StubHub (STUB) Q1 2026 Earnings Transcript

Image source: The Motley Fool.

DATE

Wednesday, May 13, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Founder, Chairman, and Chief Executive Officer — Eric H. Baker
• Chief Financial Officer — Constance James

TAKEAWAYS

• Gross Merchandise Sales (GMS) -- $2.2 billion, representing 7% growth, with international growth outpacing North America in the period.
• Revenue -- $446 million, up 12%, benefiting from normalized GMS-to-revenue conversion after market share investments made in 2025.
• Adjusted EBITDA -- $72.1 million, with a 16% margin, expanding over 400 basis points compared to the prior year.
• Gross Margin -- 85%, an increase of approximately 100 basis points, reflecting stronger customer acquisition efficiency and lower inventory costs.
• Sales and Marketing Expense -- 50% of revenue, a 500 basis point improvement from the previous year, attributed to efficiency gains at increased scale.
• General and Administrative Expense (G&A) -- Rose approximately 170 basis points as a percentage of revenue due to higher professional fees and IPO-related payroll taxes, expected to decline as the year progresses.
• Operating and Support Costs -- Approximately 3% of revenue, in line with internal expectations.
• Net Income -- $48 million, with commentary that reported net income incorporates stock-based compensation, nonrecurring items, foreign exchange and derivative gains, interest, and taxes.
• Free Cash Flow (Trailing 12-Month) -- $298 million, or 116% conversion of adjusted EBITDA, with a $189 million net benefit from working capital movements, and underlying free cash flow at $234 million (91% conversion).
• Interest Income -- $11 million generated in the quarter.
• Capital Expenditures -- Approximately 2% of revenue.
• Net Leverage -- 4.0x trailing adjusted EBITDA, down from 4.5x at 2025 year-end, supported by $1 billion in debt repayments over the past 12 months.
• Cash and Cash Equivalents -- $1.5 billion at period end, or $580 million net of seller obligations.
• Outstanding Debt -- $1.4 billion, with no maturities until March 2030.
• Fully Diluted Shares -- 399 million as of March 31, excluding performance-based RSUs and options, with expected dilution in the low- to mid-single-digit percent range for 2026.
• Preferred Equity Conversion -- $314 million converted into approximately 16 million shares of Class A common stock, increasing total to 374 million outstanding at quarter end.
• GMS Guidance -- Reiterated for the full year at $9.9 billion to $10.1 billion, representing 8%-10% growth.
• Adjusted EBITDA Guidance -- Annual range reiterated at $400 million to $420 million.
• AI Integration and Product Developments -- Announced 'distribution manager,' an AI-powered self-service tool for content rights holders to list and manage tickets, and launched API integrations with primary ticketing platforms, including Stanford University Athletics' ticketing provider.
• Advertising Initiative -- In the testing phase, with focus on building a consumer-friendly self-serve platform, optimizing auction mechanics, and improving user conversion rates.
• Recent Regulatory Developments -- Company referenced a recent antitrust settlement proposal in the live event sector that encourages nonexclusive open distribution, reinforcing the strategy of broadening distribution channels for rights holders.
• RSU Grants -- 13 million RSUs were granted in May as part of the employee incentive plan, with "the majority of the RSU awards for 2026 have already been granted."

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• G&A expense increased by approximately 170 basis points as a percentage of revenue due to "elevated professional fees and front loading of payroll taxes associated with higher stock based compensation following our IPO."

SUMMARY

Management reiterated full-year GMS and adjusted EBITDA guidance, attributing the reaffirmation to healthy cash flow, margin expansion, and sustained top-line momentum. The launch of AI-powered self-serve tools and deeper direct ticketing integrations illustrate ongoing technological advancement and strategy alignment for open distribution. Regional commentary underscored continued international outperformance, particularly in Latin America and Asia Pacific, with the live events calendar providing further tailwinds.

• Company specified, "we have not seen any of" in demand or trading-down effects despite macroeconomic fluctuations and concert cancellations, and noted resilient consumer preferences for live events.
• Constance James commented on regulatory risks, stating that "there was no price cap legislation that was in the king speech" in the UK and indicated enforcement of price caps remains unlikely and not business-impacting at this time.
• Integration partnerships with Anthropic's Claude and OpenAI’s ChatGPT were highlighted, with management emphasizing their complementary nature to core search channels rather than material current contribution.
• Preferred equity conversion and subsequent RSU grants affected share count but are expected to result in only low- to mid-single-digit percent dilution for the remainder of 2026 (excluding performance-based RSUs and options).
• Looking to the remainder of the year, management expects "slightly more profitability flowing through towards the second half" due to seasonality and event phasing, including the mid-year World Cup and the back-end loading of major sports and concert events.

INDUSTRY GLOSSARY

• GMS (Gross Merchandise Sales): Total dollar value of tickets transacted through StubHub’s online marketplace, before deducting fees and charges.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding stock-based compensation and certain nonrecurring items, as presented in company filings.
• Open Distribution: The process of enabling content rights holders to distribute and sell tickets through multiple, nonexclusive channels or marketplaces, rather than a single proprietary system.
• All-in Pricing: Pricing structure that transparently includes all mandatory fees upfront, adopted to align with consumer clarity and regulatory expectations.
• RSUs (Restricted Stock Units): Equity compensation granting employees rights to receive shares upon vesting, used by StubHub to align incentives.

Full Conference Call Transcript

Eric H. Baker: Thank you. Good afternoon, and thank you for joining us to discuss StubHub's first quarter 26 results. For reference, our first quarter earnings release and presentation are available under the Quarterly Results section of our Investor Relations website at investors.stubhub.com. Before we begin, please note that today's call will include forward-looking statements. These forward-looking statements are based on the company's current expectations and are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions it can make no assurance related to its expectations.

