Vivid Seats Inc.: Form 10-Q for the period ended Mar 31, 2025

This discussion should be read together with our condensed consolidated financial statements and accompanying notes included elsewhere in this Report, as well as our audited consolidated financial statements and accompanying notes contained in our 2024 Form 10-K. This discussion contains forward-looking statements, which are subject to a number of risks and uncertainties, including those discussed in the “Risk Factors” and “Forward-Looking Statements” sections of this Report and our 2024 Form 10-K.

Overview

We are an online ticket marketplace that utilizes our technology platform to connect fans of live events seamlessly with ticket sellers. Our mission is to empower and enable fans to Experience It Live. We believe in the power of shared experiences to connect people with live events that deliver some of life’s most exciting moments. We operate a technology platform and marketplace that enables ticket buyers to easily discover and purchase tickets to live events and book hotel rooms and packages while enabling ticket sellers and partners to seamlessly manage their operations. We differentiate from competitors by offering an extensive breadth and depth of ticket listings at a competitive value.

The following table summarizes our Marketplace Gross Order Value (“Marketplace GOV”), revenues, net income (loss), and adjusted EBITDA for the three months ended March 31, 2025 and 2024 (in thousands):

* See the “Key Business Metrics and Non-U.S. GAAP Financial Measure” section below for more information on Marketplace GOV and adjusted EBITDA, which is a financial measure not defined under accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Our Business Model

We operate our business in two segments: Marketplace and Resale.

Marketplace Segment

In our Marketplace segment, we primarily act as an intermediary between ticket buyers, sellers, and partners, for which we earn revenue from processing ticket sales for live events and facilitating the booking of hotel rooms and packages through our Owned Properties, which consists of (i) Vivid Seats; (ii) Wavedash Co., Ltd. (“Wavedash”), an online ticket marketplace headquartered in Tokyo, Japan, which we acquired in September 2023; (iii) Vegas.com, LLC, an online ticket marketplace for live event enthusiasts exploring shows, attractions, tours, flights, and hotels in Las Vegas, which we acquired in November 2023; and (iv) Vivid Picks, a real-money daily fantasy sports mobile application where users partake in contests by making player picks from a wide selection of individual and player matchup projections across a variety of sports and through our Private Label Offering, which consists of numerous distribution partners. To a lesser extent, we also earn revenue from offering event insurance to ticket buyers. Using our online platform, we facilitate customer payments, deposits and withdrawals, coordinate ticket deliveries, and provide customer service. We do not hold ticket inventory in our Marketplace segment.

The amount of Marketplace revenue earned in a given period is primarily represented by service and delivery fees charged to ticket buyers. For Vivid Picks, the amount of Marketplace revenue earned in a given period is represented by the difference between cash entry fees collected and cash amounts paid out to users for winning picks, less customer promotions and incentives. For event insurance, the amount of Marketplace revenue earned in a given period is represented by referral fees charged to third-party insurance providers.

The main costs we incur in our Marketplace segment relate to developing and maintaining our online platform, providing back-office support and customer service, facilitating payments and deposits, and shipping non-electronic tickets. We also incur substantial marketing costs, primarily related to online advertising.

A key component of our online platform is Skybox, a proprietary enterprise resource planning (“ERP”) tool that is used by the majority of ticket sellers. Skybox is a free-to-use system that helps ticket sellers manage ticket inventories, adjust pricing, and fulfill orders across multiple ticket resale marketplaces. Professional ticket sellers use ERPs to manage their operations, and Skybox is their most widely adopted ERP.

Resale Segment

In our Resale segment, we primarily acquire tickets to resell on secondary ticketing marketplaces, including our own. Our Resale segment also provides internal research and development support for Skybox and supplements our ongoing efforts to deliver industry-leading seller software and tools.

Key Business Metrics and Non-U.S. GAAP Financial Measure

We use the following metrics to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions. We believe these metrics provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as management.

The following table summarizes our key business metrics and non-U.S. GAAP financial measure for the three months ended March 31, 2025 and 2024 (in thousands):

(1) Marketplace GOV represents the total transactional amount of Marketplace orders placed on our online platform in a period, inclusive of fees, exclusive of taxes, and net of event cancellations that occurred during the period. During the three months ended March 31, 2025 and 2024, Marketplace GOV was negatively impacted by event cancellations in the amount of $15.5 million and $18.3 million, respectively.

