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What changed in Vivid Seats Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Vivid Seats Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+593 added−574 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-07)

Top changes in Vivid Seats Inc.'s 2023 10-K

593 paragraphs added · 574 removed · 457 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

92 edited+28 added−13 removed13 unchanged
Biggest changeWe have several competitive advantages that enable us to maintain and grow our position as a leading secondary ticket provider: • wide selection of listings and ticketing options; • competitive pricing; • Vivid Seats Rewards, the most comprehensive loyalty program among our key competitors; • full-service marketplace with excellent customer service; • proprietary performance marketing algorithms supported by first-party and real-time data; • scale, profitable unit economics and strong balance sheet; • close relationships with, and excellent customer service provided to, our professional ticket sellers and • free-to-use Skybox ERP for professional ticket sellers, the most widely adopted in the industry.
Biggest changeOur main competitive factors are: • the availability and variety of ticket offerings; • pricing, including in the primary ticket market; • acquiring customer traffic by way of internet search engines impacting customer acquisition and marketing costs; • brand recognition; and • technology, including functionality and ease of use to search for offerings and complete a purchase. 9 We have several competitive advantages that enable us to maintain and grow our position as a leading ticket provider: • wide selection of listings and ticketing options; • competitive pricing; • Vivid Seats Rewards, the most comprehensive loyalty program among our key competitors; • full-service marketplace with excellent customer service; • proprietary performance marketing algorithms supported by real-time first-party data; • local market authority and key supplier partnerships for our Vegas.com property; • scale, profitable unit economics and a strong balance sheet; • close relationships with, and excellent customer service provided to, professional ticket sellers; and • free-to-use Skybox ERP for professional ticket sellers, the most widely adopted ERP in the industry.
Our proprietary Skybox platform helps ticket sellers manage their inventory, set pricing, fulfill orders, and track sales. We have a proud history of innovating to support our ticket sellers and continue to develop additional tools and service offerings that address existing problems or add efficiency to the sales and fulfillment process.
Our proprietary Skybox platform helps ticket sellers manage their inventory, set pricing, fulfill orders and track sales. We have a proud history of innovating to support ticket sellers and continue to develop additional tools and service offerings that address existing problems or add efficiency to the sales and fulfillment process.
Although we have restored our refund policies to be consistent with our policies pre-pandemic, such changes to our refund practices have drawn the attention of, and inquiry from, various attorneys general and other regulators. We are subject to laws and regulations that affect companies conducting business on the Internet in many jurisdictions where we operate.
Although we 10 have restored our refund policies to be consistent with our policies pre-pandemic, such changes to our refund practices have drawn the attention of, and inquiry from, various attorneys general and other regulators. We are subject to laws and regulations that affect companies conducting business on the internet in many jurisdictions where we operate.
Our scalable, reliable and performant systems power a consumer and partner-facing platform that supports ticket buyers while our tools power inventory management and ticket fulfillment for ticket sellers. Buyer Technology and Products Our consumer systems are designed to respond to the dynamic, fast-paced landscape of the live events industry.
Our scalable, reliable and performant systems power a consumer and partner-facing platform that supports ticket buyers while our tools power inventory management and ticket fulfillment for ticket sellers and partners. Buyer Technology and Products Our consumer systems are designed to respond to the dynamic, fast-paced landscape of the live events industry.
We are proud to partner with national and local community organizations including Make-A-Wish®, MusiCares, Chicago’s Lurie Children’s Hospital and Ronald McDonald house where our employees have provided care packages, donated wish list gifts, and hosted patients and families at live events.
We are proud to partner with national and local community organizations – including Make-A-Wish, MusiCares, Chicago’s Lurie Children’s Hospital and Ronald McDonald House Charities – where our employees have provided care packages, donated wish list gifts, and hosted patients and families at live events.
We leverage the latest technologies in search, customer relationship management and data analytics and incorporate these capabilities into our advanced and flexible infrastructure. Seller Technology and Products Skybox, our premier ERP, enables ticket sellers to manage, price and fulfill their inventory.
We leverage the latest technologies in search, customer relationship management and data analytics and incorporate these capabilities into our advanced and flexible infrastructure. 7 Seller Technology and Products Skybox, our premier ERP, enables ticket sellers to manage, price and fulfill their inventory.
Our key competitors are StubHub, Ticketmaster, SeatGeek and TicketNetwork. 9 With our real money daily fantasy sports offering on our Vivid Picks app, we face a highly competitive gaming market, including other free-to-play and real money online gaming and daily fantasy sports providers. We provide a differentiated product and experience to users with an easy-to-use app with simple player props.
Our key competitors are StubHub, Ticketmaster, SeatGeek and TicketNetwork. With our Vivid Picks daily fantasy sports offering, we face a highly competitive gaming market, including other free-to-play and real money online gaming and daily fantasy sports providers. We provide a differentiated product and experience to users with an easy-to-use app with simple player props.
Our Resale segment also provides internal research and development support for Skybox and our ongoing efforts to deliver industry-leading seller software and tools. Our Growth Strategies New Customer Acquisition via Performance Marketing Fans interested in attending live events frequently utilize internet search engines to browse tickets.
Our Resale segment also provides internal research and development support for Skybox and our ongoing efforts to deliver industry-leading seller software and tools. Our Growth Strategies New Customer Acquisition via Performance Marketing and Alternative Channels Fans interested in attending live events frequently utilize internet search engines to browse tickets.
We see opportunities to create engaging and delightful experiences through a wide range of event ticket listings, relevant content, curated recommendations and a seamless checkout process. We power that experience through a host of technology systems that consider historical transactional and engagement behavior, proximity and ticket buyer preferences.
We seek opportunities to create engaging and delightful experiences through a wide range of event ticket listings, relevant content, curated recommendations and a seamless checkout process. We power that experience through a host of technology systems that consider historical transactional and engagement behavior, proximity and ticket buyer preferences.
Skybox allows ticket sellers to more effectively move their inventory, which in turn helps to increase the number of orders transacted in our marketplace. Partner Technology and Products 7 Our platform allows distribution partners to bring additional ticket buyer demand into our ecosystem.
Skybox allows ticket sellers to more effectively move their inventory, which in turn helps to increase the number of orders transacted in our marketplace. Partner Technology and Products Our platform allows distribution and supplier partners to bring additional ticket buyer demand into our ecosystem.
From time to time, federal, state, local and international authorities and/or consumers commence investigations, inquiries or litigation with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar or related laws) and other laws, particularly as related to ticket resale services.
From time to time, federal, state, local and international authorities and/or individuals commence investigations, inquiries or litigation with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar or related laws) and other laws, particularly as related to ticket resale services.
Additionally, with Vivid Picks we provide an adjacent opportunity for our sports fans to partake in a fun, interactive gamification experience where they can play and win real money. Develop Additional Seller Tools and Services We enable our ticket sellers to thrive by offering products and services that support their business needs.
Additionally, Vivid Picks provides an adjacent opportunity for our sports fans to partake in a fun, interactive gamification experience where they can play and win real money. Develop Additional Seller Tools and Services We enable ticket sellers to thrive by offering products and services that support their business needs.
We will continue to seek out mutually beneficial partnerships in our existing ecosystem and other categories that improve the experience for our customers while leveraging our existing brand, traffic and reputation. Our Platform Modern Technology that Delivers a Seamless Experience Our “built in the cloud” technology platform supports all elements of the customer experience.
We will continue to seek out mutually beneficial partnerships in our existing ecosystem and other categories that improve our customers’ experience while leveraging our existing brand, traffic and reputation. Our Platform Modern Technology that Delivers a Seamless Experience Our “built in the cloud” technology platform supports all elements of the customer experience.
We have partnered with well-known media companies to integrate our branding, promotions and links to allow their users to access and purchase tickets from us. By working with media partners, we broaden our reach and cultivate brand awareness with high-value live event fans. We enhance their users' experiences by providing a wide variety of tickets at competitive prices.
We partner with well-known media companies to integrate our branding, promotions and links to allow their users to access and purchase tickets from us. By working with media partners, we broaden our reach and cultivate brand awareness with high-value live event fans. We also enhance their users' experiences by providing a wide variety of tickets at competitive prices.
As ticket buyers gain a full appreciation of our value proposition relative to other ticketing marketplaces, we anticipate they will increasingly choose us over other marketplaces and make purchases more frequently. We typically incur lower marketing costs from repeat customers that go directly to our website and mobile application to browse and place orders.
As ticket buyers gain a full appreciation of our value proposition relative to other ticketing marketplaces, we anticipate they will increasingly choose us over other marketplaces and make purchases more frequently. We typically incur lower marketing costs from repeat customers that go directly to our websites and mobile applications to browse and place orders.
Distribution partners can integrate our event feeds and ticket listings into their online properties through application programming interfaces (“APIs”) or fully-managed web sites. We also provide turn-key checkout, customer service and fulfillment.
Distribution partners can integrate our event feeds and ticket listings into their online properties through application programming interfaces (“APIs”) or fully-managed websites. We also provide turn-key checkout, customer service and fulfillment.
Within each of these categories, there are a broad range of productions that provide further diversification: • Sports. The sports category includes the four major professional leagues (MLB, NFL, NBA and NHL), college sports and a wide variety of other sporting activities including soccer, racing and minor league baseball. • Concerts.
Within each of these categories, there are a broad range of productions that provide further diversification: • Sports. Includes the four major professional leagues (MLB, NFL, NBA and NHL), college sports and a wide variety of other sporting activities such as soccer, racing and minor league baseball. • Concerts.
Customers can search for an event, buy or sell a ticket, engage with curated content, and contact customer support. Our technology mission is to continually innovate and deliver market-leading products and services that support the evolving needs and preferences of ticket buyers, ticket sellers and daily fantasy sports users.
Customers can search for an event, buy or sell a ticket, engage with curated content, and contact customer support. Our technology mission is to continually innovate and deliver market-leading products and services that support the evolving needs and preferences of ticket buyers, sellers and partners, as well as Vivid Picks daily fantasy sports users.
Our 100% buyer guarantee provides full-service customer care, safe and secure transactions and valid tickets, which are delivered before the event. Our ticket buyers receive compensation for late delivery of tickets and cancelled events. Live event tickets are often a significant purchase.
This guarantee provides full-service customer care, safe and secure transactions and valid tickets, which are delivered before the event. Since live event tickets are often a significant purchase, our ticket buyers receive compensation for late delivery of tickets and cancelled events.
The concert category includes musical acts across a broad range of genres touring across major venues, small venues, and music festivals. • Theater. The theater category includes Broadway and off-Broadway plays and musicals, family entertainment events, comedy acts, and speaker series. Resale In our Resale segment, we acquire tickets to resell on secondary ticket marketplaces, including our own.
Includes musical acts across a broad range of genres touring across major venues, small venues and music festivals. • Theater. Includes Broadway and off-Broadway plays and musicals, family entertainment events, other stage shows, comedy acts and speaker series. Resale In our Resale segment, we acquire tickets to resell on secondary ticket marketplaces, including our own.
This offering increases the number of ticket buyers and sellers accessing our platform, allowing us to leverage our scale to drive operational and marketplace efficiencies while enabling our partners to offer additional products to their customers. Technology Infrastructure Our platform is extensible and flexible.
This offering increases the number of ticket buyers and sellers accessing our platform, allowing us to leverage our scale to drive operational and marketplace efficiencies while enabling our partners to offer additional products to their customers.
Name Age Executive Officer Since Position Stanley Chia 41 2018 Chief Executive Officer and Director Lawrence Fey 42 2020 Chief Financial Officer Riva Bakal 38 2021 Chief Product and Strategy Officer Emily Epstein 45 2022 General Counsel Jon Wagner 50 2018 Chief Technology Officer Lawrence Fey. Mr.
Name Age Executive Officer Since Position Stanley Chia 42 2018 Chief Executive Officer and Director Lawrence Fey 43 2020 Chief Financial Officer Riva Bakal 39 2021 Chief Product and Strategy Officer Emily Epstein 45 2022 General Counsel Jon Wagner 51 2018 Chief Technology Officer Lawrence Fey. Mr.
In March of 2021, we incorporated an entity in Delaware for the purpose of completing the transactions contemplated by the transaction agreement dated April 21, 2021 (the “Transaction Agreement”) among Horizon Acquisition Corporation (“Horizon”), a publicly traded special purpose acquisition company, Horizon Sponsor, LLC, a Delaware limited liability company (“Horizon Sponsor”), Hoya Intermediate, LLC, a Delaware limited liability company (“Hoya Intermediate”), and Hoya Topco, LLC, a Delaware limited liability company (“Hoya Topco”).
In March of 2021, Vivid Seats Inc. was incorporated in Delaware for the purpose of completing the transactions contemplated by the transaction agreement, dated April 21, 2021 (the “Transaction Agreement”), among Vivid Seats Inc., Horizon Acquisition Corporation, a publicly traded special purpose acquisition company (“Horizon”), Horizon Sponsor, LLC, a Delaware limited liability company (“Horizon Sponsor”), Hoya Intermediate, LLC, a Delaware limited liability company (“Hoya Intermediate"), and Hoya Topco, LLC, a Delaware limited liability company (“Hoya Topco”).
As we increase the quality and depth of our seller tools and service offerings, we will attract additional sellers and listings to our platform, reinforce our existing seller relationships and help sellers improve the efficiency of their business processes. We anticipate this will result in more transactions in our marketplace.
As we increase the quality and depth of our seller tools and service offerings, we will attract additional sellers and listings to our platform, reinforce our existing seller relationships and help sellers improve the efficiency of their business processes.
DeFlorio was Managing Director of Deutsche Bank AG Retail/Consumer Sector Investment Banking Coverage from 2007 to 2013. From 2002 to 2007, Ms. DeFlorio was an Executive Director in the Investment Banking Consumer and Retail Group at UBS Investment Bank. Ms. DeFlorio has served on the Board of SITE Centers Corp.
DeFlorio served as Managing Director of Retail and Consumer Sector Investment Banking Coverage at Deutsche Bank AG from 2007 to 2013. From 2002 to 2007, she was an Executive Director in the Investment Banking Consumer and Retail Group at UBS Investment Bank. Ms. DeFlorio also serves on the boards of directors of SITE Centers Corp.
A key component of our platform is Skybox, a proprietary enterprise resource planning (“ERP”) tool used by the majority of our 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.
We also incur substantial marketing costs, primarily related to online advertising. A key component of our platform is Skybox, a proprietary enterprise resource planning (“ERP”) tool 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.
We further protect our intellectual property through contractual provisions with employees, customers, suppliers, partners, affiliates and others, including, but not limited to, employee confidentiality and intellectual property assignment agreements, and commercial contracts that protect our intellectual property and other confidential information.
We further seek to protect our intellectual property through contractual provisions with employees, customers, suppliers, partners, affiliates and others, including, but not limited to, employee confidentiality and intellectual property assignment agreements, and commercial contracts that protect our intellectual property and confidential information. Seasonality Our financial results can be impacted by seasonality.
At our Investor Relations website, investors.vividseats.com, we make available free of charge a variety of information for investors, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC.
We make available free of charge on our Investor Relations 11 website a variety of information for investors, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
We do not hold ticket inventory in our Marketplace segment. We primarily earn revenue from service and delivery fees charged to ticket buyers. We also earn referral fee revenue by offering event ticket insurance to ticket buyers, using a third-party insurance provider.
We primarily earn revenue from service and delivery fees charged to ticket buyers. We also earn referral fee revenue by offering event ticket insurance to ticket buyers, using a third-party insurance provider.