We refer you to our recent FCC filings for a more detailed view of the risks that could impact our future operating results and financial condition. We will also refer to non GAAP measures on today's call. Unless otherwise noted, our profitability and EBITDA discussions today refer to non GAAP adjusted EBITDA. A reconciliation of non GAAP measures to the most directly comparable GAAP measures is contained in today's earnings release available on our Investor Relations site. All financial comparisons, unless noted otherwise, are based on the prior year period. Joining me today are Eric H. Baker, our founder, chairman, and chief executive officer and Constance James, our Chief Financial Officer. They will provide opening remarks and then take questions.

And with that, I will turn it over to Eric. Eric, you may begin.

Constance James: Thanks, Jonathan, and welcome everyone joining us today. We are off to a positive start in 2026, with solid top line growth and increased profitability. GMS increased 7%, to $2.2 billion. And adjusted EBITDA margin expanded to 16%. We also generated healthy cash flow, which enabled us to further deleverage and strengthen our balance sheet. As a result, we are reiterating our full year outlook for GMS and adjusted EBITDA. On our year end call in March, we outlined our 3 key priorities for StubHub in 2026. Growth in our core resale marketplace, increased profitability, advancement of longer term distribution opportunities. The quarter demonstrated our team's execution against all 3 of these objectives.

Starting with growth in our core resell marketplace, we are leveraging our leadership position and scale to drive performance both in North America and globally. The live events and secondary ticketing markets remain healthy, with strong consumer demand and a robust 2026 event calendar. In addition to favorable market dynamics, our resell business is also benefiting from advantages resulting from our increased scale. In 2025, we invested in our competitive position. Increasing liquidity and selection, and building the infrastructure to support continuous improvement to the customer experience. In 2026, we are realizing the returns on these investments in the form of superior market leadership and even greater operating advantages.

We believe our leading position combined with inherent flywheels of our marketplace model, allow us to improve customer acquisition economics while growing the business. Of course, our market leadership is a direct result of our relentless focus on the consumer experience. StubHub's mission has always been to make it easier for fans to access live entertainment. Our resale marketplace allows fans to buy and sell tickets with choice, convenience, and trust. We deliver a differentiated experience to consumers based on our scale advantages. Fans choose StubHub because we offer broad selection, trusted transactions, and a simple user experience. Sellers depend on StubHub, for aggregated demand at global scale.

Our technology and data connect both sides of the marketplace more effectively over time. That is what makes our consumer experience unique and creates durable competitive advantages. All of this adds up to what we believe is the most recognized brand in the resale market for live events. In the first quarter, we made progress in expanding the supply side of our marketplace. Beyond individual and professional sellers to enterprise scale sellers including content rights holders such as professional sports teams, artists, venues, and other event organizers. We believe it is clear that the market is heading in the direction of non-exclusive, open distribution. The ticketing ecosystem including consumers, stands to gain from greater optionality and competition.

Fans want more access and choice, and content rights holders want to fill more seats by offering inventory through more channels. Much like airlines selling tickets across platforms, the goal for content rights holders is to sell more tickets at more efficient prices and maximize the fan experience and value of each event through event optimization. It appears the regulatory environment is also recognizing the value of nonexclusive open distribution. A recent proposal to settle an antitrust suit in live event space included nonexclusive distribution, reinforcing the importance of giving content rights holders and consumers greater choice in how tickets are distributed, discovered, and purchased.

On our last call, we discussed our shift from a business development led approach to more product led self serve platform strategy. Our goal is to enable broader adoption of open distribution across rights holders by creating a seamless experience to list, manage, and distribute tickets through our marketplace. In the first quarter, we announced 2 new developments that illustrate how we can use technology to access this market. The first is distribution manager. An AI powered self serve tool that allows artists, teams, and venues to list and manage tickets directly through StubHub. The product is designed to remove friction for rights holders, and does not require a technical team or complex integration.

A partner can use a simple prompt, to identify ticket types, set pricing and sales parameters, and list inventory directly on StubHub. Because the tool sits on top of more than 25 years of StubHub marketplace data, it can also provide real time pricing and demand signals. to content rights holders before tickets go live. This is an early iteration of the tooling we plan to continue developing for enterprise scale content. It is designed to make distribution simpler, more flexible, and more effective for rights holders while increasing access and selection for fans. We are also establishing direct connections with primary ticketing platforms.

By integrating directly with StubHub, primary ticketing, or access control, providers, can work alongside our marketplace to improve outcomes for rights holders and fans. Today, event organizers often list tickets exclusively through their primary sales channel. With systems that were not designed to synchronize inventory across channels. Making it difficult to expand distribution without added complexity. Open distribution, formerly known as direct issuance, changes that by integrating directly with the ticketing platforms organizers already use we can give rights holders access to StubHub's global demand without requiring them. To change systems disrupt their existing workflows, enter new distribution contracts. For example, in the first quarter, announced an integration.

With a primary ticketing company that tickets rights holders like Stanford University Athletics, among others. Through a direct connection between the primary system and StubHub's market, organizers can choose to list tickets on StubHub within their existing dashboard. Integrations like this enable all of the primary clients to activate StubHub as an additional distribution channel through a simple workflow. We also continue to develop advertising which represents an exciting opportunity to realize additional potential of our leading marketplace platform. StubHub sits at the intersection of high-intent consumer demand and live event discovery. Over time, we believe that creates opportunities to help partners reach fans in highly relevant ways while improving the overall experience on our platform.

We are in the testing phase with advertising, and our focus remains on building it thoughtfully in a way that is consistent with our broader consumer first approach. In April, we announced an integration with Anthropic's Claude that lets fans discover and browse live events. Claude users can access StubHub global catalog of live events with up to the minute price and seat level availability. The partnership builds on StubHub's ChatGPT integration announced at the end of last year. We view AI through 2 lenses, the opportunity to transform the end-user product and the ability to transform productivity internally through greater and faster innovation with higher efficiency.

