Description

Eventbrite is an excellent SaaS + network effect business in a extremely fragmented market with thousands of small players trading at 7x steady-state EV/EBITDA.

Eventbrite is an event manager/tircketing tool. It seems like a simple business, just a payment processor where you make money by charging a fee on ticket sales. But our research shows it’s a surprisingly complex business.

Event ticketing demand is growing worldwide at breakneck speed. We realized if we found the best player in the industry, it would no doubt completely dominate the whole space. And we think this title belongs to Eventbrite as a result of their brand awareness, multiple defendable sources of revenue, and network effect through a shift in its business from being just a ticketing software to a marketplace for live experiences. 

Business

Eventbrite customers are mostly small to medium-sized event creators, below 100 attendees per event. Eventbrite targets these creators by having a simple easy-to-use platform customers can use by themselves. But this wasn’t always the case. In 2020, management made a huge decision: getting rid of its on-premises solutions that required a ton of customer support and set-up time. This effectively took out most of its high price-point operations, which at the time was half their revenue, leaving larger clients to either leave, or continue with their self-serve platform. 

It was harder to compete since the big creator event space is less fragmented. Ticketmaster, owned by Live Nation, holds a monopoly in the space, hosting celebrities like Taylor Swift, Ed Sheeran, etc. Ticketmaster had the customers, who would not switch, as well as better scale advantages. They also had an undeniable supply advantage since Live Nation owns so many concerts and stadiums. While this may have hurt Eventbrite’s top-line, the switch also made for a much leaner operation with a larger emphasis on improving the core self-serve platform that appeals mainly to frequent small creators.

Business Model

Eventbrite makes money by taking a portion of ticket sales and a fixed amount for each ticket sold (no fees for users who sell free tickets) as well as a subscription fee (or per event fee) which gives access to the dashboard, tools, and marketing suite. 

Initially, Eventbrite offered two plans: the Essential plan charged 2% and $0.79 per ticket while the Professional plan charged 3.5% and $1.59 per ticket, a take rate of 7.5%. But this year, Eventbrite cut out the Essential plan and raised the price of their Professional plan, charging everyone 3.7% and $1.79 for all the features, raising take rate to 8%, . Despite this, the price change resulted in just 1% of creators leaving. The take rate was further raised to 9% this October due to the subscription fee addition.

After comparing price points from a bunch of competitors, it appears that Eventbrite generally has a large price premium over its peers despite possessing generally similar core features. 

Figure: Eventbrite competitor comparison (average 100 tickets per month)

These 3 are the largest self-serve North American-based players. We could barely find any remotely viable self-serve competitors (unusable UI primarily) through Google search or website trackers, especially internationally. Most ticketers barely had 100k monthly traffic. The exception Brazil where Sympla, one of the few players to dominate their local area instead of Eventbrite, changes 10% compared to Eventbrite’s 8.5% average take rate. Eventbrite has different take rates in other countries with different payment structures, but take rates are still consistently below local players.

We expected scale advantages to drive cost savings that would return in the form of lower prices relative to peers. But our research tell us this price point is justified as a result of their competitive advantages. 

Breaking down Eventbrite’s value proposition

Marketplace

One of Eventbrite’s strongest competitive advantages is its marketplace. Approximately 28% of ticket sales come from the marketplace. 

Figure: Eventbrite landing page

Marketplace-driven purchases are made either through people actively browsing on Eventbrite or through events recommended by Eventbrite on the website or app, sources tell us the latter comprises the bulk of EB-driven orders. The more creators you have, the better the event selection and recommendation options, which leads to more customers on the marketplace, which leads to more sales creators will receive, motivating even more creators to sell on Eventbrite rather than competitors. 

Figure: Monthly traffic volume

Eventbrite has 800k creators, 10-16x more than all the direct competitors we’ve looked at. Eventbrite has the largest customer base, selling 87M paid tickets in 2022. The closest competitor sold 12M. Their traffic data is multiples higher than competitors. The relative scale of creators make it by far the best marketplace for creators and consumers, a self-reinforcing value proposition that makes it more and more difficult for peers to compete against. 

