StubHub Aktie

All right. We're going to get it going. I'm Doug Anmuth, JPMorgan, Internet analyst. We're pleased to have with us StubHub Co-Founder, Chairman and CEO, Eric Baker. Eric co-founded StubHub in 2000. It was later acquired by eBay in 2006. Eric founded viagogo as an international secondary ticketing marketplace. And in 2019, viagogo announced the agreement to acquire StubHub.

Prior to StubHub, Eric worked for McKinsey and Bain Capital. Today, StubHub operates the largest global secondary ticketing marketplace. Last year, buyers purchased more than 53 million tickets from more than 1 million unique sellers on StubHub's marketplace. And this year, the company should generate around $10 billion in gross merchandise sales. So welcome, Eric.

Thanks for having me, Doug. Appreciate it.

All right. So you co-founded StubHub 25 years ago, but your path since then kind of taking the company to where it is today has been quite unique. Maybe you can walk us through a little bit of that history and just how that shaped your view of the ticketing industry today.

Yes. No, it's crazy to think I've been doing this for 25-plus years, Doug, so a long time ago when we started this. And so it's been interesting to sort of have seen this from when we started the secondary ticketing industry in 2000 through, obviously, as you said, then growing something internationally to really seeing that now people view sort of tickets. They don't really care about primary and secondary. They just want to get tickets to go live events period, sort of how that's evolved. And you look at -- at least I look at the analogy of something like YouTube that also in, I think, 2005, 2006, it was basically started as people with sort of their videos of their cats and user-generated content, then they had pirated content and now all content is sort of through YouTube.

So it's been interesting to see how the business has grown. The other thing is what's really been amazing is just the resilience and endurance of how much people love live events, which is phenomenal. That's been a constant. And I think even as the world gets more technology obsessed there's nothing like actually being live at a concert or at the Knicks opening game tomorrow night.

All right. Go Knicks. All right. So you've been a public company since September of last year. How has that influenced how you view and manage the business?

Yes. So I think we really -- Doug, it hasn't changed in that we try and manage the business for the long term. The whole goal of what I'm trying to do, I think of it as just generate as much cash flow per share as you can over time and do that by building sort of the best possible product and experience for consumers so that you've got an asset that will grow and revolutionize how people are thinking about tickets. All that being said, I think the big thing has just been it's important and appreciate the opportunity today to make sure that we're communicating effectively to the investment community and making sure people know what we're doing and have their expectations set correctly, that's definitely important. But the fundamentals of how we're trying to build the business have not changed.

Okay. Let's talk about the core resale business. North America live events growth has remained healthy. You've talked about continued strength in secondary ticketing, while the market has grown low double digits in recent years. All-in pricing had some impact in '25. We're about to lap that. How do you think about North America secondary ticketing industry growth over the next few years?

Yes. No, the industry has been great. So again, when you look at live events, you have this great tailwind that there's increasingly more events that people want to go to, things like the WNBA have taken off, things like you've got folks like Matt Rife, who is a comedian who started on YouTube. And so there's more and more content going on and the passion remains. And I think, if anything, people are much more focused on the experiences rather than buying goods. And so that's why we've always seen, and again, going back 25 years, the industry has always grown in double digits consistently with the exception of COVID, which it did not, Doug, during COVID. But other than that, it's been very healthy and in a good place. And I think, again, it's really live events is just the engine that powers it and we don't see that changing.

Okay. So maybe you can talk about all-in pricing a little bit. Maybe just explain a little bit of kind of what changed and what happened last year and how you're doing as you progress through that? And is the impact kind of mostly behind at this point?

Sure. So all-in pricing basically just means that the consumer sees the entire price and fees upfront. So it includes the fees and you get that rather than historically, as in a lot of industries, you'd have the fees in the back. So just to understand that, we at Stubhub had actually lobbied the FTC to get to all-in pricing as a standard rule for everybody because we thought it's best for consumers. And so they -- we were publicly on record doing that. And in May of last year is when the FTC passed the all-in pricing rule, I think it was May 13.

We knew when we lobbied for it that, that would have a short-term hit to what goes on because when consumers see the all-in pricing the first time, you get a conversion hit. So it's a onetime hit to the industry, and we estimated that to be in the neighborhood of 10%. The reason we did it is because over the long haul, it's much better for consumers. If it's better for consumers, it's better for us just because as a leader in the industry, if consumers are happier, they're going to be buying more. The other thing it would do, we believe, is it prevents -- if there are other people out there who are not as friendly for consumers who are trying to arbitrage, it would take that away. So to your question, Doug, it was last May that, that passed.

We believed in stuff that we've seen it's around a 10% plus or minus conversion hit, and now we're lapping it. So that's now behind us or will be. It will really be behind us in Q3 and Q4. So Q3 will be the first quarter where we really have a clean pass from AIP. But obviously, getting past that should make things a little bit smoother.

Okay. Let's talk about the upcoming kind of slate when you think about events. What are your views on the summer concert season, the World Cup, just overall event slate this year?

Yes. The live event slate for this year has been very strong. So there have been a number of great concerts that have gone out that should do extremely well. So whether it's like Bruno Mars went on sale, BTS, a number of other people that we've seen. Obviously, as you mentioned, the World Cup is being played. And so the World Cup is always a great event. It's great, particularly we have a global platform. So we're in 200 countries and territories, and we see a ton of event tourism all the time.

And so the World Cup is just a phenomenal event for us in terms of not simply what it provides in terms of sales, but it's a great way for us to -- more global folks to become aware of our reach and how much that we can do. So we're pretty excited about all that. I think 2026 is a very solid year for Live Events.

Okay. You've outgrown the market really over the last several years, you've close to 50% share. How do you think about the right balance between continued share gains and margin expansion going forward?

Yes. So I think as you point out, Doug, we're the leader in our market in our space and something that we were clear about and have explained to people is that the past 2 years, and we had taken possession of the company back from eBay to build back market share and take that commanding leadership position, we had intentionally made a number of investments into market share and sort of doing that. And we believe now, and as we said, going into this year, we would be harvesting on that where basically now you've got a leadership position. And we also had always said we're in a -- from our lived experience, a marketplace business that has network effects and flywheel.

So when your relative market share becomes commanding and you have half the market or more, that is very beneficial. And so you should be able to grow while you inflect and increase your margins and sort of eliminate some of that trade-off. That was implicit in the guidance that we put out for this year, Doug, and sort of said we're going to grow while we inflect margins. And that, in fact, is what we demonstrated in Q1, and we have a lot of confidence in that for the year as we laid out. So I think the key is just to understand when you have a leadership position and high relative market share in this network effect business, marketplace business we're in, it is actually allows you to grow and inflect margins. And so you're not -- you don't have to have a trade-off between those 2 things. And as we believe, and as I've said, we expect that to continue.

Okay. Great. Let's shift gears, talk about open distribution. You've evolved your strategy from what was business development led to now more of a product-led approach. You recently announced the StubHub distribution manager tool that allows content to sell directly through your platform. Maybe you can talk about the pivot early feedback and why this is the better approach for you?

Sure. No, absolutely. So let me start by just making sure everyone is familiar with what is open distribution fundamentally, and then I'll get into how we've evolved our strategy and what we're doing to make it a reality. So open distribution is a very simple concept. It's basically the belief that if you're a content owner, you could be a theater owner, you could be an artist, a team, anyone with tickets, you should sell your tickets over StubHub, just like everyone else does and use our data and distribution. And so when we go to someone who's a seller of a ticket, whether it's the Dodgers or whomever, we're basically saying you should sell over StubHub on a nonexclusive basis, so you can sell anywhere you want, including StubHub, nonexclusive, and we don't charge you because we have a marketplace model, the consumer is buying. You're really just like any other seller over our marketplace.

And that's been extremely well received because if you go to someone and say, I'm going to give you more data and distribution at no cost. And if we don't perform, then that's fine. And so what we found, Doug, is we had started that model and doing things like that where we signed the Yankees and other teams to do this and had a lot of success with them. And we'd originally -- some of those major deals where, as Doug alluded, what I'd call a business development approach, which is you meet with leadership at these clubs, get them to sign up for a period of time, have a certain number of tickets and you could sort of build that out. Again, having done this a long time, it sort of -- as we looked at it, sort of said, wow, imagine if you could shift this model, it sort of -- that's more like what Yahoo! did to build their advertising business back in the day, they would go and they'd say, hey, we signed up Pepsi. Coca-Cola, General Mills and stack them. And while they were doing that, Google sort of perfected a platform that was very product-driven. And by having a product, it sort of becomes self-serve. You don't need a contract.

And obviously, the rest is history as they got that right and Google far surpassed what Yahoo! had been doing. So what we saw in the past number of months was that we really had people coming to us who were staying across the spectrum of various sizes, who wanted to use the open distribution model and that rather than it being about a long conversation biz dev wise in order to have a partnership and a press release, you sort of started when the Dodgers had approached us and said, we'd like to sell directly over StubHub, and we were prepared, oh, maybe I've got to go out to [indiscernible] and meet with ownership and like no, no, no, we have some people in-house, set it up, allow us to sell the tickets.

And that worked very well, gives them a ton of flexibility because they can determine on a game by game, day-by-day basis, what they do or don't want to sell. So to be clear, they could stop selling tomorrow if they wanted or they could triple the amount they want to so it's all what makes sense for them, and it's been very mutually successful. And so what we realized is that you need to just eliminate the barriers and the friction for everybody else in the tail so that it should be as simple for someone if you have a theater in Amsterdam as a soccer MLS soccer team in the States or the Dodgers to sell these tickets.

In order to do that, it's really about getting the product and making it very simple and getting it right. So you mentioned distribution manager where we took -- used AI to create a very easy tool for these people to be able to sell their tickets in a simple way that eliminates the friction for that. We've done integrations with their access control companies to make it easier on their dashboard to sell tickets. And as we do that, we think we position ourselves extremely well to capture this massive opportunity of $160 billion of tickets that could be open distribution tickets over StubHub. But again, this year is all about for us getting that product right and laying the groundwork for it so that afterwards, we can then get to really ramping up the volume.

Okay. How do we think about just product innovation road map there? Any time lines in particular around open distribution?

Yes. So I think the way we've -- so I'll talk about how we think about it. We obviously -- this is already people are using this product. We have hundreds of millions of dollars that goes over the pipes. But we're trying to refine it and get it right, as I said, so that we can really push it out in a big way in the future. What we have said time line-wise is this year, we're not focused on driving more GMS as the goal, but rather getting the setup correct. Once we have that, we'll certainly communicate to folks about what the time line financially should look like and what the GMS expectation should be. But for this year, where we wanted to make clear is we put out a guidance that sort of assumes no material growth in that area as we work on the product. And so that's factored in.

Okay. How do you frame the size of the open distribution opportunity? And then how should we think about economics relative to core resale?

Yes. So the exciting thing about open distribution, again, it's really just more supply that can come on the marketplace, right? So just think of it as we have fans, we have professional sellers and then you've got content holders. It's really tapping into that content bucket. That content bucket, if you look at it, and I think as we've talked about in prior presentations, there's about $160 billion globally on an annual basis that flows through what we would be accessible. Even if you took out what Ticketmaster does because Ticketmaster is probably not clamoring for open distribution, although they may end up there. They probably on a paid ticket basis, I think, disclosed somewhere around $35 billion to $40 billion.

And if you look at everything that's touched by Live Nation more broadly, you might total the whole thing inclusive of Ticketmaster in the $70 billion-ish range. So even if you back all that out, it's a $90 billion opportunity even if you weren't to touch any of the other stuff, and we already are. So it's a large opportunity. It's a large ocean of tickets. It's a big TAM expansion for us.

To your second question, which is, well, but how should I think about when those tickets flow, we obviously already have tickets flowing and the economics to us are the same, by which I mean, again, when we sell a ticket from a season ticket holder, a fan, power seller broker, we have our fees, our take rates, we make around 20%. That is the same if the Dodgers are selling a ticket or anyone else, which makes sense when you think about it because we're just running a marketplace. And so if you want to sell in our marketplace, that's how it works, and it's not exclusive. So you can sell simultaneously on many marketplaces, many outlets, many stores. And if we do our job and we're able to monetize the ticket for people, great. It doesn't cost you anything.

Okay. Does the recent DOJ Live Nation settlement help increase open distribution in your view?

Yes. I think -- so the first thing, let me just frame it, Doug, is that everything I've talked about with open distribution and what has already been in motion has no reliance on the DOJ and the Ticketmaster stuff. So this is all assuming just the status quo is forever. That being said, Doug, as you point out, with Live Nation and the DOJ, Live Nation came to a settlement with the DOJ, where they said, okay, we'll do A, B, C and D, and you can read sort of what they put together.

But what was really heartening and positive is that it really revolves a lot around open distribution, by which I mean they said you need to be able to distribute the tickets more openly, make it easier for people to interact, have larger percentages of tickets even through their network that are open.

The fact that, that is something that was front and center, I think, is only a tailwind for us. It's only helpful. Again, I caveat that with who knows what will be in forest, who knows what will happen. But anything that does transpire along those lines is only to the upside for us.

Okay. Let's shift gears, talk about advertising a little bit. Maybe you can just walk us through the opportunity that you see to open up the platform to advertising. What would it look like? How big of an opportunity is it for you?

Sure. So the advertising, we believe, is a massive opportunity. We know that there are tons of -- we have a great motivated passion base of folks that people want to reach in a very targeted manner. One of the most exciting opportunities that we've talked about is sponsored listings, which is that we know that it's very common on the marketplace and that sellers want to bump their listings up and make sure that they can pay to get them in front of as many people as possible. That's been proven in a lot of marketplace businesses.

What we have said, Doug, as you know, is that the key to us is making sure that the customer experience doesn't get compromised and that actually it's maximized and enhanced. And so what we've been very careful with is we've tested it and we started testing it in the fourth quarter is trying to get that right before we scale in a dramatic way. So what do I mean by get it right? What are we looking at there? One is, again, on customer conversion experience. And what we've realized is it's no longer, especially with what you can do with AI and being innovative, a goal of just having do no harm, you can actually end up with a session that could enhance your customer conversion and experience.

The second thing is getting the right sort of framework, both economic and product wise. So product-wise, is now what you can do with the products even on that side, if you build for the generation of AI-powered products is make it simpler, eliminate the friction, roll the thing out the right way. And then what's the right economic framework to charge for people and how to collect. We want to get all of that right before we scale it. So we've been testing and rolling out ads and doing all of that, getting that set up.

And again, from a time line perspective, we wanted to be clear to communicate that for our guidance in 2026, it does not assume any appreciable ad contribution. Again, the idea is that we lay the groundwork and then going forward, then we can direct and indicate what that will be. But we're very excited about the opportunity. We know it exists. We know what people want it. We just want to make sure we get it right for the long term.

Okay. And then what about on the kind of the second opportunity within ads, more of the brand side and bigger companies?

Yes. So I think what you're talking about there is there's this concept of partnerships and ad partnerships where I think about it if you're going to a live event, there's like how do I travel to the live event. We've done some stuff that we're testing with booking. Can I get a car ride, things that one might do with an Uber or someone like this or Waymo? Where am I going to eat before the game? So what's my merchandise? So those are all very natural complements.

We've done a little bit of that where we're testing it out. Again, it's about getting it very seamless in the customer experience. The big thing is oftentimes, you might have some advertisers who want to control that customer experience, and that's the fastest way to monetize immediately. That's not worth it to us. So that's why we're taking our time to get it right. But it's clearly an area that is well trodden by other people that exists. It's about a matter of getting it right, and we're just trying to make sure that we have our ducks in a row before we put our foot on the accelerator.

And I know it's still early, but any view on where ad penetration levels could go like over the long term, just as a percentage of GMS?

Yes. No, we want to -- we're obviously very bullish on it, Doug, and believe there's a big opportunity, but want to be very measured until, as I say, until we have a firm sense of what we believe we want to roll out when we want to be careful about setting expectations. Again, I think what's great is, again, people can look at various benchmarks for marketplace businesses and see what is possible, which is pretty exciting and make your own judgment, and we'll guide you as we know more.

Okay. Great. Let's talk about regulatory a little bit. There are some efforts just across different markets to implement caps on the resale price of tickets. What are your views on these initiatives? How do you think they impact the business?

Yes, sure. So I think on the price caps, and this is -- let me back sort of first set the stage. And I think, Doug, the stuff that's mostly in the news and what people talk about these days and when people are looking at it is really about you have these very few high-end concerts every year, which would be like a Taylor Swift type of concert. And people are like, oh, my goodness, we don't want someone coming in a bad actor hoovering up a bunch of tickets and then selling them at huge markups. And that's really what dominates the discussion. So one way people have looked at stuff is they'll talk about, well, we should have price caps.

So I'll talk about that. The first thing is, obviously, we work for fans, consumers, like that's not just happy talk like that's our business like they have to come back and be happy or else we don't have a business. So we always want what's best for the fan and consumer, and I believe that legislators and regulators basically, they're just trying to make events more accessible on a fair basis for people and make sure things work, which we're sort of aligned. So we have the same goal. The key is like educating people about how do you achieve that. So when we've looked at what we've seen in the few instances where price caps have been placed out there, they don't work in jurisdictions. What happens? What happens is you drive a black market, which raises the prices in the black market and the fraud goes up tremendously.

So reports have shown from economists even 4x as much fraud. So that doesn't work. The other issue is that it's very hard to even enforce these types of things because you increasingly have the concept of even what the face value of the ticket is doesn't make much sense because they're dynamically pricing in the primary market, and there's no longer a face value of the ticket. So for all those reasons, it's just not practical, doesn't work, has been rolled back in many places. And what I would say is you can even look at the U.K., I think it was about 5 months ago, Doug or 6, there was a public announcement, it was October, and it said a government official had said they're going to recommend a price cap in the U.K. And the first thing was misunderstood here that people thought there already was a price cap, which there wasn't. It's a process, legislative process.