We have several AI initiatives underway related to post purchase support, customer experience enhancement, product development, and expanded insights. Just to name a few. In conclusion, we are off to a positive start to 2026. With solid first quarter results that position us to achieve our financial outlook for the year. Our core resell marketplace continues to grow while increasing profitability. We are generating strong cash flow. And strengthening the balance sheet. And we are continuing to invest in technology and distribution opportunities that we believe will expand our reach over time. We remain focused on executing in pursuit of our vision, to build the global destination for consumers to access live entertainment.

With that, I will turn it over to Connie to discuss our financial results and outlook in more detail.

Operator: Thank you, Eric. Good afternoon, everyone. Before turning to our first quarter results, I want to briefly reiterate the financial framework aligned to our strategic objectives that Eric discussed. Durable GMS growth, meaningful margin expansion, and continued strength in free cash flow generation.

Analyst (Eric Sheridan): Our results in the quarter demonstrate progress in each of these areas. Beginning with GMS, our marketplace grew approximately 7% to $2.2 billion in the first quarter, reflecting contributions from all 3 drivers of our growth strategy. North American resale growth, continued market share leadership, and international growth. The market share gains achieved in 2025 now provide a foundation for margin expansion as we leverage the scale, network effects, and efficiency of our marketplace. International growth outpaced North America, with noteworthy performance in Latin America and Asia Pacific. Reflecting the continued strength of our global platform. As expected, our reported GMS for the first quarter reflects the comparability impact from the all in pricing implementation introduced in May.

We will fully lap that comparability period in the second quarter.

Eric H. Baker: Before discussing our income statement in detail, a reminder that my remarks will be on an adjusted basis. Excluding stock based compensation and nonrecurring items. Full reconciliations to comparable GAAP measures are available in our earnings release. Turning to the income statement. Revenue increased 12% year over year to $446 million outpacing GMS growth in the quarter. This reflects the normalization of GMS to revenue conversion as we lap our market share investments in 2025.

Constance James: Now that we have moved beyond that investment period, we expect conversion to return to more typical historical levels approaching 20% for the full year. Gross margin was 85% expanding approximately 100-basis-point year-over-year and consistent with our mid-80% operating framework. The improvement reflects stronger unit economics driven by increased efficiency in customer acquisition and servicing as well as lower inventory costs. Sales and marketing expense was approximately 50% of revenue, representing a 500-basis-point improvement year-over-year reflecting increased efficiency at scale. Operations and support costs were approximately 3% of revenue, consistent with our expectations.

G&A expense increased by approximately 170-basis-point as a percentage of revenue primarily driven by elevated professional fees and front loading of payroll taxes associated with higher stock based compensation following our IPO. We expect G&A to decrease as a percentage of revenue over the remainder of the year as the business continues to scale. Adjusted EBITDA was $72.1 million a margin of 16% which expanded over 400-basis-point year-over-year. The margin expansion reflects both underlying business growth and improved operating efficiency. More specifically, this improvement was driven by the combined impact of normalized revenue conversion, strong gross margins, and increased marketing efficiency. Each of these dynamics contributed in the quarter, resulting in the operating leverage outlined in our 2026 framework.

Operator: Net income for the first quarter was $48 million I would note that net income includes the effects of stock based compensation, nonrecurring items, foreign exchange and derivative gains, interest income and expense, and taxes, each of which can introduce variability relative to our adjusted results. We believe adjusted EBITDA helps to highlight trends in our operating results by excluding these items and the reconciliation to net income is available in our earnings release. Beyond the income statement, our cash flow performance reflects the advantages of our marketplace model. As a scaled asset light business, with gross margins above 80% and favorable working capital dynamics we generate strong and durable operating cash flow.

Analyst (Doug): This is further supported by a significantly reduced interest cost burden following the repayment of over $900 million in debt in 2025. During the quarter, capital expenditures were approximately 2% of revenue, and we generated approximately $11 million of interest income. We also continue to benefit from approximately $1.2 billion of NOLs, which provide meaningful cash tax protection in the medium term. Because our business is inherently seasonal, and individual quarters can reflect meaningful timing related swings in working capital, we believe trailing 12-month free cash flow is the most appropriate lens through which to evaluate our cash generation. We generated approximately $298 million of free cash flow on a trailing 12-month basis representing 116% conversion of adjusted EBITDA.

This includes approximately $189 million of net benefit from net inflows of buyer receipts and seller payments. As well as approximately $125 million of interest costs. Excluding these items, underlying free cash flow was approximately $234 million representing a 91% conversion of our trailing 12-month adjusted EBITDA.

Eric H. Baker: Turning to the balance sheet, We ended the quarter with approximately $1.5 billion of cash and cash equivalents or $580 million net of seller obligations. Net leverage improved to approximately 4x trailing adjusted EBITDA at quarter end down from 4.5 times at year end 2025, reflecting both earnings growth and continued strength in cash generation. Our financial position provides meaningful flexibility to execute against our capital allocation priorities. We remain focused on organic investment continued deleveraging, and disciplined dilution management while maintaining the flexibility to pursue opportunities that enhance shareholder value. Subsequent to quarter end, we repaid $100 million of our U.S. Dollar term loan.

Further demonstrating our commitment to deleveraging and our ability to deploy free cash flow towards debt reduction. This brings total debt repayment over the last 12 months to more than $1 billion, As a result, our total outstanding debt is approximately $1.4 billion with no maturities until March 2030. Related to our capital structure, during the first quarter, $314 million of preferred equity including our Series M, N and O shares, converted into approximately 16 million shares of Class A common stock resulting in 374 million common shares outstanding at quarter end. In May, we granted approximately 13 million RSUs under our employee incentive plan. Equity is an important component of compensation for employees and reinforces an ownership mentality.

