EVENTBRITE, INC. (EB) recent IPO has put it firmly on the radar of investors looking for growth stocks. The company, whose price popped by 59% on the first day of trading, was started in 2006 and is based in San Francisco. It markets events and sells tickets for its online platform.
At the end of 2017, Eventbrite had 700,000 of what it calls "creators," or event organizers, who sold 203 million tickets for three million events across 170 countries. Those figures translated to net revenues of $201.6 million in 2017, an increase of 51% from previous year figures. In the first six months of 2018, the company has already minted $142.1 million. Despite the growth in its revenue figures, however, Eventbrite has consistently reported losses due to higher sales and marketing costs. It lost $40.4 million in 2016 and $38.5 million in 2017 — and this year does not promise to be any better. As of June 30, the company was already $15.6 million in the red. Overall, Eventbrite expects to see 1.1 billion paid tickets and generate $3.2 billion in gross ticket sales this year. (See also: 7 Best Startups To Work For.)
How Does Eventbrite Make Money?
Eventbrite’s main source of revenue is a percentage cut from each ticket sold for an event. “We grow with creators as they plan, promote and produce more events and grow attendance,” the company stated in its S-1 filing. Its online platform offers creators three packages — Essential, Professional, and Premium — which offer different features and fees. While the Essential and Professional platforms are free for event creators to use, the cut taken by Eventbrite differs by tier. (See also: Amazon Sets Its Sight On U.S. Ticketing Market.)
For the Essential package, the company takes 2% from each ticket sold. For the Professional platform, the company takes 3.5% from each ticket sold. That's in addition to a 3.5% credit card processing fee and a $0.99 charge per ticket processed. The Professional package offers customers additional features, such as customizable checkout forms and detailed sales analytics. Charges for the Premium package are custom and based on a minimum threshold reached in ticket pricing. Customers also get branded and customizable forms and content. Offline, Eventbrite also offers rental equipment for box office and entry.
The services outlined above also enable Eventbrite to collect customer details, such as credit card data and personal details. The data is shared with event organizers or is used internally for business purposes, such as customer segmentation.
Besides making sales through tickets, the Eventbrite app also offers other services to streamline the check-in process for event organizers. The Entry Manager app is a check-in app that validates attendee ticket barcodes. The At The Door app is for last-minute sales that enable event attendees to purchase tickets with credit cards at the door. The app comes with a $10 card reader, which is refundable, and a printer worth $300. Other card readers, such as the one offered by Square Inc. (SQ) have closed Application Programming Interfaces (API), meaning customers cannot connect ticket sales data directly to their website to analyze data. Eventbrite claims that its card readers offer this facility and enable customers to slice and dice ticketing data from its online platform. While it has currently waived processing fees for credit cards for customers who use its readers, Eventbrite may presumably have another source of revenue from fees, after it reaches a certain threshold of card reader numbers.
Future Revenue Streams
While Alphabet Inc. company Google (GOOG) already dominates online marketing, Eventbrite has carved a niche in the event discovery space. Online ticketing is a relatively new business, whose contours are still being worked out. As such, the company intends to expand its revenue channels in the future. According to its S-1 filing, Eventbrite plans to expand its revenue opportunity to tours and attractions, movie theaters, performing arts, and spectator sports. This means that it will begin offering tickets for these experiences on its platform. In its S-1 filing, Eventbrite has outlined several future trends in its favor, such as preferences for experiences over products by customers and a 44% increase in employment figures between 2010 to 2020 for the event management industry.