Vividats Inc Class A Aktie

Good morning, and welcome to Vivid Seats' First Quarter 2026 Earnings Conference Call. Following management's prepared remarks, we will open the call for Q&A.

I would now like to turn the call over to Austin Arnett.

Good morning, and welcome to Vivid Seats' First Quarter 2026 Earnings Call. I'm Austin Arnett, Vivid Seats' General Counsel. I'm joined today by Larry Fey, Chief Executive Officer; and Joe Thomas, Chief Financial Officer.

By now, everyone should have access to our earnings press release, which was issued earlier this morning. The release as well as supplemental earnings slides are available on our Investor Relations website at investors.vividseats.com.

Today's call will include forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our projections, including the risks discussed in our earnings release, our most recent annual report on Form 10-K and our subsequent filings with the SEC.

Today's call will also include references to adjusted EBITDA, a non-GAAP financial measure that provides useful information to our investors. To the extent reasonably available, a reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure can be found in our earnings release and supplemental earnings slides.

And now I'll turn the call over to Larry.

Good morning, everyone, and thank you for joining us today. We entered fiscal year 2026 with a clear focus and road map to enhance our market position and financial trajectory. With that focus, we delivered measurable progress in the first quarter, resulting in meaningful improvements across our business.

Our first quarter results came in at the high end or above guidance. On a sequential basis, we delivered growth in GOV, adjusted EBITDA and our cash balance relative to Q4 2025. This momentum and sequential improvement support our confidence in returning to year-over-year growth in the second half of fiscal year 2026 and beyond.

Our long-term strategy centers around Vivid Seats foundational strengths, leading technology and product innovation, operational excellence and a differentiated value proposition for our customers and partners. Pairing a seamless user experience with a differentiated value proposition is central to our mission. Vivid Seats strives to be the most rewarding ticketing company, and we are increasingly aligning our product, pricing and messaging around that core idea. We deliver value through competitive pricing, seamless user experiences and meaningful rewards that deepen customer loyalty over time.

We are currently focusing our product innovation efforts on the core customer journey. We are improving funnel efficiency, enhancing conversion and delivering a faster, more intuitive experience. We recently deployed an upgraded app checkout experience, delivering a streamlined flow to accelerate the customer journey while improving conversion rates. We are encouraged by the early results and are excited about the pipeline of enhancements to both our app and web properties that will be deployed in Q2 and Q3.

Our enhanced app value proposition continues to deliver encouraging results. In Q1 2026, Vivid Seats app GOV was up 20% year-over-year. This growth led to Vivid Seats app share of GOV exceeding 40% for the quarter. Increasing app adoption reflects the combined impact of the Vivid Seats Reward program, our lowest price guarantee and continued product improvements. Together, these investments represent a highly differentiated value proposition.

App users are more engaged, return more frequently, convert at higher rates and touch paid performance marketing channels less often. As volume shifts into the app over time, we anticipate more efficient customer acquisition alongside enhanced customer retention and growing lifetime value. Alongside our app progress, we are continuing to invest in innovation across customer acquisition by working closely with leading AI platforms. This includes our recently launched ads on ChatGPT. While still in the early stages, we believe these efforts will help us capitalize on the long-term opportunities AI presents within the ticketing ecosystem.

In tandem with the encouraging trends we are seeing with Vivid Seats branded properties, we were pleased to launch a significant new private label partner during Q1 with performance already exceeding our expectations. We also recently extended our agreement with a large existing private label customer, underscoring the value proposition we deliver to our private label partners. We are pleased to see the private label business deliver sequential revenue growth in Q1 2026 and believe this trend supports our expectation of a return to growth in the second half of the year.

With that, I'll turn it over to Joe to walk through our first quarter financial results in more detail.

Thank you, Larry, and good morning, everyone. As Larry mentioned, our first quarter performance landed at or above the top end of our guidance, underscoring strong execution across the business. We achieved meaningful sequential increases in GOV and adjusted EBITDA compared to Q4 2025. This improvement is encouraging as we pursue a return to growth in fiscal year 2026 and beyond.

Q1 2026 Marketplace GOV was $612 million compared to $581 million in Q4 2025, reflecting quarter-to-quarter growth of $31 million or 5.5%. This is particularly encouraging as the fourth quarter typically represents the highest GOV quarter each year due in part to robust sports volumes with all major leagues in the season.

Q1 2026 consolidated revenue was $126 million, essentially flat with $127 million in Q4 2025. Within consolidated revenue, private label revenue grew 20% quarter-to-quarter, highlighting a meaningful growth trend in the channel despite continued year-over-year private label declines as we lap the 2025 loss of a large customer as previously disclosed. Marketplace take rate was 15.9% in Q1 2026 compared to 16.8% in Q4 2025. The lower take rate primarily reflects mix shift as private label revenue tends to come with lower take rates. We continue to expect near-term take rates to remain around 16% on a consolidated basis.

Q1 2026 adjusted EBITDA was $9.5 million compared to $1 million in Q4 2025. Adjusted EBITDA grew $8.5 million, marking substantial improvement on a sequential basis and highlighting the benefit of a material reduction in operating costs relative to a growing GOV and revenue base. Cash increased over $40 million in the first quarter to $144 million. Cash flow benefited from improved profitability alongside seasonally strong working capital dynamics.

Our first quarter results show significant progress across our operational and financial goals. Accordingly, we are reaffirming our 2026 outlook. For fiscal year 2026, we continue to expect marketplace GOV in the range of $2.2 billion to $2.6 billion and adjusted EBITDA in the range of $30 million to $40 million. This outlook reflects continued execution of our operating plan and financial profile.

I will now turn the call back to Larry for closing remarks.

Our first quarter results indicate our strategy is working, and we are moving in the right direction. We are excited about our momentum in the Vivid Seats app, where improving conversion and increasing engagement are supporting double-digit GOV growth. We are also encouraged by the sequential trends in our private label business as we seek to return to year-over-year growth later in the year.

As we move through the year, we are confident that our core strengths, leading technology and data, operational excellence and a differentiated customer value proposition will shine through. We are excited to continue executing against our strategy and to deliver long-term value to all stakeholders.

With that, operator, please open the call for questions.

[Operator Instructions] Your first question comes from the line of Cameron Mansson-Perrone with Morgan Stanley.

Larry, last quarter, you highlighted that you're seeing some encouraging trends in terms of the competitive environment kind of rationalizing. Wondering if you're continuing to see that and whether there's any event category where you're seeing more or less industry competition for activity and whether competitive intensity from an event-specific angle is -- whether the rate of change is better or worse in any specific category? I appreciate it.

Yes. Thanks, Cameron. I think the moderation that we saw started in Q4 from StubHub on the paid search side has continued. That's been somewhat counterbalanced by continued aggressiveness in that channel by some other players. But no question, they've stepped back from their peak spend that we saw early middle of 2025.

On the marketing spend side, I think perhaps a little surprising to us in the last few weeks, we've seen them shift to some price testing, price competitiveness. And so we continue to see, particularly in sports across the ecosystem, competitiveness across pricing, while the marketing landscape seems to have really stabilized and moderated a bit.

Got it. Anything to follow-up on that, anything that you could add on. I think the benefits on the push to kind of drive activity in-app probably makes you a little bit more insulated in terms of the vagaries of competitive intensity in the industry. Any additional color on kind of how you think about that and what the opportunity could be as more activity shifts to in-app?

Yes. I think that's exactly right in terms of the goal and the strategy. We're happy to have exceeded 40%. I think implicitly though, at 40%, we still have exposure to the wins of paid search and marketing expense. But the objective is very much to control our own future, bring folks into the ecosystem once and then have it more about building a long-term relationship with those customers versus continually needing to go back into the pond and acquire folks. But we do benefit when things moderate, right, given the remaining piece of the business that's still out there. So we're pleased to see that. But the surface area of that exposure has shrunk quite a bit relative to what it was 2 years ago.

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

Larry, Joe, nice job on the sequential improvements and stabilization. I want to start on industry volume and curious what you guys saw in Q1 and then Q2 quarter-to-date, acknowledging I know April was a very tough comp, but just curious to try and compare your results relative to the industry and what you saw there.

Yes. In Q1, the data we're seeing was -- industry was probably up a smidge, so low single-digits, started pretty nice in January and then it moderated a bit into February and March. So net growth, but single-digits. And then Q2 thus far, I'd say, is roughly flat, got off to a slower start with Easter timing, but April picked up with a couple of meaningful concert on sales in the last 2 weeks. So we're back to roughly flattish.

I think at the moment, generally continue to subscribe to what we had put forward at the outset of the year of modest industry growth. I think we've all seen the increase in some cancellations of certain tours over the last few weeks. I think most recent was The Pussycat Dolls, we also saw Zayn Malik, a couple of others Post Malone delayed, which I think on some level is reflecting either mispricing or some cap on potential for growth for the year.

Then just on market share, how that looked for you guys looking at SkyBox data on a sequential basis for the marketplace? And then secondly, on the market share, what you guys are seeing from SkyBox from your ERP customers?

Yes. So our share has been sequentially steady in our data when we look at Q4 into Q1 into Q2. As we've started to lap our most difficult comps last year, which started around now with the, call it, peak spending in the performance marketing channels, we've seen in our data, our share shift to being up year-over-year, not dramatically, but up, which is refreshing. And as you probably heard our theme throughout the call, I think we're well situated to return to growth in the back half of the year, and those are the types of metrics that you love to see flipping green in advance of that.

Great. Then maybe just on SkyBox too, if you're willing to comment specifically to the ERP customer market share?

Yes. There continues to be competition for those customers, but we have not seen any meaningful defections in recent months. So we're vigilant. We're continuing to reinvest and refocus on upgrading the platform to defend those relationships. But we've seen alongside our stabilizing and improving share in volumes, improvement in that dialogue and discourse with all of our sellers. So excited about the outlook on the SkyBox front.

Your next question comes from the line of Ralph Schackart with William Blair.

Two, if I could. Just first on the macro environment and sort of the reads on the consumer now that we have some elevated oil prices. Larry had said that maybe there's some cap on prices. I'm not sure if those are related, but just any comments as it relates to that? And then I have a follow-up.

Yes. We -- there's nothing we could point to in terms of the kink in the curve where the Iran conflict started, oil prices moved and you can see a discernible shift in demand or purchasing in any clear way. As we touched on earlier, with some of the concert tours being canceled, perhaps that's a reflection of at least some subset of the market being tapped out. It also may just be part of the natural oscillation of some artists misprice the tours, which is, I think, the leaning at the moment.

We have seen some weakness. The lower end of the Vegas market has probably been the most palpable place where we've seen the impact of potential consumer weakness. I think that's a comment I've really seen a number of the local operators reinforce, and we have continued to see that continue into the year. So in Vegas, we're really looking ahead to 2027 when supply tailwinds arrive with the reopening of the Mirage. But I think for this year, it's going to be more of a blocking and tackling type year in Vegas.

Okay. Great. And just maybe kind of switching gears to the app and some of the improvements you talked about in conversion rates. I think you said you're above 40% traffic now on the app. Maybe just kind of a sense how that's trended over the last year or so? And just any thoughts on where you think that you could take that rate over time?

Yes. We've seen really nice increases in the share of GOV coming through the app. And ultimately, the GOV function is how do you get more people into the app and how do you drive higher conversion. So our activities are centered on both of those. A lot of effort in the back half of last year on how do we make folks who see the app want to download and keep it through better messaging, the better value proposition, reinforcing the value proposition. The focus this year has shifted to the conversion side of things, how do you optimize the product experience? How do you collect more data to have better personalized information appear in front of folks, have a pretty exciting deployment calendar over Q2 and Q3 on the app side of things.

So we're north of 40% in Q1. I think the ambition is for a majority of the business to come through the app. I think realistic timetable for that would be at some point in 2027 to achieve that on a run rate basis, but that's what we're aspiring to deliver.

Your next question comes from the line of Brad Erickson with RBC Capital Markets.

So in terms of the return to growth, you pointed to, I think, the new private label partner giving you some added confidence there for the second half. Can you remind us any other items that could go -- kind of go right this year that gets you back to that growth in the second half of the year or at a high end of the guide type scenario? What would those drivers be?

Yes. I think as we frame why second half is where we draw the line for when we expect to flip back to growth. We lost the large private label customer in July of last year. So July and really August will be the first true clean month without that customer in there. Subsequent to losing that customer, as we noted, we brought a new meaningful private label customer on in Q1, which enabled sequential growth from Q4. I think within private label, the path to incremental upside is twofold. There's always the option of winning and bringing additional customers on. There's an interesting stick or 2 in the fire on that front.

And then the other piece that we've redoubled efforts is how do we make sure our product and our support of our partners to maximize their organic performance is where it needs to be, and we're seeing encouraging progress on that front as well. With one of the big changes being any product enhancement that we are developing for the Vivid Seats marketplace, we want to make sure we make it configurable and available to our partners in short order. And some of the upgrades that get us excited on the Vivid side that they get pushed to our private label platform, I think provide an opportunity for organic outperformance in the second half of this year, but probably more prominent as you think about growth into 2027 and full year impact.