At the same time, we are focused on dilution management, As you can see in the share count summary in our presentation posted to our Investor Relations website today, we had approximately 399 million fully diluted shares as of March 31, excluding performance based RSUs and options. Based on that fully diluted share count, we expect dilution to be in the low to mid single digit percentage range for the remainder of 2026 excluding performance based RSUs and options. As of today, we believe the majority of the RSU awards for 2026 have already been granted.

Turning to our full year 2026 outlook, our first quarter performance is consistent with the framework we outlined at the beginning of the year and supports our confidence in the health of the business. We are reiterating our full year outlook for GMS and adjusted EBITDA. GMS of $9.9 billion to $10.1 billion or year over year growth in the range of 8% to 10%. And adjusted EBITDA of $400 million to $420 million We guide on an annual basis given the inherent seasonality of live events which can vary quarter to quarter. We expect the first and second half contribution to full year GMS to remain broadly consistent with 2025.

In closing, our first quarter results are consistent with the framework we outlined at the beginning of the year. We remain focused on executing against these priorities, driving sustainable GMS growth, expanding margins through operating discipline, and generating strong free cash flow. And we look forward to reporting our progress throughout the year. With that, we will open the call for questions. Operator? At this time, if you would like to ask a question, press star. Then the number 1 on your telephone keypad. To withdraw your question, simply press 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the question. Maybe a 2 parter, if I can. In terms of what you are calling out in terms of leveraging the market share gains from last year in terms of this year's operating performance, can you talk to us a little bit about where we are in terms of baseball innings, in terms of seeing that in the financials today? And what the scope is for that leverage to play out as scale is built through the year?

And the second part of the question would be if you were to build that sort of scale and the leverage, and it would be at or above maybe your guided range for adjusted EBITDA as the year goes on, do you think about investing some of those gains back into the business or outperforming philosophically adjusted EBITDA as a guide? Thanks so much. Great to hear from you, Eric.

Constance James: Thanks so much for the question. Appreciate that. Before handing over to Connie on some of the financial details, we will say I think as you know, look we had set out and we said to take our leadership position and use that to continue to grow while we would inflect our margins, and we are glad to report that is indeed what is happening.

Operator: it is very exciting.

Analyst (Mark Mahaney): And we continue to, grow and build on our leadership position. Obviously, that is the whole underlying, basis that as you do that, you should get more operating leverage over time, which we have talked about before and we are very excited about. With that, I will hand it over to Connie. Yeah. Thanks, Eric, and appreciate Eric dialing in today. I think there is a couple elements to your question: 1, operating leverage, and then perhaps how do we think about phasing for the remainder of the year. I will take those in 2 parts here.

To your point, and as Eric mentioned, the whole intent this year was delivering on what we said we were going to do, which is top line growth and expanding margins. We know that the scale that we got to this year off the back of the investments from the prior year positioned us well and that is exactly why you are seeing that operating leverage. In terms of how we see this playing out in regards to phasing over the year, I point you to 2025 as a good guide for top line GMS as you think about H1 versus H2 split.

Eric H. Baker: And then, in relation to profitability, as you can appreciate, as the business scales throughout the year, because of the fundamentals in relation to our business model. You are naturally going to get incremental leverage as the business grows. So I would expect there to be slightly more profitability flowing through towards the second half. Great. Thank you. Your next question comes from the line of Douglas with JPMorgan. Please go ahead. Thanks for taking the questions. Can you talk more about the drivers of increased marketing efficiency? And Eric, just kind of your view on industry growth and degree of share gains for StubHub.

And then on open distribution, where do you stand on this kind of self serve and AI enabled platform build out, and if you could kind of give us some sense of pipeline around potential partners. Thank you. Sure. Douglas, thank you for the question. Appreciate it. A couple of different things here on here. And, again, I will touch on some and then let Connie give some more color. So I think in terms of growth and efficiency, which really fits on, being able to grow the business while inflecting margins and sort of how that works.

And, again, I think, fundamentally, as we have always said, when you have the leadership position in a marketplace business, this is what happens. You get more liquidity, you get more data, you have a better situation in terms of how you can manage your sellers. And all that goodness sort of flows through in that way. And I think that should--you know, that would continue. We believe in any marketplace business. And as we pointed out, I think in terms of growth, we think of growth or I do certainly as we have talked about on an annual and multi year basis as we think about it.

So look, the great thing is being in the live events industry is a great place to be. Having done this for, you know, 25 years, the industry has grown and grown. People love live events. They love attending live events. They are passionate about it. They are more and more events going on.

Constance James: The geographic scope of these events increases all the time going all over the world. So that is a wonderful driver of underlying growth. And again, if you are the largest player in the market, we feel there is tremendous opportunity that we continue to build on our leadership position.

Operator: In terms of the second part of your question, I think, on open distribution, we are obviously very excited about that.

Analyst (Mark Mahaney): We have talked about it.

Eric H. Baker: I think there is been a lot about, I think many people have seen that it is best for the consumer, and there have been a number of developments where it is been cited that basically if you have more competition, more outlets, it is a better thing, and anything that is good for the fan is good for us. In terms of specifically how we are developing that initiative, and as you point out last time, Douglas, we said, we are really trying to focus on getting that into a place where you can-- product productize it and make it turnkey and not business development oriented. And that is the focus for this year.

And so, we have made a couple, recent and I think to highlight that, 1 is around what we call, our distribution manager.

Operator: Which is basically using AI to power a self-service tool that allows artists and teams and venues to list and manage tickets directly through StubHub.