Figure: Growth in paid tickets and creators

Since the pandemic, around a quarter of their creators have been “frequent” creators, those who hold about 1 event each month, with typically below 50 attendees, yet 60-70% of ticket volume comes from this group. These creators use ticketing platforms as a regular source of income. The most common profiles were small business owners. Restaurants realized they can host cooking classes in the afternoon. Bar owners saw how much they could earn through monthly stand-up comedy nights. Artists learned they could sell drawing workshops during off-hours. Eventbrite provides the best platform for these frequent creators to promote their business. 

Marketplace sales vary a lot. Some customers we've talked to had over 50% of sales from the marketplace while others had 10% and below. We find more commoditized events like speed dating, amateur comedy, parties, pub crawls, weekly yoga, and classes benefit the most from the marketplace. These events have similar formats, and less room for differentiation or brand building. Event listings like museums, attractions, conferences, music are different because they are typically tied to a name or brand beforehand. Their customers typically find them on Google, searching up the creator’s name. Bigger events also tend to be less commoditized. 

Since the shift to frequent creators, Eventbrite’s creator-base has shifted from being dominated by music creators to a more diverse group. Music creators now make up only 22% of tickets. No category makes up over 25% of ticket sales, which as defined by EB include business, music, health/sports, visual/performing arts, community, food/drink, education, and charity/causes. We think this breakdown can be misleading, as there are multiple niches that dominate Eventbrite that can’t be categorized strictly into these groups. From our analysis, the largest groups are nightlife, followed by amateur comedy, then speed-dating/social, then tastings/food festivals, which do tend to be more commoditized events that get more value from the marketplace.

Customer acquisition is important in order to drive both creators and consumers. Most creators we talked to found Eventbrite through Google search or word of mouth. Although not as large, sources also tell us the majority of end-buyers find events through Google (search pasta class, wine tasting, speed dating). This means SEO is important, and Eventbrite’s SEO advantage comes with scale: larger traffic size and creator landing pages organically raises your ranking. Eventbrite can also vastly outspend most competitors on SEO ranking. If you Google “events near me” right now, you can almost guarantee Eventbrite will come up at the very top, followed by a whole palooza of blogs, forums, and articles, except competing event platforms. 

For FY2022, the % of platform-driven tickets was 29%, 1 percentage point higher than FY2021. It’s slow, but it shows that the flywheel is spinning. The company is at the point where it is slowly losing its reputation as a ticketing tool and getting a larger reputation as a platform for live experiences. 

Switching costs

With the focus now on frequent creators, for a large part of its creator base, Eventbrite is quite mission critical. Frequent creators typically host events every few weeks or monthly. Event ticketing is a SaaS tool. When used in scale, creators can’t afford to spend time trying to get used to a new event platform with a different user interface and system. Eventbrite has historically kept churn at 3% and below, even before its shift to self-serve.

This is the exact reason why nearly all creators we interviewed refused to switch. You need to familiarize yourself with tracking analytics, building out your landing page, creating your ticketing terms, setting up your emails, integrating your website and social media, etc. There are quite a lot of steps. Similar to many front-end business softwares, the learning curve for starting is low but the learning curve for scaling is surprisingly high. Creators have to learn how to schedule multiple events, automate multiple event content creation, and connect their social media accounts. Multi-homing across ticketers isn’t common. Creators we’ve spoken to only wanted one platform to handle all their ticketing. As Eventbrite keeps adding more and more features, now with SMS notifications and microservices, switching costs should go up. 

