SFX Earnings More Downtempo Than Upbeat

The problems that plagued September's TomorrowWorld festival didn't help SFX's third quarter, but they didn't hurt too much either. SFX took a $4 million hit from canceled or partially canceled events as earnings fell 7 percent to $133.2 million, or less than 1 percent excluding the impact of currency fluctuations.

The EDM promoter's operating loss doubled to $41.5 million. Net loss was $54.5 million compared to a $4.9 million gain in the prior-year quarter. An unspecified decline in download revenue at Beatport also impacted revenues. SFX said it expects its insurance policies will help it recoup part of the lost revenue. Transportation problems due to inclement weather caused TomorrowWorld to offer refunds to affected festivalgoers. Disappointing ticket sales caused SFX to cancel the One Tribe festival planned for late September.

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Chairman and chief executive officer Robert Sillerman called the quarter "challenging" in a statement included in the earnings release. He cited the cancellation of events and lower-than-expected sponsorship revenue attributed to "a timing issue." He also warned "the 2015 full-year financial results will not meet our prior expectations." Investors were unfazed, sending shares up 12.8 percent to 97 cents in after-hours trading late Monday.

The third-quarter revenue shortfall contrasted with growth in attendance and same-festival revenue. In the third quarter, attendance at the 286 festivals and other live events SFX produced, promoted, licensed or managed rose 24.8 percent to 1.95 million. Revenue from the 16 festivals also owned in the third quarter of 2014 was up 10 percent at constant currency.

For the first nine months of the year, SFX's revenue grew 18.6 percent to $306.5 million, or 34 percent at constant currency. Net loss increased to $144 million from $86.4 million. Event attendance during the nine-month period increased 34.8 percent to 4.08 million.

SFX has a market capitalization of just $92 million after its share price has fallen 81 percent in 2015. It has been plagued by cash shortages, management changes, and Sillerman's failure to secure financing for his attempt to take the company private. A second attempt to sell the company has resulted in a preliminary bid from Sillerman and interest from other, unspecified parties.