Analyst (Justin Post): So that is something that we have announced and is beginning to percolate out there. And then these primary integrations. So we also believe that when people are signed up with whoever they are access control company may be, we want to make it very seamless for them. To land with that platform and do what they want to do and we have had some exciting things I think also have been talked about, be it Stanford athletics and others. So we are excited about where all that is going. We think that the way of the world, but, again, we are really focused on building out the product this year. And I will pause there.

Constance James: I do not know, Connie, if you have anything to add. I would just echo what you, mentioned, Eric, which is, you know, the great news is we are now the clear market leader. there is a really healthy backdrop in relation to the live events calendar ahead of us and all of that allows us to continue to drive efficiency and while growing the business. So, we are really well positioned. Thank you both. Your next question comes from the line of Mark Stephen Mahaney Evercore. Please go ahead. Okay. I will ask you about, please, advertising and a little bit more on So I know you mentioned advertising is 1 of the kind of newer growth initiatives.

Sounds like you are still in testing phase. Any more color than that? Any more advertisers that you brought on to the network? We should expect materiality begin in 2027.

Operator: So any more color on that? And then international seemed like an area of strength, and you mentioned Asia Pac and LatAm. What drove it?

Analyst (Logan Whalley): Was it more activity with your current the current rights holders that you work with, or were you able to bring in more rights holders? Just a little bit more color on that international growth. Thank you very much. Sure. Thank you, Mark. I appreciate the question, and I will give you a give you some, responses to that. So in advertising, again, I just want to reiterate, as we said before, this remains a very exciting opportunity for us. And we have seen this in other marketplaces. And particularly, we talked about sponsored listings.

And how that can be a win both for the seller of the ticket and if done the right way for the consumer on the website.

Eric H. Baker: And so as we said we are really trying to do is get this right this year so that we make sure that it works and then we could scale it correctly. It becomes this wonderful self serve platform. In terms of, maybe giving some sense of what are the types of things we are testing? What does that actually mean? I would point to things such as how do you optimize the auction mechanic? And sort of get that right? How do we really think about the way we want to price it? How do we think about how we not only do not impact conversion rates, but maybe even improve them for the user?

And how we make it really additive for the user experience? And these are all important things because that is the number 1 thing is to make it work for the user. So we remain committed this year, as we have said, to getting that right, and, you know, we will report on when it becomes material down the line as we said. The second thing you asked about is international. We are obviously very excited as you are right. We said about international. This is a global business. it is great to have a global platform. I think what are the types of things that drive that?

I think you may have, noted or noticed there are many tours that are going international. there is a lot of excitement about Latin and Asia for many people in the market for how that content goes. I know my beloved Los Angeles Rams think, are gonna open the NFL season in Australia this year. So we are seeing just more and more events go through internationally And, again, when you have a leadership position and a global platform, you know, all that those benefits can accrue. So we are very excited about it. So that would be my commentary on those. And, I know, Connie, if have anything to add?

I just also say, you know, internally, we are continuing to make sure that we have the right talent and focus on building out the international business, as Eric mentioned. We have an amazing marketplace with a legacy that is really rooted in the international jurisdictions, and so, again, more live events are happening and, you know, the great news is given our clear market leading position internationally as well, there is opportunity for us. Okay. Thanks. Hey, Eric. I think that first game, I think, is against the 49ers. So may be a tough start, but the rest of the season should be fine. Well, listen. Mark, we support anyone who wants to attend.

Operator: Even if they are misguided on their fan support, but I appreciate it.

Analyst (Brian Pitz): Thanks. Your next question comes from the line of Justin Post with Bank of America. Please go ahead. Great. Thank you. Connie, I wanted to ask about your first half, second half phasing. It would seem the second half would be larger this year, just due to the impact of all in pricing last year and the comps. And just would love to hear your thoughts there. And then second question, the World Cup, love to hear your thoughts on how impactful that could be and how you think about your share in that market this year?

Eric H. Baker: Thank you. Yeah. And thanks, Justin, for the question.

Constance James: I think in regards to the phasing, you are absolutely right. We look at the shape of our business, mirroring what we see in the broader market and what we know to be true is that we sit here today, live events are going to scale throughout the year. So we have got obviously the World Cup coming across, you know, mid June to mid July, and then you have got the typical seasonality with concerts building across summer, and then you have got all 4 sports leagues towards the end of the year.

Eric H. Baker: And so, the business will scale. I think closer towards the second half. Again, I kind of point you towards what we would expect in terms of 2025 in relation to a shape, which was, again, a bit more back half weighted. In relation to World Cup, again, really excited about the opportunity that is coming our way. Here, but what I would say is that consistent with what we have discussed before, we believe that to be a tier 1 event.

Again, more meaningfully in relation to Q2 and Q3 following the event matchups, but the good news is, you we are excited to have an outsized portion of that share just given the benefits that we have of being the scaled leader. Great. Thank you. Mhmm. Your next question comes from the line of John Blackledge with TD Cowen. Please go ahead. Hey there. it is Logan Whalley on for John. Thanks for the questions. Maybe first, on your POS system, could you update us on progress there with ReachPro and how should we think about ability to drive more volume on the platform and maybe also how your share looks there versus the largest competitor.

And then on the regulatory front, could you update us on regulatory developments in The UK specifically as they relate to potential price gap proposals? Thank you. Sure. Thank you. Thank you for the questions. Appreciate it. I think, you asked about, our POS system, ReachPro, and then had some questions about The UK. So in terms of POS system, everything has been progressing. The way I think we articulated before that we continue to grow our share, bring people on board, and, I believe it I believe what we have said is that we will be the leader in that over the medium term, and that is nothing to change that sentiment. that is been going well.

