Vivid Seats Inc

NASDAQ:SEAT

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Kate Africk, executive]

Good morning, and welcome to Vivid Seats Second Quarter 2024 Earnings Conference Call. I'm Kate Africk, Head of Investor Relations at Vivid Seats. Joining me today to discuss Vivid Seats results are Stan Chia, Chief Executive Officer; and Larry Fey, Chief Financial Officer. By now, everyone should have access to our second quarter earnings press release, which we released earlier this morning. The press release, as well as supplemental earnings slides, are available on the investor relations page of Vivid Seats website at investors.vividseats.com.

During the course of today's call, management may make forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including the risks and uncertainties described in our earnings press release, our most recent annual report on Form 10-K and our other filings with the SEC.

On today's call, we will refer to adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures that provide useful information for our investors. To the extent reasonably available, a reconciliation of these non-GAAP financial measures to their corresponding GAAP measures can be found in our earnings press release and supplemental earnings slides.

And now, I would like to turn the call over to Stan.

[Stanley Chia, executive]

Good morning everyone, and thank you for joining us today. We are halfway through 2024 and pleased to deliver another strong quarter with great revenue and adjusted EBITDA growth. In the second quarter we executed with discipline, delivering great results while opportunistically leveraging our unique assets and capabilities. These results are evidence of our differentiated offering, dynamic model and our strong market position.

We made progress this quarter across a number of key priorities. But to begin, I'd like to touch on our financial highlights. In the second quarter, I'm proud to share that we delivered $198 million of revenues and $44 million of adjusted EBITDA, representing 20% year-over-year revenue growth and 42% year-over-year adjusted EBITDA growth. Larry will speak in more detail, but these results demonstrate our ability to drive strong growth, capture repeat orders and generate strong unit profitability. After remarkable growth years in 2022 and 2023, live events remain a priority amongst consumer spending, as we continue to see a preference towards experiences while growth has moderated towards more historical norms.

On the supply side, the industry has displayed a great breadth of events in 2024 with women's sports and soccer tournaments making a significant mark, while we lap an outlier year in 2023 that had an unusually high number of the most popular artists touring in the largest venues. We expect year-over-year growth to accelerate in the fourth quarter once the industry has fully lapped 2023's summer concert slate, and once stadium shows go on sale for 2025.

We continue to execute against our strategy and drive differentiation through our investments, which have been a source of our strength and are bearing fruit. SkyBox Drive is in the last stage of its beta phase, and we are excited to prepare for its formal launch in the coming months. This is another example of how we continue to innovate and build on our best-in-class products. SkyBox is the ERP of choice for the majority of professional sellers and SkyBox Drive takes that powerful tool further by addressing another key seller need, technology-driven pricing. We look forward to onboarding sellers from our existing large installed base of sellers using SkyBox.

On the buyer side, we have focused on encouraging repeat behavior, which is a fundamental aspect of our broader strategy. With our industry-leading loyalty program and engagement initiatives, we continue to shift toward a higher mix of accretive repeat orders. These strategic efforts have proven successful, and midway into 2024 we are trending higher than the mix of repeat orders achieved in 2023. Our priority remains building for the long term, and we have seen our loyal base of customers continue to reward us, pun intended, with stickier volume that yields greater profitability.

Our investments in building our international platform and our acquisition of Vegas.com are also progressing nicely. We remain on track to launch internationally by the end of the year. For Vegas.com, we are continuing to drive incremental orders through synergized inventory on Vegas.com from Vivid Seats. Additionally, our cross-sell campaigns are now fully underway. This has resulted in tens of thousands of customers being reached each month, combined with impressive e-mail open rates almost 50% and very accretive customer acquisition onto Vivid Seats in fans' home markets.

We have also continued to invest in other channels and engagement vehicles as we continue to efficiently attract and retain buyers. Game Center is a key mechanism that we employ to attract both existing and new customers to our app. As gamification continues to positively impact consumer behavior, we've seen users almost always browse or purchase tickets when playing. With over 340,000 customers now playing and almost no marketing dollar spent, Game Center is proving to be an extremely efficient channel to drive app downloads, app engagements and ultimately accretive app orders.