Beyond that, I think the concert calendar and supply slate is largely baked at this point. So upside from here, I think, will largely be driven by fundamental performance, right? So can these new product releases that we have upcoming in Q2 and Q3 deliver the type of conversion uplift that we anticipate or event mix. And I think the World Cup is probably the elephant in the room. If you get some great matchups in the quarter finals, semifinals, finals and you have a series of Super Bowl size events, that would be a wonderful tailwind. We'll see.

Got it. And then just bigger picture, as you continue to have conversations presumably with the LLM companies, I don't know, have you seen any indications or just any updates you can give us on how you're thinking about their desire, ability, et cetera, to potentially grab economics of bringing the booking kind of closer to the 4 walls of the LLM. And then just generally, when you think about the risks related to that, remind us like what do you point to as kind of the specific points of insulation where the ticketing sector can maintain all of its economics within kind of an LLM booking environment?

Yes. I'd say on the AI journey broadly, we've actually seen to date, quite little progress on the top of the funnel disruption and quite a bit of progress on optimizing the way we operate the business on our side. So not to say it can't change, but everything we've seen to date has been more in the camp of the tools and capabilities allow us to be much more efficient and effective on a series of parameters to deliver a better customer experience, whether that's building the software more quickly, automating processes, better information sharing. It really has been a nice tailwind on the operational side, including specifically our customer service experience.

If you look longer-term, nothing that we've seen indicates that the premise of like a fully captive transaction where the marketplace is boxed out is likely in the near-term or the focus of the LLMs in the near-term. I think the biggest barrier is this idea of when you have dynamic inventory in a deep vertical search category where you have a ton of individual preference. You need a lot of data. And they don't have -- the LLMs don't have that data across every subcategory that they service. So they're ultimately reliant on the folks like Vivid Seats or our competitors who have aggregated the inventory, have built the seat maps, have the dynamic real-time pricing.

And so unless we compile all that information and provide to them, they won't have it. And then it's incumbent on us in the industry to make sure that we don't just give away the farm without being properly compensated. But that, I think, is at least what we're seeing today. That's a multiyear journey and not one we're seeing progress being made on the LLM front at the moment.

Your next question comes from the line of Steven McDermott with Bank of America.

I was wondering if we could shift a little bit to your partnership with United, kind of any updates there? And is that really driving any incrementality that you're seeing? And then I have a follow-up after.

Yes. United is a great example of one of the, call it, many partnerships and partners we have across the ecosystem. It's been a nice tailwind throughout the year. It's not an explicit needle mover of results. So it's been great to add them, excited to continue to grow the partnership and iterate on how to maximize it, but I would not consider that a primary influence on the results that you're seeing in Q1.

Got you. And then as we look at your cost position after your recent reductions, do you feel as though you're kind of in a comfortable position to return to growth? And to that, can we expect a more aggressive OpEx spend in the second half of this year?

Yes. I think the cost side of the equation continues to be a bright spot. I think first and foremost, the cost reductions that we've actioned are flowing through. So they are real. Second, we have not seen any loss in productivity or capability. And in fact, I think I've actually seen our productivity and deployment rates increase alongside the efficiency gains, and that's one part optimizing and getting the right people in the right seats and one part utilizing some of these AI capabilities I was alluding to earlier.

So as we sit here today, our objective is operating leverage. So as we grow, disproportionate amount of that growth flows through to the bottom line. And I think we have more opportunity to capture on the expense side as we move into next year. So there are some variable costs, right, as you complete transactions, even including in our G&A line, right, some software that's per dip and that type of thing. But I think our objective is even as we return to growth, our expenses remain steady on the G&A side.

Your next question comes from the line of Thomas Forte with Maxim Group.

Great. So first off, Larry and Joe, congrats on the quarter. Larry, sorry about the Illini and at least OKC is playing the Lakers in this round. My first question is more exciting. My second question is a little boring. On the more exciting front, what gives you confidence you can maintain your share and capitalize on World Cup this year? And if you're able to do that, how might World Cup contribute to your numbers this year?

Yes. I think World Cup has been a pretty meaningful tailwind. I think broadly consistent with what we've touched on in prior quarters where we framed the opportunity as something larger than an A-List concert tour, but perhaps less than Taylor Swift. What we've seen in terms of volume flowing through to date, the World Cup first went on sale in November. So we've been selling for 6, 7 months now with a couple of months to go as we approach the start of the games. It's tracking to those levels, right?

So if a typical A-List tour is 1% of GOV for the year, Taylor Swift, more like high single-digits, it looks like overall, the event will be low to mid-single digits as a percentage of full year GOV. So we've had really nice performance and strength to date. These are high AOS events. And what we've generally found is that value proposition matters quite a bit when you're talking about these high AOS events. And so incumbent on us to continue to get the message out that our app is the place to purchase these high AOS tickets. And if we're able to continue doing that, I think we'll get our fair share a little bit better as we enter the playing phase of the tournament.

Great. And then for my boring one, now that we're a quarter in, do you want to give your updated thoughts on cash conversion for adjusted EBITDA for '26?

Yes. I think largely consistent where if anything, our CapEx is maybe coming in a little bit lower than we had previously estimated. But directionally, net interest expense in the $20-ish million range, CapEx, cap software in the low to mid-teens and then a smidge of taxes relating to our international operations. So if you get to EBITDA in the $35 million to $40 million range, you'll be cash flow positive before considering working capital. And as we have outlined, we feel pretty good about our volume trajectory and that overall working capital will be a source of cash on balance over the course of the year. And so believe that we're tracking, assuming we continue to deliver against the numbers and guidance for a cash flow positive year.

Your next question comes from the line of Kunal Madhukar with DB.

A couple, if I could. One, on the app side, I wanted to understand how the app user demographics differs from the regular customers that you have on the website in terms of maybe age, in terms of their interest, in terms of engagement, in terms of geography, in terms of the type of tickets, concert versus sports that they are buying? And then I have a follow-up.

Yes. I think the biggest delineation between app and web users tends to be that the most frequent live event attendees, those who repeat most often are the ones intuitively, who would download an app for buying live event tickets. And that generally corresponds to the categories that have the highest recurrence, which would be sports, right? The highest recurrence example would be Major League Baseball, right? There's 81 home games. If you go to baseball game a year, there's a decent chance you'll consider going to 2 or 3.

In contrast, Taylor Swift goes on tour once every 5 or 6 years. So the fact that you bought a Taylor Swift ticket might mean that you're interested in buying a Sabrina Carpenter ticket. But the fact that you bought a Cubs ticket means you're really likely to be interested in buying another Cubs ticket. So the biggest element that we see across the app is folks repeat more often, right? So if you buy on our app, the prospect for you buying again is higher.

The second is that you over-index to sports because of the inherent recurrence within sports. Beyond that, there is not a lot to flag across our geography or demographics that I would say is of note. It's really more the frequency profile with a bit more sports orientation.

Got it. And then when I was doing basic back of the envelope math, given app grew 20% and is now over 40% of the overall GOV, that suggests that the non-app GOV probably declined about 40%. And then you mentioned that we should expect that by 2027, app GOV on a run rate basis should be a majority of the business. So what kind of growth rate should we expect on the app side versus the non-app side for the remainder of the year?

Yes. First, definitionally, when we reference app GOV, that's of our Vivid Seats properties. So we're not speaking across the entire GOV footprint of the business, namely Vegas and Wavedash and our private label would not be part of that definition. So I would tweak the math a bit. I don't think we're in the business of forecasting or projecting by device type explicitly. But I think implicitly, we're expecting the business to grow, app to grow disproportionately.

As we start lapping some of the most competitively intensive periods, I think we expect that we can get web back to growth. But whenever you're looking at these aggregate GOV numbers, you just have to fully decompose it, right? You have to pull private label out. We lose private label partner that is different than competitiveness in the web, competitive landscape lens us versus StubHub versus SeatGeek. So yes, it's an implicitly true statement that app was up and other parts of the business were down, but decomposing is pretty important.

Your next question comes from the line of Andrew Marok with Raymond James.

One, with this quarter's results coming in nicely and the reiteration of the guide, is the business just kind of becoming a bit more visible in your view? Are you able to maybe have a little bit more forecasting confidence than you have had in the past? And then I have a follow-up.

Yes. Thanks, Andrew. I think I would agree with the statement overall. Certainly, as we move through a year, right, as we get to Q4 where the concert on sale calendar solidifies and crystallizes it through the back half of Q4, first half of Q1, we sit here with a pretty good sense of what the supply side of the calendar will look like. I think the fact that we've really tightened up our expense base lowers the bar, if you will, which helps mute impact. And then the last piece is we've reduced the surface area and exposure to paid search.

It's still present, but we've reduced it. I think that helps diminish volatility from things that are exogenous, namely competitive or competitor posture. So there will still be variance, right? Event mix is still a real thing, right? If we have great World Cup matchups or bad World Cup matchups, long series, short series, more concert cancellations, right? Those are all exogenous and can introduce volatility. Competitor behavior, competitor posture can still introduce some volatility. But in terms of the controllables, I think we've dialed them in quite a bit and feel better about putting outlooks in place.

Appreciate that. And then maybe as it relates to the app business, I think you mentioned this a little bit in your prepared remarks, but I just kind of want to ask it directly. There's kind of this meme out there for older people, especially where big purchases are done on the desktop, right, like ticketing, hotel bookings, flights, et cetera. How do you sort of combat that to drive app growth? Is it purely demographic? Or are there kind of nudges that you can give your consumers to get them to buy on the app?

Yes. Thanks, Andrew. It's a great question because I guess this probably reveals where I sit on the age bucket. But I will do that as well, right? When you're in discovery mode, you want to be able to either consider a bunch of different events or a bunch of different seating areas. Sometimes I'll actually do some searching on the bigger screen. But I think the objective we have is to make sure folks know that there's a better value proposition available in the app.

And so if you want to transact on desktop, that's great. And we're going to deliver the optimal experience for that. But if you also wanted to discover on desktop and then download the app, properly messaging that the lowest price guarantee and typically our lowest prices will be available in the app. Increasingly, we're going to have our rewards program prominently appear in the app and less so on web. So there will be material inducement to transact in the app, but we, of course, want to support people wherever their workflow wants them to transact.

Your last question comes from the line of Maria Ripps with Canaccord.

First, I just wanted to follow-up on your private label business. So you mentioned a new customer addition there, which is encouraging. But how should we think about that segment going forward beyond sort of returning to growth? Do you think sort of it can return to the run rate you had the business at about a year or 2 ago?

I think in absolute size, it's unlikely that we'll in the near-term, reclaim where we had been before the large customer loss. What I think we aspire to deliver is that the segment will grow at or above the broader marketplace and at or above industry rates. And so I think the 2 paths there would be enabling our existing customers to organically outpace the industry. And then what gets exciting is you have the option and the opportunity to add new customer wins on top of that organic growth.

And so we're seeing all of those signs pointing in the right direction where we can have both happening in parallel, which could lead to some nice sequential growth and starting in Q3 set us up for delivering sustained year-over-year growth. But from an absolute standpoint, I don't think returning to the pre-customer loss levels that we saw in 2024 or early 2025 is a near-term target that we think we can deliver.

Got it. That's helpful. And then just a quick follow-up. Can you maybe update us on your international strategy? And how important is it kind of on the list of your investment priorities at this point?

Yes. We continue to be encouraged by the international opportunity. I think we mentioned in our last call or 2 that we've achieved -- we're positive on the contribution margin standpoint in 2025. We grew GOV triple-digits in 2025. We've continued to see GOV grow into 2026. But in the spirit of focusing our efforts on the highest impact priorities, what we're focusing on are upgrades that benefit not only international, but also North America.

And so as you think about things like our checkout, irregardless of your location or your geography, that will benefit the business. So the near-term road map is really focused on that type of improvement. And then as we get through these universal upgrades that will benefit international, but also benefit North America. We do have an interesting road map of international upgrades queued up. It's just a matter of if we can get to it in the next quarter or the next couple of quarters.

Thank you. I'm showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Vivid Seats Fourth Quarter 2025 Earnings Webcast and Conference Call. [Operator Instructions]. I would now like to introduce your host for today's presentation, [ Mr. Austin Arnett ]. Sir, please begin.

Good morning, and welcome to the Vivid Seat's Fourth Quarter 2025 Earnings Call. I'm Austin Arnett, Vivid Seat's General Counsel. I'm joined today by Larry Fey, Chief Executive Officer; and Joe Thomas, Chief Financial Officer.

By now, everyone should have access to the earnings press release we issued earlier this morning. The release as well as supplemental earnings slides are available on our Investor Relations website at investors.vividseats.com. Today's call will include forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including those discussed in our earnings release, our annual report on Form 10-K and our other filings with the SEC.

Today's call will also include references to adjusted EBITDA and net debt, which are non-GAAP financial measures that provide useful information to investors. To the extent reasonably available, A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures can be found in our earnings release and supplemental earnings slides. And now I'll turn the call over to Larry.