(2) Marketplace orders represent the volume of Marketplace-related transactions processed through our online platform in a period, net of event cancellations that occurred during the period. During the three months ended March 31, 2025 and 2024, our Marketplace segment experienced 42,353 and 50,049 event cancellations, respectively.

(3) Resale orders represent the volume of Resale-related transactions processed through a given platform (including our own) in a period, net of event cancellations that occurred during the period. During the three months ended March 31, 2025 and 2024, our Resale segment experienced 885 and 872 event cancellations, respectively.

(4) Adjusted EBITDA is a non-U.S. GAAP financial measure. We believe adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations and serves as a useful measure for making period-to-period comparisons of our business performance. See the “Adjusted EBITDA” section below for more information, including a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable U.S. GAAP financial measure.

Marketplace GOV

Marketplace GOV is a key driver of Marketplace revenue. Marketplace GOV represents the total transactional amount of Marketplace orders placed on our online platform in a period, inclusive of fees, exclusive of taxes, and net of event cancellations that occurred during the period. Marketplace GOV reflects our ability to attract and retain customers and provides insight into the overall health of the industry.

Marketplace GOV can be impacted by seasonality. Typically, we experience slightly increased activity in the fourth quarter when all major sports leagues are in season, concert on-sales begin for the following year, and theater event orders increase during the holiday season. Quarterly fluctuations in Marketplace GOV can result from, among other things:

• Event supply;
• The popularity of and demand for certain artists, sports teams, tours, and events;
• The mix of concert venue types between stadiums, arenas, and amphitheaters;
• The length and team composition of sports playoff series and championship games; and
• Event cancellations.

Marketplace GOV decreased by $208.1 million, or 20%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from lower order volumes in our Marketplace segment.

Marketplace Orders

Marketplace orders represent the volume of Marketplace-related transactions processed through our online platform in a period, net of event cancellations that occurred during the period. A Marketplace order can include one or more tickets, hotel rooms, or parking passes. Marketplace orders allow us to monitor transaction volume and better identify trends within our Marketplace segment.

Marketplace orders decreased by 0.6 million, or 20%,during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from a decrease in Marketplace orders.

Resale Orders

Resale orders represent the volume of Resale-related transactions processed through a given platform (including our own) in a period, net of event cancellations that occurred during the period. A Resale order can include one or more tickets or parking passes. Resale orders allow us to monitor transaction volume and better identify trends within our Resale segment.

Resale orders increased by less than 0.1 million, or 6%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from higher activity in our Resale segment.

Adjusted EBITDA

We present adjusted EBITDA, which is a non-U.S. GAAP financial measure, because it is a key measure used by analysts, investors, and others to evaluate companies in our industry. Adjusted EBITDA is also used by management to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting.

We believe adjusted EBITDA is a useful measure for understanding, evaluating, and highlighting trends in our operating results and for making period-to-period comparisons of our business performance because it excludes the impact of items that are outside of our control and/or not reflective of ongoing performance related directly to the operation of our business.

Adjusted EBITDA is not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Adjusted EBITDA does not reflect all amounts associated with our operating results as determined in accordance with U.S. GAAP and may exclude certain recurring costs such as income tax expense, interest expense – net, depreciation and amortization, sales tax liabilities, transaction costs, equity-based compensation, litigation, settlements, and related costs, change in fair value of warrants, loss on asset disposals, change in fair value of derivative asset, unrealized foreign currency losses (gains), and loss on extinguishment of debt. In addition, other companies may calculate adjusted EBITDA differently than we do, thereby limiting its usefulness as a comparative tool. We compensate for these limitations by providing specific information regarding the U.S. GAAP amounts that are excluded from our presentation of adjusted EBITDA.

The following table presents a reconciliation of adjusted EBITDA to net income (loss), the most directly comparable U.S. GAAP financial measure, for the three months ended March 31, 2025 and 2024 (in thousands):

(1) During the three months ended March 31, 2025 and 2024, we received abatements and recognized other liability reductions related to our obligation to remit uncollected indirect taxes (including sales taxes) in certain U.S. and foreign jurisdictions.