Even as we diversify our marketing channels and drive efficiencies and repeat orders, traditional performance channels remain an important part of new customer acquisition. On that note, we are excited to announce that our board recently appointed Adam Stewart, as a director, to be effective upon Board composition changes expected to occur in November in connection with our transition from being a controlled company under NASDAQ rules.

Adam will join our board with extensive media and entertainment experience at leading brands, including almost 2 decades at Google. Currently, he serves as Vice President of Consumer, Government and Entertainment at Google, where he oversees advertising partnerships and integrated solutions across YouTube, Google.com and mobile. As an expert in performance marketing, a seasoned technology leader and an experienced board member, we look forward to benefiting from Adam's insight and guidance as we continue our focus on building shareholder value and executing our long-term growth strategy. Upon the effectiveness of Adam's appointment, we will have a majority independent board.

Next, I'm pleased to share that our balance sheet now allows additional strategic flexibility following our opportunistic June refinancing. We upsized our existing term loan by $125 million while simultaneously lowering our interest rate on the entire loan. We are excited to have this incremental cash available to deploy with the financial discipline that we've always shown towards our existing pillars for capital deployment, share repurchases and strategic M&A. We continue to evaluate opportunities for both with a keen focus on increasing shareholder value.

In summary, it was a solid quarter where we drove very strong revenue and even stronger adjusted EBITDA growth and furthered our strategic objectives. In an industry benefiting from long-term secular growth, we continue to expect our differentiated offering and dynamic model will deliver a double-digit growth CAGR.

With that, I will turn it over to Larry for a more detailed review of the quarter.

[Lawrence Fey, executive]

Thanks, Stan. We continue to deliver strong financial results in the second quarter, executing dynamically and with discipline. In the second quarter of 2024, we generated approximately $1 billion of marketplace GOV, which represents a 5% year-over-year increase. GOV growth was fueled by an 18% increase in total marketplace orders, partially offset by lower average order size of $322 versus $363 in the second quarter of 2023. The AOS declines are a result of mixed impact from our acquisitions, coupled with comparing against abnormally strong AOS from the summer 2023 concert slate. As Stan noted, we continue to see consumer prioritization of live events with supply normalizing to historical CAGRs.

We delivered robust revenue and adjusted EBITDA growth by acting dynamically in a competitive environment. We delivered $198 million of revenues in the second quarter, a 20% year-over-year increase, driven by a higher take rate. Our take rate was 17.0% in the second quarter compared to 14.6% in the second quarter of 2023. We delivered $44 million of adjusted EBITDA in the second quarter of 2024, a 42% year-over-year increase along with a 22% adjusted EBITDA margin. We consistently adjusted across multiple levers to find the proper balance of volume and profitability across different landscapes and are pleased by our continued ability to deliver robust revenue and adjusted EBITDA growth.

Turning to cash on our balance sheet, we deployed $16 million of cash on share repurchases in the second quarter and added $125 million of cash through our June refinancing. Our cash balance now stands at $234 million, and we continue to have a healthy balance sheet with 1.0x net leverage based on 2024 adjusted EBITDA at the midpoint of our guidance. We continue to expect strong cash generation in 2024 and beyond, and we'll continually seek accretive opportunities to deploy our balance sheet.

Next, I'll touch briefly on stock compensation. During the quarter, Hoya Topco, the private equity-backed entity that holds our Class B shares, used its own funds in the second quarter to redeem all of its outstanding profit's interest and Santon units that were held by employees of Vivid Seats. In previous periods, we have been recognizing stock compensation expense for these interests. Upon the redemption transaction, there was a onetime $8 million stock compensation charge. Going forward, stock comp expense related to these interests will cease.

Lastly, on guidance, we now expect 2024 marketplace GOV to be in the range of $4.0 billion to $4.3 billion versus $4.2 billion to $4.5 billion prior. And 2024 revenues to be in the range of $810 million to $830 million versus $810 million to $840 million prior. We continue to expect 2024 adjusted EBITDA in the range of $160 million to $170 million. We will continue to act with agility as the environment evolves and to position our business for long-term success.

Back to you, Stan.