Our Marketplace segment also includes our daily fantasy sports offering, where users partake in contests by making picks from a variety of sport and player matchups. Using our online platform, customers are able to make payments, deposits and withdrawals, and we coordinate ticket deliveries, and provide customer service to our ticket buyers and sellers and daily fantasy sports users.
Our Marketplace segment also includes our Vivid Picks daily fantasy sports offering, where users partake in contests by making picks from a variety of sport and player matchups. 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.
We can also scale our platform to meet changing levels of ticket buyer demand and evolving ticket seller needs. Third-Party Developers Our APIs allow a broad ecosystem of third-party tools and systems to integrate with our platform. Third-party tools integrate with our marketplace ticket broker API and ticket broker portal to streamline and automate the sales and fulfillment process.
We can also scale our platform to meet changing levels of ticket buyer demand and evolving ticket seller and partner needs. Third-Party Developers Our APIs allow a broad ecosystem of third-party tools and systems to integrate with our platform.
Expand our Partnerships Partnerships are an important and additive part of our ecosystem. They help generate ticket sales, drive traffic to our website and mobile applications and build brand recognition. Our partner ecosystem includes: 6 • Media Partners .
We anticipate this will result in more transactions on our marketplace. 6 Expand Our Partnerships Partnerships are an important and additive part of our ecosystem. They help generate ticket sales, drive traffic to our websites and mobile applications and build brand recognition. Our partner ecosystem includes: • Media Partners .
He is a member of the Board of Trustees of Episcopal High School. Mr. Dixon graduated from the College of William & Mary and William & Mary School of Law. David Donnini . Mr. Donnini joined GTCR in 1991 and is currently a Managing Director. Prior to joining GTCR, Mr. Donnini worked at Bain & Company. Mr.
Dixon is a graduate of the College of William & Mary and William & Mary School of Law. David Donnini. Mr. Donnini joined GTCR LLC, a private equity firm, in 1991 and is currently a Managing Director. Prior to joining GTCR, he worked at Bain & Company. Mr.
For example, we are required to comply with federal, state and international laws regarding privacy and the storing, sharing, use, disclosure and protection of personally identifiable information and user data, an area that is increasingly subject to legislation and regulations in numerous jurisdictions, including the California Consumer Privacy Act.
For example, privacy and the storing, sharing, use, disclosure and protection of personally identifiable information and user data is an area that is increasingly subject to federal, state and international legislation and regulations with which we must comply.
Our most recent brand campaign connects Vivid Seats with the number 11 and drives awareness of the key tenet of our Vivid Seats Rewards program, the free 11 th ticket. We offer a reliable and secure experience for ticket buyers. We provide our buyers with award-winning customer service and a 100% buyer guarantee.
Our brand campaigns connect Vivid Seats with the number 11 and drive awareness of the key tenet of Vivid Seats Rewards loyalty — the free 11 th ticket. We offer a reliable and secure experience for our buyers by providing them with award-winning customer service and a 100% buyer guarantee.
(NASDAQ: GOGO) since March 2021, where he is a member of Nominating and Corporate Governance Committee and also serves on the boards of CommerceHub and Jet Support Services Inc. Mr. Anderson graduated from the University of Virginia and Harvard Business School. Todd Boehly . From June 2020 to October 2021, Mr.
Anderson also serves on the boards of directors of Gogo Inc. (Nasdaq: GOGO), where he is a member of the nominating and corporate governance committee, CommerceHub, Jet Support Services, Inc., Lexipol and Point Broadband. Mr. Anderson is a graduate of the University of Virginia and Harvard Business School. Todd Boehly. Mr.
In 2022 we were named to Built In Chicago’s Best Places to Work and Fast Company’s Best Workplaces for Innovators lists. Our employees give us a competitive advantage. To support our employees, we have built a company culture that empowers them to embrace challenges, collaborate freely and seek to constantly evolve.
In 2023, we were proud to be named to Built In Chicago’s Best Places to Work and Chicago Innovation Awards lists. Our talented employees give us a competitive advantage. To support our employees, we have built and strive to maintain a company culture that empowers them to embrace challenges, collaborate freely and seek to constantly evolve.
Boehly serves on the board of directors of Kennedy-Wilson Holdings (NYSE: KW), the Los Angeles Lakers, Flexjet, PayActiv, CAIS, and Cain International. Mr. Boehly graduated from the College of William & Mary. He also studied at the London School of Economics. Jane DeFlorio . Ms.
From 2002 to 2015, he worked at Guggenheim Partners, most recently as President. Mr. Boehly also serves on the boards of directors of Kennedy-Wilson Holdings (NYSE: KW), the Los Angeles Lakers, Flexjet, PayActiv, CAIS and Cain International. Mr. Boehly is a graduate of the College of William & Mary and studied at the London School of Economics. Jane DeFlorio. Ms.
The main objectives of our human capital resources are identifying, recruiting, developing, incentivizing and retaining our existing and new employees. Our talent management team identifies key positions based on current and future business strategies and creates robust programs for talent development, including evaluating bench strength, building redundancy, and identifying potential successors.
Our talent management team identifies key positions based on current and future business strategies and creates robust programs for talent development, including evaluating bench strength, building redundancy, and identifying potential successors.
Corporate Information Vivid Seats was founded in 2001, and in 2004, we launched our website www.vividseats.com. In 2010, we launched our marketplace platform, which we scaled rapidly while we developed and refined our proprietary systems to enable us to best serve our customers.
In 2010, we launched our marketplace platform, which we scaled rapidly while we developed and refined our proprietary systems to enable us to best serve our customers.
Fey joined Vivid Seats in April 2020 and served as a member of our Board from July 2017 through February 2020. From 2005 until 2020, he worked at GTCR, a private equity firm, most recently serving as a Managing Director. While at GTCR, Mr.
Fey has served as our Chief Financial Officer since April 2020, and previously served as a member of our Board from 2017 to February 2020. From 2005 to March 2020, he worked at GTCR LLC, a private equity firm, most recently serving as a Managing Director. While at GTCR, Mr.
We launched Skybox in 2014, a free-to-use cloud-based ERP tool for sellers to manage their business, and first deployed our mobile application in 2015 to capture the increasing volume of tickets purchased through mobile channels. In 2019, we launched our loyalty program, and have since focused on building long-term customer value thorough brand affinity and a differentiated value proposition.
In 2014, we launched Skybox, a free-to-use cloud-based ERP tool for sellers to manage their businesses, and first deployed our mobile application in 2015 to capture the increasing volume of tickets purchased through mobile channels.
Bakal is a graduate of the Massachusetts Institute of Technology and Harvard Business School. Emily Epstein. Ms. Epstein joined Vivid Seats in October 2022. From January 2022 to July 2022, Ms. Epstein was General Counsel at Datto, Inc. From December 2020 to January 2022, she was Deputy General Counsel & Corporate Secretary for Coupang, Inc.
Bakal is a graduate of the Massachusetts Institute of Technology and Harvard Business School. Emily Epstein. Ms. Epstein has served as our General Counsel since joining Vivid Seats in October 2022. From January to July 2022, she served as General Counsel at Datto, Inc., a security and cloud-based software solutions provider. From December 2020 to January 2022, Ms.
Masino has served as the President, International of Taco Bell, a subsidiary of Yum! Brands (NYSE: YUM). From January 2018 to December 2019, Ms. Masino served as President, North America of Taco Bell. Ms. Masino held senior positions at Mattel (NASDAQ: MAT) from April 2017 to January 2018 and at Sprinkles Cupcakes from 2014 to 2017. Ms.
(NYSE: YUM), from January 2020 to June 2023 and as President, North America at Taco Bell from 2018 to December 2019. Ms. Masino previously held senior positions at Mattel, Inc. (Nasdaq: MAT) from 2017 to 2018 and at Sprinkles Cupcakes from 2014 to 2017. Ms. Masino previously served on the boards of directors of PhysicianOne Urgent Care and Cole Haan.
To generate ticket sales, drive traffic to our website and mobile applications, and build brand recognition, we have mutually beneficial partnerships with media partners, product and service partners, distribution partners and content rights holders such as teams, leagues and venues. To attract and retain sellers, we offer a variety of products and services that allow their businesses to thrive.
To generate ticket sales, drive traffic to our websites and mobile applications, and build brand recognition, we have mutually beneficial partnerships with media partners, product and service partners, distribution partners, content rights holders such as teams, leagues and venues, and supplier partners in Las Vegas.
In addition to providing an engaging work environment, we provide a robust assortment of benefits including healthcare and retirement programs, flexible paid time off, paid parental leave, wellness programs, in-office and remote working perks, and ticket discounts.
In addition to providing an engaging work environment, we provide a robust assortment of benefits including healthcare and retirement programs, flexible paid time off, paid parental leave, wellness programs, in-office working perks, and ticket discounts. Competition Our business faces significant competition from other primary and secondary ticketing service providers to acquire new and retain existing ticket buyers, sellers and partners.
Boehly co-founded Eldridge, a holding company with a unique network of businesses across finance, technology, real estate and entertainment, and since then has served as the Chairman and Chief Executive Officer. From 2002 to 2015, Mr. Boehly worked at Guggenheim Partners, most recently as president. Mr.
Boehly co-founded Eldridge Industries, LLC, a holding company with a unique network of businesses across finance, technology, real estate and entertainment, in 2015 and has since served as its Chairman and Executive Officer.
Bakal joined Vivid Seats in February 2019 as our Vice President of Strategy and Corporate Development and was promoted to Chief Product and Strategy Officer in March 2022. From August 2016 to December 2018, Ms. Bakal held a variety of senior positions across functions at Grubhub, most recently serving as Vice President of Market Operations. Ms.
Bakal joined Vivid Seats in February 2019 as our Vice President of Strategy and Corporate Development. From 2016 to 2018, she served in a variety of senior positions across functions at Grubhub Inc., an online and mobile takeout marketplace for restaurant orders, most recently as Vice President of Market Operations. Ms.
With the continued state adoption of internet sales tax laws and marketplace facilitator laws, more buyers across the United States will encounter sales tax on our platform in the future.
With the continued state adoption of internet sales tax and marketplace facilitator laws, more buyers across the United States will encounter sales tax on our platform in the future. Tax collection responsibility and the additional costs associated with complex sales and use tax collection, remittance and audit requirements could create additional burdens for ticket buyers, sellers and partners.
Donnini is currently a Director of AssuredPartners, Consumer Cellular, Park 12 Place Technologies and Sotera (NYSE: SHC), where he serves on the Nominating and Corporate Governance Committee. Mr. Donnini graduated from Yale University and Stanford Graduate School of Business. Tom Ehrhart . Mr. Ehrhart joined GTCR in 2012 and is currently a Director. Prior to joining GTCR, Mr.
Donnini also serves on the boards of directors of AssuredPartners, Consumer Cellular, Park Place Technologies, Kick Health, Everon, ITEL, Senske Lawn Care and Sotera (NYSE: SHC), where he serves on the nominating and corporate governance committee. Mr. Donnini is a graduate of Yale University and the Stanford Graduate School of Business. Tom Ehrhart. Mr.
The revenue we earn from our daily fantasy sports offering is the difference between cash entry fees collected and cash amounts paid out to users for winning picks, less customer promotions and incentives in a period.
The revenue we earn from our Vivid Picks daily fantasy sports offering is the difference between cash entry fees collected and cash amounts paid out to users for winning picks, less customer promotions and incentives. We incur costs for developing and maintaining our platform, providing back-office support and customer service, facilitating payments and deposits and shipping non-electronic tickets.
Marketplace In our Marketplace segment, we act as an intermediary between ticket buyers and sellers through which we earn revenue from processing ticket sales on our website and mobile applications and sales initiated through our numerous distribution partners.
Marketplace In our Marketplace segment, we primarily act as an intermediary between ticket buyers, sellers and partners through which we earn revenue processing ticket sales from our Owned Properties, consisting of our websites and mobile applications, including Vivid Seats, Vegas.com and Wavedash, and from our Private Label Offering, which includes numerous distribution partners.
For example, we offer ticket buyers the option to purchase ticket insurance and are exploring several relevant adjacencies that seek to add value to the customer experience. • Distribution Partners . We allow our distribution partners to offer event tickets to their existing customers by leveraging our technology, fulfillment and customer service capabilities. • Content Rights Holders Partners .
For example, we offer ticket buyers the option to purchase third-party event ticket insurance and provide multiple payment options, including with buy-now-pay-later payment service providers. • Distribution Partners . We allow our distribution partners to offer event tickets to their existing customers by leveraging our technology, fulfillment and customer service capabilities. • Content Rights Holders .
We also learn more about our customer preferences, and foster engagement between ticketing transactions. Within the Vivid Picks app, users are able to place entries and engage socially, as well as browse, discover, and buy tickets to events.
Within the Vivid Picks application, users are able to place entries and engage socially, as well as browse, discover, and buy tickets to events.
Our Vivid Seats Rewards program allows ticket buyers to earn Reward Credits to spend on future orders, enhancing our value proposition, and also surprises and delights buyers with other perks and upgrades.
We differentiate ourselves from competitors by offering an extensive breadth and depth of ticket listings at a competitive value. Our Vivid Seats Rewards loyalty program allows enrolled Vivid Seats ticket buyers to earn reward credits to spend on future orders, enhancing our value proposition, and surprises and delights these buyers with other perks and upgrades.
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 delivering some of life’s most exciting moments. We are relentless about finding ways to make event discovery and ticket purchasing easy, exciting and stress-free.
Item 1. Business 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 delivering some of life’s most exciting moments.
For example, New York amended its Arts and Cultural Affairs Law to require additional disclosures by ticket marketplaces and restricted a ticket marketplace’s ability to charge fees for the e-delivery of tickets. As a result of the COVID-19 pandemic, we experienced a high volume of event reschedules, postponements, and cancellations and made certain changes to our refund practices.
For example, New York recently amended its Arts and Cultural Affairs Law to require additional disclosures by ticket marketplaces and restrict a ticket marketplace’s ability to charge fees for the e-delivery of tickets.
As a team, we are energized by working with speed and agility to anticipate both the known and unknown. • We Enhance Communities. We invest in our communities. We are united in raising awareness around causes close to our hearts and are passionate about giving back.
We invest in our communities. We are united in raising awareness around causes close to our hearts and are passionate about giving back.
At the same time, we became a publicly traded company listed on the Nasdaq Global Select Market (“Nasdaq”) with our Class A common stock trading under the symbol "SEAT" and warrants trading under the symbol "SEATW." Our internet address is www.vividseats.com.
At the same time, we became a publicly traded company listed on the Nasdaq Global Select Market (“Nasdaq”) with our Class A common stock trading under the symbol "SEAT" and our warrants trading under the symbol "SEATW." Available Information Because we are subject to the requirements of the Exchange Act, we file periodic reports, proxy statements and other information with the SEC.
DeFlorio graduated from the University of Notre Dame and Harvard Business School. Craig Dixon . Mr. Dixon is the Co-Founder and Co-Chief Executive Officer of The St. James, a leading developer and operator of premium performance, wellness and lifestyle brands, technology experiences and destinations. From 2006 to 2013, Mr.
Dixon is the Co-Founder and Co-Chief Executive Officer of The St. James, a leading developer and operator of premium performance, wellness and lifestyle brands, technology experiences and destinations. From 2006 to 2013, he served as Assistant Vice President, Senior Counsel and Assistant Corporate Secretary at Smithfield Foods, Inc. Mr.
In December 2021, we acquired Betcha Sports, Inc. (“Betcha”), a real money daily fantasy sports app with social and gamification features. In August 2022, we rebranded Betcha as Vivid Picks, LLC (“Vivid Picks”) and integrated the product into our ecosystem. We leverage the natural overlap between sports fans who play fantasy and sports fans who buy tickets.