(2) Consists of: (i) legal, accounting, tax, and other professional fees; (ii) personnel costs related to retention bonuses; (iii) integration costs; and (iv) other transaction-related expenses, none of which are considered indicative of our core operating performance. Costs in the three months ended March 31, 2025 primarily related to potential strategic transactions that were explored during the period, the refinancing of the 2024 First Lien Loan with the 2025 First Lien Loan (each as defined herein), repurchases of our Class A common stock, and various strategic investments. Costs in three months ended March 31, 2024 primarily related to acquisitions and various strategic investments.

(3) Costs in the three months ended March 31, 2025 primarily related to equity granted pursuant to our 2021 Incentive Award Plan, as amended (the “2021 Plan”), which is not considered indicative of our core operating performance. Costs in three months ended March 31, 2024 primarily related to equity granted pursuant to the 2021 Plan and profits interests issued prior to the October 2021 transaction pursuant to which Horizon Acquisition Corporation merged with and into us (the “Merger Transaction”), neither of which are considered indicative of our core operating performance.

(4) Relates to external legal costs, settlement costs, and insurance recoveries that are unrelated to our core business operations.

(5) Relates to the revaluation of warrants to purchase common units of Hoya Intermediate (“Intermediate Units”) held by Hoya Topco, LLC (“Hoya Topco”) following the Merger Transaction that are unrelated to our core business operations.

(6) Relates to disposals of fixed assets, which are not considered indicative of our core operating performance.

(7) Relates to the revaluation of derivatives recorded at fair value that are unrelated to our core business operations.

(8) Relates to unrealized foreign currency losses (gains) resulting from the remeasurement of non-operating assets and liabilities denominated in non-functional currencies on the balance sheet date, which are not considered indicative of our core operating performance.

(9) Relates to losses incurred during the three months ended March 31, 2025 in connection with the extinguishment of the 2024 First Lien Loan that are unrelated to our core business operations.

Key Factors Affecting Our Performance

Other than as set forth below, during the three months ended March 31, 2025, there were no material changes to the “Key Factors Affecting Our Performance” discussed in our 2024 Form 10-K. Our financial position and results of operations depend to a significant extent on those factors.

Macroeconomic Environment and Demand for Live Events

Consumer demand for live concert, sporting, and theater events is affected by discretionary consumer and corporate spending, which is impacted by, among other things, macroeconomic factors (e.g., unemployment levels, fuel prices, interest rates, and inflation) and changes in tax rates and tax laws. Changes in trade policy can also indirectly affect demand for live events. Recently enacted and proposed tariffs and trade policies of the United States and other countries have introduced uncertainty in the global economy. During periods of such uncertainty, or of actual or perceived unfavorable economic conditions, consumers may reallocate their discretionary spending or determine they have fewer funds available for discretionary spending. This can decrease demand for and attendance at live events, as well as reduce ticket sales, which would adversely affect our revenue and operating results. In addition, any decrease in tourism to the United States as a result of perceptions of U.S. policies could disproportionately affect our business, as many tourists are consumers of live events and substantially all of our sales occur in the United States.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table presents our results of operations for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

31

Revenues

Total Revenues

The following table presents total revenues by segment for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Total revenues decreased by $26.8 million, or 14%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from a decrease in Marketplace orders.

Marketplace Revenues

The following table presents Marketplace revenues by event category for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Marketplace revenues decreased by $26.3 million, or 16%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from a decrease in Marketplace orders of 0.6 million, or 20%, partly offset by a higher Marketplace take rate (defined as Marketplace revenues divided by Marketplace GOV).

Marketplace cancellation charges, which generally have a negative impact on Marketplace revenues, represented a $5.3 million reduction to Marketplace revenues during the three months ended March 31, 2025 compared to a $9.2 million reduction to Marketplace revenues during the three months ended March 31, 2024. The decrease resulted primarily from lower payment-related chargeback activity primarily due to lower volume.

The following table presents Marketplace revenues by business model for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

The decrease in Owned Properties revenues during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 resulted primarily from a decrease in Marketplace orders partly offset by a higher Marketplace take rate.

The decrease in Private Label Offering revenues during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 resulted primarily from a decrease in Marketplace orders.

To a lesser extent, we also earn Marketplace revenue in the form of referral fees charged to third-party insurance providers in exchange for offering event insurance to ticket buyers. Marketplace revenue earned from referral fees during the three months ended March 31, 2025 and 2024 was $5.9 million and $6.8 million, respectively. The decrease resulted primarily from lower order volumes in our Marketplace segment.