[Stanley Chia, executive]

Thanks, Larry. To wrap, we delivered another strong quarter. With our long-term mindset, we continue to advance our strategic objectives that foster a lasting stickiness for both buyers and sellers. Our team remains agile as we continue to position our business to win in any environment. Between favorable tailwinds for live events, our differentiated model and the strategic flexibility that our robust cash flow affords, I'm confident that we can continue to drive compounding double-digit growth and value to shareholders.

With that, operator, let's open it up for questions.

[Operator]

[Operator Instructions] Our first question comes from Tom White of D.A. Davidson.

[Thomas White, analyst]

Maybe just first off, could you maybe just give a little bit more color on kind of the slightly degraded top line outlook for the rest of the year. You commented that consumer spending was resilient on concerts and stuff. I'm just curious if there's anything in the macro that you guys are seeing that's causing the change, or maybe something on the competitive front.

[Stanley Chia, executive]

Tom, we continue to see really strength and resiliency with the consumer as it pertains to the category. And I think when we look at the forward looking, I think on the supply side, I think it's just been a little bit of a softer year, especially as we comp a year where you had some of the largest artists touring in some of the largest venues. And this year, as we look at the remainder of the year, we've really just got folks really prioritizing amphitheaters and arenas which we've historically seen as lower attendance, lower price points. And I think just in the past week, we saw Aerosmith cancel.

So I think just being prudent with all of the information we have is how we've looked at the year. But I think we continue to see lots of strength on the consumer side, and if you look at the current quarter, great performance and really our highest order volume number that we've ever had throughout the entirety of the business. So a lot of strength, just some prudence as we look at the slate of supply coming up.

[Lawrence Fey, executive]

I'd add 2 things in support of what Stan said. We've seen really nice year-over-year strength in sports, which I think speaks to not being consumer, but perhaps a supply contrast in the concert side of things. And then the second piece, I would say we spoke in the last couple of quarters around the competitive intensity, certainly seeing that persist. And yes, I think embedded as a presumption that that continues. But in the past, we've seen ebbs, we've seen flows. So we'll hope for folks to insert additional discipline moving forward, but we're not counting on it.

[Thomas White, analyst]

Got it. Maybe just a quick follow-up on the competitive landscape. And I guess, Stan's comments about performance marketing I thought were interesting. Just curious, maybe just on the performance marketing channel, specifically, curious whether you could -- how you could characterize kind of what you're seeing there. One of your competitors seemingly maybe isn't going to come to the public markets maybe as soon as some had previously thought. Curious, whether that means that there's any change maybe in kind of some of the intensity you're seeing on key performance marketing channels.

[Stanley Chia, executive]

Yes. Look, I think we've always looked at performance marketing as a channel, that I think as Larry said, ebbs and flows. So I think when we look at ourselves as the differentiator, as you see, I think we've got lots of levers really to drive and I think win customers. And I'd say our perspective on the long-term outlook with our rewards program, our differentiated capabilities, the multiple brands and platforms that we now offer, along with gamification that keeps you engaged in the platform, is that we are just really focused on winning customers that stay and are sticky with the platform in the long term. And I think we certainly see others focus more on buying temporary volume.

[Operator]

Next question comes from Ralph Schackart of William Blair.

[Ralph Schackart, analyst]

Two questions, if I could. Stan, in the prepared remarks, you talked about, or maybe Larry, supply normalizing to historic levels. Was that something that sort of adjusted intra-quarter? I know you talked about amphitheaters, but just any more color you could add there. And just on the acquisition, I mean, the trends sound strong and solid with some of the metrics you reported. I'm just kind of curious if you sort of frame how that acquisition is progressing according to your plan, both just from operational aspect and your ability to sort of leverage that relationship and to drive customers when those people go back to their hometowns.

[Stanley Chia, executive]

So Ralph, second question is on base and how that's been performing?

[Ralph Schackart, analyst]

That's right.

[Stanley Chia, executive]

Sorry, Ralph, we were just making sure we had the question right. Yes, on the acquisition performance, I think as you heard, we're really excited about the progress that we've made there. And I think one of the biggest elements of that is being able to leverage all of the customers that we acquired through that and then bring them into the multiple other platforms and markets that we're active in through our national Vivid Seats brand. And we've made, I think, great progress there with -- I think as you heard in the prepared remarks, our cross-sell campaigns, really driving a lot of efficacy as those consumers move back into the home market.