In August 2022, we rebranded Betcha as Vivid Picks, LLC (“Vivid Picks”) and integrated the product into our ecosystem. We leverage the natural overlap between sports fans who play fantasy and sports fans who buy tickets. We also learn more about our customer preferences, and foster engagement between ticketing transactions.
Boehly has also served as the Chief Executive Officer, Chief Financial Officer and Director of Horizon Acquisition Corporation II (NYSE: HZON) since August 2020 and of Horizon Acquisition Corporation III (NYSE: HZNA) since November 2020. In 2015, Mr.
He has also served as Chief Executive Officer, Chief Financial Officer and director at Horizon Acquisition Corporation II since August 2020 and at Horizon Acquisition Corporation III since November 2020. Mr. Boehly served as Horizon Acquisition Corporation’s Chief Executive Officer and director from June 2020 to October 2021 and Chief Financial Officer and Chairman from July 2020 to October 2021.
Our platform provides ticket buyers and sellers with an easy-to-use, trusted marketplace experience, ensuring fans can attend live events and create new memories. We operate a technology platform and marketplace that enables ticket buyers to easily discover and purchase tickets from ticket sellers while enabling ticket sellers to seamlessly manage their operations.
We operate a technology platform and marketplace that enables ticket buyers to easily discover and purchase tickets while enabling ticket sellers and partners to seamlessly manage their operations.
With our proprietary digital marketing technology and real-time first-party data, we have historically captured customer search traffic within reasonable customer acquisition cost thresholds.
With our proprietary digital marketing technology and real-time first-party data, we have historically captured customer search traffic within reasonable customer acquisition cost thresholds. We will continue to hone our performance marketing algorithms, refine our strategies for other marketing channels and invest to acquire new customers where we identify positive lifetime value.
Fey was a member of the Board of many successful investments, including Six3 Systems, CAMP Systems, Zayo Group, Cision, Park Place Technologies, GreatCall, Simpli.fi and EaglePicher. Mr. Fey graduated from Dartmouth College. Riva Bakal. Ms.
Fey served on the boards of directors of many successful investments, including Six3 Systems, CAMP Systems, Zayo Group, Cision, Park Place Technologies, GreatCall and Simpli.fi. Mr. Fey is a graduate of Dartmouth College. 13 Riva Bakal. Ms. Bakal has served as our Chief Product and Strategy Officer since March 2022. Ms.
We seek to increase both the number and frequency of these repeat customer visits and transactions by having ticket buyers view us as their ticketing platform of choice. The combination of our Vivid Seats Rewards program, increasing brand awareness and ongoing product improvements will drive a more personalized and engaging experience and will result in greater affinity towards our marketplace.
The combination of our Vivid Seats Rewards loyalty program, increasing brand awareness and ongoing product improvements will drive a more personalized and engaging experience and will result in greater affinity towards our marketplace.
Our Skybox ERP integrates with numerous third-party automation and workflow management solutions. Thus, ticket sellers can leverage other applications and functions to support the specific needs of their business. Our Values Our passion and excitement for live events drives us to provide memorable experiences and services to our customers and partners.
Third-party tools integrate with our marketplace ticket broker API and ticket broker portal to streamline and automate the sales and fulfillment process. Our Skybox ERP integrates with numerous third-party automation and workflow management solutions. Ticket sellers can thus leverage other applications and functions to support the specific needs of their business.
Our values ground us in all that we do: • We Create Exceptional Experiences. Whether we are engaging with a customer, partner or teammate, we do not compromise when it comes to their experience. We hold ourselves accountable and lean into every connection to make the moment count. • We Raise the Bar. We shape our industry.
Our Values Our passion and excitement for live events drives us to provide memorable experiences and services to our customers and partners. Our values ground us in all that we do: • We Create Exceptional Experiences. Whether we are engaging with a customer, partner or teammate, we do not compromise when it comes to their experience.
Taylor spent over 13 years at Microsoft Corporation, including in roles managing corporate strategy, sales, product marketing and segment focused teams in North America and Latin America. Mr. Taylor has served on the board of Jamf Holding Corp. (NASDAQ: JAMF) since 2017 and Integral Ad Science (NASDAQ: IAS) since 2018, where he serves on the Compensation, Nominating and Governance Committees.
Prior to joining Vista Equity Partners, he spent more than 13 years at Microsoft Corporation, including in roles managing corporate strategy, sales, product marketing and segment focused teams in North and Latin America. Mr. Taylor also serves on the boards of directors of Jamf Holding Corp.
These laws and regulations involve: • privacy, • data protection, • intellectual property, • competition, • consumer protection, • ticketing, • payments, • export taxation, and • sports gaming.
Applicable federal, state, local and international laws and regulations involve areas such as privacy, data protection, intellectual property, competition, consumer protection, ticketing, payments, export taxation, anti-bribery, anti-corruption, anti-money laundering, fantasy sports and sports gaming.
Seasonality Our financial results can be impacted by seasonality, with increased activity in the fourth quarter when all major sports leagues are in season and we experience an increase in order volume for theater events during the holiday season and concert on-sales for the subsequent year.
Typically, we experience slightly increased activity in the fourth quarter when all major sports leagues are in season and there is an increase in order volume for theater events during the holiday season and concert on-sales for the following year. Corporate Information Vivid Seats was founded in 2001, and in 2004, we launched our website, www.vividseats.com .
We are ambitious and disciplined teammates who make smart plays and get better every day. • We Commit as a Team. We are one team that trusts and supports each other, and we are ready to tackle the most difficult challenges. • We Embrace Change. The only constant is change; we are ready for it.
We are one team that trusts and supports each other, and we are ready to tackle the most difficult challenges. • We Embrace Change. The only constant is change; we are ready for it. As a team, we are energized by working with speed and agility to anticipate both the known and unknown. • We Enhance Communities.
Dixon was Senior Counsel and Assistant Corporate Secretary at Smithfield Foods, a global food business. Mr. Dixon began his legal career at McGuireWoods LLP and Cooley LLP, and as a Law Clerk to the Honorable James R. Spencer, United States District Court for the Eastern District of Virginia.
Dixon began his legal career at McGuireWoods LLP and Cooley LLP and served as a Law Clerk to the Honorable James R. Spencer of the U.S. District Court for the Eastern District of Virginia. He is also a member of the board of trustees of Episcopal High School. Mr.
From November 2016 to December 2020, she served in various leadership positions at Nielsen Holdings Inc., including Deputy Chief Legal Officer. Prior to that, Ms. Epstein worked in the legal department at American Express Company. She began her legal career at Simpson Thacher & Bartlett LLP. Ms.
Epstein served as Deputy General Counsel and Corporate Secretary at Coupang, Inc. (NYSE: CPNG). From 2016 to December 2020, she served in various leadership positions at Nielsen Holdings, Inc. (NYSE: NLSN), most recently as Deputy Chief Legal Officer. From 2014 to 2016, she worked in the legal department at American Express Company (NYSE: AXP). Ms.
Some jurisdictions prohibit the resale of event tickets at prices above the face value of the tickets or at all, or highly regulate the resale of tickets. New laws and regulations or changes to existing laws and regulations could limit or inhibit our ability to operate, or our ticket buyers’ and sellers’ ability to continue to use, our ticket marketplace.
New laws and regulations or changes to existing laws and regulations could limit or inhibit our ability to operate, or the ability of ticket buyers, sellers and our partners to continue to use, our ticket marketplace.
Directors The following table provides summary information about each of our directors as of December 31, 2022: 11 Committees of the Board of Directors Name Age Director Since Audit Committee Compensation Committee Nominating and Corporate Governance Committee Stanley Chia 41 2021 Mark Anderson 47 2021 C Todd Boehly 49 2021 M Jane DeFlorio 52 2021 C Craig Dixon 47 2021 M David Donnini 57 2021 C M Tom Ehrhart 35 2021 M Julie Masino 52 2021 M M Martin Taylor 53 2021 C – Chairperson; M - Member Stanley Chia .
Board Committees Name Age Director Since Audit Compensation Nominating and Corporate Governance Stanley Chia 42 2021 Mark Anderson 48 2021 Chair Todd Boehly 50 2021 Jane DeFlorio 53 2021 Chair Member Craig Dixon 48 2021 Member Member Member David Donnini 58 2021 Chair Tom Ehrhart 36 2021 Julie Masino 53 2021 Member Member Martin Taylor 54 2021 Stanley Chia. Mr.
Our platform is built on years of transactional and engagement data that provides us with deep insights into how to best connect ticket buyers with the experiences they seek. We understand the feeling of anticipation as the start of an event approaches and work diligently to enable fans to experience as many of these moments as possible.
To attract and retain sellers and partners, we offer a variety of products and services that allow their businesses to thrive. Our platform is built on years of transactional and engagement data that provides us with deep insights into how to best connect ticket buyers with the experiences they seek.
We have donated more than $2 million since the start of the COVID-19 pandemic to help strengthen MusiCares’ relief efforts. In 2022, through our charitable foundation Vivid Cheers, we launched a partnership with Make-A-Wish®, the global organization responsible for creating life-changing wishes for children with critical illnesses.
Vivid Cheers, our charitable foundation, and Make-A-Wish, the global organization responsible for creating life-changing wishes for children with critical illnesses, have been granting wishes, and helping to share once-in-a-lifetime experiences with children and families in their time of need, since the launch of the partnership in 2022.
We strive to hire talented, dedicated and diverse team members. As of December 31, 2022, we had 575 full-time employees, with most of our employees based at one of our three office locations in Chicago, Illinois; Coppell, Texas; and Toronto, Canada.
As of December 31, 2023, we had 768 employees, most of whom are based at one of our five office locations in Chicago, Illinois; Coppell, Texas; Las Vegas, Nevada; Toronto, Canada; and Tokyo, Japan.
Chia also served in the Singapore Armed Forces as an Armored Infantry Platoon Commander. Mark M. Anderson . Since 2000, Mr. Anderson has worked at GTCR, most recently as a Managing Director. Mr. Anderson has served on the board of Gogo Inc.
Chia is a graduate of the Georgia Institute of Technology and Emory University’s Goizueta Business School. Mr. Chia also served as an Armored Infantry Platoon Commander in the Singapore Armed Forces. Mark M. Anderson. Mr. Anderson joined GTCR LLC, a private equity firm, in 2000 and is currently a Managing Director. Mr.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, acquisitions involve inherent risks which, if realized, could adversely affect our business and results of operations, including those associated with: • integrating the operations, financial reporting, technologies and personnel of acquired companies; 17 • scaling of operations, system and infrastructure and achieving synergies to meet the needs of the combined or acquired company; • managing geographically dispersed operations; • the diversion of management’s attention from other business concerns; • the inherent risks in entering markets or lines of business in which we have either limited or no direct experience; • the potential loss of key employees, customers and strategic partners of acquired companies; and • the impact of laws and regulations at the state, federal and international levels when entering new markets or business, which could significantly affect our ability to complete acquisitions and expand our business.
Biggest changeIn connection with future acquisitions, we could take certain actions that could adversely affect our business, including: using a significant portion of our available cash; issuing equity securities, which would dilute current stockholders’ ownership; incurring substantial debt; incurring or assuming contingent liabilities, known or unknown; and incurring large accounting write-offs, impairments or amortization expenses. 17 In addition, an acquisition involves inherent risks that, if realized, could adversely affect our business, financial condition and results of operations, including those associated with: integrating the operations, financial reporting, technologies and personnel of the acquired company; scaling of operations, system and infrastructure and achieving synergies to meet the needs of the combined or acquired company; managing geographically dispersed operations; the diversion of management’s attention from other business concerns; the inherent risks in entering new markets or lines of business in which we have limited or no direct experience, including the impact of newly applicable laws and regulations; and the potential loss of key employees, customers and partners of the acquired company.
These are all comprehensive privacy statutes that share similarities with the CCPA and CPRA. Similar laws have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States, which could increase our potential liability.
These are all comprehensive privacy statutes that share similarities with the CCPA and the CPRA. Similar laws have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States, which could increase our potential liability.
Outside the United States, personal data and other user data is increasingly subject to legislation and regulations in numerous jurisdictions in which we operate, the intent of which is to protect the privacy of information that is collected, processed and transmitted in or from the governing jurisdiction.
Outside the United States, personal and other user data is increasingly subject to legislation and regulations in numerous jurisdictions in which we operate, the intent of which is to protect the privacy of information that is collected, processed and transmitted in or from the governing jurisdiction.
Such incidents may occur in the future, resulting in unauthorized, unlawful, or inappropriate access to, inability to access, disclosure of, or loss of the sensitive, proprietary and confidential information that we handle.
Such incidents may occur in the future, resulting in unauthorized, unlawful or inappropriate access to, inability to access, or disclosure or loss of, the sensitive, proprietary and confidential information that we handle.
Our failure to protect our intellectual property rights in a meaningful manner or challenges to our related contractual rights could result in erosion of our brand names or other intellectual property and could adversely affect our business, financial condition and results of operations.
Our failure to protect our intellectual property rights in a meaningful manner or challenges to our related contractual rights could result in erosion of our brand names or other intellectual property and adversely affect our business, financial condition and results of operations.
In addition, the outcome of litigation is uncertain, and third parties asserting claims could secure a judgment awarding substantial damages, as well as injunctive or other equitable relief against us, which could require us to rebrand, redesign, or reengineer our platform, products or services, and/or effectively block our ability to distribute, market or sell our products and services.
In addition, the outcome of litigation is uncertain, and third parties asserting claims could secure a judgment against us awarding substantial damages, as well as injunctive or other equitable relief, which could require us to rebrand, redesign or reengineer our platform, products or services, and/or effectively block our ability to distribute, market or sell our products and services.
Nearly all our revenue is associated with payments processed through a single provider, which relies on banks and payment card networks to process transactions. If this provider or any of its vendors do not operate well with our platform or suffer any failures, our payments systems and our business could be adversely affected.
Nearly all our revenue is associated with payments processed through a single provider, which relies on banks and payment card networks to process transactions. If this provider or any of its vendors do not operate well with our platform or suffer any failures, our payments systems and business could be adversely affected.
Fraud schemes are becoming increasingly sophisticated and common, and our ability to detect and combat fraudulent schemes may be negatively impacted by the adoption of new payment methods and new technology platforms.
Fraud schemes are becoming increasingly sophisticated and common, and our ability to detect and combat fraudulent schemes may be negatively impacted by the adoption of new payment methods and technology platforms.
Our Private Equity Owner also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.
Our Private Equity Owner also may pursue acquisition opportunities that may be complementary to our business and, as a result, those opportunities may not be available to us.
As a result, there might not be future cash payments against which such excess can be applied and we could be required to make payments under our TRA in excess of our actual savings in respect of the tax attributes.
As a result, there might not be future cash payments against which such excess can be applied and we could be required to make payments under the TRA in excess of our actual savings in respect of the tax attributes.
As a result of (i) potential differences in the amount of net taxable income allocable to us and to Hoya Topco, (ii) the lower maximum tax rate applicable to corporations than individuals and (iii) the use of an assumed tax rate in calculating Hoya Intermediate’s distribution obligations, we may receive distributions significantly in excess of our actual tax liabilities and our obligations to make payments under our TRA.
As a result of (i) potential differences in the amount of net taxable income allocable to us and to Hoya Topco, (ii) the lower maximum tax rate applicable to corporations than individuals and (iii) the use of an assumed tax rate in calculating Hoya Intermediate’s distribution obligations, we may receive distributions significantly in excess of our actual tax liabilities and our obligations to make payments under the TRA.
