Eventbrite is carrying about $293 million in exposure from advance payouts to the creators on the system, official with the San Francisco-based ticketing company disclosed Monday (May 11) in its Q1 earnings report, sharing new details on plans to refund ticket holders and detailing the impact of the live music shut down on their bottom line.
The top line numbers for the quarter were brutal as nearly every public event on its system had to be postponed or canceled, leading to a $146.5 million net loss for the quarter, down 489.66% from the previous quarter, equaling a $1.71 per share loss. The losses included $113.7 million of chargebacks and reserve increases and a $76.5 million increase in reserves “in anticipation of potential future chargebacks and refunds,” according to the company’s shareholder’s letter.
The drop comes after chief executive Julia Hartz cut more than $100 million in expenses last month including a 45% staff reduction, laying off more than 500 people. On Monday Eventbrite announced it had secured a new $225 million credit facility with an initial $125 million term loan funded in May 2020 with the ability to draw a second $100 million beginning December 2020 until September 2021 subject to certain conditions.
Eventbrite is still working its way through refunds with event creators having refunded $150 million to ticket buyers while Eventbrite has had to cover about $3 million worth of refunds due to defaults.
“As of early May the outstanding balance of advanced payouts stood at approximately $293 million and many of these creators are actively working to postpone, reschedule or refund these events,” Eventbrite’s chief financial officer Lanny Baker said on the company’s May 11 earnings call.
In the coming months Eventbrite will work though a three-tiered approach on refunds, driven by the event creators on its platform. As events cancel or postpone, they have the option to push out refunds to fans on a show by show basis, issue customized gift cards that allow creators the opportunity to exchange ticket sales for credit, set at their discretion, or donate the dollar value of their ticket purchase to either the venue or a non-profit selected by the creator.
Hartz also further preview a likely sunset of the company’s Eventbrite Music product, which it began to develop last year, repositioning the company’s “strategy to deliver a self-service creator experience with strong unit economics.”
In total, “we spent approximately $4 million on SSO acquisition in 2019, a figure equal to 2% of SSO revenue last year. Over the last two years, the lifetime revenue of Self Sign-On creators has exceeded 30 times their acquisition cost,” Baker said.
Overall, paid ticket volume was down 18% year-to-year to $22 million and net revenue prior to the contra-revenue impact of refunds was down 16% in the quarter. On Tuesday, the stock closed at $8.06, down 22% from the market open of $9.74.
