10-Q
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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 March 31, 2023

OR

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.)

24 E. Washington Street

Suite 900

Chicago, Illinois

 

 

60602

(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 April 30, 2023, the registrant had 77,676,300 shares of Class A common stock, $0.0001 par value per share, outstanding, net of treasury shares 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

5

Condensed Consolidated Statements of Deficit

6

Condensed Consolidated Statements of Cash Flows

7

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

30

 

PART II.

OTHER INFORMATION

31

 

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults Upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

31

Item 6.

Exhibits

33

Signatures

35

 

 


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 are based on our current expectations and beliefs and 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:

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:
o
the impact of the pandemic on our business and the industries in which we operate;
o
our ability to compete in the ticketing industry;
o
our ability to maintain relationships with ticket buyers, sellers and distribution partners;
o
our ability to continue to improve our platform and maintain and enhance our brand;
o
the impact of extraordinary events or adverse economic conditions on discretionary consumer and corporate spending or on the supply and demand of live events;
o
our ability to comply with domestic regulatory regimes;
o
our ability to successfully defend against litigation;
o
our ability to maintain the integrity of our information systems and infrastructure, and to mitigate possible cyber security risks;
o
our ability to generate sufficient cash flows or raise additional capital necessary to fund our operations; and
o
other factors detailed under the section entitled “Risk Factors.”

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, 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.

1


 

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, 2022, which was filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2023, 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.

2


VIVID SEATS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

303,319

 

 

$

251,542

 

Restricted cash

 

 

675

 

 

 

748

 

Accounts receivable – net

 

 

46,531

 

 

 

36,531

 

Inventory – net

 

 

24,153

 

 

 

12,783

 

Prepaid expenses and other current assets

 

 

33,329

 

 

 

29,912

 

Total current assets

 

 

408,007

 

 

 

331,516

 

Property and equipment – net

 

 

10,308

 

 

 

10,431

 

Right-of-use assets – net

 

 

7,710

 

 

 

7,859

 

Intangible assets – net

 

 

81,800

 

 

 

81,976

 

Goodwill

 

 

715,258

 

 

 

715,258

 

Other non-current assets

 

 

4,432

 

 

 

4,391

 

Total assets

 

$

1,227,515

 

 

$

1,151,431

 

Liabilities and shareholders’ deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

218,138

 

 

$

161,312

 

Accrued expenses and other current liabilities

 

 

183,765

 

 

 

181,970

 

Deferred revenue

 

 

25,920

 

 

 

31,983

 

Current maturities of long-term debt

 

 

2,750

 

 

 

2,750

 

Total current liabilities

 

 

430,573

 

 

 

378,015

 

Long-term debt – net

 

 

264,384

 

 

 

264,898

 

Long-term lease liabilities

 

 

14,850

 

 

 

14,911

 

Other liabilities

 

 

13,118

 

 

 

13,445

 

Total long-term liabilities

 

 

292,352

 

 

 

293,254

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

901,866

 

 

 

862,860

 

 

 

 

 

 

 

 

Shareholders' deficit

 

 

 

 

 

 

Class A common stock, $0.0001 par value; 500,000,000 shares authorized at March 31, 2023 and December 31, 2022; 82,902,276 and 82,410,774 issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

9

 

 

 

8

 

Class B common stock, $0.0001 par value; 250,000,000 shares authorized, 118,200,000 issued and outstanding at March 31, 2023 and December 31, 2022

 

 

12

 

 

 

12

 

Additional paid-in capital

 

 

644,759

 

 

 

663,908

 

Treasury stock, at cost, 5,291,497 and 4,342,477 shares at March 31, 2023 and December 31, 2022, respectively

 

 

(40,106

)

 

 

(32,494

)

Accumulated deficit

 

 

(1,001,950

)

 

 

(1,014,132

)

Total Shareholders' deficit

 

 

(397,276

)

 

 

(382,698

)

Total liabilities, Redeemable noncontrolling interests, and Shareholders' deficit

 

$

1,227,515

 

 

$

1,151,431

 

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

3


VIVID SEATS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Revenues

 

$

161,063

 

 

$

130,772

 

Costs and expenses:

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

 

37,760

 

 

 

32,164

 

Marketing and selling

 

 

54,772

 

 

 

54,228

 

General and administrative

 

 

32,389

 

 

 

29,275

 

Depreciation and amortization

 

 

2,598

 

 

 

1,385

 

Change in fair value of contingent consideration

 

 

34

 

 

 

 

Income from operations

 

 

33,510

 

 

 

13,720

 

Other (income) expense:

 

 

 

 

 

 

Interest expense – net

 

 

3,280

 

 

 

3,942

 

Loss on extinguishment of debt

 

 

 

 

 

4,285

 

Other (income) expense

 

 

(327

)

 

 

2,279

 

Income before income taxes

 

 

30,557

 

 

 

3,214

 

Income tax expense

 

 

285

 