We are an "emerging growth company," and, for as long as we continue to be an "emerging growth company," we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including: • not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of SOX; • reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and • exemptions from the requirements of holding a nonbinding advisory vote on executive compensation or golden parachute payments not previously approved.
We are an “emerging growth company,” and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including: not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of SOX; reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation or golden parachute payments not previously approved.
Accordingly, our success depends upon the ability of these promoters, teams and facilities to correctly anticipate public demand for particular events, as well as the availability of popular artists, entertainers and teams, and any decrease in availability or failure to anticipate public demand could result in reduced demand for our services, which would adversely affect our business, financial condition and results of operations.
Accordingly, our success depends upon the ability of promoters, teams and facilities to correctly anticipate public demand for particular events, as well as the availability of popular artists, entertainers and teams, and any decrease in availability or failure to anticipate public demand could result in reduced demand for our services, which would adversely affect our business, financial condition and results of operations.
Our ability to attract and retain ticket buyers, sellers, and distribution partners depends in large part on our ability to provide a user-friendly and effective platform, develop and improve our platform and introduce compelling new solutions and enhancements. Our industry is characterized by rapidly changing technology, service and product introductions and changing demands of ticket buyers, sellers, and distribution partners.
Our ability to attract and retain ticket buyers, sellers and partners depends in large part on our ability to provide a user-friendly and effective platform, develop and improve our platform and introduce compelling new solutions and enhancements. Our industry is characterized by rapidly changing technology, service and product introductions and changing demands of ticket buyers, sellers and partners.
Our business may be subject to sales tax and other indirect taxes in various jurisdictions. The application of indirect taxes, such as sales and use, amusement, value-added, goods and services, business and gross receipts, to businesses like ours, and to ticket buyers and sellers in our marketplace, is a complex and evolving 21 issue.
Our business may be subject to sales tax and other indirect taxes in various jurisdictions. The application of indirect taxes, such as sales and use, amusement, value-added, goods and services, business and gross receipts, to businesses like ours, and to ticket buyers and sellers in our marketplace, is a complex and evolving issue.
Our business faces significant competition from other national, regional and local primary and secondary ticketing service providers to secure new and retain existing ticket buyers, sellers, and distribution partners on a continuous basis. We also face competition in the resale of tickets from other professional ticket resellers.
Our business faces significant competition from other national, regional and local primary and secondary ticketing service providers to secure new and retain existing ticket buyers, sellers and partners on a continuous basis. We also face competition in the resale of tickets from other professional ticket resellers.
Moreover, our TRA provides that, in certain early termination events, we are required to make a lump-sum cash payment to all the TRA Holders equal to the present value of all forecasted future payments that would have been made under our TRA, which would be based on certain assumptions.
Moreover, the TRA provides that, in certain early termination events, we are required to make a lump-sum cash payment to all the TRA Holders equal to the present value of all forecasted future payments that would have been made under the TRA, which would be based on certain assumptions.
We continue to have a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
We have a material weakness in our internal control over financial reporting, and we may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
The interpretation and application of many privacy and data protection laws are, and will likely remain, uncertain, and it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or product features.
The interpretation and application of many privacy and data protection laws are, and will likely remain, uncertain, and it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices, policies or product features.
Furthermore, our future obligation to make payments could make us a less attractive 29 target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax attributes that may be deemed realized under our TRA.
Furthermore, our future obligation to make payments under the TRA could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax attributes that may be deemed realized under the TRA.
Hoya Intermediate may make cash or tax distributions to the members, including us, as set forth in its LLC Agreement calculated using an assumed tax rate, to provide liquidity to members to pay taxes on such member’s allocable share of the taxable income.
Hoya Intermediate may make cash or tax distributions to the members, including us, as set forth in the Hoya Intermediate LLC Agreement calculated using an assumed tax rate, to provide liquidity to members to pay taxes on such member’s allocable share of the taxable income.
We spend substantial time and resources understanding such parties’ needs and responding to them. Building new solutions is costly and complex, and the timetable for commercial release is difficult to predict and may vary from our historical experience.
We spend substantial time and resources understanding and responding to such parties’ needs. Building new solutions is costly and complex, and the timetable for commercial release is difficult to predict and may vary from our historical experience.
Any noncompliance by us in relation to existing or new laws and regulations, or any alleged noncompliance, could result in reputational damage, litigation, increased costs or liabilities, damages, or require us to stop offering payment services in certain markets.
Any actual or alleged noncompliance by us in relation to existing or new laws and regulations could result in reputational damage, litigation, increased costs or liabilities, damages or require us to stop offering payment services in certain markets.
Further, we may become subject to changing payment regulations and requirements that could potentially affect the compliance of our current payment processes and increase the operational costs we incur to support payments.
Further, we may become subject to changing payment regulations and requirements that could affect the compliance of our current payment processes and increase the operational costs we incur to support payments.
Our amended and restated charter provides that our Private Equity Owner, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) will not have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate.
Our amended and restated charter provides that our Private Equity Owner, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) will not have any duty to refrain from engaging in the same or similar business activities or lines of business in which we operate.
Other competitive variables that could lead to a decrease in orders, ticket prices, fees and/or profit margins that could adversely affect our financial performance include: • competitors’ offerings that may include more favorable terms or pricing; 15 • competitors' increase in marketing spending; • technological changes and innovations that we are unable to adopt or are late in adopting that offer more attractive alternatives; • other entertainment options or ticket inventory selection and variety that we do not offer; • increased pricing in the primary ticket marketplace, which could result in reduced profits for secondary ticket sellers; • primary ticket marketplaces trying to restrict ticket sales by secondary marketplaces; and • increased search engine marketing costs as competitors increase bid prices.
Other competitive variables that could lead to a decrease in ticket orders, ticket prices, fees and/or profit margins that could adversely affect our financial performance include: competitors’ offerings that may include more favorable terms or pricing; competitors’ increase in marketing spending; technological changes and innovations that we are unable to adopt or are late in adopting; other entertainment options or ticket inventory selection and variety that we do not offer; increased pricing in the primary ticket marketplace, which could result in reduced profits for secondary ticket sellers; primary ticket marketplaces trying to restrict ticket sales by secondary marketplaces; and increased search engine marketing costs as competitors increase bid prices.
The CCPA provides for statutory penalties, and a private right of action for data breaches resulting from a failure to implement 19 reasonable security procedures and practices.
The CCPA provides for statutory penalties and a private right of action for data breaches resulting from a failure to implement reasonable security procedures and practices.
Rather, any excess payments made to such TRA Holders will reduce any future cash payments we are required to make under our TRA, after the determination of such excess.
Rather, any excess payments made to such TRA Holders will reduce any future cash payments we are required to make under the TRA, after the determination of such excess.
There is uncertainty as to whether a court would enforce such a provision relating to causes of action arising under the Securities Act, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. These provisions may have the effect of discouraging lawsuits against our directors and officers.
There is uncertainty as to whether a court would enforce such a provision relating to causes of action arising under the Securities Act, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. These exclusive forum provisions may have the effect of discouraging lawsuits against our directors and officers.
Certain Canadian provinces have their own data protection regulations as well. Similarly, the United Kingdom, the European Union, and countries in the European Economic Area (“EEA”) traditionally have taken broader views as to types of data that are subject to privacy and data protection laws and regulations, and have imposed different legal obligations on companies in this regard.
Certain Canadian provinces have their own data protection regulations as well. Similarly, the United Kingdom, the European Union and countries in the European Economic Area (the “EEA”) traditionally have taken broader views on, and have imposed different legal obligations on companies as to, the types of data that are subject to privacy and data protection laws and regulations.
Our current level of indebtedness and any future increases in our debt indebtedness could have adverse consequences, including: • making it more difficult for us to satisfy our obligations; • increasing our vulnerability to adverse economic, regulatory and industry conditions; • limiting our ability to obtain additional financing for future working capital, capital expenditures, acquisitions and other purposes; • requiring us to dedicate a substantial portion of our cash flow from operations to fund payments on our debt, thereby reducing funds available for operations and other purposes; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • making us more vulnerable to increases in interest rates; and • placing us at a competitive disadvantage compared to our competitors that have less debt.
Our current level of indebtedness and any future increases in our indebtedness could have adverse consequences, including: making it more difficult for us to satisfy our obligations; increasing our vulnerability to adverse economic, regulatory and industry conditions; limiting our ability to obtain additional financing for future working capital, capital expenditures, acquisitions and other purposes; requiring us to dedicate a substantial portion of our cash flow from operations to fund payments on our debt, thereby reducing funds available for operations and other purposes; limiting our flexibility in planning for, or reacting to, changes in our business and industry; making us more vulnerable to increases in interest rates; and placing us at a competitive disadvantage compared to our competitors that have less debt.
We depend on the cash flows of our subsidiaries in order to satisfy our obligations. We rely on distributions and/or loans from our subsidiaries to meet our payment requirements under our obligations. If our subsidiaries are unable to pay dividends or otherwise make payments to us, we may not be able to make debt service payments on our obligations.
We depend on the cash flows of our subsidiaries in order to satisfy our obligations. We rely on distributions and/or loans from our subsidiaries to meet our payment requirements under our obligations. If our subsidiaries are unable to pay dividends or otherwise make payments to us, we may be unable to make debt service payments on our obligations.
We rely on artists, entertainers and teams to create and perform at live music, sporting and theater events, and any unwillingness to tour, lack of availability of popular artists or decrease in the number of games or performances held could limit our ability to generate revenue.
We rely on artists, entertainers and teams to create and perform at live concert, sporting and theater events, and any unwillingness to tour, lack of availability of popular artists, entertainers and teams, or decrease in the number of games or performances held could limit our ability to generate revenue.
Each of our executive officers, key technical personnel and other employees could terminate his or her relationship with us at any time. The loss of any member of our senior management team or key personnel might significantly delay or prevent the achievement of our business objectives and could harm our business and our relationships.
Each of our executive officers, key technical personnel and other employees could terminate his or her relationship with us at any time. The loss of any member of our senior 18 management team or key personnel could significantly delay or prevent the achievement of our business objectives and/or harm our business and relationships.
The large infrastructure footprint that is required to operate our systems requires an ongoing investment of time, money and effort to maintain or refresh hardware and software and to ensure it remains at a level capable of servicing the demand and volume of business that we receive.
The large infrastructure footprint that is required to operate our systems requires an ongoing investment of time, money and effort to maintain or refresh hardware and software and to ensure it remains at a level capable of servicing the demand and volume of our business.
Ticket sales are sensitive to fluctuations in the number of entertainment, sporting and theater events and activities offered by promoters, teams and facilities, and adverse trends in the entertainment, sporting and leisure event 14 industries could adversely affect our business, financial condition and results of operations.
Ticket sales are sensitive to fluctuations in the number of concert, sporting and theater events and activities offered by promoters, teams and facilities, and adverse trends in the entertainment, sporting and leisure event industries could adversely affect our business, financial condition and results of operations.
The agreement governing our credit facility include restrictive covenants that, among other things, restrict our ability to: 25 • incur additional debt; • pay dividends and make distributions; • make certain investments; • prepay certain indebtedness; • create liens; • enter into transactions with affiliates; • modify the nature of our business; • transfer and sell assets, including material intellectual property; • amend our organizational documents; and • merge or consolidate.
The agreement governing our credit facility includes restrictive covenants that, among other things, restrict our ability to: incur additional debt; pay dividends and make distributions; make certain investments; prepay certain indebtedness; create liens; enter into transactions with affiliates; modify the nature of our business; transfer and sell assets, including material intellectual property; amend our organizational documents; and merge or consolidate.
The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, increased costs of labor, weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may continue to experience cost increases.
The existence of inflation in the economy has resulted in, and may continue to result in, high interest rates and capital costs, increased costs of labor, weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may continue to experience cost increases.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but that any such election to opt out is irrevocable.
For as long as we are an “emerging growth company” under The Jumpstart Our Business Startup Act (“JOBS Act”), our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404. We could be an “emerging growth company” until December 31, 2026.
For as long as we are an “emerging growth company” under the Jumpstart Our Business Startup Act of 2012 (the “JOBS Act”), which could be until December 31, 2026, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of SOX.
Payment card networks and our payment processing partner could increase the fees or interchange they charge us for their services or to accept or process transactions, which would increase our operating costs and reduce our margins. Any such increase in fees could harm our business, results of operations and financial condition.
Payment card networks and our payment processing partner could increase the fees or interchange they charge us for their services or to accept or process transactions, which would increase our operating costs and reduce our margins. Any such increase in fees could adversely affect our business, financial condition and results of operations.
We will not control these analysts, and the analysts who publish information about us may have relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.
We do not control these analysts, and the analysts who publish information about us may have relatively little experience with our business or industry, which could affect their ability to accurately forecast our results and make it more likely that we fail to meet their estimates.
In addition, after development, ticket buyers, sellers, and distribution partners may not be satisfied with our enhancements or perceive that the enhancements do not adequately meet their needs.
In addition, after development, ticket buyers, sellers and partners may not be satisfied with our enhancements or perceive that our enhancements do not adequately meet their needs.
It is possible that we could face sales and use tax and value-added tax audits in the future and that state or international tax authorities could assert that we are obligated to collect additional amounts as taxes on behalf of sellers and remit those taxes to those authorities.
It is possible that we could face sales and use tax and value-added tax audits in the future and that federal, state, local or international tax authorities could assert that we are obligated to collect additional amounts as taxes on behalf of ticket sellers and remit those taxes to those authorities.
Litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of proprietary rights claimed by others.
Litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of proprietary rights claimed by others.
In particular, for so long as our Private Equity Owner continues to own a significant percentage of our common stock, our Private Equity Owner will be able to cause or prevent a change of control or a change in the composition of our Board of Directors and could preclude any unsolicited acquisition of us.
In particular, for so long as our Private Equity Owner continues to own a significant percentage of our common stock, our Private Equity Owner may be able to cause or prevent a change of control or a change in the composition of our Board and could preclude any unsolicited acquisition of us.
System interruption and the lack of integration and redundancy in the information systems and infrastructure, both of our own ticketing systems and other computer systems and of affiliate and third-party software, computer networks and other communications systems service providers on which we rely, may adversely affect our ability to operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations.
System interruptions and the lack of integration and redundancy in the information systems and infrastructure, both of our own ticketing and other computer systems and of affiliate and third-party software, computer networks and other communications systems service providers on which we rely, may adversely affect our ability to operate our websites and mobile applications, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations.
In addition, a search engine could, for competitive or other purposes, alter its search algorithms or results causing our website to be placed lower in organic search query results.
In addition, a search engine could, for competitive or other purposes, alter its search algorithms or results causing our websites to be placed lower in organic search query results.
Failure to do so may result in system instability, degradation in performance, or unfixable security vulnerabilities that could adversely impact both the business and the consumers utilizing our services. While we have backup systems for certain aspects of our operations, disaster recovery planning by its nature may not be sufficient for all eventualities.
Failure to do so may result in system instability, degradation in performance or unfixable security vulnerabilities that could adversely impact both our business and consumers. 23 While we have backup systems for certain aspects of our operations, disaster recovery planning by its nature may not be sufficient for all eventualities.
We determined in all three years that we had deficiencies related to implementation of segregation of duties as part of our control activities, establishment of clearly defined roles within our finance and accounting functions and the number of personnel in our finance and accounting functions with an appropriate level of technical accounting and SEC reporting experience, which in the aggregate, constitute a material weakness.
We determined in all of these years that we had deficiencies related to the 31 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.
Our payments system depends on third-party providers and is subject to risks that may harm our business. We rely on third-party providers to support our payment methods, as our ticket buyers primarily use credit or debit cards to purchase tickets on our marketplace.