Good morning, everyone, and thank you for joining us today. I'm excited to share what we are working on as we chart a refreshed course for Vivid Seats in 2026 and beyond. We believe we have the right team and the right strategy to drive innovation, thought leadership and profitable growth in the coming quarters and years. I'd like to begin with an update on our leadership team.

Austin Arnett who provided opening remarks for this call was named General Counsel in December. Austin previously led our corporate legal team after prior roles at Latham & Watkins and McDonald's. Austin steps into the GC role with extensive legal expertise and substantial familiarity with our business.

I'd also like to introduce Joe Thomas, our new Chief Financial Officer. Joe, who joined us in January is an accomplished executive with a strong track record of driving financial discipline through data-driven decisions while supporting long-term growth initiatives. I'm excited to join forces with both of them as we embark on this new chapter for Vivid Seats.

I'd also like to thank Ted Pikes, who served as our interim CFO during this transition. Ted's deep institutional knowledge and steady hand were critical during a pivotal period for the company. I'm grateful for his continued partnership as our Chief Accounting Officer. With our new team in place, we have refined our long-term strategy and have quickly begun executing against it. Our strategy builds and expands upon visits foundational strength, our leading technology our unique data, a relentless focus on efficiency and an increasingly compelling and differentiated value proposition to customers.

I will spend a few minutes touching on our efforts across each of these foundational elements. Starting with our technology and product, we are redoubling our focus on product innovation and efficiency and expect this to benefit our results as we move through 2026. Across both our web and app properties, we are bringing a renewed focus on our core customer funnel to ensure a seamless user experience. Beyond this foundational focus, we are continuing to innovate in an increasingly AI world.

In 2023, Vivid Seats became the first company in the live events industry to launch a live events plug-in for open AI's ChatGPT. That early partnership underscored our commitment to innovating at the intersection of technology and live entertainment. Building on that foundation, we recently introduced a dedicated Vivid Seats app within ChatGPT, further advancing our AI-driven shopping capabilities. This new app is designed to capture real-time consumer intent and transform event discovery by making it more personalized, intuitive and efficient while reinforcing our position as a leader, shaping the future of how fans discover and access live events.

This launch is an example of our continuous efforts to evolve our platform in a highly dynamic environment. Our path forward will combine innovation with a disciplined focus on efficiency. As previously announced, we significantly expanded our cost reduction program increasing our initial fixed cost savings target from $25 million to $60 million. We have now achieved our increased target of $60 million of annualized savings with reductions in spanning marketing, G&A and stock-based compensation. These savings position us to reinvest selectively in growth initiatives such as our enhanced app value proposition while improving our operating leverage as we return to growth.

We also executed our corporate simplification early in the fourth quarter, which included the termination of our tax receivable agreement and the collapse of our dual-class share structure. This meaningfully reduces complexity, improves transparency and generates both immediate and long-term financial benefits. Taken together, our cost reduction program and corporate simplification are creating a more efficient, agile organization that can invest strategically for growth, while maintaining financial discipline.

Moving to the compelling and differentiated value proposition we present to customers. Vivid Seats is the most rewarding ticket company. We are centering the Vivid Seats message and experience around that simple but powerful fact. No one rewards fans more than we do. We're sharpening our messaging to highlight how Vivid Seats delivers more value at every step of the journey from rewarding prices to a seamless, stress-free shopping experience to tangible rewards that deepen loyalty over time. By delivering the most rewarding experience in ticketing, we seek to build long-term relationships with our customers and our app ecosystem.

App users return more frequently, convert at higher rates and rely less on paid performance marketing channels. We believe the combination of our rewards program and our lowest price guarantee represents the most compelling value proposition in ticketing. We are seeing encouraging trends as we pursue this strategy. App GOV is up over 20% year-over-year through the first 2 months of 2026. Since launching our enhanced app value proposition during Q3 of last year, we have seen app share of GOV increase by more than 500 basis points.

We also remain confident that information transparency will only increase as AI continues to reshape how consumers discover and evaluate offerings across the Internet. We believe we are well positioned to benefit as AI-guided consumers increasingly gravitate towards platforms that are delivering the most value to consumers. While we are early in our execution journey, the trends we are seeing thus far in Q1 indicate we are making substantial progress and that our strategy is gaining traction.

Accordingly, we are reaffirming our 2026 outlook. We continue to expect marketplace GOV in the range of $2.2 billion to $2.6 billion and adjusted EBITDA in the range of $30 million to $40 million. In addition, we are providing Q1 2026 guidance of $570 million to $620 million of GOV, $8 million to $10 million of adjusted EBITDA and a cash balance of $125 million to $135 million. Turning to the fourth quarter. While our results were challenging, they were largely in line with what we anticipated as we work through a transitional period for the business. As we shared last quarter, a softer Q4 industry backdrop, private label declines and ongoing execution of our strategic realignment were expected to pressure results.

While these pressures played out as expected, we were encouraged by emerging momentum across our own properties. In particular, our app performance remained a bright spot, reflecting the impact of our ongoing product investments and enhanced value proposition. The trends we are seeing thus far in the first quarter confirm the actions taken by this new team are translating to tangible progress. These indicators reinforce our belief that the path forward we have put in place is the right one. and that the investments we are making will enable us to return to growth in the second half of 2026 and deliver sustainable, profitable growth for many years to come.

With that, I'll turn it over to Joe to walk through our fourth quarter financial results and outlook in more detail.

Thank you, Larry, and good morning, everyone. I'm excited to join Vivid Seats and help shape the company's next phase of growth. The business is a strong foundation and significant opportunity. I look forward to working closely with Larry and the leadership team to deliver long-term value.

Turning to the results. In Q4 2025, we generated $581 million of marketplace GOV compared with $994 million in the prior year period. Q4 2025 total marketplace orders were down 32% year-over-year with average order size down to $329 from $380 in Q4 2024. According to our SkyBox data, industry volumes were down double digits in Q4, primarily due to less content on sales and a difficult world series comparison, which pressured results when combined with the loss of a large private label customer that occurred in early Q3 2025. Q4 2025 revenues were $127 million, compared to prior year revenues of $200 million.

Our Q4 2025 marketplace take rate was 16.8%, up slightly from 16.6% in Q4 2024. We expect our near-term take rates to stay in the 16% range. Adjusted EBITDA for the quarter was $1 million, reflecting the impact of lower volume and negative operating leverage. Importantly, we achieved our annualized cost reduction target of $60 million during the quarter. While we saw a partial benefit from these efforts in Q4 2025, we anticipate full benefit starting in Q1 2026 and with a more agile cost structure, allowing for improved operating leverage moving forward. We ended the fourth quarter with $103 million of cash and $390 million of debt resulting in net debt of $287 million.

As a reminder, the fourth quarter brings seasonally lower working capital flow with that flood reduction accounting for a majority of our cash outflows in the quarter. Q1 2026 is seasonally stronger in terms of cash inflow, which supports our guidance for a cash balance range of $125 million to $135 million by the end of Q1 2026. We expect Q1 2026 marketplace GOV in the range of $570 million to $620 million. This GOV level is consistent with Q4 2025 and despite the fourth quarter traditionally being the strongest volume quarter of the year, which reflects sequential improvement in share.

We expect Q1 2026 adjusted EBITDA in the range of $8 million to $10 million. This represents a substantial improvement relative to Q4 2025 EBITDA and reflects consistent volumes, improved unit economics and the full impact of our cost reduction efforts. For fiscal year 2026, we continue to expect marketplace GOB in the range of $2.2 billion to $2.6 billion and adjusted EBITDA in the range of $30 million to $40 million. This outlook reflects an expectation of modest industry growth and continued competitive pressures, but also benefits from our cost reduction program and strategic investments and an enhanced customer value proposition. Back to you, Larry.

In closing, the positive trends we are seeing in the first quarter support our belief that we are now on the right path. We are seeing encouraging progress across numerous leading indicators. Pointing to a return to volumetric growth across the business outside of private label. We are particularly excited about the app trajectory and believe the combination of a return to growth, a streamlined cost structure and more efficient tax profile positions us to deliver growing profitability and cash flow as we execute our strategy.

We are confident that visits foundational advantages our leading technology, unique data, best-in-class efficiency and the differentiated customer value proposition remains. And with disciplined execution, will support our return to profitable growth. With that, operator, please open the call for questions.

[Operator Instructions]. Our first question or comment comes from the line of Ryan Sigdahl from Craig-Hallum Capital Group.

Welcome, Joe. Larry, I want to start, you've dealt with unfavorable competitive dynamics for the better part of 2 years now. We've heard from that may appear that they plan to focus more on customer acquisition efficiency in 2026, nice change, a fairly big change, I guess, in statement versus the user acquisition Blitz Creek, that they've been going under. I guess curious if you've seen any of that and then how you think about the competitive dynamics heading into 2026 or as we start and how you plan to balance your customer acquisition efficiency versus the value proposition, the app, direct traffic, et cetera, et cetera?

Yes. Thanks, Ryan. In terms of competitive landscape and competitive intensity, I think we have seen a degree of moderation, particularly as it relates to some of the peak intensity from StubHub in particular. I think others in the space continue to be pretty aggressive, and I think there continues to be a meaningful priority placed on GOV and volume across a number of our competitors relative to fundamental unit economics and profitability. But I think we continue to see that over time economics play out, financial realities ultimately win.

And so I think we will stay the course that we've been on for the last couple of years where -- there is certainly inherent tension between volume and profitability, but we're going to stay true to our unit economics. And in particular, the focus on the app ecosystem, the focus on the app value proposition is trying to enhance our lifetime value which enables you -- if you know you are keeping people in your ecosystem longer with a longer relationship with more repeat rates, you can still solve your unit economic question while being more aggressive on the customer acquisition front.

So we think we can try to accomplish both, right, stay true to our unit economic frameworks and enable ourselves to drive better volumetric performance as we continue to execute against that.

Very good. Then just you mentioned ChatGPT plug-in in '23. Your main competitor press released, I guess, a relationship and partnership with ChatGPT a few months ago. So I guess curious kind of how you fit with your competitive set within there. I think you also have perplexity that you didn't mention, but just talk broadly speaking about LLM if you're willing to quantify kind of the percentage of whether it's customers or GMV or anything there, that would be helpful.

Yes. AI, as you can imagine, top of mind an incredibly dynamic space. We haven't yet seen consumer behavior in our space reflects the height, right? It's still a pretty small percentage, very small percentage, probably 1% is the best estimate I would put out there for what we're seeing in terms of direct traffic through the AI channel today. That said, I think we are fundamentally of the belief that this is a one-way street where AI will have more, not less impact and that there are fundamental unlocks that AI can bring for the benefit of consumers in our space, the benefit of consumers across e-commerce with better information transparency.

And so we've been in a space where, for many years, being at the top of a search was critical to driving customer awareness and you could charge in many instances, premium pricing to facilitate that. So it hasn't changed yet, but we are making the bet that there will be evolution there where customers will be better able to surface differentiated value propositions over time, better able to research and compare. We do think there's still a place in ticketing where the seat you're in, the angle of your view, the size of the stadium there's a lot of deeply personal preferences.

So the desire to do detailed shopping, detailed comparisons in an app, we think will be a longer-term home for a lot of customers, but AI at the top of the funnel when people are researching their options, understanding the choices out there we think will be meaningfully disruptive over the coming quarters.

Our next question comment comes from the line of Cameron Mansson-Perrone from Morgan Stanley.

One follow-up on the industry trends. Just curious, there's a competitive dynamic, but then there's also been some potentially favorable dynamics happening as well. Wondering if you've seen any benefit or seen anything in the marketplace in conjunction with the changes that Ticketmaster has made around its resale platform and activity. And then as we look forward to 2026, wondering what -- how you guys are framing your thinking about the World Cup and any expectations around participating in that resale activity this summer.

Yes. Thanks, Cameron. On the industry front, Q4, not a great quarter. We saw it down double digits I think we mentioned tough MLP comp, but in particular, concert on sales were down dramatically year-over-year. Those on sales picked back up in Q1, whether that was just normal variation in timing or something reflective of some other planning or considerations on the Ticketmaster side, not clear to us. We haven't seen any meaningful impact beyond that in terms of Ticketmaster's overall posture level of aggressiveness in the space.

So I'd say those kind of rumored changes or adjustments not to a degree that we could say we've seen, felt or can measure, but we'll continue to keep an eye on it. for broader industry overall, the last time when we gave guidance, we had pointed to expectations of flat over the year. I think with the Q1 on sales, we continue to feel equally as good, if not a little bit better with World Cup volumes equally as good, if not a little bit better. So I think stable to slight growth in the industry is our new estimate.

And as we look at the World Cup, I think if you think of the benchmarks or the goalpost -- goalpost as a typical A-List tour would be 1% of GOV for the year. Taylor Swift be the other side of that, that's ever mid- to high single digits as a percentage of I think World Cup is an event will end up somewhere in between. Where in between will be, I think, dictated by do you have great matchups, does the U.S. play Mexico and the semifinals. So that would be a dream. But we think it will be substantial, a couple of hundred basis points of GOVs our best guess.