So they have to take it to something called the King speech that happens every spring, propose it and then it takes another year to go through Parliament if it goes through and then it takes more time to activate. And we said at the time, look, this is a complicated issue. We're educating them. It's not so simple. And in fact, the King speech was just last week, and it was not in the King speech. So they're not moving forward at this time with that, they'll have to see if they come forward again. And again, I think that's because as they get more educated about it, they realize it's probably not doing what they'd hoped it would do.

The last thing I'd just say about price caps and since it's been helpful, Doug, and we mentioned this on one of our earnings calls, for investors is to say, okay, let's just back up and sometimes people said, well, how do I boundary how much of your business is this? What if you -- what if the intergalactic court just said price caps everywhere like this, and it just happened. And we try to explain to people, look, it's really just a subsegment of our business. So we looked and I think we explained if you took high-end concert tickets for the high-end concerts that are bought by these professional sellers that are talking about and at the relevant price caps, you're talking around 10% of our GMS. That's it. And again, that's if across all 200 jurisdictions and more, you had a problem. So it is containable. It's a discrete issue, which, as I say, we believe is not going to occur. But even if you disagree, you can boundary the impact to what I said.

Okay. Great. Let's shift gears, talk about AI. So the potential for marketplace disintermediation in an agentic world just obviously remains top of mind for investors. How do you think about that AI threat and opportunity for StubHub?

Sure. So AI is obviously a huge disruptive technology across the board. A lot of exciting things going on. No one knows exactly how everything will play out. So we take it very seriously. That being said, we think we're positioned for this to be a great tailwind for us and very positively positioned. So why do we think that? First of all, we're dealing with live events in a real-world product. So we run a 2-sided marketplace with a lot of complexity, where at the end of the day, you're going to the Red Sox game where you're going to a concert and whatnot. So we think that's a good place to be. It's not like we're not selling software.

We're not selling content that you can replicate. So we think that's great. That also means that the supply chain, everything from payments to fraud, to gathering all our disparate suppliers is not the type of thing that is in the sweet spot for what AI is trying to do. Where we see the upside is that there's a tremendous ability to use this technology to revolutionize in a positive way, the experience for consumers. So we believe that you have an agentic experience through StubHub, where basically they'll say, hey, Doug, we know you, you love Michigan. Here's where you like to sit. This is what you're interested in. And it can present options for you and the experience of buying tickets will look completely different and whether you're doing that through a voice modality or whatever you may be doing. So we think that's very exciting. Obviously, as many people have said, you can then take the technology to eliminate friction through the rest of the chain and do that in a very cost-effective manner.

So you can take cost out while you're improving your product and you are actually improving the revenue component. So you're making more money with a better product experience at lower cost. And we believe the key is to be a leader in a vertical like ours. So if you're the leader in the vertical marketplace like this that's well situated, you can really get a huge data advantage that we have. And that data advantage that we've talked about before, we think, becomes even more insurmountable and powerful. So that's a long way of saying a lot of exciting things. We have done integrations with Claude and with ChatGPT. One thing to comment there because people often are interested. Today, that's de minimis, google Search, Facebook, those are as strong as ever, going great. But we want to make sure we are wherever the consumers are going to go. And so we want to be on the cutting edge of that. So it's very exciting to be integrated with these partners, and we'll see how it plays out. But it's exciting times.

Okay. And anything to call out just in terms of kind of internal product development and increased efficiency?

Yes. I think there's 2 things I'd say because I think a lot of people understand, and it's across the board that most companies, obviously, can be more efficient. Your people are more efficient. You can start taking back-office costs out, and that's all exciting in the future. Two things I think are underappreciated. One is the speed to ship. So we're a product organization and a product technology organization. So the faster we can ship and innovate product is just hugely -- that's hugely beneficial thing for us. And what you can do now is really increase that speed in ways that you couldn't before.

The second is, I think, the ability that we have now to take our data analytics and really get much or insights much more quickly and much more actionably. So in other words, imagine we've always prided ourselves on using our data to test, to think about things. What you can do now is really amazing. You have that data almost instantaneously, the ability to analyze the data so quickly to then make better decisions on a quicker basis. So if you can make better decisions on a quicker basis and you can, therefore, ship your product faster and that compounds. I think that's going to create, again, a scenario where when you're the leader, as we talked about or any leader in any space and you've got a data flywheel, that benefit is just going to compound and sort of create an even more yawning gap between the winners and people who are not the winners.

Okay. In terms of just thinking about kind of '26 guidance and financials, you've guided to about 9% GMS growth at the midpoint for this year. That implies accelerating to double-digit growth in the back half. How do you think about shape of the year? And I guess, what gives you the confidence in that back half growth, recognizing you'll lap all-in pricing?

Yes. No, absolutely. As you pointed out, Doug, our guidance is 8% to 10% growth of GMS and $400 million to $420 million on the EBITDA line. And we're very -- we just reiterated our confidence in that guidance on our last call, which we're very excited about, again, with the health of everything going on, the inflection and the growth. I think in terms of the shaping, clearly, when we look and we look at it annually, but as I think you alluded, the back half of the year typically is where there's a lot of stuff going on. There's a great calendar this year. There's a lot of positive benefits from, we believe, from lapping all-in pricing. So we're very confident in our guidance and stand behind it.

Okay. And anything to call out just in terms of how we should think about contribution from the World Cup?

World Cup, it's a great event. I think, obviously, what I would say is it's -- we've always said, and I think as we said on our call, it's like a Tier 1 event, the way that we've thought about it. That's like a top concert or something like that. I will say sometimes people are like, well, isn't it like Taylor Swift? I just would reiterate, there's only one Taylor Swift. So I don't think that's anticipated. We'll let you know if it turns out that that's different. But it's a great event, and it's performing exactly as we anticipated up till now.

But that's factored into the guidance we just talked about and how we think about the year. We'll obviously know more after it really goes through June and July are the key months where the tournament is going on. And as we know more and that closes out, we'll certainly inform you about it. But it's tracking as we would expect as a very strong event as we sit here today.

Okay. Your guidance also suggests margins will expand pretty meaningfully this year. Maybe you can just help us directionally kind of bridge that expansion across take rate normalization, improved marketing efficiency, operating leverage, just anything else we should be thinking about?

Yes, sure. So as you point out, and we mentioned before, implicit in the guidance we gave is obviously that we'll grow and will [ affect ] margins, which started happening sort of in Q1, and we think it will continue. So to your point, as we laid out, why does that happen when you get, again, scale leadership in a business like this. And I think, Doug, you alluded to a number of the points that contribute to that. One is that you just get obviously operating leverage as you get bigger. The second is that as you have leadership in the market, you're just more efficient naturally, we found in everything that you do because what's happening as we've gone into an upward trajectory, other people go into more of a downward spiral, right, in terms of how much liquidity they have and how efficient they can be. So you end up being more efficient through the channels that you market through. You get the compound effects through your repeat usage and your direct traffic. All of those things are extremely positive.

And then, Doug, I think as we also had mentioned and you mentioned here, you get normalization of the take rates, which will approach 20%, which is normal course for us as opposed to what in the past in the last 2 years, we were in that mode of sort of solidifying market position. So all those things come together to end up with why we believe we will report those numbers that we talked about, which will demonstrate that we've been able to grow while inflecting margins. And hopefully, again, I would just say, because it's important that we do that to demonstrate that, we've lived that experience before. Obviously, there are folks who may believe or could say, I don't know, you're in a commodity business. And in a commodity business, if you're not a network effect marketplace business, you only have price in advertising. And in those businesses, you either lower your prices or you spend more on advertising to grow. That's not the business that we're in. And so that's why we look forward to posting those numbers and demonstrating confirmation of that, that we will be able to grow while we inflect our margins.

Okay. Great. So just wrapping up, what are you most excited about? Is there anything you think is misunderstood about the company or its positioning in the industry?

Yes. No. Obviously, as you can tell, very excited about -- I mean, thank God, I'm in the live events business that is a great business to be in. I [ lucked ] into being in live events. People love sports, they love concerts. It's more and more global. So that's great. And we have leadership in our marketplace and so many TAM expansion cases. I think in terms of misunderstood, it's on us to communicate better. I think, Doug, I appreciate the opportunity to address some of those things. I think like we talked about some of the regulatory stuff, not understood what's actually going on. We brought up like the ad people who think, oh, in the U.K., you're already outlawed or the exposure of price caps.

And so hopefully trying to make sure people understand that. And also people just understand the dynamic of the marketplace business with the leadership position. I think there are people, again, who I don't think fully appreciate how our business works and the way it does. But that's why it's important that we do what we say we're going to do and grow and inflect margins and demonstrate it. So I appreciate the time and appreciate the interest.

All right. We're going to leave it there. Thank you, Eric.

Thank you.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to StubHub's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, May 13, 2026. I will now turn the call over to Jonathan Schaffer, SVP, Investor Relations with StubHub.

Thank you. Good afternoon, and thank you for joining us to discuss StubHub's first quarter 2026 results. For reference, our first quarter earnings release and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com.

Before we begin, please note that today's call will include forward-looking statements. These forward-looking statements are based on the company's current expectations and are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can make no assurance related to its expectations. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

We will also refer to non-GAAP measures on today's call. Unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is contained in today's earnings release available on our Investor Relations site. All financial comparisons, unless noted otherwise, are based on the prior year period.

Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Connie James, our Chief Financial Officer. They will provide opening remarks and then take questions. And with that, I'll turn it over to Eric. Eric, you may begin.

Thanks, Jonathan, and welcome, everyone, joining us today. We are off to a positive start in 2026 with solid top line growth and increased profitability. GMS increased 7% to $2.2 billion, and adjusted EBITDA margin expanded to 16%. We also generated healthy cash flow, which enabled us to further deleverage and strengthen our balance sheet. As a result, we are reiterating our full year outlook for GMS and adjusted EBITDA.

On our year-end call in March, we outlined our 3 key priorities for StubHub in 2026: Growth in our core resale marketplace; increased profitability; and advancement of longer-term distribution opportunities. The quarter demonstrated our team's execution against all 3 of these objectives.

Starting with growth in our core resale marketplace, we are leveraging our leadership position and scale to drive performance both in North America and globally. The live events and secondary ticketing markets remain healthy with strong consumer demand and a robust 2026 event calendar. In addition to favorable market dynamics, our resell business is also benefiting from advantages resulting from our increased scale.

In 2025, we invested in our competitive position, increasing liquidity and selection and building the infrastructure to support continuous improvement to the customer experience. In 2026, we are realizing the returns on these investments in the form of superior market leadership and even greater operating advantages. We believe our leading position, combined with the inherent flywheels of our marketplace model, allow us to improve customer acquisition economics while growing the business.

Of course, our market leadership is a direct result of our relentless focus on the consumer experience. StubHub's mission has always been to make it easier for fans to access live entertainment. Our resale marketplace allows fans to buy and sell tickets with choice, convenience and trust. We deliver a differentiated experience to consumers based on our scale advantages. Fans choose StubHub because we offer broad selection, trusted transactions and a simple user experience. Sellers depend on StubHub for aggregated demand at global scale. Our technology and data connect both sides of the marketplace more effectively over time. That is what makes our consumer experience unique and creates durable competitive advantages. All of this adds up to what we believe is the most recognized brand in the resale market for live events.

In the first quarter, we made progress in expanding the supply side of our marketplace beyond individual and professional sellers to enterprise scale sellers, including content rights holders such as professional sports teams, artists, venues and other event organizers. We believe it is clear the market is heading in the direction of nonexclusive open distribution. The ticketing ecosystem, including consumers, stands to gain from greater optionality and competition. Fans want more access and choice, and content rights holders want to fill more seats by offering inventory through more channels. Much like airlines selling tickets across platforms, the goal for content rights holders is to sell more tickets at more efficient prices and maximize the fan experience and value of each event through event optimization.

It appears the regulatory environment is also recognizing the value of nonexclusive open distribution. A recent proposal to settle antitrust suit in the live events space included nonexclusive distribution, reinforcing the importance of giving content rights holders and consumers greater choice in how tickets are distributed, discovered and purchased. On our last call, we discussed our shift from a business development-led approach to a more product-led self-serve platform strategy. Our goal is to enable broader adoption of open distribution across rights holders by creating a seamless experience to list, manage and distribute tickets through our marketplace.

In the first quarter, we announced 2 new developments that illustrate how we can use technology to access this market. The first is Distribution Manager: An AI-powered self-serve tool that allows artists, teams and venues to list and manage tickets directly through StubHub. The product is designed to remove friction for rights holders and does not require a technical team or complex integration. A partner can use a simple prompt to identify ticket types, set pricing and sales parameters and list inventory directly on StubHub. Because the tool sits on top of more than 25 years of StubHub marketplace data, it can also provide real-time pricing and demand signals to content rights holders before tickets go live. This is an early iteration of the tooling we plan to continue developing for enterprise scale content. It is designed to make distribution simpler, more flexible and more effective for rights holders while increasing access and selection for fans.

We are also establishing direct connections with primary ticketing platforms. By integrating directly with StubHub, primary ticketing or access control, providers can work alongside our marketplace to improve outcomes for rights holders and fans. Today, event organizers often list tickets exclusively through their primary sales channel with systems that were not designed to synchronize inventory across channels, making it difficult to expand distribution without added complexity. Open distribution, formerly known as direct issuance, changes that. By integrating directly with the ticketing platforms organizers already use, we can give rights holders access to StubHub's global demand without requiring them to change systems, disrupt their existing workflows or enter new distribution contracts.

For example, in the first quarter, we announced an integration with a primary ticketing company that tickets rights holders like Stanford University Athletics, among others. Through a direct connection between the primary system and StubHub's marketplace, organizers can choose to list tickets on StubHub within their existing dashboard. Integrations like this enable all of the primary clients to activate StubHub as an additional distribution channel through a simple workflow.

We also continue to develop advertising, which represents an exciting opportunity to realize additional potential of our leading marketplace platform.

StubHub sits at the intersection of high intent consumer demand and live event discovery. Over time, we believe that creates opportunities to help partners reach fans in highly relevant ways while improving the overall experience on our platform. We are in the testing phase with advertising, and our focus remains on building it thoughtfully in a way that is consistent with our broader consumer-first approach.

In April, we announced an integration with Anthropic's Claude that lets fans discover and browse live events. Claude users can access StubHub's global catalog of live events with up-to-the-minute price and seat level availability. The partnership builds on StubHub's ChatGPT integration announced at the end of last year.

We view AI through 2 lenses: the opportunity to transform the end user product; and the ability to transform productivity internally through greater and faster innovation with higher efficiency. We have several AI initiatives underway related to post-purchase support, customer experience enhancement, product development and expanded insights, just to name a few.

In conclusion, we are off to a positive start to 2026 with solid first quarter results that position us to achieve our financial outlook for the year. Our core resale marketplace continues to grow while increasing profitability. We are generating strong cash flow and strengthening the balance sheet, and we are continuing to invest in technology and distribution opportunities that we believe will expand our reach over time. We remain focused on executing in pursuit of our vision to build the global destination for consumers to access live entertainment.

With that, I'll turn it over to Connie to discuss our financial results and outlook in more detail.

Thank you, Eric. Good afternoon, everyone. Before turning to our first quarter results, I want to briefly reiterate the financial framework aligned to our strategic objectives that Eric discussed: Durable GMS growth; meaningful margin expansion; and continued strength in free cash flow generation.

Our results in the quarter demonstrate progress in each of these areas. Beginning with GMS, our marketplace grew approximately 7% to $2.2 billion in the first quarter, reflecting contributions from all 3 drivers of our growth strategy: North American resale growth, continued market share leadership and international growth. The market share gains achieved in 2025 now provide a foundation for margin expansion as we leverage the scale, network effects and efficiency of our marketplace. International growth outpaced North America with noteworthy performance in Latin America and Asia Pacific, reflecting the continued strength of our global platform. As expected, our reported GMS for the first quarter reflects the comparability impact from the all-in pricing implementation introduced in May last year. We will fully lap that comparability period in the second quarter.

Before discussing our income statement in detail, a reminder that my remarks will be on an adjusted basis, excluding stock-based compensation and nonrecurring items. Full reconciliations to comparable GAAP measures are available in our earnings release.

Turning to the income statement. Revenue increased 12% year-over-year to $446 million, outpacing GMS growth in the quarter. This reflects the normalization of GMS to revenue conversion as we lap our market share investments in 2025. Now that we have moved beyond that investment period, we expect conversion to return to more typical historical levels approaching 20% for the full year. Gross margin was 85%, expanding approximately 100 basis points year-over-year and consistent with our mid-80% operating framework. The improvement reflects stronger unit economics driven by increased efficiency and customer acquisition and servicing as well as lower inventory costs.

Sales and marketing expense was approximately 50% of revenue, representing a 500 basis point improvement year-over-year, reflecting increased efficiency at scale. Operations and support costs were approximately 3% of revenue, consistent with our expectations. G&A expense increased by approximately 170 basis points as a percentage of revenue, primarily driven by elevated professional fees and front-loading of payroll taxes associated with higher stock-based compensation following our IPO. We expect G&A to decrease as a percentage of revenue over the remainder of the year as the business continues to scale.

Adjusted EBITDA was $72.1 million, a margin of 16%, which expanded over 400 basis points year-over-year. The margin expansion reflects both underlying business growth and improved operating efficiency. More specifically, this improvement was driven by the combined impact of normalized revenue conversion, strong gross margins and increased marketing efficiency. Each of these dynamics contributed in the quarter, resulting in the operating leverage outlined in our 2026 framework.