Our payments system depends on third-party providers and is subject to risks that may adversely affect our business. We rely on third-party providers to support our payment methods, as ticket buyers primarily use credit or debit cards to purchase tickets on our marketplace.
In addition, our Private Equity Owner may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you or may not prove beneficial.
In addition, our Private Equity Owner may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to our other security holders or may not prove beneficial.
Any change in existing daily fantasy sports rules and regulations or their interpretation related to our daily fantasy sports product, or the regulatory climate applicable to daily fantasy sports, could adversely impact our ability to operate our business as currently conducted or as we seek to operate in the future.
Any change in existing daily fantasy sports rules and regulations or their interpretation related to Vivid Picks, or the regulatory climate applicable to daily fantasy sports, could adversely impact our ability to operate our business as currently conducted or as we seek to operate in the future.
Our amended and restated charter provides that, to the fullest extent permitted by law, and unless we provide consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee or stockholder to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporate Laws (“DGCL”), our amended and restated charter or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine, provided that this provision, including for any “derivative action,” will not apply to suits to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Our amended and restated charter provides that, to the fullest extent permitted by law, and unless we provide consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that such Court of Chancery does not have jurisdiction, the U.S. federal district court for the District of Delaware or the other state courts of the State of Delaware) is the sole and exclusive forum for any (i) derivative action or proceeding brought on our behalf, (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee or stockholder to us or our stockholders, (iii) action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (the “DGCL”), our amended and restated charter or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) action asserting a claim governed by the internal affairs doctrine, provided that this provision, including for any “derivative action,” does not apply to suits to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.
Such interruptions could occur by virtue of natural disaster, malicious actions such as cyber attacks or intrusions, or acts of terrorism or war, or human error. In addition, the loss of some or all of certain key personnel could require us to expend additional resources to continue to maintain our software and systems and could subject us to systems interruptions.
Such interruptions could occur by virtue of natural disaster, malicious actions such as cyber-attacks or intrusions, acts of terrorism, military actions or human error. In addition, the loss of certain key personnel could require us to expend additional resources to continue to maintain our software and systems and subject us to systems interruptions.
If any tax attributes we initially claimed or utilized are disallowed, the TRA Holders (as defined in our TRA) will not be required to reimburse us for any excess payments that we may have previously made pursuant to our TRA, for example, due to adjustments resulting from examinations by taxing authorities.
If any tax attributes we initially claimed or utilized are disallowed, the TRA Holders will not be required to reimburse us for any excess payments that we may have previously made pursuant to the TRA, for example, due to adjustments resulting from examinations by taxing authorities.
Our status as an "emerging growth company" will end as soon as any of the following occurs: • the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; • the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; • the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or • December 31, 2026.
Our status as an emerging growth company will end as soon as any of the following occurs: (i) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (ii) the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; (iii) the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or (iv) December 31, 2026.
Although we may take measures to mitigate the impact of inflation, these measures may not be effective and our business, financial condition, results of operations and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference in timing between the impact of inflation and effects of the mitigating actions we take.
Although we may take measures to mitigate the impacts of inflation, these measures may not be effective and our business, financial condition, including liquidity, and results of operations could be adversely affected. Even if such measures are effective, there could be a difference in timing between the impacts of inflation and the effects of the mitigating actions we take.
We could also be subject to audits and assessments with respect to states and international jurisdictions for which we have not accrued tax liabilities.
We could also be subject to audits and assessments with respect to jurisdictions for which we have not accrued tax liabilities.
If we do not continue to maintain and improve our platform or develop successful new solutions and enhancements or improve existing ones, our business, results of operations and financial condition could be harmed.
If we do not continue to maintain and improve our platform or develop successful new solutions and enhancements or improve existing ones, our business, financial condition and results of operations could be adversely affected.
We cannot assure you that the market price of our Class A common stock and warrants will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following: • the realization of any of these risk factors; • difficult global market and economic conditions; 31 • loss of investor confidence in the global financial markets and investing in general; • adverse market reaction to indebtedness we may incur, securities we may grant under our 2021 Incentive Award Plan or otherwise, or any other securities we may issue in the future, including shares of our Class A common stock; • adverse market reaction to changes in our ownership or capital structure including a secondary offering for our Class A common stock; • unanticipated variations in our quarterly and annual operating results or dividends; • failure to meet securities analysts’ earnings estimates; • publication of negative or inaccurate research reports about us or the live events or ticketing industry or the failure of securities analysts to provide adequate coverage of our Class A common stock in the future; • changes in market valuations of similar companies; • speculation in the press or investment community about our business; • the trading activity of our largest stockholders; • the number of shares of our common stock that are available for public trading; • short sales, hedging and other derivative transactions involving our capital stock; • additional or unexpected changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters; and • increases in compliance or enforcement inquiries and investigations by regulatory authorities.
We cannot assure you that the market price of our securities will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others: the realization of any of the risk factors discussed in this Report; difficult global market and economic conditions; loss of investor confidence in the global financial markets and investing in general; adverse market reaction to indebtedness we may incur or securities we may issue in the future, including securities we may grant under our 2021 Incentive Award Plan, as amended (the "2021 Plan"); adverse market reaction to changes in our ownership or capital structure, including secondary offerings of our Class A common stock; unanticipated variations in our quarterly and annual operating results or dividends; failure to meet securities analysts’ earnings estimates; publication of negative or inaccurate research reports about us or the live events or ticketing industries or the failure of securities analysts to provide adequate coverage of us or our securities in the future; changes in market valuations of similar companies; speculation in the press or investment community about our business; the trading activity of our largest stockholders; the number of shares of our Class A common stock that are available for public trading; short sales, hedging and other derivative transactions involving our securities; new or unexpected changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters; and increases in compliance or enforcement inquiries and investigations by regulatory authorities.
If we do not successfully maintain and enhance our brand and successfully differentiate our marketplace from competitive products and services, our business may not grow, we may not be able to compete effectively and we could lose ticket buyers, sellers or distribution partners or fail to attract potential new ticket buyers, sellers and distribution partners, all of which would adversely affect our business, results of operations and financial condition.
If we do not successfully maintain and enhance our brand and differentiate our marketplace from competitive products and services, our business may not grow, we may be unable to compete effectively and we could lose existing, or fail to attract new, ticket buyers, sellers or partners, all of which would adversely affect our business, financial condition and results of operations.
Our success depends upon the continued service of our senior management team and key technical employees, as well as our ability to continue to attract and retain additional highly qualified personnel. Our success depends on our continuing ability to identify, hire, develop, motivate, retain and integrate highly skilled personnel for all areas of our organization.
Our success depends upon the continued service of our senior management team and key technical employees, as well as our ability to continue to identify, attract, hire, integrate, develop, motivate and retain highly skilled personnel for all areas of our organization.
For example, the Canadian Personal Information Protection and Electronic Documents Act (“PIPEDA”) is a comprehensive privacy and security law for organizations collecting, using, or disclosing information about identified individuals for commercial purposes, and may impose obligations upon organizations subject to that law that are greater than what is commonplace in the United States.
For example, the Canadian Personal Information Protection and Electronic Documents Act (“PIPEDA”) is a comprehensive privacy and security law for organizations collecting, using or disclosing information about identified individuals for commercial purposes, and may impose obligations upon covered organizations that are greater than what is common in the United States.
In addition, we are currently, and from time to time in the future may be, subject to various other claims, investigations, legal and administrative cases and proceedings (whether civil or criminal) or lawsuits by governmental agencies or private parties.
In addition, we are currently, and from time to time in the future, we, ticket sellers and our partners may be subject to various other claims, investigations, legal and administrative cases, and proceedings and lawsuits (whether civil or criminal) by governmental agencies or private parties.
Payments under our TRA generally will be based on the tax reporting positions that we determine (in consultation with an advisory firm and subject to the TRA Holder Representative’s review and consent). The IRS or another taxing authority may challenge a position we take, and a court may sustain such a challenge.
Payments under the TRA generally will be based on the tax reporting positions that we determine (in consultation with an advisory firm and subject to the TRA Holder Representative’s review and consent). The Internal Revenue Service or another taxing authority may challenge a position we take, and a court may sustain such a challenge.
We may face liquidity constraints if we are unable to generate sufficient cash flows and we may be unable to raise additional capital when necessary or desirable. As of December 31, 2022, we had cash and cash equivalents of $251.5 million, which is available to us to fund our operating, investing and financing activities.
We may face liquidity constraints if we are unable to generate sufficient cash flows and/or to raise additional capital when necessary or desirable. As of December 31, 2023, we had cash and cash equivalents of $125.5 million, which is available to us to fund our operating, investing and financing activities.
In the future, we may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all.
In the future, we may need to raise additional funds, and we may be unable to obtain additional debt or equity financing on favorable terms, if at all.
However, a challenge to any tax attributes we initially claimed or utilized may not arise for a number of years after such payment and such excess cash payment may be greater than the amount of future cash payments that we may be required to make under the terms of our TRA.
However, a challenge to any tax attributes we initially claimed or utilized may not arise for a number of years after such payment and, even if challenged earlier, such excess cash payment may be greater than the amount of future cash payments that we may be required to make under the terms of the TRA.
If this provider does not perform adequately or determines certain types of transactions are prohibited, if this provider’s technology does not interoperate well with our platform, or if our relationships with this provider, the bank or the payment card networks on which it relies were to terminate or be suspended unexpectedly, ticket buyers may find our platform more difficult to use.
If this provider does not perform adequately or determines that certain types of transactions are prohibited, if this provider’s technology does not interoperate well with our platform or if our relationships with this provider (or the bank or the payment card networks on which it relies) were to terminate or be suspended unexpectedly, ticket buyers may find our platform more difficult to use and, as a result, use our platform less.
If we need additional capital and cannot raise it on acceptable terms, if at all, we may not be able to, among other things: • further develop and enhance our platform and solutions; • continue to invest in our technology and marketing efforts; • hire, train and retain employees; • respond to competitive pressures or unanticipated working capital requirements; or • pursue acquisition opportunities.
If we need additional capital and cannot raise it on acceptable terms, if at all, we may be unable to, among other things: further develop and enhance our platform and solutions; continue to invest in our technology and marketing efforts; attract, hire, develop, motivate and retain employees; respond to competitive pressures or unanticipated working capital requirements; or pursue acquisition opportunities.
A successful assertion that we should be collecting additional sales or other taxes in jurisdictions where we have not historically done so, and do not accrue for sales or other taxes, could result in substantial tax liabilities for past sales and otherwise harm our business and results of operations.
A successful assertion that we should be collecting additional sales or other taxes in jurisdictions where we have not historically done so, and where we do not accrue for sales or other taxes, could result in substantial tax liabilities for past sales and otherwise adversely affect our business, financial condition and results of operations.
Furthermore, our failure to successfully manage our search engine optimization could result in a substantial decrease in traffic to our website, as well as increased costs if we were to replace free traffic with paid traffic, which may harm our business, results of operations and financial condition.
Furthermore, our failure to successfully manage our search engine optimization could result in a substantial decrease in traffic to our websites, as well as increased costs if we were to replace free traffic with paid traffic, which may adversely affect our business, financial condition and results of operations.
In the ordinary course of their business activities, our Private Equity Owner and its affiliates may engage in activities where their interests conflict with our interests or those of our other shareholders, such as investing in or advising businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours.
In the ordinary course of their business activities, our Private Equity Owner and its affiliates may engage in activities where their interests conflict with our interests or those of our other stockholders, such as investing in or advising businesses that compete with certain portions of our business or are our suppliers or customers.
For example, our applications may receive unfavorable treatment compared to the promotion and placement of competing applications, such as the order in which they appear within marketplaces. Further, iOS and Android apps are an important distribution channel for sales of our tickets.
For example, our applications may receive unfavorable treatment compared to the promotion and placement of competing applications, such as the order in which they appear within marketplaces. Further, our Apple iOS and Google Android applications are an important distribution channel for ticket sales.
It is possible that advances in computer and threat actor capabilities, new variants of malware, the development of new penetration methods and tools, inadvertent violations of company policies or procedures or other developments could result in a compromise of customer or employee information or a breach of the technology and security processes that are used to protect customer and employee information.
It is possible that advances in computer and threat actor capabilities, new variants of malware, the development of new penetration methods and tools, inadvertent violations of our practices or policies or other developments could result in a compromise of, or a breach of the technology and cybersecurity processes that are used to protect, customer and employee information.
We may be subject to securities class action litigation, which may harm our business, financial condition and results of operations. Companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future.
We may be subject to securities class action litigation, which could adversely affect our business, financial condition and results of operations. Companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future.
Although we have developed systems and processes that are designed to protect customer and employee information and to prevent security breaches or incidents (which could result in data loss or other harm or loss), such measures cannot provide absolute security or certainty.
Although we have developed systems, practices and policies that are designed to protect customer and employee information and to prevent cybersecurity incidents (which could result in data loss or other harm or loss), such measures cannot provide absolute security or certainty.
Accordingly, for such period of time, our Private Equity Owner has significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers, decisions on whether to raise future capital and amending our charter and bylaws, which govern the rights attached to our common stock.
Accordingly, for such period of time, our Private Equity Owner has significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers, decisions on whether to raise future capital and the amendment of our organizational documents, which govern the rights attached to our common stock.
Although we do not currently trigger the application of the GDPR, if we materially alter our operations such that we become established in the EU/UK (e.g., by employing individuals in those locations), begin monitoring individuals in the EU/UK or demonstrate an intention to offer goods and services to individuals in the EU/UK, we may be required to comply with data protection laws in the EEA or the UK, such as the GDPR and the UK GDPR.
Although we do not currently trigger the application of the GDPR, if we materially alter our operations such that we become established in the European Union and/or the United Kingdom (e.g., by employing individuals in those locations), begin monitoring individuals in the European Union and/or the United Kingdom or demonstrate an intention to offer goods and services to individuals in the European Union and/or the United Kingdom, we may be required to comply with EEA and/or U.K. data protection laws, such as the GDPR and the U.K.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of December 31, 2022, we leased approximately 48,000 square feet of space in Chicago, Illinois for our headquarters under a lease agreement that runs through December 31, 2033 with a 5-year renewal option, unless terminated sooner. We also lease facilities in Coppell, Texas and Toronto, Ontario. Item 3. Legal Proceedings None. Item 4.
Biggest changeItem 2. Properties As of December 31, 2023, we leased approximately 48,000 square feet of space in Chicago, Illinois for our headquarters under a lease agreement that runs through December 31, 2033 with a five-year renewal option, unless terminated sooner. We also lease facilities in Coppell, Texas; Las Vegas, Nevada; Toronto, Ontario; and Tokyo, Japan. Item 3. Legal Proceedings None.
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Item 4. Mine Safety Disclosures Not applicable. Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe comparisons reflected in the graph are not intended to forecast the future performance of our stock and may not be indicative of our future performance. 38
Biggest changeThe comparisons reflected in the graph are not intended to forecast, and may not be indicative of, the future performance of us or our Class A common stock. 37 Issuer Purchases of Equity Securities The following table provides information about our purchases of our common stock during the three months ended December 31, 2023: Period Total No. of Shares Purchased Avg.
Stock Performance Graph The following graph depicts the total return to stockholders from the closing price on October 19, 2021 (the date our Class A common stock began trading on Nasdaq) through December 31, 2022, relative to the performance of Nasdaq Composite and the Russell 2000 Technology Index.