So I look at base as a profitable customer acquisition vehicle for the national Vivid Seat's brand, and we're well underway there. As you look at our Wavedash property in Japan to strong integration across the Vivid Seats stack driving cross-border travel, in particular in the baseball season with a lot of fans clearly in Japan of the Dodgers and of Shohei Ohtani in particular. The Dodgers being a Vivid Seat's partner where we are their official marketplace as well. So I think we've seen a lot of great results and continue to be excited about how to continue to drive synergy and leverage across that front.

[Lawrence Fey, executive]

And Ralph, on the first question on sort of trajectories across supply. I would say as we headed into the year, if you kind of knew what the lineup was -- you had a sense for the shift from stadiums down to amphitheaters and arenas. But I think as it's played out, the top of the card, which was already soft took some unexpected hits. You had Feel Young cancel, you had Jennifer Lopez cancel, both of them characterized for pretty different reasons.

Now you have Aerosmith canceling due to -- for Steven Tyler. So you sort of already had a soft top of the card and for -- I think, idiosyncratic reasons, it's gotten a bit softer, which has influenced kind of the outlook until we get to the next year calendar, right? So kind of the first 9 months we live on this year's calendar, then in Q4 we shift to next year's calendar. And based on all the commentary we're hearing -- we would expect that we have a more pep and step in Q4.

[Operator]

One moment for our next question. Our next question comes from Curtis Nagle of BofA.

[Curtis Nagle, analyst]

First one, Stan, Larry, could you talk a little bit more about the balance between driving GOV, much higher take rates? What's behind that and just overall profitability, which came in pretty nicely for the quarter.

[Lawrence Fey, executive]

Yes. Curtis, yes, I think the question in many ways, simplifies the thought process where it's always a balance between driving volume and driving profitability. And when we talk about some of the ebbs and flows, we've certainly seen competitors go through phases where they seem to prioritize volume at the expense of profitability. -- some more consistently than others. And at the moment, I think we're seeing more competitors prioritize top line than is typically the case.

So somewhat in reaction to that competitive dynamic where we try to stick to our unit economic discipline. 3 components I'd point to on the year-over-year take rate improvement, right? One part is you talked about some of the accretive benefit from the acquisitions. Second part, last year, we talked about the really high average order size on a couple of the big name tours. We are taking a lower take rate, but maximize dollars strategy. So last year's take rate was artificially low.

And then we focused on our take rate this year and said in an era where folks are chasing unprofitable volume, they can do that, we'll protect unit economics. And so the 3 of those summed up to -- I think, what are pretty meaningfully improved take rate both year-over-year and relative to expectations, and those take rates support the strong unit economics down the rest of the P&L.

[Curtis Nagle, analyst]

Okay. That makes sense. And then maybe just kind of follow up on that last question. Any early reads on the content season for 25s, what's given that confidence in the acceleration for 4Q, as those ticket sales start to hit the market?

[Stanley Chia, executive]

Curtis, I think we're certainly. I wish we had the perfect crystal ball to be able to have precision on that. I think as we look at industry commentary around 25, we followed I think the excitement that we've heard around perhaps next year having -- being a stadium year versus the amphitheater and arena year that it is this year. And certainly, I think it sounds like there are more stadiums booked for next year than there was last year, right? So 25%, I think being potentially a larger stadium year than 23%.

So I think as we look at those publicly available industry components, I think that gives us -- I think, lots of optimism that I think that supply sort of digestion or normalization that we're feeling this year, I think should move back into what we see as normalcy next year.

[Operator]

Our next question comes from Ryan Sigdahl of Craig-Hallum Capital Group.

[Ryan Sigdahl, analyst]

Nice execution guys. I want to ask on international, just any update you can provide. I know you said on track, but if you're willing to comment on specific regions and then how you think about kind of as you near that launch date of customer acquisition and balancing the cost side versus ramping the market?

[Stanley Chia, executive]

I think we remain on track, I think, certainly for end of the year to launch our international platform and continue to make, I think pretty good progress as we build out the components necessary. I think what we continue to talk about is -- I would expect I think, our investments to fundamentally be on a platform and highly leverageable basis. And as we continue -- as we start to launch into, I would say into the markets that we have prioritized, I would expect volumes to flow through in the medium term to be similar to how we look at contributions broadly. And so I think not a lot of fixed expense as we move into the markets beyond the platform investments, and we remain excited about launching those this year.