Net income for the first quarter was $48 million. I would note that net income includes the effects of stock-based compensation, nonrecurring items, foreign exchange and derivative gains, interest income and expense and taxes, each of which can introduce variability relative to our adjusted results. We believe adjusted EBITDA helps to highlight trends in our operating results by excluding these items and the reconciliation to net income is available in our earnings release.

Beyond the income statement, our cash flow performance reflects the advantages of our marketplace model. As a scaled asset-light business with gross margins above 80% and favorable working capital dynamics, we generate strong and durable operating cash flow. This is further supported by a significantly reduced interest cost burden following the repayment of over $900 million in debt in 2025. During the quarter, capital expenditures were approximately 2% of revenue, and we generated approximately $11 million of interest income. We also continue to benefit from approximately $1.2 billion of NOLs, which provide meaningful cash tax protection in the medium term.

Because our business is inherently seasonal and individual quarters can reflect meaningful timing-related swings in working capital, we believe trailing 12-month free cash flow is the most appropriate lens through which to evaluate our cash generation. We generated approximately $298 million of free cash flow on a trailing 12-month basis, representing a 116% conversion of adjusted EBITDA. This includes approximately $189 million of net benefit from net inflows of buyer receipts and seller payments as well as approximately $125 million of interest costs. Excluding these items, underlying free cash flow was approximately $234 million, representing a 91% conversion of our trailing 12-month adjusted EBITDA.

Turning to the balance sheet. We ended the quarter with approximately $1.5 billion of cash and cash equivalents or $508 million net of seller obligations. Net leverage improved to approximately 4x trailing adjusted EBITDA at quarter end, down from 4.5x at year-end 2025, reflecting both earnings growth and continued strength in cash generation. Our financial position provides meaningful flexibility to execute against our capital allocation priorities. We remain focused on organic investment, continued deleveraging and disciplined dilution management, while maintaining the flexibility to pursue opportunities that enhance shareholder value.

Subsequent to quarter end, we repaid $100 million of our U.S. dollar term loan, further demonstrating our commitment to deleveraging and our ability to deploy free cash flow towards debt reduction. This brings total debt repayment over the last 12 months to more than $1 billion. As a result, our total outstanding debt is approximately $1.4 billion with no maturities until March 2030.

Related to our capital structure, during the first quarter, $314 million of preferred equity, including our Series M, N and O shares converted into approximately 16 million shares of Class A common stock, resulting in 374 million common shares outstanding at quarter end. In May, we granted approximately 13 million RSUs under our employee incentive plan. Equity is an important component of compensation for our employees and reinforces an ownership mentality. At the same time, we are focused on dilution management. As you can see in the share count summary in our investor presentation posted to our Investor Relations website today, we had approximately 399 million fully diluted shares as of March 31, excluding performance-based RSUs and options. Based on that fully diluted share count, we expect dilution to be in the low to mid-single-digit percentage range for the remainder of 2026, excluding performance-based RSUs and options. As of today, we believe the majority of the RSU awards for 2026 have already been granted.

Turning to our full year 2026 outlook. Our first quarter performance is consistent with the framework we outlined at the beginning of the year and supports our confidence in the trajectory of the business. We are reiterating our full year outlook for GMS and adjusted EBITDA. GMS of $9.9 billion to $10.1 billion or year-over-year growth in the range of 8% to 10% and adjusted EBITDA of $400 million to $420 million. We guide on an annual basis given the inherent seasonality of live events, which can vary quarter-to-quarter. We expect the first and second half contribution to full year GMS to remain broadly consistent with 2025.

In closing, our first quarter results are consistent with the framework we outlined at the beginning of the year. We remain focused on executing against these priorities, driving sustainable GMS growth, expanding margins through operating discipline and generating strong free cash flow, and we look forward to reporting our progress throughout the year.

With that, we will open the call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Eric Sheridan with Goldman Sachs.

Maybe a two-parter, if I can. In terms of what you're calling out in terms of leveraging the market share gains from last year in terms of this year's operating performance, can you talk to us a little bit about where we are in terms of baseball innings in terms of seeing that in the financials today and what the scope is for that leverage to play out as scale is built through the year? And the second part of the question would be if you were to build that sort of scale in the leverage and it will be at or above maybe your guided range for adjusted EBITDA as the year goes on, how do you think about investing some of those gains back into the business or outperforming philosophically adjusted EBITDA as a guide.

Great to hear from you, Eric. Thanks so much for the question. I appreciate that. Before handing over to Connie on some of the financial details, we'll say, I think as you know, look, we had set out and we decided to take our leadership position and use that to continue to grow while we would inflect our margins, and we're glad to report that, that is indeed what is happening. It's very exciting, and we continue to grow and build on our leadership position. Obviously, that's the whole underlying basis that as you do that, you should get more operating leverage over time, which we've talked about before, and we're very excited about. With that, I'll hand it over to Connie.

Yes. Thanks, Eric, and appreciate Eric dialing in today. I think there's a couple of elements to your question on operating leverage and then perhaps how do we think about phasing for the remainder of the year. So I'll take those in 2 parts here.

To your point, and as Eric mentioned, our whole intent this year was delivering on what we said we were going to do, which is top line growth and expanding margins. We know that the scale that we got to this year off the back of the investments from the prior year positioned us well, and that's exactly why you are seeing that operating leverage.

In terms of how we see this playing out in regards to phasing over the year, I'd point you to 2025 as a good guide for top line GMS as you think about H1 versus H2 split. And then in relation to profitability, as you can appreciate, as the business scales throughout the year because of the fundamentals in relation to our business model, you're naturally going to get incremental operating leverage as the business grows. So I'd expect there to be slightly more profitability flowing through towards the second half.

Your next question comes from the line of Doug Anmuth with JPMorgan.

Can you talk more about the drivers of increased marketing efficiency? And Eric, just kind of your view on industry growth and degree of share gains for StubHub? And then on open distribution, where do you stand on the kind of self-serve and AI-enabled platform build out? And if you could kind of give us some sense of pipeline around potential partners.

Sure. Doug, thank you for the question. I appreciate it. A couple of different things hit on here. And again, I'll touch on some and then let Connie give some more color. So I think in terms of growth and efficiency, which really hits on being able to grow the business while inflecting margins and sort of how that works. And again, I think fundamentally, as we've always said, when you have the leadership position in a marketplace business, this is what happens. You get more liquidity, you get more data, you have a better situation in terms of how you can manage your sellers and all that goodness sort of flows through in that way. And I think that should -- that would continue, we believe, in any marketplace business and as we've pointed out.

I think in terms of growth, we think of growth -- or I do, certainly, as we've talked about on an annual and multiyear basis as we think about it. And so look, the great thing is being in the live events industry is a great place to be. Having done this for 25 years, the industry has grown and grown. People love live events. They love attending live events. They're passionate about it. There are more and more events going on. The geographic scope of these events increases all the time going all over the world. So that is a wonderful driver of underlying growth. And again, if you're the largest player in the market, we feel there's tremendous opportunity that we continue to build on our leadership position.

In terms of the second part of your question, I think, on open distribution, we're obviously very excited about that, and we've talked about it. I think there's been a lot about -- I think many people have seen that it's best for the consumer, and there have been a number of developments where it's been cited that basically, if you have more competition, more outlets, it's a better thing. And anything that's good for the fan is good for us.

In terms of specifically how we're developing that initiative, and as you pointed out last time, Doug, we said, we're really trying to focus on getting that into a place where you can productize it and make it turnkey and not business development oriented. And that's the focus for this year. And so we have made a couple of recent announcements, and I think to highlight that. One is around what we call our distribution manager, which is basically using AI to power a self-service tool that allows artists and teams and venues to list and manage tickets directly through StubHub. So that is something that we've announced is beginning to percolate out there. And then these primary integrations. So we also believe that when people are signed up with whoever their access control company may be, we want to make it very seamless for them to land with that platform and do what they want to do, and we've had some exciting things, I think, also have been talked about, be it Stanford Athletics and others.

So we're excited about where all that is going. We think that's the way of the world. But again, we're really focused on building out the product this year. And I'll pause there. I don't know, Connie, if you have anything to add.

I just echo what you mentioned, Eric, which is the great news is we're now the clear market leader. There's a really healthy backdrop in relation to the live events calendar ahead of us, and all of that allows us to continue to drive efficiency and while growing the business. So we're really well positioned.

Your next question comes from the line of Mark Mahaney with Evercore.

Okay. I'll ask about, please, advertising and then a little bit more on international. So I know you mentioned advertising is one of kind of the newer growth initiatives. It sounds like you're still in testing phase. Any more color than that? Any more advertisers that you brought on to the network? We should expect materiality to begin in 2027. So any more color on that? And then international seemed like an area of strength. And you mentioned Asia Pac and LatAm. What drove it? Was it more activity with your current -- the current rights holders that you work with? Or were you able to bring in more rights holders? Just a little bit more color on that international growth.

Sure. Thank you, Mark. I appreciate the question, and I'll give you some responses to that. So in advertising, again, I just want to reiterate, as we said before, this remains a very exciting opportunity for us, and we've seen this in other marketplaces. And particularly, we talked about sponsored listings and how that can be a win both for the seller of the ticket and have done the right way for the consumer on the website. And so as we said, what we're really trying to do is get this right this year so that we make sure that it works and then we can scale it correctly so it becomes this wonderful self-serve platform.

In terms of maybe giving us some sense of what are the types of things we're testing. What does that actually mean? I would point to things such as how do you optimize the auction mechanics and sort of get that right. How do we really think about the way we want to price it? How do we think about how we not only don't impact conversion rates, but maybe even improve them for the user? And how do we make it really additive for the user experience. And these are all important things because that's the #1 thing is to make it work for the user. So we remain committed this year, as we've said, to getting that right, and we'll comment on when it becomes material down the line, as we said.

The second thing you asked about is international. We're obviously very excited, as you're right. We've said about international. This is a global business. It's great to have a global platform. I think what are the types of things that drive that. I think you may have noted or noticed there are many tours that are going international. There's a lot of excitement about Latin America and Asia for many people in the market for how that content goes. I know my beloved Los Angeles Rams, I think, are going to open the NFL season in Australia this year. So we're seeing just more and more events go through internationally. And again, when you have a leadership position and a global platform, all those benefits can accrue. So we're very excited about it. So that would be my commentary on those. And again, I don't know, Connie, if you have anything to add.

Yes, I'd just also say, internally, we're continuing to make sure that we have the right talent and focus on building out the international business, as Eric mentioned. We have an amazing marketplace with a legacy that's really rooted in the international jurisdictions. And so again, more live events are happening. And the great news is given our clear market-leading position internationally as well, there is a huge opportunity for us.

Okay. Eric, I think that first game is against the 49ers so that may be a tough start, but the rest of the season should be fine.

Well, listen, Mark, we support anyone who wants to attend even if they're misguided on their fan support, but I appreciate that.

Your next question comes from the line of Justin Post with Bank of America.

Great. Connie, I wanted to ask about your first-half, second-half phasing. It would seem the second half would be larger this year just due to the impact of all-in pricing last year in the comps. So I just love your thoughts there.

And then second question, the World Cup, I just love to hear your thoughts on how impactful that could be and how you think about your share in that market this year?

Yes. And thanks, Justin, for the question. I think in regards to the phasing, you're absolutely right. We look at the shape of our business, obviously nearing what we see in the broader market. And what we know to be true is as we sit here today, live events are going to scale throughout the year. So we've got, obviously, the World Cup coming across mid-June to mid-July and then you've got the typical seasonality with concerts building across the summer and then you've got all 4 sports leagues towards the end of the year. And so naturally, the business will scale, I think, closer towards the second half. Again, I kind of point you towards what we would expect in terms of '25 in relation to a shape, which was, again, a bit more back-half weighted.

In relation to World Cup, again, really excited about the opportunity that's coming our way here. But what I would say is that consistent with what we've discussed before, we believe that to be a Tier 1 event. Again, more meaningfully in relation to Q2 and Q3 following the event match up. But the good news is we're excited to have an outsized portion of that share just given the benefits that we have of being the scaled leader.

Your next question comes from the line of John Blackledge with TD Cowen.

It's Logan Whalley on for John. Maybe first on your POS system, could you update us on progress there with ReachPro and how should we think about its ability to drive more volume on the platform and maybe also how your share looks there versus the largest competitor? And then on the regulatory front, could you update us on regulatory developments in the U.K. specifically as they relate to potential price cap proposals?

Sure. Thank you for the question. Appreciate it. I think you asked about our POS system, ReachPro and then had some questions about the U.K. So in terms of the POS system, everything has been progressing the way I think we articulated before that we continue to grow our share, bring people on board. And I believe what we've said is that we will be the leader in that over the medium term. And that is -- nothing to change that sentiment. That's been going well. Obviously, as we've also said before, by becoming that operating system for a number of sellers and even giving them a much better experience than what they've had historically, that helps people sell more tickets, and it helps them sell more tickets on StubHub, we believe, as they have that data advantage. So we're excited about that. That continues.

In terms of your question about, I think, the U.K. and price caps. And so yes, no, I think we've always said -- we're always in a -- we've been in a very good environment for 20-plus years. People sell tickets, they love resale. Occasionally, there are jurisdictions that make noises about looking into price caps and somewhat -- that has been basically few and far between. And when it happened, it hasn't really worked. So by that I mean, it's ended up burning consumers in those places where it reduces access to events, increases black market prices and fraud. In fact, our studies have shown over 4x the amount of fraud in those types of markets. Secondly, it's become increasingly impractical to enforce as difficult as it's been as their dynamic pricing in the primary market and the concept of face value goes away. All that is a long way of just couching it that, that's why we haven't seen this spread, and we don't see that as something that makes a ton of sense.

Now that being said, and I'll come back to your point about the U.K., what's important is that we, of course, want to make sure we're educating regulators and educating legislators about why -- while it may be well intended in their mind, it doesn't work and shouldn't be pursued. And that's what we do. And we find people to be very receptive to that. And as they learn more, they realize it doesn't make a ton of sense and certainly is worth even considering further or maybe not moving forward.

What we've seen with the U.K., I think today, they gave the King's Speech and there was no price cap legislation that was in the King's Speech. I think as we've mentioned before, even if there had been, which there was not, this would be -- would have kicked off a multiyear process that may or may not have resulted in something as they're educated. In this case, that's pushed even further down the road to the next King's Speech. So we think it's a further, if it happens at all. But I think it's just further evidence of the fact that these types of policies, while maybe well meaning by some just aren't really good for consumers and therefore, don't gain much traction.

Your next question comes from the line of Brian Pitz with BMO Capital Markets.

Maybe 2 broader ones. First, unlike last year and this year, we've already seen roughly a dozen concert tours already canceled. What do you think is really driving this outside of maybe some of the unexpected health issues? We are seeing some buzz around consumer concerns on higher ticket prices. I'd love to get your thoughts on that. And then the macro has changed noticeably since we last spoke 2 months ago. Have you observed any indication that fans may be trading down to lower-priced seats or reducing the frequency of event attendance? Any thoughts there would be helpful.

Yes. No. Thank you for the questions. Really appreciate it, Brian. So I think on the first thing, I think you're asking something about canceled events and again, I'll kick it over to Connie, but we haven't seen any of that in any way that's on our radar. So Connie can tell you something about that.

Yes. That's exactly right. Again, we just run the flash financials yesterday. There is no slide. Q2 continues to progress really well.

Yes. So that's not anything that we've seen. In terms of your second question is, I think, related to sort of how do you think about is there any slowdown with the recession or gas prices going up and all those types of things. And I think, again, the quick answer is no. We don't see -- we haven't seen any impact on that. I think what's important, though, to contextualize for everybody, and I've mentioned this before, is that having done this for 26 years now, we've always been an extremely resilient sector. It's grown through everything, say, COVID and the economy goes up, geopolitics go up and down. Why is that? I think it's because -- there are a couple of reasons. One is there's tremendous passion the fans have and they love live events. And so if you're a Green Bay Packers fan or music fan, you're going to go to that concert, that's not the first thing you're going to cut or think about. It's closer to a necessity than you may think.

The second thing is, look, we have various price points. We always have across the board. Nothing has really changed with that. But the steady state is half of all tickets on StubHub trade at less than $100. And that's always sort of been the case. So we really see it as fans are passionate to go live events, it's always been something that's grown through thick and thin. And from where we sit today, that continues to occur, and we see no reason why it won't continue happening.

Your next question comes from the line of Shweta Khajuria with Wolfe Research.

I have 2 follow-ups on some of the prior questions. One is what you just addressed, which is on macro. And could you please comment on something like this when we saw in prior history at StubHub and when there was inflationary pressure and mix shift in wallet spend towards perhaps necessities, how StubHub actually did in terms of demand trends? That's question number one.

And then two is a follow-up on the World Cup impact. It is a Tier 1 event. So is it fair to assume the impact sort of comparable to, I guess, Taylor Swift type sort of contribution to your financials?

Thank you, Shweta. Thank you for the questions, and I can talk about the macro, and I'm sure Connie can reiterate some of the stuff on the World Cup. So I think on the macro, as I said, again, we'll reiterate the reasons that consumers are resilient. But in terms of your question, why [ I cite ] that has sort of lived experience. So all the way back when we started, we went through 9/11. Of course, the company was very small at that point, but the first ticket were sold in the summer of 2000. So right after 9/11, it wasn't gangbusters. And then we lived through the great financial crisis, which I can't -- I guess I can't comment exactly on inflation or whatnot, but it was not a very happy time for lots of consumers, continue to go through that. We've seen, obviously, I think, recently in '22 to '23 where inflation had spiked, relatively speaking. Again, the company and live events continue to grow. So certainly, through our lived experience in many cycles, at least through 26 years, that has always proven to be the case. Again, short COVID, that's what's happened. So that's what gives me that confidence and that lived experience on it. And again, any more about the World Cup, Connie can comment on.

