MarketWatch First Take: How Eventbrite believes it will survive the pandemic

MarketWatch First Take: How Eventbrite believes it will survive the pandemic

12 May    Finance News

The top executives of Eventbrite Inc. told Wall Street on Monday that the company will survive the pandemic through many steps it has taken, including a massive restructuring, but they are still pinning the future on live-events ticketing, and banking that ultimately people need to be around other people.

Earlier in the day, The ticketing and event-management company reported first-quarter results that were worse than adjusted estimates, due to the cancellation of all in-person events due to the COVID-19 pandemic, causing its shares to tumble nearly 12% in after-hours trading. Eventbrite EB, +2.43% also announced an initial loan from Francisco Partners, a private equity firm, for $125 million, at an interest rate in the “low double-digits.” An additional $100 million draw is available, assuming certain business conditions that relate to the expense structure of the business and operating results can be met.

“I want to first emphasize that this is temporary and once we can gather in real life, safely, the demand for in-personnel experiences will be strong,” Eventbrite co-founder and Chief Executive Julia Hartz told analysts. “It is a fundamental need for humans to gather, as we have been doing for thousands of years, and we will be there to power that connection.”

The company’s business, though, has been in a tailspin since sheltering-in-place measures took effect around the world. Eventbrite said that during the month of March, its paid ticket volume was down 90%. Executives said they saw some slight improvement since then, but it’s hardly much better. “We’ve seen improvement off the March lows, with paid ticket volume pacing 85% lower year-to-year in early May,” said Lanny Baker, Eventbrite’s chief financial officer.

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The company has also had to refund ticket-buyers for canceled events, and increased its reserves by $77 million in the first quarter for ticket refunds or chargebacks.

Hartz said the company is making a big change in its cost structure, to focus on a lower-cost, self-service-driven model, so that its customers can, for the most part, easily create and manage their event ticketing. Since the pandemic began, Eventbrite has been used by some of its customers for online classes or streamed events, with 8 million paid and free tickets distributed in April through online events. But the company is still banking on in-person events to resume, albeit at much smaller scale and likely with social-distancing restrictions in place, and Eventbrite believes it can help its customers manage those requirements.

“What we need to do is provide accurate real-time knowledge to our creators through our content to be able to help them make the right decisions for their events,” Hartz said, adding that as live events re-emerge, “it’s going to be less about government regulations for these smaller events and more about consumer behavior and desire and the feeling of trust that they can be safe.” The company is working with event associations and government agencies to develop some best practices that it will be able to share to help guide its future event-planning customers.

Small to medium-size events will be the first to come back, the company predicts, and they will be held more frequently to pick up the slack left by larger events, which will take significantly longer to resume. But as many in the world are still trying to avoid human contact, the big question is: How long can Eventbrite survive without the resumption of big events? Clearly, some investors don’t want to stick around and find out.

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