Good afternoon, and welcome to Eventbrite's second quarter 2020 earnings conference call. Prior to this call, we released our shareholder letter announcing our financial results.

It can be found on our website at investor.eventbrite.com. Before we begin, I would like to remind you that during today's call, we will be making forward-looking statements regarding future events and financial performance.

We caution that such statements reflect our best judgment as of today, August 6, based on factors that actual future events or results could differ materially due to several factors, many of which are beyond our control. For a discussion of the risks and uncertainties affecting our future results, we refer I refer you to the section titled forward-looking statements in our shareholder letter and our filings with the SEC.

We undertake no obligation to update any forward-looking statements made during the call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events, except as required by law. During this call, we will present adjusted EBITDA and free cash flow, both of which are non-GAAP financial measures.

These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and have limitations as analytical tools. You should not consider them in isolation or as substitutes for analysis of our results of operations as reported under GAAP.

Reconciliations to the most directly comparable GAAP financial measures are available in our shareholder letter, and we encourage you to read our shareholder letter as it contains important information about GAAP and non-GAAP results. And with that, I'll now turn the call over to Julia Hartz, Co-Founder and Chief Executive Officer.

Thanks, Ron. Hi, everyone, and thank you for joining us on the call today.

We hope that you and your loved ones are healthy and safe. As I reflect on the last few months, I'm struck by two things: the durability of our founding – and creators.

Building self-service solutions for the many challenges that our creators face in their day-to-day work has always been the center of our strategy. We believe the second quarter's impressive activity on the resilience and creativity as well as our unique ability to rapidly evolve to meet their needs.

In the second quarter, overall event volume held at nearly 3/4 of prior year levels. We processed more than 40 million total event tickets on the platform with nearly 5 million paid event tickets.

Thanks in large part to a surge in online event activity. Tickets to online events increased more than 30 times from last year, as creators used our platform to extend their reach and host more frequent events.

In fact, the number of 55% compared to last year. We are seeing creators expand their events nationally and globally.

In our shareholder letter, we featured – creator. Market books hosted a thoughtful online discussion with Author Ibram X.

Kendi, which helped them expand beyond their local audience to contribute to the global discourse and racial justice. The powerful virtual event gathered 17,000 attendees.

This is just one example of how creators are reaching new audiences with Eventbrite. Creators are also using Eventbrite to delight and engage their audiences with free events.

Free event ticket volume was 70% of the year ago level in the second quarter and actually grew year-over-year in July. Many of these events are also being hosted online and at increasing frequency.

By offering expansive and unique features, we continue to build stronger relationships with creators as they rely on Eventbrite to drive the success of their businesses. While we are pleased with the strong creator engagement, paid ticket volume remained below normal levels in the second quarter due to restrictions on in person gathering.

We are, however, seeing encouraging signs as creators are adapting to the current environment. Paid event tickets improved consistently throughout the second quarter and also in July, and we are seeing particular strength in the Self-Sign On channel.

We will not predict the shape or duration of recovery, but we are prepared for any scenario. We are using this time to position our platform and product experience to be the very best solution for event creators to continue rebuilding the live experience as economy.

We are committed to providing creators with the critical features to both navigate this temporarily changed world as well as thrive into the future. To help us realize our product-driven vision and accelerate our progress, we are pleased to welcome Vivek Sagi to our team as Chief Technology Officer.

Vivek brings more than 20 years of experience leading globally distributed and high-performing engineering teams. When he starts next week, Vivek will report directly to me while leading over 200 engineers worldwide.

I remain as confident as ever an event rights enduring mission and the ingenuity of our creators. We believe that by solving creators' unique needs in this critical time, we will not only cement Eventbrite as the platform of choice for live events around the world, but expand our market share in the future.

Time to drive greater efficiency and focus, while accelerating platform improvement and shipping critical features makes us an even stronger company. I want to pay deep respect to our team for the steadfast dedication and focus on what is most important.

Their unwavering commitment to our customers and each other has helped Eventbrite continue to hold its central and vital position in serving millions of event creators and ticket buyers during this time. And with that, I will turn it over to Lanny.

Thanks, Julia. As reported in our shareholder letter, second quarter 2020 revenue was $8.4 million compared to $81 million a year ago.