Our next question comment comes from the line of Dan Kurnos from Benchmark.

Great. Thanks. Good morning. Welcome, Joe. For -- I guess, Larry, just as we think about your customer acquisition strategy around app, I know we've talked about it a little bit, but I don't know if you want to take a second to kind of maybe flesh out obviously, without giving away any trade secrets, how you're thinking about driving incremental traffic beyond just pointing to the value prop? Like are you thinking about different marketing channels, you thinking about better more efficient ways to kind of get people to understand the message there? And then I have a follow-up for you.

Yes. I think the last thing you said, having people clearly understand the value prop is a critical threshold element where if we don't do that successfully, we have no reason to believe people will come back more often. We'll build a lifetime relationship. So we're mid-flight on it, but you should see continued improvements in the journey as an app customer. So your onboarding experience. How do we build that initial report if you make it feel like a win-win where you're providing us your information, and we're providing you something of value and return to kick off on the right foot.

Well-situated messaging to drive home not only the everyday pricing, but this idea of ongoing rewards, ongoing benefits for loyalty and repeat purchasers, such that if you are a customer who has intentions of going to multiple live events per year for presumably decades to come, you can get peace of mind that you've completed your research, right? You'll do the research and depth, you'll compare the pricing, you'll validate the claims and once that validation is complete, you can with peace of mind buy from us. I think the second dimension beyond making sure that once you arrive at the app, it's very clear what we're doing and why we are making claims about our value proposition.

We have a very large database of people who have purchased from us over the years. And so really thoughtfully targeting and messaging that database of folks continuing to use growing AI capabilities to have personalized messages that could resonate right message at the right time. I think that's the second major dimension. And then over time, I think we'll continue to explore complementary marketing channels that are outside of that core paid search funnel, right, whether it's social or other adjacencies. There continues to be an opportunity there, but it has been a relatively long-term play to build that awareness. And so that will be a steady as she goes element.

Got it. That's super helpful. And then I'll just ask if you care to opine on -- I know we've already had sort of the competitive question, but clearly, while you guys aren't in primary, we've had movement from DOJ and live now, and there's always knock-on effects to the competitors that are maybe hybrid or trying to get in there. Into that space, you guys have tested the waters in primary and small doses in the past.

Just curious if how you think about regulatory either from that perspective or the bulk seller stuff might just impact overall industry dynamics, consolidation, just anything that you would like to opine on how you think kind of the broader group adjusts to some of the regulatory stuff.

Yes. I mean, we've certainly been through the term sheet. I think devil in the details is probably the operative phrase here. So we'll wait for more to come out and probably premature for us to comment in too much depth given the lack of detail on some pretty important provisions in the term sheet. From everything we've seen, I can't see anything that would be deemed or even considered potentially adverse to our position in the marketplace. And at least from our position, I don't see a lot that will change anything meaningfully. But put the [indiscernible] for devil in the details, and we'll see if there's more to it.

Our next question comment comes from the line of Maria Ripps from Canaccord.

Welcome, Joe. First, I just wanted to follow up on your within. Can you maybe just talk about sort of the type of consumer that you're attracting within ChatGPT and sort of conversion rate? And then do you maintain sort of the customer profile or customer data after that initial engagement?

Yes. Thanks, Maria. I think the ChatGPT app is a good example of you need to play in traffic while this world situates itself. As it sits today, finding apps in the LOM journey requires someone who's looking for the app or you need to come in with a targeted search and seek out, whether it's ours or a competitor's app and that open up a different use case, but I don't think it's gone mainstream. I don't think most people have unlocked how to access apps within the LLM journey.

And so as a result, what you do see is folks who come through LLM and folks who come through that app convert at structurally higher rates. What is probably too early to tell. Is that because you have a selection bias or the folks who are doing that are the most intent thoughtful tech savvy users and thus you're just revealing that their intent versus tool is fundamentally changing their behavior journey. So we're looking at all the data with eager anticipation. But I don't think we have clear answers yet on that. separately to the broader question on customer personalization, the more interactions you have with someone, right, where you can see if they're logging in, in Chicago, and they're searching cubs tickets.

And then 6 months later, they search their tickets, you can start to create a profile of a Chicago-based sports fan and make sure that they see content aligned with those sports preferences and you perhaps deemphasize comedy shows, if they've never shown any interest and over time, figuring out ways to round out that profile, right? There's numerous sources that I think we're increasingly focused on capturing more customer information to create a more bespoke experience. And one of the exciting elements over the intermediate term that we think AI offers aside from the top of the funnel, as you ingest more of this customer information, how do you create a fundamentally better experience for your users. And at the core of that, I think is thoughtful personalization built around a growing dataset.

Got it. That's very helpful. And then can you maybe give us a little bit more color on what you're seeing on the supply side in concert sort of this year? And to what extent that's a factor for sort of improving trends and returning to growth in the second half of the year?

Yes. Yes. Pretty nice lineup of on sales that has come out in Q1. BTS was -- is probably the highest profile of those, but steady stream of meaningful artists coming out in January and February, Harry Styles, Noah Khan, et cetera, which was welcome because the Q4 lineup was underwhelming. When you sum up Q4 and Q1, and we've seen this before where timing moves a little bit between the quarters. It was a solid concert lineup. And so I think maybe consistent with what we've heard Auto Live Nation, where they continue to point to steady growth perhaps double digits for them across their global footprint, but still continued growth in North America on the lower end of that range. I think everything we've seen from the supply side continues to support that perspective. And we had a little bit of hesitation based on how Q4 industry trends were shaping up, and it's been refreshing to see Q1 strengthen from there.

Our next question comment comes from the line of Thomas Forte from Maxim Group.

So I also want to welcome Joe to the call. One question, one follow-up. Can you talk about your ability to capitalize record recurring sporting events that are not always held on an annual basis, including World Cup, Olympics and World Baseball Classic, in particular, when this type of event is in 1 of your geographies, how confident are you in your ability to get a similar share of GOV as in other sports, baseball, football, et cetera?

Yes. Thanks, Tom. Those intermittent sporting events. They're really interesting hybrid because as a general statement, if you were to look at sports versus our concert and theater customer journey, sports. If you're a Cubs fan, you're a Cub's fan, right? You're going to a Cub's game this year, you're probably going to Cub's next year, you'll probably go in the year after that. Same with baseball, football, pick your sport a preference. And so the proclivity for repeat is just higher on sports, whereas concerts are more episodic.

Even if you're a lifelong die hard Taylor Swift fan. She's in town once every 5 years, right? And maybe you're going to take it one time and you're not a town the next time so you see our once in a lifetime, right, once every 10 years. And the interest in Taylor Swift may or may not map to Sabrina Carpenter or Pop Star X. And so it's a different relationship, right? It's a bit more intermittent on all things concert comedy theater relative to that more continuous sports relationship.

And these intermittent events kind of straddle those. It's pretty hard to say like what on any individual customer basis, their soccer preferences or their World Cup preferences in particular, would be. And whatever we learn about them, it's probably not going to be that valuable going forward as what is going to be 30 years before we get the World Cup here again. But we can leverage folks who are MLSs are soccer fans and target those folks in a thoughtful way. But we actually see the nits of World Cup folks who it ends up being more new customers than you would see in a typical sports league because there is that intermittent element. But less so than concerts because you do have that stable base of sports fans who knows where they want to come and buy a ticket from.

And then for a follow-up, can you give your thoughts on cash conversion and free cash flow generation for full year '26?

Yes. I appreciate that question. So our major cash obligations or CapEx, interest expense and taxes. The sum of those, we think, will fall between $35 million and $40 million. And so a majority of that amount would be our net interest expense. Our CapEx and cap software we think will be in the $15-ish million range. And then post tax simplification, taxes will be quite a bit lower to low single-digit millions.

And thus, we need $35 million to $40 million of EBITDA before considering working capital to be cash flow neutral to generative. And then I think as we've demonstrated in spades this past few quarters, if you are growing GOV, working capital can be a source of cash, the inverse is also true. So as we project a return to growth, which we're feeling quite good about as we approach the second half of the year on a year-over-year basis and equally good earlier in the year on a sequential basis. Within working capital shift to being a source of cash and thus, we expect to be modestly but cash generative in 2026. Thank you.

Our next question comes from the line of Andrew Marok from Raymond James.

One on the comps. I know you called out a difficult world series. This year as a headwind. I guess as we're looking forward into the 2026 trajectory, how are the 2025 championships and maybe special events and sports playing out from a comp perspective as we look into the model?

Yes. Great question, Andrew. I think if we were to just go through the calendar, we've already seen some benefit when you had the, call it, up down up in the Super Bowl. So 2024 sort of peak experience with Vegas 2025 with the kind of repeat participants in New Orleans was been underwhelming, much stronger performance, Super Bowl in 2026. As we look at the rest of the year, I'd say there's nothing daunting. I'd say, it ranges from, call it, slightly below -- slightly above average matchups.

NCAA tournament was relatively strong last year. We'll see how that goes in the next few weeks. Nothing I would say of note in terms of NDA or NHL I love that Oklahoma City has 47 traffics over the next couple of years, except for the fact that Oklahoma City is not the most dynamic market from a secondary standpoint. So we'll see if anyone topples them on the MBA side. And MLB was off of the peak Yankees Dodgers levels, but Yankee Blueray wasn't bad. So I'd say that was still above average last year. So the MLB comp is probably the most daunting of the remaining major championships coming through the rest of the year.

Our next question comment comes from the line of Benjamin Black from Deutsche Bank.

This is Jeff on for Ben. Can you just talk a little bit about the puts and takes to getting to the high and the low end of your guidance, particularly in GLD, would you need to see the competitive dynamics kind of continue to soften from here? Or could you get to the high end with just better performance from events in the industry?

Yes, it's a great question. Our presumption is that we can get to the high end of our GOV and EBITDA range. through our own execution. So steady performance from industry volumes consistent with current competitive intensity and continued delivery of a pipeline of product enhancements that we're really excited about that we think will start coming out over the next couple of months and have a meaningful portion of the year to benefit in terms of the back half contribution. And if we deliver in those enhancements flow through as expected. That's the path to the top end of the range. cure if there's better industry volume and/or a further shift in competitive landscape that would make it easier and/or create a path to outperforming.

Understood. Got it. And then maybe just one quick follow-up on sort of the app share growth in the gains. You talked about the increase in the FPD. Is that more driven by bringing new customers to the app? Or is it sort of just increasing the velocity or the repeat purchases of existing customers already using the app.

I'm happy to say yes to that. So it is across both dimensions, we are seeing app sessions increasing year-over-year. We are seeing app repeat rates increased double digits when we're looking at our cohort subsequent to these changes. And one of the things we talk about a lot over here that when you're playing a longer game with trying to build lifetime relationships to drive long-term repeat, the toughest day of that journey is the first day because you feel all the pain on the enhanced value proposition. We haven't given folks an opportunity to come back and repeat. So we feel like we started the snowball down the hill, and now as we move through subsequent quarters and years, that benefit will compound.

And we're seeing all the underlying -- we talk about leading indicators that are flash and positive. That's a perfect example. These repeat rates, the growing size of the cohort and the growing proclivity to repeat within them. are the types of leading indicators that if you could stack over time, become a really powerful trend.

Next question or comment comes from the line of Ralph Schackart from William Blair.

Larry, you talked about sort of entering Q2 with a refined strategy. Maybe talk about, I guess, maybe your top 1 or 2 key priorities or adjustments to that strategy? I know you talked about the APRA new focus, I'm not sure if that's [indiscernible] two of them. But just maybe if you could sort of highlight or underscore what those are in progress to date and kind of how that progresses through 2026. That would be great.

Yes. Thanks, Ralph. I think as you noted, parts of the strategy were starting to be rolled out back half of last year, executed throughout Q4 and will continue. And so the efficiency, the cost reduction program was the starting point of that, reinvesting some of those savings into the structurally enhanced at value proposition was a part of that. I think when you look at what incrementally we're pursuing, I think there's a refreshed focus on the core customer journey, where you need -- when someone has decided that they want to attend an event, a relentless focus on making that journey as quick, efficient and pleasurable as possible for the customer. Don't distract them with superfluous information, but make sure all of the relevant information is in front of them, make sure every step of the journey works efficiently, you aren't introducing undue friction.

And that's been an area where I think we were pursuing a lot of different paths and distracting a little bit. So ultimately, that will manifest in, I think, an enhanced conversion profile, particularly on our web journey. We're very excited about that. I won't go into too much detail on this. I think there's some enhancements to our private label philosophy and approach that we're working on that get that business line returning to growth as we lap the tough comps starting in Q3. They're a little more operational in nature. But if I were to say it in a word, getting back to being operationally elite, it's the core focus in addition to the cost efficiency and the app value proposition, each which has their own sub elements where we'll continue to build on the early gains and wins.