There are plenty of Eventbrite creators who sell tickets on a website or bootstrap set of forms in addition to Eventbrite. It’s definitely more economical to use a bootstrap method, registration tool, or own website to do ticketing, but it doesn’t have the needed features and doesn’t work as robustly as a ticketing tool in scale, and it takes time and effort to build those systems whereas Eventbrite is really easy to get on and use it self-serve. This means larger creators could be more inclined to spend on building out their own ticketer, but for smaller frequent creators who just want something easy to get started with, Eventbrite provides more value.

Brand equity and social proof is high. A lot of creators we talked to used Eventbrite simply because it was popular and everybody was using it. Furthermore, Eventbrite, without a doubt, has the best user-interface across the board. One of the key things creators and consumers look for is trustworthiness of the site. Ticketers have been notorious for withholding creator-payments (EB is not entirely innocent of that during the pandemic) during tough times to keep the business afloat. Ticketers are also prone to overload for on-sales/holidays or be a house for scammers. Creators want to ensure consumers trust their ticketer and that their money is kept safe. Smaller or new ticketers would have a harder time building that social proof similar to what Eventbrite already has.

The most surprising thing we learned is that end-buyer switching costs also exist for recurring end-buyers going to the same creator events since they are used to using Eventbrite. Creators switching to another user could throw consumers off, but will likely not significantly affect sales. 

The only susceptible switchers we see are customers using Eventbrite solely as a ticketing tool for private events. They are very price-sensitive since all the event platforms offer nearly the same product. But for frequent creators, Eventbrite’s bread and butter, the switching costs coupled with the audience is too good a value proposition, even if you are paying more than similar platforms. 

What’s the TAM?

We believe the growth runway for Eventbrite can be summarized in three factors: 1) grabbing customers and creators from direct competitors, 2) geographical expansion, and 3) growth of the small events industry as a whole. The second and third factor in particular will likely take up most of this. 

Direct competitors

The event ticketing industry is extremely fragmented with thousands of tiny players in each region. Most competitors tend to fill a specific niche or price point. Dice, for example, targets music creators. Cvent targets larger creators at a higher price point, but with more specialized and complex features. Universe, the small event platform subsidiary of Ticketmaster, is very low cost at its lowest price bracket but has simpler features. Eventbrite has larger monthly traffic than the next 4 biggest players combined. 

We expect Eventbrite’s superior marketplace to eat away at the market share of direct competitors that aren’t niche or specialized enough to provide better value for creators, and consequently, for consumers. Eventbrite’s product is also way more user-friendly and feature-rich than most competitors as evidenced by better reviews and our own experience using the product. 

International growth

Figure: Estimated EB revenue geographical breakdown

Breaking down the geographic sales, 60% of Eventbrite paid tickets come from North America, 14% from the UK, 6% from Australia, and 19% from the rest of the world. This has been quickly changing, with international sales gaining a larger and larger share of the pool.

Due to the nature of the business, the network effect only works when the consumers are near the event creators. If you’re in an untapped area, no matter how many creators Eventbrite as a whole has, your local platform will most likely have more near you. This makes it more difficult for the company to quickly expand to new regions compared to the typical software company that can scale globally at minimal cost.

Nevertheless, for English-speaking countries like the UK, Ireland, and Australia, Eventbrite has captured a majority market share purely organically with similar churn to North America. In fact, to date Eventbrite has done zero ticket subsidies and zero partner creator in any of the regions they’re in. Sources confirm that Eventbrite has consistently outspent competitors on SEO to grab market share. For non-English speaking regions, they’ve typically entered by buying local players, from Brazil all the way to the Netherlands. Since the pandemic, Eventbrite has more than doubled international revenue, but North American revenues continue to grow much faster, compounding over 63% annually since 2020.

This is mostly due to the new regions having thousands of small competitors with poor user-interfaces, scam-filled markets, and/or overload-prone systems. The only exception has been Brazil where Sympla takes 1st place and generates larger traffic and charges a higher take rate. Although Sympla employees refused to speak with us, they mentioned that while everyone knows about Eventbrite, their threat has never been discussed in the workplace. The higher switching costs will make it hard for Eventbrite to dominate, but through superior scale and technology, Eventbrite, at the moment, has the arsenal to take them on.