Resale Revenues

Resale revenues decreased by $0.6 million, or 2%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Despite an increase in Resale orders, the decrease resulted primarily from a lower average order size per Resale order and higher Resale cancellation charges.

Resale cancellation charges, which generally have a negative impact on Resale revenues, represented a $0.5 million reduction to Resale revenues during the three months ended March 31, 2025 compared to a $0.3 million reduction to Resale revenues during the three months ended March 31, 2024.

Cost of Revenues

Total Cost of Revenues

The following table presents total cost of revenues by segment for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Total cost of revenues decreased by $5.1 million, or 10%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from a decrease in Marketplace orders.

Marketplace Cost of Revenues

Marketplace cost of revenues decreased by $5.1 million, or 20%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease, which was primarily due to the decrease in Marketplace orders, was consistent with the 20% decrease in Marketplace GOV during the same period.

Resale Cost of Revenues

Resale cost of revenues increased by $0.1 million, or 0%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Marketing and Selling

Total Marketing and Selling

The following table presents total marketing and selling expenses by advertising category for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Total marketing and selling expenses, which are entirely attributable to our Marketplace segment, decreased by $3.6 million, or 5%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was not consistent with the 16% decrease in Marketplace revenues during the same period, primarily due to higher investment in digital performance marketing channels.

Online Advertising

Online advertising costs decreased by $2.7 million, or 4%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted from a decrease in Marketplace orders, partly offset by higher investment in digital performance marketing channels.

Offline Advertising

Offline advertising costs decreased by $0.9 million, or 16%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from lower activity in our traditional brand marketing channels.

Contribution Margin

Total Contribution Margin

The following table presents total contribution margin by segment for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Total contribution margin decreased by $18.1 million, or 25%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from a lower contribution margin in our Marketplace segment.

Marketplace Contribution Margin

Marketplace contribution margin decreased by $17.5 million, or 26%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from a decrease in Marketplace orders and higher investment in digital performance marketing channels.

Resale Contribution Margin

Resale contribution margin decreased by $0.6 million, or 9%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease resulted primarily from lower average revenue per Resale order.

General and Administrative

Total General and Administrative

The following table presents total general and administrative expenses by category for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Total general and administrative expenses increased by $5.7 million, or 13%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from an increase in professional services fees.

Personnel Expenses

Personnel expenses increased by $0.7 million, or 2%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from an increase in equity-based compensation expense.

Sales and Indirect Taxes

Expenses related to sales and indirect taxes increased by $0.9 million, or 40%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from lower abatements and other liability reductions related to our obligation to remit uncollected indirect taxes (including sales taxes) in certain U.S. and foreign jurisdictions.

Other General and Administrative

Other general and administrative expenses increased by $4.1 million, or 34%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from an increase in professional services fees.

Depreciation and Amortization

Depreciation and amortization expenses increased by $1.1 million, or 11%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from an increase in intangible assets as a result of our October 2024 acquisition of a domain name that we had previously licensed and, to a lesser extent, an increase in capitalized development activities related to our platform.

Interest Expense – Net

Interest expense – net increased by $0.6 million, or 11%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from lower interest income earned on our cash balances.

Other Income – Net

Other income – net increased by $6.7 million, or 261%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from unrealized foreign currency gains related to the remeasurement of non-operating assets and liabilities denominated in non-functional currencies on the balance sheet date and unrealized gains related to the fair value remeasurement of the warrants issued by Hoya Intermediate to Hoya Topco in connection with the Merger Transaction.

Loss on Extinguishment of Debt

Loss on extinguishment of debt increased by $0.8 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted entirely from the refinancing of the 2024 First Lien Loan with the 2025 First Lien Loan.

Income Tax Expense

Income tax expense increased by $0.9 million, or 39%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase resulted primarily from equity-based compensation and limitations on compensation deductions.

Liquidity and Capital Resources

We have historically financed our operations primarily through cash generated from operations. Our primary short-term requirements for liquidity and capital are to fund general working capital, capital expenditures, and debt service requirements. Our primary long-term liquidity needs are related to debt repayment and potential acquisitions.

Our primary source of funds is cash generated from operations. Our existing cash and cash equivalents are sufficient to fund our liquidity needs for the next 12 months and thereafter for the foreseeable future. As of March 31, 2025, we had $199.5 million of cash and cash equivalents, which consist of interest-bearing deposit accounts, money market accounts managed by financial institutions, and highly liquid investments with maturities of three months or less. During the three months ended March 31, 2025, we generated negative cash flows from operating activities.