I'm showing no additional questions in the queue at this time. Ladies and gentlemen, this concludes today's program. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

Good morning, and welcome to the Vivid Seats Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Following management's prepared remarks, we will open the call for Q&A. I would now like to turn the call over to Kate Africk.

Good morning, and welcome to Vivid Seats' Third Quarter 2025 Earnings Conference Call. I am Kate Africk, Head of Investor Relations at Vivid Seats. This morning, we issued our third quarter financial results. The press release as well as supplemental earnings slides are available on the Investor Relations page of our website at investors.vividseats.com.

During the course of today's call, we may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our most recent annual report on Form 10-K, our subsequent quarterly reports on Form 10-Q and our other filings with the SEC.

On today's call, we will refer to adjusted EBITDA, which is a non-GAAP financial measure that provides useful information for investors. A reconciliation of this non-GAAP financial measure to its corresponding GAAP measure can be found in our earnings press release and supplemental earnings slides. This morning, we also announced a leadership transition that is effective today. Lawrence Fey, who has served as Chief Financial Officer since 2020, will succeed Stan Chia as Chief Executive Officer.

Additionally, Ted Pickus, who has served as Chief Accounting Officer since 2022, has been appointed as Interim Chief Financial Officer until a successor is identified.

Accordingly, Larry and Ted are joining me today on the call.

With Larry's extensive history with Vivid Seats dating back to 2017, the Vivid Seats Board believes he is uniquely qualified to navigate the evolving industry environment and steer the company back to growth.

Larry will share more detail on his vision for Vivid Seats next chapter today. And now I would like to turn the call over to Larry.

Good morning, everyone, and thank you for joining us today. First, I would like to discuss the leadership transition and express my gratitude to Stan for his leadership and service over the last 7 years. His accomplishments include successfully leading Vivid Seats through a global pandemic, bringing Vivid Seats to the public markets and launching key innovations such as the Vivid Seats Reward program, which provides a foundation on which we will continue to build as we deliver a unique and leading value proposition to our customers.

I recognize the responsibility of this role and we'll look to take decisive action to reverse recent trends and build a resilient business well positioned for long-term success. The core pillars of our strategy start with the foundational advantages that have been in place at Vivid Seats for years and build from there. There is much work to be done, but the foundation to return to profitable growth is in place, and our path forward is clear.

Vivid Seats has long been known for its leading tech capabilities, unique data and focus on efficiency. In recent years, as paid search has become more competitive and customer acquisition economics have become strained, Vivid Seats has increasingly invested in its app with a focus on building a loyal and recurring customer base.

We are now increasing our focus and investment in delivering a leading value proposition to our customers. Alongside our loyalty program with rewards redeemable in the app, late in the third quarter, we launched our lowest price guarantee also in the app. We believe the combination of our lowest price guarantee and our loyalty program represents the most compelling value proposition in the industry, and we are already seeing positive responses from our customers.

With our enhanced value proposition, we expect to see a growing number of app users and resulting transactions. Our app users return more often, convert at a higher rate and touch performance marketing channels less.

Over time, as our volume increasingly moves into the app, our performance will be increasingly insulated from the heightened competitiveness we have seen in performance marketing channels in recent years.

Further, we believe that information transparency will only increase as AI proliferates and impacts the way consumers interact with brands across the Internet. It will take time to build comprehensive awareness of our enhanced app value proposition, but we are confident we will disproportionately benefit as AI reshapes consumer discovery and decision-making as we match consumer demand with the most compelling value in the industry.

One of our initial efforts to build awareness of our app value proposition is our recently renewed partnership with ESPN. With ESPN, we have launched a national marketing campaign on Disney streaming, which is reaching more than 127 million global subscribers across over 700 live sports events monthly.

We are excited to see how fans respond to our new offering as awareness continues to build.

We believe our investments in delivering a leading value proposition will drive order volume but reduce our take rates. Funding these investments in a sustainable manner will require a commitment to operating the most efficient platform in ticketing. We will focus on operating as a lean and agile organization enabled by powerful technology and unique data.

We announced the cost reduction program last quarter, and we are now more than doubling our fixed cost reduction target from $25 million to $60 million.

We have made substantial progress towards our updated target with savings spanning fixed marketing, G&A and stock-based compensation. Both these savings and our considerable reinvestment in our app value proposition are reflected in our initial 2026 guidance.

Continuing with our theme of driving efficiency through clear focus, we executed our corporate simplification agreement, which included the termination of our tax receivable agreement and the collapse of our dual class share structure early in the fourth quarter.

The corporate simplification will yield substantial immediate and ongoing savings. As part of the termination, we issued approximately 400,000 Class A shares to the former TRA parties. In return, we will avoid $6 million of cash TRA payments otherwise due in Q1 2026, while capturing up to $180 million of lifetime tax savings, subject to generating sufficient profitability.

In addition, by simplifying our structure, we expect to save approximately $1 million per year from reduced financial reporting and compliance costs while also removing tax inefficiencies in our structure.

At current levels of profitability, we anticipate our annual cash income taxes to be approximately $3 million.

The savings between our cost reduction program and corporate simplification will create a more focused and agile organization, one that can invest strategically for growth while maintaining discipline and profitability.

Next, I'll address trends in our third quarter results, which we believe validate our path forward and underpin our initial 2026 outlook, which Ted will provide.

While private label remains under pressure, we are encouraged to see stabilization and early signs of momentum across our owned properties.

Against the flat sequential industry backdrop, Vivid Seats and Vegas.com delivered sequential GOV growth, while the Vivid Seats app delivered double-digit sequential growth and returned to year-over-year GOV growth. This is a direct result of our ongoing investment in product development and our enhanced value proposition.

As we look to the fourth quarter and into 2026, there are no quick fixes, but our priorities are clear. We are committed to improving our financial performance by leveraging Vivid Seats foundational advantages, including leading technology, unique data, best-in-class efficiency and continued investment into a unique and differentiated value proposition.

Now I'll turn it to Ted to discuss the quarter and financial outlook in more detail. As we mentioned earlier, Ted, our Chief Accounting Officer, will take on the role of Interim Chief Financial Officer. Ted has been at Vivid Seats leading our accounting function for more than a decade. I have full confidence in Ted, and I'm glad to have him step into the interim CFO role as we manage our leadership transition.

Thank you, Larry, and hello, everyone. I am honored to be with you today and to assume this role during a transformational time for the business.

Turning to our results. In the third quarter, we delivered $618 million of marketplace GOV, $136 million of revenues and $5 million of adjusted EBITDA. These results reflect an intense competitive environment that impacted our private label business, which was also impacted by the loss of a large partner.

We generated $618 million of marketplace GOV in Q3, which was down 29% year-over-year. Total marketplace orders were also down 29% with average order size flat.

Looking at sequential trends compared to Q2 of this year, overall marketplace GOV was down 10% due to private label headwinds, while owned property GOV increased in a flat sequential industry environment.

We generated $136 million of revenues in Q3, down 27% year-over-year. Our Q3 marketplace take rate was 17.0%, down from 17.5% in Q3 2024. We expect near-term take rates in the 16% range.

Our third quarter adjusted EBITDA was $5 million, down substantially from the prior year due to lower volume, lower take rates and negative operating leverage. We expect improved operating performance as we enter 2026 with the full benefit of our recent cost reductions.

Next, I'll address our 2026 initial outlook. With stabilizing owned property volumes, we expect 2026 marketplace GOV in the range of $2.2 billion to $2.6 billion.

At the midpoint, this assumes Marketplace GOV roughly in line with our third quarter run rate.

We intend to reinvest cost savings into our enhanced customer value proposition and as such, currently anticipate $30 million to $40 million of 2026 adjusted EBITDA.

Our 2026 initial outlook assumes industry volumes are flat year-over-year as the core concert on sales season, which provides supply visibility for the coming year has yet to occur.

We ended Q3 with $391 million of debt, $145 million of cash and net debt of $246 million. Against a flat industry environment, we saw working capital continue to consume cash, but at a substantially lower level than seen the first half of the year.

I'll now hand it back to Larry for concluding remarks.

Thanks, Ted. Despite challenging year-over-year trends, the third quarter offered signs of stabilization, including sequential growth in owned property GOV, year-over-year growth in app GOV and substantial cost reduction progress.

From here, diligent execution is crucial, but we believe our investment into our app value proposition provides a clear path to return to growth.

With that, operator, let's open it up for questions.

[Operator Instructions] Your first question comes from the line of Cameron Mansson-Perrone with Morgan Stanley.

Ted, welcome to the call. I guess the first question is really just -- I'd like to hear a little bit more about what gives you confidence in issuing '26 guidance this early given the pressures that have existed in the business recently. I heard you on the stabilization front, but just a little bit more on what gives you kind of that increased visibility relative to the past, I think, would be helpful.

And then if you could just kind of try and help contextualize what's reflected in the high and low end of the guide for next year with regard to competitive environment and expectations and any other gating factors around what would determine whether you shake out on the high or low end?

Yes. Cameron, yes, I think the you've heard us say in the past that we prefer to give guidance on our Q4 call once the Q4 on sale calendar has run its course as you'll have more industry visibility. And so the important caveat in the guidance we put forward is it presumes a flat year-over-year industry outlook.

And I think to your question on what would govern the low end versus the high end, I would start with if the industry under-indexes to flat, that would push you towards the low end. If it over-indexes or grows, that would push you towards the higher end. We certainly saw the Live Nation commentary, which if you interpolate what they said, it feels like they're pointing towards another positive growth year in North America.

So hopefully, there is some conservatism built in. We'll learn more over the coming months on exactly where the industry settles out, but try to put a baseline that we think is reasonably skewed to the cautious side of the spectrum on the industry performance.

Why do we put guidance out, why do we have confidence? I'd point to a few elements. I think one, we obviously pulled 2025 guidance. So it's been a while since there's been a flag or a stake in the ground for folks to look at. You can see a number of changes playing out in Q3, where we talked about our cost reduction initiatives. We talked about some of our reinvestment in our value proposition and lots of puts and takes. And rather than having there be a vacuum where people are waiting in suspense for 4 months on what the net of all of those are, we wanted to distill it down to a target probably goes without saying if competition or competitive intensity reaches new highs, that will pressure.

And if they abate, that will be a release valve relative to the range we put forward. But we've assumed essentially a broad continuation of the competitive intensity we've seen in the second half of 2025.

Next question comes from the line of Dan Kurnos with Benchmark Company.

Larry, I guess, maybe just to double-click on the leadership transition. Obviously, Stan had a lot of digital experience from his history. So I guess maybe why now make this move? If you could just give us some color on the thought process. And obviously, to be clear here, I think you're eminently qualified to lead the company, Larry. I just would be helpful to get sort of some of the thought process on the timing.

And then in an agentic world, you talked about discovery with OpenAI. If you're going to push app, which is fine, everyone else is putting their app into OpenAI for discoverability. So I don't know what your thoughts are about that, given some of the puts and takes on demand gen and OpenAI potentially becoming the source of demand gen, but -- just help us think about your willingness to increase visibility via that channel and other ways that you might increase the visibility of the value prop?

Yes. Thanks, Dan. I'd start with the thanks to Stan, of course, we're sincere 7 years was a great run. I think it was just reaching a time for a shift and preparing the business for the efficiency push that we're embarking on in the near term.

To the second question, I think you touched on a theme that is spot on. Yes, we're pushing on app. And I almost think of the customer universe as 2 buckets, right? There's the new customer acquisition and there's a competitive dynamic around that. And then there's the folks who have already done their research and made informed decisions around which marketplaces they buy from or which marketplaces they consider, and that generally occurs in the app.

Where I think there could be a really interesting blurring of those lines or fusion of the 2 as we move forward. If one of the fundamental tenets of AI is increasing information synthesis, increasing information transparency as we increasingly place the best value proposition out into the ether.

We then, of course, have an obligation to make sure that value proposition is digestible by these new AI platforms that are looking for all of the best information to synthesize and distill for customers. But you better have something that's compelling, right? If they do their job and put forward the best value proposition, you better be front of the line. And so that's where we're going with the app. I think in the near term, while we wait for the commerce portion of the AI disruption to fully arrive, we're going to continue focusing on retaining our customers in the app ecosystem.

And then we think there's opportunity coming on that customer acquisition as the technology format evolves.

Next question comes from the line of Maria Ripps with Canaccord Genuity.

Larry and Ted, congrats on the transition. Can you maybe share a little bit more color on the competitive backdrop right now? Are you seeing any early signs that maybe some of the competitors in the space are starting to focus more on profitability?

Yes. Thanks, Maria. We've talked in the past a bit about ebbs and flows, and it can be a little dangerous to extrapolate short-term behavior and assume it continues indefinitely. But I would say, broadly aligning with, call it, changes in corporate status, we have seen a shift in competitive posture. It was a fairly methodical increase in share that we saw from StubHub over the last couple of years. It come in waves, but it kind of went one direction. And we've actually seen that reverse and roll over in September and October, where they're now down year-over-year on share.