Yes. I'm happy to add a little bit more color on that, Shweta. As we went through our process of evaluating the opportunity from the World Cup, again, we included this as a Tier 1. But to be crystal clear, it is not comparable to Taylor Swift, she is a one of one. But what I would also just highlight, and Eric mentioned this earlier, is that one of the benefits of our marketplace is that it's just very diverse. We have a number of various segments, geographies that we benefit from. And so we're not single-threaded on any specific event in order to achieve our outlook. And in fact, as we sit here today, Q2 is tracking well, you would have seen that we reiterated the guide.

Your next question comes from the line of Andrew Boone with Citizens.

I wanted to ask a little bit about the potential of the antitrust settlement that you mentioned earlier. Can you give us an idea of the spectrum of either operational or financial outcomes that may become available depending on kind of which way the swings, whether something more favorable is really important to you guys or whether this doesn't really materially move the needle?

And then I wanted to ask about your just adoption of AI chatbots. Can you guys help us understand what that looks like in the future? Understood it's small today, but what's kind of the bigger-picture vision as you guys start to integrate with AI chatbots.

Sure. Thank you for the question, Andrew. And so I guess the first is around the Live Nation stuff with the DOJ and the second around AI chatbots. So I think on the first, I'll just give you the straight quick answer is like it doesn't. Everything that we're talking about here today and all of our guidance, projections, dreams and everything we want to do has not hinged on any outcome from the DOJ or Ticketmaster in any direction. So that's that.

I think the only thing what I would reiterate is, look, anything that pushes more towards open distribution and it's better for consumers, meaning more selection, more ease of multiple channels, not exclusively everything that we've talked about, that's always positive. And so it's great to see that, that's what's been talked about. But again, it remains to be seen what does or doesn't get implemented. But again, that's all upside, if you will, potentially.

In terms of your question on chatbots, I think you may be talking about or alluding to some of the stuff we've done with AI. We've done some interesting integrations with ChatGPT and Claude. As we sit here today, so the way I would think about it is we want to be wherever consumers are going to be in the future through any channel and every channel. As we sit here today, we don't see any changes in consumer behavior, the Google channel is just as powerful as ever through traditional search. But we know we want to be ahead of the curve on anything that may or may not develop. And so as we think about it, we want to make it so that the experience is as easy as seamless to meet consumers where they are. And we think that's part of sort of using our data and distribution to provide the best experience for consumers and also for the content right holders when they do open distribution, so they know they're going through every channel and every way to reach everyone. And so that's our thought process there.

Your next question comes from the line of Jed Kelly with Oppenheimer.

Just getting back to the concerts and the open distribution. Is that more of a conversation with the promoters? And if you're able to reach a couple of promoters, that can scale relatively quickly? Or is it with the venues? And then just as a follow-up, how should we think about fee caps in individual states in the U.S.?

Sure. Okay. So I think -- so 2 questions there. So the first on sort of the open distribution, Jed. Again, this is really the concept is that anyone who has a ticket to sell to use our data and distribution in a nonexclusive way to reach consumers and do well, that can be anybody who's sort of issuing the ticket. Sometimes on the model [indiscernible], it could be a venue, it could be a promoter, it could be the artists themselves. We're sort of indifferent to that, and it should work for anybody depending on how they've decided to control distribution of the tickets. So that's how we sort of think about that.

And again, as I've emphasized before, it's really about just making the product so simple and so seamless, whether it's through just linking it up to us or integrating whatever their primary is that it's just a no-brainer that you're going to want to reach more consumers on a nonexclusive basis. So that's a little bit of how we think about that.

And then again, I think you're talking about -- I've already addressed sort of the price caps and why we think that really doesn't work well for consumers. It's not consumer friendly, and we don't see that going. I think if you're talking about fees, I guess what I would say, again, it's sort of similar to sort of the types of economics that don't make a lot of sense. But I think what I would point to is really what the states have been after is the transparency, which was the all-in pricing. And so a lot of what we've seen is that when it comes to fees, the key thing is making it very clear that consumers know what they're paying and making very clear that it's all in upfront. That's why we spent time actually lobbying for all-in pricing, and we think that any development like that, that's good for consumer and makes people compete based on what's good for the consumer will be good for StubHub.

Your next question comes from the line of Cameron Mansson-Perrone with Morgan Stanley.

A follow-up on Claude and OpenAI partnerships. Just curious if you could provide some color on the level of activity that you're seeing move through those channels so far. Obviously, it's a little early for Claude, but maybe for OpenAI. And then how you see those integrations with those platforms or with similar platforms evolving over time?

Great. Thank you for the question, Cameron. I appreciate it. Again, what I would say is our whole point of view is we want to be where consumers are, where they may be in the future, and we want to meet them and have them be able to meet with us through multiple touch points and the best product experience. Clearly, everything happening with AI and how it can be applied, including through some of these platforms is an important thing to be on the cutting edge of and sort of that's what we've done and integrated with. Those are not material things right now. But again, we're always thinking to the future and these things can be exciting. And we see it even as complementary channels to the strong channels that we haven't seen any impact on today. So that's -- we just think more and more that our advantage of being a scale player and a leader in the marketplace with the best product and the best technology and the best data in distribution should advantage us to work through any and all distribution channels and any and all technological developments as long as we're there. And that's why it's important that we're on the front foot working with folks like Claude, Anthropic and ChatGPT.

Your next question comes from the line of Jason Bazinet with Citigroup.

Just a question on sales and marketing. You guys noted that the sales and marketing expenses were 50% of revenues down from 55% of a year ago. But if I go back 2 years, it was 46% of revenues. If I go back 3 years, it was 37% of revenue. So what's going on? Why is it sort of up over the long term? And what's the right sales and marketing intensity for this business?

Yes. I'm happy to take that one. If you step back and you really think about the course of the history and the journey that we've been on in StubHub, I think that there's a clear understanding of what we've been trying to do. So over the course of both '24 and '25, there was a period of investment. What we know to be true is that being the clear market leader in a marketplace environment creates a tremendous amount of scale. And so as you look at those various investments, what I can tell you, they've been very deliberate to drive specific outcomes in which we're really pleased with the ultimate result.

As we sit here in 2026, we've been very clear about what our financial framework is for this year now that we've reached that level of scale being the clear market leader, which is our ability to not only drive top line growth, but also expand margins, and that's exactly what you're seeing show up in Q1. 7% top line growth, 400 basis point improvement on the bottom line. And as I mentioned, we would expect further improvement as you look through the course of the year.

Your next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.

Take rate was up over 100 basis points both year-over-year and sequentially. Curious what the main drivers of that were and if that level is sustainable going forward?

Yes. Happy to take that. Good to be with you today, Ryan. Again, it was really an intentional outcome of the strategy that we set forth this year. So if you rewind back to 2025, as I mentioned, it was really a period of investment in order to create market share. We're really pleased, again, with that outcome now being the clear market leader. So what you're seeing is a more normalized level of this GMS to revenue conversion. What I'd say looking forward is that we expect that to continue to return to what I'll call more typical historical levels, I think approaching 20% as a blended rate for the full year. So simply, this was just a change in our strategy, again, as we really focus on driving the top line, expanding margins, all which is again the benefit of reaching scale.

Your next question comes from the line of Brandon Ross with LightShed Partners.

I guess a couple of follow-ups to prior questions. First, on the Live Nation settlements. One thing we noticed is that while the settlement allows venues to sell tickets through other platforms, it stipulates those sales can only be through other primary ticketing marketplaces. So if that gets implemented, does that change your open distribution or direct issuance strategy, maybe give you desire to get into real traditional access control primary ticketing?

And then on the price caps. Ontario recently went to price caps, and Toronto is a pretty big city, so maybe a decent case study there. I know it's early, but can you just kind of tell us what you've seen.

Sure. Brandon, thank you for the questions. Appreciate it. I think in terms of the Live Nation stuff and sort of as we say, what we've observed is, basically, everything is about opening up distribution, allowing it to open up. In terms of the specifics and the things that they may try to negotiate and how they want to define it, we'll see where it all shakes out. But I think it's very clear, at least to me, when you look at it, that it's really about more competition for consumers and creating an open distribution thing. And again, as I said, whatever happens, there's nothing happens there. Nothing changes with our conviction of everything we're doing, but it certainly seems like, at least the indications are it will be better than the status quo or status quo ante.

And then in terms of, as you mentioned, again, we've addressed the price cap stuff. There's always been jurisdictions over the years that have looked at doing this stuff. And they roll it out. And obviously, then there becomes a lot of details in terms of how that works, if it works and oftentimes they get rolled back. But again, at this point in time, there's nothing that's materially impacting our business. And so we'll see how everything plays out.

Your final question comes from the line of Lloyd Walmsley with Mizuho Securities.

This is [ Wayne ] calling for Lloyd. Congrats on the solid results, first. I have 2 quick questions. Number one, I think it's been almost half a year since you recalibrated your market share -- marketplace take rate. Things seem to be doing well. But can you help give us an update on vendor reception and also maybe the industry competitive dynamics you have observed so far?

And secondly, I was wondering if you could comment on the monthly GMS growth trend in the quarter and then in the month of April. Curious how much the outsized tax return this year is helping.

Thank you for the question. Appreciate it. I'll give it to Connie on some -- I think you had some financials. One thing I think sort of -- if I take the question, I think is basically saying, wow, you've been able to grow while increasing your margins and inflecting margins. And so how is that possible to do. And I think, again, as we -- as the leader and the leading marketplace, we're able to provide the best possible service, the best possible liquidity, the best possible data and distribution for everyone and a great experience for consumers. And so I think the performance sort of speaks that, again, as we've talked about and as we've said, we're able to grow while inflecting margins through these various levers. And we expect that to continue along the lines we discussed. But with that, I'll hand it over to Connie maybe briefly as we wrap up about -- I think the question was about how are things looking as we move forward in this quarter.

Yes. Happy to take that. The good news is as we sit here today, the second quarter is shaping up in line with our expectations, hence, why we reiterated our guide for the full year. So we look forward to giving you more of an update. Again, we don't look at things on a monthly basis, but rather, again, we're really focused on how the full year shapes up. And the good news is we have all of the building blocks intact. North American growth, international growth, clear market leadership and importantly, all in the backdrop of a healthy live events calendar. So we look forward to sharing more as the year progresses.

That concludes our question-and-answer session. I will now turn the call back over to Eric Baker for closing remarks.

Thanks again, everyone, for joining us today. We're executing well against our business and financial objectives. And our focus remains on growing our top line, expanding our margins and continuing to pursue initiatives to broaden our reach. And we look forward to continuing to update you on the progress in the months to come. Have a great night.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to StubHub's Fourth Quarter and Year-End 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, March 4, 2026.

I will now turn the call over to Clinton Hooks with StubHub. Please go ahead.

Thank you, operator, and thank you for joining us to discuss StubHub's fourth quarter and year-end 2025 results. For reference, our fourth quarter and year-end 2025 earnings release, shareholder letter and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com.

Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements. These forward-looking statements, which are usually identified by use of words such as will, expect, anticipate, should or other similar phrases are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect, and therefore, you should exercise caution when interpreting and relying on them. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can make no assurance related to its expectations. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, unless otherwise required by law.

We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We encourage investors to review our regulatory filings, including the annual report on Form 10-K for the year ended December 31, 2025, when it is filed with the SEC.

During today's call, we will also be discussing non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings release, shareholder letter and investor presentation as applicable, available on the StubHub Investor Relations website. Please note that unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA.

Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Connie James, our Chief Financial Officer. They will provide opening remarks, then take questions. With that, I'll turn it over to Eric.

Good afternoon, everyone, and thank you for joining us today. 2025 was a pivotal year for StubHub. We grew our marketplace, further strengthened our competitive position, transformed our balance sheet and became a public company.

As we enter 2026, StubHub remains a leading global ticketing marketplace for live events with durable advantages, scale and liquidity, structurally strong financial fundamentals and a diversified global footprint. These fundamentals are built on our core strengths, which continue to drive our competitive advantage.

First, our leading marketplace position with a category-defining brand and approximately 50% share of the secondary ticketing market in North America. Second, our proven network effects that create durable competitive advantages. As we attract more buyers through our leading distribution and global reach, sellers add more inventory and selection to our platform, which in turn draws more buyers and further expands our distribution.

Third, our asset-light online marketplace model, which delivers consistent take rates, over 80% adjusted gross margins and strong free cash flow conversion. As an online marketplace, we generally do not take inventory risk and incur limited variable costs with each transaction, allowing us to reach large global audiences and generate substantial revenue with modest ongoing capital requirements.

Fourth, our extensive data set across millions of global events. Our data on supply, demand, pricing and user behavior enables differentiated product innovation, marketing optimization and pricing intelligence that reinforce our market leadership.

Fifth, scale is the defining advantage in our category. As the scale leader in secondary ticketing, our superior liquidity, trusted brand and operational excellence creates sustainable competitive advantages.

And finally, an exceptional team with leadership experience built through decades of building and operating our business. I'm grateful to work alongside a group of high-caliber employees who show up every day for our customers, improving the product, strengthening trust and delivering operational excellence at scale.

We're also fortunate to have a deeply experienced management team, leaders who helped build this company from the ground up, raising the bar for StubHub year after year. Together, these strengths position us to capitalize on the expanding live event industry. We sit in a unique position at the intersection of technology and live events as we pursue our vision to be the global destination for fans to access live entertainment. We remain relentlessly focused on improving every part of the StubHub experience from discovery and pricing transparency to fulfillment and support because a better fan experience strengthens trust, drives conversion and reinforces the marketplace flywheel.

Before I touch on longer-term initiatives, I want to be clear about what is driving our business today. Our results and outlook are driven by our resale marketplace, which constitutes the vast majority of our revenue. In 2025, we delivered $9.2 billion of GMS, continued to grow, gained share and strengthened our competitive position. We expect that in 2026, StubHub's financial performance will continue to be driven by this core resale marketplace.

Building on this foundation, our first several months as a public company have provided valuable perspective on our strategy to unlock new market opportunities. We believe direct issuance, non-exclusive, open distribution of originally issued tickets remains a transformational long-term opportunity for StubHub and the broader live event ecosystem. We have made progress through business development with marquee content rights holders across sports and music in multiple geographies, and we believe demand for this distribution model has been validated.

Our experience has reinforced that the largest market potential will come from making direct issuance frictionless to adopt across a much broader range of rights holders. That requires reducing operational friction for partners with varying levels of technological sophistication and advances in artificial intelligence are materially expanding what is now practical to build on the supply side. By leveraging these advancements, we believe we can bring capabilities to market that would have been difficult to deliver even a year ago, including AI-assisted tools that automate workflows and simplify inventory management.

For 2026, we are prioritizing building the product foundation required to scale direct issuance broadly. Accordingly, we are shifting from a primarily business development-led strategy to a more product-led strategy, building an AI-enabled technology-driven ecosystem that enables inventory to be contributed and managed with minimal operational burden.

Development is underway to bring these supply-side products to market. We believe this approach positions direct issuance to become a durable growth engine when the self-serve capability is in place. This strategy shift means we will not be optimizing for immediate revenue growth, but for maximizing our revenue opportunity over the long term.

Similarly, our efforts to build our advertising business are showing promising early results as we leverage our unique advantages. Early partnerships have helped validate the opportunity and are helping inform how we will scale advertising in a way that is truly additive by enhancing relevance and utility for customers. Our advertising business is generating modest revenue today, and we are continuing to iterate toward a model that enhances the seller and buyer experience. We are taking a disciplined approach to both initiatives, prioritizing scalable execution. This measured path forward reflects our commitment to maintaining the marketplace experience that defines our competitive advantage while compounding shareholder value over the long term.

Finally, a quick note on the regulatory environment. We continue to operate within a generally favorable status quo that supports open functioning resale markets across jurisdictions. That said, public discussion around ticketing has increased in recent months, and we want to be clear about why we believe the secondary ticketing market and StubHub as a scale leader are defensible and durable over the long term.

The secondary market solves durable ecosystem needs across a broad diversity of live event content. It is not dependent on any single event type or a narrow set of behaviors. A liquid resale market supports the ecosystem in foundational ways by: one, improving the category experience for consumers through trusted, fraud-protected ways to buy and sell tickets with ease and providing flexibility when plans change. Two, improving sell-through and pricing confidence in the primary market as consumers are more willing to buy earlier when they know they have a trusted option to resell.

Three, enabling risk and cash flow management for content rights holders, teams, promoters and event organizers by providing liquidity and a pathway for inventory to be redistributed through power sellers and season ticket holders. And lastly, improving attendance utilization and venue economics by helping ensure tickets end up with someone who will attend, driving meaningful ancillary revenue through concessions, parking, merchandise and a better in-venue experience.

Even if well-intentioned, we believe altering this vital link in the live event value chain ultimately harms the fan experience and the live event ecosystem overall. Regulatory change in live events is inherently complex. The live events ecosystem is a vast global surface of content and demand profiles, spanning everything from lower demand community events, small club shows to global music tours and the world's largest sporting moments across countless jurisdictions and market structures. Any framework that seeks to broadly reshape the resale market would need to account for a wide range of event types, seller profiles, consumer use cases and enforcement realities and would need to be implemented across many jurisdictions where live events occur.

With that context, we believe public discussion tends to focus on a certain subset of the resale market, resellers that list large quantities of inventory on marketplaces for very high-demand concerts at high prices significantly above the original sale price. Based on our internal data, we estimate that approximately 10% of our GMS in 2025 was attributable to these types of high-demand concert ticket sales by resellers.

Importantly, we believe that StubHub's durability is reinforced by our diversification and lack of concentration across sellers, content rights holders, buyers, event types and geographies. providing a level of insulation from potential regulatory changes that may affect any single subset of the market or any single jurisdiction.