And adjusted EBITDA was a loss of $20 million for the quarter compared to breakeven one year ago. However, those headline figures do not immediately reveal the underlying resilience we see in our creators or the inherent strength residing within our platform.

Going a layer or two deeper, we can share more of that picture. After hitting a low in late March, paid ticket volume rebounded in April and then grew by 33% from April to May.

Paid tickets grew by another 38% from May to June. 45% of total paid ticket volume for the quarter was transacted in June and paid ticket volume in July was 10% higher than in June.

For July, total paid ticket volume was down 71% year-to-year, a very nice improvement from the 90% declines we saw in March. Within those figures, smaller, highly local, frequent creators who are our mainstays and the focus of our self-service business have fared even better.

Paid ticket volume in our Self-Sign On channel has improved consistently since late March. Tickets were down 80% year-to-year in April, 70% in May, 60% in June and by just over 50% in July.

It's been heartening to see and support this steady progress within our self-service franchise. Smaller, highly entrepreneurial creators have demonstrated again their characteristic nimbleness during the pandemic as reflected in the exponential growth of online events on Eventbrite.

We processed more than 27 million free and paid tickets to online events in the second quarter compared to just 850,000 a year ago and 4 million in the first quarter of 2020. More than 70% of Eventbrite creators who hosted an event in the second quarter, organized at least one online event, and about half of these creators were brand-new to Eventbrite.

Not only are we helping existing creator customers shift their businesses online, we're also acquiring new creators, thanks to the flexibility and ubiquity of our platform. Results like these, during a time of enormous social and economic challenge, reinforce our confidence in the long-term opportunity in our market and in our business.

Let me now turn back to our financial results for the second quarter. I'll not go through the results line-by-line because these are covered in detail in our shareholder letter.

However, I do want to call attention to certain COVID related impacts in the second quarter. First, reported revenue of $8.4 million for the quarter was reduced by $3.4 million in reserves related to anticipated ticket fee refunds and services revenue.

Second, total operating expenses of $34.4 million for the quarter were reduced by $18.1 million due to a partial reversal of the APO reserve we booked in the first quarter of 2020. This reversal was recorded within sales, marketing and support and reflects progress we've made reducing APO exposure, which I'll get back to in a minute.

Third, we recorded $6 million in severance and other costs associated with our expense reduction initiative. And finally, we recorded $3.2 million in expenses associated with impairments of creator contracts and fees.

Netting it all out, operating expenses would have been $43.4 million in the quarter, excluding these COVID related impacts. On that basis, operating expenses were down roughly $22 million or 33% from the second quarter of 2019.

This puts us slightly ahead of plan on our path to over a $100 million in annualized expense savings. Moving to the balance sheet.

Eventbrite's available liquidity, our cash and cash equivalents plus certain receivables and advances plus payables and cash from ticket sale proceeds that we hold on the creators account was $360 million at June 30, up from $151 million at the start of the quarter. This increase in available liquidity reflects the private placement of senior notes as well as the convertible bond offering we completed during the quarter.

The company's advanced payout balance which is cash advanced to creators ahead of events occurring and is therefore netted out of greater payables stood at $253 million at June 30 and had declined to $244 million by August 5. Since we suspended the APO program in early March, we've reduced what was originally a $354 million outstanding balance by $111 million or 31%, with less than $4 million in cumulative refund or charge back losses for Eventbrite.

This healthy progress has been enabled by our product, payment and operations teams who have worked diligently to serve creators and attendees during an unprecedented period in our industry. Based on the progress we've made and the trends we've seen, we reduced our reserve for future APO losses by $18 million in the quarter.

Looking ahead to the rest of 2020, our outlook remains clouded by the ongoing impact of the pandemic and the near-term uncertainty this presents for live events. While strength in online events and amongst smaller creators on our platform have propelled increases in paid ticket volume and revenue since March, we expect paid tickets and revenue to remain well below normal levels in the second half of the year.

Excluding processing fees, we expect cash costs which were $36 million in the second quarter to be between $33 million and $35 million in the third and fourth quarters of this year. Our monthly adjusted EBITDA loss was in the $5 million to $8 million range in June and July.

In conclusion, our second quarter results reflect at once, the external pressures on our industry as well as the benefits of steps we've taken to position Eventbrite for the future. We've sharpened our focus on self-serve, made our operating model leaner and strengthened our financial resources.