And I think that is directly tied to what we perceive as a shift in marketing aggressiveness. The magnitude, obviously, it was enough to reverse that trend, but it wasn't like a reversion to 2022 or 2023 levels. And we, of course, know that they reserve the right to change their mind and posture as we embark into 2026, but a notable change over the last, call it, 6 weeks to 8 weeks.

Got it. That's very helpful. And then any early thoughts you can share sort of on quality of concert lineup in 2026?

Yes. We -- I'd say, continue to be looking to Live Nation for the prospective views on what's coming. I heard pretty positive commentary when I read the release, I think they touched on what clearly looks like positive North American growth, a skew towards larger venues. Thus far in the year, you get into these year-over-year comparisons where timing just varies slightly year-over-year. But we're in the midst of this year, Morgan Wallen just announced that I think will be one of the top tours of the year. We've seen several others.

So at this point, I would say, other than week-to-week variance, it looks like the Live Nation commentary is flowing through in what we're seeing.

Next question comes from the line of Ryan Sigdahl with Craig-Hallum.

In response to the FTC lawsuit, Ticketmaster shutting down TradeDesk for concerts. They're also limiting Ticketmaster accounts even further as it appears as they take more action on pricing.

Curious your perspective on this. Does this present an opportunity for Vivid to take share on the POS side. But at the same time, I guess the negative would be how much contraction and negative do you see from a supply standpoint in the secondary ticketing?

Yes. Thanks, Ryan. I think you framed it properly in that any disruption to TradeDesk, I think, can only be a tailwind, and we think SkyBox will be waiting with open as with its best-in-class capabilities to support any customers who no longer have the full suite that they need to run their business and can only help our position.

And then as you said, counterbalance, if there is additional pressure, I'd start from our fundamental view is that the vast majority of what drives this industry is fundamental financial well-functioning financial market, right, where you have artists and teams who are looking to diversify risk. You have artists and teams who are looking to offload risk well in advance of shows and that there is a healthy, vibrant financial instrument via the secondary market that facilitates and benefits all parties. To the extent folks are violating the rules of the game, we have always said this, we continue to say it, we can, should, will support anything and everything that needs to be done to ensure folks do play by the proper rules as defined by the artists and the primary ticketing platforms.

To the extent there are folks that are -- I'm sure there are right, there's got to be a bad actor out there. To the extent those folks' behaviors are forced to modify, I think what will be unknown, right? And we'll find out, as you all find out, does that contract the secondary market? Or does it just change the form where you now have increased fragmentation where new smaller sellers fill in the gap and the overall market opportunity remains the same.

So we'll keep a close eye on it. But I do think -- yes, there's a positive tailwind on TradeDesk, a potential headwind, but maybe not on the change to Ticketmaster policies.

Then just the other hot topic kind of from an industry standpoint, direct issuance. Vivid has a smaller DI type offering with college basketball crown. But curious what you think about the ambitions of some of your peers in the space on this model specifically? And then kind of to your point on rules of the game, I guess, contractually, et cetera, I guess, just your thoughts on direct issuance and the viability of doing that in an accelerated way going forward? And what that potentially means from a secondary marketplace standpoint if that further limits the supply of brokers play?

Yes. I think obviously, strategies are subject to change. And so just reacting to the way we have seen the direct issuance opportunity defined to date, maybe they change us. But to date, it's been primarily focused as we understand it, on unsold inventory. And so you can imagine regular season baseball games, less popular theater shows where you have well past the event going on sale substantial available inventory available from the primary.

And if that gets piped directly into a secondary marketplace, that would represent incremental supply. I think the threshold question for the robustness of that opportunity would start with, is this a supply or demand-constrained industry?

And does the fact that you took an event that already had a decent amount of supply and made more available, will that stimulate incremental demand? Or will it cannibalize the eyeballs that you were already getting on the site and to sell more, you still need to get additional eyeballs and spend the marketing dollars to bring them in. I think our viewpoint has been that generally, this is a demand-constrained exercise, not supply constrained in all but the most rarefied air, right?

Like you could see Taylor Swift tickets really selling out, but most events, including World Series, Super Bowl, right? There are tickets available all the way up until the event starts even for the highest profile events. So I'd say we're a bit more muted on our belief of the impact that could have. But we certainly have heard that the ambitions are big, and so we'll keep a close eye.

Next question comes from the line of Ralph Schackart with William Blair.

Larry, I just kind of want to circle back on sort of driving more awareness to the app and sort of the efforts there. I know you talked about having ESPN as a partner to do that, which is obviously a great partner to have there. But maybe you could just sort of provide a little bit more color how you drive more direct traffic here and build more awareness? And would you be contemplating potentially like a marketing campaign or other efforts to grow more awareness to go direct to the app?

Yes. Ralph, I think we're doing what I would call our brand marketing surge via ESPN. That is going to be concentrated in the near term kind of throughout Q4, which is peak sports season. I think this is an industry where there's been many attempts to do broad-based brand marketing, and it is challenging to prove compelling ROI from that. So I don't think we're going to reverse course and jump head first back into broad brand marketing. I think we're going to continue to focus on thoughtful different slices of, call it, more targeted performance-based metrics.

One of the advantages we have foundational strengths we have is we've been one of the leading marketplaces for a long time. And as a result, we sold a lot of tickets to a lot of people, and we have a really robust existing user base, really robust CRM database. And so a lot of our effort has been increasing our personalization, improving the nature of our messaging. And now when we're delivering a message with a fundamentally improved value proposition, I think that leads to more engagement across that existing user base. And then continuing as people -- we acquire them on the web, making them immediately aware of what awaits -- if they trusted us enough to buy on the web, that's wonderful. And I think we have perks that would compel them to come back to the app and making sure that, that hyper addressable audience gets made fully aware of the proposition. Those are the 2 major buckets I think we'll be focusing on in the near term.

Next question comes from the line of Steven McDermott with Bank of America.

Just 2 quick ones. Firstly, for 2026, what World Cup assumptions are kind of built into that outlook?

Yes. We essentially have not assumed a meaningful impact from World Cup. I think that is primarily due to 2 things. One, there's not a lot of precedent that we can rely on, right? The U.S. World Cup in an era with online secondary ticketing has 0 precedent data points. When we look at the last 2 World Cups, they are in markets that we basically don't operate in, in Russia and Qatar. And so trying to strike a cautious tone given a lack of conviction beyond that.

The second observation, I think it's fairly well documented, but we've seen FIFA be, let's say, quite aggressive in seeking to monetize, optimize their monetization of the event. I think it's safe to assume there will be incremental volume. We will benefit from it. But between those 2 factors, we've opted to essentially disregard it as we've contemplated our outlook for next year, and it would purely represent upside.

Got it. Appreciate that color. And then my second question, just -- it sounds like you said StubHub pulled back on marketing spend a bit. Is it fair to say that the Q3 exit rate improved on a year-over-year basis?

Yes. I think it would be fair to say that over the course of Q3, we saw a shift in their behavior and a corresponding shift in volumes across marketplaces. Yes, that happened closer to the end of Q3 than the beginning.

Next question comes from the line of Brad Erickson with RBC Capital Markets.

I just follow up on that last one, actually, Larry. When you say -- or when you look at kind of what's instructing the stabilization commentary on the owned property business, so you mentioned competitive intensity easing several times. Is that kind of the main driver? Any other drivers you'd call out there, either things in your control or other market forces?

Yes. I think the biggest one is -- so yes, the competitive landscape, of course, matters. But I'd say similar, if not equal, if not slightly more important in terms of what we've seen in the immediate term has been this value proposition push. And inherent in what we're trying to achieve, as we get more volume in our app, I think that is a more protected ecosystem, right?

You can bid whatever you want for a Google Link. But if someone already has our app, already trust us is already looking at us. they will likely look at us. And if we have a structurally better offer, it doesn't matter who else is buying the top Google Link. And so there's -- you control your own destiny more on app. That's why we're pushing, right, reduce the surface area and exposure to competitive response. That's a long game play, right?

You don't make that change and immediately have profound shift of volume from one channel to the other. But we have seen market increases in the volume that's moving into the app. And I think this is one of those like layer cake dynamics where every month that goes where you bring in a new cohort of customers who have done their research, seen the value prop, they're going to be fundamentally stickier.

And over time, that will compound and build into something pretty exciting.

Got it. And then I appreciate the '26 guide and all you gave the EBITDA numbers. Any color you can give maybe on cash conversion relative to that EBITDA guide?

Yes. So I appreciate that question. Yes, I think if we look at our cash obligations moving forward, you have roughly $20 million of net interest expense. We'll have a bit less than $20 million of ex cap software. And then we mentioned in this release that pro forma for the TRA transaction, we'll have about $3 million of cash taxes, primarily from international operations.

So you sum those up before you consider working capital, you have a roughly $40 million set of cash obligations. As we've kind of talked about quite a bit the last few quarters, when we're growing, working capital is a source when we're shrinking, it's a use of cash.

And so I think at the epicenter of will cash balance grow next year is do you believe that we can sequentially grow GOV. I think it's reasonable to assume that take Q1 as we lap the private label losses that we saw in Q3, continue to lap those. The overall year-over-year GOV numbers will continue to be down. But if the sequential help because the balance sheet kind of remark to market every quarter is stable and growing, you can see working capital reverse course.

And so the base case plan is at the midpoint or better of our guidance, we would expect to be cash generative next year.

Next question comes from the line of Ben Black with Deutsche Bank.

This is [ Kunal ] for Ben. Quick one on the outlook, and you just talked about the cash flow consequences that we could see. One thing with regard to the assumption that underlie that. So are you assuming that the competitive intensity remains at the September, October levels in 2026? Or are you assuming that maybe things go back to what we had seen earlier in this year, and that is what determines the market share that you expect in '26?

And then the second one would be with regard to the traffic that you are getting and the traffic that you have on your app. What is different from other providers that makes your value proposition so unique that people will not go anywhere else to shop?

Yes. So let me start with the app value prop because I think that's a really compelling one. I think we've talked about our loyalty program for a number of years. We continue to be on a journey to build awareness of that loyalty program. But those who find and use that program, I think, structurally buy more at a multiple of the typical user. And it -- even before the more recent changes to our value proposition, I think, resulted in kind of a clear best-in-class value prop.

And then recently, what we've really pushed is base lower everyday pricing. And then we're continually innovating on what kind of inducements and incentives we can provide as customers move through their journey -- their lifetime journey with us.

So we think if you create an experience where someone comes in and realizes that your pricing without paying consideration to any incentives, without paying consideration to loyalty are the best in the industry relative to our largest competitors, you have a good experience, right?

You get great customer service, you enjoy the way out of the site. And then subsequent to that, you get thoughtful recommendations, you get incentives and inducements, you sign up for loyalty and that price advantage becomes even more significant. That's a really compelling lifetime experience.

Now is that to say that others can't offer various elements of that. I don't think there's anything philosophically that would prevent folks from doing it. I think it's an economic question, right? If you're spending significant amounts bidding for the top keywords on search, can you do that and offer these lower price points? If you have very large partnership obligations, can you do those and offer these inducements and incentives.

So we'll see, right? I think our belief is that we can operate the leanest platform, and that uniquely enables us to sustainably deliver a best-in-class value prop and others will need to respond as they see fit.

As it relates to the first question on the competitive environment contemplated, it's difficult to be precise on this. we certainly have seen that it's been kind of an up into the right level of intensity over the last 2 years, and we are -- we want to make sure we don't just forget that. We also want to reflect that we have seen a change. And so I would characterize the midpoint as, call it, something in between what we've seen in September and October and what we saw at the worst of it kind of late Q1, early Q2. And so a little bit of reversion from the run rate, but not all the way back to the most extreme point that we saw.

Next question comes from the line of Thomas Forte with Maxim Group.

So first off, congratulations, Larry and Ted, on the new opportunities and best wishes to Stan for his future endeavors.

One question, one follow-up. So Larry, are you seeing any changes in consumer behavior when it comes to the secondary ticket market? For example, when you have a game 7 and a playoff series, are they still willing to pay premium prices for the experience as they have in the past?

Yes. Tom, I would say, as a broad aggregate statement, continues to feel like live events are a central piece of what consumers want to spend their money on. We had a tough World Series comp, right? You can't really get better than the Yankees and Dodgers. And so I think World Series volumes and average order size were down relative to that. But when we look at the World Series relative to every year post-COVID other than the Yankees and Dodgers, this was the second best year.

And so I think healthy, robust demand, we're seeing that across a lot of high-profile events. I think we alluded to this last quarter. To the extent we have seen softness, it's more been on the lower end of the market. And I think we actually see that manifest in Vegas more than in our core business.

The call it, weekday lower AOS shows have been feeling, I think, some of this much talked about consumer softness.

Excellent. And then I might be a little early in this one. But can you talk about your capital allocation priorities, including reinvesting in the business, international expansion, strategic M&A and buybacks?