Stock Performance Graph The following graph depicts the total return to stockholders from the closing price on October 19, 2021 (the date on which our Class A common stock began trading on Nasdaq) through December 31, 2023, relative to the performance of the Nasdaq Composite and the Russell 2000 Technology Index.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Principal Market On October 19, 2021, our Class A common stock and warrants began trading on the Nasdaq under the symbols “SEAT” and "SEATW", respectively. Prior to that date, there was no public trading market for our common stock and warrants.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information On October 19, 2021, our Class A common stock and warrants began trading on Nasdaq under the symbols “SEAT” and "SEATW," respectively.
Stockholders As of February 28, 2023, there were 79 holders of record of our common stock. The actual number of our stockholders is greater than this number, and includes beneficial owners whose shares are held in “street name” by banks, brokers and other nominees. Dividends None.
The actual number of holders of our Class A common stock is greater than this number, as it includes beneficial owners whose shares are held in “street name” by banks, brokers and other nominees. Dividends We did not pay any cash dividends on our Class A common stock during the year ended December 31, 2023.
Issuer Purchases of Equity Securities On May 25, 2022, our board of directors authorized a share repurchase program of our Class A Common Stock of up to $40.0 million ("Repurchase Program"). The Repurchase Program was announced on May 26, 2022 and will be effective until March 31, 2023.
On February 29, 2024, our Board authorized a share repurchase program for up to $100.0 million of our Class A common stock, which program was publicly announced on March 5, 2024 and does not have a fixed expiration date. Item 6. [R e served] 38
Removed
Equity Compensation Plan Information Information concerning our equity compensation plan is incorporated herein by reference to Part III, Item 12 of this report. Use of Proceeds from Sale of Registered Securities None.
Added
Prior to that date, there was no public trading market for our securities. 36 Stockholders As of February 29, 2024, there were 57 holders of record of our Class A common stock and one holder of our Class B common stock.
Removed
We may repurchase shares from time to time in open market transactions, through privately negotiated transactions or otherwise in accordance with applicable federal securities laws. The amount and timing of repurchases will depend upon market conditions and other factors including price.
Added
We intend to retain future earnings for future operations, development, expansion, debt repayment and potential acquisitions and share repurchases, and we have no current plans to declare or pay any cash dividends on our Class A common stock for the foreseeable future.
Removed
The Repurchase Program does not obligate us to acquire any particular amount of stock, and it may be terminated, modified, or suspended at any time at our discretion. The Repurchase Program commenced on July 5, 2022.
Added
Any future decision to declare and pay dividends will be made at the discretion of our Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions (including those under our credit facility and/or any future indebtedness we may incur), business prospects and other factors that our Board may deem relevant.
Removed
As of December 31, 2022, we have repurchased 4.3 million shares of our Class A Common Stock for $32.5 million under the Repurchase 37 Program which includes commissions paid of $0.1 million. The share repurchases are accounted for as Treasury stock in the Consolidated Balance Sheets.
Added
Price Paid Per Share Total No. of Shares Purchased As Part of Publicly Announced Plans or Programs Max. No. (or Approx.
Removed
The following table provides information about purchases of shares of our common stock during the year ended December 31, 2022: Date Total Number of Shares Purchased Weighted Average Price Paid Per Share(1) Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under Program (in millions) September 1-30, 2022 397,551 $ 7.65 397,551 $ 36.9 October 1-31, 2022 716,857 7.87 716,857 31.3 November 1-30, 2022 972,578 7.73 972,578 23.8 December 1-31, 2022 2,255,491 7.19 2,255,491 $ 7.5 Total 4,342,477 $ 7.46 4,342,477 (1) The weighted average price paid per share does not include the cost of commissions.
Added
Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs October 1-31, 2023 — — — — November 1-30, 2023 — — — — December 1-31, 2023 2,000,000 (1) $ 6.24 — — Total 2,000,000 $ 6.24 — — (1) On December 12, 2023, we repurchased 2.0 million shares of our Class A common stock from the underwriters of the December 2023 Secondary Offering (as defined herein) at a price of $6.24 per share (the same price per share paid by the underwriters to Hoya Topco, the selling stockholder).
Added
See Note 17, Equity , to our consolidated financial statements included elsewhere in this Report for more information regarding the December 2023 Secondary Offering.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

118 edited+55 added−44 removed12 unchanged
Biggest changeComparison of the Years Ended December 31, 2022 and 2021 The following table sets forth our results of operations (in thousands, except percentages): 2022 2021 Change % Change Revenues $ 600,274 $ 443,038 $ 157,236 35 % Costs and expenses: Cost of revenues (exclusive of depreciation and amortization shown separately below) 140,508 90,617 49,891 55 % Marketing and selling 248,375 181,358 67,017 37 % General and administrative 127,619 92,170 35,449 38 % Depreciation and amortization 7,732 2,322 5,410 233 % Change in fair value of contingent consideration (2,065 ) — (2,065 ) 100 % Income from operations 78,105 76,571 1,534 2 % Other (income) expense: Interest expense – net 12,858 58,179 (45,321 ) (78 )% Loss on extinguishment of debt 4,285 35,828 (31,543 ) (88 )% Other (income) expense (8,227 ) 1,389 (9,616 ) (692 )% Income (loss) before income taxes 69,189 (18,825 ) 88,014 468 % Income tax expense (benefit) (1,590 ) 304 (1,894 ) (623 )% Net income (loss) 70,779 (19,129 ) 89,908 470 % Net loss attributable to Hoya Intermediate, LLC shareholders prior to reverse recapitalization — (12,836 ) 12,836 100 % Net income (loss) attributable to redeemable noncontrolling interests 42,117 (3,010 ) 45,127 1,499 % Net income (loss) attributable to Class A Common Stockholders $ 28,662 $ (3,283 ) $ 31,945 973 % Revenues The following table presents revenues by segment (in thousands, except percentages): 2022 2021 Change % Change Revenues: Marketplace $ 511,094 $ 389,668 $ 121,426 31 % Resale 89,180 53,370 35,810 67 % Total revenues $ 600,274 $ 443,038 $ 157,236 35 % Total revenues increased $157.2 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Biggest changeComparison of the Years Ended December 31, 2023 and 2022 The following table sets forth our results of operations (in thousands, except percentages): 2023 2022 Change % Change Revenues $ 712,879 $ 600,274 $ 112,605 19 % Costs and expenses: Cost of revenues (exclusive of depreciation and amortization shown separately below) 182,184 140,508 41,676 30 % Marketing and selling 274,096 248,375 25,721 10 % General and administrative 159,081 127,619 31,462 25 % Depreciation and amortization 17,178 7,732 9,446 122 % Change in fair value of contingent consideration (998 ) (2,065 ) 1,067 52 % Income from operations 81,338 78,105 3,233 4 % Other (income) expense: Interest expense – net 13,505 12,858 647 5 % Loss on extinguishment of debt — 4,285 (4,285 ) (100 )% Other (income) expense: (3,109 ) (8,227 ) 5,118 62 % Income before income taxes 70,942 69,189 1,753 3 % Income tax expense (benefit) (42,199 ) (1,590 ) (40,609 ) (2,554 )% Net income 113,141 70,779 42,362 60 % Net income attributable to redeemable noncontrolling interests 38,605 42,117 (3,512 ) (8 )% Net income attributable to Class A Common Stockholders $ 74,536 $ 28,662 $ 45,874 160 % 45 Revenues The following table presents revenues by segment (in thousands, except percentages): 2023 2022 Change % Change Revenues: Marketplace $ 597,388 $ 511,094 $ 86,294 17 % Resale 115,491 89,180 26,311 30 % Total revenues $ 712,879 $ 600,274 $ 112,605 19 % Total revenues increased $112.6 million, or 19%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.
We share the dedication to our mission to Experience It Live . Offering employees an engaging and positive work environment contributes to both their success and our success. We are committed to fostering an environment that is inclusive and welcoming to diversity in backgrounds, experiences and thoughts as a means toward achieving employee engagement, empowerment, innovation and good decision-making.
We share the dedication to our mission to Experience It Live . Offering employees an engaging and positive work environment contributes to both their and our success. We are committed to fostering an environment that is inclusive and welcoming to diversity in backgrounds, experiences and thoughts as a means toward achieving employee engagement, empowerment, innovation and good decision-making.
JOBS Act Accounting Election Section 107 of the JOBS Act allows emerging growth companies to take advantage of the extended transition period for complying with new or revised accounting standards. Under Section 107, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
JOBS Act Accounting Election Section 107 of the JOBS Act allows emerging growth companies to take advantage of the extended transition period for complying with new or revised accounting standards. Under Section 107 of the JOBS Act, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
To the extent that actual usage differs from expected usage, or that recent trends require a change in the estimated usage rate of unexpired credits, our revenue will be impacted by the change. Revenue from our Resale business primarily consists of sales of tickets to customers through online secondary ticket marketplaces.
To the extent that actual usage differs materially from expected usage, or that recent trends require a change in the estimated usage rate of unexpired credits, revenue will be materially impacted by the change. Revenue from our Resale business primarily consists of sales of tickets to customers through online secondary ticket marketplaces.
Cash Used in Investing Activities Net cash used in investing activities for the year ended December 31, 2022 was $15.4 million, which was attributable to capital spending on development activities related to our platform and capital expenditures related to our new corporate headquarters in Chicago, which we moved into in late 2022.
Net cash used in investing activities for the year ended December 31, 2022 was $15.4 million, which was primarily attributable to capital spending on development activities related to our platform and capital expenditures related to our new corporate headquarters in Chicago, which we moved into in late 2022.
Net cash provided by operating activities was $175.8 million for the year ended December 31, 2021 due to $19.1 million in net loss, non-cash charges of $75.3 million, and net cash inflows from a $119.7 million change in net operating assets.
Net cash provided by operating activities was $175.8 million for the year ended December 31, 2021 due to $19.1 million in net loss, non-cash charges of $75.3 million and net cash inflows from a $119.7 million change in net operating assets and liabilities.
Credits issued to buyers for cancellations are recorded as accrued customer compensation within Accrued expenses and other current liabilities on our Consolidated Balance Sheets. When a credit is redeemed, revenue is recognized for the newly placed order.
Credits issued to buyers for cancellations are recorded as accrued customer compensation within Accrued expenses and other current liabilities on the Consolidated Balance Sheets. When a credit is redeemed, revenue is recognized for the newly placed order.
Quarterly fluctuations in our Marketplace GOV result from the number of cancellations, the popularity and demand of performers, tours, teams, and events, and the length and team composition of sports playoff series and championship games.
Quarterly fluctuations in our Marketplace GOV result from the popularity and demand of performers, tours, teams and events, the length and team composition of sports playoff series and championship games, and the number of event cancellations.
To the extent that actual usage differs from expected usage, that trends in usage rates differ from those used to establish our breakage estimate, or that the volume of credits subject to escheatment changes, revenue may be materially impacted. In 2022, we increased our estimated breakage rates based on lower credit usage.
To the extent that actual usage differs materially from expected usage, that trends in usage rates differ materially from those used to establish our breakage estimate, or that the volume of credits subject to escheatment changes, revenue may be materially impacted. In 2022 and 2023, we increased our estimated breakage rates based on lower credit usage.
For the year ended December 31, 2022, management did not identify any events or changes in circumstances which would indicate the carrying amount of an asset or asset group may not be recoverable. As such, there were no long-lived asset impairments for the year ended December 31, 2022.
For the year ended December 31, 2023, management did not identify any events or changes in circumstances which would indicate the carrying amount of an asset or asset group may not be recoverable. As such, there were no long-lived asset impairments for the year ended December 31, 2023.
The net cash inflows from the change in our net operating assets were primarily due to a $128.2 50 million increase in accounts payable, $19.2 million increase in deferred revenue, and a $14.2 million increase in accrued expenses and other current liabilities, partially offset by a $44.1 million decrease related to deferred paid-in-kind interest paid on May 2020 First Lien Loan, $7.6 million decrease in prepaid expenses and other current assets and a $4.3 million increase in inventory.
The net cash inflows from the change in our net operating assets and liabilities were primarily due to increases of $128.2 million in accounts payable, $19.2 million in deferred revenue and $14.2 million in accrued expenses and other current liabilities, partially offset by a $44.1 million decrease related to deferred paid-in-kind interest paid on the May 2020 First Lien Loan, a $7.6 million decrease in prepaid expenses and other current assets and a $4.3 million increase in inventory.
The net cash outflows from the change in our net operating liabilities were primarily due to a $94.4 million decrease in accrued expenses and other current liabilities and a $30.8 million decrease in accounts payable, partially offset by a $42.9 million decrease in prepaid expenses and other current assets.
The net cash outflows from the change in our net operating assets and liabilities were primarily due to decreases of $94.4 million in accrued expenses and other current liabilities and $30.8 million in accounts payable, partially offset by a $42.9 million decrease in prepaid expenses and other current assets.
This reserve, known as accrued future customer compensation, is classified within Accrued expenses and other current liabilities, with a corresponding asset for expected recoveries from ticket sellers and distribution partners recorded within Prepaid expenses and other current assets on our Consolidated Balance Sheets.
This reserve, known as accrued future customer compensation, is classified within Accrued expenses and other current liabilities, with a corresponding asset for expected recoveries from ticket sellers and distribution partners recorded within Prepaid expenses and other current assets on the Consolidated Balance Sheets.
Further, we believe this measure is helpful in highlighting trends in our operating results because it excludes the impact of items that are outside the control of management or not reflective of ongoing performance related directly to the operation of our business segments.
Further, we believe this measure is helpful in highlighting trends in our operating results because it excludes the impact of items that are outside of our control or not reflective of ongoing performance related directly to the operation of our business.
We recognize Resale revenue on a gross basis because we act as a principal in these transactions. We recognize Resale revenue when an order is confirmed. Equity-Based Compensation We account for Restricted Stock Units ("RSUs"), stock options, and profits interest at fair value as of the grant date. We award RSUs to our employees, directors and consultants.
We recognize Resale revenue when an order is confirmed. We recognize Resale revenue on a gross basis because we act as a principal in these transactions. Equity-Based Compensation We account for restricted stock units ("RSUs"), stock options and profits interest at their grant date fair value. We award RSUs to our employees, directors and certain consultants.
Tax Receivable Agreement In connection with the Merger Transaction, we entered into a Tax Receivable Agreement with the existing Hoya Intermediate shareholders that will provide for payment to Hoya Intermediate shareholders of 85% of the amount of the tax savings, if any, that we realize (or, under certain circumstances, is 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 and its subsidiaries, and (iii) certain other tax benefits (including deductions in respect of imputed interest) related to Hoya Intermediate making payments under the Tax Receivable Agreement.
Tax Receivable Agreement In connection with the Merger Transaction, we entered into the TRA with the existing Hoya Intermediate shareholders that provides for our payment to such shareholders of 85% of the amount of the tax savings, if any, 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 and its subsidiaries, and (iii) certain other tax benefits (including deductions in respect of imputed interest) related to us making payments under the TRA.
The qualitative assessment included the history and longevity of our brand, our reputation, market share, and importance of our brand in buying decisions. Each reporting period, we perform an evaluation of the remaining useful life of our indefinite-lived trademark to determine whether events and circumstances continue to support an indefinite life.
The qualitative assessment included the history and longevity of our brands, our reputation, our market share and the importance of our brands in buying decisions. Each reporting period, we perform an evaluation of the remaining useful life of our indefinite-lived trademarks to determine whether events and circumstances continue to support an indefinite life.
Any decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We have elected to use the extended transition period under the JOBS Act. 54
Any decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We have elected to use the extended transition period under Section 107 of the JOBS Act. 55
Seasonality Our operational and financial results can be impacted by seasonality, with increased activity in the fourth quarter when all major sports leagues are in season and we experience an increase in order volume for theater events during the holiday season and concert on-sales for the subsequent year.
