complex in Nashville.

Billboard did a sampling of Ticketfly clients selected from a large signing period in 2016, which Ticketfly highlighted about a year before being acquired. Of the 17 clients the company announced had joined Ticketfly in August 2016, only two -- Moonfest in West Palm Beach, Florida and Many Rivers to Cross festival in Atlanta -- have switched over to Eventbrite. None of the venues signed in the August 2016 roundup have switched to Eventbrite: nine are still on Ticketfly and six have either left for a different ticketing company or ceased doing business.

Venues like Seth Hurwitz's 9:30 Club and The Anthem are also still on Ticketfly, while Brooklyn Bowl in New York and Manhattan's Bowery Ballroom still have not made the migration to Eventbrite Music. Other creators are making progress switching over — MRG, which operates a number of venues in Canada, recently completed the migration from Ticketfly to Evenbrite, executing a complex multi-venue conversion during the winter months when the live music scene is slower in Canada.

Several promoters who spoke Billboard on background said they were planning to make the switch over to Eventbrite and noted the delays stemmed from timing issues. Converting a club to a new ticketing company can means changes to booking, marketing and accounting and requires communication with fans and changes to how shows are promoted and settled.

Company officials said they felt confident that they would meet their goal of converting most of the Ticketfly clients over to Eventbrite by mid-year, with Befumo saying he was confident Eventbrite would soon deliver a "single global platform will pay off for many years to come.”

Eventbrite has also shown progress developing the international infrastructure needed to be a global platform, Hartz said, striking deals with payment processors in Latin America and Asia while investing $18 million in technology last year. 

"I'm also excited to continue to lean into the durable growth that our self-sign on creates," said Hartz, noting that the company's non-music ticketing platform continued to show double digit growth both domestically and internationally. The company's biggest challenge, financial reporter Andrew Sheivachman explained, is convincing investors that Evenbrite has enough runway to turn around mounting losses and accelerate conversion so that resources can be shifted to growing revenue.

"Is the bottom falling out for Eventbrite? Not really, but it needs to turn a corner soon to make investors more confident in its future," Sheivachmann wrote at Skift. "It takes time and money to build a global platform, and it looks like Eventbrite could be running out of time."


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