SFX had their third quarter earnings call today in which they discussed—and expanded upon—their quarterly earnings report released this morning. The report is, overall, a rosy one that boasts increased revenue quarter-over-quarter and year-over-year, as well as increased attendance at their events and higher “platform revenue” from resources like Beatport and ticket fees. You can read the report, or Billboard’s fine summary, and get the picture.
We actually listened in on the call and noticed a few other pretty big takeaways not specifically mentioned in the report, and at least one that wasn’t mentioned at all. You can listen too, if hearing old dudes boast about the monetization of our favorite subculture is your thing, and if meaningless corporate-speak like this doesn’t make you want to stab yourself in the eye:
“Since last quarter’s call we’ve made continued progress with our strategic plan to drive growth by extending our signature events into new geographies while synthesizing our digital efforts around Beatport. Other quarterly highlights include the recognition of significant revenue and EBITDA from our marketing and sponsorship arrangements, the completion of add-on financing of $75mm, and the closing on the acquisitions of Air, Monumental, and Plus Talent. In all it was a productive quarter which begins to demonstrate the efficacy of our business plan and the power and value of the platform we’ve built.”
Ugh, right? Well we took one for the team, and here’s what we walked away with:
1. It’s all about expansion and consolidation:
As we’ve reported, SFX has been on a buying spree lately, snatching up promotion agencies, ticketing companies, and big-name concerts like crazy. Beatport, Rock in Rio, Plus Talent, and ID&T are just a few. A recently announced relationship with PRISA Radio is their latest effort to expand further into Latin America and Europe. With this expansion comes the need to consolidate services and functions and, from there, everything pretty much follows…
2. Expect layoffs:
Remember that 2013 “fucking bloodbath”, when SFX had just purchased Beatport and laid off dozens of employees in San Francisco and Denver? You can expect even more of that. In today’s call, CEO Robert Sillerman said, “You can expect to see a not-insignificant shift in assignments and reduction in workforce, all of which will go to improve efficiency and of course improve EBITDA.* How many layoffs? And will they be stateside? Who knows. We’ll find out soon enough, though; that much is certain.
3. Beatport is about to get bigger:
The SFX digital empire currently consists of 59 websites, many of which require separate log-ins or accounts. Today Sillerman and CFO Rich Rosenstein both spoke about plans to consolidate those 59 websites under the Beatport brand. Sillerman said that Beatport has 50 million users and, separately, “over 300 million incremental people have visited our sites and viewed our content.” SFX is currently testing “a robust consumer site with one log-in” that will launch in beta next month, drawing those hundreds of millions of eyes and dollars to the same place.
4. “Cashless” is the future:
SFX launched their cashless payment system at Mysteryland this year, and it was such a success that the company plans on rolling it out to all 2015 festivals. The system, which utilizes RFID chips in wristbands connected to checking or credit accounts to
allow require attendees to pay without cash, has resulted in a “significant” impact on sales at other festivals, though SFX has not released official numbers for their concerts. Rosenstein said that SFX is “very committed to cashless,” and that the system is powered by MasterCard.
5. Sponsorship is the SFX lifeblood:
Though both Rosenstein and Sillerman declined to comment on exact revenue figures brought in by individual sponsorships, they happily listed brands that have signed on as partners to support SFX events: T-Mobile, MasterCard, and Corona were specifically mentioned, as well as a new partnership with Skol beer in Brazil. The press release mentions a $10 million figure for approximate sponsorship revenue in the third quarter, and says “Over the last eleven months SFX has developed important long-term relationships with leading brands, including the third quarter announcement of our multi-year global partnership with MasterCard. We believe these partnerships confirm that the SFX platform is a highly effective and efficient means for major global sponsors to reach millennials around the world.”
SFX (NASDAQ: SFXE) is currently trading down 1.11 (22.38%) at $3.85.
*EBITDA: Earnings before interest, taxes, depreciation, and amortization. Read about it here.
Tomorrowland image by Global Stomping via flickr Creative Commons