Finally, we have a responsibility to continue educating policymakers on the consumer protections and structural benefits that our marketplace provides and are continuing to bolster our government relations efforts to support this. We intend to engage constructively while operating responsibly to best serve fans around the globe.

We are entering 2026 with a scaled, resilient core resale business, an improved competitive position that supports growth and scaling margins and a transformed balance sheet. We are also continuing to progress towards longer-term upside opportunities. Our commitment is straightforward, set expectations we can deliver upon and execute consistently. We intend to deliver results that reflect the strength and durability of the business.

With that, I'll turn the call over to Connie to discuss our financial results and guidance.

Thanks, Eric. In 2025, we delivered $9.2 billion of GMS, up 6% year-over-year. Excluding the Eras Tour, our GMS grew 18% year-over-year, reflecting the underlying performance of the business. Our growth was driven by continued market share gains in North America, where we expanded our share in North America to approximately 50% of the secondary market. Internationally, our expansion outpaced growth in North America. Turning to our income statement. As a reminder, I'll discuss our financials on an adjusted basis, excluding stock-based compensation and other onetime items. Full reconciliations are available in our earnings release.

First, on the fourth quarter. Beginning with the fourth quarter 2025, we generated $2.3 billion of GMS, down 8% year-over-year. This reflected lapping an unusually strong fourth quarter 2024, which benefited from several favorable dynamics, including the conclusion of the Eras Tour, a particularly strong MLB World Series and the timing of major concert on sales shifting across quarters. Excluding Eras-related comparability, fourth quarter GMS growth was approximately 6%.

Revenue was $449 million or 19% of GMS, down 16% year-over-year. The change was primarily due to lower GMS, partially offset by lapping prior year direct issuance-related minimum guarantee structures that were treated as principal revenue and that we have since reduced. Additionally, our revenue as a percentage of GMS of 19% reflects our deliberate market share investments through take rate adjustments, consistent with our full year 2025 operating strategy to prioritize competitive positioning.

Adjusted gross margin was 83%, up from 76% in the prior year period, reflecting the lapping of those minimum guarantee structures.

Adjusted sales and marketing expenses were $234 million or 52% of revenue compared to $221 million in the prior year period or 41% of revenue. The change reflects our investments to accelerate market share in core resale.

Adjusted EBITDA was $63 million, representing a 14% margin. This reflects the impact of our market share investments as we deliberately prioritize capturing market share and our continued investment in direct issuance capabilities during their early partnership development phase.

For the full year 2025, revenue for the year was $1.7 billion, 19% of GMS compared to $1.8 billion in 2024. The performance was impacted primarily due to direct issuance-related minimum guarantee structures in the prior period and the impact of our market share investments on take rates.

Adjusted gross margin for the year was 83%, up 200 basis points from 2024. The improvement reflects the lapping of the costs associated with minimum guarantee structures. The full year gross margin is representative of our current operational profile and demonstrates the structural advantages of our asset-light marketplace model where we facilitate transactions.

Adjusted sales and marketing expenses were $943 million or 54% of revenues compared to $828 million or 47% of revenues in 2024. The increase reflected 2 primary drivers. First, our investments to accelerate market share in core resale where we deliberately prioritized market share capture. Second, our continued investment in building direct issuance capabilities during the early partnership development phase.

Adjusted ops and support costs were $57 million, down from $59 million, flat as a percentage of revenue at 3%, reflecting improved operating efficiency. Adjusted G&A costs were $223 million, 13% of revenue, down from $250 million or 14% of revenue in 2024. The reduction reflects improved operating leverage as we continue to scale the business, including a reduction in professional service fees.

Adjusted EBITDA was $232 million, equal to 13% of revenue. This result reflects 2 primary factors: First, the deliberate investments we made during the year, both in market share acceleration and in building longer-term initiatives. These investments successfully positioned us to achieve approximately 50% of North American secondary ticketing market share, establishing a foundation that supports fiscal '26 margin expansion.

Finally, I want to highlight 2 factors impacting our net income. Our GAAP results for the full year include a nonrecurring noncash expense of $1.4 billion related to stock-based compensation granted prior to our IPO. The expense was triggered by the completion of our IPO. Accounting standards require recognition of these previously granted awards when their IPO-related performance conditions are satisfied.

In addition, we incurred a nonrecurring noncash income tax expense of approximately $480 million related to the establishment of a valuation allowance on the deferred tax assets. Both stock-based compensation and valuation allowance expenses are excluded from our adjusted EBITDA calculations and have no impact on our cash flow or cash position.

Turning to cash flow. I want to spend a minute on how cash is generated in our marketplace model. First, our cash conversion cycle benefits from the timing mechanics of ticketing. We collect funds from buyers at checkout while seller payouts occur later, often closer to or after the event date. This timing difference creates a recurring balance of seller proceeds on our balance sheet and contributes to our cash generation.

Our business is also structurally asset-light. We don't generally take inventory risk and capital expenditures remain modest relative to the size of our business. We also benefit from net operating losses that reduce cash taxes in the medium term.

Finally, because of the seasonality of live events and the timing of major tours and sports calendars, free cash flow can be variable quarter-to-quarter. For this reason, we evaluate free cash flow on full year and trailing 12-month periods rather than any single quarter. In 2025, our free cash flow represented nearly 70% conversion of adjusted EBITDA. This figure also includes interest costs during the period, which has since been reduced as a result of our debt repayment.

Turning to the balance sheet. In 2025, we reduced our total debt by approximately 35% through the repayment of approximately $900 million of our U.S.-denominated term loan, bringing our total debt down to $1.5 billion at year-end. We also ended the year with approximately $1.2 billion of cash and cash equivalents or $494 million, net of payments due to sellers. As we scale, we expect the business to continue generating strong cash flow, and our priority remains maintaining a strong balance sheet and reducing leverage over time.

Turning to our fiscal year '26 guidance. Before I discuss the specifics, I want to address why we are providing annual rather than quarterly guidance. The live event market is seasonal and can be variable quarter-to-quarter where the timing of major concert on sales and event schedules can shift across quarters from year-to-year. This can create lumpiness in quarterly growth rates even when underlying business momentum is steady. Fourth quarter '24 and fourth quarter '25 GMS illustrate this dynamic clearly.

Fourth quarter '24 benefited from unusually favorable timing, including the finale of the Eras Tour and a concentrated set of major concert on sales, contributing to an exceptionally strong period and year-over-year GMS growth of 47%. Fourth quarter '25 reflected the inverse. Our GMS was down 8% year-over-year, driven by the lapping of this unusually strong comparison and by major concert on sales being more spread across quarters. Neither quarter on its own provides a representative view of the business. In fact, our market share was higher in the period GMS declined than in the period GMS grew significantly. For these reasons, we believe our business is best evaluated on an annual and last 12 months basis.

Our guidance is grounded in what we control and what we believe we can execute with high confidence. For 2026, this reflects the earnings power of our core resale marketplace and includes disciplined operating expenses to support direct issuance and advertising without assuming any material revenue contribution from either initiative.

For 2026, we expect to grow GMS to between $9.9 billion and $10.1 billion, representing 9% growth at the midpoint and expand adjusted EBITDA to between $400 million and $420 million as our marketplace flywheel strengthen and operating leverage increases at scale. Our GMS growth formula is straightforward: North American market growth, incremental market share gains plus international growth. Let me dive into each of these segments.

First, North American secondary market growth. This market has historically grown at low double-digit rates. While there will continue to be a comparability impact from the all-in pricing transition until we lap its implementation in May, we believe underlying growth in the market remains strong.

Second, market share gains in North America. We have a demonstrated track record of outgrowing the market in recent years. For 2026, we expect to continue gaining share while reducing these investments and increasing customer acquisition efficiency.

Last, international growth. International markets account for approximately 15% of our GMS. We expect GMS in international markets to grow at an accelerated rate, benefiting from earlier-stage market development. Overall, our adjusted EBITDA guidance assumes the economic engine that has long defined StubHub remains consistent. Take rates in the 20% range, over 80% adjusted gross margin and improving operating efficiency as we scale.

Given the structural strength of our unit economics, an important driver of earnings power is how efficiently we scale operating expenses, particularly adjusted sales and marketing, our largest expense line. To that end, our 2026 plan reflects 2 key strategic refinements. First, we are evolving our direct issuance strategy towards a more scalable technology-enabled model, which naturally reduces investment intensity. And second, we are raising customer acquisition efficiency in core resale. Acquisition efficiency is an input we control and our improved scale and conversion allows us to earn higher returns on marketing spend while growing.

In 2025, we deliberately lowered acquisition efficiency, spending more per transaction to accelerate market share gains. The goal was to strengthen the marketplace in durable ways. As our share of transactions increased, our competitive position improved, and we created advantages that continue to compound through improved conversion. Higher conversion means each marketing dollar generates more transactions and more gross profit than it did previously. As a result, in 2026, we believe that we can raise acquisition efficiency while continuing to grow and take share. Together, these refinements reflect how a scaled marketplace model inflects. As conversion improves and our competitive position strengthens, we can allocate marketing dollars more efficiently while growing, expanding EBITDA through operating leverage and generating strong free cash flow.

With that, we will now open the call to Q&A. Operator?

[Operator Instructions] the first question comes from Doug Anmuth with JPMorgan.

You're gaining share in retail, you talked about hitting kind of around the 50% level. Does the 9% growth in GMS just in the core retail market is growing slower than you initially expected in '26? Or is there something else going on?

Sure. Doug, thank you for the question. Appreciate it around growth. And let me revisit just sort of the general framework around growth and how we think about it, and then I'll hand it to Connie to get into some of the specifics. So again, as we've sort of said, we're very -- our market has been very strong. More people are going to live events. They're going to a greater breadth of events. They're doing it all across the world. So the North American market has been strong.

As we've said, too, we continue to gain share in the market as we're inflecting margins. So that's happening. And then we're seeing increased throughput internationally, these global events that are taking place and people traveling. So there's a lot of great tailwinds in the market, which is allowing us to grow and grow while we take share. But with that, let me throw it over to Connie for the details.

Yes. Thanks, Doug. Good to be with you. And I'll just touch on the GMS drivers, and there's really 3 key ones, which you've picked up on a couple of them. So first, the market growth, as Eric mentioned, we benefit from operating in a really healthy overall North America secondary market that has consistently grown low double digits. That said, what we know to be true is we're going to continue to have this all-in pricing overhang for the first 5 months. We do anticipate continuing to accrete some modest share gains and then layer on top of that international growth. So all of that, call it, ladders up to the 8% to 10% GMS. And what I would also add is, again, it's anchored in what we're seeing today. The good news is quarter-to-date, we're seeing really healthy top line growth, expanding margins, all supportive of our full year guide.

And then if I could just follow up on direct issuance, you've kind of talked in the past about like '26 being a potentially industry inflection point. And now obviously, there's a strategy shift that's taking place. I guess what has changed most here in your view on the outlook and progress for direct issuance?

Sure. Thank you for the question, Doug. And let me walk you through what's evolved on direct issuance and what we've seen and why we've made this deliberate decision to shift to the product development for this year. So just for everyone again, to set the context, direct issuance for us is this belief in this open distribution. Content is going to want to come, sell their tickets directly over StubHub and use our data and distribution to do so. We've had great success we had with folks like the Yankees, Ambassador Theater Group and others to prove this out. And as in the past 6 months, as we've gone out and we've been excited about it, there's a lot of, we believe, demand and enthusiasm for it. And quite frankly, we've been very excited about how broad and deep that is, by which I mean there's a long tail of different types of events and a great breadth of them.

What we have found, Doug, in going through it with the team is that really, we think one of the key unlocks to unlock it even faster is eliminating friction on the product side, make it easy for people to use the product and technology because the will is there, everything makes sense. And that really unlocks more of what we talked about with a number of customers we had seen where you have this like self-serve ecosystem, which is a great solution for the customer. It's also a great business model that scales very nicely.

And so as we looked at and we sat down, we said really with what's going on, we should focus in '26 on developing that product, particularly with the fact that given everything going on with AI, there's a real chance to advance those tools quickly and to get them to a good place. As a result, that does mean that we are deliberately shifting to a longer-term focus. We think we will create more value in the long term rather than focusing on the short-term revenue creation this year.

Your next question is from Eric Sheridan from Goldman Sachs.

Maybe a 2-parter, if I can. In terms of learning on some of the key dynamics from ramping marketing and gaining market share in '25, can you talk a little bit about what the key lessons learned from that were? And how it informs the theme you're talking about tonight with respect to being more effective with acquisition and growth investments in '26? And if possible, a way to frame sort of that effectiveness either quantitatively or qualitatively '26 relative to maybe some of the return profile in '25?

Sure, Eric. Thank you for the question. Appreciate it. Let me give you an overview about some what you're asking about what are -- how do we think about this core secondary engine and what does that mean in terms of getting these inflections. And I'll give you my sense of that, and then Connie can give you more of the financial detail as well.

So I think as you recall, our whole fundamental thesis that was from our lived experience is that we saw that if you can get -- if you have the StubHub asset and you run it the right way and you can get the market share back and hit the right point of relative market share, you accelerate all these different flywheels that you get and network effects because you're in a marketplace business. So whether that's you've got more data, the conversion goes up, the liquidity flywheel, all these good things happen. Therefore, what we've seen and what you see in marketplace businesses is that you're able to hit a point where you get this beautiful thing, you're able to grow and take share while increasing your margins, which is why it's such a great business to be in. That's not just something that we've observed about marketplaces, be it the Airbnbs and others of the world. That's our lived experience that we've seen in building these businesses and what we saw at viagogo.

And so to your point, what we said is in 2025, we really were focused on finishing off and pushing this concept of the market share and doing some of those things. And we really believe and as our thesis was that we would see we would get to this relative market share, be 3x greater than other people and start seeing this virtuous cycle occur.

As Connie, I'm sure, will walk you through, not to steal her thunder, you can see what we're now saying in our guidance, we're seeing that we will be able to grow, continue to take share and inflect the margins. And I think as Connie will tell you, we sit here now, whatever it is in March, observing that this is, in fact, happening.

So with that, let me turn it over to Connie.

Yes. I think that's exactly right, Eric. And also thanks, Eric, for joining the call today. If you step back and really think about it, we were explicit that '25 would be a period of accelerated investment in particular into these relative market share, and we were really pleased with the outcome having secured about half of the market. So what you would have seen is an elevated period of sales and marketing.

Late December, we decided to call it turn the dials given the flywheels and the benefits that Eric explained that started to show up, and that has continued. So we are seeing better efficiency coming through, which is resulting in these expanded margins, which Eric mentioned, we're seeing as we sit here, 2/3 the way for the first quarter. So all of that, again, gives us confidence of the stickiness and the benefits that we've seen and supports the full year guide.

We'll now go to Justin Post from Bank of America.

Great. Just wondering what you're thinking about for the concert season this year? You mentioned you had some comments on that in November and also the World Cup impact and then I have a follow-up. And how that's incorporated in your guidance?

Sure. I'll just give you a couple of comments generally, Justin, and thank you for the question for being on the call, and then Connie can talk. So obviously, as we said, in terms of the concert season, we've seen a number of very exciting concerts going on sale in January and whatnot, and that's been great. Obviously, the World Cup is a wonderful event that sort of epitomizes the fact that we have this global platform.

I do think as Connie will walk you through some of the guidance slots, I think she'll probably also touch on why we guide annually. And I think it's sort of key in what we hope to articulate before because there's sometimes a little bit of lumpiness of when things go on sale. But with that, let me turn it over to Connie.

Yes. Thanks, Eric, and I appreciate jumping on the call, Justin. I think as we sit here today, things look really healthy. We typically look at the overall opportunity for the year and call it, Tier 1, Tier 2, Tier 3 events.

In relation to your question specifically around World Cup, what we have seen in terms of our forecast assumptions is that we've decided to include that as a Tier 1 category. To be explicit, the Eras Tour was in a league of itself. As and when the World Cup continues to progress, we'll continue to keep you updated.

In addition, I think you had a question just around how does perhaps some seasonality or as Eric talked, lumpiness occur from a concerts perspective and perhaps that just relates to what we saw in the fourth quarter. You're absolutely right. There can be movement. But again, the good news is when you look at it on an annualized basis, it tends to normalize. So where we sit from today, the overall market looks really healthy.

Great. And then I'd love to hear any updates on the U.S. secondary regulatory environment? And/or have you learned anything so far from the Ticketmaster trial and opening arguments? Anything you might have learned from that?

Yes. Thank you for the question, Justin. And let me walk you through how we think about regulatory, and then I can touch on the trial that's going on. So the first thing is that from -- just to give people sort of our orientation is, started this business 25 years ago basically to give consumers a safe, secure way to buy tickets. And so that you wouldn't have fraud, you wouldn't have problems. And so we are, by definition, sort of we serve the consumer, we serve the fan, and that's what we do. And what I would say is we try and work as cooperatively with legislators and regulators because I believe, certainly, that in good faith, they have the same thing. They work for their citizens. They want people to have a good experience. They're working for the fan to make sure they can get into their events and get in there without having any problems. And so that makes sense.

And obviously, we mentioned all-in pricing earlier. That's a great example where we worked and lobbied for that because we believe it's great for the fan and the consumer, even if it was a short-term headwind, as Connie said, because in the long term, anything that's good for the fan and the consumer is good for StubHub, and that's how we think about it.

Now let me talk about the general regulatory environment today as it stands and some of the chatter that's out there. We generally -- first thing for people to understand is that we're in a very positive environment. It's legal to resell tickets. People are enthused about it. There's no issue going on today that is sort of hindering that in any meaningful way.

