Eventbrite’s Slow Ticketfly Integration Leads to Growing Losses

It’s hard to appease investors as a public company when you don’t make money and routinely miss earnings estimates, as Eventbrite is finding out following its initial public offering last year.

The company’s purchase and integration of Ticketfly, which was supposed to provide a major boost for the company’s ticketing business, is taking longer than expected and has proven the difficulties of scaling an event technology company to global heights. Having Live Nation, the world’s biggest ticketing operation, as a competitor adds additional pressure.

The time and cost of creating a single platform for all its event technology offerings are dragging the company down in the eyes of investors.

Eventbrite missed its guidance on earnings per share, losing $0.13 per share instead of the $0.08 expected by analysts. Operating expenses grew 23.1 percent year-over-year, with product development and administrative costs surging. The company’s stock price declined around 30 percent after earnings dropped amid worries that the company’s focus on retaining current customers will come at the cost of new business.

“We took on a substantial challenge when we acquired Ticketfly and spent time and resources to address the product demand and competitive landscape,” said Julia Hartz, CEO and co-founder of Eventbrite, on the company’s first quarter 2019 earnings call this week. “This resulted in a complex and consuming integration process. Internally, resources dedicated to Ticketfly has been primarily focused on integrating existing revenues as opposed to delivering net new growth… While we recognize we have multiple opportunities beyond ticketing, we appreciate that we will only earn the right to take on those possibilities if we deliver healthy growth for our business on a sustained basis.”

Is there any good news for Eventbrite? Well, yes. Net revenue grew 9 percent to $81.3 million driven by a surge in gross ticket fees from platform users who signed onto the platform themselves. Paid ticket growth overall grew 14.5 percent as the company sold 27 million tickets in the first quarter. People are buying more tickets to events run by small- and medium-size operators, boding well for the event industry at large.

Eventbrite executives worry, though, that churn from the complex integration will lead current customers to choose other event technology venues when it comes time to switch systems. As bad as things have been, they could look worse when the company loses mid-scale clients that may seek alternatives when migrating to a new platform. Hartz hopes the worst is over.

“We’ve seen an acceleration again in the migration pace in Q1 that is closely linked to the product capabilities that we’ve now launched on the platform, and we’ll continue to see that momentum increase as we get to the second half of the year where we’re going to be sunsetting the platform,” said Hartz. “I also think that we faced the challenges of migration loss more heavily in the second half because of that sunset commitment to the platform. On the non-music verticals and the trends that we’re seeing there.”

So Eventbrite’s core ticketing business is growing as the company’s prospects remain muted by costs from integrating Ticketfly.

They’re scooping up smaller clients at a time when the company’s future strength in the middle of the market is mired in doubt. The wider event technology landscape, however, remains ripe for disruption if Eventbrite is able to successfully switch gears back to what made them an industry powerhouse.

“Outside of music,” said Hartz, “our competitive landscape has been unchanged since [going public].”