We believe Eventbrite is ready to emerge from the pandemic, a stronger company and a trusted partner to creators everywhere. We're inspired by the ingenuity and resilience of those creators, and we are committed to supporting their success today and into the future.

With that, let's open the line for questions. Please, operator?

Hi, great. Thanks.

This is Nate Mitchell on for Youssef. Lanny, maybe just starting with you, how do you think we should think about the APO exposure trajectory from here.

And on the one hand, I think the rate of improvement seems to have slowed since you last disclosed it. But on the other hand, you're reversing some of the reserves, and it sounded like you're even starting to open the program back up.

So would love some more color there on how we should be thinking about the trajectory of this exposure?

Sure, Nate. We're pleased with the progress we've made and how the APO balance has resolved thus far.

Our efforts to manage the APO balance, which include reaching out to creators, providing them with the ability to more easily process refunds, introducing new features like ticket credits have very significantly helped reduce the APO outstanding over the course of the summer. Creators have come forth to refund the overwhelming majority of refunds, and they continue to proactively communicate with their attendees about postponements and rescheduling of events.

So thus far, we haven't seen a large number of charge backs that have required funding by Eventbrite. Our to date, as we said, has been less than $4 million of charge backs and refunds.

And as we look forward and we look at those trends and the experience we've had to date, we determined that the reserve we took originally 90 days ago, was larger than we need. It will take some time to resolve the remaining $250 million, $244 million outstanding today of APO balance.

But from where we sit right now, things have been moving forward in a pretty productive way, and we feel like it's a situation we'll continue to be able to manage fairly effectively. We've got another five or six weeks on the summertime concert and festival season.

As we get through that, I think we'll know just a little bit more about how the balance will ultimately resolve. Things look good so far.

Great. Thank you for that color.

Julia, I wanted to hear maybe if you could expand a little bit on the opportunity with online or virtual events. How do you think about the total addressable market or revenue opportunity for online events?

And how should we think about monetization levels? Are you seeing creators gaining more confidence that they can charge for these kinds of events?

Any color there would be really appreciated.

Sure. Thanks, Nate.

Well, I think that online event presents an unprecedented opportunity for our event creators to expand their audiences beyond fund their local or even national boundaries. And so one of the most impressive things that we've seen has been the reach that our creators can have particularly on the Eventbrite platform because we are a global platform.

So we already have embedded in our marketplace, international consumers who are looking for ways to connect with each other over things that they have in common. And I think that has been a big driver of growth for our creators.

We're seeing frequency be another opportunity in online events, obviously, with both consumer behavior shifting to be available and also to be adopting online formats for events. Creators are needing that pent-up demand with new formats and ways to be able to connect with them through live events.

So the strength and growth in online events on the platform is one that I think is both a testament to the creativity and the entrepreneurialism of our creators as well as the ubiquity of the Eventbrite platform in all live experiences. I think as we start to continue up this adoption curve and see more online events become – these formats become more mature, we'll be looking for opportunities to help our event creators monetize these live experiences.

I think predominantly today, we see a big – a big portion of these online events are free. We think there's an opportunity in that.

The fact that online – that our free tickets, free event tickets grew year-over-year in July gives us a lot to work with in that regard in terms of the momentum.

Awesome. Thanks.

I’ll get back into queue.

Thanks, Nate.

Yes. Hi, guys, thanks for taking my questions.

I guess, Lanny, maybe just to start to follow-up on the APO question. If we look at that $244 million balance, is there a way to help us understand how much of that is related to events that have been postponed so that the attendee has taken a credit for a future event.

Just trying to understand that what's out there that maybe really isn't at risk for you guys?

Sure. Well, let me make one point clearly first, which is that there's a difference between holding a ticket for a future event and taking a credit for a future event.

Attendees would hold a ticket for a future event when the same event was being postponed or being rescheduled. There are other cases where with the new product offering that we've introduced, an attendee is able to take a credit for some as yet to be defined and yet to be scheduled future event.

And both of these are ways for us to assist this market to effectively clear in a very highly unusual time. It's been really heartening to us to see that in the vast majority of cases, north of 98% of the time, when there has been a call for any kind of refund the creators have stepped forward to send that money back to Eventbrite.

Eventbrite has then forward that money to attendees. We've also seen a significant number of attendees, say, effectively, I'm willing to hold my ticket.