Seasonality Our operational and financial results can be impacted by seasonality. Typically we experience slightly increased activity in the fourth quarter when all major sports leagues are in season and there is an increase in order volume for theater events during the holiday season and concert on-sales for the following year.
Change in fair value of contingent consideration Change in fair value of contingent consideration was $2.1 million during the year ended December 31, 2022 due to the fair value remeasurement of cash earnouts.
Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration was $1.0 million during the year ended December 31, 2023 due to the fair value remeasurement of cash earnouts.
Our Marketplace segment also includes our daily fantasy sports offering, where users partake in contests by making picks from a variety of sport and player matchups. Using our online platform, we facilitate customer payments, deposits and withdrawals, coordinate ticket deliveries, and provide customer service to our ticket buyers and sellers and daily fantasy sports users.
Our Marketplace segment also includes our Vivid Picks daily fantasy sports offering, where users partake in contests by making picks from a variety of sport and player matchups. 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.
(3) Total Resale orders represents the volume of Resale segment orders in a period, net of event cancellations that occurred during that period. During the year ended December 31, 2022, our Resale segment experienced 5,205 event cancellations, compared to 6,165 and 20,644 event cancellations during the years ended December 31, 2021 and 2020.
(3) Total Resale orders represents the volume of Resale segment orders in a period, net of event cancellations that occurred during that period. During the year ended December 31, 2023, our Resale segment experienced 2,910 event cancellations compared to 5,205 and 6,165 event cancellations during the years ended December 31, 2022 and 2021, respectively.
Distributions to non-controlling interests Per the Hoya Intermediate LLC agreement, Hoya Intermediate is required to make pro-rata tax distributions to its members, of which $5.2 million was distributed to non-controlling interests in the year ended December 31, 2022.
Distributions to non-controlling interests Per the Hoya Intermediate LLC agreement, Hoya Intermediate is required to make pro-rata tax distributions to its members, of which $14.3 million was distributed to non-controlling interests in the year ended December 31, 2023.
During the year ended December 31, 2022, Marketplace GOV was negatively impacted by event cancellations in the amount of $80.3 million, compared to $108.0 million and $216.0 million during the years ended December 31, 2021 and 2020.
During the year ended December 31, 2023, Marketplace GOV was negatively impacted by event cancellations in the amount of $43.6 million compared to $80.3 million and $108.0 million during the years ended December 31, 2022 and 2021, respectively.
(2) Total Marketplace orders represents the volume of Marketplace segment orders placed on our platform during a period, net of event cancellations that occurred during that period. During the year ended December 31, 2022, our Marketplace segment experienced 199,595 event cancellations, compared to 257,109 and 549,085 event cancellations during the years ended December 31, 2021 and 2020.
(2) Total Marketplace orders represents the volume of Marketplace segment orders placed on our platform in a period, net of event cancellations that occurred during that period. During the year ended December 31, 2023, our Marketplace segment experienced 99,078 event cancellations compared to 199,595 and 257,109 event cancellations during the years ended December 31, 2022 and 2021, respectively.
We classify our long-lived assets as a single asset group, which consists primarily of definite-lived intangible assets, property and equipment, right-of-use assets, and personal seat licenses. Our definite-lived intangible assets consist of developed technology, customer and supplier relationships, and non-compete agreements.
We classify our long-lived assets as a single asset group, which consists primarily of definite-lived intangible assets, property and equipment, right-of-use assets and personal seat licenses. Our definite-lived intangible assets consist of customer and supplier relationships, acquired developed technology and capitalized development costs.
(7) This relates to the revaluation of warrants to purchase common units of Hoya Intermediate ("Intermediate Units") held by Hoya Topco following the Merger Transaction. (8) This relates to the revaluation of Vivid Picks cash earnouts. (9) This relates to asset disposals, which are not considered indicative of our core operating performance.
(7) This relates to the revaluation of warrants to purchase Intermediate Units held by Hoya Topco following the Merger Transaction. (8) This relates to the revaluation of derivatives recorded at fair value. 42 (9) This relates to the revaluation of Vivid Picks cash earnouts. (10) This relates to asset disposals, which are not considered indicative of our core operating performance.
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 sources of funds are cash generated from operations and proceeds from borrowings, including our term loans.
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.
In 2021 and 2022, reserves reduced due to reductions in estimated future cancellation rates. In extreme circumstances, should actual cancellation charges exceed previous estimates by a significant amount, we may experience negative overall revenue. When an event is cancelled, ticket buyers may receive either a cash refund or credit for future purchases in our marketplace.
In extreme circumstances, should actual cancellation charges exceed previous estimates by a significant amount, we may experience negative overall revenue. When an event is cancelled, ticket buyers may receive either a cash refund or credit for future purchases in our marketplace.
During the second half of 2021, we began collecting sales tax from customers in the required jurisdictions. The sales tax liability presented herein represents the tax liability for sales tax prior to the date we began collecting sales tax from customers reduced by abatements received, inclusive of any penalties and interest assessed by the jurisdictions.
The sales tax liability for 2022 and 2021 represents the tax liability for sales tax prior to the date we began collecting sales tax from customers reduced by abatements received, inclusive of any penalties and interest assessed by the jurisdictions.
We do not hold ticket inventory in our Marketplace segment. We primarily earn revenue from service and delivery fees charged to ticket buyers. We also earn referral fee revenue by offering event ticket insurance to ticket buyers, using a third-party insurance provider.
We primarily earn revenue from service and delivery fees charged to ticket buyers. We also earn referral fee revenue by offering event ticket insurance to ticket buyers, using a third-party insurance provider.
The following table summarizes our key business metrics and non-GAAP financial measure (in thousands): 2022 2021 2020 Marketplace GOV (1) $ 3,184,754 $ 2,399,092 $ 347,259 Total Marketplace orders (2) 9,183 6,637 1,066 Total Resale orders (3) 313 199 49 Adjusted EBITDA (4) $ 113,325 $ 109,869 $ (80,204 ) (1) Marketplace GOV represents the total transactional amount of Marketplace segment orders placed on our platform in a period, inclusive of fees, exclusive of taxes, and net of event cancellations that occurred during that period.
The following table summarizes our key business metrics and non-GAAP financial measure for the years ended December 31, 2023, 2022 and 2021 (in thousands): 2023 2022 2021 Marketplace GOV (1) $ 3,920,526 $ 3,184,754 $ 2,399,092 Total Marketplace orders (2) 10,898 9,183 6,637 Total Resale orders (3) 380 313 199 Adjusted EBITDA (4) $ 141,982 $ 113,325 $ 109,869 (1) Marketplace GOV represents the total transactional amount of Marketplace segment orders placed on our platform in a period, inclusive of fees, exclusive of taxes and net of event cancellations that occurred during that period.
For the year ended December 31, 2022, loss on extinguishment of debt was due to the refinancing of the June 2017 First Lien Loan with the February 2022 First Lien Loan in the first quarter of 2022.
Loss on extinguishment of debt Loss on extinguishment of debt was $4.3 million during the year ended December 31, 2022 due to the refinancing of the June 2017 First Lien Loan with the February 2022 First Lien Loan in the first quarter of 2022. There was no loss on extinguishment of debt during the year ended December 31, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Op erations Our discussion and analysis is intended to help the reader understand our results of operations and financial condition and is provided as an addition to, and should be read in connection with, our audited consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Op erations This discussion is intended to help readers understand our results of operations and financial condition and is provided as an addition to, and should be read together with, our audited consolidated financial statements and accompanying notes included elsewhere in this Report.
We differentiate from competitors by offering an extensive breadth and depth of ticket listings at a competitive value, and by providing a reliable and secure experience for ticket buyers. We acquire new ticket buyers through various marketing channels, partnerships, brand advertisement and word-of-mouth. Performance marketing channels are highly competitive, and we must continue to be effective in these acquisition channels.
We differentiate ourselves from competitors by offering an extensive breadth and depth of ticket listings at a competitive value, and by providing a reliable and secure experience for ticket buyers. We acquire new ticket buyers through various marketing channels, partnerships, brand advertisement and word-of-mouth.
Within the Marketplace segment, we also earn referral fee revenue by offering event ticket insurance to ticket buyers, using a third-party insurance provider. Our referral fee revenue was $33.4 million and $33.5 million during the years ended December 31, 2022 and 2021, respectively. Referral fees were flat compared to 2021 as insurance attachment rate to orders declined.
Within the Marketplace segment, we also earn referral fee revenue by offering event ticket insurance to ticket buyers, using a third-party insurance provider. Our referral fee revenue was $29.4 million and $33.4 million during the years ended December 31, 2023 and 2022, respectively.
Growth and Retention of Buyers, Sellers and Distribution Partners Our revenue growth primarily depends on acquiring and retaining customers. We seek to have ticket buyers and sellers view us as the go-to ticketing marketplace when searching for, purchasing and selling event tickets.
The key factors discussed below impacted our 2023 results and/or are anticipated to impact our 2024 results. Growth and Retention of Ticket Buyers, Sellers and Partners Our revenue growth primarily depends on acquiring and retaining customers. We seek to have ticket buyers and sellers view us as the go-to ticketing marketplace when searching for, purchasing and selling event tickets.
We 52 defer revenue associated with these credits, which is recorded as Deferred revenue on our Consolidated Balance Sheets. The deferred amount is based on expected future usage, including the frequency with which buyers reach the ten stamp threshold for reward credit conversions and the rate of credit redemptions, and is recognized as revenue when the credits are redeemed.
The deferred amount is based on expected future usage, including the frequency with which buyers reach the threshold for reward credit conversions and the rate of credit redemptions, and is recognized as revenue when the credits are redeemed.
Many of the factors affecting the number of live events are beyond our control. Attracting and Retaining Talent We rely on the ability to attract and retain employees. Our future success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization.
Many of the factors affecting the strength of the event slate are outside of our control. 43 Attracting and Retaining Talent We rely on our ability to attract, motivate and retain employees. Our success depends on our ability to continue to identify, attract, hire, integrate, develop, motivate and retain highly skilled personnel for all areas of our organization.
(5) These expenses relate to external legal costs and settlement costs, which were unrelated to our core business operations. (6) These charges relate to severance costs resulting from significant reductions in employee headcount due to the effects of the COVID-19 pandemic.
(5) This relates to external legal costs, settlement costs and insurance recoveries that were unrelated to our core business operations. (6) This relates to severance costs resulting from significant reductions in employee headcount due to the effects of the COVID-19 pandemic prior to 2022.
Loss on extinguishment of debt incurred in 2021 and 2020 resulted from the retirement of the May 2020 First Lien Loan, fees paid related to the early payment of a portion of the principal of the June 2017 First Lien Loan in October 2021, and the retirement of the revolving credit facility in May 2020.
Losses incurred in 2021 resulted from the retirement of the May 2020 First Lien Loan (as defined herein) and fees paid related to the early payment of a portion of the principal of the June 2017 First Lien Loan in October 2021.
As of December 31, 2022, we had $251.5 million of cash and cash equivalents. Cash and cash equivalents consist of interest-bearing deposit accounts and money market accounts managed by financial institutions. For the year ended December 31, 2022, we generated positive cash flows from our operating activities.
As of December 31, 2023, we had $125.5 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. For the year ended December 31, 2023, we generated positive cash flows from our operating activities.
Net cash provided by financing activities was $38.0 million for the year ended December 31, 2021. This was due to capital contributions of $752.9 million, offset by $441.0 million in debt payments and debt extinguishment costs, $236.0 million of preferred equity redemptions, $20.1 million of Merger Transaction costs, and $17.7 million of dividends paid.
This was due to capital contributions of $752.9 million, partially offset by $441.0 million in debt payments and debt extinguishment costs, $236.0 million of preferred equity redemptions, $20.1 million of Merger Transaction costs, and $17.7 million of dividends paid.
We assess definite-lived intangible assets and other long-lived assets (collectively, “long-lived assets”) for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
Long-Lived Assets We assess our indefinite-lived intangible asset (our trademarks) and other long-lived assets (collectively, our “long-lived assets”) for impairment periodically to determine whether events or business changes in circumstances indicate that the carrying amounts of an asset or asset group may not be recoverable.
Similar to goodwill, our indefinite-lived trademark is not amortized, but reviewed for impairment annually, or earlier whenever events or changes in business circumstances indicate that the carrying value may not be recoverable. For the year ended December 31, 2022, as part of our annual assessment, a qualitative assessment was performed resulting in no impairment.
Similar to goodwill, our indefinite-lived trademarks are not subject to amortization and are reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. For the year ended December 31, 2023, as part of our annual assessment, a quantitative and qualitative assessment was performed resulting in no impairment.
(4) Adjusted EBITDA is not a measure defined under accounting principles generally accepted in the United States of America ("GAAP"). We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance.
(4) Adjusted EBITDA is a non-GAAP financial measure. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for making period-to-period comparisons of our business performance.
The assumptions and estimates associated with revenue recognition; equity-based compensation, warrants and earnouts, and impairment of our goodwill, indefinite-lived intangible assets, definite-lived intangible assets, long-lived assets, and valuation allowances have the greatest potential impact on our consolidated financial statements.
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 consolidated financial statements. Accordingly, these are the policies that are the most critical to aid in fully understanding and evaluating our consolidated financial statements.
The model requires us to make assumptions and judgments about the variables used in the calculation, the volatility of our common stock, risk-free interest rate, and expected dividends. We estimate the fair value of profits interest using the Black-Scholes option pricing model, which includes assumptions related to volatility, expected term, dividend yield and risk-free interest rate.
The grant date fair value of stock options is estimated using an option pricing model, which requires us to make assumptions and judgments about the variables used in the calculation related to the volatility of our common stock, risk-free interest rate and expected dividends.
Macroenvironment and Resulting Consumer Demand for Live Events Consumer demand for live events could be impacted by economic conditions affecting disposable consumer income, including unemployment levels, fuel prices, interest rates, changes in tax rates and tax laws that impact individuals and rising inflation, that affect disposable consumer income.
Macroenvironment and Resulting Consumer Demand for Live Events Consumer demand for live events could be impacted by economic conditions affecting discretionary consumer and corporate spending, including unemployment levels, fuel prices, interest rates inflationary concerns and changes in tax rates and tax laws.
Key Factors Affecting Our Performance Our operational and financial results have been, and will continue to be, affected by a number of factors that present significant opportunities as well as risks and challenges, including those discussed below and elsewhere in this Annual Report on 10-K, particularly in Part I, Item 1A, "Risk Factors.” The key factors discussed below impacted our 2022 results or are anticipated to impact our 2023 results.
Key Factors Affecting Our Performance Our operational and financial results have been, and will continue to be, affected by a number of factors that present significant opportunities as well as risks and challenges, including those discussed below and elsewhere in this Report, particularly in the “Risk Factors” section.
A key component of our platform is Skybox, a proprietary ERP tool used by the majority of our 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 an ERP to manage their operations and Skybox is their most widely adopted ERP.
We also incur substantial marketing costs, primarily related to online advertising. 39 A key component of our platform is Skybox, a proprietary ERP tool 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.
Cash (Used in) Provided by Financing Activities Net cash used in financing activities for the year ended December 31, 2022 was $236.5 million and was primarily related to the repayment of the June 2017 First Lien Loan in connection with the refinancing and our Class A Common Stock Repurchase Program.
Net cash used in financing activities for the year ended December 31, 2022 was $236.5 million, which was primarily related to the repayment of the June 2017 First Lien Loan and share repurchases. Net cash provided by financing activities for the year ended December 31, 2021 was $38.0 million.
Our Marketplace GOV is impacted by seasonality, and typically sees increased activity in the fourth quarter when all major sports leagues are in season and we experience increases in order volume for theater during the holiday season and concert on-sales for the subsequent year.
