Consumer ticketing giant Eventbrite’s long-awaited initial public offering is moving forward after a period in which the San Francisco-based company drove revenue growth in an extremely crowded global market.

Eventbrite’s dual strengths are its simplicity for clients to sell and market event tickets while acting as a marketplace and point-of-sale for consumers. It takes a small percentage of each ticket sold and a small flat fee as well when it processes payments.

Founded in 2006, Eventbrite has raised $332.3 million in a variety of funding rounds. Since then, they’ve removed many of the legacy roadblocks to effectively managing and marketing events. The company plans to raise $200 million through its IPO, and trade under the symbol “EB,” according to the company’s S-1 filing. The company has not listed a share price yet, or specified when it will actually go public. Speculation has been that it will be before the end of the year.

Part of the problem for Eventbrite going forward, which is evident from the filing, is that most of the company’s growth has been counter-balanced by increased spending. Eventbrite posted a net loss of $40.4 million in 2016 and $38.5 million in 2017, and doesn’t expect its strong revenue increases stemming from acquisitions to necessarily continue into the future, the document, filed on Thursday with the Securities and Exchange Commission, revealed.

Right now, the company’s spending on operations is outstripping its revenue, and it expects costs to increase going forward; it also has $66.36 million in debt to pay off. Eventbrite’s top competitor Live Nation also posted a small $6 million loss in 2017, so this strategy has precedent. Live Nation sold 500 million tickets last year compared to Eventbrite’s 203 million.

Running a truly global ticketing operation isn’t cheap.

“We also expect our costs to increase in future periods as we continue to expend substantial financial resources on technology infrastructure, product and services development and enhancement, international expansion and localization efforts, business development and acquisitions, sales and marketing and general administration, including legal and accounting expenses,” reads the risk factors in Eventbrite’s filing. “These investments may not result in increased revenue or growth in our business.”

The Cost of Going Global

International growth, as well, may not be as strong a catalyst as it has been in prior years. In 2017, 70 percent of the company’s revenue came from the U.S. market, down just three percent from 2016 despite a variety of global acquisitions. Integrating and operating ticketing services in a variety of countries ranging from Brazil to the UK and Australia also opens Eventbrite to a variety of complex risks from currency fluctuations to customer service.

“We plan to continue to expand our international operations as part of our growth strategy,” states the filing. “Despite our experience operating internationally, future expansion efforts into new countries may not be successful. Our international expansion has placed, and our expected future international growth will continue to place, a significant strain on our management, customer service, product development, sales and marketing, administrative, financial and other resources. We cannot be certain that the investment and additional resources required in expanding our international operations will be successful or produce desired levels of revenue or profitability in a timely manner, or at all.”

One path forward would be to become more acquisitive when it comes to event technology companies instead of other ticket selling platforms. Overall, about 90 percent of Eventbrite’s revenue is associated with payments processing, with all its sales and marketing and venue ticketing tools available for free. A new payment processing deal was announced with Square last year to help streamline the existing process that is extremely complex.

A wider variety of products for partners that sell the most tickets could help drive revenue outside ticketing fees, since just 54 percent of the company’s net revenue came from the 95 percent of customers that signed up for themselves, who are likely less sophisticated and sell a smaller volume of tickets. Eventbrite doesn’t detail the nature of its deals with larger clients that are housed under its Eventbrite Premium product tier that includes the ability to rent equipment and better customer support.

Improving their event technology offerings would bring them closer to the model embraced by business-to-business event technology companies like Cvent and Aventri, which are in an arms race to build up their platforms. It may not be in their consumer event wheelhouse, but the growth of the experience economy and the emergence of technologies like augmented reality mean Eventbrite will have to innovate once again to remain relevant if annual churn begins to increase.

Eventbrite boasted a 97 percent retention rate in 2017, meaning its customers aren’t jumping ship, yet ticketing fees alone represented about a third of its revenue ($71 million of $201 million total revenue). Bigger customers have more complex needs, and there is still a huge wide-open market providing services to those holding large and complicated events.

Was Ticketfly a Bargain?

Eventbrite’s acquisition of Ticketfly last year was a big deal, and a look behind the financials behind the deal show why the timing made so much sense.

In the filing, Eventbrite breaks out Ticketfly’s 2017 financials, showing $33.3 million in sales through August 31, 2017. This projects out to $50 million on the year and Eventbrite paid $200 million for the company, amounting to a 4x multiple which is high but not unheard of, according to Seth Borko, Skift’s senior research analyst.

But taken in the context of Pandora’s previous acquisition of Ticketfly, Eventbrite could have gotten a bit of a deal. Pandora acquired Ticketfly for $335 million in October 2015, but eventually copped to a $131 million impairment charge on the deal when selling to Eventbrite.

So, Eventbrite got an asset previously valued at $335 million for just $200 million. Despite the headaches caused by Ticketfly being hacked and disabled for weeks earlier this year, the boost to revenue is welcome for Eventbrite, which needs to power a continued period of revenue growth once public.

Photo Credit: The Eventbrite headquarters in San Francisco. Eventbrite