I'm willing to wait for that future event. And we haven't seen an influx of chargeback requests that has been at all inconsistent with our normal historical experience, even though we're going through such an unusual time.

So as we look forward, I think that the ultimate resolution of the APO balance is very likely to be creators communicating with attendees about postponements eventually putting those events back on the calendar, and that will be matched by some of the things we're seeing from attendees where they may be willing to forgo the ticket, they may be willing to donate the ticket value and in other cases, they may ask for either a refund or a credit. But it's been heartening to see the – these are communities that we serve, communities of creators, serving their communities of attendees in most cases.

And there is a healthy relationship between both of them. And in some ways, they look out for each other just as we look out for all of them.

Okay, that's helpful. And then I think, Julia, as we see, paid ticket volume and free ticket volume build each month.

Is there anything you see in the data around what types of events are coming back? Or are there any geographies that we stand out either here in the U.S.

or globally that you would cause the trend or highly is right at for us.

Sure. So we're consistently seeing smaller format events, whether they be classes, workshops, seminars, really at the top of the category list in smaller, more frequent patterns.

So the events per creator increasing 55% year-over-year is a signal that creators are able to host these more frequent intimate events, whether it's online or in person. In terms of in-person events, nothing major that I would point to right now in terms of a trend, except for the fact that in places like New Zealand, where you see the recovery of COVID be quite remarkable.

We've seen over the last eight weeks, the recovery of that market on event price. So they have almost raised the decline that they saw in the initial COVID outbreak in the shelter in place order over the last eight weeks.

While it's a small contract, obviously, it's significant in terms of the signal that we can get on how quickly people want to get back out and out to live events.

Yes, I know. It’s great to hear.

I’ll jump back in the queue.

Thank you.

Hi, this is Ryder on for Doug. Thanks for taking my questions.

I'm curious how we should think about the sales channel in 2021 and beyond? You've talked about there being possibly an 80-20 mix between Self-Sign On and its sales.

But is it possible that creators in the sales channel are kind of sticky just due to Eventbrite's brand recognition and the fact that they're used to the product. And then my second question is, you've talked about how Self-Sign On creators have a 30 times LTV to CAC ratio.

And I'm wondering if that implies maybe an opportunity to spend more marketing dollars there. Or if those creators are just inherently acquired better through word of mouth?

Thanks so much. I'll take the first question.

I'll let Lanny chime in on the second. So in terms of the sales channel, we imagine as we've recentered our business model around our core self-service ticketing platform and particularly the strength in our Self-Sign On channel is that sales continues to be an important part of the picture going forward, the sales motion is going to be different.

We believe that there's significant market opportunity in serving and – in acquiring and serving self-serve creators, and we think that they can come through either channel. While the Self-Sign On channel is higher-margin and faster growing, the sales channel does play an important role in helping us identify strategically important creators who are bringing compelling supply and inventory to the marketplace.

And so as we think about the future of sales, it's much more of an identification of high-value frequent creators as well as an onboarding mechanism versus selling sort of adjacent services or high-touch service in addition to the technology. We know that we have great strength in our self-service ethos.

It's we founded the Eventbrite platform on 14 years ago, and we'll continue to lean into that. So we think the two go hand-in-hand quite well.

Lanny, do you want to take the second question?

Sure. The – we have a really attractive lifetime bio to customer acquisition cost dynamic in our self-service channel, particularly when measured in the classic sense of looking at paid marketing dollars that are used to acquire customers.

And this is really built on a couple of things. It's built on a very strong organic presence for Eventbrite that goes to our history and probably more importantly, just the breadth of our event, content of our creator, footprint of our geographical reach.

That helps us from an organic perspective, be kind of at the top of the list, whether you're looking for an online event or in-person event, we kind of show up really, really well. We bolster that with investments in content, in data, our product and thought leadership, publishing pieces that are based on data and trends we see in the marketplace to help creators be thoughtful about when to host events in this environment, for instance, or how to migrate and communicate with an in-person crowd as you might try to move in real-life event to online.

And these things as well have very attractive return on investment. And we'll keep doing those things, and I anticipate that, that will be the mainstay of Eventbrite's customer acquisition activity.

There is room to spend on customer acquisition. Recently, we've seen some very attractive payback periods on acquiring online creators or creators of online events and spent a little bit of money there.

