Eventbrite's shares are plunging after its losses tripled last quarter
- Eventbrite plummeted as much as 35% on Thursday after the events group's losses more than tripled in the first three months of 2019.
- The company's market value has tumbled from $2.8 billion when it listed its shares in September to less than $900 million.
- Eventbrite stomached higher product-development and personnel costs as it worked to integrate its Ticketfly acquisition.
- The company will "continue to face hurdles that will inhibit revenue growth, including the focus on migration efforts and the churn from venues that decide not to migrate to our platform," its executives wrote in a letter to shareholders.
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Eventbrite shares plummeted by as much as 35% on Thursday after its losses more than tripled in the first three months of 2019. The events group stomached higher product-development and personnel costs as it struggled to integrate its Ticketfly acquisition.
Nearly 800,000 creators used Eventbrite's platform to plan, promote, and produce 3.9 million events and sell 265 million tickets in 2018, according to its website. However, the company's market value has tumbled from $2.8 billion when it listed its shares in September to less than $900 million.Eventbrite's net revenue rose 9% to about $81 million as ticket sales on its platform - from which it takes a cut - jumped 15% to 27 million, according to its first-quarter earnings report. However, operating expenses climbed 23% to about $61 million as product-development costs surged 62% and general and administrative expenses jumped 26%. As a result, Eventbrite's operating loss mushroomed from $3.1 million to $10.1 million.
Stock awards were a key driver of the higher costs. Stock-based compensation surged more than 180% to $8.1 million in the period, reflecting new hires and increased headcount following acquisitions. The payouts contributed to a $5.5 million free-cash outflow in the year to March - a sharp drop from over $29 million in free cash flow in the preceding 12 months.
Eventbrite's Ticketfly acquisition has been problematic. It stomached a $6.3 million charge after hackers accessed the personal details of about 27 million Ticketfly accountholders in May 2018. It has also struggled to absorb Ticketfly's business and satisfy its users.
"We took on a challenge when we acquired Ticketfly, as it marked a significant expansion in our commitment to their main customers, music venues," said CEO Julia Hartz and CFO Randy Befumo in a letter to shareholders.
"We may see meaningful migration loss as we move to shut down the Ticketfly platform in the second half of the year," they added. Eventbrite is working to minimize that loss by rolling out new functions to meet the needs of music venues, Hartz said on the company's first-quarter earnings call.
However, Eventbrite will "continue to face hurdles that will inhibit revenue growth, including the focus on migration efforts and the churn from venues that decide not to migrate to our platform," its executives wrote in their shareholder letter.Nonetheless, they plan to ramp up investment in the second quarter. They expect net revenue of between $74 million and $78 million, and adjusted EBITDA of between zero and a $4 million loss.
Eventbrite's shares trade at about $17, less than half their closing share price on September 20, the day of its intial public offering.