Loan Agreements

In June 2017, we entered into a $575.0 million first lien debt facility comprising a $50.0 million revolving credit facility and a $525.0 million term loan (the “2017 First Lien Loan”), and a second lien credit facility comprising a $185.0 million second lien term loan (the “2017 Second Lien Loan”). In July 2018, we amended the 2017 First Lien Loan to upsize the committed amount by $115.0 million. In October 2019, we repaid the 2017 Second Lien Loan in its entirety. The revolving credit facility component of the first lien debt facility was retired in May 2020.

In February 2022, we (i) repaid $190.7 million of the outstanding 2017 First Lien Loan and (ii) amended the 2017 First Lien Loan to refinance the remaining balance with a new $275.0 million term loan (the “2022 First Lien Loan”), add a $100.0 million revolving credit facility (the “Revolving Facility”) with a maturity date of February 3, 2027, replace the London Interbank Offered Rate (“LIBOR”)-based floating interest rate with a term secured overnight financing rate (“SOFR”)-based floating interest rate, and revise the springing financial covenant to require compliance with a first lien net leverage ratio when revolver borrowings exceed certain levels.

In June 2024, we amended the 2022 First Lien Loan to refinance the remaining balance with a $395.0 million term loan (the “2024 First Lien Loan”) with a maturity date of February 3, 2029 and revise the term SOFR-based floating interest rate.

On February 5, 2025, we amended the 2024 First Lien Loan to refinance the remaining balance with a new $393.0 million term loan (the “2025 First Lien Loan”) with a maturity date of February 3, 2029 and reduce the applicable interest thereon to the SOFR-based floating interest rate described below.

The 2025 First Lien Loan requires quarterly principal payments of $1.0 million. The Revolving Facility, which was unaffected by the refinancing of the 2022 First Lien Loan and the refinancing of the 2024 First Lien Loan, does not require periodic payments. All obligations under the 2025 First Lien Loan are unconditionally guaranteed by Hoya Intermediate and substantially all of Hoya Intermediate’s existing and future direct and indirect wholly owned domestic subsidiaries (collectively, the “Guarantors”). All obligations under the 2025 First Lien Loan are secured, subject to permitted liens and other exceptions, by first-priority perfected security interests in substantially all of our and the Guarantors’ assets. The 2025 First Lien Loan carries an interest rate of SOFR (subject to a 0.5% floor) plus a margin of 2.25%; provided that such margin may be reduced to 2.00% if the corporate rating assigned to us by Moody’s Investors Service, Inc. and S&P Global Ratings is at least Ba3/BB- (in each case, stable or better).

In connection with our acquisition of Wavedash, we assumed long-term debt owed to Shoko Chukin Bank (the “Shoko Chukin Bank Loan”) of JPY 458.3 million (approximately $3.1 million), which had an original maturity date of June 24, 2026 and was subject to a fixed interest rate of 1.3% per annum. In April 2024, we paid off the Shoko Chukin Bank Loan balance in its entirety.

As of March 31, 2025, we had the 2025 First Lien Loan outstanding and we had no outstanding borrowings under the Revolving Facility.

Share Repurchase Program

On February 29, 2024, our Board of Directors (our “Board”) authorized a share repurchase program for up to $100.0 million of our Class A common stock (the “Share Repurchase Program”). The Share Repurchase Program was publicly announced on March 5, 2024 and does not have a fixed expiration date.

During the three months ended March 31, 2025, we repurchased 2.4 million shares of our Class A common stock under the Share Repurchase Program, for which we paid $6.0 million and incurred less than $0.1 million of commissions and excise taxes. As of March 31, 2025, we recognized a liability of $0.9 million related to unpaid share repurchases, which is recorded in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

Cumulatively as of March 31, 2025, we have repurchased 6.5 million shares of our Class A common stock under the Share Repurchase Program, for which we have paid $28.8 million and incurred $0.3 million of commissions and excise taxes. As of March 31, 2025, $70.3 million remained available for future repurchases under the Share Repurchase Program.

Share repurchases are accounted for as equity transactions and are recorded in Treasury stock in the Condensed Consolidated Balance Sheets.