Obviously, as we have also said before, by becoming that operating system for a number of sellers and even giving them a much better experience than what they have had historically, that helps people sell more tickets. And it helps them sell more tickets on StubHub, we believe, they have that data advantage. So we are excited about that.

Operator: That continues. In terms of your question about, I think, The UK and price caps, and so, yeah. No.

Analyst (Shweta Khajuria): I think we have we have always said, you know, we are always in a we have been in a very good environment for 20 plus years. People sell tickets. They love resale. Occasionally, there are jurisdictions that make noises about looking into price caps and somewhat, that has been basically few and far between. And when it is happened, it has not really worked. So by that, I mean, it ended up hurting consumers in those places. Where it reduces access to events, increases black market prices and fraud. In fact, our studies have shown over 4x the amount of fraud in those types of markets.

Secondly, it is become increasingly difficult to enforce as it is been as there is dynamic pricing in the primary market and the concept of face value goes away. All that is a long way of just couching it that is why we have not seen this spread and we do not see that as something that makes a ton of sense.

Eric H. Baker: Now that being said, and I will come back to your point about The UK, what is important is that we, of course, want to make sure we are educating regulators and educating legislators about why while it may be well intended in their mind, it does not work. And should not be pursued. And that is what we do. And we find people to be very receptive to that. And as they learn more, they realize it does not make a ton of sense. And certainly is worth even considering further or maybe not moving forward.

What we have seen, with The UK, I think today, they gave the king speech, and there was no price cap legislation that was in the king speech. I think as we have mentioned before, even if there had been, which there was not, this would have kicked off a multiyear process that may or may not have resulted in something as they are educated. In this case, that is pushed even further down the road to the next king's speech.

Constance James: So we think it is a further, if it happens at all. But I think it is just further evidence of the fact that these types of policies while maybe well meaning by some, just are not really good for consumers. And therefore do not gain much traction. Great. Thanks, Eric. Next question comes from the line of Brian Pitz with BMO Capital Markets. Please go ahead. Thanks for the questions. Maybe 2 broader ones. First, unlike last year, this year, we have already seen roughly a dozen concert tours already canceled. What do you think is really driving this, you know, out of maybe some of the unexpected health issues?

We are seeing some buzz around consumer concerns on higher ticket prices. Love to get your thoughts on that.

Operator: And then the macros changed noticeably since we last spoke 2 months ago. Have you observed, you know, any indication that fans may be trading down to lower priced seats or reducing the frequency of event attendance?

Analyst (Andrew Boone): Any thoughts there would be helpful. Thank you. Yeah. No. Thank you for the questions. Really appreciate it, Brian. So I think on the first thing you I think you are asking something about canceled events. And, kick it over to Connie, but we have not seen any of that in any way that is on our radar.

Eric H. Baker: So then Connie can tell you about that. that is exactly right. Again, we just ran the flash financials yesterday. there is no spike. Q2 continues to progress really well. Yeah. So that is not anything that we have seen. In terms of your second question is, I think, related to sort of do you think about is there any slowdown with a recession or gas prices going up and all those types of things. And I think, again, the quick answer is no. Do not see we have not seen any impact on that.

I think what is important, though, to con contextualize for everybody, and I have I have mentioned this before, is that having done this for, you know, 26 years now, we have always been an extremely resilient sector. it is growing through the throat. it is grown through everything. I would say COVID and the economy goes up, geopolitics go up and down. Why is that? I think it is because there are a couple reasons. 1 is there is tremendous passion in a fan has, and they love live events.

And so if you are a Green Bay Packers fan or a music fan, you are gonna go to that concert. that is not the, first thing you are gonna cut or think about. it is closer to an necessity than you may think. The second thing is, look.

Operator: We have various price points. We always have. Across the board.

Analyst (Jed): Nothing's really changed with that, but the steady state is, you know, half of all tickets on StubHub trade at less than a $100. And that is always sort of been the case. So you know, we really see it as fans are passionate about live events. it is always been something that is grown through thick and thin. And from where we sit today, that continues to occur, we see no reason why it will not continue happening. Great. Thank you very much. Your next question comes from the line of Shweta Khajuria with Wolfe Research.

Operator: Please go ahead.

Eric H. Baker: Okay. Thank you for taking my questions. I have 2 follow-up on some of the prior questions. 1 is what you just addressed, which is on macro Could you please comment on something like this when we saw, you know, in prior history at StubHub and when there was inflationary pressure and mix shift in wallet spend towards perhaps necessities, how StubHub actually did in terms of demand trends. that is question number 1. And then 2 is a follow-up on the World Cup impact. It is a tier 1 event. So is it fair to assume the impact sort of comparable to, you know, I guess, Taylor Swift type sort of contribution to your financials? Thank you.

Thank you, Shweta. Thank you for the questions, and I can talk about the macro. And I am sure Connie can reiterate some of the stuff on the World Cup. So I think on the macro, as I have said, again, we will reiterate the reasons that consumers are resilient. But in terms of to your question, why is that sort of lived experience? So you go all the way back when we started, we went through 09/11. Of course, was very small at that point, but the first tickets were sold in the 2000. So right after 09/11, it was not gangbusters. And then we lived through the great financial crisis.

Which I cannot I guess I cannot comment exactly on inflation, whatnot, but it was not a very happy time for lots of consumers. Continue to go through that. We have seen obviously I think, recently in 22 to 23 where inflation had, spiked relatively speaking.

Operator: Again, the company and live events continue to grow. So certainly through our lived experience in many cycles, at least through 26 years, that has always proven to be the case.

Analyst (Cameron): Again, short COVID that is what is happened. So that is what gives me that confidence and that lived experience on it. And, again, any more about the World Cup, Connie can comment on. Yeah. I am happy to add a little bit more color on that, Shweta.