[Ryan Sigdahl, analyst]

And then just on capital allocation, good terms on the new add-on debt. But is there plans in the near term to leverage and utilize kind of the increased cash balance? Or is it really flexibility for the key priorities you guys have highlighted and executed on over the past years?

[Stanley Chia, executive]

Yes. Yes, I think what we've always put forward is our 2 primary vehicles for capital deployment, our strategic M&A that is idiosyncratic, and we try to bring a high bar to that. But do you want to have the flexibility to strike when the opportunities do arise? And then buying ourselves back when the price is right.

So we – as have the share repurchase authorization in place, we've continued to execute against that in Q2 and unfortunately, the shares have become more attractive subsequently. So those are the pillars, they remain the pillars. We'll continue to try to find the right balance between those 2 in light of opportunities in the pipeline and dynamics in the shares. But given how profitable we are, given our cash generation, I do think those are the main pillars, right? We are able to fund international and our other projects comfortably out of our existing P&L and cash balance.

So we're not starving our operational animal by any stretch, and do feel like we have a good amount of flexibility now. And even if we do deploy that cash, we feel like we're still very comfortably levered relative to our cash flow profile with 2.4x gross leverage, and obviously consider to be less than that on that basis.

[Operator]

Our next question comes from Cameron Mansson-Perrone of Morgan Stanley.

[Cameron Mansson-Perrone, analyst]

First, just a follow-up on the guidance. What's allowing you guys to execute against – I know it's just a modestly lower growth outlook, but the adjusted EBITDA guide for the year unchanged. Maybe you could talk about kind of what's allowing you to execute there despite the modestly lower growth outlook? And then any help in the quarter in terms of unpacking on an organic basis, what growth’s looking like if we kind of strip out the Vegas and Wavedash benefits?

[Stanley Chia, executive]

I'll take the first part, and then Larry can certainly give you some thoughts on how to think about organic. Look, I think we've continued to talk about, I think, the investments that we've made over the past years to drive repeat behavior engagements, stickiness to the platforms and that fundamentally repeat user for us is highly profitable and highly multiples more profitable than our first order with the user, right? And I think the levers that we have to really drive that, I think, are what give us -- I think, the ability to perform like we did in Q2 and continue to drive leverage and profitability through our model.

If you heard, I think we continue to track higher on repeat mix as a percent of our business, and that mix is -- I think, a very powerful lever of profitability into the business. And then when you look at the other vehicles, whether it's our gamification engine, driving app usage, app downloads, I think all of those are strong proponents of what I think give us lots of confidence to drive just strong stickiness, and therefore profitability into our platform and ecosystem.

[Lawrence Fey, executive]

And on the organic trends, I think you probably picked up on a theme where we have knowingly walked away from some -- what we're considering unprofitable volume in the current environment. So in light of that shifting economics you should think of organic GOV being down a bit year-over-year, but organic revenue being up -- call it, low single digits year-over-year.

[Operator]

Your next question comes from Thomas Forte of Maxim Group.

[Thomas Forte, analyst]

Congrats on the quarter. One question, one follow-up. I've been getting a lot of questions from investors on your first-party ticket strategy. You have that college asphalt tournaments that you've talked about. Can you talk about your first-party ticket strategy, and how that may affect your future sales and profits?

[Stanley Chia, executive]

Yes, I think one of the other components that we've been excited about with our Vegas.com acquisition, this certainly gave us new -- I think, capabilities as it pertains to integrating with venues on the front end, right? That is where Vegas’s inventory primarily came from is directly from the venues and box offices.

As we've looked at opportunities, AEG and AXS have always been really strong partners for us. And with them, we were able to craft, I think a very unique model in the CBC tournaments the college basketball tournament that will premiere in April. I think that is a new model where we are able to be the official ticketing partner overall of the event with the capabilities that we have. And we'll look to see how that shakes out as we get into it, but we're certainly bullish on the prospects. We like the model, and should we find success there as in everything we do, we will look certainly for opportunities to rapidly scale that model.