Tax Distributions to Redeemable Noncontrolling Interests

Pursuant to its Limited Liability Company Agreement, Hoya Intermediate is required to make pro rata tax distributions to its members, of which $1.7 million was distributed to redeemable noncontrolling interests during the three months ended March 31, 2025. As of March 31, 2025, we recognized a liability of $1.7 million related to unpaid tax distributions to redeemable noncontrolling interests, which is recorded in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

Tax Receivable Agreement

In connection with the Merger Transaction, we entered into a Tax Receivable Agreement (the “TRA”) with the existing Hoya Intermediate unitholders that provides for our payment to such unitholders of 85% of the amount of any tax savings that we realize (or, under certain circumstances, are deemed to realize) as a result of, or attributable to: (i) increases in the tax basis of assets owned directly or indirectly by Hoya Intermediate or its subsidiaries from, among other things, any redemptions or exchanges of Intermediate Units; (ii) existing tax basis (including depreciation and amortization deductions arising from such tax basis) in long-lived assets owned directly or indirectly by Hoya Intermediate or its subsidiaries; and (iii) certain other tax benefits (including deductions in respect of imputed interest) related to us making payments under the TRA.

Amounts payable under the TRA are contingent upon the generation of future taxable income over the term of the TRA and future changes in tax laws. If we do not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then we would not be required to make the related payments. As of March 31, 2025, we estimate that the tax savings associated with all tax attributes described above would aggregate to approximately $183.3 million. Under this scenario, we would be required to pay approximately 85% of such amount, or $155.8 million, primarily over the next 14 years.

Cash Flows

The following table summarizes our cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

Net Cash Provided by (Used In) Operating Activities

Net cash used in operating activities was $25.3 million during the three months ended March 31, 2025 due to a net loss of $9.8 million, net non-cash charges of $17.7 million, and net cash outflows from a $33.2 million change in operating assets and liabilities. The net cash outflows from the change in operating assets and liabilities were primarily due to a decrease in Accounts payable resulting from a decrease in amounts payable to ticket sellers as a result of lower Marketplace GOV and a decrease in Accrued expenses and other current liabilities (specifically accrued payroll) due to lower Marketplace GOV, as well as the timing of disbursements.

Net cash provided by operating activities was $39.2 million during the three months ended March 31, 2024 due to $10.7 million in net income, net non-cash charges of $23.0 million, and net cash inflows from a $5.4 million change in operating assets and liabilities. The net cash inflows from the change in operating assets and liabilities resulted primarily from an increase in accounts payable due to seasonal fluctuations.

Net Cash Used in Investing Activities

Net cash used in investing activities during the three months ended March 31, 2025 and 2024 was $7.6 million and $5.3 million, respectively, which was primarily related to capital spending on development activities for our online platform in both periods.

Net Cash Used in Financing Activities

Net cash used in financing activities during the three months ended March 31, 2025 and 2024 was $11.6 million and $4.6 million, respectively, which was primarily related to repurchases of our Class A common stock under the Share Repurchase Program and payments of liabilities under the TRA in both periods.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Actual results may differ from these estimates under different assumptions or conditions. The estimates and assumptions associated with revenue recognition, equity-based compensation, warrants and earnouts, recoverability of our goodwill, indefinite-lived intangible assets, definite-lived intangible assets, long-lived assets, and valuation allowances have the greatest potential impact on our condensed consolidated financial statements. Accordingly, these are the policies that are the most critical to aid in fully understanding and evaluating our unaudited condensed consolidated financial statements. For a description of our critical accounting policies and estimates, see our 2024 Form 10-K. During the three months ended March 31, 2025, there were no material changes to the critical accounting policies disclosed in our 2024 Form 10-K.

We perform an annual impairment assessment of our goodwill and indefinite-lived intangible assets as of October 31 of each fiscal year. In fiscal year 2024, we conducted a quantitative assessment of our goodwill and indefinite-lived intangible assets and concluded that there was no impairment thereof. The fair value estimates used in our assessment were based on assumptions we believe to be reasonable, but that are unpredictable and inherently uncertain, including estimates of future growth rates and operating margins and assumptions about the overall economic and competitive environments. There can be no assurance that the estimates and assumptions used at the time of our annual assessment will not change over time. If fiscal year 2025 profitability trends decline below what is expected, it is possible that an interim assessment, or a future annual assessment, could result in an impairment of our goodwill and indefinite-lived intangible assets.