From what we hear, Eventbrite expects saturation in the North American market within the next few years. They also expect the UK and Australia to reach maturity in the near future. The longest chunk of the growth runway will have to come from non-English speaking regions. Right now, the 19% ROW revenues are mostly made of Europe and LatAm, and no doubt there are plenty of opportunities for geographical expansion. But we also believe their biggest potential market is India, where Eventbrite has an office and where a big chunk of their engineers reside. India has multiples the potential customers Eventbrite currently has combined and like other regions, there are thousands of small clunky competitors. Sources tell us penetration based on long-tail potential creators are still in mid-20% for North America, teens for UK and Ireland, and lower for other regions. 

Industry dynamics

When we asked former employees who the scariest competitor is, one of them stood out when they said that it was not the direct but the indirect competitors who pose the greatest threat. Eventbrite is competing against concert shows, sports games, and Netflix; all these guys are trying to be the answer to the question “What do you want to do with your buddies this Saturday night?” And on these terms, Eventbrite has a tiny share of the market, but it’s mainly because people aren’t used to finding small events on a regular basis. 

We think this generally underserved market has huge long-term potential, especially internationally where the landscape is barren, and even the small players present have nowhere near the robustness and user-friendliness of Eventbrite. As the industry grows, it may be plausible that happy customers will start getting recommended and attending small events more frequently, bringing their friends. And these friends also bring their friends, and so on, giving event platforms a stronger and stronger advantage in getting people to choose them as a regular choice for recreation. 

There are still huge markets Eventbrite can still tap. The tours/attractions market is a big one. Museums, theme parks, live tours, you name it, attraction sales could immensely benefit from Eventbrite’s 55M monthly traffic brimming with consumers looking for new experiences. According to JPM, the ticketing market for tours/attractions in Eventbrite’s top 12 markets is over 5x larger than music or festivals. We think Eventbrite’s network can provide a strong alternative or addition to the typical event marketing suite (social media, word of mouth, website, etc). 

On the creator-side, there are still plenty of small businesses and people who may be drawn to Eventbrite as a possible source of income. While we don’t have numbers of this penetration, we know that every restaurant with downtime hours can host classes in the afternoon and parties late at night. We know every bar and club would reach a larger audience hosting parties or crawls or socials at Eventbrite. We know every hotel could host stand-up comedy, tastings, and socials in their lobbies on Eventbrite. We are confident that the potential penetration is significant, and it will take time for word of mouth and education through user base growth for this to happen. There’s just so many ways event platforms can be used to generate income for creators. And as the supply increases, we may also see reduced prices in the future, which may lead to even more customers and traffic.

Improving unit economics

Just late last year, Eventbrite released Eventbrite Ads, which allows creators, by paying a fixed daily budget (similar to Google’s SEO system), to have their event on the top of the search list or on the recommended page. This could provide a huge source of revenue to the company, and should become a more and more appealing product as the marketplace gets bigger.  Eventbrite Ads is already at a $4.4M run rate, which we believe can easily double for the next few years.

The second “big” release was Eventbrite Boost, released in 2021. Boost is a marketing SaaS that allows creators to manage email and social media marketing all in one place. Creators are able to automate more emails in much larger volumes, create and automate Facebook, Instagram, and Instagram Stories ad campaigns, get marketing and targeting recommendations leveraging Eventbrite’s own data, and build multi-event marketing schedules. Instead of having to manage separate accounts on social media apps and email SaaS tools, they can do everything in Eventbrite plus get targeted data-based recommendations. Creators who use Boost marketing tools increased their ticket volume per event by 63%. As of 2022, Boost was at a run rate of $1.6M, up 4x from the year it launched. Boost reached 10k subscribers in Q2 2023, making up 1.25% of all creators. The switching costs are quite significant too, because the marketing activities of frequent multi-event creators are mission-critical. Once your email base is on Boost, creators need to spend time setting up their email contacts on another platform as well as learning how to use the new user interface. 

