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Eventbrite Struggling Under Public Gaze

Posted on Thursday, May 30th 2019

Last year, San Francisco-based, Eventbrite, finally listed on the NYSE. The company had been trying to stay independent for a while. But being under public scrutiny hasn’t been very helpful. Investors haven’t been happy with its continuing losses and the stock price has tumbled. Nearly nine months after listing, the stock continues to languish below list price with little hope in sight for recovery.

Eventbrite’s Financials

Eventbrite was founded in 2006 by entrepreneur Kevin Hartz; his wife and MTV veteran Julia Hartz; and platform developer Renaud Visage. The trio wanted to build a platform that could enable creators to seamlessly plan, promote and produce live events while increasing reach and drive ticket sales. Within a decade, the company had worked with over 700,000 creators, and issued more than 203 million tickets across three million events in over 170 countries.

Eventbrite charges a service fee and a payment processing fee on tickets sold on its platform. Over the past few years, it has witnessed strong revenue growth. For the year ended 2018, it saw revenues grow 44% over the year to $291.6 million. But growing revenues haven’t translated to profits. Eventbrite had reported a net loss of $64 million for fiscal 2018, compared with a net loss of $38.5 million reported a year ago. The recently reported first quarter results weren’t impressive either and the stock fell nearly 30% soon after the announcement.

For the first quarter of the year, revenues grew 9% to $81.3 million, missing the Street’s expectations of $83.3 million. Loss per share of $0.13 was also significantly worse than the market’s forecast loss of $0.08 per share.

Among key metrics, paid tickets grew 14.5% over the year as is reported sales of 27 million tickets in the quarter. However, net revenue per paid ticket fell during the quarter to $3.01, down from $3.16 a year ago. Eventbrite attributed the decrease to a combination of currency fluctuations, mix in pricing packages and event categories/types.

Its forecast did not inspire much confidence either. For the current quarter, Eventbrite forecast revenues of $74-$78 million. The Street was looking for revenues of $82.4 million with a loss of $0.06 per share.

Eventbrite’s Concerns

The market is not happy with Eventbrite’s continued losses and the slow pace of integration for its acquisitions. In 2017, Eventbrite had purchased another ticketing player, Ticketfly, for $200 million. Instead of deciding to run Ticketfly independently, Eventbrite decided to merge the two platforms to deliver on its vision of a global ticketing platform. But the decision has resulted in significant challenges as nearly two years later, the two platforms are still not fully integrated.

The integration requires an intensive process with the teams focusing on migrating existing customers as well as building platform enhancements. It was expected to have been completed in 2018, but a data breach on the Ticketfly platform in June last year caused further delays. The data breach saw names and email addresses of about 27 million accounts being compromised, and resulted in customers abandoning the platform.

Things are improving, but at a much slower pace than anticipated. Eventbrite now expects to complete the integration later this summer. Till then, the company, and investors worry that when the time comes to finally switch systems, existing customers will decide to migrate to other event technology players instead. It remains to be seen what decisions the customers take, but if successful, the merger will help drive long term revenue growth.

Till September last year, Eventbrite was venture funded and had raised $332.2 million from investors including Tiger Global Management, T. Rowe Price, 137 Ventures, DAG Ventures, Tenaya Capital, Sequoia Capital, SV Angel, and several other individual investors. Its last round of funding was held in September 2017 when it raised $134 at an undisclosed valuation. A 2014 funding round had valued the company at over $1 billion. In September last year, Eventbrite’s stock listed at $23 apiece and raised $230 million at a valuation of $1.8 billion.

Its stock is currently trading at $15.99 with a market cap of $1.3 billion. It had soared to a high of $40.25 soon after listing. It has recovered marginally from the low of $15.30 that it had fallen to earlier this month, but continues to languish below its list price.

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