What we are talking about now is why is that the case? And why has it been the case for decades. And I think there's two things that people need to understand. One is that, as I said, we're providing a service that's great for fans to give them access and eliminate fraud. And two is that it's actually very good for the content ecosystem. So in 2 ways. One is that if they're selling tickets and people have a safe, secure way to resell what they can't use, it's going to make it easier to sell the ticket in the first place. Secondly, is if you can unload tickets and put it in the hands of someone who can use it, you're more likely to fill the seats in the arena. So for all those reasons, that's why it has looked this way.

Now let me get to your question twofold. One is, well, what is the regulatory -- what's the chatter? Are there concerns? What could they be? How do we think about it? So when we look at it today, Justin, all the real public discussion is really focused on what we see as a very narrow set of the market, which is for very high demand concerts where people are concerned or there are people who buy up tickets for those concerts in bulk and then sell them at a markup in bulk. They sell a number of tickets. So that's really where the focus has been.

To give you a sense of how we -- because we think about this a lot, just what that surface is for our company as we approximate it to the best of our belief, you look at it that, that's about 10% of our global GMS. And that's 10% of our -- when I say global GMS for those types of events, that's across everything, across jurisdictions, across locations, across types of concerts, across different primary ticketing companies. So we have a very diverse catalog. That's just to give people a sense of surface. I know that's important to them and so forth.

Finally, in terms of the Live Nation trial that's going on, I think it's important for people to hopefully understand, let me give you context for that. The DOJ going to trial with them is talking about Ticketmaster being a monopoly in primary tickets primarily. They've also talked about whether or not they tie things together, but let's stick with the monopoly power, I think, is the main focus. To us, that's really fundamentally, if you listen to what they're talking about, is the need for more open distribution.

So they're basically talking about what we've called direct issuance and open distribution, which is that isn't the best outcome for any consumer and quite frankly, for content to allow them to take a ticket and distribute it ubiquitously, non-exclusively and have the outlets compete to give the best service to the fan. We're all for that. We support that. We're obviously working for the fan the same way other people do.

All that being said, what we've also said is we do not bake in or anticipate any changes to what the status quo. I'm in no position to predict what may or may not happen in a courtroom or between the governments and Live Nation. We'll see how it plays out. If anything was to come to pass that was to push forward more of this open distribution agenda, that would only be great for fans and therefore, great for StubHub, but we will see.

And next up is Mark Mahaney from Evercore ISI.

I'll just ask one question. On the advertising initiatives that you've had that is in advertising revenue. So you started rolling that out in the fourth quarter. Can you talk about what kind of traction -- you just mentioned it briefly in your opening remarks? How much revenue you've been able to generate so far, what the demand looks like in '26, how much you're baking into your outlook for '26? I know it's helpful on the top line, but particularly on the bottom line, too. So just how much contribution you expect from there? And when do you think you'll have a fully rolled out, the way you'd like it to be, advertising option? Is that this year? Or is that still -- is that more like a '27 event?

Thank you, Mark. Appreciate the question. Thanks for being on the call. Let me give you first on the advertising piece, what has evolved and how we've made some deliberate decisions in terms of how we're thinking about the strategy and timing there. I'll walk you through that, and then Connie can address sort of how that fits into guidance.

So advertising, big opportunity for us. We know that we have a great group of users and folks on the site that have a very passionate and clear intent that people want to reach. We also know we have a bunch of sellers on the platform who have a perishable item and they want to get their ticket in front of the right buyer. So there's a lot of demand and interest for that.

We always said that we have to get that right in terms of the customer experience, the experience for the buyer and the seller and then how it fits in our business before we're going to scale it up. And therefore, we did what we said we were going to do, which is in the fourth quarter, we started rolling out the ad product, sponsored listings as well. And we saw a good reaction from sellers to that. We started generating revenue and testing.

What we realized in our thinking is we said, gosh, it's very important that we get this right to maximize the experience for the long term and maximize the business model for the long term so that we create maximum value for the participants in our ecosystem as well as for our shareholders. And in doing that, we've come to the determination that we want to spend more time working that through, working the product through and experimenting with it in this coming year. And that's the conscious decision we made, which we think will drive more value over the long term, even at the sacrifice of near-term revenue.

With that backdrop, I'll turn it over to Connie, who can more specifically address your question about how that filters through guidance.

Thanks, Eric, and I appreciate you jumping on the line, Mark. In relation to how much revenue did we have in the fourth quarter, again, a very small modest amount. As Eric mentioned, we're still in testing mode on a small portion of the surface, albeit, again, super excited about the longer-term opportunity. And then we've been really explicit about ensuring that our guide is anchored in what we see in relation to today. And so we've taken the approach to have a very modest amount of revenue flowing through. You can think, call it, tens of millions for this year. That being said, as that continues to progress and change, we'll provide you with updates.

John Blackledge from TD Cowen is up next.

It's Logan Whalley on for John. A question around agentic commerce. Could you discuss your early learnings from your partnership with OpenAI and ChatGPT? And then looking forward, how do you expect to compete with other marketplaces in a world where people could be using chatbots to purchase tickets and other goods?

Thank you for the question. Logan, appreciate it. Let me -- I think you're asking about AI and how we think about that, what our experience has been in different ways. So let me start by sort of just setting the table for how we're thinking about that, how we think we're positioned.

So the first thing is, obviously, AI is a transformational technological development across the world, across society. It's a big thing. There'll be a lot of, I'm sure, disruption. And with disruption comes risk and opportunity. So we spend a lot of time thinking about this and how we mitigate risks and how we see those opportunities. And I think as we've looked at and thought about it, I'll tell you how we think about it. We think we're very well positioned for what's going on if we execute and innovate appropriately.

The first thing that is important to note is we are in the live event end market. So that is a pretty good end market to be in. We're very optimistic that it will be a long time before you're watching AI robots participate in the Super Bowl and people want to go to live events. So that's a good thing.

The second thing is that we are a marketplace business, and we think it's a marketplace business with the complexity that we have operationally, that is also a good place to be. But let me be more specific to probably some of the questions you had about how we think about it. There's what we call the marketplace operations layer and then there's an experience layer to it. And I'll tell you how we think about each.

So on the marketplace operations of our business, we think, is not something that's easily replicable, so to speak, just by an agent in terms of you've got very fragmented supply. You've got to have trusted fulfillment, payments, fraud prevention, customer support, financial protections. And quite frankly, AI will help us as the largest player with the most data excel at providing the best experience for customers in that. So we think that's good.

On the experience side and as you note, there are people who are going to be making purchases through chat and agent-based interfaces with us. And we've been at the forefront of doing a number of things, as you mentioned, with some of our partners. What we're excited about is that by having the most data on our platform about you as a user, if we are able to -- what we're working on is weaving AI into the product, we can create that great experience for you at StubHub that's unmatched anywhere else.

We also think that it is a unique emotive experience where humans relative to other things are more likely to want to have the experience of even looking at what event they want to go to, discovering those things. It's not like finding the cheapest toilet paper, so to speak. So for all those reasons, we think there's a lot of opportunity.

I'd also say on that discovery layer, it's creating more demand at the top of the funnel. So you're adding more ways to get people in, in a great fashion. And so we think that's great. And we think that at the top of the funnel, what we found is they want to make sure they're directing people to a trusted brand that has the customer service and execution, which is key because it's not just driving someone to content, where if you get the content, you're done and there's nothing else to it. So we think there are a lot of tailwinds.

The last thing I would say, and Connie may add something here, as with everyone, I'm sure everyone knows, there's tremendous cost efficiencies and productivity gains for anyone who applies this the right way, which we're very focused on. And that's why it's very important to us to be taking advantage of AI every way we can in what we do. We take it, as I say, extremely seriously because any time there's a big disruption, there's big opportunity. But if you don't work with purpose and with innovation, of course, there's risk. And so we're working hard every day to do that. But maybe on the efficiency side, I'll let Connie add a couple of things if she has it.

Yes, absolutely. And just happy to build on what Eric said, which is, again, we're excited about the technology, a huge number of benefits across the board. One of them clearly being cost efficiency. The team has already done a phenomenal job in terms of ops of support, really thinking about how we can create a level of efficiency, but perhaps even more importantly, how can we continue to delight the customer with a better way to interact. So seeing some really early traction there and obviously more to come. And then more broadly, even just from an engineering perspective, we know there's a huge opportunity. So again, a tremendous number of benefits, excited about the technology and how it plays out.

Next question is from Brian Pitz, BMO Capital Markets.

Eric, maybe more broadly, with primary ticketers pushing initial prices ever higher via dynamic pricing, can you comment on whether this is squeezing the volumes or margin spreads historically available to you in the secondary market?

And then maybe number two, apologies if I missed this, but can you quantify the GMS growth and progress made in international markets during the fourth quarter? And are there any specific remaining regulatory hurdles regarding viagogo's global presence?

Sure. So thank you. Thank you for the question. So a couple of different things in there. So let me try and make sure I address or give you a sense on the different things you're talking about. So I think a question there about primary ticketers and sort of how they use dynamic pricing and how that may impact the business. And then you had some specific questions on international specifically. So let me try to answer those as best I can and then flip it over to Connie for more of the nitty gritty.

So I think in terms of the primary companies and these different policies they've talked about with dynamic pricing and other things that they're doing, I just want to set the context for everyone. Again, doing this for 25 years. We've been competing with the Ticketmaster and other primary companies for many, many years, for decades. And they obviously have always had an interest in trying to control more of that system and capture things. Again, they don't work for the fan, the same way that we do, and there's nothing wrong with that. They just have a different business in terms of what they want to do.

And so this concept of dynamically pricing and doing things has been around for a long, long time. So I would just put that into that context. And therefore, both historically and today, we have not seen any impact from those types of policies on our business. It continues again. We've got a broad and deep catalog. We're serving a real need for consumers, and we think a real need for the ecosystem. So we haven't -- and that's just to give you the historical take of that not only today, but on decades of experience of something that has been around.

Internationally, I'll just -- before going over to Connie, what I would say is that international is just a phenomenal opportunity for us. One thing also getting back into sort of the history of it is that viagogo, which I started, it was an international company. And so we have a heritage in our DNA is servicing things internationally. We had to be able to service the languages, the jurisdictions, the payments. And so as events become more and more international, it's phenomenal as things move to Asia and Latin America, it's phenomenal. I think there's definitely a lot of speaking about our friends who are in the promotion business as they always talk about, there's tremendous opportunity in those markets, and we think that's great. So we're bullish on it.

In terms of any more specifics that we can or can't comment on, I will throw it over to Connie.

Great. Thanks. And just to address your question in relation to what was the fourth quarter growth rate in the international business. We don't break it out specifically, but what I can tell you is that it was growing at multiples of the North America. As Eric mentioned, we have a phenomenal footprint operating in over 200 countries and really continue to be excited about the opportunity.

And everyone, we have time for one final question. It comes from Andrew Boone, Citizens.

I wanted to go back to the marketing efficiency. As we think about the EBITDA guide for 2026, should we compare marketing levels for 2026 to 2024? Is that the right level of normalization? Or can you provide us with any others [indiscernible] as we think about that expense normalizing? And then you guys made gains in 2025 with ReachPro. Can you help us better understand what are the benefits of that? And then how do you approach making additional gains? Or how aggressive do you want to be with that product this year?

Thank you for the question. It sounds like you had some questions about the guide around some of the marketing stuff and some questions around ReachPro. So let me try and address the level of the product stuff in ReachPro a little bit, and then I'll give it over to Connie to tie out on some other things. So yes, just so everyone understands, ReachPro is a point-of-sale system that sellers can use to manage their tickets and manage their flow. It's just basically like software tools. It's not anything that we're selling or whatnot, but it becomes a default for people to use.

When you get that default in the operating system, it has tremendous benefits data-wise. People make you the first quarter call. So it's very helpful in terms of getting some permanent benefit in terms of share and whatnot. We basically, as part of the share gains we got, we're able to deploy ReachPro, and I think Connie will talk about how we've accreted tremendous share in that and have a great trajectory. That is also in a good place where, again, one of the benefits of the flywheels is once you become 3x larger than someone else and more efficient and this -- and you have a superior tool, you can get continued acceleration of people adopting it, which has continued benefits for our system and for our customers. But let me throw it over to Connie because I think you had some questions about marketing.

Yes. I think before we go into the details on marketing, it's probably worthwhile just to step back and think about the broader building blocks of the guide that just might help provide a bit more context. We did touch on growth, which we know we have 3 drivers, again, operating in a really healthy overall North America secondary market, but noting again, the overhang of all in pricing in those first 5 months.

In addition, we do anticipate continuing to accrete modest share gains. And then as we just discussed, we've got a tremendous international business that you can layer on top. What's also important to recall is if you step back and you think about last year, we were explicit about taking a point uptake and investing it in order to accelerate market share. Again, incredibly pleased with the progress we made in capturing nearly half of the market. But as we move forward, we would expect take to -- be more consistent with what we've seen historically, call it, in that 20% range.

And then specifically, I think you were touching on, well, what should we expect in relation to marketing efficiency. Again, last year, it was a period where we had a deliberate decision to invest, which ran sales and marketing as a percentage of revenue at a bit of an elevated rate. You would have seen in the first quarter, we were at 55%. By the end of Q4, we're about 52% normalized. And what I would say is you should continue to see increased benefit flowing through. So all of that, call it, ladders up into expanding margins at the bottom line.

Thank you, everyone, that does conclude our question-and-answer session. I'd like to hand the call back to Eric Baker for any additional or closing remarks.

Yes. I just want to say thank you to everyone. I appreciate folks making the time and taking the interest, and we appreciate it greatly. So thank you very much.

And again, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to StubHub's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, November 13, 2025.

I will now turn the call over to Clinton Hooks with StubHub.

Thank you for joining us to discuss StubHub's Third quarter 2025 results. For reference, our third quarter 2025 earnings release and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com.

Before we begin, please note that today's discussion will include forward-looking statements within the meaning of federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from our expectations. We assume no responsibility for updating these statements. Therefore, please exercise caution in relying on them. For detailed risk factors, please refer to our SEC filings.

We'll also discuss certain non-GAAP measures, which we believe are useful to investors for evaluating our performance. These measures should not be considered in isolation or as substitutes for GAAP results. Full reconciliations to GAAP measures are available in our earnings release. Unless otherwise noted, our profitability and EBITDA discussions today refer to non-GAAP adjusted EBITDA.

Joining me today are Eric Baker, our Founder, Chairman and Chief Executive Officer; and Connie James, our Chief Financial Officer. They will provide opening remarks, then take questions.

With that, I'll turn it over to Eric.

Good afternoon, everyone, and thank you for joining us for our first earnings call as a public company. I want to welcome all our investors, both those who supported us throughout our private journey and those who are new to the StubHub story. We're grateful for your trust and partnership, as we embark on this next chapter together.

Today, I'll focus primarily on the progress we've made in establishing StubHub as a leading live event ticketing marketplace and on our strategic initiatives. I'll then hand it over to Connie to speak to our third quarter financial performance. While we won't be providing detailed 2026 guidance on today's call, we look forward to sharing our outlook during our next earnings call in early 2026.

With that said, I want to begin by stepping back and discussing the business that we have built over the last 2 decades and share the long-term vision of where we are going, one that continues to be defined by a customer-focused and relentless drive to make live entertainment accessible to everyone everywhere.

The past few years have been transformative for our business. We completed the StubHub acquisition, navigated the pandemic, fully rebuilt StubHub's technology stack, restored StubHub as the clear category leader and have now entered the public market. Our thesis for the acquisition was to restore StubHub's market leadership in North America and create a unified global ticketing marketplace.

Our business today is the result of the successful execution of that thesis, and we are very proud of the asset that exists as a result. Today, StubHub operates what we believe is the largest global secondary ticketing marketplace for live event tickets, selling over 40 million tickets annually across more than 200 countries and territories from over 1 million sellers all over the world.

Our many years of leadership in the resale market have created brands synonymous with the category, resulting in moats around our business and durable competitive advantage through customer loyalty and trust, organic traffic and superior acquisition and conversion. We maintain what we believe is the most comprehensive operations and supply chain capabilities in our category, the largest event catalog in the world and the capability to fulfill virtually any ticket across any category, all through a single global marketplace.

Our business produces a huge data asset as tens of millions of people interact with our product services on what we believe is the largest floating price marketplace for live events in the world. This data on supply, demand, pricing, user behavior, etc., provides structural advantage through differentiated product innovation, marketing optimization and pricing intelligence.

Finally, this is all built on a single, modern, globally deployed technology stack, allowing us to rapidly innovate across our product surface and nimbly deploy features using new technologies, something becoming increasingly important as AI development shapes the future of digital commerce.

Our business has built a rare combination of best-in-class financial attributes that create exceptional value at scale with proven durability. First, we are growing rapidly with nearly 20% GMS growth over the last 12 months. Second, our marketplace models operated with enduring economics, consistent take rates and high margins. Third, we built a profitable customer acquisition engine that allows us to grow and take market share while generating profits through our performance marketing channels.

Fourth, our asset-light business model and the natural flow generated by our marketplace dynamics result in exceptional cash conversion. Fifth, we've demonstrated remarkable resilience through economic cycles, consistently growing nearly every year since inception. And finally, we operate in a large and expanding core global secondary ticketing market with durable long-term tailwinds.

In addition, we have opportunities for significant TAM expansion through accessing the broader ticketing ecosystem. We believe you would be hard-pressed to find many other companies to check these boxes. That said, we are most excited about leveraging these assets to realize our vision to become the global destination for consumers to access live entertainment.

We believe that buyers want one destination where they can purchase any ticket for any event in their language and currency. Sellers want to optimize revenue and attendance through broad distribution and pricing intelligence. We believe we can service these needs by building a single product that puts the world's live entertainment at fans' fingertips and services their needs throughout their entire journey. This is not something that exists in our category today. This is a product and service that can only be built by applying technology and relentless customer focus to eliminate friction around the live event experience.