Typically, we experience slightly increased activity in the fourth quarter when all major sports leagues are in season and there is an increase in order volume for theater events during the holiday season and concert on-sales for the following year.
Off-Balance Sheet Arrangements As of December 31, 2022, we did not have any off-balance sheet arrangements, as defined in item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.
Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, results of operations or cash flows.
The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, net income (loss) (in thousands): 2022 2021 2020 Net income (loss) $ 70,779 $ (19,129 ) $ (774,185 ) Income tax expense (benefit) (1,590 ) 304 — Interest expense – net 12,858 58,179 57,482 Depreciation and amortization 7,732 2,322 48,247 Sales tax liability (1) 2,814 8,956 6,772 Transaction costs (2) 4,840 12,852 359 Equity-based compensation (3) 19,053 6,047 4,287 Loss on extinguishment of debt (4) 4,285 35,828 685 Litigation, settlements and related costs (5) 2,477 2,835 1,347 Severance related to COVID-19 (6) — 286 795 Change in fair value of warrants (7) (8,227 ) 1,389 — Change in fair value of contingent consideration (8) (2,065 ) — — Loss on asset disposals (9) 369 — 169 Impairment charges (10) — — 573,838 Adjusted EBITDA $ 113,325 $ 109,869 $ (80,204 ) (1) We have historically incurred sales tax expense in jurisdictions where we expected to remit sales tax payments but were not yet collecting from customers.
We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from Adjusted EBITDA. 41 The following is a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, net income (loss) (in thousands): 2023 2022 2021 Net income $ 113,141 $ 70,779 $ (19,129 ) Income tax expense (benefit) (42,199 ) (1,590 ) 304 Interest expense – net 13,505 12,858 58,179 Depreciation and amortization 17,178 7,732 2,322 Sales tax liability (1) 3,172 2,814 8,956 Transaction costs (2) 12,779 4,840 12,852 Equity-based compensation (3) 27,614 19,053 6,047 Loss on extinguishment of debt (4) — 4,285 35,828 Litigation, settlements and related costs (5) 215 2,477 2,835 Severance related to COVID-19 (6) — — 286 Change in fair value of warrants (7) (971 ) (8,227 ) 1,389 Change in fair value of derivative asset (8) (536 ) — — Change in fair value of contingent consideration (9) (998 ) (2,065 ) — Loss on asset disposals (10) 685 369 — Foreign currency revaluation gain (11) (2,177 ) — — TRA liability adjustment (12) 574 — — Adjusted EBITDA $ 141,982 $ 113,325 $ 109,869 (1) We have historically incurred sales tax expense in jurisdictions where we expected to collect and remit indirect taxes, but were not yet collecting from customers.
Adjusted EBITDA is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting. Moreover, we believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations.
Adjusted EBITDA is a key measure used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance and performing strategic planning and annual budgeting.
In determining the realizability of our deferred tax assets, we consider all available positive and negative evidence, including historical taxable income or loss amounts, projected future taxable income, anticipated reversals of temporary book/tax differences, tax planning strategies and recent results of operations.
To the extent we believe all or a portion of these assets are not more likely than not to be realized, we record a valuation allowance against the deferred tax asset’s value. 54 In determining the realizability of our deferred tax assets, we consider all available positive and negative evidence, including historical taxable income or loss amounts, projected future taxable income, anticipated reversals of temporary book/tax differences, tax planning strategies and recent results of operations.
Depreciation and Amortization Depreciation and amortization expenses increased $5.4 million, or 233%, during the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily as a result of an increase in development activities related to our platform and the intangibles acquired as part of the Vivid Picks acquisition.
Depreciation and Amortization Depreciation and amortization expenses increased $9.4 million, or 122%, during the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was primarily due to the intangibles acquired as part of our acquisitions of Wavedash and Vegas.com and, to a lesser extent, an increase in capitalized development activities related to our platform.
On October 18, 2021, we repaid this loan in full in connection with, and using the proceeds from, the Merger Transaction and the PIPE Financing and incurred a $28.0 million prepayment penalty. We had an outstanding loan balance of $465.7 million under the June 2017 First Lien Loan as of December 31, 2021.
In October 2021, we made an early principal payment related to the June 2017 First Lien Loan of $148.2 million in connection with, and using the proceeds from, the Merger Transaction and the PIPE Financing. We had an outstanding loan balance of $465.7 million under the June 2017 First Lien Loan as of December 31, 2021.
An order can include one or more tickets and/or parking passes. Total Marketplace orders allow us to monitor order volume and better identify trends within our Marketplace segment.
Total Resale Orders Total Resale orders represent the volume of Resale segment orders sold in a period, net of event cancellations that occurred during that period. An order can include one or more tickets or parking passes. Total Resale orders allow us to monitor order volume and better identify trends within our Resale segment.
Loan Agreements In response to the COVID-19 pandemic, we entered into the May 2020 First Lien Loan, which resulted in $251.5 million in net cash proceeds.
Loan Agreements In May 2020, in response to the COVID-19 pandemic, we entered into a first lien term loan (the “May 2020 First Lien Loan”), which resulted in $251.5 million in net cash proceeds. We had an outstanding loan balance of $275.7 million under the May 2020 First Lien Loan as of December 31, 2020.
The increase to total cost of revenues resulted primarily from higher order volume in both our Marketplace and Resale segments and a higher proportion of revenue from our Resale segment. Marketplace Marketplace cost of revenues increased $21.4 million, or 41%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
The increase was primarily driven by higher Marketplace GOV in our Marketplace segment and higher revenue in our Resale segment. Marketplace Marketplace cost of revenues increased $21.4 million, or 29%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Total Resale orders increased 0.1 million, or 57%, during the year ended December 31, 2022 compared to the year ended December 31, 2021. Cancellation charges, classified as a reduction of revenue, 46 negatively impacted Resale revenue by less than $0.1 million and $2.8 million for the years ended December 31, 2022 and 2021, respectively.
Total Marketplace orders increased 1.7 million, or 19%, during the year ended December 31, 2023 compared to the year ended December 31, 2022. Cancellation charges, which are recognized as a reduction of revenues, negatively impacted Marketplace revenues by $20.0 million and $27.8 million for the years ended December 31, 2023 and 2022, respectively.
Interest incurred under the May 2020 First Lien Loan was capitalized into the principal quarterly in August and November 2020, resulting in an outstanding principal of $275.7 million as of December 31, 2020. Additional interest was capitalized into the principal in the first nine months of 2021, resulting in an outstanding principal of $304.1 million as of September 30, 2021.
Additional interest was capitalized into the principal in the first nine months of 2021, resulting in an outstanding principal of $304.1 million as of September 30, 2021.
We account for forfeitures of outstanding, but unvested grants, in the period they occur. Expense related to grants of equity-based awards is recognized as equity-based compensation in the Consolidated Statements of Operations. Warrants The estimated fair value of warrant liabilities is determined by using the Black-Scholes model.
We estimate the fair value of profits interest using the Black-Scholes model, which includes assumptions related to volatility, expected term, dividend yield and risk-free interest rate. We account for forfeitures of outstanding, but unvested grants, in the period they occur. Expense related to grants of equity-based awards is recognized as equity-based compensation in the Consolidated Statements of Operations.
Goodwill is not subject to amortization and is reviewed for impairment annually, or earlier whenever events or changes in business circumstances indicate an impairment may have occurred. We assess goodwill for impairment at the reporting unit level.
Our goodwill and indefinite-lived trademarks are held in our Marketplace segment, which contains two reporting units. Goodwill is not subject to amortization and is reviewed for impairment annually, or more frequently if events or changes in circumstances indicate an impairment may have occurred. We assess goodwill for impairment at the reporting unit level.
At December 31, 2022, we had no outstanding borrowings under our Revolving Facility. Share Repurchase Program On May 25, 2022, our board of directors authorized a share repurchase program of our Class A Common Stock of up to $40.0 million ("Repurchase Program"). The Repurchase Program was announced on May 26, 2022 and will be effective until March 31, 2023.
As of December 31, 2023, we had the February 2022 First Lien Loan and the Shoko Chukin Bank Loan outstanding and we had no outstanding borrowings under the Revolving Facility. Share Repurchases On May 25, 2022, our Board authorized a share repurchase program for up to $40.0 million of our Class A common stock (the “Repurchase Program”).
We also award stock options to certain employees. The awards are subject to the recipient’s continued service through the applicable vesting date. The grant-date fair value of stock options is estimated using an option pricing model.
We also award stock options to certain employees and consultants. The awards are subject to the recipient’s continued service through the applicable vesting date.
The revenue we earn from our daily fantasy sports offering is the difference between cash entry fees collected and cash amounts paid out to users for winning picks, less customer promotions and incentives in a period.
The revenue we earn from our Vivid Picks daily fantasy sports offering is the difference between cash entry fees collected and cash amounts paid out to users for winning picks, less customer promotions and incentives. We incur costs for developing and maintaining our platform, providing back-office support and customer service, facilitating payments and deposits, and shipping non-electronic tickets.
Cost of Revenues (exclusive of Depreciation and Amortization) The following table presents cost of revenues by segment (in thousands, except percentages): 2022 2021 Change % Change Cost of revenues: Marketplace $ 73,126 $ 51,702 $ 21,424 41 % Resale 67,382 38,915 28,467 73 % Total cost of revenues $ 140,508 $ 90,617 $ 49,891 55 % Total cost of revenues increased $49.9 million, or 55%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Cost of Revenues (exclusive of Depreciation and Amortization) The following table presents cost of revenues by segment (in thousands, except percentages): 2023 2022 Change % Change Cost of revenues: Marketplace $ 94,557 $ 73,126 $ 21,431 29 % Resale 87,627 67,382 20,245 30 % Total cost of revenues $ 182,184 $ 140,508 $ 41,676 30 % Total cost of revenues increased $41.7 million, or 30%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Net cash used in investing activities for the years ended December 31, 2021 and 2020 was $9.3 million and $7.6 million, respectively, which was primarily attributable to capital spending on development activities related to our platform.
Net cash used in investing activities for the year ended December 31, 2021 was $9.3 million, which was primarily attributable to capital spending on development activities related to our platform. 51 Cash (Used in) Provided by Financing Activities Net cash used in financing activities for the year ended December 31, 2023 was $43.4 million, which was primarily related to share repurchases and tax distributions to non-controlling interests.
Marketplace In our Marketplace segment, we act as an intermediary between ticket buyers and sellers through which we earn revenue from processing ticket sales on our website and mobile applications and sales initiated through our numerous distribution partners.
Marketplace In our Marketplace segment, we primarily act as an intermediary between ticket buyers, sellers and partners through which we earn revenue processing ticket sales from our Owned Properties, consisting of our websites and mobile applications, including Vivid Seats, Vegas.com and Wavedash, and from our Private Label Offering, which includes numerous distribution partners.
We believe that these metrics provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team.
Key Business Metrics and Non-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 our management team.
We also recognize revenue for referral fees earned on the purchase of ticket insurance by ticket buyers from third-party insurers. We recognize revenue from our Marketplace segment when the ticket seller confirms an order with the ticket buyer, at which point the seller is obligated to deliver the tickets to the ticket buyer in accordance with the original marketplace listing.
We recognize revenue from live event tickets when the ticket seller confirms an order with the ticket buyer, at which point control of the ticket is transferred because the seller is then obligated to deliver the tickets to the buyer in accordance with the original marketplace listing.
The increase in cost of revenues is fairly consistent with the increase in total Marketplace orders, which increased by 2.5 million orders, or 38%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
The increase was relatively consistent with the increase in Marketplace GOV, which increased by 23% during the same period. Resale Resale cost of revenues increased $20.2 million, or 30%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The February 2022 First Lien Loan requires quarterly amortization payments of $0.7 million. The Revolving Facility does not require periodic payments. All obligations under the February 2022 First Lien Loan are secured, subject to permitted liens and other exceptions, by first-priority perfected security interests in substantially all of our assets.
All obligations under the February 2022 First Lien Loan are secured, subject to permitted liens and other exceptions, by first-priority perfected security interests in substantially all of our assets. The February 2022 First Lien Loan carries an interest rate of SOFR (subject to a 0.5% floor) plus 3.25%.
The model requires us to make assumptions and judgments about the variables used in the calculation related to volatility, expected term, dividend yield and risk-free interest rate. The warrant liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Consolidated Statements of Operations.
Warrants The estimated fair value of warrant liabilities is determined using the Black-Scholes model, which requires us to make assumptions and judgments about the variables used in the calculation related to volatility, expected term, dividend yield and risk-free interest rate.
Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and 51 expenses, and related disclosures.
Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, 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.
Depending upon the results of that assessment, the recorded goodwill may be written down, and impairment expense is recorded in the consolidated statements of operations when the carrying amount of the reporting unit exceeds the fair value of the reporting unit. 53 For the year ended December 31, 2022, as part of our annual assessment, a qualitative goodwill assessment was performed and we determined it was not more likely than not that the fair value of our reporting unit was less than its carrying value.
Depending upon the results of that assessment, the recorded goodwill may be written down, and impairment expense is recorded in the Consolidated Statements of Operations when the carrying value of the reporting unit exceeds its fair value.
Resale Revenue for our Resale segment increased $35.8 million, or 67%, during the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase resulted primarily from higher order volume in the concert category.
The increase resulted primarily from higher order volume. Total Resale orders increased 0.1 million, or 21%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+6 added−0 removed1 unchanged
Biggest changeBecause our interest rate is tied to market rates, we will be susceptible to fluctuations in interest rates if we do not hedge the interest rate exposure arising from our floating-rate borrowings.
Biggest changeWe will be susceptible to fluctuations in interest rates if we do not hedge the interest rate exposure arising from our floating-rate debt, which may adversely impact our financial results.
Our objective is to mitigate potential income statement, cash flow, and market exposures from changes in interest rates. Interest Rate Risk Our market risk is affected by changes in interest rates. We maintain floating-rate debt that bears interest based on market rates plus an applicable spread.
Our objective is to mitigate potential income statement, cash flow, and market exposures from changes in interest rates. Interest Rate Risk Our market risk is affected by changes in interest rates. The February 2022 First Lien Loan bears a floating interest rate based on market rates plus an applicable spread.
A hypothetical 1% increase or decrease in interest rates, assuming rates are above our interest rate floor, would change our interest expense by $3.0 million based on amounts outstanding under the June 2017 First Lien Loan and February 2022 First Lien Loan during the year ended December 31, 2022. 55
A hypothetical 1% change in interest rates, assuming rates are above our interest rate floor, would have impacted our interest expense by $2.8 million based on amounts outstanding under the February 2022 First Lien Loan during the year ended December 31, 2023.
Added
Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar, while 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 fluctuations in foreign currency exchange rates against the U.S. dollar.
Added
Accordingly, we are subject to foreign currency risk, which may adversely impact our financial results. We are also exposed to foreign exchange rate fluctuations as we translate the financial statements of our foreign subsidiaries into U.S. dollars in consolidation.
Added
We have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more significant.
Added
Due to fluctuations in exchange rates resulting from the current macroeconomic environment, we may experience negative impacts on the translation adjustments resulting from the conversion of the financial statements of our foreign subsidiaries into U.S. dollars, as well as the revaluation adjustments on U.S. dollar denominated intercompany loans.
Added
Foreign currency translation adjustment included in the Consolidated Statements of Comprehensive Income (Loss) was $1.2 million during the year ended December 31, 2023.
Added
As of December 31, 2023, a hypothetical 10% change in foreign currency exchange rates applicable to our business would have impacted our foreign currency revaluation gain or loss, which is reflected in the Consolidated Statements of Operations, by $4.2 million. 56

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