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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-40926

Vivid Seats Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	86-3355184
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
111 N. Canal Street Suite 800 Chicago, Illinois	60606
(Address of principal executive offices)	(Zip Code)

(312) 291-9966

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	SEAT	The Nasdaq Stock Market LLC
Warrants to purchase one share of Class A common stock	SEATW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2022, the registrant had 82,041,142 shares of Class A common stock, $0.0001 par value per share, outstanding and 118,200,000 shares of Class B common stock, $0.0001 par value per share, outstanding.

table of contents


		Page

	Forward-Looking Statements	1
PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Deficit	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	36

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
Signatures		40

forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and the future results of Vivid Seats Inc. that are based on our current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “likely,” “may,” “designed,” “would,” “future,” “can,” “could,” and other similar expressions which are predictions of, indicate future events and trends or which do not relate to historical matters, are intended to identify such forward-looking statements. These statements involve a number of risks, uncertainties and assumptions that are difficult to predict.

For example, we may use forward-looking statements when addressing topics such as:

•

the COVID-19 pandemic, its duration, its impact on our business, results of operations, financial condition, liquidity, use of our borrowings, business practices, operations, suppliers, third-party service providers, customers, employees, industry, ability to meet future performance obligations and ability to efficiently implement advisable safety precautions;

•

our ability to raise financing in the future;

•

our future financial performance;

•

our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•

our ability to pay dividends on our Class A common stock on the terms currently contemplated or at all; and

•

factors relating to our business, operations and financial performance, including, but not limited to:

the impact of the pandemic on our business and the industries in which we operate;

our ability to compete in the ticketing industry;

our ability to maintain relationships with buyers, sellers and distribution partners;

our ability to continue to improve our platform and maintain and enhance our brand;

the impact of extraordinary events or adverse economic conditions on discretionary consumer and corporate spending or on the supply and demand of live events;

our ability to comply with domestic regulatory regimes;

our ability to successfully defend against litigation;

our ability to maintain the integrity of our information systems and infrastructure, and to mitigate possible cyber security risks;

our ability to generate sufficient cash flows or raise additional capital necessary to fund our operations; and

other factors detailed under the section entitled “Risk Factors.”

Actual results may differ materially and adversely from those expressed in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document, or in the case of statements incorporated by reference, on the date of the document incorporated by reference. While we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Factors that might cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, under the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2022, under the section entitled “Risk Factors,” in our press releases, and in our other filings with the SEC.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of new information, future events, or risks. New information, future events, or risks may cause the forward-looking events we discuss in this report not to occur.

VIVID SEATS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data) (Unaudited)


	June 30,			December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	287,811		$	489,530
Restricted cash		219			280
Accounts receivable – net		44,373			36,124
Inventory – net		21,202			11,773
Prepaid expenses and other current assets		59,306			72,504
Total current assets		412,911			610,211
Property and equipment – net		3,293			1,082
Right-of-use assets – net		8,806			—
Intangible assets – net		80,067			78,511
Goodwill		715,258			718,204
Other non-current assets		2,717			787
Total assets	$	1,223,052		$	1,408,795
Liabilities and shareholders’ deficit
Current liabilities:
Accounts payable	$	191,454		$	191,201
Accrued expenses and other current liabilities		246,157			281,156
Deferred revenue		32,657			25,139
Current maturities of long-term debt – net		2,750			—
Total current liabilities		473,018			497,496
Long-term debt – net		265,902			460,132
Long-term lease liabilities		9,386			—
Other liabilities		17,414			25,834
Total long-term liabilities		292,702			485,966
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests		882,954			1,286,016

Shareholders' deficit
Class A common stock, $0.0001 par value; 500,000,000 shares authorized at June 30, 2022 and December 31, 2021; 79,241,032 and 79,091,871 issued and outstanding at June 30, 2022 and December 31, 2021, respectively		8			8
Class B common stock, $0.0001 par value; 250,000,000 shares authorized, 118,200,000 issued and outstanding at June 30, 2022 and December 31, 2021		12			12
Additional paid-in capital		606,238			182,091
Accumulated deficit		(1,031,880	)		(1,042,794	)
Total Shareholders' deficit		(425,622	)		(860,683	)
Total liabilities, Redeemable noncontrolling interests, and Shareholders' deficit	$	1,223,052		$	1,408,795

The accompanying notes are an integral part of these financial statements.