These services were eventually combined into the regular Eventbrite pricing in October, which meant all creators were forced to have them available. The TAM for marketing is immense. According to creator surveys, around 8% of event costs are associated with ticketing, while 20-40% of costs are associated with marketing.

Other event management functions that could use an event-driven include venues who could rent out their space, firms looking to sponsor events, catering providers, security and management services, equipment and sound rentals, photography/streaming services, DJs and music creators, hosts, decor providers, etc. We believe Eventbrite could potentially leverage its network to provide platform services for creators and event management related businesses who would like one place where they could find each other without having to spend time asking around or searching online. It’s already proven to be doable; Cvent is a good model. Rather than build up a customer network, Cvent’s main advantages for creators are its venue and supplier network.

Barriers to Entry?

The barriers of entry to the event platform space is low. Let’s start with large entrants. What’is the chance that big network firms like Facebook or Google, make their own integrated live experience marketplace. They have way bigger traffic, users, and network compared to Eventbrite. Facebook has way more users than all the event ticketing platforms combined. But our research tells us otherwise.

Eventbrite already has a brand that is difficult for other big firms to replicate. Google is known as a search engine. Facebook is known as a social networking site. Square is a POS system. Existing customers who are already browsing on Eventbrite may try out their event platforms but Eventbrite will still hold top of mind. They know what the experience of using Eventbrite was like; there’s little search cost. Creators know that when they launch an event on Eventbrite, it’s going to circulate amongst people who are specifically looking for events. If this was on a broader network site, it would be more difficult to target the people you want. Eventbrite’s focus on its niche is what will help it defend against large entrants. 

Moreover, investing in the ticketing software is more complex than it looks. Different countries have different ways of ticket payment processing. In Germany, wire payments are preferred over credit cards. Latin America has a very unique payment system where a coupon has to be printed out and scanned at a nearby bodega to confirm a purchase. You also need a ton of features: discount options, ad integration, email integration, reporting, on-site check in, etc. Different kinds of events behave differently. Music creators care a lot more about promotion and reporting. If their seats are not filled enough, audiences get the feeling people don’t want to watch, no social proof. Sports and conferences need very detailed on-site check-in features, printable name tag integrations, and updates before, during, and after the event. Parties and speed-dating events need detailed personal information forms, age verifications, and options to choose drinks or other items. It takes time and significant investment to find the hearts of each category of event creators. 

Speaking for ad-revenue giants, the margins on ads are way higher than the margins for tickets. It makes little sense for firms this big to light their money on fire all for it to end up as a rounding error on the top-line. Instead, integrating with Eventbrite as a payment processor partner is a far more cost-effective way to incorporate events in your site, which is what Facebook has opted for. A former business development employee at EB had this to say about established firms entering the space:

“Constant Contact was a company who through their email marketing product, they had done exactly what you said, like 5 or maybe even 10 years ago. They had created an event RSVP product, connect your PayPal or Off.Net account, take payment, and it was bundled into the Constant Contact subscription fee. They got, whatever, five plus years into that, and said, "This is a pain in the ass, we don't want to maintain this forever, and our product is not nearly as good as Eventbrite's," and so they came to Eventbrite and said, "Hey, can you guys just power an events product that we can bolt on?" And so, I think that's actually the opportunity for Eventbrite..”

While new entrants can easily set up ticketing software, it is notoriously difficult to scale. Unlike most software businesses, ticketing has volumes that behave in a very bizarre spikey manner. When popular events go on-sale, you usually have immense demand at the very beginning, simmering down overtime. What this means is that 90% of the time, running your software is easy, but 10% of the time, you need a crazy amount of server space and infrastructure. And every crash and error is an unhappy customer. Your site’s reputation gets ruined: customers are unhappy, now creators are unhappy. Even scaled first like Ticketmaster often face massive reputational damage due to systems not being able to handle the sheer amount of on-sale volume. Since they’re a monopoly, consumers have no choice. But for small frequent creators with thousands of options, it takes you out of the game. You need to ensure you get creators that are large enough to bring in profitable customers but not too large where your system breaks and everyone leaves. 