Eric H. Baker: As we went through our process of evaluating the opportunity from the World Cup, Again, we included this as a tier 1, but to be crystal clear, it is not comparable to Taylor Swift. She is a 1-of-1. But what I would also just highlight, and Eric mentioned this earlier, is that 1 of the benefits of our Mark is that it is just very diverse. We have a number of various segments, geographies that we benefit from, and so we are not single threaded on any specific event in order to achieve our outlook. And, in fact, as we sit here today, Q2 is tracking well. You would have seen that we reiterated the guide. Okay.

Thank you very much. Your next question comes from the line of Andrew Boone with Citizens. Please go ahead. Thanks so much for taking my questions. I wanted to ask a little bit about the potential of the antitrust settlement that you mentioned earlier. Can you give us an idea of the spectrum of either operational or financial outcomes that may become available depending on kind of which way the swings, whether something more favorable is really important to you guys or whether this does not really materially move the needle.

Operator: And then I wanted to ask about your just adoption of AI chatbots. Can you guys help us understand what that looks like in the future? Understood it is small today, but what is kind of the bigger picture vision as you guys start to integrate with AI chatbots?

Analyst: Thank you so much. Sure. Thank you for the question, Andrew. And so I guess the first is around the Live Nation stuff with the DOJ and the second around AI chatbot. So I think on the first, I will just give you the straight quick answers. Like, it does not or everything that we are talking about here today and all of our guidance projections, dreams, and everything we want to do does not hinge on any outcome from the DOJ or Ticketmaster in any direction.

Constance James: So that is that. I think the only thing, you know, what I would reiterate is look. Anything that pushes more towards open distribution and it is better for consumers, meaning more selection, more ease of multiple channels, nonexclusively everything that we have talked about. that is always positive. And so it is great to see that is what is been talked about, but, again, it remains to be seen. does or does not get implemented. But, again, that is all you know, upside, if you will, potentially. In terms of your question on chatbot, I think you may be, talking about or alluding to some of the stuff we have done with AIs.

We have done interesting integrations with ChatGPT and Claude.

Operator: As we sit here today, so the way I would think about it is we want to be wherever consumers are gonna be in the future. Through any channel and every channel.

Analyst (Brian): As we sit here today, we do not see any changes in consumer behavior. The Google channel is just as powerful as ever through traditional search, but we know we want to be ahead of the curve on anything that may or may not develop. And so as we think about it, we want to make it so that the experience is as easy and as seamless to meet consumers where they are. And we think that is part of sort of using our data and distribution.

Constance James: To provide the best experience for consumers and also for the content right holders when they do open distribution. So they know they are going through every channel and every way to reach everyone. And so that is our thought process there. Thank you. Your next question comes from the line of Jed Kelly with Oppenheimer. Please go ahead. Hey, great. Thanks for taking my question. Just getting back to the concerts and the open distribution.

Operator: Is that more of a conversation with the promoters? and if you are able to reach a couple of promoters,

Analyst: That can scale relatively quickly, or is it with the venues And then just as a follow-up, how should we think about price caps in individual states in The US? Thanks. Sure. So okay. So I think, so 2 questions there. So the first on sort of the open distribution, Jed. Again, this is really the concept is that anyone who has a ticket to sell should use our data and distribution in non-exclusive way to reach consumers and do well. That can be anybody who is sort of issuing a ticket.

Eric H. Baker: Sometimes on the it could be a venue, it could be a promoter, it could be the artist himself. We are sort of indifferent to that. And it should work for anybody depending on how they have decided to control this distribution of the tickets. So that is how we sort of think about that. And, again, as I have emphasized before, it is really about just making the product so simple.

Constance James: And so seamless, whether it is through, just linking it up to us or integrating whatever their primary is, that it is just a no brainer that you are going to want to reach more consumers on a nonexclusive basis. So that is a little bit of how we think about that.

And then, again, I think you are talking about I have already addressed sort of the price caps and why we think that really does not work well for consumers. it is not consumer-friendly, and we do not see that going I think if you are talking about fees, I guess what I would say again is sort of similar to sort of the types of economics that do not make a lot of sense. But, I think what I would point to is really what the states have been after is the transparency, which was the all in pricing.

And so a lot of what we have seen is that when it comes to fees, the key thing is making it very clear that consumers know what they are paying and making very clear that it is all in upfront. that is why we spend time actually lobbying for all in pricing, and we think that any development like that is good for a consumer, and makes people compete based on what is good for the consumer will be good for StubHub. Thank you.

Operator: Your next question comes from the line of Cameron Mansson-Perrone with Morgan Stanley. Please go ahead.

Eric H. Baker: Thanks, and good afternoon. Follow-up on Claude and OpenAI partnerships. I am just curious if you could provide some color on the level of activity that you are seeing move through those channels so far.

Operator: Obviously, it is a little early for Claude, but maybe for OpenAI. And then how you see those integrations with those platforms or with similar platforms evolving over time? Thanks.

Analyst: Great. Thank you for the question, Cameron. Appreciate it. Again, what I would say is our whole point of view is we want to be where consumers are where they may be in the future, and we want to meet them and have them be able to meet with us through multiple touch points in the best product experience. Clearly, everything happening with AI and how it can be applied, including through some of these platforms, is an important thing to be on the cutting edge of, and sort of that is what we have done and integrated with.

Those are not material things right now, but, again, we are always thinking to the future and these things can be exciting and we see it even as complementary channels to the strong channels that we have not seen any impact on today. So that is-- you know, we just think more and more that our advantage of being the scale player and the leader in the marketplace with the best product and the best technology and the best data distribution should advantage us to work through any and all distribution channels and any and all technological developments as long as we are there.