[Thomas Forte, analyst]

And then for my follow-up, can you talk about women's sports such as WNBA and soccer and the progress on potentially becoming a fourth pillar.

[Stanley Chia, executive]

Yes, I think this year has been a really nice -- I think I'll start with overall sports year right, where we've seen lots of new categories, women's sports from the NCAA tournament and now the WNBA, I think, with lots of really wonderful interest from consumers and great new stars, I think, driving the new generation. We just continued to see really strong strength there, and so we're excited with the growth in the category and some potential like you said, new entrants to drive longer-term sustainable growth in the category.

[Thomas Forte, analyst]

How about soccer?

[Lawrence Fey, executive]

Yes. I can take soccer -- phenomenal year. I think it's been a combination of secular growth, the Messi effect. And then we had Copa America, which is a once every 4-year tournament, all combining to be very, very significant year-over-year soccer GOV growth, approaching triple digits. As you think about it rolling into next year, typically you say, well, you have to lap the COPA-America effect. But there are meaningful international tournaments in each of 2025 and then perhaps most exciting in the World Cup is being held in North America in 2026.

So assuming the secular trends hold and Messi stays healthy, I think we're on track for a nice soccer trajectory for the next couple of years.

[Operator]

Our next question comes from Dan Kurnos of -- the Benchmark Company.

[Daniel Kurnos, analyst]

Stan, can we just double-click on a little bit more granularity around the loyalty program and maybe the consumer in general, if there's any change in velocity of ticket sales? And did I hear you say that your customer acquisition cost was down for loyalty, like you were getting leverage on that line?

[Stanley Chia, executive]

Dan, thanks for the question. Yes, I think it was -- look, I think we're becoming -- as the program continues to evolve -- I would say we continue to get smarter around how to really target and find the most loyal users and drive -- call it, the highest repeat from the most loyal users and continue to see that benefit ripple through. And as you imagine -- I think as you drive that certainly on a profitability basis as you mix into those orders, that is what drives a lot of, I would say, leverage in our profile.

And so I think we continue to have that be a high level of focus for us to find and drive value and target those repeat users. And I think that's what you're seeing in terms of what we're talking about and certainly in terms of the financial results as well.

[Daniel Kurnos, analyst]

And speaking of Drive, I mean you talked about it with SkyBox. Just curious on, A, if we are assuming anything this year from a monetization perspective, how you're going to test that? I know you're in beta, but do you bring it to market to everyone all at once? Just any incremental thoughts on how we should expect that to kind of roll out from here?

[Stanley Chia, executive]

Yes. I think the beta has -- I would say we've more than tripled the number of users on the beta since we’ve started. And so I think as we said in the prepared remarks, we're pretty close to officially launching that. And as with every launch, I think we will temper, I think, rolling that out with velocity as well as stability. We certainly have a wait list of users in the hundreds, and so we are excited certainly with the reception and the demand that we've seen. And we'll certainly talk about it more once we officially launch. In terms of monetization, it's not included in any of the numbers in our forward-looking guide. But certainly, if that changes, we will be sure to update everybody.

[Operator]

Our next question comes from Andrew Marok of Raymond James.

[Andrew Marok, analyst]

Maybe one on sports, so some good commentary earlier around the incrementality of things like women's sports and some of the soccer events coming online. But with double-digit growth this quarter for the first time in over a year, is there anything else to call out perhaps on pricing dynamics or taking order share or is it really just a result of some of that supply incrementality?

[Lawrence Fey, executive]

Yes, I would point to more of this dichotomy where you get sports with a meaningful number of tailwinds across more supply, better supply and women's sports, some good matchups respectable series in NBA. I would not say that there was a meaningful difference and call it the competitive landscape or competitive intensity across categories. So that was fairly consistent the difference you're seeing between, call it concerts and sports is more of a supply issue than anything else.

[Andrew Marok, analyst]

Great, and maybe one more quick one, if I could, on the resale business. I know it's not necessarily a full strategic focus. But I guess, what are some of the drivers behind the decline in growth rate and gross margin in 2Q? And maybe how should we think about this business as trends in the context of the '24 guide?

[Stanley Chia, executive]

Andrew, so yes, I think there is always some idiosyncratic event mix within that business and probably reflective of some of the comments around the concert supply side being a little bit less than you would have dreamed up coming into the year, that kind of flows through on the resale positions that are in that category as well.