Development future

Research and development

Eventbrite is unprofitable, but only because of R&D spend., which makes up 30% of revenue, higher than 20% pre-pandemic. Immense investment had to be made to make the self-serve model as reliable and versatile as possible since Eventbrite made the bold move of cutting off their on-premise solution. Building out new features, rolling out new products to increase take rate and value-add, as well as improving infrastructure. Now cash is being thrown at AI to automate event creation. Frequent creators will soon be able to let Eventbrite publish events for them, generating all the required content and options, streamlining the creator’s business. THey recently had a partnership with OpenAI which allows you to auto-generate captions and event descriptions. We think Eventbrite will be a net benefactor of AI and at its relative scale should be able to invest the most in it.

Most recently, Eventbrite made a huge infrastructural change: moving from their older rigid one-program software to a dynamic micro-service architecture. The new architecture allows different products and segments to be operated on separately. In other words, this change signals the decoupling of the core ticketing software from its ads product, platform, and other components alongside leaving their legacy software and tech debt. Many engineers at Eventbrite have complained about these issues, so it’s a good sign that their voices are being heard by decision-makers. 

Product Strategy

Figure: Product rollout since pivot decision in 2020

Many basic self-serve products such as a simple dashboard or adding Google logins were rolled out within the last few years. Eventbrite has very recently and is still at this moment becoming the self-serve platform it wants to be; the extent of its product capabilities' steady state has incredible potential. 

The past 3 years has seen a shift in focus from acquiring creators to acquiring consumers, and this meant putting more resources both into marketing and product development aimed at growing the consumer-base rather than the creator-base.  Eventbrite’s former Chief Product Officer and now Advisor, Casey Winters, has been credited with planning and executing most of the product-strategy since 2019. He was a major contributor to the decision and execution in cutting off the on-premise segment, revamping the legacy tech infrastructure, and rolling out Ads and Boost. Winters has had extensive experience in platform businesses, working with Grubhub in its early years, building out Pinterest’s network effect, and being an advisor for multiple firms including AirBnB and Reddit. We think this shift was somewhat his idea. 

Well, Ads and Boost, while used by creators, definitely boosted the demand for events. Ads improved the discovery experience by enhancing event targeting while Boost simply helped creators do marketing better, expanding their reach to more end-buyers. Something as obvious as releasing a landing page video upload feature saw creators who added videos to their listings get a 74% increase in page views. Or simply adding a rating system for consumers added social proof in event selection. A lot of resources were put into the personalization of the search experience. Customers who attended or searched up an event will get recommended similar listings. SEO spend is very large, but more effort is being placed into social media and influencer partnerships. Creator sales growth overall has been going up 40-50% YoY. It shows how much Eventbrite still could add to make their marketplace experience on par with mature platform businesses. 

Acquisition History

Eventbrite’s acquisition strategy has been quite opportunistic. Acquisitions have been made either to secure talent, engineering, or to enter a new market. 

Eventioz was acquired in 2013 at an undisclosed amount. Eventioz was founded in 2008 in Argentina. By 2013, they had operations in Brazil, Chile, Colombia, Mexico, and Peru, hosting 15k creators, 20k events, and selling 1M tickets annually. Eventbrite was neck-on-neck with Sympla in volume and revenue. We heard they had issues getting creator and consumer trust with the bodega coupon payment system, which caused reputational damage for a time, now we hear Eventbrite’s LatAm segment is growing faster than all English-speaking regions. The people are culturally outgoing, jovial, and social. Sympla still remains the biggest threat.