VIVID SEATS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for per share data) (Unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Revenues	$	147,694		$	115,498	$	278,466		$	139,612
Costs and expenses:
Cost of revenues (exclusive of depreciation and amortization shown separately below)		32,422			19,986		64,586			23,911
Marketing and selling		59,412			46,422		113,640			54,377
General and administrative		36,207			29,106		65,482			44,977
Depreciation and amortization		1,726			500		3,111			795
Income from operations		17,927			19,484		31,647			15,552
Other (income) expense:
Interest expense – net		2,699			16,839		6,641			33,158
Loss on extinguishment of debt		—			—		4,285			—
Other income		(8,832	)		—		(6,553	)		—
Income (loss) before income taxes		24,060			2,645		27,274			(17,606	)
Income tax expense		—			—		76
Net income (loss)		24,060			2,645		27,198			(17,606	)
Net income (loss) attributable to Hoya Intermediate, LLC shareholders prior to reverse recapitalization		—			2,645		—			(17,606	)
Net income attributable to redeemable noncontrolling interests		14,405			—		16,284			—
Net income attributable to Class A Common Stockholders	$	9,655		$	—	$	10,914		$	—

Income per Class A Common Stock(1):
Basic	$	0.12				$	0.14
Diluted	$	0.12				$	0.14
Weighted average Class A Common Stock outstanding(1):
Basic		79,256,354					79,204,430
Diluted		79,259,017					79,737,582

(1) There were no shares of Class A Common Stock outstanding prior to October 18, 2021. Therefore, no income (loss) per share information has been presented for any period prior to that date.

The accompanying notes are an integral part of these financial statements.

VIVID SEATS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands) (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss)	$	24,060	$	2,645	$	27,198	$	(17,606	)
Other comprehensive income (loss):
Unrealized gain on derivative instruments		—		270		—		513
Comprehensive income (loss), net of taxes	$	24,060	$	2,915	$	27,198	$	(17,093	)
Comprehensive income (loss) attributable to Hoya Intermediate, LLC shareholders prior to reverse recapitalization		—		2,915		—		(17,093	)
Comprehensive income attributable to redeemable noncontrolling interests		14,405		—		16,284		—
Comprehensive income attributable to Class A Common Stockholders	$	9,655	$	—	$	10,914	$	—

The accompanying notes are an integral part of these financial statements.

VIVID SEATS INC.

CONDENSED CONSOLIDATED STATEMENTS OF DEFICIT

(in thousands, except share/unit data) (Unaudited)


	Redeemable Senior preferred units				Redeemable Preferred units				Common units
	Units		Amount		Units		Amount		Units		Amount		Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive income (loss)			Total members' deficit
Balances at January 1, 2021		100	$	218,288		100	$	9,939		100	$	—	$	755,716		$	(1,026,675	)	$	(822	)	$	(271,781	)
Net loss		—		—		—		—		—		—		—			(20,251	)		—			(20,251	)
Unrealized gain on derivative instruments		—		—		—		—		—		—		—			—			243			243
Deemed contribution from former parent		—		—		—		—		—		—		1,091			—			—			1,091
Accretion of senior preferred units		—		6,822		—		—		—		—		(6,822	)		—			—			(6,822	)
Balances at March 31, 2021		100	$	225,110		100	$	9,939		100	$	—	$	749,985		$	(1,046,926	)	$	(579	)	$	(297,520	)
Net income		—		—		—		—		—		—		—			2,645			—			2,645
Unrealized gain on derivative instruments		—		—		—		—		—		—		—			—			270			270
Deemed contribution from former parent		—		—		—		—		—		—		1,183			—			—			1,183
Accretion of senior preferred units		—		6,821		—		—		—		—		(6,821	)		—			—			(6,821	)
Balances at June 30, 2021		100	$	231,931		100	$	9,939		100	$	—	$	744,347		$	(1,044,281	)	$	(309	)	$	(300,243	)

VIVID SEATS INC.

CONDENSED CONSOLIDATED STATEMENTS OF DEFICIT

(in thousands, except share/unit data) (Unaudited)


			Class A Common Stock				Class B Common Stock
	Redeemable noncontrolling interests		Shares		Amount		Shares		Amount		Additional paid-in capital			Accumulated deficit			Total shareholders' deficit
Balances at January 1, 2022	$	1,286,016		79,091,871	$	8		118,200,000	$	12	$	182,091		$	(1,042,794	)	$	(860,683	)
Net income		1,879		—		—		—		—		—			1,259			1,259
Issuance of shares		—		75,072		—		—		—		—			—			—
Deemed contribution from former parent		691		—		—		—		—		463			—			463
Equity-based compensation		—		—		—		—		—		2,443			—			2,443
Subsequent remeasurement of Redeemable noncontrolling interests		18,706		—		—		—		—		(18,706	)		—			(18,706	)
Balances at March 31, 2022	$	1,307,292		79,166,943	$	8		118,200,000	$	12	$	166,291		$	(1,041,535	)	$	(875,224	)
Net income		14,405		—		—		—		—		—			9,655			9,655
Issuance of shares		—		74,089		—		—		—		—			—			—
Deemed contribution from former parent		699		—		—		—		—		468			—			468
Equity-based compensation		—		—		—		—		—		4,145			—			4,145
Distributions to non-controlling interest