Last year was really just a wonderful dynamic in concerts in particular. And so you had a couple of pockets of softness this year. On the supply side, you saw margins just played a bit from pretty robust levels, still pretty pleased with where they shook out this year. And so while we'll certainly aspire to get back to last year's margins, I think this year's results, it's fairly consistent with what we would consider a steady state sustainable.

[Operator]

Our next question comes from Maria Ripps of Canaccord.

[Maria Ripps, analyst]

So if we assume that the U.S. is entering a period of economic softness, that sort of impacts demand for live events, could you maybe talk about your willingness or ability to lean into promotions to try to drive incremental demand? And any thoughts on potential maybe trade-offs between margins and growth in such an environment?

[Stanley Chia, executive]

Maria, I think, look, maybe a 2-part answer for you. I think we're certainly always watching, I think what's happening on the consumer front. And as we almost kicked off the call with, I echoed first that we continue to see lots of consumer resiliency as it pertains to this category. And I think as evidenced by our highest order number ever, I think in the quarter. As it pertains to promotions, I mean, I think about 2 things for us, right? One, I think we always, I think, test into vehicles that we find to be efficient LTV drivers from an acquisition perspective and promotions is certainly a component of that. In addition to that, we have our loyalty program, which continues to work really well, which you might almost think of as a permanent promotion that is always there, that is continuing to yield the right behavior and the right economics for us.

So I think as we look at those 2 components and I think our proven now discipline to be thoughtful around how we invest to drive long-term users, I think that's going to guide certainly how we look at, I think customer acquisitions going forward as well.

[Maria Ripps, analyst]

Great. And then just following up on international expansion, any thoughts maybe you can share on how investors should be thinking about any potential contribution to revenues next year from newer markets?

[Stanley Chia, executive]

Yes. I think at this point, as we're still in the, call it, development and learning phase, I think our view is that we would expect there to be some falling contribution in putting precision around that, probably still a little premature. But I think we'd expect it to be a measurable tailwind to GOV. I would expect roughly ratable flow through to revenue. We've generally been of the view that take rates are a little bit higher internationally than they are here, but a modest enough difference that I probably wouldn't build a structural case around the accretion at volume levels that we'll see in the near term.

And I think the big variable as you flow that through the P&L as we're trying to build that business to scale. We touched on having the platform investments baked into the numbers this year. I don't believe there'll be certainly any meaningful incremental fixed expense, it will be more shift in the nature of that investment. But decisions will be made in real-time around incremental contributions to try to build scale, I think for how we're sort of thinking -- you'll try to be contribution margin neutral and get as much volume as that paradigm will enable in that first year.

[Operator]

Next question comes from Jason Bazinet of Citi.

[Jason Bazinet, analyst]

I just want to go back to the cancellation topic. I guess a two-part question. In the footnotes, it looks like cancellations are running sort of 2x year-to-date what they were a year ago. My first question is would you describe the last year as a very low cancellation rate and now we're just back to normal or is this above average?

And then second, I just want to confirm, you guys don't think that there's anything systemic across these cancel backs that these are all sort of just one-offs. Is that the right interpretation of what's happened so far this year?

[Lawrence Fey, executive]

Jason, on the cancel rate, that's actually predominantly driven by the impact of Vegas, which has a different cancellation set of terms that core [indiscernible] which resulted. So net that out, I'd say it's fairly consistent year-over-year, maybe up a little bit, but closer to flat than the reported number would make you think. And when you go through the -- that we saw, we certainly heard and saw the speculation, right? Are these tours running into issues because there's actually softening consumer demand or was it something idiosyncratic and specific to those tours, and I think we've generally been of the belief that it's the latter. And so most extreme of that is Aerosmith with being kind of vocal issues for Steve and Tyler, I think pretty safely detached from underlying economics.

I think there's probably a lot out there on the sequence of developments on the Jennifer Lopez tour, but I think the general perspective was that was more a marketing execution issue than anything. And the price points that the type of music that was advertised. And when you just come out of the gate without the right momentum it's hard to get it back on track. So probably more on the supply side than on the demand side.

[Operator]

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