Technology businesses innovating on behalf of consumers have reimagined access to many products and services, information, music, video, food, but not yet for live entertainment. This is exactly what StubHub is, a business with a core competency in technology development focused on applying its expertise to revolutionize the way consumers interact with live event commerce.

With this context, we can turn to some of the topics I think are top of mind regarding recent developments in our operating environment. First, we wanted to discuss some recent developments in our core resale market. Restoring StubHub's market share in North America was the key tenet of our acquisition thesis.

Following our acquisition of StubHub in 2020 and the completion of the technology migration in 2022, we have consistently gained share in the North American market, transforming StubHub from a business that was roughly comparable in size to the nearest competitor in 2022 to one that is now approximately 4x larger than that same competitor based on GMS and comparable metrics.

This momentum in share gains and the subsequent positive impacts of relative share we observed led us to invest in accelerating this dynamic via disciplined customer acquisition and conversion levers, specifically take rates and performance marketing, which continued in the most recent quarter.

I want to highlight one specific downstream impact of this share gain, our growing share of the point-of-sale market. In our market, the point-of-sale is a software product used by power sellers to manage the listing, pricing, distribution and fulfillment of their ticket portfolios. Sellers build their operational workflows around the software infrastructure, which becomes sticky as a result, like many enterprise software products.

For many years, the technology was provided by one of our competitors, whose product had the majority share of the market. We recently launched our own product called ReachPro. As our relative market share of sales volume has increased, we've seen rapid adoption of our technology.

We have benefited from a powerful network effect. As our marketplace captures a larger share of sellers' sales, these sellers are increasingly willing to migrate their operations to what we believe is our far superior technology, backed by our unmatched data and insights.

In the secondary market, installation of ReachPro naturally produces higher relative market share. When sellers use our tool, they tend to index their behavior around our marketplace, ensuring competitive pricing and high standards of fulfillment, leading to structural advantage and benefits for our buyers.

It also provides valuable data insights, which can be used to improve the quality of our products and a strategic product development surface to launch advertising products and innovate with features that will serve large sellers even at enterprise scale.

Q3 was both our largest relative market share quarter to date and the largest quarter of new seller adoption for ReachPro. We believe we have line of sight into becoming the largest provider of this product in the medium term, a durable and strategic asset created in part via our relative market share investments.

This brings us to the next topic, direct issuance, which we believe will be a major innovation to original issuance ticketing distribution that will promote competition and improve the fan experience while improving economics for ticket issuers.

As I mentioned earlier, we believe buyers want a single platform that offers access to all the world's live entertainment. At the same time, sellers maximize revenue and attendance by accessing the broadest possible distribution with the smartest pricing intelligence. Our strategy to unlocking this value proposition is through what we call direct issuance.

Generally speaking, there are 3 seller types in the market: individuals, power sellers and enterprise sellers. StubHub and viagogo began as platforms to service individual sellers, season ticket holders, concert goers whose plans change and so on.

As liquidity of the market grew, market makers developed. Power sellers selling large quantities of tickets through the marketplace on a regular basis, and we ultimately developed products such as ReachPro to allow these sellers to manage the listing, pricing and fulfillment of tickets seamlessly.

For our business, direct issuance simply refers to expanding the supply side of our platform once again to allow enterprise sellers, content rights holders like teams, arts and venues to access our marketplace through a frictionless technology-enabled experience as any individual or power seller does.

We believe simultaneous multichannel or open distribution using data-backed pricing intelligence is the future of ticket distribution, as it will maximize value for fans and content. To be clear, this is a very different model to legacy primary ticketing companies. Primary ticketing company's core service is to provide access control to venues. And secondarily, they provide a retail web storefront with limited or no marketing.

Content today, for the most part, sells an inventory through antiquated distribution methods. They often sell tickets, expiring products that drive huge economics exclusively through these access control providers. The result is an opaque market with huge inefficiency, narrow distribution, lack of pricing intelligence and ultimately, unsold seats and tremendous value loss for content, not to mention a lack of competition leading to a terrible experience for fans.

We are not competing with this model, and we are not providing access control technology. We offer something new, the ability for content to access StubHub's distribution engine through a variety of options that does not require them to switch their access control provider.

We make our distribution available to content rights holders with no exclusivity requirement, broadening their distribution and empowering them with robust data insights from our scaled floating price marketplace to make informed pricing and utilization decisions.

This means content rights holders can access our marketplace, distribution, data and customers, in the same way individuals and power sellers can. They can list tickets multichannel across retail outlets at whatever price points they choose to optimize their utilization and yield, and we compete to sell inventory the same we do today.

We're actively making investments to grow this business and demonstrate the benefits of open distribution's content and are excited about the progress we are making. We recently signed a partnership with Major League Baseball, a great example of one of the world's premier sports properties endorsing open distribution.

MLB momentum has continued, and more teams are continuing to become sellers on StubHub, several of which are doing so without any additional economic incentive or protection from us. They're selling just as any other seller on our platform does.

We have also had success with the music festival category, adding Peachtree Entertainment, one of the largest independent promoters in the Southeast, and LED Presents, an independent EDM promoter on the West Coast. These promoters combined put on dozens of events attended by hundreds of thousands of fans annually.

We have also continued to add talent to lead this initiative. Shaun Stewart, who spent much of his career building supply chain for travel businesses such as Expedia and Airbnb, joined as VP of Direct Issuance. Shaun will be reporting to Raj Beri, who was instrumental in building Uber Eats' APAC business and recently joined StubHub as Chief Business Officer to oversee all global supply.

Direct issuance represents an addressable market opportunity well in excess of $100 billion, a transformative growth vector that we believe will drive substantial long-term growth, value creation for our business and shareholders for years to come.

The other business we are in the early stages of developing is advertising, which we believe can be a large and profitable business for us, as it has been for many other marketplaces. We are pursuing 2 advertising models initially. First, sponsored listings, where sellers can bid for premier placement on event pages to dramatically increase exposure. For any given event, we may be merchandising hundreds, even thousands of tickets on our event pages. These are expiring products, meaning that sellers receive nothing if the ticket does not sell.

With the sponsored listing offering, sellers can bid for higher visibility among competing inventory, improving the likelihood of a buyer seeing and ultimately purchasing their ticket. Conversations with sellers on our platform have demonstrated tremendous interest and features such as sponsored listings as an additional and powerful tool for sellers on our marketplace.

As ReachPro has gained users and market share, we've also established a ready-made distribution platform for sponsored listings, as we can build access to the feature directly into ReachPro's user workflow without the heavy lift of a sales force.

The second advertising model is through more traditional corporate advertising partnerships with businesses in adjacent product categories that can be additive to the customer experience. One example of this is Booking.com. Event tourism is a rapidly growing category, and we know that many of our customers are purchasing tickets for events outside of where they live.

Our partnership with Booking is a great example of how we can monetize post-purchase real estate in our product to deliver a travel offering to customers. And it is also a great example of a high-quality business, recognizing the value of our customer base and paying us for access. We believe this will extend to other categories adjacent to sports, music and live event attendance.

We are very excited about the potential for advertising on our platform. Of course, as with everything we do, our #1 priority is ensuring that we do not adversely impact the customer experience. Therefore, introducing advertising thoughtfully and methodically remains our focus. We recognize investors are eager for more details on direct issuance and advertising. We intend to provide a more fulsome update on the long-term opportunity on our call early next year.

To close, StubHub is a business that is growing fast at scale while generating profits and cash flow. StubHub is a global category leader with the data, technology and customer focus to continue capturing share of the global ticketing market.

Indeed, we are very proud of all that we have accomplished to date. However, the real goal for us is to reimagine our market to create an unprecedented experience for fans and an asset of tremendous value in the process. That is what is really exciting.

With that, I'll turn the call over to Connie to discuss our financial results.

Thanks, Eric. Before I discuss our third quarter financial performance, I'd like to share our financial philosophy that guides our decision-making, and ultimately, how we look to drive long-term shareholder value. To that end, the foundation of our value creation approach rests on 3 financial principles. First, we prioritize driving sustainable market share growth by strategically investing in our marketplace ecosystem. Second, we are committed to long-term margin expansion through operational discipline and the natural leverage in our marketplace model. Third, we focus relentlessly on cash flow generation. Our business model efficiently converts adjusted EBITDA into free cash flow, providing us the financial flexibility to reinvest in the business and optimize our capital structure.

With that context, let's turn to our third quarter results, beginning with our key marketplace metrics, gross merchandise sales, or GMS. GMS represents the total economic value flowing through our platform and directly drives the network effects that make StubHub increasingly valuable to both buyers and sellers.

Our GMS reached $2.4 billion in the third quarter, representing 11% growth from the prior year period. This performance demonstrates the fundamental strength of our marketplace even as we navigated the anticipated impact of the federally mandated all-in pricing in the United States earlier this year.

As expected, the transition has reduced conversion rates as customers adjusted to the new pricing format. Based on our internal estimates previously disclosed, we believe the implementation of all-in pricing had an estimated 10% one-time impact on the size of the North American secondary ticketing market. We expect this transition effect will continue to influence year-over-year comparisons through May 2026 as we cycle through the full 12-month period following the May 2025 implementation date.

Even with this temporary growth headwind, our results demonstrate the resilience of our business model and our ability to continue to gain market share in this dynamic environment. Beyond the impact of all-in pricing, we believe our GMS growth reflects a more fundamental trend, sustained share gains across the North America secondary ticketing market, where we continue to outpace overall market, as well as continued international expansion.

When excluding the outsized impact of Taylor Swift's Eras Tour from the prior year period, our GMS grew 24% year-over-year with broad-based strength across our platform and categories. Revenue for the third quarter was $468 million, up 8% compared to last year.

The performance was primarily driven by our GMS growth, offset by 2 factors worth highlighting. First, as Eric discussed earlier, we made the strategic decision to further invest in market share expansion, in part through a reduction in take rates, resulting in our revenue as a percentage of GMS declining slightly to 19% this period compared to 20% in the prior year period. This measured reduction in take rates reflects our deliberate approach to balancing near-term results with long-term market leadership.

Second, we experienced a reduction in inventory revenue as we strategically phased out the use of minimum guarantees for direct issuance sellers. This move is aligned with our long-term marketplace strategy of building sustainable, scalable relationships with content rights holders.

Unless otherwise noted, the following discussion of our results will be on an adjusted basis to exclude stock-based compensation and other one-time costs. Full reconciliations to GAAP figures are available in our press release. Our adjusted gross margin was 84% during the quarter, up from 82% last year. The improvement primarily reflects a reduction in ticket substitution and replacement costs.

Adjusted sales and marketing expenses were $255 million or 54% of revenue compared to $221 million or 51% of revenue last year. The increase as a percentage of revenue was driven by the reduction in take rates to drive relative market share gains in the North America secondary market.

Adjusted operations and support expenses were $17 million or 3.5% of revenue during the quarter compared to $16 million or 3.6% of revenue last year. Adjusted G&A was $52 million or 11% of revenue during the quarter compared to $62 million or 14% of revenue last year. As we look forward, we do anticipate a modest amount of investment in technology resources. On the profitability front, we delivered adjusted EBITDA of $67 million, representing 14% of revenue, up 21% compared to $56 million or 13% of revenue in the same period last year.

Finally, I want to highlight a one-time item on the income statement. Our GAAP results for the quarter include a nonrecurring noncash expense of $1.4 billion related to stock-based compensation granted prior to our IPO. The expense was triggered by the completion of our IPO. Accounting standards require recognition of these previously granted rewards in the quarter when the IPO-related performance conditions are satisfied. To be clear, all stock-based compensation, including this one-time expense is excluded from our adjusted EBITDA calculations. Additionally, this accounting recognition has no impact on our cash flow or cash position as it represents a noncash expense.

Turning to cash flow. Before diving into our performance, I want to provide some context on how we view operational cash generation in our business. Our marketplace model has inherent favorable cash flow characteristics. We collect cash from buyers at the time of purchase, but remit payments to sellers at a later date, often after the event occurs. These cash balances show up on our balance sheet as payments due to sellers.

With this timing difference, we earn a yield on these proceed balances. To illustrate, on a trailing 12-month basis, you will see $41 million of interest income on our income statement. Additionally, we are asset-light with only $26 million of CapEx over the trailing 12-month period. We also benefit from over $1 billion of NOLs, resulting in minimal cash taxes in the medium term. Over the same trailing 12-month period, our cash tax amount was only $17 million. This allows us to consistently convert cash at a rate roughly 100% of our adjusted EBITDA.

In relation to free cash flow, we measured on a trailing 12-month basis to reduce the lumpiness created by quarterly timing differences between when we collect cash from buyers and when we remit payments to sellers, which is impacted by seasonality and event mix.

For the 12-month period ending September 30, free cash flow was $6 million, which included $120 million of net cash outflows due to the change in our payments due to buyers and sellers. This amount was impacted by an atypical concentration in seller proceed outflows occurring in the fourth quarter of '24 following the final leg of Taylor Swift's North American tour.

Our trailing 12-month free cash flow also included $153 million in cash interest costs during the period. Excluding those items, we generated $279 million in free cash flow conversion of approximately 100% of TTM adjusted EBITDA.

Taking a step back, I want to frame our results within the broader context of our 2025 objectives. This year, our priorities have been clear: to grow market share in North America, to expand internationally and to lay the groundwork for long-term TAM expansion through disciplined and focused investment. From the outset, we anticipated that 2025 would present a more challenging growth environment for our market.

There were 2 notable, but temporary factors shaping this year's comparisons. First, we are lapping the unprecedented Taylor Swift Eras Tour; and second, the industry transitioned to all-in pricing, which took effect in May. In addition, we are lapping the historic Yankees-Dodgers World Series as well as an unusually high concentration of major on sales that occurred in last year's fourth quarter.

This year, we are observing some shifts in the timing of these on sales. Several large tours that would typically go on sale in the fourth quarter occurred earlier in late September. It remains to be seen how this concert on-sale timing dynamic plays out in November and December.

Even with these temporary market dynamics in 2025, we are executing well against the objectives within our control, driving strong operational performance and expanding our leading market share position.

And as we look ahead to 2026, the Taylor Swift comparison will be behind us, and we will lap the implementation of all-in pricing in May. Fan demand for live events remains strong, and we're excited about what is shaping up to be another robust year for live entertainment.

Let me now address our thoughts on guidance, as we navigate our early stages as a public company. We are focused on operating the business for long-term value creation. Of course, we want to provide our investors with transparency so they can track our progress and execution against our long-term goals. While we are not providing specific guidance today, we plan to share annual guidance for our 2026 expectations when we report our fourth quarter and full year 2025 results early next year.

Turning to the balance sheet. Our capital structure philosophy centers on maintaining flexibility and optionality to position our business for long-term success. This approach guided our capital markets activity during the quarter, which was designed to enhance our financial strength by prioritizing a reduction in our leverage, something that will continue to be a key priority.

During the quarter, we successfully executed 2 transactions that collectively raised approximately $1 billion. First, we raised $224 million through our Series O preferred equity, which will convert into common equity at the expiration of the lockup.

Next, we completed our $800 million IPO, raising net proceeds of approximately $758 million after deducting underwriting discounts and commissions. The influx of capital provided us with the opportunity to significantly improve our balance sheet by reducing leverage and lowering our debt service costs while maintaining strong liquidity.

Specifically, we reduced our total debt by approximately 30%, retiring $750 million of our U.S. dollar-denominated term loan, bringing our total debt down to $1.7 billion. As a result, we ended the quarter with $1.4 billion of cash and cash equivalents or $623 million, net of our payments due to sellers, and $1.1 billion of net debt. The ratio of our net debt to TTM adjusted EBITDA was 3.9x at quarter end.

Importantly, the interest rates on our remaining term loans are hedged via interest rate swaps through February 2027, resulting in a fixed, blended interest rate of 5.8%. Over the last 12 months, our debt service cost between cash interest and required amortization was $174 million.

Today, our annual debt service requirement is $99 million, a reduction of $75 million, or 43%. Given the excess cash amounts we are holding, we intend to make additional debt repayments in the near term, which will reduce this cost even further.

We also increased our revolver capacity by $440 million during the quarter from $125 million to $565 million, expanding our available liquidity and ability to respond quickly to any short-term capital need. Our strengthened balance sheet not only supports disciplined growth, but also reduces the interest burden, directly enhancing free cash flow generation.

This creates a virtuous cycle that enables continued disciplined investment in organic growth and further deleveraging, both of which remain central to our capital allocation priorities in the near and intermediate term.

With that, we will now open the call to Q&A. Operator?

[Operator Instructions] And our first question comes from the line of Doug Anmuth with JPMorgan.

Eric, during 2025, you've made some substantial investments in core resale market share and also direct issuance. Can you just talk about the returns you're seeing on those 2 areas of spending and whether you expect those to continue in '26?

And then, I know there's some noise as Eric mentioned in the 4Q on sales versus last year, but just curious on the thought process in not providing a 4Q guide in that you're halfway through the quarter.

Sure. Thanks for the question, Doug. Appreciate it. So I think you had a few things in there in terms of what we've been doing with market share investment, how we think about that and how we think about the outlook for the business. Again, I think as we said in our opening remarks, we take a long-term approach, so we are not providing guidance, and we'll be talking about 2026 when we're on our next call.

But with that being said, let me address some of the things that you brought up. So first is, as you noted and as we talked about, we had a real focus this year in investing to take market share and to do that in a very systematic way. And we've been extremely pleased with the results. I think we can see in this quarter that has just passed that, that has continued to pace.

Our relative market share, I think, as I said, is about 4x. And I think everyone can see what has happened out there in the market in a great way. I think what's exciting about that, again, is that we're really creating permanent advantages in terms of how people are situated. One of the things I mentioned at the opening was around the point-of-sale system.