 

 

76

 

Net income

 

 

30,272

 

 

 

3,138

 

Net income attributable to redeemable noncontrolling interests

 

 

18,090

 

 

 

1,879

 

Net income attributable to Class A Common Stockholders

 

$

12,182

 

 

$

1,259

 

 

 

 

 

 

 

 

Income per Class A common stock:

 

 

 

 

 

 

Basic

 

$

0.16

 

 

$

0.02

 

Diluted

 

$

0.15

 

 

$

0.02

 

Weighted average Class A common stock outstanding:

 

 

 

 

 

 

Basic

 

 

77,410,820

 

 

 

79,151,929

 

Diluted

 

 

195,823,982

 

 

 

198,414,147

 

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

4


VIVID SEATS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) (Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Net income

 

$

30,272

 

 

$

3,138

 

Other comprehensive income:

 

 

 

 

 

 

Comprehensive income, net of taxes

 

$

30,272

 

 

$

3,138

 

Comprehensive income attributable to redeemable noncontrolling interests

 

 

18,090

 

 

 

1,879

 

Comprehensive income attributable to Class A Common Stockholders

 

$

12,182

 

 

$

1,259

 

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

5


VIVID SEATS INC.

CONDENSED CONSOLIDATED STATEMENTS OF DEFICIT

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

 

 

 

 

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional paid-in capital

 

 

Shares

 

 

Amount

 

 

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

)

 

 

 

 

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional paid-in capital

 

 

Shares

 

 

Amount

 

 

Accumulated deficit

 

 

Total shareholders' deficit

 

Balances at January 1, 2023

 

$

862,860

 

 

 

82,410,774

 

 

$

8

 

 

 

118,200,000

 

 

$

12

 

 

$

663,908

 

 

 

(4,342,477

)

 

$

(32,494

)

 

$

(1,014,132

)

 

$

(382,698

)

Net income

 

 

18,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,182

 

 

 

12,182

 

Issuance of shares

 

 

 

 

 

491,502

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Deemed contribution from former parent

 

 

577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

391

 

 

 

 

 

 

 

 

 

 

 

 

391

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,615

 

 

 

 

 

 

 

 

 

 

 

 

4,615

 

Repurchases of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(949,020

)

 

 

(7,612

)

 

 

 

 

 

(7,612

)

Distributions to non-controlling interest

 

 

(3,816

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsequent remeasurement of Redeemable noncontrolling interests

 

 

24,155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,155

)

 

 

 

 

 

 

 

 

 

 

 

(24,155

)

Balances at March 31, 2023

 

$

901,866

 

 

 

82,902,276

 

 

$

9

 

 

 

118,200,000

 

 

$

12

 

 

$

644,759

 

 

 

(5,291,497

)

 

$

(40,106

)

 

$

(1,001,950

)

 

$

(397,276

)

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

6


VIVID SEATS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

30,272

 

 

$

3,138

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

2,598

 

 

 

1,385

 

Amortization of deferred financing costs and interest rate cap

 

 

226

 

 

 

329

 

Equity-based compensation expense

 

 

5,530

 

 

 

3,597

 

Loss on extinguishment of debt

 

 

 

 

 

4,285

 

Change in fair value of warrants

 

 

(327

)

 

 

2,279

 

Amortization of leases

 

 

150

 

 

 

490

 

Loss on asset disposals

 

 

7

 

 

 

 

Change in fair value of contingent consideration

 

 

34

 

 

 

 

Change in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(10,000

)

 

 

(17,854

)

Inventory

 

 

(11,370

)

 

 

(6,126

)

Prepaid expenses and other current assets

 

 

(3,417

)

 

 

(3,252

)

Accounts payable

 

 

56,826

 

 

 

45,094

 

Accrued expenses and other current liabilities

 

 

444

 

 

 

(10,599

)

Deferred revenue

 

 

(6,063

)

 

 

3,094

 

Other assets and liabilities

 

 

201

 

 

 

(2,326

)

Net cash provided by operating activities

 

 

65,111

 

 

 

23,534

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(215

)

 

 

(693

)

Investments in developed technology

 

 

(2,027

)

 

 

(2,748

)

Purchases of personal seat licenses

 

 

(365

)

 

 

 

Net cash used in investing activities

 

 

(2,607

)

 

 

(3,441

)

Cash flows from financing activities

 

 

 

 

 

 

Payments of February 2022 First Lien Loan

 

 

(688

)

 

 

 

Repurchase of common stock as treasury stock

 

 

(7,612

)

 

 

 

Cash paid for milestone payments

 

 

(2,500

)

 

 

 

Payments of June 2017 First Lien Loan

 

 

 

 

 

(465,712

)

Proceeds from February 2022 First Lien Loan

 

 

 

 

 

275,000

 

Payments of deferred financing costs and other debt-related costs

 

 

 

 

 

(4,856

)

Net cash used in financing activities

 

 

(10,800

)