Yes. I think for now, it's reasonable to assume that we won't be looking to complete acquisitive M&A that would be, call it, adjacencies. I think we've long believed that there could be a compelling consolidation in the space. And so we would be eager participants in that. But TAM expansion, I think we've got to batten the hatches and focus on the core business.

Given the performance on both EBITDA and cash flow this year, I think we'll display a lot of prudence on any cash leaving the system, including share repurchases in the near term. I think we think that there's a very compelling value at these prices, but step one is batten the hatches and assure that we have all of the capital we need to continue investing in all the initiatives that we see really compelling ROIs against such as international.

And so we'll keep doing the defend the core. And then once we have a little more of a proven track record of stabilization, return to growth, return to cash, we can open up the aperture a bit.

Next question comes from the line of Andrew Marok with Raymond James.

Maybe on the international part there, I guess, what signals are you seeing in kind of that what you call the core international business that give you the impetus to continue investing there as opposed to maybe rationalizing some incremental cost savings out of that business?

Yes. Andrew, I'd start with -- we've been pleasantly surprised at the quickness with which we've been able to bring the international business to be contribution margin positive. So we are there today already. I think we've had -- just to refresh on the context, Viagogo has a very substantial market position in Europe. And as a result, when we have shown up in pockets where we have fully competitive supply, and I would say that has initially been areas where it's either NFL comes to Europe, U.S. artists go on global tours or other events where U.S. sellers have meaningful positions. We immediately have fully competitive supply. When we have competed for traffic and eyeballs on those areas with competitive supply and competitive pricing, we have seen abundant success.

The task ahead then is to continue to add pockets across various countries, especially with a focus on local events where we can have that fully competitive supply and pricing. And from what we've seen, the ability to market profitably will follow quickly once you have that supply in place. That's some hand-to-hand knife fighting to get to that point. And so that's the journey we're on from here.

There are no further questions at this time. That concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, and welcome to the Vivid Seats Second Quarter 2025 Earnings Conference Call. Following management's prepared remarks, we will open the call for Q&A. I would now like to turn the call over to Kate Africk.

Good morning, and welcome to Vivid Seats Second Quarter 2025 Earnings Conference Call. I'm Kate Africk, Head of Investor Relations at Vivid Seats. Joining me today to discuss Vivid Seats results are Stan Chia, Chief Executive Officer; and Larry Fey, Chief Financial Officer. By now, everyone should have access to our second quarter earnings press release, which was issued earlier this morning. The press release as well as supplemental earnings slides are available on the Investor Relations page of our website at investors.vividseats.com.

During the course of today's call, we may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our most recent annual report on Form 10-K and our other filings with the SEC.

On today's call, we will refer to adjusted EBITDA, which is a non-GAAP financial measure that provides useful information for our investors. A reconciliation of this non-GAAP financial measure to its corresponding GAAP financial measure can be found in our earnings press release and supplemental earnings slides. And now I would like to turn the call over to Stan.

Good morning, everyone, and thank you for joining us today. Today, I'll walk through our second quarter results, provide context on the broader industry environment and detail a strategic cost reduction program that we are executing against. This initiative is designed to rightsize our cost structure, improve operating leverage and better position Vivid Seats to capitalize on long-term growth opportunities. Then I'll turn it over to Larry to share our financial results in more detail.

In the second quarter, we delivered $685 million of Marketplace GOV, $144 million of Revenues, and $14 million of Adjusted EBITDA. The industry and competitive landscape continue to present a challenging near-term operating environment, but we nonetheless continue to have conviction in the tailwinds driving live event growth on a long-term basis.

Similar to Q1, in Q2, we saw industry growth to start the quarter that gave way to double-digit industry declines across categories in June. While some amount of monthly oscillation is to be expected due to event mix, the degree of monthly volatility has been elevated thus far in 2025, which we attribute to a combination of economic uncertainty and the implementation of the FTC's all-in pricing mandate. The sports category was particularly weak and down double digits in Q2 with underwhelming playoff match-ups, challenging comps and NFL schedule release occurring just 2 days after the all-in pricing rollout. Meanwhile, the concerts category was up low single digits in Q2, but down double digits in June. Recent industry trends, including the switch to all-in pricing, do not change our view that live events remain an attractive long-term opportunity supported by durable supply and demand tailwinds.

Despite this long-term confidence, the current operating environment is highly competitive, so we are taking deliberate action designed to enhance efficiency, strengthen our foundation for the future and most importantly, to return to sustainable long-term growth.

Today, we announced a cost reduction program targeting $25 million in annualized operating expense savings to be actioned upon by year-end. We are focused on increasing efficiency without compromising the experience we deliver to our fans or sellers. To date, we have realized over $5 million in annualized savings. In line with our focus on operational efficiency, we have chosen to shut down Vivid Picks with savings to come over the next several months as that business winds down.

We expect to realize the remaining savings under the program as we finish the year through additional technology and AI-enabled efficiencies as well as targeted reductions in G&A and marketing. These actions are part of a broader commitment to ensure near-term competitive challenges do not threaten long-term value creation. Following the execution of these efficiency efforts, Vivid Seats will operate with greater agility, deliver more impact and drive durable growth.

Importantly, we do not believe these cost reductions will impact our ability to innovate across our core strategic initiatives. As we've shared, our industry-leading ERP SkyBox is utilized by over half of professional sellers to run their businesses. This quarter, we rolled out incremental analytical capabilities within SkyBox that were well received, and we are excited about additional SkyBox functionality in our product pipeline.

Internationally, I'm pleased to share that we are now live in 4 European countries. Our international business is demonstrating strong growth, albeit from a small base and is exceeding our margin expectations. While our initial target was to break even on a contribution basis while growing international revenues, we have been net contribution positive thus far in 2025.

We look forward to further diligent expansion abroad. To conclude, the second quarter was challenging, but we remain confident that better industry conditions will return. We are keenly focused on reigniting sustainable growth through best-in-class efficiency and differentiation on both sides of our marketplace.

With that, I will turn it over to Larry for a more detailed financial review of the quarter.

Thank you, Stan. We generated $685 million of Marketplace GOV in Q2, which was down 31% year-over-year. Total Marketplace orders were down approximately 30% year-over-year, while average order size was down 2%. We generated $144 million of Revenues in Q2, which was down 28% year-over-year. Our Q2 Marketplace take rate was 16.7%, down slightly year-over-year. While we expect some degree of continued take rate variability, we anticipate near-term take rate will remain in the 16% range. Q2 2025 Adjusted EBITDA was $14 million, down substantially from the prior year due primarily to lower volume and negative operating leverage.

Performance marketing intensity continues unabated and will continue to pressure results. Despite this pressure, we remain focused on creating a path to return to sustainable growth. We will drive additional efficiency through our cost reduction program, and we'll utilize a portion of these savings to offer a leading value proposition to buyers while remaining competitive across relevant marketing channels as we look to stabilize top line in 2026 and beyond. We ended Q2 with $392 million of debt and $153 million of cash with net debt of $239 million.

In the quarter, we utilized approximately $9 million in cash to purchase approximately 4 million shares of our Class A common stock at an average price of $2.34. As Stan noted, due to industry volumes were quite soft even relative to typical seasonality. Our quarter end cash balance is driven by volume trends as we exit the quarter, which resulted in continued pressure on cash balances in Q2. We anticipate positive cash flow in Q3 due to a combination of typical seasonality improvements and a belief that the degree of June softness was atypical.

Lastly, please note that our planned 1-for-20 reverse stock split, which was announced yesterday, will become effective after market close today. Our second quarter financial statements reflect share count and per share amounts before the reverse stock split, but subsequent periods will be reported on a post-split basis. We believe the reverse stock split will, among other things, enhance the marketability of our common stock.

I'll now hand it back to Stan for concluding remarks.

Thanks, Larry. While industry challenges continued in the second quarter, our long-term thesis on live events persists. Our aim is to remain lean, agile and well positioned to capture opportunity as the environment evolves and ultimately return to sustainable long-term growth.

And with that, operator, open up the line for questions.

[Operator Instructions] Our first question comes from Dan Kurnos at the Benchmark Company.

A couple for me. Maybe just kind of high-level thoughts on take rate was a little higher in the quarter. I don't know if that was just in anticipation of you guys implementing the cost controls. So I guess, do we think that you guys are looking at the way the market is transpiring right now and going, okay, there's maybe a smaller TAM on GOV, but we can be more profitable and more nimble within that? Or once these cost savings get implemented, I know you talked in the prepared remarks, Dan, about being more competitive in the back half of the year, but there's obviously an intelligent way to do it. So maybe kind of just walk us through threading that needle.

Yes. Dan, thanks for that. I'll take the first part and then certainly, Larry can talk a little bit more about the take rate moves. But yes, I think when you look at certainly the environment and how we are positioning ourselves, we are still continue to be really focused and honing our unit economics and really plan on emerging much leaner and using that as a mechanism to drive sustainable growth really into 2026. Lots of activity now as we continue to optimize our cost structure that we think will allow us to really push that growth as we drive acquisition and to have lots of leverage on that kind of moving again forward with our eyes towards '26 post some of these cost reductions.

Yes. And Dan, on the take rate itself, I would not read into that we actually increased pricing. There's some mix shifts across some of our different relationship types, right? Namely marketplace and the private label. And so if anything, if you think about the two competitive levers, the two primary competitive levers out there with marketing expense and take rate, I think the intent and focus is on sustaining, if not increasing competitiveness across both of those levers this year moving forward.

Got it. And Larry, can you just give us some color on the buckets of the annualized savings plan?

Yes. It's -- I would think of all of the numbers that we're referencing when we talk about savings as fixed expense. So we're not taking credit for anything that would be variable. So volume goes down, you spend less on credit cards, volume goes down, you spend less on paid search. That is not being captured in there. So what is in there, though, is what I'd call fixed marketing, i.e., like longer duration brand-type marketing is on the block and then G&A. Our G&A is primarily people and software expense. So you can think of this as additional efficiency across those two categories. As we look at the targets, the majority is expected to come out of G&A.

Our next question comes from Ralph Schackart at William Blair.

Just in terms of kind of looking back at the quarter, I think you called out consumer spending, obviously, as well as competitive pressures. Any way you could split that out and give a sense maybe which one was having a bigger impact during the quarter? I know it's difficult, but just any color there. And then I have a follow-up.

Yes, Ralph, it's hard to be precise, but the best proxy, I think, that we have, recognizing that Vegas isn't directly analogous to all of our markets, you do get, I think, the cleanest read on underlying trends with the transient nature of Vegas. And we saw kind of throughout the first half, consistent year-over-year declines, I think in the mid- to high single digits in terms of some combination of visitors, hotel occupancy, price points.

I think there was a fair amount of chatter recently on the either June or July data coming out showing Vegas was down double digits. So I think the headline is certainly the competitive intensity, but the consumer softness is probably a couple of hundred basis points of underlying headwind.

And just in terms of Europe, it sounds like obviously off a small base, as you noted, but it's exceeding your margin expectations. I know you have a lot going on right now. But just as you sort of get through this period of transition, does that sort of reshape your thoughts on your rollout plan or the number of countries? Maybe kind of speak to what you're thinking about that market as the calendar turns into 2026? Would it allow you to potentially accelerate that growth? Any perspective would be great.

Rob, yes, I think we've been pretty pleased by what we've seen internationally, as we've talked about, probably ahead of schedule in terms of number of countries that we're in and ahead of schedule in terms of what we're seeing from a contribution margin perspective. So I think as we continue to see that dynamic, I think we are excited and continue to be thoughtful, but willing to accelerate investment as we see that as certainly TAM accretive and margin accretive in the future. And we'll continue to, I think, look to make investments to grow that part of our business.

Our next question comes from Cameron Mansson-Perrone at Morgan Stanley.

First, I wanted to ask, Google on their earnings call this quarter, you talked a bit about activity, search activity shifting into more towards AI mode. I was wondering if I could get your thoughts or thinking about how as search activity changes in that regard, how that might impact your SEO and performance marketing channels? And any read-through as you're thinking about it in terms of how that impacts the secondary ticketing industry more broadly? And then second, on the savings opportunity, Larry, I was wondering if -- just a housekeeping question, but is the $25 million, is that in-period savings? Is it an annualized kind of exit rate at year-end '25? Just a little bit more specificity there would be helpful.

Cameron, I'll take the first part and then turn it over to Larry on the savings. But Yes. Look, I mean, certainly, I think I'd start by framing as we look at how consumer discovery continues to evolve, I mean, it's clear, and we're certainly an example of how much consumer discovery flows through the Google funnel, which today, I think, has a lot of opportunity for cost and spend-based funneling of traffic.

I think certainly, as AI overviews is coming through, I think you see, I think, expected behavior there where I think you're getting a lot of perhaps relevancy over spend that's showing up. And certainly, as we think about that adaptation of how consumers discovery AI overviews as it pertains to search and other evolving and emerging channels. We continue to look at that and really position our platform to be discoverable and ready to take advantage of those channels. So lots of stuff, I think, changing in that world. I think certainly on the Google front, we're paying close attention and deeply in partnership with them as some of that search experience evolves.