And we've seen that what we've deployed in the point-of-sale system has rapidly been taking share ahead of schedule, moving us into a dominant position, which obviously feeds the data that we have, feeds the -- we get increased durable share as people use the POS to operate their business, and it provides a great backbone for our advertising business and sponsored listings.

So we're very excited about all of that. I think Connie addressed, as we go and we look forward from where we sit, there's an extremely strong market for live events. It's as strong as ever. I think Connie addressed their shifts in terms of when on sales may happen. But as we look at it, everything is going at pace.

And our next question comes from the line of Eric Sheridan with Goldman Sachs.

As we turn the page on 2025, curious how you're thinking about aligning marketing investments over the medium to long term? And what signals you're getting in terms of the receptivity to marketing investments to continue to grow the user base across all the array of offerings and products you're bringing to the market?

Great. Eric, thank you for the question. And I think some of that echoes what I also would follow up. And I think as Doug asked about some of the various investments, and I talked about market share, and we're seeing great traction and durability in that as we sort of see the flywheel is working, I think the other thing which we've talked about is, obviously, we're very excited about our direct issuance business.

And what that for us really means open distribution. And to sort of recap what that is, is we really view it as, look, our mission backing up is that for fans. We want to give them easy access to the events they want to go to so they can access those live events and get there in a very easy, delightful fashion.

We also want to assist content in making sure tickets don't go unsold, seats don't go empty, and they can maximize their revenue. And that's a real pressing issue for people. I think even Live Nation on their most recent call mentioned that 98% of their events do not sell out. And there's tons of tickets, obviously, don't sell. Sports has a similar dynamic, where they're trying to fill arenas.

And so I think this ties into the direct issuance initiative, and to your question, which is that we have seen a tremendous receptivity, which is that in order to solve this issue that rights owners have in order to try and increase their revenue, increase throughput, get people into the arenas, they see the wealth of data and distribution we have, that has sort of led to, obviously, Major League Baseball, where we're seeing great receptivity from the teams. We talked about the festival channel, where we signed up Peachtree and LED, and we've been doing a great job with that.

Tying that back to your question in terms of some of the marketing spend, we also talked about as we built that out, we've made the investment to prove it. And we see rights owners and people in the queue coming on board where it does not require any financial payment for them to access our open distribution. And so similar to how teams like the Dodgers have done that, when I was speaking with Shaun and Raj just last week in New York, and we were looking at the pipeline, the majority of the pipeline, as it's transitioning, does not involve any cash payment from us. And so we think this is going in an excellent direction and tracking the way we want to see it.

And our next question comes from the line of Justin Post with Bank of America.

Wondering if you could give us any visibility on the sponsored listing ad launch, when you're thinking the timing is and how quickly that could ramp?

And then second, maybe talk more about the Major League Baseball deal, are you going to get direct tickets from the league? And are you seeing more productive discussions across multiple leagues?

Excellent. Justin, thank you for the question. Appreciate it. I think you're asking -- let me address some of the advertising generally, including sponsored listings, then I can talk about what you asked about MLB.

So let's talk about advertising. And first, let me just frame it. The way we think of our opportunity in advertising is, first of all, doing things which are value-added for our consumer base to enhance that experience and doing it for other members in the ecosystem who are selling tickets.

There's 2 flavors of that advertising. One is, again, where you have things like the Booking.com deal that we did, where we work with different potential partners so that post-purchase people, if you're traveling again, we have a huge international business. People travel for these events, you can book through Booking and so forth. And so that Booking has been a great proof point and a start to that.

The second, which you mentioned, is sponsored listings. And so on sponsored listings, just to explain what that is, is basically that we have sellers on our platform, and these sellers are looking to sell their tickets. And as in many marketplaces, we put the ability for these people to pay to bump their listings to the top and sort of feature them. This is not reinventing the wheel.

Here's what we're excited about and get to sort of why we're excited about the progress and the promise for it. We have 2 great aspects to it that are unique. One is that these people are selling a perishable item. So it expires, and then, it's not worth anything. So it's very important to get that in front of people. And most of the supply that we have on our platform is competing to try and get in front of customers. And so if you've got similarly priced supply, taking the sponsored listings avenue is very attractive to these people, and we think, will add a lot of value and be done in a way that works for the customer.

The second thing I want to highlight is I talked about our point-of-sale system in terms of relative market share and how that's helped us lock people in. That creates a very easy conduit. The point of sale, again, is what these sellers are using to operate their business. So as they operate their business, as they list tickets, as they price tickets, right in that workflow, with one click, they will be able to opt for sponsored listing.

This means that basically, that product is our sales force to tie in for it. So that's why we're very excited about the opportunity. What we're trying to do is make sure that we roll it out the right way for consumers, in the right way that it works smoothly for sellers. As we've said, that will be rolling out second half of Q4. We look forward to rolling that out.

Lastly, real quickly, I think, Justin, you mentioned about MLB. Let me quickly just recap what is that deal, and then, I can talk about why we're excited about it and how it looks promising. What the deal is? MLB, at the corporate level, they will be taking advantage of direct issuance with tickets that they control for certain MLB events, which is exciting.

They're also helping us facilitate signing additional teams, as we already work with, as people know, the Yankees, the Dodgers and others. That has already been extremely promising. We're really liking the pipeline on that. And again, as I alluded to, many of these teams are understanding they're not concerned with or focused on a payment. They see the value of open distribution inherently driving intrinsic value for them. So that's an exciting way that it ramps in a great economic situation for us. Thank you.

And our next question comes from the line of Mark Mahaney with Evercore.

Eric, I just want to ask about the direct issuance market. And if you think about it in terms of low, medium, high-hanging fruit, if there's such an expression, where do you think the best opportunities are for StubHub in the next 2 to 3 years? Is it more international? Is it more U.S.? Is it more sports? Is it more live theater? Like what are the best opportunities to ramp up into this promising market?

Sure. Thank you, Mark. Appreciate it. Let me again say that what we are talking about doing for content is universal to all content. So when I talk -- talking with Shaun the other day, when you go in and you say, we have a solution where we can actually get you access to more data, more distribution, more people nonexclusively to help drive your revenue and fill seats, people are like, this is great. They're very receptive to it. Because remember, what content is trying to solve every day is increasing the revenue, increasing the attendance and doing that in a way that works for fans. And we -- obviously, that's what we've been doing for years and years. So it's really just about making that as easy as possible from a product and service solution.

So that's a long way of saying we're seeing a very diverse pipeline across the board. There's obviously multiple sports leagues in the United States. But globally, we've said before, we worked with European soccer franchises. Festivals we work with, I cited 2, that are domestic, but there are many internationally that we're looking at working with. We talked about the increased ramp in MLB. So I think really, this is something that is attractive across the board.

Let me leave you with one other thought, Mark, on this, is that another way to think about it, and we've said this, is that this is not something which is competing with primary ticketing. We are not trying to replace primary ticketing companies. You can imagine us partnering with primary ticketing companies in order to open up our distribution to them. And that being a very powerful way to access anything across the planet because, again, this is a $150 billion-plus market. So it is a huge ocean to fish in, and we're very excited about it.

And our next question comes from the line of Brian Pitz with BMO Capital Markets.

Maybe a broader question on how StubHub is thinking about the future of Agentic search and ticket buying. Maybe you could provide us your views on how agents will impact either future take rates or advertising revenue going forward as we are hearing more and more industry discussions around Agentic capabilities in live event ticketing?

Yes. No, thank you, Brian, and thank you for the question on AI, which is obviously a very exciting topic. And so let me open by just saying, in the immediate term, everything has been business as usual with consumers using the channels that they use, and that continues. That being said, as you say, and we're always thinking long term and how this works. And I'll tell you why we're excited about the opportunities and how we think it will play out.

The first thing is that any time there's top-of-the-funnel ways to reach people in competitive ways with people giving you that access top of the funnel to reach people and compete, which is traditional Google search and other methods, we believe it's extremely powerful. We believe we're extremely well positioned, and what we're seeing is that when you're looking at where you send traffic and where the agent needs to go and how they need to, they're solving for the best solution for that consumer, which naturally goes back to who has that supply chain, who has the catalog, who can be relied on for the ticket, who has the best selection, et cetera. So as we build that, we see the same way it worked even in search and everything else. That's ultimately where you need to be.

Now, I think over time, what we're very excited about, Brian, is there's going to be both paid and unpaid ways to take advantage of this. We think that as we see in our dialogues with many of these companies that we talk to all the time, there may be ways where there's a paid model for them to drive traffic, but again, always with a quality score and thinking that way. And there's ways that there will be unpaid as they show. But again, the key thing is that they're going to want to drive people to the best possible outcome for consumers that's going to deliver value, and that's what we're building. So we're excited about the opportunities. That's how we see it.

And our next question comes from the line of Lloyd Walmsley with Mizuho.

You guys talked earlier about the headwind to growth from all-in pricing. And just wondering if you guys feel like you've carved some of that back already. Is it still running at sort of the low double-digit headwind rate? And do you feel like we're just -- we're sort of -- we just have to comp through it next year?

And then secondly, if you could just comment on how meaningful you think World Cup could be next year? And any early indications you're seeing on that would be great.

Sure. Thank you for the questions, Lloyd. Let me on all-in pricing and then World Cup. And so let me straight on, I think, as we talked about before when we've discussed this and we talked about it, the all-in pricing is a 10% headwind, we believe, for 1 year. We'll lap it in May of '26, I think, as Connie said. So that is -- we don't see any deviance from that. That's what we see. That sort of is what it is.

I do want to put that in context for people to understand one thing. We talk about running our business for the long term and that we're really trying to do right by the consumers and the content. And look, I want to put this in context, we also have explained to people, we lobbied for all-in pricing for multiple years. It's something that I think you can go to the SEC website, it's public record. It's not something -- and we were the only people, I think, in our sort of sector to do that.

And the reason I bring that up is we did that knowing that there would be this hit. And we knew that in the short term, it's obviously arithmetic, Lloyd, it's 10%. But in the long term, it creates a much better experience for consumers, and it's going to behoove people like us who provide the best experience. Anyway, that's all on pricing.

The World Cup, again, listen, we don't -- again, we're not quantifying going forward, but what -- here's what I can tell you. The World Cup has always been a tremendous event for even going back to the days of viagogo because our heritage is international. It's phenomenal in terms of resale, and it is a global event that's going to be North America with a ton of matches, which is arguably the biggest sports spectacle on planet Earth. So we are extremely excited about it and very much looking forward to it, and we'll see.

And our next question comes from the line of John Blackledge with TD Cowen.

One question on take rates. Could you talk about take rates between the secondary market and the emerging direct issuance business? And do you expect them to be similar as the direct issuance bid scales?

And secondly, just curious if you can unpack the 3Q '25 GMS growth between North America and international?

Thanks, John. I appreciate the question. So let me -- I believe you had a question about how do take rates, how do you think about then direct issuance and open distribution and some stuff around our international business. Let me frame some stuff and then maybe Connie will give whatever color we can as well.

So I think the first thing is when we talk about the open distribution-direct issuance model, the very straightforward answer to you is the take rates are the same. As we sit here today and everything we've seen, the take rates are the same. That's just fact. I think to help understand, so I want people to understand what we're doing here and why that is, is sometimes people again say, well, doesn't a primary ticketing company have a different take rate?

And again, I just want to be very clear, we're not running a primary ticketing access control system. What we're doing is providing a marketplace, providing distribution for people just like we do for fans, just like we do for power sellers, no different. That is why we are able to tell people that when they sell through us, we're charging through the marketplace in the same way. We're not charging them. So that's the answer to that question.

I think in terms of U.S. international, I'll just give you in terms of high-level flavor, and we don't break it out. So that's just not to disappoint you there. International has been a rapidly growing business for us, we're very excited about. I think sometimes we don't do a good enough job of articulating to people viagogo, which obviously went on to acquire StubHub, was built internationally. We're in 200 countries.

I will tell you, Asia and Latin America are particularly strong. And I will also tell you that if you listen to different event and concert schedules for 2026 and what everyone says in the industry, which we see is tours are going increasingly global, and they're increasingly in these different geographies. So we're very excited about that.

Yes. Nothing further to add, just to emphasize that international continues to be an area where we see consistent growth. We're also excited to have Raj on board, who's going to put some direct focus on international as well, which is super exciting. So great momentum across the board.

And our next question comes from the line of Shweta Khajuria with Wolfe Research.

The first one is on direct issuance. Could you please talk to how you're thinking about the number of teams that you expect to perhaps bring on onto the platform next year? And what level of visibility do you have in terms of the timeline? Anything you can comment on when do you need to sign them all by to benefit by the end of next year? So that's the first one.

And the second one, any color on just the overall demand trends that you're seeing through the quarter through October and November that could help us out as to how we think about fourth quarter going forward?

Yes. No, Shweta, thank you for the question. I know I think in terms of -- let me talk generally, I think about. I can talk to you generally about DI and open distribution, how we think about that. And also certainly, how do we see sort of live event demand and what's going on? Obviously, as we've said, the way that we think, and we're not providing guidance at this time, and I'm sure we look forward to the next call and talking about next year then.

With that context, what I would say is in direct issuance, again, the way we think about it is, again, I think to the question that Eric may have answered -- asked earlier, is that we really have this wide ocean, and it's in so many different compartments when we talk to Shaun and Raj that you've got different leagues, different festivals, different geographies. So it's very, very broad. And what we're finding is the applicability is pretty universal and that really what we need to do is have the product and service work for people the right way.

What I would also tell you is that when you get the product and service done the right way, and remember, I want to make this very clear, we are not doing this where it's not exclusive to us. It's multi-listed on multiple platforms, and it fits into their workflow. It doesn't -- that means you don't have to sign up at some predetermined date. You don't have to make a long-term decision. It becomes an option that is in your workflow at any point in time to flip the switch and sell through the retail channel. That then becomes a beautiful thing because you're not bidding on RFPs years in advance and saying, I own this for X years. So that's -- thank you for asking the question. It's an important distinction.

I think, in terms of just consumer demand and live events, again, and we don't -- not giving guidance and stuff, but I will take it this way, the demand for live events is phenomenal. We don't see anything with consumer demand that's any different. I think as Connie alluded to, as she spoke, we run a marketplace business and the timing of when things go on sale on the event catalog sometimes varies. And I've been doing this for 20, 25 years, my gosh. And it can move. Sometimes things go in the fourth quarter instead of first quarter, sometimes things go in the third quarter instead of the fourth quarter. That is a timing catalog question that has nothing to do with the robust demand that we see from consumers who love going to live events and continue to do so.

And our next question comes from the line of Jason Helfstein with Oppenheimer.

I guess, I want to just maybe re-ask the Shweta's question just because we're getting asked this by a number of clients. So maybe, Connie, can you help us understand, I guess, how much pull forward did you see in 3Q that may kind of be affecting fourth quarter? And I guess, how meaningful is kind of the unfavorable World Series relative to last year?

And then a second question that's been coming up, Ticketmaster, Live Nation, whatever, has been under increased pressure, I think, to try to rein in speculative sellers. Can you just talk about like how you manage the business around speculative selling? And just your broad thoughts about it. Is it something that like -- kind of it's something we should all be paying attention to or just in the scope of a very big business, it's just not meaningful?

Yes. Great. Thanks for the question. And happy to provide some color. As we mentioned, we knew going in to the fourth quarter that it would be a little bit of a tough comparison. We had the unique Taylor Swift comp as well as the World Series. And as I mentioned, we did see a little bit of timing shift in relation to September.

To Eric's point, what we continue to focus on is the long term. We know that there can be timing shifts from time to time. What we continue to be focused on is capturing share. And in the third quarter, we were able to do just that. In fact, if you look at our market share, we were nearing 50%. So as we look at it, we think it's merely a timing issue more than anything else. And more broadly, I'd say the outlook for '26 continues to look really strong. And so if there's a little bit of timing, the good news is that we're well positioned to capture a significant portion of those on sales when they do come in. So hopefully, that gives you a little bit of color.

In relation to speculative ticketing, et cetera, I'll pass it over to Eric to provide some color.

Yes. No, thanks for the question, Jason. I think sometimes when people talk about, I think, within speculative ticketing, there's a lot of people in the market that -- how do we make sure that we're guaranteeing people get tickets and that it happens in an authentic way. That's our business. That's what we do. So minimizing fraud and make sure these tickets get delivered. So for us, there's not -- it's business as usual and nothing to talk about there.

And our final question comes from the line of Andrew Boone with Citizens.

This is Brianna on for Andrew Boone. Just can you share how users are currently interacting with the mobile app and how that may be different than on the web? And do you see an opportunity for the mobile app to evolve into a more comprehensive platform, whether that's through loyalty program or a different lever to drive better frequency and retention?

Thank you for the question. Appreciate it. I think the question about mobile app, on the first thing, just we don't break out for the purposes of what we report. I think though, as you allude, and I think what we are seeing and what you're sort of alluding to is that as we are getting more and more people coming back to us all the time, as we think about what we provide to make that experience easy to know who you are to -- even with these things where we're adding in things through Booking and other things to build a more complete product, that's really what we're striving to do. So as we continue to do that, we're certainly adding the building blocks for a complete product and making it easier and easier for people to know that they just have the first port of call to go to, which is StubHub, and that's what we're excited about. Thank you.

And ladies and gentlemen, that concludes our question-and-answer session. I will now turn the call back over to Mr. Eric Baker for closing remarks.

Thank you, everyone, for joining us for our first earnings call as a public company. We very much appreciate it. As I said at the outset, both to those who have been along with us for our many-year journey and for those who are new to the story, thank you for taking the time. We look forward to speaking to you again in the future.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.