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Live Nation Entertainment Reports First Quarter 2014 Financial Results
First Quarter Highlights (year over year):
- Revenue Up 22% to $1.1 Billion
- AOI Increased 56% to $83 Million
- Operating Income Improved 63% to ($12) Million
- Free Cash Flow Up 138% to $34 Million
- Event-Related Deferred Revenue Up 14% to $885 Million
- Concert Attendance Up 11%
- Ticketmaster Resale Volume Up 40% in April
Live Nation Entertainment released financial results for the three months ended March 31, 2014.
Coming off a record year in 2013, we are off to a strong start in the first quarter, setting us up for our fourth consecutive year of growth in 2014. Our first quarter delivered revenue growth of 22%, Adjusted Operating Income (AOI) growth of 56% and a free cash flow increase of 138%. Each of our businesses contributed to this growth, with all four segments delivering revenue and AOI growth for the quarter.
Our Concerts division delivered revenue of $663 million in the first quarter of 2014, an increase of 29% over the same period in 2013. This strong revenue growth was driven primarily by more arena events which drove improvements in AOI of 80% and in operating income of 15%. Tickets sold through May 2 of this year for all events in 2014 are up 5% year-on-year. These higher ticket sales drove a 14% increase in our event-related deferred revenue as of March 31 as compared to last year. In total, we promoted over 4,800 events with more than 9 million attendees in the first quarter, an increase in attendance of 11% over last year.
Last year, we added 10 million fans across our Concert events, and expect to deliver continued growth and add more fans in 2014. We are off to a strong start for the year, and expect that we will continue to build our share and promote over 80% of the top 25 tours globally this year. With 5 million fans across 63 festivals, we believe Live Nation is the largest festival producer in the world and we expect to grow this fan base by another 10% this year. Our portfolio of 18 electronic festivals continues to be strong, led by Electric Daisy Carnival in Las Vegas, which is the largest electronic festival in the world with over 400,000 fans attending. Collectively, our global concert platform has never been stronger and we currently expect to promote over 23,000 shows again this year, in more than 40 countries with over 3,000 artists, and we expect to continue adding more markets, festivals and shows.
Our artist management business is becoming increasingly strategic for us as a pipeline into our concerts business, which in turn drives our high-margin on-site, sponsorship and ticketing businesses. Artist Nation's revenue in the first quarter of $73 million was an increase of 44% over last year, largely driven by higher management commissions. In 2014, we expect to promote approximately 30% more shows for major Artist Nation artists as compared to last year, a strong indicator that our strategy is succeeding and that this division is now contributing real growth to the company.
Our net renewal rate in Ticketing has continued at over 100% in 2014 and revenue was $355 million for the first quarter, an increase of 9% over last year. The number of primary tickets sold this quarter grew by 3% over last year, with a 17% increase in AOI and a 42% improvement in operating income. A top priority for our Ticketing business in 2014 continues to be delivering fans a fully integrated offering of primary and secondary tickets together on TM+. We now have 60 teams from the NFL, NBA and NHL and over 2,000 concerts that are now officially offering fans all of their legitimate ticketing options in one place. Looking at our most recent results, for the month of April, we grew our global resale volume by 40% relative to April of 2013.
TM+ is one of the great new products that has come from our continuing investment in the Ticketmaster platform and products. Another area of ongoing innovation in 2014 is in our mobile products. We are deploying new apps and mobile web experiences with greater functionality, making it easier for fans to buy, transfer and sell their tickets across any mobile platform or device. As a result, our rapid sales shift to mobile continues and we saw 16% of all tickets sold in the first quarter being sold via mobile and tablet devices, up 33% from the same period last year.
Sponsorship & Advertising
Our Sponsorship & Advertising business for the first quarter of this year had revenue of $45 million, which is up 13% over last year, with increases in both sponsorships and online advertising globally, driving AOI improvement of 8% and operating income up 7%. Recent sponsorship activity includes JBL sponsoring our Pier 97 venue in New York along with JCPenney as a new festival sponsor in North America. New content partners for 2014 include Absolut, in a campaign focused on the discovery of developing artists, and AT&T around the role of mobile in helping artists stay connected while on the road.
Last week we took a major step forward in transforming our advertising business towards a true media and content company with the announcement of our Live Nation Channel on Yahoo. While others have streamed shows in the past, we believe that only Live Nation, with its scale of 23,000 shows globally, can consistently deliver programming and establish a network with an ongoing advertising base. With this channel, we will co-sell advertising and we are currently attracting large commitments that will drive advertising revenue. We have been building our advertising team in preparation for launching the channel on Yahoo!, deploying additional content verticals and building our current Live Nation and Ticketmaster sites. I expect that as our ventures with Yahoo and other content initiatives prove successful, you will see us further leveraging our content and the Live Nation brand, to deliver an acceleration in the growth of our advertising business over the next few years.
2014 Growth Expectations
Given our momentum coming out of 2013, our strong early success with the first quarter and solid leading indicators for the year, I am confident that in 2014 we will (1) deliver our fourth consecutive year of revenue, AOI and free cash flow growth, (2) grow the profitability of each of our businesses, (3) stay on track to deliver our 2015 financial plans, and (4) operationally continue to invest in and build all of our businesses to drive continued growth.