And on the cost reduction question, the number we put forward, think of that as a full year annualized figure that we will expect to have fully actioned by the end of this calendar year. And so incremental to 2026 results in full. But as you look at the back half of '25, I'd say they are in flight, and they will layer in over the coming months. And so not a particularly significant immediate benefit, but it will scale quickly as we fully action the identified savings.

Our next question comes from Ryan Sigdahl at Craig-Hallum.

This is Matthew Raab on for Ryan. On industry volume, Larry, you gave a little color on the cadence of the quarter, gave a little insight into June. Can you maybe talk a little bit more about the all-in pricing change and how that's changed the market from a consumer perspective? And then I don't know if I caught it, did the June softness continue into Q3?

Yes. So I'd say the story is not yet fully written on all-in pricing. We've seen this before the national rollout play out at several states, the Maryland, California, Tennessee had previously moved to all-in pricing. And what we did see was a decline in those states in conversion that persisted for a couple of months and then largely normalized, which would generally put with what we've seen across various testings where conversion is generally higher if you do utilize lower price upfront with fees shown in the checkout versus an all-in price.

I think the part that's -- we have the data points from the prior state examples, but now we have a lot more states flowing through, and it's [indiscernible] will that recovery that we saw in those other states fully flow through at the national level. But broadly, it's tracking. And I think there is a digestion period that we're certainly working through, and we'll see as we approach kind of next year's calendar, if the flow-through in Cascade properly works its way through the system or if there's another kind of digestion period as the industry recalibrates kind of up and down the chain.

And then on just the June softness, did that continue into Q3?

Yes. So I think we noted on Q1 month-to-month volatility, noted again in Q2 month-to-month volatility. I'd say volatility continues. So we've actually seen July revert to being up year-over-year. July is a softer period. So all of the caveats that I would put on an already volatile year where that volatility continues, but we are seeing July return to positive.

Our next question comes from Andrew Marok at Raymond James.

On the cost savings again, you mentioned shutting down Vivid Picks, but are there any other of those kind of emerging areas or investment initiatives that might come under review in the cost reduction program? Or is that kind of mostly aimed like you said, at the core of the legacy business and the OpEx involved in that? And then I have a follow-up.

Andrew, yes, I think we are continuing to, I think, put our lens on all areas, I think that can be really streamlined and enable us to be as lean and nimble, I think, as possible as we look to really drive investment into growth. So I think our portfolio of investments, I think, is completely under review. But certainly, our focus is on, I think, our large G&A base, which I think we believe we can significantly streamline by the end of the year.

Appreciate it. And then maybe a quick one on 2Q. So I heard that the poor playoff matchups were one of the reasons that sports came in a bit below in the quarter. Is there any way to quantify the contribution of a poor playoff slate versus a good one or just kind of the range of outcomes that we should be thinking about in like a typical playoff season?

Yes. The Sports Comp, I would characterize as a pile of issues that summed up to the headwind. Last year, we had the Copa América that drove pretty significant volume in soccer. This year, we did have the FIFA World Cup, but that came in considerably smaller than Copa. So you had a tough soccer comp -- last year, I'd say Caitlin Clark, Fever was at its peak. So we saw some headwinds on all things, women's basketball on a year-over-year basis. And then as you noted, some match-up softness.

That -- if I were to put a rough number on, call it, an NBA finals between two small market teams versus the NBA finals between Minneapolis Lakers and Celtics. I would probably say in the quarter, that type of series guardrails are like 1% of GOV. So a fraction of a percent when you think of it on a full year basis. There's just such diversity in events, any one won't make or break, but when it's part of a contributing series of issues, we like to call it out.

Our next question comes from Curtis Nagle at Bank of America.

Just a quick one for me. On the $25 million in expense reductions, could you just go through, I guess, the balance of flow-through versus reinvestment? And where would those reinvested dollars primarily go?

Yes. I think some level of reserve judgment on exactly what the ratios will be based on what we see in the competitive landscape. But I think we've touched on the two major, call it, competitive levers in the P&L are the value proposition you're offering customers on the top line and then the marketing expense on the cost side. I will reiterate our view that the incremental yield on marketing spend in this current environment is difficult to put it politely.

And so you can imagine reinvestment focusing on the other lever with exact form and channel to be fully resolved as we continue to evaluate exactly where we want to go and how. But if you think about base pricing, loyalty, promos, that portfolio of offers, I think, is where you would most likely reinvest it. And really, if you think about a, call it, LTV to CAC paradigm focused on enhancing LTV in a world where CAC is under severe pressure.

Our next question comes from Maria Ripps at Canaccord.

Sort of understanding competitive intensity on the marketing side, are there any alternative sort of customer acquisition channels that you may be exploring where competition is more manageable?

Yes. Maria, we're always looking. There are complementary channels to be had, but they are all a fraction of what the paid search and performance channels are today. So if you think about paid social as an example, a lot of time spent on Meta, on Reddit, on TikTok. But the transactional mindset is less. You're scrolling through pictures, you're having a chat versus you go into Google and you say, I want tickets to ACT Events. So we continue to find paid searches today by far, the largest channel. Hence, the comment earlier where if you think about the other lever in retaining customers, driving LTV through retention and repeat approach, I think that's the likely near-term focus that we'll pursue. And then we have the broader questions on the longer-term top of funnel. I think that's a question that spans not only our industry, but many others.

And then can you maybe help us understand some of the dynamics between owned properties versus private label revenue in Q2? I guess what's driving this accelerated pressure within the private label segment?

Yes. Maria, when you think about our private label business, I think it's made up of a multitude and of numerous distribution partners. And as you can imagine, some -- they vary largely in size as well. I'd say for us, as you look at the disproportionate decline in private label, I think, unfortunately, one of our largest partners made a change, and it resulted in us seeing some substantially smaller volume from that partner and thus the accelerated or sort of disproportionate decline in that segment of our business.

Our next question comes from Benjamin Black at Deutsche Bank.

Can you maybe talk about the decision to invest internationally instead of supporting the U.S. market with more capital just given the challenges that you're seeing here. So maybe talk a little bit about the rationale there. And maybe on the other side of the Marketplace, how has the competition evolved on the seller side of the equation? Have you seen any impact on your supply at all? How are professional brokers responding to sort of the challenging end market?

Thanks, Ben. Yes, I'll speak to international sellers. Yes, on the international business, I would think of it as an analysis around the incremental contribution that we can realistically get in the near term. And we talked about the J-curve in getting international off the ground. We incurred most of that in 2024. And then I think in 2025, while the top line in absolute figures and as a percentage of our total business remains small, we are now through that contribution margin curve and are positive on contribution margin. There's some incremental G&A.

But as we look at the landscape and the ability to generate volume at structurally sound economics from what we've seen to date, the opportunity internationally remains healthy and robust and more consistent with what we would have seen in North America prior to the behavior of the last few years. And so it continues to feel like an attractive pursuit where it's still going to be a much smaller piece of the business for any reasonable time frame in North America, but can still be a positive needle mover with absolute impact on our GOV and profitability.

On the sell side, Ben, I think sellers look for both a combination of distribution channels as well as, I think, technology providers that allow them to efficiently and effectively run and grow their businesses. On the distribution side, I think we remain a significant source of volume from them. And so I think we continue to look at better ways to serve that.

And then certainly, on the infrastructure and technology side, our Marketplace continues to build out components on SkyBox that we believe are quite retentive and accretive to sellers. We talked about in the prepared remarks, launching analytics tool sets for them this quarter as well as, I think, enhancing some of the mobile user experiences we have for our sell side continue to be ways that we build and innovate on behalf of the sell side of the marketplace.

Our next question comes from Brad Erickson at RBC Capital Markets.

I guess, first, just as you think about all this competitive intensity happening you keep talking about, I would be curious if you could just maybe break that down for us a bit more, what's actually going on kind of industry-wide now, why is that so persistent? And kind of what levers you think you can pull there to help try and address? And then second, just on the supply environment, maybe just anything you can share in terms of what you're embedding in your thinking for the second half of the year?

Yes. On competitive landscape, I think we've spoken about the meaningful increase in aggressiveness in performance channels. And think of that as it's a Google or a Bing Auction where someone when you type in a search, right, for Toronto Blue Jays tickets, someone is showing up in the first, second, third spot. That's an open auction and the price people are willing to pay will influence who shows up at the top of that search.

And there's data out there across industries that most often customers will click on the first link if they're going to click on any link. And so as folks are willing to bid more for that first link, they can really take a meaningful portion of the available surface area. And if they're able to effectively monopolize customer awareness by consistently showing up at the top spot, they will get disproportionate traffic flow and whether their value proposition is the most compelling or not, they'll continue to see that traffic. By our math, that incremental bid is uneconomic.

And I think you've seen across several industry players or if you kind of follow the industry chatter, that has proven out that this incremental spend is uneconomic. But different folks have different strategic objectives, and I think some folks are really focused on demonstrating top line growth even if that's destructive to the industry profitability pool. Frankly, coming into 2025, we thought that, that story was an unfortunate, but perhaps constrained the 2024 story. And to our disappointment, it seems to continue unabated. The why and the end game in all of this is less clear because it seems like we're well past the bounds of any reasonable corporate finance framework that you could employ.

And then supply for the back half of the year. I think from our side, we had touched on last quarter saying that we think at the industry level, expect flat, maybe down a little bit for the year. We saw Q2 come in roughly flat, albeit volatile, Q3 off to a positive start with relatively easy comps year-over-year, Q4 tougher comps year-over-year. So at this point, not really changing that perspective that flattish is probably the right paradigm from an industry standpoint. But to make a call on, call it, the Q4 on sale calendar and what that will mean for 2026, a bit premature. But for the next 1.5 quarters, the concert calendar is pretty locked. I think we feel fine about it, not too much volatility there.

Yes. And I think the only other one thing, Brad, kind of circling back as you think about the broad industry dynamics, certainly very aligned sort of with what we look to position ourselves to be able to do is we certainly got a lot of marketing pressure. And I think the structural changes that we are certainly embarking on will better position us to be aggressive on that front as things return to, I think, a period of growth for us. But certainly, when you look at the industry profit pool, it's not just the CAC dynamic from a marketing perspective that's under pressure.

There's certainly take rate pressure as well that exists. I think as we continue to see broadly, I think, what we believe to be financially irrationally irrational moves on that front. And so as we look at, again, positioning ourselves for the future, I think our goal is to be able to compete, whether it's on marketing or the take rate pressures that we're seeing with a lot of nimbleness and agility that we believe we can get as we lean out our cost structure.

Our last question comes from Tom Forte at Maxim Group LLC.

So first, Stan, Larry, best of luck navigating a challenging environment. One question and one follow-up. On Shuttering Vivid Picks, why Shutter Vivid Picks, it wasn't driving engagement as expected, competitive set, relative margin versus remainder of the business, regulatory environment? Just additional thoughts there would be appreciated.

Tom, I think certainly, probably the right -- it's a combination of all of the above, right? I'd start with -- we certainly had great aspirations and saw great early reads on potential engagement vehicles for the product that we had. I think as we look to focus in, I think, certainly, that was an area that took focus away from the core business, and we wanted to make sure as we thought about, again, the platform and the cost structure that allowed us to really move nimbly, that was one that fell a little bit outside the bounds of that.

Similarly, as you talk about, I think there were in that space and continue to be increasing regulatory components that are unique and distinct from our core business. And so as we looked at the overall impact, made the decision that it was more of a distraction than it was something that would enable the business and so decided to shut that down.

Just really quick. We tried our darnedest to crack the [indiscernible] code and we just weren't able to do it at scale. And so we sort of became stuck as a subscale provider with unit economics that just didn't create a pathway to becoming something other than a subscale provider, gave it a multiyear effort, tried a bunch of different approaches and once it became evident that we weren't able to unlock a more sustainable unit economic profile, decided to call it.

So for my follow-up, can you give your current thoughts on Adjusted EBITDA cash conversion for the remainder of the year? And then to the extent you're able to provide your thoughts on your cash flow expectations for 2025 and 2026?

Yes. I think it continues to be cash generation story driven primarily by two things: one, where EBITDA shakes out and then two, if we're able to return to sequential GOV growth. So I think year-over-year trends likely to remain under pressure for the next several quarters. But if you can get sequential improvement, that will show up in the balance sheet. So I do think we expect to be cash flow positive in Q3. There's seasonal strength in Q3 relative to Q2, particularly if you compare September to June, which determines the end of quarter cash balance. Our resale business, we spend money in the first half acquiring inventory, generally move that inventory in the second half, so some tailwinds there as well.

And then moving into next year, I think that the core objectives is to -- are to: one, return to growth; and two, generate sustainable positive cash flow. And those two statements are very closely linked, especially with where our EBITDA has been running relative to our interest expense and our CapEx without positive working capital contribution, significant positive cash generation will be difficult to deliver in this environment. So getting back to top line growth is key and is the focus as we head into 2026.

This concludes the question-and-answer session. Thank you for your participation in today's conference. You may now disconnect.