Recent Accounting Pronouncements

See Note 2, New Accounting Standards, to our unaudited condensed consolidated financial statements included elsewhere in this Report for a description of recently adopted accounting pronouncements and issued accounting pronouncements not yet adopted.

Market risk is the potential loss in future earnings, fair values, or cash flows of market risk-sensitive instruments resulting from adverse changes in interest rates, foreign exchange rates, and market prices.

Interest Rate Risk

Our primary market risk is the interest rate risk associated with our long-term debt (including the 2025 First Lien Loan, which bears a floating interest rate based on market rates plus an applicable spread). We manage our exposure to this risk through established policies and procedures aimed at mitigating the potential effect of adverse interest rate changes. However, we will be susceptible to interest rate fluctuations if we do not effectively hedge the interest rate exposure arising from our floating-rate debt, which may adversely impact our financial results.

A hypothetical 1% change in interest rates, assuming rates are above our applicable interest rate floor, would have impacted the interest expense recorded in Interest expense – net in the Condensed Consolidated Statements of Operations by $1.3 million during the three months ended March 31, 2025 (based on amounts outstanding from January 1, 2025 through February 4, 2025 under the 2024 First Lien Loan and amounts outstanding from February 5, 2025 through March 31, 2025 under the 2025 First Lien Loan).

Foreign Currency Exchange Risk

While our reporting currency is the U.S. dollar, certain of our international subsidiaries’ functional currency is their local currency. Our international revenue, as well as costs and expenses denominated in foreign currencies, expose us to the risk of adverse fluctuations in foreign currency exchange rates against the U.S. dollar, which may adversely impact our financial results.

We are also exposed to foreign currency exchange rate fluctuations as we translate our foreign subsidiaries’ financial statements into U.S. dollars during consolidation. Due to foreign currency exchange rate fluctuations resulting from the macroeconomic environment, we may experience negative impacts on the translation adjustments resulting from the conversion of our foreign subsidiaries’ financial statements into U.S. dollars, as well as the revaluation adjustments on U.S. dollar-denominated intercompany loans. While we have not entered into derivative or hedging transactions, we may do so in the future.

During the three months ended March 31, 2025, the unrealized foreign currency gain recorded in Other expense (income) – net in the Condensed Consolidated Statements of Operations was $2.0 million. As of March 31, 2025, a hypothetical 10% change in exchange rates applicable to our business would have impacted our foreign currency translation adjustment by $2.4 million.

Disclosure Controls and Procedures

Limitations on Effectiveness of Disclosure Controls and Procedures

In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures.

Management, with the participation of our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on such evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective at the reasonable assurance level as of March 31, 2025 due to the material weakness in our internal control over financial reporting described below.

Internal Control Over Financial Reporting

Material Weakness and Remediation Activities

In connection with the audit of our consolidated financial statements as of December 31, 2024, 2023, and 2022, we identified and disclosed deficiencies in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) related to the implementation of segregation of duties as part of our control activities, the establishment of clearly defined roles within our finance and accounting functions, and the number of personnel in those functions with an appropriate level of technical accounting and SEC reporting experience, which, in the aggregate, constitute a material weakness.

Management, with the participation of our Board and its Audit Committee, began the implementation of remediation activities in 2022 and has since continued to develop and implement additional remediation activities. We believe significant progress has been made in our remediation efforts, which through March 31, 2025 included continuing to:

• implement segregation of duties over business process and information technology control activities;
• establish clearly defined roles within our finance and accounting functions;
• increase the number of personnel in our finance and accounting functions that have an appropriate level of technical accounting and SEC reporting experience; and
• design and implement additional internal controls.

While not yet remediated, management believes that the measures described above will remediate the material weakness and strengthen our overall internal control over financial reporting. The material weakness will not be considered remediated until the applicable remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We continue to devote significant time and attention to these efforts.

Changes in Internal Control over Financial Reporting

Except with respect to our continuing remediation activities discussed above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the information set forth in this Report, you should carefully consider the risks and uncertainties discussed in the “Risk Factors” section of our 2024 Form 10-K. These risks and uncertainties could cause actual results to differ materially from historical results or the results contemplated by the forward-looking statements contained in this Report. During the three months ended March 31, 2025, there were no material changes to the risk factors discussed in our 2024 Form 10-K.