TicketFly was acquired by Eventbrite in 2017. It was Eventbrite’s biggest competitor in the US with a seventh of Eventbrite’s ticket volume and had a large market share among music creators. Ticketfly was purchased by Pandora, a music-streaming service, for $450M 18 months prior to Eventbrite’s acquisition. Pandora was forced to fire-sell Ticketfly, allowsing Eventbrite to buy it for $200M, a nearly 60% drop. At the time of acquisition, TicketFly generated $54M in revenue for the year, which means Eventbrite bought TicketFly at 2.4x revenue when most software companies were getting acquired at 4.5x revenue. Nevertheless, management faced difficulties integrating the creators. This culminated when TIcketFly was hacked, leaking personal info on 27M accounts. Eventbrite only managed to absorb 70% of creators from Ticketfly, hurting return. Fortunately, management has acknowledged the acquisition was an operational failure, and say they will be more careful on big acquisitions like this going forward. 

TicketScript was acquired by Eventbrite in 2017, several months before the Ticketfly acquisition, for $33.4M. TicketScript was a pure market entry play. TicketScript was the market dominant player in the Netherlands and Germany, and has had long experience in the market, being founded at the same time as Eventbrite. Eventbrite bought the firm for approx. 3x revenue. 

In 2018, Eventbrite made two smaller acquisitions: TicketTea for $11.4M and Picatic for CAD 1.8M. TicketTea was a leading Spanish ticketer. It helped Eventbrite enter the Spanish market but Eventbrite primarily bought the company to gain access to its engineers which were just as good and educated as those in San Fran but could be paid at much lower cost. Eventioz and TicketTea would eventually house most of Eventbrite’s engineers following their workforce cuts during the pandemic. The Picatic acquisition was purely for the features they offered. Picatic, based in Vancouver, offered a variety of features including online guest surveys, more sophisticated inventory management, crowdfunding, and comprehensive reporting.

The last acquisition Eventbrite has made so far was ToneDen for $7.5M in November 2020. ToneDen, based in Los Angeles, was a marketing dashboard tool that could integrate with social media and email. The acquisition provided the framework and the engineering capability for Eventbrite’s marketing suite.

Management

Eventbrite was founded by Julia and Kevin Hartz in 2006, who started the firm in their home soon after getting engaged and moving to the Bay area. Early adopters included small tech meetups and speed dating. The Hartzs spent time studying customers first-hand, adding more and more features ad-hoc. It was a scrappy operation with less than 10 employees. None of them knew how to build the tech, but Kevin had a strong network, bringing in Renaud Visage who became CTO. 

Eventbrite got their big break when Sequoia Capital invested $8M in 2009. Eventbrite then secured $50 million in Series E Financing in 2011, with Tiger Global as the primary investor. In 2013, the company raised an additional $60 million led by Tiger Global and T. Rowe Price. Subsequently, in 2014, Eventbrite secured $60 million in a private equity round. Finally, in September 2017, the company successfully raised $134 million in a Series G funding round, bringing their total funding to $334 million. The company then went public in 2018 at $23 a share, a market cap of $1.76B. Julia Hartz has served as CEO since 2016, replacing Kevin Hartz who now serves as Executive chairman.

Kevin (Executive chairman) has had a long history in the start-up scene and in platform businesses. An ex-Paypal employee, Kevin founded Xoom in 2001 and served as CEO until 2005, remaining as a Director up until its IPO and eventual acquisition by PayPal. Xoom was a remittance platform, whose framework echoed that of Eventbrite.  It had a payment processor which earned for Xoom by taking 1-3% of the exchange rate spread, and had some network effect: families and friends who were sending money to each other would see the Xoom logo when they got the payment, prompting the receiver to eventually become a sender themselves. Like Eventbrite, Xoom relied on reputation in sending money as efficiently and securely as possible. Kevin and the team grew Xoom at a compounded rate of nearly 40% since the end of the 2008 crash, turning a profit in 2015 on a EBITDA margin and cash flow basis, the same year Paypal bought it for $1.09B, almost 6x revenue. 