And that is why it is important that we are on the front foot working with folks like Claude and Anthropic and ChatGPT. Helpful. Thanks. Your next question comes from the line of Jason Bazinet with Citigroup. Please go ahead. I just had a question on the sales and marketing. You guys noted that the sales and marketing expenses were 50% of revenues down from 55% a year ago. But if you go back 2 years, it was 46% of revenues. And if I go back 3 years, it was 37% of revenues. So what is going on? Why is it sort of up over the long term? And what is the right sales and marketing intensity for this business?

Yeah. I am happy to take that 1. If you step back and you really think about the course of the business and the journey that we have been on in StubHub, I think that there is a clear understanding of what we have been trying to do. So over the course of, you know, both 2024 and 2025, there was a period of investment.

What we know to be true is that being the clear market leader in a marketplace environment creates a tremendous amount of scale And so as you look at those various investments that I can tell you, they have been very deliberate to drive specific outcomes in which we are really pleased with the ultimate result. As we sit here in 2026, we have been very clear about what our financial framework is for this year. Now that we have reached that level of scale being the clear market leader, which is our ability to not only drive top line growth but also expand margins, and that is exactly what you are seeing show up in Q1.

7% top line growth, 400 basis point improvement on the bottom line, and as I mentioned, we would expect further improvement as you look through the course of the year. Thank you. Mhmm. Your next question comes from the line of Brian Fitzgerald with Craig Hallum Capital Group. Please go ahead. Hey. Good afternoon, Eric, Connie. Take rate, was up over 100-basis-point both year over year and sequentially. Curious what the main drivers of that were and if that level is sustainable going forward? Yeah. Happy to take that. Good to be with you today, Brian. Again, it was really an intentional outcome of the strategy that we set forth this year.

So, if you rewind back to 2025, as I mentioned, it was really a period of investment in order to accrete market share. We are really pleased, again, with our outcome now being the clear market leader. So what you are seeing is a more normalized level of this GMS to revenue conversion. What I would say looking forward is that we expect that to continue to return to what I will call more typical historical levels, think approaching 20% is a blended rate for the full year. Hopefully, this is just a change in our strategy again as we really focus on driving the top line expanding margins, all of which is again the benefit of reaching scale. Great.

Thank you. Thanks. Next question comes from the line of Brandon Ross with LightShed Partners. Please go ahead. Hi. Thanks for taking the questions. I guess a couple of follow ups to prior questions. First, on the Live Nation settlement. 1 thing we noticed is that while the settlement allows venues to sell tickets through other platforms, it stipulates those sales can only be through other primary ticketing marketplaces. So if that gets implemented, does that change your open distribution or direct issuance strategy maybe give you desire to get into real like, traditional access control primary ticketing.

And then on the price caps, Ontario, recently went to price caps, and Toronto is a pretty big city, so maybe a decent case study there. I know it is early, but can you just kinda tell us what you see? Sure. Brandon, thank you for the questions. Appreciate it. I think in terms of the Live Nation stuff and sort of as we would say, what we have observed is basically everything's about opening up distribution, allowing it to open up in terms of the specifics and the things that they may try to negotiate and how they wanted define it.

We will see where it all shakes out, but I think it is very clear at least to me when you look at it, that it is really about more competition for consumers. And creating, an open distribution thing. And, again, as I said, we are whatever happens, if nothing happens there, nothing changes with conviction of everything we are doing, but it certainly seems like, at least the indications are it will be better than the status quo or status quo anti. And then in terms of, as you mentioned again, we have addressed the price cap stuff. there is always been jurisdictions over the years that have looked at doing this stuff, and they rule it out.

And, you know, obviously, then there becomes a lot of details in terms of how that works, if it works, and oftentimes, they get rolled back. But again, at this point in time, there is nothing that is materially impacting our business, and so, we will see how everything plays out. Thank you. Your final question comes from the line of Lloyd Walmsley with Mizuho Securities. Please go ahead. Thank you. This is Wei Kiong calling in for Lloyd. Congrats on the solid results for I have 2 quick questions. Number 1, I think it is been almost half a year since you recalibrated your market share marketplace take rate.

Seemingly, it seems to be doing well, but can you help give us an update on vendor reception and, also maybe the industry competitive dynamics you have observed so far? And secondly, was wondering if you could comment on the monthly GMS growth Trend in the quarter and then in the month of April. Curious how much the outsize of the tax return this year is helping. Thank you. Thank you for the question. Appreciate it. I will give it to Connie on some I think he had some financials. 1 thing I think sort of if I take the question, think, is basically saying, wow. You have been able to grow while increasing your margin and inflecting margins.

And so how is that possible to do? And I think, again, as we as the leader in the leading marketplace, we are able to provide the best possible service, the best liquidity, the best possible data, and distribution for everyone in a great experience for consumers. And so I think the, performance sort of speaks to that, again, as we have talked about and as we have said, we are able to grow while inflecting margins through these various levers, and we expect that to continue along the lines we discussed.

But with that, I will hand it over to Connie maybe briefly as we wrap up about I think the question was about how are things looking as we move forward in this quarter. Yeah. I am happy to take that. The good news is as we sit here today, the second quarter is shaping up in line with our expectations hence why we reiterated our guide for the full year. So, we look forward to giving you more of an update.

Again, we do not look at things on a monthly basis, but rather, again, we are really focused on how the full year shapes up, and the good news is we have all of the building blocks intact, North American Growth, clear market leadership, and importantly, all in the backdrop of a healthy live events calendar. So, we look forward to sharing more as the year progresses. Great. Thank you. That concludes our question and answer session. I will now turn the call back over to Eric Baker for closing remarks. Thanks again, everyone, for joining us today.

We are executing well against our business and financial objectives, and our focus remains growing our top line, expanding our margins, and continuing to pursue initiatives to broaden our reach And we look forward to continuing to update you on the progress in the months to come. Have a great night. Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.