Earnings calls can make or break a company. Once the quarterly report is released, the results can either build investors' confidence or have them wishing they never heard of the company in the first place.
So far, 2022 has been a remarkable year for certain industries as everyone is seemingly rebounding from economic losses felt during the pandemic. While most are experiencing a boon in business, there are several factors to consider as to whether or not the results of one company can help inform another company in a different area of the same industry.
For example, what can live event companies learn about the future of live music from the recent earnings calls from Spotify, Universal Music Group, and Eventbrite?
Spotify, Universal Music Group and Eventbrite all saw positive returns for the second quarter of 2022 with each one experiencing an increase in revenue overall in comparison to the year-over-year in the quarter.
With Live Nation about to announce its second-quarter results on Aug. 4 (AEG Presents is a privately owned company), it will be interesting to see if they will experience similar results to Spotify, Universal Music Group and Eventbrite, especially given that the company reported positive earnings of 60.2% in the last reported quarter.
That being said, could the butterfly effect be taking place right now? Just because Spotify, Universal Music Group and Eventbrite are all flapping their positive wings doesn't mean there's a potential storm brewing for the live events industry. Or does it?
The positive results for Spotify and Universal Music Group show that consumers are willing to pay for the consumption of music but with rising ticket prices and a looming recession, are they willing to shell out the money to see these artists live?
Interest rates are increasing, as are prices. Unemployment is low and the GDP for the U.S. was negative for the second quarter.
All of this should point to a recession. When this happens, companies start laying off people and consumers reel in their spending habits. However, the opposite is taking place. (2.7 million jobs were added in the U.S. in the first half of the year and consumers continue to spend).
In a recent article in Fast Company, it was noted that "Consumer spending continued to rise, even adjusted for inflation, and is now roughly back on trend with what it was pre-pandemic. .....American consumers are unhappy, but are spending freely on air travel, hotels, and entertainment."
Of Spotify, Universal Music Group and Eventbrite, Eventbrite, given that there is a ticketing component to the company, would be the best indicator of consumers' current willingness to spend money on live events.
Ticketing is only one facet of the Eventbrite business model and, according to their Q2 earnings call, it was one of mixed results.
Co-founder and CEO Julia Hartz stated "Over 10 million unique buyers attended paid events through Eventbrite in 2Q. That is the highest level of consumer activity on our platform in two years. Events in music, performing arts, and food and drink are particularly popular right now and ticket sales in the United Kingdom and Australia are now 15% to 20% higher than they were pre-pandemic."
However, later on during the call, Charles Baker, CFO of Eventbrite noted "Ticket sales volume declined from the peak in March through June. However, that decline was smaller in 2022 compared to pre-pandemic years."
In short, while some markets are showing robust ticket sales, others are failing to follow suit. The interest in the consumption of music is there - it always will be. But, overall, live music companies will have a harder sell when it comes to getting butts in the seats.