Julia Hartz (CEO) worked in show business before starting Eventbrite. In the early 2000s, Julia was an executive producing shows such as MTV’s hit series Jackass, FX’s The Shield, Nip/Tuck, Rescue Me, and 30 Days. Julia has had extensive experience dealing with actors, production managers, executives, and directors. Event creators share similar challenges with people in show business: both need to appease an audience and have to get enough of them to earn a profit. We think Julia’s time with entertainers surprisingly makes her an excellent fit for the event space. 

Kevin enjoys growing young companies and then sending them to college while Julia wanted to be a parent to the company. We saw this in Xoom where Kevin took a backseat after running the firm for 4 years, and now after 10 years of Kevin as CEO. Both have been described as savvy, caring, capable operators, and incredibly open-minded. One former employee told us Britelings could send an email to Kevin and Julia about a new idea and they would always have a conversation about it. They trusted their people, and were only hands-on when necessary. We got the feeling that Eventbrite really prioritized culture. When Eventbrite wanted to acquire Sympla, Kevin chose Eventioz because Eventioz people were close-knit and allowed pets in the office. 

Management is bold. The pivot to frequent creators is no easy decision, considering that it wiped out half their sales. Sources say Casey Winters orchestrated this. We don’t know if he was the one to suggest the shift, but he likely led its execution. His time at Eventbrite was a 3-year “gig” for him, but he evidently had a profound impact on Eventbrite’s current strategy. Employees also thought really highly of him. With Winters’s mark and Kevin’s decision to take a backseat, Eventbrite on a managerial level is quite different now compared to pre-pandemic. 

Incentives

We think management is well aligned with shareholders. 

Insider ownership is good. Julia and Kevin hold 10% of the Eventbrite, worth around $73M. Through Xoom’s acquisition, which Kevin held 2% of, Kevin received $24M, which puts the couple’s Eventbrite stake at around 75% of their net worth. Kevin increased his stake 4 fold since the pandemic. Together, insiders hold 4.7% of shares. 

On the flip side, very little compensation comes from salary. In 2022, stock compensation made up 43% of Julia’s compensation while stock options made up 51%. Stock compensation made up 73% of Charles Baker's (CFO) compensation while options made up 16%. Vivek Sagi’s (CTO) was 73% stock, 17% options, and 10% salary plus bonus. Base salary of all three ranged from $430-475k. Because of the heavy contribution of stock compensation, all insider stakes have been going up. Since the pandemic, most executives increased their stakes 4-7 fold.

Capital allocation

Kevin and Julia are generally hands-off when it comes to capital allocation outside M&A. Since Baker joined 2019, he has promised to introduce share repurchases eventually once profitability has improved. Unfortunately, his term saw Eventbrite become a net issuer to provide employee stock option plans, although this has dropped significantly since 2022 to the point where they are no longer a net issuer. He has loaned nearly $487M of debt, so far paying back a third of it. While Eventbrite is unprofitable EBIT-wise, they have amassed $720M in cash, a fifth of which is in US treasuries and savings deposits, so we think they should be covered. Overall, capital allocation is okay; similar to other young tech companies. 

Valuation

Eventbrite suffered from an overpriced IPO, leading to a over 70% in share price since. The stock is up 33% YTD, a bit lower than Nasdaq’s 40%. Eventbrite trades at approximately 2.5x sales, lower than current industry average. Assuming steady state EBITDA margins of 20%, Eventbrite trades at 7x EV/EBITDA, also below industry average.

We assumed paid ticket volume grows at 20M a year as it had been for almost the last decade and the years following the shift to the self-service model. We also assumed take rates stay at 9% and the average ticket value on Eventbrite stays at $40/ticket. With these, we expect Eventbrite to compound revenue at 20% for the next 5 years. Using conservative assumptions, we think at worst-case scenario, Eventbrite should be worth at least nearly double its current value.

Catalyst

Growth