But I anticipate that we'll continue to leverage our online – sorry, our organic presence rather than drive a big increase in paid spending for acquisition.

Great. Thanks.

Yes. Hi.

Thanks for the color. I guess, Julia or Lanny, as you see by the free events actually grow in July, can you talk about the importance of data and driving volume through the system and how that helps you, I guess, craft what categories to go after or what events are working and as we think more broadly, back to more of a normal world, where we're seeing maybe hybrid models and much bigger audiences that can tag on the life events.

How do you see that evolving your use of data and discovery and volume you can push through the platform? Thanks.

Thanks. We think about data as being a table stakes element of our growth plan.

So when you talk about online events and particularly the – actually, the growth of free events rather, this is – this opportunity for us to reach a broad audience and a global audience of consumers is very valuable because not only does it allow us to introduce new consumers to Eventbrite. It also allows our event creators to take advantage of the global marketplace and the broad, broad scale of our platform to be able to grow their base of customers as well.

And so one good sort of tactical use of this data is being able to draw consumers into the Eventbrite ecosystem and help them find even more events to connect to. We've seen a high repeat rate of consumers who are coming to more and more online events.

And in July, we had over 1 million consumers follow four or more event creators through our destination, meaning they're able to get real-time updates from those creators when they publish new events, they're reminded of ticket sales that are happening for events, and that creates a much stickier experience for these consumers and also improve their retention rate. So that's one way that we can use the data that we're collecting through free event ticket registrations in order to help the whole ecosystem grow.

The second is that on the category front, we're able to identify where consumers want to be, what they want to be connecting with, whether it's an online event or an in-person event, and then we can point our marketing machine towards that. We can publish case studies through our content channel.

We can spend on performance marketing. Some of the newer trends that have been popping up recently are in person events at driving theaters in the United States or globally, social activism events that we're – we've been able to really put front and center on our homepage and see an incredible conversion rate of those events by really garnering the search results that we see on Eventbrite and then being able to serve up curated high-quality content to meet those needs.

That’s great to hear. Thank you.

Great. Thanks.

Just wanted to dig a little bit deeper into the online opportunity, particularly into – with the new CTO on board into sort of the tech investments that you need to make to really fully take advantage of what online and particularly hybrid events could become over time. Hopefully, we do get back to normal but the idea that maybe some part of online, some part of this will be with us for a longer time.

What role do you see for Eventbrite? Where do you want with a new CTO, what does sort of the first 100 days and beyond kind of look like from a priority perspective and the spending that needs to sort of go with it to really take advantage of that.

Thanks, Heath. Well, I think that about it on three different factors, one; platform; two, product; and three, marketing.

So on the platform front, there is no rest for the weary at Eventbrite right now. We are just jamming through some of the upgrades that we have been wanting to make to our infrastructure for quite some time and then taking advantage of the lower activity on the platform to be able to create an acceleration around those improvements.

So it's fundamental building blocks. So particularly in investments and a continued one around making our platform faster, more reliable and more flexible because that allows us to build faster, deliver faster value to our customers.

It also allows us to integrate with best-in-class software that can be critically important to our small business customers who are launching or pivoting new business models at this time. The second is a product experience, core to who we are is the ease-of-use nature of how people can use our products and the features that we offer that are completely self-serviced for our customers.

We know that there is a roadmap ahead of us to be able to continue to improve on the core functionality of our product experience that particularly needs of frequent paid creators. So things like reporting or being able to publish and manage series events much more easily.

And then the third is marketing. We talked a little bit about data and one of the ways in which we can help our customers succeed is by pointing them in the right direction of how they can become much more efficient and successful marketers for their events.

There will be pent-up demand, no doubt when we emerge out of this period of time. But building and rebuilding new businesses are – is going to be an incredible opportunity for our creators.

And we think we'll be right there with them as the screen shoots start to grow. So in terms of Vivek's first 100 days, his background is very much in transformation and being at front and center in taking platforms like ours to the next level.

That's really where his head is going to be in addition to getting to know all the Britelings remotely around the world. And the investment on all of these vectors will remain consistent with what we set up to do in 2020.

Because we've been able to strategically shift and narrow our focus on the most important things, we know that we can continue to be consistent in that investment and still stay with its range of financially healthy as we face this feature.

Great. Thank you so much.