Live Nation Revenue, Attendance Each Up 8% in Second Quarter (Updated)

Driven by its concerts division, Live Nation revenue rose 8% to  $1.68 billion in the second quarter from $1.55 billion a year ago. The concerts division, the company's largest source of revenue, grew 10.9% to $1.2 billion in the second quarter. Its revenue was up 11.9% in the first half of the year.

Net income jumped to $58.1 million in the quarter from $7.7 million in the prior-year period. Live Nation's net loss of $5.1 million through the first half of the year is a big improvement from the $61.5 million net loss a year earlier. Adjusted operating income grew 9.5% to $159.9 million.

The positive results were a vote of confidence for the concert business, which has crawled back after suffering through difficulties at the onset of the recession. They showed Live Nation's long-term strategy is succeeding. And they helped substantiate the business model of SFX Entertainment, an EDM-focused rollup that has filed for an initial public stock offering.

Live Nation attributed the revenue gains to increased attendance in Europe, higher activity in international markets such as Australia, and new revenue from acquisitions. But those new acquisitions didn't add to the bottom line. CEO Michael Rapino said during the earnings call that growth in adjusted operating earnings was "organic" as the company had not made any acquisitions "of substance" over the last year.

Shares of Live Nation were up over 6% to $17.33 in after-hours trading. They are up 75.3% since the beginning of the year and have increased 80.9% in the last 12 months.

The second half of the year appears strong as 23 million tickets have been sold for concerts in July through December, a 50% increase over last year. Rapino said the company expects double-digit growth across festivals, amphitheaters and arenas and show count growth at clubs, amphitheaters and arenas.
Ticketmaster, Live Nation's ticketing arm, and the Sponsorships & Advertising divisions posted gains as well. Ticketmaster revenue grew $2.7 million to $337.8 million while adjusted operating income rose 8.7% to $77.6 million. The number of tickets sold for a fee increased 2.2% to 36.3 million while the value of tickets sold jumped 6.7% to $2.3 billion.
Sponsorship & Advertising had strong growth. Its revenue rose 16.2% to $71.2 million and its adjusted operating income increased 10% to $47.2 million.

Live Nation expects double-digit growth in concert attendance this year. It plans to grow its festival base by over 20% to more than four million attendees of 67 festivals in 15 countries.
EDM is a particular focus. This year Live Nation expects to double attendance of 17 EDM festivals in the United States and Europe year to more than 2.5 million attendees. Rapino said the company sees significant growth opportunity around the world for the genre and has received inquiries from around the world from people interested in launching an EDM event with one of Live Nation's brands.

"We're nowhere near saturation," Rapino said.

Investors should take note of that statement. SFX's entire business is being built on the belief that the EDM market will continue to grow.

Rapino added that EDM has great potential in sponsorships but currently accounts for less than 1% of total sponsorship revenue.

"My sponsorship team will tell me when they're out talking to the CMOs, one of the biggest questions they get is, 'How do we get into EDM? How do we get to that youth market?'"